Business Context and Reporting Period
The filing is Vesper Healthcare Acquisition Corp.’s Form 10-K for the fiscal year ended December 31, 2020, covering the period from incorporation on July 8, 2020 through December 31, 2020. The supplied metadata identifies “Skinhealth Systems Inc.,” but the filing itself identifies the registrant as Vesper Healthcare Acquisition Corp., an early-stage Delaware blank-check company and shell company.
Vesper was formed to complete an initial business combination. It completed its IPO on October 2, 2020, issuing 46.0 million units at $10.00 per unit, and subsequently signed a merger agreement with Edge Systems LLC, doing business as The HydraFacial Company.
Financial Metrics
| Metric | Period ended December 31, 2020 |
|---|---|
| Revenue | $0; the company had not commenced operations or generated operating revenue. |
| Operating costs | $1.21 million |
| Net loss | $1.11 million |
| Other income | $98,212, including $90,128 of interest income and $8,084 of unrealized gains on trust-account securities. |
| Net loss per non-redeemable common share | $0.09 |
| Cash flow from operations | $(1.09) million |
| Cash outside trust account | $3.27 million |
| Trust-account securities | $460.10 million |
| Total assets | $464.00 million |
| Total liabilities | $16.87 million, including $16.10 million of deferred underwriting fees. |
| Debt | No long-term debt, capital leases, operating leases, or other long-term liabilities were reported. |
| Class A shares subject to possible redemption | 44.21 million shares recorded as temporary equity at $442.14 million. |
| Stockholders’ equity | $5.00 million |
Margins and year-over-year comparisons are not meaningful because the company had no operating business and the reporting period began at inception.
Material Changes and Transactions
- The company transitioned from formation-stage activities to a publicly traded SPAC following its October 2020 IPO.
- Gross IPO proceeds were $460.0 million, and the sponsor separately purchased 9.33 million private placement warrants for $14.0 million.
- A total of $460.0 million was deposited into the trust account. Transaction costs totaled $25.78 million, including $16.10 million of deferred underwriting fees.
- On December 8, 2020, Vesper entered into a merger agreement for a business combination with HydraFacial. Aggregate merger consideration is expected to be approximately $975.0 million, subject to adjustments, including HydraFacial net debt, transaction expenses, and working-capital adjustments.
- Vesper also entered into PIPE subscription agreements for 35.0 million Class A shares at $10.00 per share, or approximately $350.0 million of gross proceeds, subject to closing conditions.
Outlook, Risks, Contingencies, and Unusual Items
- The company expects no operating revenue until after completion of a business combination. It must complete a business combination by October 2, 2022 or liquidate.
- If the transaction is not completed by the deadline, public shares are generally expected to be redeemed for a pro rata portion of the trust account, while public and private warrants would expire worthless.
- The HydraFacial transaction remains subject to customary closing conditions, potential shareholder redemptions, financing availability, regulatory matters, and other transaction requirements. HydraFacial stockholders may receive up to $75.0 million of contingent consideration in shares based on specified future acquisitions and revenue.
- Management disclosed potential conflicts of interest because the sponsor and management hold founder shares and private placement warrants and may receive benefits from completing a business combination.
- Four shareholder lawsuits were filed in January and February 2021 alleging, among other matters, breaches of fiduciary duty and misleading or incomplete proxy disclosures. Two additional shareholder demand letters were received on March 2, 2021. The company considers the allegations without merit but cannot predict the outcome.
- The COVID-19 pandemic could adversely affect the company’s search for a target and financial position, although the specific impact was not determinable at the reporting date.
- The company pays an affiliate of its chief executive officer $10,000 per month for office space and administrative support through the earlier of a business combination or liquidation.
- Disclosure controls were deemed effective as of December 31, 2020. No management assessment or auditor attestation report on internal control over financial reporting was included because of applicable transition rules for newly public emerging growth companies.
Investor Verification Items
- Verify the registrant identity: the filing is for Vesper Healthcare Acquisition Corp., not Skinhealth Systems Inc.
- Confirm the status, final terms, closing date, financing, shareholder approvals, and redemption levels for the HydraFacial business combination.
- Reconcile the $460.0 million trust account with deferred underwriting fees, taxes, redemptions, and any permitted withdrawals.
- Assess dilution from the 11.5 million founder shares, 35.0 million PIPE shares, public warrants, private placement warrants, and any contingent consideration.
- Review the shareholder litigation, demand letters, and any subsequent amendments or additional proxy disclosures.
- Confirm whether the company completed a business combination by October 2, 2022 and whether the stated liquidation and redemption protections remained applicable.