References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to CleanTech Acquisition Corp. References to our "management" or
our "management team" refer to our officers and directors, references to the
"Sponsor" refer to CleanTech Sponsor, and references to the "Co-Sponsor" refer
to CleanTech Investments. The following discussion and analysis of the Company's
financial condition and results of operations should be read in conjunction with
the unaudited condensed consolidated financial statements and the notes thereto
contained elsewhere in this Quarterly Report. Certain information contained in
the discussion and analysis set forth below includes forward-looking statements
that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" that are not
historical facts and involve risks and uncertainties that could cause actual
results to differ materially from those expected and projected. All statements,
other than statements of historical fact included in this Quarterly Report
including, without limitation, statements in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" regarding the
Company's financial position, business strategy and the plans and objectives of
management for future operations, are forward-looking statements. Words such as
"expect," "believe," "anticipate," "intend," "estimate," "seek" and variations
and similar words and expressions are intended to identify such forward-looking
statements. Such forward-looking statements relate to future events or future
performance, but reflect management's current beliefs, based on information
currently available. A number of factors could cause actual events, performance
or results to differ materially from the events, performance and results
discussed in the forward-looking statements. For information identifying
important factors that could cause actual results to differ materially from
those anticipated in the forward-looking statements, please refer to the Risk
Factors section of the Company's final prospectus for its Initial Public
Offering (as defined below) filed with the U.S. Securities and Exchange
Commission (the "SEC"). The Company's securities filings can be accessed on the
EDGAR section of the SEC's website at www.sec.gov. Except as expressly required
by applicable securities law, the Company disclaims any intention or obligation
to update or revise any forward-looking statements whether as a result of new
information, future events or otherwise.
Overview
We are a blank check company incorporated on June 18, 2020 as a Delaware
corporation and formed for the purpose of effectuating a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses, which we refer to throughout this
Quarterly Report as our "initial business combination". We intend to effectuate
our initial business combination using cash from the proceeds of our initial
public offering (the "Initial Public Offering") and the private placement of the
Private Placement Warrants (as defined below), the proceeds of the sale of our
shares in connection with our initial business combination (pursuant to forward
purchase agreements or backstop agreements we may enter into following the
consummation of the Initial Public Offering or otherwise), shares issued to the
owners of the target, debt issued to bank or other lenders or the owners of the
target, or a combination of the foregoing.
Business Combination Agreement
On December 16, 2021, the Company entered into an Agreement and Plan of Merger,
as amended on January 30, 2022 through Amendment No. 1 (the "Merger Agreement,"
and together with the other agreements and transactions contemplated by the
Merger Agreement, the "Business Combination") with CleanTech Merger Sub, Inc., a
Delaware corporation and a wholly owned subsidiary of CleanTech ("Merger Sub"),
and Nauticus Robotics, Inc., a Texas corporation ("Nauticus"). Pursuant to the
terms of the Merger Agreement, a business combination between CleanTech and
Nauticus will be effected through the merger of Merger Sub with and into
Nauticus, with Nauticus surviving the merger as a wholly owned subsidiary of
CleanTech (the "Merger"). The Board of Directors of CleanTech (the "Board") has
unanimously (i) approved and declared advisable the Merger Agreement, the Merger
and the other transactions contemplated thereby and (ii) resolved to recommend
approval of the Merger Agreement and related matters by the stockholders of
CleanTech.
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Preferred Stock. Immediately prior to the Effective Time, each share of Nauticus
Preferred Stock that is issued and outstanding immediately prior to such time
shall automatically convert into shares of Nauticus Common stock, par value
$0.01 per share (the "Nauticus Common Stock"), in accordance with its
Certificate of Incorporation (collectively, the "Nauticus Preferred Stock
Conversion"). An aggregate of 15,062,524 shares of CLAQ Common Stock will be
issued to the holders of Nauticus Preferred Stock.
