☒
2022
☐
Alpha Healthcare Acquisition Corp.
| Delaware | 85-1763759 | ||||||||||
| (State or other jurisdiction of incorporation or organization) | ( | Identification No.) | |||||||||
| 2525 East North Carolina Highway 54 | |||||||||||
| Durham, | NC | 27713 | |||||||||
| (Address of principal executive offices) | (Zip code) | ||||||||||
1177 Avenue of the Americas, 5th Floor
New York, New York 10036
Registrant’s telephone number, including area code: (646) 494-3296
code)
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
| The Nasdaq Stock Market LLC | ||||||||||||||
| Redeemable Warrants, each whole warrant exercisable for one share of | The Nasdaq Stock Market LLC | |||||||||||||
| Large accelerated filer | o | Accelerated filer | o | |||||||||||
| Non-accelerated filer | x | Smaller reporting company | x | |||||||||||
| Emerging growth company | x | |||||||||||||
Alpha Healthcare Acquisition Corp.
| Page No. | |||||||||
i
ALPHA HEALTHCARE ACQUISITION CORP.CONDENSED BALANCE SHEETS
| March 31, 2021 (Unaudited) | December 31, 2020 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 513,059 | $ | 1,094,761 | ||||
| Prepaid expenses | 124,582 | 148,977 | ||||||
| Total current assets | $ | 637,641 | $ | 1,243,738 | ||||
| Cash Held in Trust account | 100,029,852 | 100,016,161 | ||||||
| Total assets | 100,667,493 | 101,259,899 | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 5,000 | $ | 5,000 | ||||
| Franchise tax payable | 113,475 | 113,475 | ||||||
| Due to related party | 10,000 | 34,334 | ||||||
| Promissory Note – Related Party | 7,172 | 95,136 | ||||||
| Total current liabilities | 135,647 | 247,945 | ||||||
| Warrant Liabilities | 14,993,775 | 6,038,351 | ||||||
| Deferred underwriters’ discount | 2,127,821 | 1,959,758 | ||||||
| Total liabilities | 17,257,243 | 8,246,054 | ||||||
| Commitments | ||||||||
| Class A common stock subject to possible redemption, 7,841,024 and 8,801,384 shares at redemption value | 78,410,240 | 88,013,840 | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding | — | — | ||||||
| Class A common stock, $0.0001 par value; 100,000,000 shares authorized; 2,513,976 shares and 1,553,616 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively (excluding 7,841,024 and 8,801,384 shares subject to possible redemption, respectively) | 252 | 156 | ||||||
| Class B common stock, $0.0001 par value; 10,000,000 shares authorized; 2,500,000 shares issued and outstanding at March 31, 2021 and December 31, 2020 | 250 | 250 | ||||||
| Additional paid-in capital | 13,015,395 | 3,579,954 | ||||||
| Accumulated earnings (deficit) | (8,015,887 | ) | 1,419,645 | |||||
| Total stockholders’ equity | 5,000,010 | 5,000,005 | ||||||
| Total liabilities and stockholders’ equity | $ | 100,667,493 | $ | 101,259,899 | ||||
| March 31, 2022 | December 31, 2021 | ||||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 198,222 | $ | 217,502 | |||||||
| Short-term investments | 8,000 | 8,000 | |||||||||
| Accounts receivable | 233 | 176 | |||||||||
| Prepaid expenses and other current assets | 2,840 | 3,662 | |||||||||
| Total current assets | 209,295 | 229,340 | |||||||||
| Finance lease right-of-use assets, net | 20,917 | 21,432 | |||||||||
| Operating lease right-of-use assets, net | 716 | 727 | |||||||||
| Property and equipment, net | 33,540 | 35,034 | |||||||||
| Total assets | $ | 264,468 | $ | 286,533 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | 3,037 | $ | 2,094 | |||||||
| Accrued expenses | 5,460 | 6,757 | |||||||||
| Finance lease obligation, current portion | 2,047 | 1,981 | |||||||||
| Deferred payroll tax, current portion | 173 | 173 | |||||||||
| Operating lease obligation, current portion | 46 | 45 | |||||||||
| Total current liabilities | 10,763 | 11,050 | |||||||||
| Contingent earnout liability | 100,402 | 103,660 | |||||||||
| Finance lease obligation, net of current portion | 20,581 | 21,109 | |||||||||
| SVB loan payable | 27,739 | 27,361 | |||||||||
| Operating lease obligation, net of current portion | 670 | 682 | |||||||||
| Common stock warrant liabilities | 423 | 497 | |||||||||
| Total liabilities | 160,578 | 164,359 | |||||||||
| Commitments and contingencies (Note 11) | 0 | 0 | |||||||||
| Stockholders’ equity | |||||||||||
| Preferred stock, $0.0001 par value; 20,000,000 shares designated as of March 31, 2022 and December 31, 2021; 0 shares issued and outstanding as of March 31, 2022 and December 31, 2021 | — | — | |||||||||
| Common stock, $0.0001 par value; 250,000,000 shares authorized as of March 31, 2022 and December 31, 2021; 103,004,572 and 103,003,646 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively. | 10 | 10 | |||||||||
| Additional paid-in capital | 538,285 | 536,737 | |||||||||
| Accumulated deficit | (434,405) | (414,573) | |||||||||
| Total stockholders' equity | 103,890 | 122,174 | |||||||||
| Total liabilities and stockholders’ equity | $ | 264,468 | $ | 286,533 | |||||||
ALPHA HEALTHCARE
CONDENSED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2021
(Unaudited)
| Formation and operating costs | $ | 493,818 | ||
| Loss from operations | (493,818 | ) | ||
| Other Loss | ||||
| Interest income | 19 | |||
| Change in fair value of warrant liabilities | (8,955,424 | ) | ||
| Interest income on marketable securities held in Trust account | 13,691 | |||
| Total other income (loss) | (8,941,714 | ) | ||
| Net loss | $ | (9,435,532 | ) | |
| Weighted average shares outstanding, Class A common stock subject to possible redemption | 10,350,000 | |||
| Basic and diluted net income per share, Class A common stock subject to possible redemption | $ | 0.00 | ||
| Weighted average shares outstanding, Non-redeemable common stock | 8,625,000 | |||
| Basic and diluted net loss per share, Non-redeemable | $ | (0.20 | ) |
See
For the Three Months Ended March 31, | |||||||||||||||||||||||
| 2022 | 2021 | ||||||||||||||||||||||
| Grant revenue | $ | 233 | $ | 155 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | 16,314 | 15,137 | |||||||||||||||||||||
| General and administrative | 5,682 | 4,787 | |||||||||||||||||||||
| Total operating expenses | 21,996 | 19,924 | |||||||||||||||||||||
| Loss from operations | (21,763) | (19,769) | |||||||||||||||||||||
| Other income (expense), net: | |||||||||||||||||||||||
| Interest income | 31 | 1 | |||||||||||||||||||||
| Change in fair value of contingent earnout liability | 3,258 | — | |||||||||||||||||||||
| Interest expense | (1,432) | (533) | |||||||||||||||||||||
| Change in fair value of common stock warrant liabilities | 74 | — | |||||||||||||||||||||
| Total other income (expense), net | 1,931 | (532) | |||||||||||||||||||||
| Net loss and comprehensive loss | $ | (19,832) | $ | (20,301) | |||||||||||||||||||
| Net loss per share attributable to common stockholders, basic and diluted | $ | (0.19) | $ | (3.46) | |||||||||||||||||||
| Weighted-average shares outstanding used in computing net loss per share attributable to common stockholders, basic and diluted | 103,004,088 | 5,874,700 | |||||||||||||||||||||
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2021
(Unaudited)
| Common Stock | Additional | Accumulated | Total | |||||||||||||||||||||||||
| Class A | Class B | Paid-In | Earnings | Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | (Deficit) | Equity | ||||||||||||||||||||||
| Balance as of December 31, 2020 | 1,553,616 | $ | 156 | 2,500,000 | $ | 250 | $ | 3,579,954 | $ | 1,419,645 | $ | 5,000,005 | ||||||||||||||||
| Change in deferred underwriter discount | — | — | — | — | (168,063 | ) | — | (168,063 | ) | |||||||||||||||||||
| Change in Class A common stock subject to possible redemption | 960,360 | 96 | — | — | 9,603,504 | — | 9,603,600 | |||||||||||||||||||||
| Net loss | — | — | — | — | — | (9,435,532 | ) | (9,435,532 | ) | |||||||||||||||||||
| Balance as of March 31, 2021 | 2,513,976 | $ | 252 | 2,500,000 | $ | 250 | $ | 13,015,395 | $ | (8,015,887 | ) | $ | 5,000,010 | |||||||||||||||
See
| Redeemable Convertible Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders' (Deficit) Equity | ||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2021 | — | $ | — | 103,003,646 | $ | 10 | $ | 536,737 | $ | (414,573) | $ | 122,174 | ||||||||||||||||||||||||||||||||
| Proceeds from the exercise of stock options | — | — | 926 | — | 1 | — | 1 | |||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | 1,547 | — | 1,547 | |||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | (19,832) | (19,832) | |||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2022 | — | $ | — | 103,004,572 | $ | 10 | $ | 538,285 | $ | (434,405) | $ | 103,890 | ||||||||||||||||||||||||||||||||
| Redeemable Convertible Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders' (Deficit) Equity | ||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2020 | 69,613,562 | $ | 420,989 | 5,822,396 | $ | 1 | $ | 37,778 | $ | (388,096) | $ | (350,317) | ||||||||||||||||||||||||||||||||
| Proceeds from the exercise of stock options | — | — | 116,149 | — | 206 | — | 206 | |||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | 2,528 | — | 2,528 | |||||||||||||||||||||||||||||||||||||
| Issuance of warrants in conjunction with debt | — | — | — | — | 2,360 | — | 2,360 | |||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | (20,301) | (20,301) | |||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2021 | 69,613,562 | $ | 420,989 | 5,938,545 | $ | 1 | $ | 42,872 | $ | (408,397) | $ | (365,524) | ||||||||||||||||||||||||||||||||
CONDENSED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2021
(Unaudited)
| Cash Flows from Operating Activities: | ||||
| Net loss | $ | (9,435,532 | ) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||
| Change in fair value of warrant liabilities | 8,955,424 | |||
| Income on trust account | (13,691 | ) | ||
| Changes in current assets and current liabilities: | ||||
| Prepaid assets | 24,395 | |||
| Due to related party | (24,334 | ) | ||
| Net cash used in operating activities | (493,738 | ) | ||
| Cash Flows from Financing Activities: | ||||
| Proceeds from issuance of promissory note to related party | 52,627 | |||
| Repayment of promissory note to related party | (140,591 | ) | ||
| Net cash used in financing activities | (87,964 | ) | ||
| Net Change in Cash | (581,702 | ) | ||
| Cash - Beginning | 1,094,761 | |||
| Cash - Ending | $ | 513,059 | ||
| Supplemental Disclosure of Non-cash Financing Activities: | ||||
