Full Press Release Details
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information ( pro forma financial information ) is based on the
historical financial statements of Compute Health and Allurion, adjusted to depict the accounting of the Mergers, the PIPE Investment, the Incremental Financing, the Revenue Interest Financing, the Fortress Financing, the Chardan Equity Facility,
the Backstop Agreement, the Contribution Agreements, the RSU Forfeiture Agreement, the Termination Agreements, the Amended and Restated RTW Side Letter, and the Fortress Letter Agreement, each as described in Note 1. The unaudited pro forma
condensed combined balance sheet as of March 31, 2023 reflects adjustments that depict the accounting of the Mergers, the PIPE Investment, the Revenue Interest Financing, the Fortress Financing, the Incremental Financing, the Chardan Equity
Facility, the Backstop Agreement, the Contribution Agreements, the RSU Forfeiture Agreement, the Termination Agreements, the Amended and Restated RTW Side Letter, and the Fortress Letter Agreement (the Balance Sheet Pro Forma Transaction
Accounting Adjustments ). The unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2023 and the year ended December 31, 2022 reflects the Statement of Operations Pro Forma Transaction
Accounting Adjustments assuming those adjustments were made as of January 1, 2022, which is the beginning of the earliest period presented ( Statement of Operations Pro Forma Transaction Accounting Adjustments ). Collectively, the
Balance Sheet Pro Forma Transaction Accounting Adjustments and Statement of Operations Pro Forma Transaction Accounting Adjustments are referred to in this section as transaction accounting adjustments.
The pro forma financial information has been derived from:
The pro forma financial
information is provided for illustrative purposes only and is not necessarily indicative of what the actual results of operations and financial position would have been had the Mergers, the PIPE Investment, the Incremental Financing, the Revenue
Interest Financing, the Fortress Financing, the Chardan Equity Facility, the Backstop Agreement, the Contribution Agreements, the RSU Forfeiture Agreement, the Termination Agreements, the Amended and Restated RTW Side Letter, and the Fortress Letter
Agreement taken place on the dates indicated, nor is it indicative of the future consolidated results of operations or financial position of the combined company.
The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety
ALLURION TECHNOLOGIES, INC./COMPUTE HEALTH ACQUISITION CORP.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
thousands, except share and per share amounts)
| Historical | Balance Sheet Pro Forma Transaction Accounting Adjustments | Pro Forma Balance Sheet | ||||||||||||||||||
| Compute Health | Allurion | |||||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Current assets: | ||||||||||||||||||||
| Cash and cash equivalents | $ | 281 | $ | 9,943 | $ | 3,095 | (5c | ) | $ | 103,701 | ||||||||||
| (7,143 | ) | (5h | ) | |||||||||||||||||
| (5,293 | ) | (5i | ) | |||||||||||||||||
| 35,944 | (5j | ) | ||||||||||||||||||
| 12 | (5k | ) | ||||||||||||||||||
| 40,000 | (5o | ) | ||||||||||||||||||
| 1,841 | (5p | ) | ||||||||||||||||||
| (2,500 | ) | (5q | ) | |||||||||||||||||
| 13,176 | (5s | ) | ||||||||||||||||||
| 37,922 | (5v | ) | ||||||||||||||||||
| (75 | ) | (5w | ) | |||||||||||||||||
| 2,850 | (5n | ) | ||||||||||||||||||
| Accounts receivable, net of allowance of uncollectible accounts of $1,741 | 28,988 | 28,988 | ||||||||||||||||||
| Inventory | 4,314 | 4,314 | ||||||||||||||||||
| Prepaid expenses and other current assets | 139 | 2,485 | 2,624 | |||||||||||||||||