Convertible Notes. Immediately prior to the Effective Time, each of (i) that
certain Unsecured Convertible Promissory Note, dated June 19, 2021, by and
between Goradia Capital, LLC and Nauticus, as amended on December 16, 2021, (ii)
that certain Unsecured Convertible Promissory Note, August 3, 2021, by and
between Material Impact Fund II, L.P. and Nauticus, as amended on December 16,
2021, (iii) that certain Unsecured Convertible Promissory Note, dated October
22, 2021, by and between In-Q-Tel, Inc. and Nauticus, as amended on December 16,
2021, (iv) that certain Unsecured Convertible Promissory Note, dated July 28,
2020, by and between Schlumberger Technology Corporation and Nauticus, as
amended on December 16, 2021, and (v) that certain Unsecured Convertible
Promissory Note, dated December 7, 2020, by and between Transocean Inc. and
Nauticus, as amended on December 16, 2021 (each, a "Nauticus Convertible Note"
and collectively, the "Nauticus Convertible Notes") shall automatically convert
into shares of Nauticus Common Stock in accordance with the terms of each such
Nauticus Convertible Note (collectively, the "Nauticus Convertible Notes
Conversion"). An aggregate of 5,299,543 shares of CLAQ Common Stock will be
issued to the holders of Nauticus Convertible Notes.
Common Stock. At the Effective Time, following the Nauticus Preferred Stock
Conversion and Nauticus Convertible Notes Conversion, each share of Nauticus
Common Stock (including shares of Nauticus Common Stock outstanding as a result
of the Nauticus Preferred Stock Conversion and Nauticus Convertible Notes
Conversion, but excluding shares of the holders of which perfect rights of
appraisal under Delaware law) will be converted into the right to receive the
applicable Per Share Merger Consideration (as defined below) and the Earnout
Shares (as defined below). An aggregate of 9,669,216 shares of CLAQ Common Stock
will be issued to the holders of Nauticus Common Stock.
Stock Options. At the Effective Time, each outstanding option to purchase shares
of Nauticus Common Stock (a "Nauticus Option"), whether or not then vested and
exercisable, will be assumed by CLAQ and converted automatically (and without
any required action on the part of such holder of outstanding option) into an
option to purchase shares of the CLAQ's Common Stock equal to the number of
shares determined by multiplying the number of shares of the Nauticus Common
Stock subject to such Nauticus Option immediately prior to the Effective Time by
the Exchange Ratio (as defined below), which product shall be rounded down to
the nearest whole number of shares, at a per share exercise price determined by
dividing the per share exercise price of such Nauticus Option immediately prior
to the Effective Time by the Exchange Ratio. Options to purchase an aggregate of
4,055,704 shares of CLAQ Common Stock will be issued to the holders of Nauticus
Options.
Earnout Shares. Following the closing of the merger, former holders of shares of
Nauticus Common Stock (including shares received as a result of the Nauticus
Preferred Stock conversion and the Nauticus Convertible Notes conversion) shall
be entitled to receive their pro rata share of up to 7,500,000 additional shares
of CleanTech Common Stock (the "Earnout Shares") if, within a 5-year period
following the signing date of the Merger Agreement, the closing share price of
the CleanTech Common Stock equals or exceeds any of three thresholds over any 20
trading days within a 30-day trading period (each, a "Triggering Event") .
28
i. one-half of the Escrow Shares will be released if, within a 5-year period
following the signing date of the Merger Agreement, the volume-weighted
average price of the Combined Company Common Stock equals or exceeds $15.00
per share over any 20 trading days within a 30-day trading period;
ii. one-quarter of the Escrow Shares will be released if, within a 5-year period
following the signing date of the Merger Agreement, the volume-weighted
average price of the Combined Company Common Stock equals or exceeds $17.50
per share over any 20 trading days within a 30-day trading period; and
iii. one-quarter of the Escrow Shares will be released if, within a 5-year period
following the signing date of the Merger Agreement, the volume-weighted
average price of the Combined Company Common Stock equals or exceeds $20.00
per share over any 20 trading days within a 30-day trading period.
On or about December 14, 2021, the Company entered into subscription agreements,
with certain investors pursuant to which, among other things, the Company agreed
to issue and sell, in a private placement to close immediately prior to the
closing of the Business Combination, an aggregate of 3,530,000 shares of common
stock for $10.00 per share for a total of $35,300,000 (the "Equity Financing").