| Change in value of Class A common stock subject to possible redemption | $ | (9,603,600 | ) | |
| Change in deferred underwriter discount payable charged to additional paid in capital | $ | 168,063 | ||
See
For the Three Months Ended March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Cash flows from operating activities | |||||||||||
| Net loss | $ | (19,832) | $ | (20,301) | |||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
| Depreciation expense | 1,525 | 1,555 | |||||||||
| Stock-based compensation expense | 1,547 | 2,528 | |||||||||
| Change in fair value of contingent earnout liability | (3,258) | — | |||||||||
| Change in fair value of common stock warrant liabilities | (74) | — | |||||||||
| Amortization expense | 515 | 515 | |||||||||
| Non-cash operating lease costs | 11 | 10 | |||||||||
| Amortization of SVB debt discount | 378 | — | |||||||||
| Accrued interest on PPP loan obligation | — | 8 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | (57) | (42) | |||||||||
| Prepaid expenses and other current assets | 822 | 7 | |||||||||
| Accounts payable | 934 | 595 | |||||||||
| Accrued expenses | (1,297) | 593 | |||||||||
| Operating lease obligation | (11) | (11) | |||||||||
| Net cash used in operating activities | (18,797) | (14,543) | |||||||||
| Cash flows from investing activities | |||||||||||
| Purchase of property and equipment | (22) | (29) | |||||||||
| Net cash used in investing activities | (22) | (29) | |||||||||
| Cash flows from financing activities | |||||||||||
| Proceeds from the exercise of stock options | 1 | 206 | |||||||||
| Payment of finance lease principal | (462) | (402) | |||||||||
| Proceeds from SVB loan | — | 19,659 | |||||||||
| Payment of deferred offering costs | — | (192) | |||||||||
| Net cash (used in) provided by financing activities | (461) | 19,271 | |||||||||
| Net (decrease) increase in cash and cash equivalents | (19,280) | 4,699 | |||||||||
| Cash and cash equivalents at the beginning of the period | 217,502 | 39,929 | |||||||||
| Cash and cash equivalents at the end of the period | $ | 198,222 | $ | 44,628 | |||||||
| Supplemental disclosure | |||||||||||
| Cash paid for interest on SVB loan | $ | 563 | $ | — | |||||||
| Supplemental disclosure of noncash activities: | |||||||||||
| Unpaid liabilities assumed in connection with Merger | $ | 130 | $ | — | |||||||
| Purchase of property and equipment in accounts payable | $ | 30 | $ | — | |||||||
| Issuance of warrants in conjunction with debt | $ | — | $ | 2,360 | |||||||
| Unpaid deferred offering costs | $ | — | $ | 2,199 | |||||||
NOTES TO FINANCIAL STATEMENTS
Note 1 —
subsidiary (the “Company”) is pioneering the development and manufacture of off-the-shelf, universally implantable, bioengineered human tissues, complex tissue systems, and organs designed to improve the lives of patients and transform the practice of medicine. The Company is leveraging its technology platform to develop proprietary, bioengineered, acellular human tissues, complex tissue systems, and organs for use in the treatment of diseases and conditions across a range of anatomic locations in multiple therapeutic areas.
As of March 31, 2021, the Company had not yet commenced any operations. All activity through March 31, 2021, relates to the Company’s formation and the Initial Public Offering (“IPO”) described below. The Company will not generate any operating revenues until after the completion of its initial business combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the IPO.
Financing
The registration statement for the Company’s IPO was declared effective on September 17, 2020 (the “Effective Date”). On September 22, 2020, the Company consummated the IPO of 10,000,000 units (the “Units” and, with respect to the shares of Class A common stock included in the Units sold, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $100,000,000, which is described in Note 3.
Simultaneouslycollectively with the closing of the IPO, the Company consummated the sale of 355,000 Units (the “Private Placement Units”) the Sponsor, Oppenheimer & Co. Inc. (“Oppenheimer”) and Northland Securities, Inc. (“Northland”) at a purchase price of $10.00 per Private Placement Unit, generating gross proceeds to the Company of $3,550,000, which is described in Note 4.
Transaction costs amounted to $4,197,388 consisting of $2,000,000 of underwriting fee, $1,959,758 of deferred underwriting fee and $329,713 of other offering costs. Of the total transaction cost $317,023 was expensed as non-operating expenses in that statement of operations with the rest of the offering cost charged to stockholders’ equity. The transaction costs were allocated based on the relative fair value basis, compared to the total offering proceeds, between the fair value of the public warrant liabilities and the Class A common stock.
Trust Account
Following the closing of the IPO on September 22, 2020, an amount of $100,000,000 from the net proceeds of the sale of the Units in the IPO and the sale of the Private Placement Units was placed in a trust account (“Trust Account”) which will be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company. Except with respect to interest earned on the funds held in the trust account that may be released to the Company to pay its tax obligations, the proceeds from the IPO and the sale of the private placement units will not be released from the trust account until the earliest of (a) the completion of the Company’s initial business combination, (b) the redemption of any public shares properly submitted in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation, and (c) the redemption of the Company’s public shares if the Company is unable to complete the initial business combination within 24 months from the closing of the IPO, subject to applicable law. The proceeds deposited in the trust account could become subject to the claims of the Company’s creditors, if any, which could have priority over the claims of the Company’s public stockholders.
ALPHA HEALTHCARE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Initial Business Combination
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO, although substantially all of the net proceeds are intended to be generally applied toward consummating a business combination.
The Company’s business combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account (as defined below) (net of taxes payable) at the time of the signing an agreement to enter into a business combination. However, the Company will only complete a business combination if the post-business combination company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a business combination.
The Company will provide its public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of the initial business combination either (i) in connection with a stockholder meeting called to approve the initial business combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a proposed initial business combination or conduct a tender offer will be made by the Company, solely in its discretion. The stockholders will be entitled to redeem their shares for a pro rata portion of the amount then on deposit in the Trust Account (initially $10.00 per share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations).
The shares of common stock subject to redemption is recorded at a redemption value and classified as temporary equity upon the completion of the IPO, in accordance with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case, the Company will proceed with a business combination if the Company has net tangible assets of at least $5,000,001 either immediately prior to or upon consummation of a business combination and, if the Company seeks stockholder approval, a majority of the issued and outstanding shares voted are voted in favor of the business combination.
The Company will have 24 months from the closing of the IPO (with the ability to extend with stockholder approval) to consummate a business combination (the “Combination Period”). However, if the Company is unable to complete a business combination within the Combination Period, the Company will redeem 100% of the outstanding public shares for a pro rata portion of the funds held in the Trust Account, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to the Company, divided by the number of then outstanding public shares, subject to applicable law and as furthertransactions described in the registration statement,Merger Agreement, the “Reverse Recapitalization”). On the Closing Date, AHAC changed its name to Humacyte, Inc. (“New Humacyte”) and then seekLegacy Humacyte changed its name to dissolve and liquidate.
Humacyte Global, Inc. The Company’s sponsor, officers and directors have agreed to (i) waive their redemption rights with respect to their founder shares, private placement shares and public shares in connection with the completion of the initial business combination, (ii) waive their redemption rights with respect to their founder shares and public shares in connection with a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation, and (iii) waive their rights to liquidating distributions from the trust account with respect to their founder shares and private placement shares if the Company fails to complete the initial business combination within the Combination Period.
ALPHA HEALTHCARE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
The Company’s sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third partyMerger is accounted for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act. However, the Company has not asked its sponsor to reserve for such indemnification obligations, nor has the Company independently verified whether its sponsor has sufficient funds to satisfy its indemnity obligations and believe that the Company’s sponsor’s only assets are securities of the Company. Therefore, the Company cannot assure that its sponsor would be able to satisfy those obligations.
Liquidity
As of March 31, 2021, the Company had cash outside the Trust Account of $513,059 available for working capital needs. All remaining cash held in the Trust Account are generally unavailable for the Company’s use, prior to an initial business combination, and is restricted for use either in a Business Combination or to redeem common stock. As of March 31, 2021 and December 31, 2020, none of the amount in the Trust Account was available to be withdrawn as described above.
