Oaktree Acquisition Corp. III Life Sciences 10-K

Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities (a) Market Information Our units, Class A ordinary and warrants are each traded on the Nasdaq under the symbols “OACCU,” “OACC” and “OACCW,” respectively. Our units commenced public trading on October 24, 2024. Our Class A ordinary shares and warrants included in the public units began separate trading on December 16, 2024 at the option of the holders thereof. (b) Holders As of the date of this Report, we had one holder of record for our public units, one holder of record for our private placement units, one holder of record for our publicly held Class A ordinary shares, one holder of record for our Class B ordinary shares and one holder of record for our public warrants. (c) Dividends We have not paid any cash dividends on our ordinary shares to date and do not intend to pay cash dividends prior to the completion of our initial business combination even if we have substantial assets outside the trust account. The payment of cash dividends following the completion of our initial business combination will be within the discretion of our board of directors at such time and will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition at such time. There is no certainty we will be in a position to, or decide to, pay cash dividends after completing any business combination. Further, if we incur any indebtedness in connection with our initial business combination, our ability to declare dividends following completion of our initial business combination may be limited by restrictive covenants we may agree to in connection therewith. (d) Securities Authorized for Issuance under Equity Compensation Plans None. (e) Performance Graph Not Applicable. (f) Recent Sales of Unregistered Securities; Use of Proceeds from Registered Offerings Unregistered Sales On July 15, 2024, Oaktree Acquisition Holdings III LS, L.P. paid $25,000 to cover for certain expenses on our behalf in exchange for issuance of 5,031,250 of our Class B ordinary shares, or approximately $0.005 per share. On September 9, 2024, in connection with its dissolution, Oaktree Acquisition Holdings III LS, L.P. transferred the 5,031,250 Class B ordinary shares to Oaktree Acquisition Holdings III LS, LLC, our sponsor, and assigned all its rights and obligation under the securities subscription agreement dated July 15, 2024 to our sponsor. Such securities were issued in connection with our organization and subsequently transferred pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. The number of founder shares issued was determined based on the expectation that such founder shares would represent 20% of the issued and outstanding shares (excluding any private placement shares included in the private placement units purchased by our sponsor) upon completion of our initial public offering. In connection with the partial exercise on October 30, 2024 of the over-allotment option that was granted to the underwriters of our initial public offering, the Company forfeited 231,492 founder shares at no cost to the Company. 86 Table of Contents Our sponsor is an accredited investor for purposes of Rule 501 of Regulation D. Each of the equity holders in our sponsor is an accredited investor under Rule 501 of Regulation D. The sole business of Oaktree Acquisition Holdings III LS, LLC was to act as the company’s sponsor in connection with its initial public offering. Our sponsor also purchased pursuant to a written agreement 583,981 private placement units, at a price of $10.00 per private placement unit, in connection with the closing of our initial public offering. The issuance of the private placement units was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. No underwriting discounts or commissions were paid with respect to such sales. Use of Proceeds Of the gross proceeds received from the initial public offering of our public units, $191,990,290 was placed in the Company’s trust account. The net proceeds of the initial public offering of our public units and certain proceeds from the sale of private placement units to our sponsor that were also deposited in the Company’s trust account may be held in cash, including in demand deposit accounts at a bank, or may be invested in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. In connection with our initial public offering, we paid a total of approximately $3,839,806 in upfront underwriting discounts and commissions to the underwriters of our initial public offering. In addition, the underwriters agreed to defer approximately $6,719,660 in underwriting discounts and commissions until the closing of an initial business combination. There has been no material change in the planned use of proceeds that we described in the final prospectus relating to our initial public offering. For more information on our use of proceeds going forward, also see “ Item 1. Business ” and other sections in this Report for (i) how we plan to effect an initial business combination with the funds deposited in our trust account, (ii) how we plan to use the proceeds held outside of the trust account and interest earned on the funds deposited in our trust account in connection with the search for an initial business combination and our ongoing working capital requirements, and (iii) how we may raise additional funds in connection with the consummation of an initial business combination. For more information, also see “ Item 1A. Risk Factors—Risks Relating to our Search for, and Consummation of, or Inability to Consummate, a Business Combination—If the net proceeds of our initial public offering and the sale of the private placement units