| Total current assets | 420 | 45,730 | 93,477 | 139,627 | ||||||||||||||||
| Investments held in Trust Account | 96,539 | (60,595 | ) | (5a | ) | |||||||||||||||
| (35,944 | ) | (5j | ) | |||||||||||||||||
| Property and equipment, net | 2,587 | 2,587 | ||||||||||||||||||
| Right-of-use asset | 3,564 | 3,564 | ||||||||||||||||||
| Other long-term assets | 6,085 | (5,420 | ) | (5s | ) | 665 | ||||||||||||||
| Total assets | $ | 96,959 | $ | 57,966 | $ | (8,482 | ) | $ | 146,443 | |||||||||||
| LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDER S EQUITY (DEFICIT) | ||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||
| Accounts payable | $ | 42 | $ | 13,706 | $ | (3,076 | ) | (5s | ) | $ | 10,672 | |||||||||
| Accrued and other current liabilities | 15,888 | (1,591 | ) | (5s | ) | 14,297 | ||||||||||||||
| Franchise tax payable | 50 | 50 | ||||||||||||||||||
| Term loan, net of discounts | 53,521 | (53,521 | ) | (5p | ) | |||||||||||||||
| Current portion of lease liabilities | 865 | 865 | ||||||||||||||||||
| Convertible promissory note related party | 755 | (3,850 | ) | (5q | ) | |||||||||||||||
| 3,095 | (5c | ) | ||||||||||||||||||
| Promissory note related party | 2,350 | (2,350 | ) | (5q | ) | |||||||||||||||
| Income tax payable | 27 | 27 | ||||||||||||||||||
| Total current liabilities | 3,224 | 83,980 | (61,293 | ) | 25,911 | |||||||||||||||
| Revenue interest notes payable | 40,000 | (5o | ) | 40,000 | ||||||||||||||||
| PIPE Conversion Option derivative | 1,752 | (5o | ) | 1,752 | ||||||||||||||||
| Term loan, net of discounts | 59,500 | (5p | ) | 59,500 | ||||||||||||||||
| Convertible notes payable, net of discounts | 16,703 | (3,103 | ) | (5m | ) | |||||||||||||||
| (13,600 | ) | (5n | ) | |||||||||||||||||
| Lease liabilities | 2,902 | 2,902 | ||||||||||||||||||
| Derivative warrant liabilities | 13,758 | (5,133 | ) | (5d | ) | 8,625 | ||||||||||||||
| Deferred legal costs | 7,143 | (7,143 | ) | (5h | ) | |||||||||||||||
| Contingent consideration liability | 53,310 | (5r | ) | 53,310 | ||||||||||||||||
| Other liabilities | 4,037 | (1,454 | ) | (5t | ) | 2,583 | ||||||||||||||
| Total liabilities | $ | 24,125 | $ | 107,622 | $ | 62,836 | $ | 194,583 |
ALLURION TECHNOLOGIES, INC./COMPUTE HEALTH ACQUISITION CORP. (Continued)
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
thousands, except share and per share amounts)
| Historical | Balance Sheet Pro Forma Transaction Accounting Adjustments | Pro Forma Balance Sheet | ||||||||||||||||||
| Compute Health | Allurion | |||||||||||||||||||
| LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDER S EQUITY (DEFICIT) | ||||||||||||||||||||
| Compute Health Class A Common Stock, subject to possible redemption | $ | 96,362 | $ | $ | (60,595 | ) | (5a | ) | $ | |||||||||||
| (7,000 | ) | (5f | ) | |||||||||||||||||
| (28,767 | ) | (5g | ) | |||||||||||||||||
| Allurion Series C Redeemable Convertible Preferred Stock | 39,122 | (39,122 | ) | (5u | ) | |||||||||||||||
| Stockholders deficit: | ||||||||||||||||||||
| Compute Health Preferred Stock | ||||||||||||||||||||
| Compute Health Class A Common Stock | (5d | ) | ||||||||||||||||||
| (5e | ) | |||||||||||||||||||
| (5f | ) | |||||||||||||||||||
| (5g | ) | |||||||||||||||||||
| Compute Health Class B Common Stock | 2 | (5b | ) | |||||||||||||||||
| (2 | ) | (5d | ) | |||||||||||||||||
| (5e | ) | |||||||||||||||||||
| Allurion Preferred Stock | 58,029 | (58,029 | ) | (5u | ) | |||||||||||||||
| (5k | ) | |||||||||||||||||||
| Allurion Common Stock | 51 | (5k | ) | |||||||||||||||||
| (5m | ) | |||||||||||||||||||
| (51 | ) | (5u | ) | |||||||||||||||||
| (5n | ) | |||||||||||||||||||
| (5l | ) | |||||||||||||||||||
| New Allurion Common Stock | 1 | (5g | ) | 5 | ||||||||||||||||
| (5n | ) | |||||||||||||||||||