Through March 31, 2021, the Company’s liquidity needs were satisfied through receipt of $25,000 from the sale of the founder shares, advances from the Sponsor in an aggregate amount of $147,763 and the remaining net proceeds from the IPO and the sale of Private Placement Units.
The Company anticipates that the $513,059 outside of the Trust Account as of March 31, 2021, will be sufficient to allow the Company to operate for at least the next 12 months from the issuance of the financial statements, assuming that a Business Combination is not consummated during that time. Until consummation of its Business Combination, the Company will be using the funds not held in the Trust Account, and any additional Working Capital Loans (as defined in Note 5) from the initial stockholders, the Company’s officers and directors, or their respective affiliates (which is described in Note 5), for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business Combination.
The Company does not believe it will need to raise additional funds in order to meet the expenditures required for operating its business. However, if the Company’s estimates of the costs of undertaking in-depth due diligence and negotiating business combination is less than the actual amount necessary to do so, the Company may have insufficient funds available to operate its business prior to the business combination. Moreover, the Company will need to raise additional capital through loans from its Sponsor, officers, directors, or third parties. None of the Sponsor, officers or directors are under any obligation to advance funds to, or to invest in, the Company. 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 its business plan, 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.
ALPHA HEALTHCARE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Risks and Uncertainties
On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus (the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak continues to evolve. The impact of the COVID-19 outbreak on the Company’s financial position will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions. These developments and the impact of the COVID-19 outbreak on the financial markets and the overall economy are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, the Company’s financial position may be materially adversely affected. Additionally, the Company’s ability to complete an initial business combination may be materially adversely affected due to significant governmental measures being implemented to contain the COVID-19 outbreak or treat its impact, including travel restrictions, the shutdown of businesses and quarantines, among others, which may limit the Company’s ability to have meetings with potential investors or affect the ability of a potential target company’s personnel, vendors and service providers to negotiate and consummate an initial business combination in a timely manner. The Company’s ability to consummate an initial business combination may also be dependent on the ability to raise additional equity and debt financing, which may be impacted by the COVID-19 outbreak and the resulting market downturn.
Note 2 — Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements have been preparedreverse recapitalization in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and under this method of accounting, AHAC is treated as the acquired company for interim financial informationreporting purposes and in accordance withLegacy Humacyte is treated as the instructionsacquirer. Operations prior to Form 10-Q and Article 8the Merger are those of Regulation S-XLegacy Humacyte.
Company has financed its operations primarily through the sale of equity securities and convertible debt, proceeds from the Reverse Recapitalization, borrowings under loan facilities and, to a lesser extent, through governmental and other grants. At March 31, 2022 and December 31, 2021, the Company had an accumulated deficit of $434.4 million and $414.6 million, respectively. The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K/A filed with the SEC on May 14, 2021, as well as the Company’s Current Reports on Form 8-K. The interim resultsCompany
8
ALPHA HEALTHCARE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Emerging Growth2022, the Company Status
had cash and cash equivalents and short-term investments of $206.2 million. The Company is an “emerging growth company,” as defined in Section 2(a)believes its combined cash and cash equivalents and short-term investments on hand will be sufficient to fund operations, including clinical trial expenses and capital expenditure requirements, for at least 12 months from the issuance date of these interim financial statements.
Further, Section 102(b)(1)related economic impact of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a classpandemic.
Legacy Humacyte.
Cash
the related footnote disclosures are unaudited. These unaudited interim financial statements have been prepared on the same basis as the audited financial statements, and in management
’s opinion, include all adjustments, consisting of only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of March 31, 2022 and its results of operations for the three months ended March 31, 2022 and 2021, and cash flows for the three months ended March 31, 2022 and 2021. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the year ended December 31, 2022 or any other period. The December 31, 2021 year-end condensed consolidated balance sheet was derived from audited annual financial statements but does not include all disclosures from the annual financial statements.Marketable Securities Heldused in Trust Account
At March 31, 2021, the Trust Account had $100,029,852 heldtreatment of diseases and conditions across a range of anatomic locations in marketable securities. During period January 1, 2021 to March 31, 2021,multiple therapeutic areas. The Company
evaluating financial performance and allocating resources.
ALPHA HEALTHCARE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Common Stock Subject to Possible Redemption
The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A common stock subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, common stock are classified as stockholders’ equity. The Company’s common stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly,Corporation (“FDIC”) as of March 31, 2021, 7,841,024 shares of Class A common stock subject to possible redemption2022 and December 31, 2021. The Company has cash equivalents that are presented at redemption value as temporary equity, outsideinvested in highly rated money market funds invested only in obligations of the stockholders’ equity sectionU.S. government and its agencies.
total revenue relates to an award it received from the Department of Defense (“DoD”) in August 2017. As of March 31, 2022 and December 31, 2021 100% of the Company’s accounts receivable relates to the DoD grant.
NetStockholders
Below is a reconciliation of the net income per common share:
| For the three months March 31, 2021 | ||||
| Numerator Earnings allocable to Class A common stock | ||||
| Interest income on Trust account | $ | 13,691 | ||
| Class A common stock net earnings | $ | 13,691 | ||
| Denominator: Weighted average Class A shares | ||||
| Class A Common stock, basic and diluted | 10,355,000 | |||
| Earnings/basic and diluted per share Class A common stock | $ | 0.00 | ||
| Numerator: Net income minus Earnings allocable to Class A common stock | ||||
| Net income (loss) | $ | (9,435,532 | ) | |
| Less : Earnings allocable to Class A common stock | 13,691 | |||
| Class B net income | $ | (9,449,223 | ) | |
| Denominator: weighted average Class B common stock | ||||
| Class B common stock, basic and diluted | 2,500,000 | |||
| Income/Basic and diluted per share Class B common stock | $ | (3.78 | ) | |
ALPHA HEALTHCARE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Offering Costs
The Company complies with the requirements of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A - “Expenses of Offering”. Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the Public Offering and that were charged to stockholders’ equity upon the completion of the IPO. Accordingly, on September 22, 2020, offering costs totaling $4,289,471 have been charged to stockholders’ equity (consisting of $2,000,000 of underwriting fee, $1,959,758 of deferred underwriting fee and $329,713 of other offering costs). Of the total transaction cost $317,023 was expensed as non-operating expenses in that statement of operations with the rest of the offering cost charged to stockholders’ equity. The transaction costs were allocated based on the relative fair value basis, compared to the total offering proceeds, between the fair value of the public warrant liabilities and the Class A common stock.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the Financial Accounting Standards Board (“FASB”) ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet.
Derivative warrant liabilities
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments,because 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.
The Company accounts for its 5,177,500 common stock warrants issued in connection with its Initial Public Offering (5,000,000) and Private Placement (177,500) as derivative warrant liabilities in accordance with ASC 815-40. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts 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 statement of operations. The fair value of warrants issued by the Company in connection with the Public Offering and Private Placement has been estimated using Monte-Carlo simulations at each measurement date.
ALPHA HEALTHCARE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Income Taxes
The Company accounts for income taxes under ASC 740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of March 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The Company has identified the United States as its only “major” tax jurisdiction.
The Company may be subject to potential examination by federal and state taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Recent Accounting Standards
Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted,them would have a materialhad an antidilutive effect on the Company’s financial statements.
were as follows:
| March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Shares issuable upon conversion of Series A redeemable convertible preferred stock | — | 18,421,897 | |||||||||
| Shares issuable upon conversion of Series B redeemable convertible preferred stock | — | 24,137,647 | |||||||||
| Shares issuable upon conversion of Series C redeemable convertible preferred stock | — | 11,241,283 | |||||||||
| Shares issuable upon conversion of Series D redeemable convertible preferred stock | — | 15,812,735 | |||||||||
| Exercise of options under stock plan | 6,641,647 | 6,237,914 | |||||||||
| Warrants to purchase common stock | 5,588,506 | 287,704 | |||||||||
Pursuant to the IPO on September 22, 2020, the Company sold 10,000,000 Units, at a purchase price of $10.00 per Unit. Each unit that the Company is offering has a price of $10.00 and consists of one share of Class A common stock and one-half of one redeemable warrant. Only whole warrants are exercisable. Each whole warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share (see Note 8).
ALPHA HEALTHCARE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Note 4 — Private Placement
Simultaneously with the closing of the IPO, the Company consummated the Private Placement with the Company’s Sponsor, AHAC Sponsor LLC, Oppenheimer, the representative of the underwriters, who is referred to as the representative, and Northland purchased an aggregate of 355,000 placement units at a price of $10.00 per unit, for an aggregate purchase price of $3,550,000. Each placement unit is identical to the units sold in the IPO.
The private placement warrants will be non-redeemable and exercisable on a cashless basis so long as they are held by the sponsor, the representative, Northland or their permitted transferees. If the private placement warrants are held by holders other than the sponsor, the representative, Northland or their permitted transferees, the private placement warrants will be redeemable by the Company and exercisable by the holders on the same basis as the warrants included in the units being sold in the IPO. In addition, for as long as the private placement warrants are held by the representative, Northland or their designees or affiliates, they may not be exercised after five yearsexcluded from the effective date of the registration statement.
