Pursuant to the Equity Purchase Agreement, dated as of November 15,
2021 (the “Milk Equity Purchase Agreement” and, together with the Obagi Merger Agreement, the “Transaction Agreements”),
by and among the Company, Obagi Holdco 1 Limited, a limited company incorporated under the laws of Jersey (“Holdco Purchaser”),
Waldencast Partners LP, a Cayman Islands exempted limited partnership (“Waldencast LP” and together with Holdco Purchaser,
the “Milk Purchasers”), Milk, certain former members of Milk (the “Milk Members”), and Shareholder Representative
Services LLC, a Colorado limited liability company, solely in its capacity as representative of the Milk Members (the “Equityholder
Representative”), the Milk Purchasers acquired from the Milk Members, and the Milk Members sold to the Milk Purchasers, all of the
issued and outstanding membership units of Milk in exchange for the Milk Cash Consideration (as defined in the Milk Equity Purchase Agreement),
the Milk Equity Consideration (as defined in the Milk Equity Purchase Agreement), which consists of partnership units of Waldencast LP
(“Waldencast LP Common Units”) exchangeable for Waldencast plc Class A ordinary shares (as defined below), and the Waldencast
plc Class B ordinary shares (as defined below) (the “Milk Transaction” and, collectively with the Obagi Merger and the other
transactions contemplated by the Transaction Agreements, the “Business Combination”).
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR
MANAGEMENT AND ADVISERS
A. |
Directors and Senior Management |
Information on the directors and executive
officers of the Company upon consummation of the Business Combination is set forth in the Company’s Form F-4, in the section titled
“Management of Waldencast plc Following the Business Combination,” which is incorporated herein by reference.
The business address for each of the
Company’s directors and executive officers is c/o Waldencast plc, 10 Bank Street, Suite 560, White Plains, NY 10606.
Marcum LLP has acted as the independent
registered public accounting firm for the Company as of December 31, 2021 and for the period from December 8, 2020 (inception) through
December 31, 2020.
New York, NY
PCAOB ID Number 688
In connection with the consummation
of the Business Combination, the Company intends to engage Deloitte & Touche LLP (“Deloitte”) as the Company’s
independent registered public accounting firm following the closing of the Business Combination and subject to Deloitte’s completion
of its standard client acceptance procedures.
ITEM 2. OFFER STATISTICS AND EXPECTED
TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
A. |
Selected Financial Data |
Prior to the Business Combination, the
Company had no material assets and did not operate any business. Following and as a result of the Business Combination, the business
of the Company is conducted through Obagi and Milk, the Company’s indirect subsidiaries, and their subsidiaries.
Company
Selected financial information of the
Company is included in the Form F-4 in the section entitled “Selected Historical Financial Information of Waldencast,”
which is incorporated herein by reference.
Obagi
Selected financial information regarding
Obagi is included in the Form F-4 in the section entitled “Selected Historical Financial Information of Obagi,” which
is incorporated herein by reference.
Milk
Selected financial information regarding
Milk is included in the Form F-4 in the section entitled “Selected Historical Financial Information of Milk,” which
is incorporated herein by reference.
B. |
Capitalization and Indebtedness |
The following table sets forth the capitalization
of the Company on an unaudited pro forma combined basis as of March 31, 2022, after giving effect to the Business Combination, the PIPE
Subscription Agreements, the Forward Purchase Agreements and the Credit Agreement.
As of March 31, 2022
(pro forma for
Business Combination, PIPE Investment, Forward Purchase Transactions and
Credit Agreement) | |
($ in millions) | |
Cash and cash equivalents | |
$ | 58.5 | |
| |
| | |
Total equity | |
| 862.4 | |
Debt: | |
| | |
Loans and borrowings (non-current) | |
| 174.5 | |
Loans and borrowings (current) | |
| 7.8 | |
Total indebtedness | |
| 182.2 | |
| |
| | |
Total capitalization | |
$ | 1,044.6 | |
C. |
Reasons for the Offer and Use of Proceeds |
Not applicable.
The risk factors associated with the
Company are described in the Form F-4 in the section titled “Risk Factors,” which is incorporated herein by reference.
ITEM 4. INFORMATION ON THE COMPANY
A. |
History and Development of the Company |
Waldencast plc (formerly known as Waldencast
Acquisition Corp.) was incorporated on December 8, 2020 as a Cayman Islands exempted company and a blank check company solely for the
purpose of effecting the Business Combination, which was consummated on July 27, 2022. On July 26, 2022, with the approval of the Company’s
shareholders, and in accordance with the Cayman Act, the Jersey Companies Law and the Company’s amended and restated memorandum
and articles of association, the Company effected the Domestication, pursuant to which the Company’s jurisdiction of incorporation
was changed from the Cayman Islands to Jersey and the name of the Company was changed to Waldencast plc.