| 3 | (5u | ) | ||||||||||||||||||
| 1 | (5v | ) | ||||||||||||||||||
| (5w | ) | |||||||||||||||||||
| (5o | ) | |||||||||||||||||||
| (5p | ) | |||||||||||||||||||
| (5q | ) | |||||||||||||||||||
| Additional paid-in capital | 3,135 | (5b | ) | 115,064 | ||||||||||||||||
| 12 | (5k | ) | ||||||||||||||||||
| 5,135 | (5d | ) | ||||||||||||||||||
| (5e | ) | |||||||||||||||||||
| 7,000 | (5f | ) | ||||||||||||||||||
| 28,766 | (5g | ) | ||||||||||||||||||
| 3,155 | (5m | ) | ||||||||||||||||||
| (5o | ) | |||||||||||||||||||
| (53,310 | ) | (5r | ) | |||||||||||||||||
| 1,454 | (5t | ) | ||||||||||||||||||
| 68,376 | (5u | ) | ||||||||||||||||||
| 5,042 | (5l | ) | ||||||||||||||||||
| 37,921 | (5v | ) | ||||||||||||||||||
| 250 | (5w | ) | ||||||||||||||||||
| (5p | ) | |||||||||||||||||||
| 3,700 | (5q | ) | ||||||||||||||||||
| (13,929 | ) | (5s | ) | |||||||||||||||||
| 18,357 | (5n | ) | ||||||||||||||||||
| Accumulated deficit | (23,530 | ) | (149,993 | ) | (5,293 | ) | (5i | ) | (163,209 | ) | ||||||||||
| (52 | ) | (5m | ) | |||||||||||||||||
| (1,907 | ) | (5n | ) | |||||||||||||||||
| (1,752 | ) | (5o | ) | |||||||||||||||||
| (4,138 | ) | (5p | ) | |||||||||||||||||
| 28,823 | (5u | ) | ||||||||||||||||||
| (5,042 | ) | (5l | ) | |||||||||||||||||
| (325 | ) | (5w | ) | |||||||||||||||||
| Total stockholders equity (deficit) | (23,528 | ) | (88,778 | ) | 64,166 | (48,140 | ) | |||||||||||||
| Total liabilities, redeemable convertible preferred stock, and stockholders equity (deficit) | $ | 96,959 | $ | 57,966 | $ | (8,482 | ) | $ | 146,443 |
ALLURION TECHNOLOGIES, INC./COMPUTE HEALTH ACQUISITION CORP. UNAUDITED PRO FORMA CONDENSED
COMBINED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2023
(in thousands, except share and per share amounts)
| Historical | Statement of Operations Pro Forma Transaction Accounting Adjustments | Pro Forma Statement of Operations | ||||||||||||||||||
| Compute Health | Allurion | |||||||||||||||||||
| Revenue | $ | $ | 14,071 | $ | $ | 14,071 | ||||||||||||||
| Cost of revenue | 2,940 | 2,940 | ||||||||||||||||||
| Total gross profit | 11,131 | 11,131 | ||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Research and development | 7,852 | 7,852 | ||||||||||||||||||
| General and administrative | 3,512 | 5,306 | (30 | ) | (6a | ) | 5,442 | |||||||||||||
| (3,096 | ) | (6e | ) | |||||||||||||||||
| (250 | ) | (6h | ) | |||||||||||||||||
| Sales and marketing | 11,864 | 11,864 | ||||||||||||||||||
| Franchise tax expenses | 50 | 50 | ||||||||||||||||||
| Total operating expenses | 3,562 | 25,022 | (3,376 | ) | 25,208 | |||||||||||||||
| Loss from operations | (3,562 | ) | (13,891 | ) | 3,376 | (14,077 | ) | |||||||||||||
| Other income (expense), net: | ||||||||||||||||||||
| Interest expense, net | 1 | (2,237 | ) | 2,237 | (6g | ) | (1,446 | ) | ||||||||||||
| (1,447 | ) | (6j | ) | |||||||||||||||||
| Change in fair value of derivative liabilities | (29 | ) | (29 | ) | ||||||||||||||||
| Change in fair value of derivative warrant liabilities | (9,975 | ) | (1,475 | ) | 3,722 | (6b | ) | (7,728 | ) | |||||||||||
| Change in fair value of promissory note related party | (573 | ) | 573 | (6c | ) | |||||||||||||||
| Income from investments held in trust account | 1,012 | (1,012 | ) | (6d | ) | |||||||||||||||
| Other expense, net | (135 | ) | 708 | (6l | ) | 573 | ||||||||||||||
| Total other income (expense), net | (9,535 | ) | (3,876 | ) | 4,781 | (8,630 | ) | |||||||||||||
| Net loss before income taxes | (13,097 | ) | (17,767 | ) | 8,157 | (22,707 | ) | |||||||||||||
| Provision for income taxes | 202 | 34 | 236 | |||||||||||||||||
| Net loss and comprehensive loss | (13,299 | ) | (17,801 | ) | 8,157 | (22,943 | ) | |||||||||||||