The Company’s sponsor, the representative and Northland have agreed to (i) waive their redemption rights with respect to their private placement shares in connection with the completion of the Company’s initial business combination, (ii) waive their redemption rights with respect to their private placement shares in connection with a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation (A) to modify the substance or timing of the Company’s obligation to redeem 100% of its public shares if the Company does not complete its initial business combination within 24 months from the closing of the IPO or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity and (iii) waive their rights to liquidating distributions from the trust account with respect to their private placement shares if the Company fails to complete its initial business combination within 24 months from the closing of the IPO. In addition, the Company’s Sponsor, officers and directors have agreed to vote any founder shares or private placement shares held by them in favor of the Company’s initial business combination.
Note 5 — Related Party Transactions
Founder Shares
On July 20, 2020, the Company issued 2,875,000 shares of Class B common stock to its initial stockholder, AHAC Sponsor, LLCanti-dilutive table for $25,000, or approximately $0.01 per share. The founder shares include an aggregate of up to 375,000 shares subject to forfeiture if the over-allotment option is not exercised by the underwriters in full. The over-allotment option was not exercised by the underwriters during the 45-day option period; thus, 375,000 shares were forfeited accordingly as of November 1, 2020. As of March 31, 2021 and December 31, 2020, 2,500,000 shares of common stock (the “Founder Shares”) are issued and outstanding.
Promissory Note — Related Party
On July 1, 2020, the Company issued an unsecured promissory note to the sponsor, pursuant to which the Company may borrow up to an aggregate principal amount of $300,000 to be used for a portion of the expenses of the IPO. This loan is non-interest bearing, unsecured, and due on the earlier of (a) March 31, 2021 or (b) the date on which the Company completes the IPO. The loan will be repaid out of the offering proceeds not held in the Trust Account. As of March 31, 2021, the Company had $7,172 in borrowings outstanding under the promissory note.
ALPHA HEALTHCARE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Administrative Service Fee
The Company has agreed, commencing on the effective date of the prospectus, to pay an affiliate of the Company’s sponsor a monthly fee of an aggregate of $10,000 for general and administrative services including office space, utilities and secretarial and administrative support. This arrangement will terminate upon completion of a business combination or the liquidation of the Company. For the three months ended March 31, 2022 as such shares are contingently issuable until the share price of the Company exceeds specified thresholds that have not yet been achieved, or upon the occurrence of a change in control.
Related Party Loans
adopted ASU 2021-04 as of January 1, 2022. The adoption of this ASU had no impact on the Company
’s financial statements and related disclosures.Note 6 — Commitments & Contingencies
Registration Rights
The holders of the founder shares, placement units (including securities contained therein) and units (including securities contained therein) that may be issued upon conversion of working capital loans, and any shares of Class ANew Humacyte’s common stock issuable upon the exercise of the placement warrants and any shares of Class A common stock and warrants (and underlying Class A common stock) that maywould be issued upon conversion of the units issued as partshares of Legacy Humacyte preferred stock based on the working capital loansapplicable conversion ratio immediately prior to the effective time, multiplied by approximately 0.26260; and Class A
ALPHA HEALTHCARE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Underwriters Agreement
On September 22, 2020, the underwriters were paid an underwriting discount of two percent (2.0%) of the gross proceeds of the IPO, or $2,000,000.
In addition, the underwriters are entitled to a deferred underwriting fee of three and a half percent (3.5%) of the gross proceeds of the IPO upon the completion of the Company’s initial business combination. The underwriters have agreed that up to 1% of the deferred underwriting fee may be re-directed to other Financial Industry Regulatory Authority (FINRA) member firms that have provided services in connection with the identification and consummation of a business combination, in the sole discretion of the Company; provided, that all such payments to other FINRA member firms may only be made if permitted under applicable law.
The Company may reduce the deferred underwriting fee by up to 50% based on stockholders redeeming their shares for their pro-rata amount of the proceeds in the Trust Account; provided, however, that (a) the underwriters’ maximum deferred underwriting fee reduction based on stockholder redemptions will be 50% regardless of whether stockholder redemptions exceed 50%; and (b) any sums paid to other advisors as discussed above, will be credited against the reduction of and added back to the deferred underwriting fee payable to the underwriters; and (c) under no circumstance will the deferred underwriting fee be less than 1.75% of the gross proceeds of the IPO. As March 31, 2021, the Company accrued a deferred underwriting fee of $2,127,821.
Legal Matters
The Company has engaged a law firm to assist the Company with its legal matters in identifying, negotiating, and consummating a Business Combination, as well as assisting with other legal matters. In the event of a successful Business Combination, the amount of fees to be paid will be agreed upon between the Company and the law firm in light of all the facts and circumstances at that point in time. If a Business Combination does not occur, the Company will not be required to pay this contingent fee. Management is unable to determine the amount of the legal fees to be paid at this time. There can be no assurance that the Company will complete a Business Combination.
Note 7 — Stockholder’s Equity
Preferred Stock — The Company is authorized to issue a total of 1,000,000 shares of preferred stock at par value of $0.0001 each. At March 31, 2021 and December 31, 2020, there were no shares of preferred stock issued or outstanding.
Class A Common Stock — The Company is authorizedequal to issue a total of 100,000,000 shares of Class A common stock at par value of $0.0001 each. At March 31, 2021 and December 31, 2020, there were 2,513,976 and 1,553,616 shares issued and outstanding (excluding 7,841,024 and 8,801,384 shares subject to possible redemption)
Class B Common Stock — The Company is authorized to issue a total of 10,000,000 shares of Class B common stock at par value of $0.0001 each. At March 31, 2021 and December 31, 2020, there were 2,500,000 shares of Class B common stock issued or outstanding.
Both Class A and B stockholders vote together as a single class on all matters submitted to a vote of the Company stockholders, with each share of common stock entitling the holder to one vote.
ALPHA HEALTHCARE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Class B shares are identical to the Class A shares except that Class B shares (founder shares) automatically convert into shares of Class A common stock at the time of the consummation of our initial business combination, on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts offered in this prospectus and related to the closing of the initial business combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class ALegacy Humacyte common stock issuablesubject to such option or warrant multiplied by approximately 0.26260, at an exercise price per share equal to the current exercise price per share for such option or warrant divided by approximately 0.26260;
The holders of the founder shares have agreed not to transfer, assign or sell any of their founder shares until the earlier to occur of: (A) one year after the completion of our initial business combination and (B) subsequent to our initial business combination, (x)per tranche if the reported lastvolume-weighted average closing sale price of our Class A common stock equalsthe Common Stock is greater than or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizationsequal to $15.00 and the like)$20.00, respectively, for any 20 trading days within any 30-trading30 consecutive trading day period commencing at least 150 days after our initial business combination, or (y)period. At the dateClosing on whichAugust 26, 2021, the Company completesrecorded a liquidation, merger,liability (“Contingent Earnout Liability”) of $159.4 million, based on the estimated fair value of the 15,000,000 Contingent Earnout Shares with a corresponding reduction of additional paid-in capital stock exchange or other similar transaction that results in allthe equity section of our stockholders having the rightCompany’s condensed consolidated balance sheet.
Note 8 — Warrants
Each whole warrant entitles the registered holder to purchase one share of Class A common stockCommon Stock (the “PIPE Shares”) in a private placement at a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing on the later of 12 months from the closing of the IPO and 30 days after the completion of our initial business combination and will expire five years after the completion of the Company’s initial business combination, or earlier upon redemption or liquidation.
The Company may redeem outstanding warrants (excluding the warrants contained in the private units) at a price of $0.01 per warrant i) at any time while the warrants are exercisable; ii) upon a minimum of 30 days prior written notice of redemption; iii) if, and only if, the reported last sale price of the common stock equals or exceeds $18.00$10.00 per share for any 20 trading days within a 30 trading day period commencing oncean aggregate purchase price of $175 million (the “PIPE Financing”). The PIPE Financing was consummated in connection with the warrants become exercisable and ending on the third business day priorClosing.
ALPHA HEALTHCARE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
If the Company calls the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.” In determining whether to require all holders to exercise their warrants on a “cashless basis,” our management will consider, among other factors, our cash position, the number of warrants that are outstanding and the dilutive effect on our stockholders of issuing the maximum
| Shares | ||||||||
| Common stock of AHAC, outstanding prior to Merger | 10,355,000 | |||||||
| Less redemption of AHAC shares | (3,008,551) | |||||||
| Common stock of AHAC | 7,346,449 | |||||||
| AHAC Founder Shares | 2,500,000 | |||||||
| New Humacyte shares issued to PIPE Investors | 17,500,000 | |||||||
| Issuance of common stock upon reverse recapitalization and PIPE Financing | 27,346,449 | |||||||
| New Humacyte shares issued in Merger to Legacy Humacyte stockholders | 75,656,935 | (1) | ||||||
| Total shares of Common Stock immediately after Merger | 103,003,384 | |||||||
The exercise price and number of shares of common stock issuable on exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or the Company’s recapitalization, reorganization, merger or consolidation. If the Company (x) issues additional shares of Class A common stock or equity-linked securities for capital raising purposes inLegacy Humacyte.
