Filing summary
Entity mismatch: The supplied filing is Oaktree Acquisition Corp.’s Form 10-Q, not a filing by Hims & Hers Health, Inc. The summary below describes the filing actually provided.
Business context and reporting period
This unaudited quarterly report covers the quarter and six months ended June 30, 2020. Oaktree was a blank-check company formed to pursue a business combination, with an intended focus on industrial and consumer businesses. It had not begun operations or generated operating revenue; activity consisted of formation, IPO-related matters, and searching for a target. Its IPO closed July 22, 2019.
Financial results and position
| Metric | Reported amount |
|---|---|
| Revenue | No operating revenue |
| Three-month net loss | $86,776; $123,634 of general and administrative expense partly offset by $36,858 of trust interest |
| Six-month net income | $1,247,246; $370,417 of general and administrative expense offset by $1,617,663 of trust interest |
| Cash from operating activities, six months | $(124,809) |
| Cash outside the trust account | $1,385,532 at June 30, 2020, versus $1,510,341 at December 31, 2019 |
| Trust investments | $204,725,005 at June 30, 2020, versus $203,107,342 at December 31, 2019 |
| Total assets / liabilities | $206,200,737 / $8,361,452 at June 30, 2020 |
| Working capital | Approximately $308,000 at June 30, 2020 |
| Debt | No long-term debt; no working-capital loans outstanding |
Profitability and margins are not meaningful for this pre-combination company. The six-month net income reflects trust-account investment income, not operating performance. The trust balance consisted principally of U.S. Treasury securities; approximately 19.3 million Class A shares, carried at $192.8 million, were subject to possible redemption.
Changes, outlook, risks, and contingencies
- Compared with December 31, 2019, trust investments increased about $1.6 million, while cash outside the trust declined about $125,000. Current liabilities rose from $979,394 to $1,167,702. The filing’s 2019 comparison is from inception through June 30, 2019, not a comparable prior-year quarter.
- Management reported no identified target or operating forecast and expected ongoing public-company and due-diligence expenses. The filing provides no revenue or earnings guidance.
- Management stated that liquidity and the requirement to complete a business combination or liquidate by July 22, 2021 raise substantial doubt about the company’s ability to continue as a going concern. Shareholders could approve a later deadline. If no combination is completed, public shares are to be redeemed from the trust, subject to applicable terms.
- COVID-19 could adversely affect the company’s financial position, results, or target search; the impact was not determinable, and the financial statements included no related adjustments.
- A newly disclosed risk is that negative interest rates on trust investments could reduce public shareholders’ redemption proceeds below $10 per share. Other key transaction risks include inability to complete a combination and potential dilution or financial constraints from issuing equity or debt.
- The company had $7.04 million of deferred underwriting commissions and $150,000 of deferred legal fees, payable from trust funds only if a business combination is completed. It also accrued about $495,000 due to related parties and $115,000 of related-party expenses. No legal proceedings were reported.
Important facts for investors to verify
- Confirm the intended issuer: this filing is for Oaktree Acquisition Corp., not Hims & Hers Health, Inc.
- Check subsequent filings for any business-combination agreement, extension of the July 22, 2021 deadline, or liquidation outcome.
- Review trust-account value, redemption terms, and the effect of investment returns and withdrawals on per-share proceeds.
- Assess the going-concern disclosure, available cash outside the trust, related-party balances, and the contingent deferred transaction fees.
- Consider potential share dilution and warrant terms if a business combination or financing is pursued.