| Loss attributable to common shares subject to conversion | (717 | ) | (717 | ) | ||||||||||||||||
| Net loss attributable to common shareholders | $ | (13,299 | ) | $ | (18,518 | ) | $ | 8,157 | $ | (23,660 | ) | |||||||||
| Weighted average common shares outstanding: | ||||||||||||||||||||
| Basic | 21,562,500 | 7,661,736 | 25,818,056 | (6n | ) | 47,380,556 | ||||||||||||||
| Diluted | 21,562,500 | 7,661,736 | 25,818,056 | (6n | ) | 47,380,556 | ||||||||||||||
| Net loss attributable to common stockholders: | ||||||||||||||||||||
| Basic | $ | (0.43 | ) | $ | (2.42 | ) | $ | (0.50 | ) | |||||||||||
| Diluted | $ | (0.43 | ) | $ | (2.42 | ) | $ | (0.50 | ) |
ALLURION TECHNOLOGIES, INC./COMPUTE HEALTH ACQUISITION CORP.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2022
(in thousands, except share and per share amounts)
| Historical | Statement of Operations Pro Forma Transaction Accounting Adjustments | Pro Forma Statement of Operations | ||||||||||||||||||
| Compute Health | Allurion | |||||||||||||||||||
| Revenue | $ | $ | 64,211 | $ | $ | 64,211 | ||||||||||||||
| Cost of revenue | 13,485 | 13,485 | ||||||||||||||||||
| Total gross profit | 50,726 | 50,726 | ||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Research and development | 16,966 | 16,966 | ||||||||||||||||||
| General and administrative | 4,488 | 15,365 | (120 | ) | (6a | ) | 36,338 | |||||||||||||
| 5,138 | (6f | ) | ||||||||||||||||||
| 2,752 | (6h | ) | ||||||||||||||||||
| 8,390 | (6e | ) | ||||||||||||||||||
| 325 | (6m | ) | ||||||||||||||||||
| Sales and marketing | 50,405 | 50,405 | ||||||||||||||||||
| Franchise tax expenses | 200 | 200 | ||||||||||||||||||
| Total operating expenses | 4,688 | 82,736 | 16,485 | 103,909 | ||||||||||||||||
| Loss from operations | (4,688 | ) | (32,010 | ) | (16,485 | ) | (53,183 | ) | ||||||||||||
| Other income (expense), net: | ||||||||||||||||||||
| Interest expense, net | 1 | (4,426 | ) | 4,426 | (6g | ) | (5,776 | ) | ||||||||||||
| (5,777 | ) | (6j | ) | |||||||||||||||||
| Change in fair value of derivative liabilities | 866 | (19 | ) | 847 | ||||||||||||||||
| Change in fair value of derivative warrant liabilities | 26,485 | (9,882 | ) | (6b | ) | 16,603 | ||||||||||||||
| Change in fair value of promissory note related party | 1,211 | (1,211 | ) | (6c | ) | |||||||||||||||
| Income from investments held in trust account | 10,661 | (10,661 | ) | (6d | ) | |||||||||||||||
| Loss on extinguishment of term loan | (4,298 | ) | (6i | ) | (5,798 | ) | ||||||||||||||
| (1,500 | ) | (6k | ) | |||||||||||||||||
| Other expense, net | (1,146 | ) | 454 | (6l | ) | (692 | ) | |||||||||||||
| Total other income (expense), net | 39,224 | (5,591 | ) | (28,449 | ) | 5,184 | ||||||||||||||
| Net income (loss) before income taxes | 34,536 | (37,601 | ) | (44,934 | ) | (47,999 | ) | |||||||||||||
| Provision for income taxes | 2,165 | 143 | 2,308 | |||||||||||||||||
| Net income (loss) and comprehensive income (loss) | 32,371 | (37,744 | ) | (44,934 | ) | (50,307 | ) | |||||||||||||
| Loss attributable to common shares subject to conversion | (2,907 | ) | (2,907 | ) | ||||||||||||||||
| Net income (loss) attributable to common shareholders | $ | 32,371 | $ | (40,651 | ) | $ | (44,934 | ) | $ | (53,214 | ) | |||||||||
| Weighted average common shares outstanding: | ||||||||||||||||||||
| Basic | 21,562,500 | 7,495,479 | 25,818,056 | (6n | ) | 47,380,556 | ||||||||||||||
| Diluted | 21,562,500 | 7,495,479 | 25,818,056 | (6n | ) | 47,380,556 | ||||||||||||||
| Net income (loss) attributable to common stockholders: | ||||||||||||||||||||
| Basic | $ | 0.32 | $ | (5.42 | ) | $ | (1.12 | ) | ||||||||||||
| Diluted | $ | 0.32 | $ | (5.42 | ) | $ | (1.12 | ) |
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