See “Explanatory Note” in
this Report for additional information regarding the Company and the Business Combination. The history and development of Waldencast
plc, and the material terms of the Business Combination are described in the Form F-4 under the headings “Summary of the Proxy
Statement/Prospectus,” “BCA Proposal,” “Information About Waldencast” and “Description
of Waldencast plc Securities,” which are incorporated herein by reference.
Waldencast plc’s registered office
is 2nd Floor Sir Walter Raleigh House, 48-50 Esplanade, St. Helier, Jersey JE2 3QB. Following the consummation of the Business Combination,
its principal executive office is 10 Bank Street, Suite 560, White Plains, NY 10606, and its telephone number is (917) 546-6828.
The SEC maintains an Internet site that
contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC which
is accessible at http://www.sec.gov. Since Waldencast plc is a “foreign private issuer,” it is exempt from the rules
and regulations under the Exchange Act prescribing the furnishing and content of proxy statements, and its officers, directors and principal
shareholders are exempt from the reporting and “short-swing” profit recovery provisions contained in Section 16 of the Exchange
Act with respect to their purchase and sale of the Company’s shares. In addition, the Company is not required to file reports and
financial statements with the SEC as frequently or as promptly as U.S. public companies whose securities are registered under the Exchange
Act. However, it is required to file with the SEC an Annual Report on Form 20-F containing financial statements audited by an independent
accounting firm.
Waldencast plc’s principal website
address is waldencast.com. The information contained on Waldencast plc’s website does not form a part of, and is not incorporated
by reference into, this Report.
Following and as a result of the Business
Combination, all of Waldencast plc’s business is conducted through its subsidiaries and consolidated affiliated entities. A description
of the business is included in the Form F-4 in the sections entitled “Information about Waldencast,” “Information
about Obagi,” “Information about Milk,” “Waldencast’s Management’s Discussion and Analysis
of Financial Condition and Results of Operations,” “Obagi’s Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” and “Milk’s Management’s Discussion and Analysis of Financial Condition
and Results of Operation,” which are incorporated herein by reference.
C. |
Organizational Structure |
Upon consummation of the Business Combination,
Obagi and Milk became indirect subsidiaries of Waldencast plc. The following diagram depicts a simplified organizational structure of
Waldencast plc, as of the date hereof.
![Diagram Description automatically generated](https://content.edgar-online.com/edgar_conv_img/2022/08/03/0001213900-22-044277_image_001.jpg)
D. |
Property, Plants and Equipment |
Waldencast plc’s property, plants
and equipment are held directly and through Obagi and Milk. Information regarding Waldencast plc, Obagi and Milk’s property, plants
and equipment is described in the Form F-4 under the headings “Information about Waldencast – Facilities,” “Information
about Obagi – Properties” and “Information about Milk – Properties,” which information is incorporated
herein by reference.
ITEM 4A. UNRESOLVED STAFF COMMENTS
None / Not applicable.
ITEM 5. OPERATING AND FINANCIAL REVIEW
AND PROSPECTS
The discussion and analysis of the financial
condition and results of operation of Waldencast plc is included in the Form F-4 in the section titled “Waldencast’s Management’s
Discussion and Analysis of Financial Condition and Results of Operation,” which information is incorporated herein by reference.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT
AND EMPLOYEES
A. |
Directors and Senior Management |
The directors and executive officers
upon the consummation of the Business Combination are set forth in the Form F-4, in the section titled “Management of Waldencast
plc following the Business Combination,” which is incorporated herein by reference.
Information pertaining to the compensation
of the directors and executive officers of Waldencast plc is set forth in the Form F-4, in the section titled “Information about
Waldencast – Executive Officer and Director Compensation,” which is incorporated herein by reference.
A discussion of the Waldencast plc 2022
Incentive Award Plan is included in the Form F-4 in the section entitled “The Incentive Award Plan Proposal,” which is incorporated
herein by reference. The Company expects that the board of directors or the compensation committee of the Company’s board of directors
will make grants of awards under the Incentive Award Plan Proposal to eligible participants. A copy of the Incentive Award Plan is filed
as Exhibit 4.9 to this Report.
Upon the consummation of the Business
Combination, the Company entered into indemnification agreements with its directors and executive officers. For further details please
refer to Item 7.B of this Report.
