Business Context and Reporting Period
Filing entity: Vesper Healthcare Acquisition Corp., not Skinhealth Systems Inc. The filing is an unaudited Form 10-Q for the quarter ended September 30, 2020, covering the period from incorporation on July 8, 2020 through September 30, 2020.
Vesper was a newly formed special purpose acquisition company (SPAC) and shell company with no operating business or revenue. Its purpose was to identify and complete a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination.
Financial Metrics
| Metric | September 30, 2020 / Inception-to-date |
|---|---|
| Cash | $25,000 |
| Total assets | $437,609 |
| Total liabilities | $414,149 |
| Stockholders’ equity | $23,460 |
| Revenue | None |
| Formation and operating costs | $1,540 |
| Net loss | $(1,540) |
| Basic and diluted loss per share | $(0.00) |
| Net cash used in operating activities | $(540) |
| Net cash provided by financing activities | $25,540 |
| Debt and related-party obligations | $5,190 promissory note and $228,723 advance from related party at September 30, 2020 |
The filing does not provide meaningful operating margins because the company had no operations or revenue. There were no cash equivalents, market-risk exposure, long-term debt, capital leases or off-balance-sheet arrangements at September 30, 2020.
Material Changes Versus the Prior Comparable Period
No prior comparable operating period exists because the company was incorporated on July 8, 2020. The financial statements cover only the inception-to-date period.
After quarter-end, on October 2, 2020, the company completed its initial public offering of 46,000,000 units at $10.00 per unit, including full exercise of the underwriters’ over-allotment option, generating gross proceeds of $460.0 million. It also sold 9,333,333 private placement warrants for $14.0 million.
Following the offering, $460.0 million was placed in a trust account. Total transaction costs were $25.8 million, including $9.2 million of underwriting fees, $16.1 million of deferred underwriting fees and $477,859 of other offering costs. Related-party advances and the promissory note were repaid on October 6, 2020, according to the filing.
Guidance, Outlook, Risks and Unusual Items
- The company had no operating revenue and expected to generate operating revenue only after completing a business combination.
- Management intended to use substantially all trust-account proceeds to complete a business combination. No target or transaction was identified in the provided filing text.
- The company had until October 2, 2022 to complete a business combination. If unsuccessful, it would liquidate, redeem public shares using trust-account funds and cause its warrants to expire worthless.
- The target business or businesses must generally have an aggregate fair market value of at least 80% of the trust account value, excluding specified items, and the post-transaction company must obtain control of the target.
- Public stockholders received redemption rights in connection with a business combination, subject to the terms described in the filing. The company must maintain at least $5,000,001 of net tangible assets to complete a business combination.
- COVID-19 could negatively affect the identification of a target company, although the specific impact was not determinable as of issuance of the financial statements.
- The trust account was invested in short-term U.S. government securities or qualifying money market funds. Negative interest rates could reduce the per-share redemption amount below $10.00.
- The company agreed to pay an affiliate of its chief executive officer up to $10,000 per month for office space and administrative support until the earlier of a business combination or liquidation.
- The filing states that disclosure controls and procedures were effective at a reasonable assurance level and that no material change occurred in internal control over financial reporting during the quarter.
Important Facts for Investors to Verify
- Confirm the filing identity: the source document is for Vesper Healthcare Acquisition Corp., not Skinhealth Systems Inc.
- Verify the post-quarter-end IPO, private placement, trust-account balance and transaction costs in subsequent Form 8-K filings.
- Review any announced business-combination target, transaction terms, financing, dilution and redemption levels after the reporting date.
- Assess the October 2, 2022 liquidation deadline and the consequences for public shares, founder shares and warrants if no transaction is completed.
- Review sponsor compensation, founder-share conversion provisions, related-party advances, potential working-capital loans and registration rights.
- Confirm the effect of public-share redemptions and any additional equity or debt financing on ownership and warrant-adjustment provisions.