On February 9, 2023, Compute Health entered into the Existing Business Combination Agreement with Merger Sub I,
Merger Sub II, Allurion, and New Allurion. On May 2, 2023, Compute Health, Merger Sub I, Merger Sub II, Allurion and New Allurion entered into the BCA Amendment which, among other things, amended the calculation of the aggregate number of
shares of New Allurion Common Stock to be issued to (or reserved for issuance for) Allurion equityholders upon the consummation of the Intermediate Merger to be as follows: (a) 37,812,000 minus (b) the Allocated Shares. Other than as expressly
modified by the BCA Amendment, the terms of the Existing Business Combination Agreement remain in full force and effect.
Business Combination Agreement, and described in the Proxy Statement/Prospectus, and filed with the SEC, in the section titled Proposal No. 1 The Business Combination Proposals, the merger
transactions were consummated in three steps: (a) Compute Health merged with and into New Allurion, with New Allurion surviving the CPUH Merger as a publicly listed entity and became the sole owner of the Merger Subs; (b) three hours
following the consummation of the CPUH Merger, Merger Sub I merged with and into Allurion, with Allurion surviving the Intermediate Merger and becoming a direct, wholly-owned subsidiary of New Allurion; and (c) thereafter, Allurion merged with
and into Merger Sub II, with Merger Sub II surviving the Final Merger and remaining a direct, wholly-owned subsidiary of New Allurion.
connection with the execution of the Business Combination Agreement, Allurion entered into the Revenue Interest Financing Agreement with RTW and has agreed to enter into the Fortress Financing with Fortress.
In connection with the execution of the Business Combination Agreement, Compute Health and New Allurion entered into the PIPE Subscription
Agreements with respect to the PIPE Investment and Allurion entered into a commitment letter with respect to the Chardan Equity Facility.
Pursuant to the Business Combination Agreement, Allurion was required to use reasonable best efforts to obtain gross cash proceeds of at least
$15 million of additional financing pursuant to one or more private sales of Allurion s equity securities, which automatically converted into shares of Allurion Common Stock upon the consummation of the Business Combination, which is
referred to as the Incremental Financing. From February 15, 2023 until August 1, 2023, Allurion issued an aggregate principal amount of $28.7 million of Bridge Notes to various investors pursuant to convertible note purchase agreements,
dated as of February 15, 2023 and June 14, 2023, including the $13 million HVL Bridge Note sold to HVL on February 15, 2023, pursuant to the Initial Financing. As of August 1, 2023, Allurion has repaid $10.8 million principal
amount of the Bridge Notes sold to HVL, resulting in an aggregate principal amount of $18.0 million of Bridge Notes outstanding upon the Closings, which were converted into 3,153,788 shares of Allurion Common Stock. The Side Letter Holders,
including RTW, HVL and Jason Gulbinas, also entered into the Side Letters with Allurion, pursuant to which, in the event the Side Letter Holders Bridge Notes converted in connection with the consummation of the transactions contemplated by the
Business Combination Agreement, the conversion rate for such Bridge Notes would be adjusted after the Closing Date to provide each of the Side Letter Holders with additional shares of New Allurion Common Stock, in the event that the trading price of
the shares of New Allurion Common Stock was lower than the Conversion Price, as adjusted for the Intermediate Merger Exchange Ratio (as defined in the Business Combination Agreement).