Information pertaining to the Company’s
board practices is set forth in the Form F-4, in the section titled “Management of Waldencast plc following the Business Combination,”
which is incorporated herein by reference.
Information pertaining to Waldencast
plc’s employees is set forth in the Form F-4, in the section titled “Information about Waldencast plc—Employees,” which
is incorporated herein by reference.
Ownership of the Company’s shares
by its directors and executive officers upon consummation of the Business Combination is set forth in Item 7.A of this Report.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED
PARTY TRANSACTIONS
The following table sets forth information
regarding the beneficial ownership of ordinary shares as of the date hereof by:
| ● | each person known by us to
be the beneficial owner of more than 5% of ordinary shares; |
| ● | each of our executive
officers and directors; and |
| ● | all our executive officers
and directors as a group. |
Beneficial ownership is determined according
to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole
or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable
within 60 days.
As of the date hereof, there are 107,564,779
ordinary shares outstanding, consisting of 86,460,554 Waldencast plc Class A ordinary shares and 21,104,225 Waldencast plc Class B
ordinary shares.
Unless otherwise indicated, we believe
that all persons named in the table below have sole voting and investment power with respect to all voting shares beneficially owned
by them.
Name and Address of Beneficial Owner(1) | |
Waldencast plc Class A ordinary shares | | |
% of
Waldencast plc
Class A ordinary shares outstanding | | |
Waldencast plc Class B ordinary shares(8) | | |
% of Combined Voting Power(9) | |
5% Holders | |
| | |
| | |
| | |
| |
Cedarwalk Skincare Ltd(3) | |
| 28,237,500 | | |
| 32.7 | % | |
| — | | |
| 21.9 | % |
Waldencast Long-Term Capital LLC (our Sponsor)(2) | |
| 23,066,666 | | |
| 25.0 | % | |
| — | | |
| 17.2 | % |
Dynamo Master Fund(4) | |
| 19,826,109 | | |
| 21.4 | % | |
| — | | |
| 14.7 | % |
Burwell Mountain Trust(5) | |
| 11,826,110 | | |
| 13.1 | % | |
| — | | |
| 8.9 | % |
| |
| | | |
| | | |
| | | |
| | |
Directors and Executive Officers | |
| | | |
| | | |
| | | |
| | |
Sarah Brown | |
| 20,000 | | |
| * | | |
| — | | |
| * | |
Aaron Chatterley | |
| 20,000 | | |
| * | | |
| — | | |
| * | |
Juliette Hickman | |
| 20,000 | | |
| * | | |
| — | | |
| * | |
Lindsay Pattison | |
| 20,000 | | |
| * | | |
| — | | |
| * | |
Zack Werner | |
| 20,000 | | |
| * | | |
| — | | |
| * | |
Michel Brousset(6) | |
| 5,159,447 | | |
| 5.8 | % | |
| — | | |
| 3.9 | % |
Simon Dai | |
| — | | |
| — | | |
| — | | |
| — | |
Tassilo Festetics(7) | |
| — | | |
| — | | |
| — | | |
| — | |
Hind Sebti | |
| — | | |
| — | | |
| — | | |
| — | |
Cristiano Souza | |
| — | | |
| — | | |
| — | | |
| — | |
Felipe Dutra(5) | |
| — | | |
| — | | |
| — | | |
| — | |
All Waldencast plc directors and executive officers as a group (11 individuals) | |
| 5,259,447 | | |
| 5.9 | % | |
| — | | |
| 4.0 | % |
(1) |
Unless otherwise noted, the business address for each of those listed in the table above is c/o
Waldencast plc, 10 Bank Street, Suite 560, White Plains, NY 10606. |
(2) |
Reflects securities held directly by Beauty Ventures consisting of (i)
17,300,000 Waldencast plc Class A ordinary shares and (ii) 5,766,666 Waldencast plc Class A ordinary shares issuable upon exercise
of warrants to be issued to Beauty Ventures pursuant to the Third-Party Forward Purchase Agreement. Waldencast Long-Term Capital
LLC, our Sponsor, is the managing member of Beauty Ventures. The voting and investment power of our Sponsor is exercised jointly by
Waldencast Ventures, LP, Burwell, and Dynamo Master Fund. Waldencast Ventures, LP is controlled by Michel Brousset. Burwell Mountain
PTC LLC is the trustee of Burwell Mountain Trust, a non-grantor, fully discretionary dynasty trust duly organized under Wyoming law.