ALPHA HEALTHCARE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
to the extent possible. The a prepayment fee of 3.00% that was stepped down to 2.00% after March 30, 2022 (with a further step down to 1.00% after March 30, 2023). The Company 2021: accordance with U.S. generally accepted accounting principles. The preparation of our unaudited condensed consolidated financial statements and Smaller Reporting Company Status because of the potential differences in accounting standards used. Procedures 2022. Factors Securities Information ExhibitsNote 9 —for sale ofto sell an asset or paid forto transfer of a liability in the principal or most advantageous market in an orderly transaction between market participants at the measurement date. GAAPAccounting Standards Codification (“ASC”) 820, Fair Value Measurement and Disclosures, establishes a three-tier fair value hierarchy which prioritizes thewhereby inputs to valuation techniques used in measuring fair value. Thevalue are prioritized, or the fair value hierarchy. There are three levels to the fair value hierarchy gives the highest priority tobased on reliability of inputs, as follows: in active markets for identical assets or liabilities (Levelin active markets.measurements)that are observable for the asset or liability, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.lowest priorityappropriate level at which to classify them for each reporting period, utilizing valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs (Level 3 measurements). These tiers include:●Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;●Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and●Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.following table presents information aboutdetermination requires significant judgments to be made by the Company.arewere measured at fair value on a recurring basis were as follows:($ in thousands) Fair Value Measured as of March 31, 2022 Level 1 Level 2 Level 3 Total Assets: Cash equivalents (money market funds) $ 191,152 $ — $ — $ 191,152 Cash equivalents (certificates of deposit) — 2,000 — 2,000 Short-term investments (certificates of deposit) — 8,000 — 8,000 Total financial assets $ 191,152 $ 10,000 $ — $ 201,152 Liabilities: Contingent Earnout Liability $ — $ — $ 100,402 $ 100,402 Private Placement Warrants liability — — 423 423 Total financial liabilities $ — $ — $ 100,825 $ 100,825 ($ in thousands) Fair Value Measured as of December 31, 2021 Level 1 Level 2 Level 3 Total Assets: Cash equivalents (money market funds) $ 208,821 $ — $ — $ 208,821 Cash equivalents (certificates of deposit) — 2,000 — 2,000 Short-term investments (certificates of deposit) — 8,000 — 8,000 Total financial assets $ 208,821 $ 10,000 $ — $ 218,821 Liabilities: Contingent Earnout Liability $ — $ — $ 103,660 $ 103,660 Private Placement Warrants liability — — 497 497 Total financial liabilities $ — $ — $ 104,157 $ 104,157 ($ in thousands) Contingent
Earnout LiabilityPrivate Placement
WarrantsFair value as of December 31, 2021 $ (103,660) $ (497) Change in fair value included in other income (expense), net 3,258 74 Fair value as of March 31, 2022 $ (100,402) $ (423)
___________________________($ in thousands) March 31,
2022December 31,
2021$ 27,673 $ 27,641 Computer equipment 155 155 Software 335 335 Furniture and fixtures 988 988 Leasehold improvements 26,355 26,355 55,506 55,474 Accumulated depreciation (21,966) (20,440) Property and equipment, net $ 33,540 $ 35,034 ($ in thousands) March 31,
2022December 31,
2021Accrued external research, development and manufacturing costs $ 2,348 $ 2,520 Accrued employee compensation and benefits 2,781 3,943 Accrued professional fees 331 294 Total $ 5,460 $ 6,757 indicateson October 13, 2021, the fair value hierarchyCompany borrowed an additional $10.0 million under the Loan Agreement. Borrowings under the Loan Agreement are accounted for net of issuance costs which are being accreted to interest expense over the term of the valuation inputsloan using the effective interest method. As of March 31, 2022, 2 subsequent $10.0 million term loan tranches were eligible to be disbursed at the request of the Company utilizedduring specified draw periods between now and 2023 if certain business milestones and other requirements are met by the dates specified in the Loan Agreement. Borrowings bear interest at the greater of 7.5% or the Wall Street Journal Prime Rate plus 4.25% (7.75% as of March 31, 2022). Interest only payments on the principal amount outstanding are due monthly beginning in the first month after the loan is dispersed. Repayment of principal may begin as soon as July 1, 2023 under the level of borrowing outstanding at March 31, 2022, and no later than April 1, 2024 if the remaining 2 loan tranches are drawn. The term loans may only be prepaid in full, and such prepayment requires 30 days’ advance notice and was subject initially to determine such fair value: March 31, Quoted
Prices In
Active
Markets Significant
Other
Observable
Inputs Significant
Other
Unobservable
Inputs 2021 (Level 1) (Level 2) (Level 3) Description Warrant liabilities - Public Warrants 14,550,000 14,550,000 - - Warrant liabilities – Private Warrants 443,775 443,775 $ 14,993,775 $ 14,550,000 $ - $ 443,775 utilizesis not obligated to pay a Monte Carlo simulation modelprepayment fee if the Company makes a prepayment after March 30, 2024.valuethe lenders to purchase shares of Common Stock at an exercise price of $10.28 per share, of which 287,704 warrants were immediately exercisable. The warrants are classified within stockholders’ equity as the settlement of the warrants at each reporting period, with changes in fair valueis indexed to the Company’s own stock. The Company recognized in the statement of operations. The estimated fair value of the warrant liability iswarrants immediately exercisable within stockholders’ equity using a Black-Scholes valuation model at issuance.using Level 3 inputs. Inherent in a binomial options pricing model are assumptions relatedthat the funding of an additional tranche was not probable, and therefore no value was ascribed to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its ordinary shares based on historical volatilityremaining 123,302 warrants that matcheswere only exercisable upon the expected remaining lifefunding of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date foradditional tranche. As a maturity similar to the expected remaining liferesult of the warrants.Company’s additional $10.0 million borrowings under the Loan Agreement on October 13, 2021, the warrants to purchase the additional 123,302 shares of Common Stock became exercisable at an exercise price of $10.28 per share and the value of the warrants was recorded as of that date. The expected lifeadditional warrants are classified within stockholders’ equity using a Black-Scholes valuation model, as the settlement of the warrants is indexed to the Company’s own stock.($ in thousands) March 31,
2022Principal amount of SVB loan payable $ 30,000 Final payment amount of SVB loan payable 1,500 Net premium associated with accretion of final payment and other debt issuance costs (3,761) SVB loan payable, current and noncurrent 27,739 Less SVB loan payable, current portion — SVB loan payable, noncurrent portion $ 27,739 Year ending December 31: ($ in thousands) 2022 (remainder) $ — 2023 10,000 2024 17,143 2025 2,857 Total future payments $ 30,000 March 31,
2022Common stock reserved for Contingent Earnout Shares 15,000,000 Exercise of options under stock plans 6,641,647 Issuance of options under stock plans 7,487,556 Shares available for grant under ESPP 1,030,033 Warrants to purchase Common Stock 5,588,506 35,747,742 equivalentincluded in each such series, by adopting a resolution and filing a certification of designations. Voting powers, designations, powers, preferences and relative, participating, optional, special and other rights shall be stated and expressed in such resolutions. There were 20,000,000 shares designated as preferred stock and none were outstanding as of March 31, 2022 and December 31, 2021.their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero.Condensed Consolidated Financial Statements
(unaudited)ALPHA HEALTHCARE ACQUISITION CORP.NOTES TO FINANCIAL STATEMENTSThe aforementioned warrant liabilities are not subject to qualified hedge accounting.transfers between Levels 1, 2issuances, exercises or 3expirations of warrants during the three months ended March 31, 2022. During the three months ended March 31, 2021 there were 32,961 of warrants exercised that were issued in conjunction with a long-term debt agreement entered into on March 2006 and paid in full during 2011. See Note 7 — Debt for a discussion of common stock warrants issued in conjunction with the Company’s Loan Agreement in 2021 (such warrants, “Legacy Humacyte Common Stock Warrants”). There were no expirations of warrants during the three months ended March 31, 2021.Common Stock Warrants Outstanding Legacy Humacyte Common Stock Warrants 411,006 Private Placement Warrants 177,500 Public Warrants 5,000,000 Total Common Stock Warrants 5,588,506 March 31,
2022December 31,
2021Market price of public stock $ 7.06 $ 7.25 Exercise price $ 11.50 $ 11.50 Expected term (years) 4.41 4.65 Expected share price volatility 55.8 % 61.0 % Risk-free interest rate 2.43 % 1.21 % Estimated dividend yield 0 % 0 % March 31,
2022December 31,
2021Current stock price $ 7.06 $ 7.25 Expected share price volatility 82.7 % 85.8 % Risk-free interest rate 2.32 % 1.52 % Estimated dividend yield 0.0 % 0 % Expected term (years) 10.00 10.00 Three Months Ended March 31, 2022 2021 Estimated dividend yield 0 % 0 % Expected share price volatility (weighted average and range, if applicable) 100 % 91.5% (91.5% to 92.1%) Risk-free interest rate (weighted average and range, if applicable) 1.89 % 0.62% (0.62% to 0.97%) Expected term of options (in years) 6.25 6.00 the year endedremaining unrecognized cost as of March 31, 2022 and December 31, 2020.Three Months Ended March 31, ($ in thousands) 2022 2021 Research and development $ 281 $ 636 General and administrative 1,266 1,892 Total $ 1,547 $ 2,528 ($ in thousands) March 31,
2022December 31,
2021Unrecognized share-based compensation cost $ 10,584 $ 13,346 Expected weighted average period compensation costs to be recognized (years) 2.0 2.3 Number of Shares Weighted
Average Exercise
Price Per ShareWeighted
Average
Remaining
Contractual Term
(years)Aggregate
Intrinsic Value
(in thousands)Options outstanding at December 31, 2021 6,711,192 $ 7.48 5.3 $ 8,276 Granted 113,700 $ 5.90 Exercised (926) $ 1.15 Forfeited (182,319) $ 9.50 Options outstanding at March 31, 2022 6,641,647 $ 7.40 5.1 $ 8,028 Vested and exercisable, March 31, 2022 4,645,602 $ 6.30 3.4 $ 7,896 Vested and expected to vest, March 31, 2022 6,641,647 $ 7.40 5.1 $ 8,028 provides quantitative information regarding Level 3 fair value measurements: At
March 31,
2021 At
December 31,