Following the consummation of the Initial Financing, Compute Health, Allurion, and New
Allurion refinanced the Initial Financing and, pursuant to the Termination Agreements entered into by Allurion with each of the Side Letter Holders, the Side Letters were terminated, effective as of May 2, 2023. In addition, under the
Termination Agreements, the Side Letter Holders also waived certain provisions and obligations set forth in their respective Bridge Notes with respect to proportionate repayment obligations that would otherwise apply to Allurion under the Bridge
Notes. Other provisions of the Side Letter Holders Bridge Notes remained unchanged and in full force and effect. In addition, in connection with the refinancing of the Initial Financing, the applicable parties entered into the Backstop
Agreement, the Contribution Agreements, the RSU Forfeiture Agreement, the Amended and Restated Side Letter and the Fortress Letter Agreement.
Related events that occurred in connection with the Mergers, including the Revenue Interest Financing, the Fortress Financing, the Incremental
Financing, the Chardan Equity Facility, the Backstop Agreement, the Contribution Agreements, the RSU Forfeiture Agreement, the Termination Agreements, the Amended and Restated RTW Side Letter, and the Fortress Letter Agreement, are discussed in more
In addition, under HVL s Termination Agreement, upon the terms and subject to the conditions set forth therein, HVL received 831,526
shares of New Allurion Common Stock, of which, 443,830 shares were issued by New Allurion, 229,232 shares were related to the Sponsor Contribution Agreement, and 158,464 shares were related to the Gaur Contribution Agreement and RSU Forfeiture
Agreement. Refer to note 5(n) below;
Compute Health and New Allurion entered into PIPE Subscription Agreements with the PIPE Investors, pursuant to which the PIPE Investors
purchased, in aggregate, 5,386,695 shares of New Allurion Common Stock for a net purchase price of $7.04 per share for an aggregate commitment amount of $37.9 million. The purpose of the PIPE Investment is to fund general corporate expenses of
New Allurion. Refer to note 5(v) below.
Allurion entered into a commitment letter for the Chardan Equity Facility from and after the Closings whereby New Allurion agreed to issue
freely tradable shares of New Allurion Common Stock at 97.0% of the VWAP of the shares of New Allurion Common Stock in exchange for an aggregate Chardan Equity Facility of $100.0 million. New Allurion has a right to require Chardan to purchase
shares of New Allurion Common Stock up to the aggregate Chardan Equity Facility of $100.0 million. Pursuant to the terms of the Chardan Equity Facility, upon the consummation of the Mergers, New Allurion paid a structuring fee of
$75 thousand in cash, and a commitment fee of $250 thousand in 35,511 shares of New Allurion Common Stock at the PIPE Investment purchase price of $7.04 per share. The Chardan Equity Facility will remain outstanding for three years from
the execution date unless terminated upon reasonable notice. The purpose of the execution of the Chardan Equity Facility is to fund general corporate expenses of New Allurion. Refer to notes 5(w) and 6(m) below.
The Eligible Allurion Equity Holders may be entitled to receive the Contingency Shares from New Allurion, on or before the fifth anniversary
after the effectiveness of the Resale Registration Statement, in an aggregate, a number of shares of New Allurion Common Stock in accordance with the terms of the Business Combination Agreement as follows: (1) 4,500,000 shares of New Allurion Common
Stock if the VWAP of the shares of New Allurion Common Stock equals or exceeds $15.00 in any 20 trading-days within any consecutive 30 trading-day period (the Trading Period ) on any securities
exchange or securities market on which the shares of New Allurion Common Stock are then traded; and (2) an additional 4,500,000 shares of New Allurion Common Stock if the VWAP of the shares of New Allurion Common Stock equals or exceeds $20.00
in the Trading Period on any securities exchange or securities market on which the shares of New Allurion Common Stock are then traded. The Contingency Shares have been accounted for as a contingent consideration liability in accordance with ASC
815, Derivatives and Hedging. The Contingency Shares are not considered indexed to New Allurion Common Stock and are therefore classified as a liability in the unaudited pro forma condensed consolidated combined balance sheet and will be
remeasured at fair value at each reporting date until such time as the milestones have been met or the earnout period expires. Refer to note 5(r) below.