not being held in the trust account and funds from our permitted withdrawals are insufficient to allow us to operate for the 24 months following the closing of our initial public offering, it could limit the amount available to fund our search for a target business or businesses and complete our initial business combination, and we will depend on permitted withdrawals and loans from our sponsor or management team to fund our search and to complete our initial business combination. ” (g) Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. Item 6. [Reserved] Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with our audited financial statements and the notes related thereto which are included in “Item 8. Financial Statements and Supplementary Data” of this Report. Certain statements contained in the discussion and analysis set forth below constitute forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Cautionary Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors” and elsewhere in this Report. 87 Table of Contents Overview We are a blank check company incorporated on June 28, 2024 as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities. We intend to effectuate our initial business combination using cash from the proceeds of our initial public offering and the sale of the private placement units to our sponsor in connection with our initial public offering, as well as our shares, debt or a combination of cash, equity and debt. We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a business combination will be successful. Results of Operations We have neither engaged in any operations nor generated any revenues to date. Our only activities from inception to December 31, 2024 were organizational activities, those necessary to prepare for the initial public offering, described below, and, after the initial public offering, identifying a target company for a business combination. We do not expect to generate any operating revenues until after the completion of our business combination. We generate non-operating income in the form of interest income on marketable securities held in the trust account. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with completing a business combination. For the period from June 28, 2024 (inception) through December 31, 2024, we had a net income of $1,331,707, which consists of change on overallotment liability of $94,781 and interest earned on cash held in trust account of $1,588,732, offset by operating costs of $351,806. Liquidity and Capital Resources On October 25, 2024, we completed the initial public offering of 17,500,000 units, at $10.00 per unit, generating proceeds of $175,000,000. Simultaneous with the closing of the initial public offering, we consummated the sale of 550,000 private placement units at a price of $10.00 per private placement unit in a private placement to the sponsor, generating gross proceeds of $5,500,000. Simultaneously with the closing of the partially exercised over-allotment option by the underwriters on October 30, 2024, the sponsor purchased an aggregate of 33,981 private placement units, at a price of $10.00 per private placement unit, for an aggregate purchase price of $339,810. Following the initial public offering, the partial exercise of the over-allotment option, and the sale of the private placement units, a total of $191,990,290 was placed in the trust account. We incurred transaction costs of $11,587,475, consisting of $3,839,806 of cash underwriting fees, $6,719,660 of deferred underwriting fees, and $1,028,009 of other offering costs. For the period from June 28, 2024 (inception) through December 31, 2024, net cash used in operating activities was $89,687. Net income of $1,331,707 was impacted by payment of operation costs through promissory note of $41,160, change on overallotment liability of $94,781 and interest earned on investment securities held in trust account of $1,588,732. Changes in operating assets and liabilities provided $220,959 of cash from operating activities. As of December 31, 2024, we had cash of $193,579,022 held in the trust account. We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account (less permitted withdrawals and deferred underwriting commissions) to complete our business combination. To the extent that our shares or debt is used, in whole or in part, as consideration to complete an initial business combination, the remaining proceeds held in the trust account will be used as working capital to finance the operations of the post-business combination entity, make other acquisitions and pursue our growth strategies. As of December 31, 2024, we had cash of $1,357,044 outside of the trust account. We intend to use the funds held outside the trust account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, properties or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a business combination. 88 Table of Contents In order to fund working capital deficiencies or finance transaction costs in connection with a business combination, our sponsor or an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a business combination, we would repay such loaned amounts. In the event that a business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment. Up to $1,500,000 of such loans are convertible at the option of the lender into private placement units identical to the private placement units sold to our sponsor in connection with our initial public offering, at a conversion price of $10.00 per unit. As described in other parts of this Report, we may make permitted withdrawals from the trust account. Permitted withdrawals are amounts withdrawn or eligible to be withdrawn from our trust account to fund our working capital requirements, subject to an annual limit of $250,000 (plus the rollover of unused amounts from prior years), and/or to pay our taxes (any withdrawals to pay for our taxes (which shall exclude the Excise Tax if any is imposed on us) shall not be subject to the $250,000 annual limitation described in the foregoing); provided that such withdrawals can only be made from interest and not from the principal held in the trust account. Off-Balance Sheet Financing Arrangements We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of December 31, 2024. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets. Contractual Obligations We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay the sponsor for office space, secretarial and administrative services provided to the Company in the amount of $25,000 per month. We began incurring these fees on October 23, 2024 and will continue to incur these fees monthly until the earlier of the completion of the business combination and our liquidation. For more information on the administrative services and indemnification agreement, see “ Item 13. Certain Relationships and Related Transactions, and Director Independence—Certain Relationships and Related Transactions—Administrative Services and Indemnification Agreement .” The underwriters were entitled to an underwriting discount of $0.20 per public unit, or $3,839,806 in the aggregate, $3,500,000 of which were paid on October 25, 2024 and $339,806 of which were paid on October 30, 2024 in connection with the closing of the partially exercised over-allotment option granted to the underwriters of our initial public offering. In addition, in connection with the closing of the initial public offering on October 25, 2024 and the closing of the partially exercised over-allotment option on October 30, 2024, $0.35 per public unit sold, or $6,719,660 in the aggregate will be payable to the underwriters for deferred underwriting commissions. The deferred fee will become payable to the underwriters from the amounts held in the trust account solely in the event that the Company completes a business combination, subject to the terms of the underwriting agreement. Due to the partial exercise of the over-allotment option and forfeiture of the remaining option by the underwriters on October 30, 2024, the Company forfeited 231,492 Founder Shares at no cost to the Company. 89 Table of Contents Critical Accounting Policies The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies: Warrant Instruments The Company accounts for the public warrants and private placement warrants issued in connection with the initial public offering and the private placement in accordance with the guidance contained in FASB ASC Topic 815, “Derivatives and Hedging”. Accordingly, the Company evaluated and recorded the warrant instruments under equity treatment at their assigned values. Such guidance provides that the warrants described above are not precluded from equity classification. Equity-classified contracts are initially measured at fair value (or allocated value). Subsequent changes in fair value are not recognized as long as the contracts continue to be classified in equity in accordance with ASC 480 and ASC 815. Class A Redeemable Share Classification The public shares will contain a redemption feature which allows for the redemption of such public shares in connection with the Company’s liquidation, certain amendments to the Company’s amended and restated memorandum and articles of association or if there is a shareholder vote or tender offer in connection with the Company’s initial business combination. In accordance with ASC 480-10-S99, the Company classifies public shares subject to redemption outside of permanent equity as the redemption provisions are not solely within the control of the Company. The Company recognizes changes in redemption value immediately as they occur and will adjust the carrying value of redeemable shares to equal the redemption value at the end of each reporting period. Immediately upon the closing of the initial public offering, the Company recognized the accretion from initial book value to redemption value. The change in the carrying value of redeemable shares will result in charges against additional paid-in capital (to the extent available) and accumulated deficit. Net Income Per Ordinary Share The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. Net income per ordinary share is computed by dividing net income by the weighted average number of ordinary shares outstanding for the period. The Company has two classes of ordinary shares, which are referred to as Class A ordinary shares and Class B ordinary shares. Income and losses are shared pro rata between the two classes of shares. Accretion associated with the redeemable shares of Class A ordinary shares is excluded from earnings per share as the redemption value approximates fair value. Recent Accounting Pronouncements Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statement. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this ASU require disclosures, on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating officer decision maker (“CODM”), as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. The ASU requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. Public entities will be required to provide all annual disclosures currently required by Topic 280 in interim periods, and entities with a single reportable segment are required to provide all the disclosures required by the amendments in this ASU and existing segment disclosures in Topic 280. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item. 90 Table of Contents