On December 16, 2021, the Company entered into a Securities Purchase Agreement
(as further described below) with certain investors purchasing up to an
aggregate of $40,000,000 in principal amount of secured debentures (the
"Debentures") and warrants (the "Warrants") with an exercise price of $20.00
substantially concurrently with the closing of the Business Combination (the
"Debt Financing," and together with the Equity Financing, the "PIPE
Investment"). As of June 30, 2022, ATW Special Situations I LLC ("ATW") is the
only purchaser and has subscribed for Debentures in the aggregate principal
amount of $37,959,184 and associated warrants for 3,036,735 shares of the
Combined Company's common stock. ATW is managed by ATW Partners Opportunities
Management, LLC, which is an affiliate of Chardan Capital Markets, LLC
("Chardan"), and the Company's director, Mr. Jonas Grossman, is the Managing
Partner and President of Chardan. Chardan will not receive any fees or
compensation for ATW's participation in the Debt Financing.
It is anticipated that upon completion of the Business Combination, CLAQ's
public stockholders (other than the PIPE Investment investors) would retain an
ownership interest of approximately 28.5% in the Combined Company, the PIPE
Investment investors will own approximately 5.6% of the Combined Company (such
that the public stockholders, including the PIPE Investment investors, would own
approximately 34.1% of the Combined Company), the Co-Sponsors, officers,
directors and other holders of founder shares will retain an ownership interest
of approximately 6.8% of the Combined Company and the Nauticus stockholders will
own approximately 59.1% (including the 7,500,000 Earnout Shares) of the Combined
Company. The ownership percentage with respect to the Combined Company does not
take into account (i) the redemption of any shares by the CLAQ's public
stockholders or (ii) the issuance of any additional shares upon the closing of
the Business Combination under the 2015 Equity Incentive Plan. If the actual
facts are different from these assumptions (which they are likely to be), the
percentage ownership retained by the CLAQ stockholders will be different. See
"Unaudited Pro Forma Condensed Combined Financial Information."
The Merger Agreement contains customary representations and warranties of the
parties thereto with respect to, among other things, (a) entity organization,
good standing and qualification, (b) capital structure, (c) authorization to
enter into the Merger Agreement, (d) compliance with laws and permits, (e)
taxes, (f) financial statements and internal controls, (g) real and personal
property, (h) material contracts, (i) environmental matters, (j) absence of
changes, (k) employee matters, (l) litigation, and (m) brokers and finders.
The Merger Agreement includes customary covenants of the parties with respect to
operation of their respective businesses prior to consummation of the Merger and
efforts to satisfy conditions to consummation of the Merger. The Merger
Agreement also contains additional covenants of the parties, including, among
others, covenants providing for CleanTech and Nauticus to use reasonable best
efforts to cooperate in the preparation of the Registration Statement and Proxy
Statement (as each such term is defined in the Merger Agreement) required to be
filed in connection with the Merger and to obtain all requisite approvals of
their respective stockholders including, in the case of CleanTech, approvals of
the restated certificate of incorporation, the share issuance under Nasdaq rules
and the omnibus incentive plan. CleanTech has also agreed to include in the
Proxy Statement the recommendation of its board that stockholders approve all of
the proposals to be presented at the special meeting.
29
CleanTech has agreed to approve and adopt a 2022 omnibus incentive plan (the
"Incentive Plan") to be effective as of the Closing and in a form mutually
acceptable to CleanTech and Nauticus. The Incentive Plan shall provide for an
initial aggregate share reserve equal to 5% of the number of shares of CleanTech
Common Stock on a fully diluted basis at the Closing. Subject to approval of the
Incentive Plan by the CleanTech's stockholders, CleanTech has agreed to file a
Form S-8 Registration Statement with the SEC following the Effective Time with
respect to the shares of CleanTech Common Stock issuable under the Incentive
Plan.
Each of CleanTech and Nauticus has agreed that from the date of the Merger
Agreement to the Effective Time or, if earlier, the valid termination of the
Merger Agreement in accordance with its terms, it will not initiate any
negotiations with any party, or provide non-public information or data
concerning it or its subsidiaries to any party relating to an Acquisition
Proposal or Alternative Transaction (as such terms are defined in the Merger
Agreement) or enter into any agreement relating to such a proposal. Each of
CleanTech and Nauticus has also agreed to use its reasonable best efforts to
prevent any of its representatives from doing the same.