The pro forma financial information was prepared in accordance with Article 11 of Regulation S-X. The
transaction accounting adjustments presented in the pro forma financial information are made to provide relevant information necessary for an understanding of the combined company reflecting the accounting for the Mergers, the PIPE Investment, the
Revenue Interest Financing, the Fortress Financing, the Incremental Financing, the Chardan Equity Facility, the Backstop Agreement, the RSU Forfeiture Agreement, the Contribution Agreements, the Termination Agreements, the Amended and Restated RTW
Side Letter, and the Fortress Letter Agreement.
Management has made significant estimates and assumptions in its determination of the
transaction accounting adjustments. The transaction accounting adjustments are based on certain currently available information and certain assumptions and methodologies that management believes are reasonable under the circumstances. The
transaction accounting adjustments, which are described in these notes, may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments, and
it is possible the difference may be material.
The pro forma financial information does not give effect to any anticipated synergies,
operating efficiencies, tax savings, or cost savings that may be associated with the Mergers. Compute Health and Allurion have not had any historical relationship prior to the Mergers. Accordingly, no pro forma adjustments were required to eliminate
activities between the companies.
The following table summarizes the pro forma number of shares of New Allurion Common Stock
outstanding following the consummation of the Mergers, the PIPE Investment, the Incremental Financing, the Revenue Interest Financing, the Fortress Financing, the Chardan Equity Facility, the Backstop Agreement, the RSU Forfeiture Agreement, the
Contribution Agreements, the Termination Agreements, the Amended and Restated RTW Side Letter, and the Fortress Letter Agreement, excluding the potential dilutive effect of (1) the exercise or vesting of stock options or warrants and
(2) the Contingency Shares. Please see the subsections entitled Questions and Answers What Are the Possible Sources and the Extent of Dilution that the Public Stockholders that Elect Not to Redeem their Shares Will Experience in
Connection with the Business Combination and Related Transactions and Risk Factors If the Business Combination is consummated, Compute Health Stockholders will experience dilution of this current report on Form 8-K for additional information on the potential dilutive effect of the Mergers, the PIPE Investment, the Incremental Financing, the Revenue Interest Financing, the Fortress Financing, the Chardan Equity Facility,
the Backstop Agreement, the RSU Forfeiture Agreement, the Contribution Agreements, the Termination Agreements, the Amended and Restated RTW Side Letter, and the Fortress Letter Agreement.
| Equity Capitalization Summary | Shares | Ownership Percentage | ||||||
| Allurion equity holders (1) | 27,867,658 | 59 | % | |||||
| Compute Health Public Shareholders (2) | 4,081,379 | 9 | % | |||||
| Medtronic (3) | 994,319 | 2 | % | |||||
| Sponsor and the Additional Class B Holders (4) | 3,352,710 | 7 | % | |||||
| RTW (5) | 950,000 | 2 | % | |||||
| Fortress (6) | 950,000 | 2 | % | |||||
| HVL (7) | 831,526 | 2 | % | |||||
| Other Allurion Convertible Noteholders (7) | 2,857,409 | 6 | % | |||||
| PIPE Investors (8) | 5,386,695 | 11 | % | |||||
| Chardan (9) | 35,511 | 0 | %* | |||||
| Total New Allurion Common Stock (10) | 47,307,207 | 100 | % |
Notwithstanding the legal form of the Mergers pursuant to the Business Combination Agreement, the Mergers represent a reverse merger and are
accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, although Compute Health is the legal acquirer that acquired all of the outstanding equity interests of Allurion in the Mergers, Compute Health is
treated as the acquired company and Allurion is treated as the accounting acquirer for financial statement reporting purposes. Accordingly, the Mergers are treated as the equivalent of Allurion issuing stock for the net assets of Compute
Health, accompanied by a recapitalization. The net assets of Compute Health and Allurion are stated at historical cost, with no goodwill or other intangible assets recorded. Subsequent to the completion of the Mergers, the results of operations
prior to the Mergers are those of Allurion.