See footnote 7 for further details. Dynamo Internacional Gestão de Recursos Ltda., a Brazilian limited company (“Dynamo
International”), is the investment manager of Dynamo Master Fund. Each of Luiz Orenstein, Bruno Hermes da Fonseca Rudge and
Luiz Felipe de Almeida Campos participate in voting and investment decisions of Dynamo International. |
|
|
(3) |
Sijue Dai is deemed to have sole voting and dispositive power with
regard to 28,237,500 Waldencast plc Class A ordinary shares. His business address is c/o Cedarwalk Skincare Limited, Rm 3001-3010,
30/F, China Resource Building, 26 Harbour Road, Wanchai, Hong Kong. |
|
|
(4) |
Dynamo International is the investment manager of Dynamo Master Fund. Each of Luiz Orenstein, Bruno
Hermes da Fonseca Rudge and Luiz Felipe de Almeida Campos participate in voting and investment decisions of Dynamo International.
The securities reported by Dynamo International herein reflect the distribution by the Sponsor of the founder shares, the private
placement warrants and the working capital loan warrants to its members that occurred in connection with the Business Combination. |
|
|
(5) |
Burwell Mountain PTC LLC, as trustee of Burwell Mountain Trust, has
the sole voting and dispositive power over the shares held on behalf of the Burwell Mountain Trust, a non-grantor, fully
discretionary dynasty trust duly organized under Wyoming law of which Felipe Dutra and his descendants are eligible beneficiaries.
Burwell Mountain PTC LLC is an independent trustee over which Mr. Dutra has no control. The business address of each is 270 W. Pearl
Avenue, Suite 103, Jackson, WY 83001. The securities reported by Burwell Mountain Trust herein reflect the distribution by the
Sponsor of the founder shares, the private placement warrants and the working capital loan warrants to its members that occurred in
connection with the Business Combination. In connection with the closing of the Business Combination, Burwell pledged all of the
reported securities held by it to be used as portion of the collateral pursuant to a loan agreement with customary default
provisions. In the event of a default under the loan agreement, following such securities respective lock-up periods, the secured
parties may foreclose upon any and all securities pledged to them. |
(6) |
As described above, following the closing of the Business Combination,
the Sponsor distributed the founder shares, the private placement warrants and the working capital loan warrants to its members. As
such, Waldencast Ventures, LP holds (i) 2,848,334 Waldencast plc Class A ordinary shares that converted automatically, on a
one-for-one basis, from Class B ordinary shares upon the consummation of the Business Combination, (ii) 1,977,779 Waldencast plc
Class A ordinary shares issuable upon exercise of the private placement warrants and (iii) 333,334 Waldencast plc Class A ordinary
shares issuable upon exercise of the working capital loan warrants. Mr. Brousset is the chief executive officer of Waldencast
Management, LLC, the general partner of Waldencast Ventures, LP. As such, he may be deemed to beneficially own the shares held by
Waldencast Ventures, LP. |
|
|
(7) |
Effective June 10, 2022, Tassilo Festetics resigned as Chief Financial and Technology Officer and
the principal financial officer of Waldencast. |
|
|
(8) |
Waldencast plc Class B ordinary shares are non-economic voting shares of
the Company and may be exchanged, together with an equal amount of Waldencast LP Common Units, for Waldencast plc Class A ordinary shares.. |
|
|
(9) |
Includes both Waldencast plc Class A ordinary shares and Waldencast plc
Class B ordinary shares. |
B. |
Related Party Transactions |
Information pertaining to Waldencast
plc’s related party transactions is set forth in the Form F-4, in the section titled “Certain Relationships and Related
Person Transactions—Waldencast Acquisition Corp.,” which is incorporated herein by reference.
Indemnification Agreements
In connection with the Business Combination,
the Company entered into indemnification agreements with each of its directors. The indemnification agreements provide, to the fullest
extent permitted under law, indemnification against all expenses, judgments, fines and amounts paid in settlement relating to, arising
out of or resulting from indemnitee’s status as a director, officer, employee, fiduciary or agent of the Company or any other corporation,
limited liability company, partnership, joint venture, trust, employee benefit plan or other entity which such person is or was serving
at the Company’s request as a director, officer, employee or agent. In addition, the indemnification agreements provide that the
Company will advance, to the extent not prohibited by law, the expenses incurred by the indemnitee in connection with any proceeding,
and such advancement will be made within thirty (30) days after the receipt by the Company of a statement requesting such advances from
time to time, whether prior to or after final disposition of any proceeding.
The foregoing description of the indemnification
agreements and the transactions contemplated thereby is not complete and is subject to and qualified in its entirety by reference thereto,
copies of which are filed as Exhibits 4.14 to 4.22 to this Report and the terms of which are incorporated by reference herein.