The consummation of the Merger is conditioned upon, among other things, (i)
receipt of the CleanTech stockholder approval and Nauticus stockholder approval,
(ii) the expiration or termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) the
absence of any governmental order, statute, rule or regulation enjoining or
prohibiting the consummation of the Transactions, (iv) the effectiveness of the
Registration Statement under the Securities Act, (v) CleanTech having at least
$5,000,001 of net tangible assets (as determined in accordance with Rule
3a51-1(g)(1) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), (vi) solely with respect to CleanTech, (A) the representations and
warranties of Nauticus being true and correct to applicable standards applicable
and each of the covenants of Nauticus having been performed or complied with in
all material respects and (B) the approval of the conversion of the convertible
notes and (vii) solely with respect to Nauticus, (A) the representations and
warranties of CleanTech being true and correct to applicable standards
applicable and each of the covenants of CleanTech having been performed or
complied with in all material respects (B) the receipt of the approval for
listing by Nasdaq of the shares of CleanTech Common Stock to be issued in
connection with the transactions contemplated by the Merger Agreement, (C) the
effective resignations of certain directors and executive officers of CleanTech,
(D) the amount of Minimum Cash Condition (as defined in the Merger Agreement)
being equal to or exceeding $50,000,000.
On June 6, 2022, the Parties to the Merger Agreement entered into Amendment No.
2 to the Merger Agreement (the "Amendment") pursuant to which the Parties agreed
to increase the aggregate number of shares of the Post-Combination Company's
Common Stock to be reserved for issuance under its Incentive Plan from 5% to 10%
of the fully diluted outstanding shares of its Common Stock immediately after
Closing, which share reserve shall be automatically increased on an annual basis
by 3% of the total number of Common Stock outstanding as provided under the
Incentive Plan. The foregoing description of the Amendment does not purport to
be complete and is qualified in its entirety by the terms and conditions of the
Amendment, which is filed as Exhibit 2.1 hereto and incorporated by reference
herein.
Results of Operations
We have neither engaged in any operations nor generated any operating revenues
to date. Our only activities for the three and six months ended June 30, 2022
and 2021 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
initial business combination. We generate non-operating income in the form of
interest income on cash and cash equivalents held after the Initial Public
Offering. 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.
30
For the three months ended June 30, 2022, we had net loss of $795,831, which
resulted from a change in fair value of warrant liabilities of $503,750, a net
gain on investments held in Trust Account in the amount of $235,270, which was
partially offset by operating costs of $1,446,459, franchise tax expense of
$76,033, and income tax expense of $12,359.
For the six months ended June 30, 2022, we had net income of $1,155,839, which
resulted from a change in fair value of warrant liabilities of $2,917,250, a net
gain on investments held in Trust Account in the amount of $252,815, which was
partially offset by operating costs of $1,905,106, franchise tax expense of
$96,761, and income tax expense of $12,359.
For the three and six months ended June 30, 2021, there was no activity in
relation to the Company's operations.
Liquidity and Capital Resources
As of June 30, 2022 and December 31, 2021, the Company had $172,785 and $518,905
in cash held outside of the Trust Account, respectively, a working capital
deficit of $1,755,090 and surplus of $259,136, respectively.
The Company's liquidity needs prior to the consummation of the Initial Public
Offering were satisfied through the proceeds of $25,000 from the sale of the
Founder Shares, and a loan of up to $250,000 under an unsecured and non-interest
bearing promissory note. Subsequent to the consummation of the Initial Public
Offering, the Company's liquidity will be satisfied through the net proceeds
from the private placement held outside of the Trust Account.
In addition, in order to finance transaction costs in connection with a Business
Combination, our Sponsor or an affiliate of the Sponsor, or certain of our
officers and directors may, but are not obligated to, loan us funds as may be
required ("Working Capital Loans"). As of June 30, 2022 and December 31, 2021,
there were no amounts outstanding under any Working Capital Loan.
For the six months ended June 30, 2022, net cash used in operating activities
was $746,453, which was due to a net gain on investments in the Trust Account of
$252,815, the change in the fair value of warrant liabilities of $2,917,250,
offset in part by our net income of $1,155,839 and changes in operating assets
and liabilities of $1,267,773.
For the six months ended June 30, 2022, net cash provided by financing
activities was $400,333, which was fully comprised of proceeds from the related
party promissory notes.