2020 Stock price $ 10.83 $ 10.17 Strike price $ 11.50 $ 11.50 Term (in years) 4.89 5.13 Volatility 24.4 % 24.4 % Risk-free rate 0.84 % 0.38 % Dividend yield 0.0 % 0.0 % Note 10 — Subsequent EventsThe Company evaluated subsequent events and transactions that occurred after the balance sheet date through the date that the financial statements were issued. Based upon this review, other than as described above, the Company did not identify any subsequent events that would have required adjustment or disclosureshows a summary of related party expenses included in the financial statements.Three Months Ended March 31, ($ in thousands) 2022 2021 License expenses $ 50 $ 50 Other 2 35 Total 52 85 References to the “Company,” “our,” “us” or “we” refer to Alpha Healthcare Acquisition Corp. the Company’sour financial condition and results of operations should be read in conjunction with theour unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q (“Quarterly Report”) and with our audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021 (“Annual Report”), filed with the Securities and Exchange Commission (the “SEC”) on March 29, 2022. In addition, you should read the “Risk Factors” and “Information Regarding Forward-Looking Statements” sections of this Quarterly Report and our Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.Cautionary Note Regarding Forward-Looking StatementsThis Quarterly Report for additional information regarding this assessment.Form 10-Qthe scope and costs of our development and commercial manufacturing activities. To date, we have not generated any revenue from the sale of commercialized products. Our ability to generate product revenue will depend on the successful development and eventual commercialization of one or more of our product candidates. Until such time, if ever, we expect to finance our operations through the use of existing cash and cash equivalents and short-term investments, the sale of equity or debt, borrowings under credit facilities, or through potential collaborations, other strategic transactions or government and other grants. Adequate capital may not be available to us when needed or on acceptable terms. If we are unable to raise capital, we could be forced to delay, reduce, suspend or cease our research and development programs or any future commercialization efforts, which would have a negative impact on our business, prospects, operating results and financial condition. See “Risk Factors” for additional information.forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”),higher costs associated with hiring additional personnel, director and Section 21E ofofficer insurance premiums, audit and legal fees, and expenses for compliance with public company reporting requirements under the Securities Exchange Act of 1934 as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or impliedrules implemented by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Such statements include, but are not limited to, possible business combinations and the financing thereof, and related matters, as well as all other statements other than statements of historical fact included in this Form 10-Q. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those set forth in the Risk Factors section of the Company’s Annual Report on Form 10-K/A filed with the SEC on May 14,and The Nasdaq Stock Market LLC (“Nasdaq”).described in our other Securitiesof February 17, 2021 (the “Merger Agreement”), by and Exchange Commissionamong Legacy Humacyte, AHAC and Hunter Merger Sub, Inc. (“SEC”Merger Sub”) filings.OverviewWe are a blank check company incorporated as, a Delaware corporation and formed forwholly owned subsidiary of AHAC. As contemplated by the purposeMerger Agreement, Merger Sub merged with and into Legacy Humacyte, with Legacy Humacyte continuing as the surviving corporation and as a wholly owned subsidiary of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. While our effortsAHAC (the “Merger”). On the Closing Date, AHAC changed its name to identify a target business may span many industriesHumacyte, Inc. and regions worldwide, we intendLegacy Humacyte changed its name to focus our search for prospects withinHumacyte Global, Inc. Operations prior to the healthcare industryMerger included in this Quarterly Report are those of Legacy Humacyte.United States. We have not selected any specific business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target. We intend to effectuate our initial business combination using cash from the proceeds of our IPO and the saleterms of the private placement units,Merger Agreement, at the proceedseffective time of the saleMerger (the “Effective Time”), (1) each outstanding share of ourcommon stock of Legacy Humacyte (“Legacy Humacyte common stock”) was cancelled and converted into the right to receive approximately 0.26260 shares in connection with our initial business combination (including pursuant to backstop agreements we may enter into), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing.On September 22, 2020, we consummated our initial public offering (the “IPO”) of 10,000,000 units (the “Units”). Each Unit consists of one share of Class ACompany’s common stock, par value $0.0001 per share (“Class A Common Stock”), and one-half of one redeemable warrant (each whole warrant, a “Warrant”), with(2) each whole Warrant entitling the holder thereof to purchase oneoutstanding share of Class Apreferred stock of Legacy Humacyte (“Legacy Humacyte preferred stock”) was cancelled and converted into the aggregate number of shares of Common Stock for $11.50 per share. The Units were sold at a pricethat would be issued upon conversion of $10.00 per Unit, generating gross proceedsthe shares of Legacy Humacyte preferred stock based on the applicable conversion ratio immediately prior to us of $100,000,000. We granted the underwritersEffective Time, multiplied by approximately 0.26260, resulting in the IPO,issuance of a 45-day optiontotal of 75,656,935 shares of Common Stock. Prior holders of shares of Legacy Humacyte common stock and Legacy Humacyte preferred stock also received the contingent right to purchase upreceive certain Contingent Earnout Shares (as defined below), for each share owned by each such Legacy Humacyte stockholder that was outstanding immediately prior to 1,500,000 additional Units solely to cover over-allotments, if any. Oppenheimer & Co. Inc. acted as the sole book running manager and Northland Securities, Inc. acted as the co-managerclosing of the IPO. The securities sold in the IPO were registered under the Securities Act on registration statements on Form S-1 No. 333-240374. The SEC declared the registration statement effective on September 17, 2020.On September 22, 2020, simultaneously with the consummation of the IPO, we completed the private saleMerger (the “Private Placement”“Closing”) of. In addition, certain investors purchased an aggregate of 355,000 Units17,500,000 shares of Common Stock (such investors, the “PIPE Investors”) in a private placement that closed concurrently with the Closing for an aggregate purchase price of $175 million (the “Private Placement Units”“PIPE Financing”). Additionally, at the Closing, 2,500,000 shares of AHAC’s Class B common stock (“Founder Shares”) automatically converted into shares of Common Stock on a one-for-one basis.(our “Sponsor”), Oppenheimer & Co. Inc. and Northland Securities, Inc., generating gross proceeds to us of $3,550,000. Such securities were issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.A total of $100,000,000, comprised of $98,000,000 of the proceeds from the IPO and $2,000,000 of the proceeds of the sale of the (“Private Placement Units, was placed in a U.S.-based trust account maintained by Continental Stock Transfer & Trust Company, acting as trustee.The issuance of additional sharesWarrants”), which we assumed in connection with an initial business combinationthe Merger, and which are subject to the ownersremeasurement to fair value at each balance sheet date resulting in a non-cash gain or loss.target or other investors:●may significantly dilute the equity interest of investors, which dilution would increase if the anti-dilution provisions in the Class B common stock resulted in the issuance of Class A shares on a greater than one-to-one basis upon conversion of the Class B common stock;●may subordinate the rights of holders of our common stock if preferred stock is issued with rights senior to those afforded our common stock;●could cause a change in control if a substantial number of shares of our common stock is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors;●may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us; and●may adversely affect prevailing market prices for our Class A common stock and/or warrants.Similarly, if we issue debt securities or otherwise incur significant debt to bank or other lenders or the owners of a target, it could result in:●default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;●acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;●our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;●our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding;●our inability to pay dividends on our common stock;●using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes;●limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;●increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;●limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and●other purposes and other disadvantages compared to our competitors who have less debt.As indicated in the accompanying financial statements, as ofThree Months Ended March 31, 2021, we had $513,059 in cash. Further, we expect to incur significant costs in the pursuit of our initial Business Combination. We cannot assure you that our plans to raise capital or to complete our initial Business Combination will be successful.Proposed Business CombinationOn February 17, 2021, the Company entered into a business combination agreement (the “Business Combination Agreement”) by2022 and among the Company, Hunter Merger Sub, Inc., a Delaware corporation (“Merger Sub”), and Humacyte, Inc., a Delaware corporation (“Humacyte”). The Business Combination Agreement provides, among other things, that on the terms and subject to the conditions set forth therein, Merger Sub will merge with and into Humacyte, with Humacyte surviving as a wholly-owned subsidiary2021Three Months Ended March 31, Change ($ in thousands) 2022 2021 $ % Revenue $ 233 $ 155 $ 78 50 % Operating expenses: Research and development 16,314 15,137 1,177 8 % General and administrative 5,682 4,787 895 19 % Total operating expenses 21,996 19,924 2,072 10 % Loss from operations (21,763) (19,769) (1,994) 10 % Other income (expense), net Change in fair value of contingent earnout liability 3,258 — 3,258 100 % Interest expense (1,432) (533) (899) 169 % Other income 105 1 104 * Total other income (expense), net 1,931 (532) 2,463 (463) % Net loss $ (19,832) $ (20,301) $ 469 (2) % Company (the “Business Combination”). Uponthree months ended March 31, 2022 and 2021, revenue was approximately $0.2 million and related to our grant from DoD.closingbreakdown of the Business Combination (the “Closing”), it is anticipated that the Company will change its name to “Humacyte, Inc.” For additional information about the Business Combination Agreementresearch and the ancillary documents executed or to be executed in connection therewith, see Note 1 to the “Notes to Unaudited Condensed Financial Statements” included in this Report.Results of Operationsdevelopment expenses:Three Months Ended March 31, Change ($ in thousands) 2022 2021 $ % External services $ 3,850 $ 3,852 $ (2) — % Materials and supplies 3,737 3,201 536 17 % Payroll and personnel expenses 5,641 5,321 320 6 % Other research and development expenses 3,086 2,763 323 12 % $ 16,314 $ 15,137 $ 1,177 8 % Known Trends or Future EventsWe have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational activities, those necessary to preparedevelopment expenses increased from $15.1 million for our Initial Public Offering and identifying a target company for our initial Business Combination. We do not expect to generate any operating revenues until after completion of our initial Business Combination. We generate non-operating income in the form of interest income on cash and cash equivalents 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 expenses as we conduct due diligence on prospective Business Combination candidates.For the three months ended March 31, 2021 to $16.3 million for the three months ended March 31, 2022. The increase of $1.2 million, or 8%, was primarily driven by (i) increased salaries and benefits of $0.7 million to support our expanding research and development initiatives, (ii) a $0.5 million increase in the purchase of materials and supplies, and (iii) a $0.3 million increase in other research and development expenses, partially offset by (iv) a $0.4 million decrease in non-cash stock compensation expense.net lossnumber of $9,435,532, which consistsrisks and uncertainties, including those described in the sections entitled “Forward-Looking Statements” and “Risk Factors” in this Quarterly Report and our Annual Report.formationMarch 31, 2022 and December 31, 2021, we had working capital of $198.5 million and $218.3 million, respectively. As of March 31, 2022, we had $30.0 million outstanding principal and $20.0 million of contingent borrowing capacity under our Loan Agreement. We do not currently have any committed external source of funds beyond the Loan Agreement.($ in thousands) Total Less than