Waiver and Agreement
In connection with the consummation of the Business Combination,
the Company waived those certain provisions as contemplated by the Letter Agreement, dated as of March 15, 2021, by and among the Company,
its officers and directors, the Sponsor, and certain members of the Sponsor (as amended, the “Letter Agreement”), and certain
other agreements related thereto (collectively, the “Waiver”), with respect to any securities held by an Insider (as defined
in the Letter Agreement) as of the closing the Business Combination (the “Lock-Up Securities”) that would disallow a pledge
by such Insider of the Lock-up Securities in a transaction for the purpose of financing such Insider’s payment obligations owed
in connection with the closing of the Business Combination.
In connection with such Waiver, the Company entered into that certain Waiver
and Agreement, dated as of July 25, 2022, by and between the Company and Burwell (the “Waiver and Agreement”), to permit a
pledge by Burwell of its Lock-Up Securities to be used as a portion of the collateral under a loan to finance Burwell’s payment
obligations under the Sponsor Forward Purchase Agreement in connection with the closing of the Business Combination. Pursuant to the terms
of the Waiver and Agreement, in the event of a foreclosure, any such lenders or a collateral agents will be required to execute a joinder
to the Letter Agreement pursuant to which they will be bound by the transfer restrictions of the Lock-Up Securities (including the foreclosure
of or other exercise of remedies under any such loan documentation) in the Letter Agreement for the duration of such agreement.
The Company also agreed to provide any such lender or collateral agent with customary registration rights in the event of default, foreclosure
or other exercise of remedies following the respective Lock-Up Periods (as defined in the Letter Agreement).
The foregoing description of the Waiver
and Agreement and the transactions contemplated thereby is not complete and is subject to and qualified in its entirety by reference
thereto, a copy of which is filed as Exhibit 4.32 to this Report and the terms of which are incorporated by reference herein.
Amended and Restated Registration
Rights Agreement
In connection with the consummation
of the Business Combination, the Company entered into that certain Amended and Restated Registration Rights Agreement, dated as of July
27, 2022, by and among the Company, the Sponsor, certain former shareholders of Obagi and certain former members of Milk (“Amended
and Restated Registration Rights Agreement”). The description of the Amended and Restated Registration Rights Agreement in the
Form F-4 in the section titled “BCA Proposal — Related Agreements — Related Agreements to the Obagi Merger and the
Milk Transaction — Registration Rights Agreement” is incorporated herein by reference.
Obagi China Related Party Agreements
In connection with the pre-closing distribution
by Obagi Holdings Company Limited (“Obagi Holdings”) to Obagi and the distribution by Obagi to Cedarwalk Skincare Ltd (“Cedarwalk”)
of all of the issued and outstanding shares of capital stock of Obagi Hong Kong Limited (“Obagi Hong Kong”) and certain related
assets pursuant to distribution agreements, the following agreements were entered into at the consummation of the Business Combination:
(a) that certain Transition Services Agreement, dated as of July 27, 2022, by and among Obagi Cosmeceuticals LLC (“Obagi Cosmeceuticals”
and, together with Obagi Holdings, “Obagi Worldwide”), certain of Obagi Cosmeceuticals’ affiliates and Obagi Hong Kong,
pursuant to which Obagi Cosmeceuticals and certain of its affiliates shall provide transition services to Obagi Hong Kong (the “Transition
Services Agreement”), (b) that certain Intellectual Property License Agreement, dated as of July 27, 2022, by and among Obagi Worldwide
and Obagi Hong Kong pursuant to which Obagi Worldwide will exclusively license intellectual property relating to the Obagi brand to Obagi
Hong Kong with respect to the People’s Republic of China, inclusive of the Hong Kong Special Administrative Region, the Macau Special
Administrative Region, and Taiwan (the “China Region”) (the “Intellectual Property License Agreement”), and (c)
that certain Supply Agreement, dated as of July 27, 2022, by and between Obagi Cosmeceuticals and Obagi Hong Kong pursuant to which Obagi
Cosmeceuticals will supply products to Obagi Hong Kong for distribution and sale in the China Region (the “Supply Agreement”).
In connection with the consummation
of the Business Combination, the Company entered into that certain Investor Rights Agreement, dated as of July 27, 2022, by and among
the Company, Cedarwalk and CWC Skincare Ltd, as guarantor of Cedarwalk’s obligations thereunder (the “Investor Rights Agreement”
and, together with the Transition Services Agreement, Intellectual Property License Agreement, and Supply Agreement, the “Obagi
China Related Party Agreements”).