For the six months ended June 30, 2022, there was no net cash provided by or
used in investing activities.
For the six months ended June 30, 2021, there was no net cash provided by or
used in operating activities, investing activities or financing activities.
We have incurred and expect to continue to incur significant costs in pursuit of
our acquisition plans. We may have insufficient funds available to operate our
business prior to our initial business combination. Moreover, we may need to
obtain additional financing either to complete our business combination or
because we become obligated to redeem a significant number of public shares upon
completion of our business combination, in which case we may issue additional
securities or incur debt in connection with such business combination. These
conditions raise substantial doubt about our ability to continue as a going
concern for a period of time within one year after the date that the
accompanying condensed financial statements are issued.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of June 30, 2022 or
December 31, 2021.
31
Contractual Obligations
Promissory Note - Related Party
On March 1, 2021, the Company issued an unsecured promissory note to the Sponsor
(the "Promissory Note"), pursuant to which the Company could borrow an aggregate
of up to $250,000 to cover expenses related to the Initial Public Offering. The
Promissory Note was non-interest bearing and is payable on the earlier of
Promptly after the date on which the Company consummates an Initial Public
Offering of its securities or (ii) the completion of the Initial Public
Offering. The outstanding balance under the Promissory Note of $188,302 was
repaid on July 23, 2021. The promissory note is no longer available to the
Company.
On March 23, 2022, the Company entered into a Promissory Note with the Sponsor
(the "Second Promissory Note") to which the Company could borrow up to an
aggregate of $267,000. The Second Promissory Note is non-interest bearing and
payable upon the earlier of (i) completion of the initial Business Combination
or (ii) the date on which the Company determines that it is unable to effect a
Business Combination. As June 30, 2022, the outstanding balance under the Second
Promissory Note was $267,000.
On May 5, 2022, the Company entered into a Promissory Note with the Sponsor (the
"Third Promissory Note") to which the Company could borrow up to an aggregate of
$133,333. The Third Promissory Note is non-interest bearing and payable upon the
earlier of (i) completion of the initial Business Combination or (ii) the date
on which the Company determines that it is unable to effect a Business
Combination. As June 30, 2022, the outstanding balance under the Third
Promissory Note was $133,333.
Underwriter's Agreement
The Company granted the underwriter a 45-day option to purchase up to 2,250,000
additional Units to cover over-allotments at the Initial Public Offering price,
less the underwriting discounts and commissions. On July 28, 2021, the
Underwriters exercised the over-allotment option in full and purchased an
additional 2,250,000 Units for an aggregate purchase price of $22,500,000.
In connection with the closing of the Initial Public Offering and subsequent
exercise of the over-allotment option, the underwriter was paid a cash
underwriting fee of $0.20 per Unit, or $3,450,000 in the aggregate.
Related Party Extension Loans
The Company may extend the period of time to consummate a Business Combination
up to two times, each by an additional three months (for a total of 18 months to
complete a Business Combination). In order to extend the time available for the
Company to consummate a Business Combination, without the need for a separate
stockholder vote, is for the Company's initial stockholders or their affiliates
or designees, upon five days' advance notice prior to the application deadline,
to deposit into the trust account $1,500,000 or $1,725,000 if the underwriters'
over-allotment option is exercised in full ($0.10 per public share, or an
aggregate of $3,000,000 (or $3,450,000 if the over-allotment option is exercised
in full) if extended for each of the full three months), on or prior to the date
of the application deadline. In the event that the stockholders, or affiliates
or designees, elect to extend the time to complete the Company's initial
business combination and deposit the applicable amount of money into trust, the
initial stockholders will receive a non-interest bearing, unsecured promissory
note equal to the amount of any such deposit that will not be repaid in the
event that the Company is unable to close a business combination unless there
are funds available outside the trust account to do so. Such note would be paid
upon consummation of the Company's initial Business Combination.