1 year1 – 3 years 3 – 5 years More than
5 yearsFinance leases $ 32,052 $ 3,892 $ 8,079 $ 8,434 $ 11,647 Operating leases 1,073 105 211 211 546 $493,818preclinical development, laboratory testing and investment incomeclinical trials for our additional product candidates;$13,710our future commercialization activities, including product manufacturing, marketing and distribution for our HAVs if approved by the FDA, and any other product candidate for which we receive marketing approval in the future;Three Months Ended March 31, ($ in thousands) 2022 2021 Net loss $ (19,832) $ (20,301) 644 4,616 Changes in operating assets and liabilities: 391 1,142 Net cash used in operating activities (18,797) (14,543) Net cash used in investing activities (22) (29) Net cash (used in) provided by financing activities (461) 19,271 Net decrease (increase) in cash and cash equivalents $ (19,280) $ 4,699 Cash and cash equivalents at the beginning of the period $ 217,502 $ 39,929 Cash and cash equivalents at the end of the period $ 198,222 $ 44,628 in warrant liabilities of $8,955,424. Liquidityour contingent earnout liability and Capital ResourcesAs of March 31, 2021, the Company had cash outside the Trust Account of $513,059 available for working capital needs. All remaining cash held in the Trust Account are generally unavailable for the Company’s use, prior to an initial business combination, and is restricted for use either in a Business Combination or to redeem common stock. As of March 31, 2021 and December 31, 2020, none of the amount in the Trust Account was available to be withdrawn as described above.Through March 31, 2021, the Company’s liquidity needs were satisfied through receipt of $25,000 from the sale of the founder shares, advances from the Sponsor in an aggregate amount of $147,763 and the remaining net proceeds from the IPO and the sale of Private Placement Units.The Company anticipates that the $513,059 outside of the Trust Account as of March 31, 2021, will be sufficient to allow the Company to operate for at least the next 12 months from the issuance of the financial statements, assuming that a Business Combination is not consummated during that time. Until consummation of its Business Combination, the Company will be using the funds not held in the Trust Account, and any additional Working Capital Loans (as defined in Note 5) from the initial stockholders, the Company’s officers and directors, or their respective affiliates (which is described in Note 5), for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business Combination.The Company does not believe it will need to raise additional funds in order to meet the expenditures required for operating its business. However, if the Company’s estimates of the costs of undertaking in-depth due diligence and negotiating business combination is less than the actual amount necessary to do so, the Company may have insufficient funds available to operate its business prior to the business combination. Moreover, the Company will need to raise additional capital through loans from its Sponsor, officers, directors, or third parties. None of the Sponsor, officers or directors are under any obligation to advance funds to, or to invest in, the Company. 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 its business plan, 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.Related Party TransactionsFounder SharesOn July 20, 2020, we issued 2,875,000 shares of Class Bour common stock to our initial stockholder, AHAC Sponsor, LLC for $25,000, or approximately $0.01 per share. warrant liabilities. founder shares include an aggregate of up to 375,000 shares subject to forfeiture if the over-allotment option is not exercised by the underwriters increase in full. The over-allotment option was not exercised by the underwriters during the 45-day option period; thus, these shares were forfeited accordingly as of November 1, 2020.Promissory Note — Related PartyOn July 1, 2020, we issued an unsecured promissory note to the sponsor, pursuant to which we may borrow up to an aggregate principal amount of $300,000 to benet cash used for a portion of the expenses of the IPO. This loan is non-interest bearing, unsecured, and due on the earlier of (a) March 31, 2021 or (b) the date on which we complete the IPO. The loan will be repaid out of the offering proceeds not held in the Trust Account. As of March 31, 2021, the Company had $7,172 in borrowings outstanding under the promissory note.Administrative Service FeeWe have agreed to pay an affiliate of our sponsor a monthly fee of an aggregate of $10,000 for general and administrative services including office space, utilities and secretarial and administrative support. This arrangement will terminate upon completion of a business combination or the liquidation of the Company. Foroperating activities from the three months ended March 31, 2021 to the Company incurred $30,000three months ended March 31, 2022 was primarily due toadministrative service fee.Related Party LoansIn addition,investing activities remained consistent at less than $0.1 million for each of ordernet cash provided by financing activities was primarily due to finance transactions costs$19.7 million of net proceeds in connection with a business combination,draws under our loan facility with Silicon Valley Bank in March 2021.sponsor, or certain of the Company’s officers, directors, or their affiliates may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a business combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a business combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determinedperiods presented, and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a business combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be converted into units of the post business combination entity at a price of $10.00 per unit.Sponsor Support AgreementIn connection with the execution of the Business Combination Agreement, AHAC Sponsor LLC (“Sponsor”) and the other holders (the “Company Supporting Stockholders”) of the Company’s Class B common stock, par value $0.0001 per share (the “Class B Common Stock”) entered into a support agreement with the Company and Humacyte (the “Sponsor Support Agreement”). Under the Sponsor Support Agreement, each Company Supporting Stockholder agreed to vote, at any meeting of the stockholders of the Company and in any action by written consent of the stockholders of the Company, all of such Company Supporting Stockholder’s Class A Common Stock and Class B Common Stock (i) in favor of (a) the Business Combination Agreement and the transactions contemplated thereby and (b) the other proposals that the Company and Humacyte agreed in the Business Combination Agreement shall be submitted at such meeting for approval by the Company’s stockholders together with the proposal to obtain the Company Stockholder Approval (the “Required Transaction Proposals”) and (ii) against any proposal that conflicts or materially impedes or interferes with any Required Transaction Proposals or that would adversely affect or delay the Business Combination. The Sponsor Support Agreement also prohibits each Company Supporting Stockholder from, among other things and subject to certain exceptions, selling, assigning or transferring any Class A Common Stock or Class B Common Stock held by such Company Supporting Stockholder or taking any action that would have the effect of preventing or materially delaying such Company Supporting Stockholder from performing his, her or its obligations under the Sponsor Support Agreement. In addition, in the Sponsor Support Agreement, each Company Supporting Stockholder agreed to waive, and not to assert or perfect, among other things, any rights to adjustment or other anti-dilution protections with respect to the rate at which the shares of Class B Common Stock held by the Company Supporting Stockholders convert into shares of Class A Common Stock in connection with the transactions contemplated by the Business Combination Agreement.Commitments and ContingenciesRegistration RightsThe holders of the founder shares, placement units (including securities contained therein) and units (including securities contained therein) that may be issued upon conversion of working capital loans, and any shares of Class A common stock issuable upon the exercise of the placement warrants and any shares of Class A common stock and warrants (and underlying Class A common stock) that may be issued upon conversion of the units issued as part of the working capital loans and Class A common stock issuable upon conversion of the founder shares, will be entitled to registration rights pursuant to the registration rights agreement requiring us to register such securities for resale (in the case of the founder shares, only after conversion to our Class A common stock). The holders of the majority of these securities are entitled to make up to three demands, excluding short form demands, that the Company registers such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of an initial business combination and rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act. The registration rights agreement does not contain liquidated damages or other cash settlement provisions resulting from delays in registering our securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.Underwriting AgreementOn September 22, 2020, the underwriters were paid an underwriting discount of two percent (2.0%) of the gross proceeds of the IPO, or $2,000,000. In addition, the underwriters are entitled to a deferred underwriting fee of three and a half percent (3.5%) of the gross proceeds of the IPO upon the completion of the Company’s initial business combination. The underwriters have agreed that up to 1% of the deferred underwriting fee may be re-directed to other FINRA member firms that have provided services in connection with the identification and consummation of a business combination, in the sole discretion of the Company; provided, that all such payments to other FINRA member firms may only be made if permitted under applicable law.The Company may reduce the deferred underwriting fee by up to 50% based on stockholders redeeming their shares for their pro-rata amount of the proceeds in the Trust Account; provided, however, that (a) the underwriters’ maximum deferred underwriting fee reduction based on stockholder redemptions will be 50% regardless of whether stockholder redemptions exceed 50%; and (b) any sums paid to other advisors as discussed above, will be credited against the reduction of and added back to the deferred underwriting fee payable to the underwriters; and (c) under no circumstance will the deferred underwriting fee be less than 1.75% of the gross proceeds of the IPO. As March 31, 2021, the Company accrued a deferred underwriting fee of $2,127,821.Risks and UncertaintiesManagement is continuing to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the our financial position, results of our operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statementswe do not include