The description
of the Obagi China Related Party Agreements in the Form F-4 in the section titled “BCA Proposal — Related Agreements —
Related Agreements to the Obagi Merger” is incorporated herein by reference.
Working Capital Promissory Notes
In order to finance transaction costs
in connection with the Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and
directors could loan the Company funds as required. Such working capital loans were evidenced by promissory notes. The notes were to
be repaid upon completion of the Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000
of notes could be converted upon completion of a Business Combination into warrants at a price of $1.50 per warrant. Such warrants would
be identical to the Private Placement Warrants.
On August 18, 2021, the Company issued
a working capital promissory note to the Sponsor for an aggregate amount of up to $1,500,000 (the “Convertible Working Capital Note”).
As of July 27, 2022, the Company had a total aggregate principal amount of $1,500,000 in outstanding borrowings under the Convertible
Working Capital Note. In connection with the closing of Business Combination, the Sponsor elected to convert $1,500,000 of the Convertible
Working Capital Note balance into warrants at a price of $1.50 per warrant for a total of 1,000,000 warrants (the “Working
Capital Warrants”). The Working Capital Warrants issuance was exempt from registration pursuant to Section 4(a)(2) of the
Securities Act, and Rule 506 of Regulation D promulgated thereunder. Borrowings under the Convertible Working Capital Note are no longer
available.
In addition, the Company issued working capital
promissory notes to the Sponsor on (i) May 20, 2022, for up to $600,000 (“May Working Capital Note”) and (ii) July 15, 2022,
for up to $450,000 (“July Working Capital Note” and, together with May Working Capital Note, the “Non-Convertible Working
Capital Notes”), in each case, for working capital purposes. As of July 27, 2022, the Company had a total aggregate principal amount
of $1,050,000 in outstanding borrowings under the Non-Convertible Working Capital Notes. In connection with the closing of Business Combination,
the aggregate outstanding balance under the Non-Convertible Working Capital Notes of $1,050,000 was repaid to the Sponsor. Borrowings
under the Non-Convertible Working Capital Notes are no longer available.
C. |
Interests of Experts and Counsel |
None / Not applicable.
ITEM 8. FINANCIAL INFORMATION
A. |
Consolidated Statements and Other Financial Information |
Financial Statements
Consolidated financial statements have
been filed as part of this Report. See Item 18 “Financial Statements.”
Legal Proceedings
Legal or arbitration proceedings are
described in the Form F-4 under the heading “Information about Waldencast—Legal Proceedings,” which is incorporated
herein by reference.
None / Not Applicable.
ITEM 9. THE OFFER AND LISTING
A. |
Offer and Listing Details |
Nasdaq Listing of Waldencast plc
Ordinary Shares and Waldencast plc Warrants
Waldencast plc Class A ordinary shares
and Waldencast plc Warrants are listed on the Nasdaq Capital Market under the symbols “WALD” and “WALDW,” respectively.
Holders of Waldencast plc Class A ordinary shares and Waldencast plc Warrants should obtain current market quotations for their securities.
Lock-Up Agreements
Information regarding the lock-up restrictions
applicable to the Waldencast plc Class A ordinary shares is included in the Form F-4 under the heading “BCA Proposal—Related
Agreements to the Obagi Merger and the Milk Transaction—Lock-Up Agreement,” which is incorporated herein by reference.
Waldencast plc Warrants
Upon the completion of the Business
Combination, there were 29,533,332 Waldencast plc Warrants outstanding. The Waldencast plc Warrants, which entitle the holders to acquire,
on a one-for-one basis, Waldencast plc Class A ordinary shares, will become exercisable at any time commencing on the later of August
26, 2022, the date that is thirty (30) days after the completion of the Business Combination and March 18, 2022, which is 12 months from
the closing of the Company’s public offering. The exercise price of these warrants will be $11.50 per share. The Waldencast plc
Warrants will expire five (5) years after the completion of the Business Combination, at 5:00 p.m., New York City time, or earlier upon
redemption or liquidation in accordance with their terms.
Not applicable.
Waldencast plc Class A ordinary shares
and Waldencast plc Warrants are listed on the Nasdaq Capital Market under the symbols “WALD” and “WALDW,” respectively.
Not applicable.
Not applicable.
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
The Company is authorized to issue (i)
1,000,000,000 Waldencast plc Class A ordinary shares, par value $0.0001 per share, (ii) 100,000,000 Waldencast plc Class B ordinary shares,
par value $0.0001 per share, and (iii) 25,000,000 Waldencast plc preference shares, par value $0.0001 per share.
