10-Q: Live Oak V Reports Q2 Net Income, Continues SPAC Search

Live Oak Acquisition Corp. V reported a net income of $2.1 million for the second quarter of 2025, while actively seeking a business combination target.

Summary

• Live Oak Acquisition Corp. V (LOKV) is a blank check company formed to effect a business combination, having commenced its Initial Public Offering (IPO) on March 3, 2025.
• The company consummated its IPO of 23,000,000 units at $10.00 per unit, generating gross proceeds of $230,000,000, including the full exercise of the over-allotment option.
• Simultaneously, 4,500,000 Private Placement Warrants were sold to the Sponsor at $1.00 per warrant, generating $4,500,000.
• A total of $231,150,000 was placed in a Trust Account following the IPO and private placement, which had grown to $234,310,386 by June 30, 2025, due to interest income.
• For the three months ended June 30, 2025, the company reported a net income of $2,098,161, primarily from $2,442,453 in interest earned on marketable securities in the Trust Account, offset by $344,292 in general and administrative costs.
• For the six months ended June 30, 2025, the company reported a net loss of $4,205,602, which included $7,365,988 in operating costs and $3,160,386 in interest income.
• Transaction costs for the IPO amounted to $7,723,148, comprising a $250,000 cash underwriting fee, $6,900,000 deferred underwriting fee, and $573,148 in other offering costs.
• The company has until December 3, 2026 (or March 3, 2027, under certain conditions) to complete an initial Business Combination.
• As of June 30, 2025, cash and cash equivalents outside the Trust Account totaled $2,177,539.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive. While the company reported a net loss for the six-month period, it achieved a net income in the most recent quarter due to strong interest earnings on its Trust Account. The Trust Account value has grown, and the company is actively pursuing its business combination objective within the defined timeframe. The management change is minor, and the capital raise potential is a standard SPAC feature. The primary uncertainty remains the successful identification and completion of a business combination.

Positives

• Reported a net income of $2,098,161 for the three months ended June 30, 2025, driven by interest income.
• Generated significant interest income of $2,442,453 in Q2 2025 and $3,160,386 for the six months ended June 30, 2025, from funds held in the Trust Account.
• Successfully completed its Initial Public Offering and private placement, raising substantial capital for its business combination objective.
• The Trust Account balance has increased to $234,310,386 as of June 30, 2025, exceeding the initial deposit of $231,150,000, providing more capital for a potential business combination.

Negatives

• Incurred a net loss of $4,205,602 for the six months ended June 30, 2025, primarily due to operating costs and deferred advisory fees.
• Significant deferred underwriting and advisory fees totaling $13,800,000 are payable upon the completion of a business combination, which will reduce available funds.
• The company has not yet identified or completed a business combination, facing a deadline of December 3, 2026 (or March 3, 2027, with extension).
• Operating costs for the six months ended June 30, 2025, were $7,365,988, indicating ongoing expenses without an operating business.

Risks

• Ability to complete an initial Business Combination may be adversely affected by factors beyond control, including changes in laws or regulations, financial market downturns, economic conditions, inflation, interest rate fluctuations, tariffs, supply chain disruptions, declines in consumer confidence and spending, public health considerations, and geopolitical instability.
• Risk of being deemed an investment company under the Investment Company Act of 1940, which increases the longer investments are held in the Trust Account.
• Failure to meet the Nasdaq 36-Month Requirement to complete an initial Business Combination could lead to suspension of trading and delisting from Nasdaq.
• The proceeds deposited in the Trust Account could become subject to claims of creditors, which could have priority over public shareholders' claims.
• The Sponsor's ability to satisfy indemnity obligations for third-party claims against the Trust Account is not assured, as their only assets are believed to be company securities.

Future Outlook

The company intends to use funds outside the Trust Account to identify and evaluate target businesses, perform due diligence, and negotiate a Business Combination. It may need additional financing to complete a Business Combination or if a significant number of Public Shares are redeemed. The company may extend the Combination Period, subject to shareholder approval and Nasdaq rules, and may liquidate Trust Account investments into cash to mitigate investment company risk.

Management Comments

• Management believes the company will not need to raise additional funds to meet operating expenditures, but acknowledges potential insufficiency if target identification and due diligence costs exceed estimates.
• Management states that the company's only activities since inception have been organizational, relating to the IPO, and identifying/evaluating prospective acquisition candidates.

Industry Context

Live Oak Acquisition Corp. V operates as a Special Purpose Acquisition Company (SPAC) in a competitive market for identifying and acquiring private companies. The current financial environment, characterized by potential fluctuations in interest rates and economic conditions, could impact the availability and valuation of suitable target businesses. The company's performance, as a pre-combination SPAC, is primarily measured by its ability to preserve and grow its Trust Account assets through interest income, while managing operating expenses, and ultimately, its success in identifying and closing a qualifying business combination within the stipulated timeframe. The resignation of a director could be a minor governance concern, but typical for a SPAC in its early stages.

Comparison to Industry Standards

• The interest earned on the Trust Account, approximately $3.16 million for the six months ended June 30, 2025, reflects the prevailing short-term interest rates on U.S. government treasury obligations or money market funds, which is standard practice for SPACs to preserve capital.
• The initial per-unit value of $10.00 and the redemption value of $10.19 per share as of June 30, 2025, indicates a modest appreciation in the Trust Account value, which is generally in line with market expectations for SPACs investing in low-risk assets.
• The deferred underwriting fee of $6,900,000 (3.0% of gross proceeds) and an advisory fee of $6,900,000 (3.0% of gross proceeds) are within the typical range of fees paid by SPACs to underwriters and advisors, such as those seen in comparable SPAC IPOs like Churchill Capital Corp. IV or Gores Holdings VIII, which often feature similar fee structures upon business combination completion.

Management Changes

Corporate Governance

Related Party Transactions

• The Sponsor (Live Oak Sponsor V, LLC) initially contributed $25,000 for 5,750,000 founder shares.
• The Sponsor purchased 4,500,000 Private Placement Warrants for $4,500,000.
• The Sponsor loaned the company up to $300,000 via an IPO Promissory Note, which has been repaid ($176,573 outstanding balance repaid as of June 30, 2025).
• The company pays the Sponsor or an affiliate $17,500 per month for office space, utilities, and administrative support, with $52,500 incurred and paid for the three and six months ended June 30, 2025.
• The Sponsor or affiliates may provide Working Capital Loans up to $1,500,000, convertible into Private Placement Warrants.

Stakeholder Impact

• Shareholders: Public shareholders benefit from the growth of the Trust Account due to interest income, increasing their potential redemption value. However, they face the risk of the company failing to complete a business combination or significant redemptions reducing the capital available for a target.
• Sponsor: The Sponsor holds founder shares and Private Placement Warrants, which gain value upon a successful business combination. They also provide administrative services and potential working capital loans.
• Underwriters and Advisors: Entitled to significant deferred fees ($13.8 million combined) upon the completion of a business combination, aligning their interests with a successful transaction.

Next Steps

• Identify and evaluate target businesses for a Business Combination.
• Perform business due diligence on prospective target businesses.
• Structure, negotiate, and complete a Business Combination.
• Potentially seek shareholder approval to extend the Combination Period if needed.
• File a post-effective amendment to the registration statement or a new registration statement covering Class A ordinary shares issuable upon warrant exercise after a Business Combination.

Key Dates

Keywords

SPAC, Live Oak Acquisition Corp. V, LOKV, 10-Q, Quarterly Report, Business Combination, Trust Account, IPO, Warrants, Financial Results, SEC Filing