any adjustments that might result from the outcome of this uncertainty.Off-Balance Sheet ArrangementsAs of March 31, 2021, we did notcurrently have, any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii)SEC rules and regulations.Regulation S-K. We do not participate in transactions that create relationships with unconsolidated entities orour financial partnerships, often referred to as variable interest entities,condition and results of operations are based upon our unaudited condensed consolidated financial statements, 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.Contractual ObligationsWe do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than the underwriters are entitled to a deferred fee of $2,127,821prepared in the aggregate. The deferred fee will become payable to the underwriters 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.Critical Accounting Policiesin accordance with GAAP requires managementus to make estimates, assumptions and assumptionsjudgments that affect the reported amounts reportedof assets, liabilities, revenues, and expenses, and disclosure of contingent liabilities. We base our estimates and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Although we believe that our estimates, assumptions, and judgments are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates based on different assumptions, judgments, or conditions.the unauditedour audited consolidated financial statements as of and accompanying notes. Actual results could differ from those estimates. Thefor the years ended December 31, 2021 and 2020, included in our Annual Report.has identified the following as its critical accounting policies:Warrant Derivative Liabilitydo 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.We issued 5,152,500 warrants in connection with our initial public offering (5,000,000) and private placement (152,500) 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 statement of operations. The initial fair value of warrants issued in connection with the initial public offering and private placement has been estimated using Monte-Carlo simulations at each measurement date.Recent Accounting StandardsManagement does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed financial statements.JOBS ActThe JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” as defined in the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”), and undermay take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies until it is no longer an emerging growth company. Section 107 of the JOBS Act will be allowed to comply with new or revised accounting pronouncements based onprovides that an emerging growth company can take advantage of the effective dateextended transition period afforded by the JOBS Act for private (not publicly traded) companies. We are electing to delay the adoptionimplementation of new or revised accounting standards,standards. We expect to use the extended transition period and, as a result,therefore, while we mayare an emerging growth company we will not comply withbe subject to new or revised accounting standards onat the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our financial statements may not be comparablesame time that they become applicable to other public companies that comply withare not emerging growth companies, unless we choose to early adopt a new or revised accounting pronouncements asstandard. This may make it difficult or impossible to compare our financial results with the financial results of another public company effective dates.processExchange Act (“Regulation S-K”). Smaller reporting companies may take advantage of evaluating the benefits of relying on the othercertain reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to,disclosure obligations, including, among other things, (i) provide an auditor’s attestation report on our systemproviding only two years of internal controls overaudited financial statements. We will remain a smaller reporting pursuant to Section 404, (ii) provide allcompany if (1) the market value of Common Stock held by non-affiliates is less than $250 million as of the compensation disclosure that may be requiredlast business day of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted bysecond fiscal quarter, or (2) our annual revenues in its most recent fiscal year completed before the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the auditlast business day of its second fiscal quarter are less than $100 million and the financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related items suchmarket value of Common Stock held by non-affiliates is less than $700 million as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a periodlast business day of five years following the completion of our initial public offering or until we are no longer an “emerging growth company,” whichever is earlier.second fiscal quarter.aboutAbout Market Risk.AsRiskMarch 31, 2021, we wereRegulation S-K and, thus, are not subjectrequired to any market or interest rate risk. Followingprovide the consummation of our Initial Public Offering, the net proceeds of our Initial Public Offering and the sale of the Private Placement Units are held in the Trust Account and will be invested in U.S. government treasury bills with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.information required by this Item.Procedures. are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controlsforms and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is(ii) accumulated and communicated to our management, including our Chief Executive Officer (who serves as our principal executive officer) and Chief Financial Officer (who serves as our principal financial and accounting officer), to allow timely decisions regarding required disclosure.As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer, carried out an evaluationto allow timely decisions regarding required disclosure. of the design and operation of our disclosure controls and procedures as of March 31, 2021.(as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon theiron that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were ineffective due to a material weakness in evaluating complex accounting issues which resulted in a restatementeffective as of our DecemberMarch 31, 2020 financial statements.Restatement of Previously Issued Financial StatementsOn May 14, 2021, we revised our prior position on accounting for warrants and restated our December 31, 2020 financial statements to reclassify the Company’s warrant. These non-cash adjustments to the financial statements do not impact the amounts previously reported for our cash and cash equivalents or total assets.overOver Financial Reportingwaswere no changechanges in our internal control over financial reporting that occurred(as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter endingthree months ended March 31, 20212022 that hashave materially affected, or is reasonableare reasonably likely to materially affect, our internal control over financial reporting as the circumstances that led to the restatementreporting.Proceedings.None.Factors. that could cause our actual results to differ materially from thosethis Quarterly Report are any of the risks described in the Risk Factors sectionPart I, Item 1A of our annual report on Form 10-K/A filed withAnnual Report. There have been no material changes during the SEC on May 14, 2021. Any of these factors could result in a significantthree months ended March 31, 2022 from or material adverse effect on our results of operations or financial condition. Additionalupdates to the risk factors not presently known to us or that we currently deem immaterial may also impairdiscussed in Part I, Item 1A, Risk Factors of our business or results of operations. from Registered SecuritiesOn September 22, 2020, we consummated our initial public offering (the “IPO”) of 10,000,000 units (the “Units”). Each Unit consists of one share of Class A common stock, par value $0.0001 per share (“Class A Common Stock”) and one-half of one redeemable warrant (each whole warrant, a “Warrant”), with each whole Warrant entitling the holder thereof to purchase one share of Class A Common Stock for $11.50 per share. The Units were sold at a price of $10.00 per Unit, generating gross proceeds to us of $100,000,000. We granted the underwriters in the IPO, a 45-day option to purchase up to 1,500,000 additional Units solely to cover over-allotments, if any. Oppenheimer & Co. Inc. acted as the sole book running manager and Northland Securities, Inc. acted as the co-manager of the IPO. The securities sold in the IPO were registered under the Securities Act on registration statements on Form S-1 No. 333-240374. The SEC declared the registration statement effective on September 17, 2020.On September 22, 2020, simultaneously with the consummation of the IPO, we completed the private sale (the “Private Placement”) of an aggregate of 355,000 Units (the “Private Placement Units”) to AHAC Sponsor LLC, Oppenheimer & Co. Inc. and Northland Securities, Inc., generating gross proceeds to us of $3,550,000. Such securities were issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.A total of $100,000,000, comprised of $98,000,000 of the proceeds from the IPO and $2,000,000 of the proceeds of the sale of the Private Placement Units, was placed in a U.S.-based trust account maintained by Continental Stock Transfer & Trust Company, acting as trustee.We paid a total of $4,197,388 of transaction costs consisting of $2,000,000 of underwriting fee, $1,959,758 of deferred underwriting fee and $329,713 of other offering costs. Of the total transaction cost $317,023 was expensed as non-operating expenses in that statement of operations with the rest of the offering cost charged to stockholders’ equity. The transaction costs were allocated based on the relative fair value basis, compared to the total offering proceeds, between the fair value of the public warrant liabilities and the Class A common stock.For a description of the use of the proceeds generated in our IPO, see Part I, Item 2 of this Form 10-Q.Securities.Disclosures.Not applicable.Information.Exhibits.ExhibitNumberDescriptionDescription 2.1Business Combination Agreement, dated as of February 17, 2021, by and among Alpha Healthcare Acquisition Corp., Hunter Merger Sub, Inc. and Humacyte, Inc. (1)10.1Form of Subscription Agreement. (1)31.131.1* 31.231.2*32.132.1**32.232.2**101.INS101*XBRL Instance Document101.SCHXBRL Taxonomy Extension Schema Document101.CALXBRL Taxonomy Extension Calculation Linkbase Document101.DEFXBRL Taxonomy Extension Definition Linkbase Document101.LABXBRL Taxonomy Extension Label Linkbase Document101.PREXBRL Taxonomy Extension Presentation Linkbase Document(1)Previously filed as an exhibit to our CurrentThe following materials from Humacyte, Inc.’s Quarterly Report on Form 8-K filed on February 17, 202110-Q for the quarter ended March 31, 2022, formatted in Inline XBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets (unaudited), (ii) Condensed Consolidated Statements of Operations and incorporated by reference herein.Comprehensive Loss, (iii) Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) (unaudited), (iv) Condensed Consolidated Statements of Cash Flows (unaudited), (v) Notes to Condensed Consolidated Financial Statements, and (vi) Cover Page.104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
* Filed herewith.17th13th day of May, 2021.2022.Alpha Healthcare Acquisition Corp.HUMACYTE, INC. Date: May 13, 2022 By: /s/ Rajiv Shukla /s/ Laura E. Niklason, M.D., Ph.D.Name: Rajiv Shukla Laura E. Niklason, M.D., Ph.D.Title: President and Chief Executive Officer Alpha Healthcare Acquisition Corp.By: /s/ Patrick /s/ Dale A. SturgeonSanderName: Patrick Dale A. SturgeonSanderTitle: Chief Financial Officer, Chief Corporate Development Officer and Treasurer 29