Prior to the closing of the Business
Combination, the share capital of the Company consisted of (i) 500,000,000 Waldencast Acquisition Corp. Class A ordinary shares, par
value $0.0001 per share, (ii) 50,000,000 Waldencast Acquisition Corp. Class B ordinary shares, par value $0.0001 per share, and
(iii) 5,000,000 Waldencast Acquisition Corp. preferred shares, par value $0.0001 per share.
As of the date hereof, subsequent to the
closing of the Business Combination, there were 86,460,554 Waldencast plc Class A ordinary shares and 21,104,225 Waldencast plc
Class B ordinary shares that were outstanding and issued. There are also 29,533,332 Waldencast plc Warrants outstanding, each
exercisable at $11.50 per Waldencast plc Class A ordinary share, of which 11,500,000 are public warrants (“Public
Warrants”) and 18,033,332 are Waldencast plc Warrants that were issued in a private placement exempt from registration under
the Securities Act (“Private Warrants”) held by Beauty Ventures, Burwell and Dynamo Master Fund.
The description
of the Company’s share capital is included in the Form F-4 in the section entitled “Description of Waldencast plc Securities,”
which is incorporated by reference herein.
The following is a summary of Waldencast plc”s outstanding ordinary
shares, and a calculation of Waldencast plc’s outstanding ordinary shares on a diluted shares outstanding basis, calculated based on Waldencast
plc’s closing share price as of July 29, 2022:
| |
| | |
| | |
Shares | |
Basic shares outstanding(1) | |
| | | |
| | | |
| 107,564,779 | |
Vested employee RSUs(2) | |
| | | |
| | | |
| 395,471 | |
Pro forma basic shares outstanding | |
| | | |
| | | |
| 107,960,250 | |
| |
Number of
Shares
| | |
Weighted-average
strike price
| | |
| | |
Unvested employee RSUs | |
| | | |
| | | |
| 1,394,827 | |
Vested employee stock rights with exercise prices(3) | |
| 4,046,591 | | |
$ | 4.43 | | |
| 1,971,802 | |
Unvested employee stock rights with exercise prices(3) | |
| 3,898,151 | | |
$ | 5.44 | | |
| 1,445,708 | |
Total diluted shares outstanding (“DSO”) | |
| | | |
| | | |
| 112,772,588 | (4) |
| |
| | | |
| | | |
| | |
Warrants(5) | |
| | | |
$ | 11.50 | | |
| 29,533,332 | (6) |
(1) | Includes 21,104,225 Waldencast plc Class B ordinary shares owned by former members of Milk. |
(2) | Vested RSUs not yet included in basic shares outstanding as not yet converted at discretion of unit holders. |
(3) | Dilution from employee stock rights with exercise prices assumes net share settlement under treasury stock method, based on WALD closing
price of $8.64 on July 29, 2022. |
(4) | The Company has reserved additional shares for future issuances of employee incentive awards. |
(5) |
Includes
11,500,000 Waldencast plc Warrants, 5,333,333 Waldencast plc warrants issued in a private placement in connection with the Sponsor
Forward Purchase Agreement, and 5,766,666 Waldencast plc Warrants issued in a private placement in connection with the Third-Party
Forward Purchase Agreement with $11.50 strike price, redeemable at $18.00; includes 5,933,333 Waldencast plc Warrants issued in a
private placement at the closing of Waldencast Acquisition Corp.’s initial public offering and 1,000,000 Waldencast plc Warrants
issued in a private placement in connection with the Working Capital Loan with $11.50 strike price. |
(6) |
Waldencast plc Warrants out-of-the-money given exercise price of $11.50; at illustrative pro forma share price of $12.50, warrants would create approximately 2,400,000 shares of incremental dilution (assuming net share settlement). |
B. |
Memorandum and Articles of Association |
The articles of association of the Company
effective as of July 26, 2022 are filed as part of this Report.
Material Contracts Relating to
Waldencast plc’s Operations
Information pertaining to Waldencast
plc’s material contracts is set forth in the Form F-4, in the section titled “Risk Factors,” “Waldencast’s
Management’s Discussion and Analysis of Financial Condition and Results of Operation,” “Obagi’s Management’s
Discussion and Analysis of Financial Condition and Results of Operation,” “Milk’s Management’s Discussion
and Analysis of Financial Condition and Results of Operation,” and “Certain Relationships and Related Person Transactions,”
each of which is incorporated herein by reference.