32
Critical Accounting Policies
The preparation of unaudited condensed consolidated 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 unaudited
condensed consolidated 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:
Derivative Warrant Liabilities
The Company accounts for warrants as either equity-classified or
liability-classified instruments based on an assessment of the warrant's
specific terms and applicable authoritative guidance in ASC 480, Distinguishing
Liabilities from Equity ("ASC 480"), and ASC 815, Derivatives and Hedging ("ASC
815"). The assessment considers whether the warrants are freestanding financial
instruments pursuant to ASC 480, meet the definition of a liability pursuant to
ASC 480, and whether the warrants meet all of the requirements for equity
classification under ASC 815, including whether the warrants are indexed to the
Company's own Common Stock, among other conditions for equity classification.
This assessment, which requires the use of professional judgment, is conducted
at the time of warrant issuance and as of each subsequent quarterly period end
date while the warrants are outstanding.
The Company evaluates its financial instruments to determine if such instruments
are derivatives or contain features that qualify as embedded derivatives in
accordance with ASC Topic 815, Derivatives and Hedging. For derivative financial
instruments that are accounted for as liabilities, the derivative instrument is
initially recorded at its fair value on the grant date and is then re-valued at
each reporting date, with changes in the fair value reported in the consolidated
statements of operations. The classification of derivative instruments,
including whether such instruments should be recorded as liabilities or as
equity, is evaluated at the end of each reporting period. Derivative liabilities
are classified in the balance sheet as current or non-current based on whether
or not net-cash settlement or conversion of the instrument could be required
within 12 months of the balance sheet date.
For issued or modified warrants that meet all of the criteria for equity
classification, the warrants are required to be recorded as a component of
additional paid-in capital at the time of issuance. For issued or modified
warrants that do not meet all the criteria for equity classification, the
warrants are required to be recorded at their initial fair value on the date of
issuance, and each balance sheet date thereafter. For the initial valuation, the
Company utilized a Monte Carlo simulation model for the initial valuation of the
Public Warrants, and the publicly-traded value for the subsequent valuation of
the Public Warrants. Changes in the estimated fair value of the warrants are
recognized as a non-cash gain or loss on the consolidated statements of
operations. The fair value of the Private Placement Warrants was estimated using
a Black-Scholes Option Pricing Model (see Note 10). The subsequent measurement
of the Public Warrants as of June 30, 2022 and December 31, 2021 is classified
as Level 1, as such, an observable market quote in an active market under the
ticker CLAQW was used.
Common stock subject to possible redemption
The Company accounts for its Common Stock subject to possible redemption in
accordance with the guidance in ASC Topic 480, Distinguishing Liabilities from
Equity. Common Stock subject to mandatory redemption (if any) is classified as
liability instruments and are measured at fair value. Conditionally redeemable
Common Stock (including Common Stock that feature redemption rights that are
either within the control of the holder or subject to redemption upon occurrence
of uncertain events not solely within the Company's control) are classified as
temporary equity. At all other times, Common Stock are classified as
stockholders' equity. The Company's Common Stock feature certain redemption
rights that are considered to be outside of the Company's control and subject to
the occurrence of uncertain future events. Accordingly, as of June 30, 2022 and
December 31, 2021, 17,250,000 Common Stock subject to possible redemption are
presented as temporary equity, outside of the stockholders' deficit section of
the Company's balance sheet. Effective with the closing of the Initial Public
Offering, the Company recognized the accretion from the initial book value to
redemption amount, which resulted in charges against additional paid-in capital
(to the extent available) and accumulated deficit.
The Company recognizes changes in redemption value immediately as they occur and
adjusts the carrying value of redeemable Common Stock to equal the redemption
value at the end of each reporting period. This method would view the end of the
reporting period as if it were also the redemption date for the security.
Increases or decreases in the carrying amount of redeemable Common Stock are
affected by charges against additional paid in capital and accumulated deficit.
33
Net income (loss) Per Share of Common Stock
Net income (loss) per share of common stock is computed by dividing net earnings
by the weighted-average number of shares of common stock outstanding during the
period (for all periods during which these shares were subject to forfeiture,
the calculation of weighted average shares outstanding excludes an aggregate of
562,500 shares of common stock held by the Sponsor that were subject to
forfeiture). The Company has not considered the effect of the Warrants sold in
the Initial Public Offering and private placement to purchase an aggregate of
15,800,000 shares in the calculation of diluted income per share, since the
exercise of the Warrants are contingent upon the occurrence of future events and
the inclusion of such Warrants would be anti-dilutive.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on the
Company's condensed consolidated financial statements.
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