Material Contracts Relating to
the Business Combination
Transaction Agreements
The description of the Transaction Agreements
in the Form F-4 in the sections titled “BCA Proposal—Obagi Merger Proposal—The Obagi Merger Agreement” and
“BCA Proposal—Milk Transaction Proposal—The Milk Equity Purchase Agreement” is incorporated herein by
reference.
Related Agreements
The description of the material provisions
of certain additional agreements entered into or to be entered into pursuant to the Business Combination Agreement in the Form F-4 in
the section titled “BCA Proposal—Related Agreements” is incorporated herein by reference.
The Credit Agreement, dated June 24,
2022, by and among Waldencast Finco Limited, Waldencast Partners LP, as the parent guarantor, the lenders party thereto and JPMorgan
Chase Bank, N.A., as administrative agent (the “Credit Agreement”) was updated to (a) reflect the amendment and restatement
of the limited partnership agreement of Waldencast LP; and (b) provide that an officer of the general partner of Waldencast LP may execute
documents on Waldencast LP’s behalf, given Waldencast LP does not have officers. A copy of the Credit Agreement is filed as Exhibit
4.31 to this Report and the terms of which are incorporated by reference herein.
There are no governmental laws, decrees,
regulations or other legislation in Jersey that may affect the import or export of capital, including the availability of cash and cash
equivalents for use by the Company, or that may affect the remittance of dividends, interest, or other payments by the Company to non-resident
holders of its ordinary shares. There is no limitation imposed by the laws of Jersey or in the Company’s articles of association
on the right of non-residents to hold or vote shares.
Information pertaining to tax considerations
is set forth in the Form F-4, in the sections titled “U.S. Federal Income Tax Considerations” and “Jersey
Tax Considerations” which is incorporated herein by reference.
F. |
Dividends and Paying Agents |
The Company has never declared or paid
any cash dividends and has no plan to declare or pay any dividends on Waldencast plc Class A ordinary shares in the foreseeable future.
The Company currently intends to retain any earnings for future operations and expansion.
Not applicable.
The Company is subject to certain of
the informational filing requirements of the Exchange Act. Since the Company is a “foreign private issuer,” the Company is
exempt from the rules and regulations under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers,
directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions contained
in Section 16 of the Exchange Act, with respect to their purchase and sale of our shares. In addition, the Company is not required to
file reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under
the Exchange Act. However, we are required to file with the SEC an Annual Report on Form 20-F containing financial statements audited
by an independent accounting firm. The Company may, but is not required, to furnish to the SEC, on Form 6-K, unaudited financial information
after each of our first three fiscal quarters. Information filed with or furnished to the SEC by us will be available on our website.
The SEC also maintains a website at http://www.sec.gov that contains reports and other information that we file with or furnish
electronically with the SEC. You may read and copy any report or document we file, including the exhibits, at the SEC’s public
reference room located at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on
the public reference room.
I. |
Subsidiary Information |
Not applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
The Company is exposed to certain market
risks in the ordinary course of its business, including fluctuations in interest rates, foreign exchange and inflation. Currently, these
risks are not material to the Company’s financial condition or results of operations, but they may be in the future.
Further information regarding quantitative
and qualitative disclosure about market risk is included in the Form F-4 under the sections titled “Obagi’s Management’s
Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative Disclosures About Market
Risk” and “Milk Management’s Discussion and Analysis of Financial Condition and Results of Operations—Qualitative
and Quantitative Disclosures about Market Risk”, which are incorporated herein by reference.
ITEM 12. DESCRIPTION OF SECURITIES
OTHER THAN EQUITY SECURITIES
Warrants
Upon the completion of the Business Combination,
there were 11,500,000 Public Warrants outstanding. The Public Warrants, which entitle the holder to purchase one Waldencast plc
Class A Ordinary Share at an exercise price of $11.50 per share, will become exercisable at any time commencing on the later of
August 26, 2022, which is 30 days after the completion of the Business Combination and March 18, 2022, which is 12 months from the
closing of the Company’s public offering. The Public Warrants will expire on July 27, 2027 (i.e., five years after the
completion of the Business Combination), at 5:00 p.m., New York City time, or earlier upon redemption or liquidation in accordance
with their terms. Upon the completion of the Business Combination, there were also 18,033,332 Private Warrants held by Beauty
Ventures, Burwell and Dynamo Master Fund. The Private Warrants are identical to the Public Warrants in all material respects, except
that the Private Warrants may not, subject to certain limited exceptions, be transferred, assigned or sold until August 26, 2022,
which is 30 days after the completion of the Business Combination.