References to the "Company," "
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report includes, and oral statements made from time to time by
representatives of the Company may include, forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Exchange Act and are intended to be covered by the safe
harbor created thereby. The Company has based these forward-looking statements
on management's current expectations, projections and forecasts about future
events. These forward-looking statements are subject to known and unknown risks,
uncertainties and assumptions about the Company that may cause its actual
business, financial condition, results of operations, performance and/or
achievements to be materially different from any future business, financial
condition, results of operations, performance and/or achievements expressed or
implied by these forward-looking statements. Factors that might cause or
contribute to such a discrepancy include, but are not limited to, those
described in the Company's other filings with the
Overview
We are a blank check company originally incorporated in
As of
Results of Operations
We have not generated any revenues to date, and we will not be generating any
operating revenues until the closing and completion of our initial Business
Combination. Our entire activity up to
For the three months ended
For the six months ended
21
Table of Contents
Liquidity and Capital Resources
Until the consummation of the Initial Public Offering, our only source of liquidity was an initial sale of the Founder Shares to the Sponsor.
On
Concurrently with the consummation of the Initial Public Offering, we
consummated the Private Placement of an aggregate of 7,250,000 Private Placement
Warrants to the Sponsor at a price of
We presently have no operating revenue. Our net income was
In order to finance transaction costs in connection with a Business Combination,
the Sponsor or an affiliate of the Sponsor, or certain of the Company's
executive officers and directors may, but are not obligated to, loan the Company
funds as may be required (the "Working Capital Loans"). The Working Capital
Loans would be evidenced by promissory notes. The notes may be repaid upon
completion of a Business Combination, without interest or, at the lender's
discretion, up to
We may also need to obtain additional financing either to complete an initial Business Combination or because we become obligated to redeem a significant number of shares of the Class A Common Stock upon completion of the Business Combination, in which case we may issue additional capital stock, debt or a combination of the foregoing in connection with the initial Business Combination.
22 Table of Contents
Liquidity and Management's Plan
In connection with our assessment of going concern considerations in accordance with ASU 2014-15, "Disclosures of Uncertainties about an Entity's Ability to Continue as a Going Concern," our management believes that the funds which we have available following the completion of the Initial Public Offering will enable us to sustain operations for a period of at least one (1) year from the issuance date of these financial statements. Accordingly, substantial doubt about our ability to continue as a going concern as disclosed in previously issued financial statements has been alleviated.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with US GAAP requires our 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 condensed financial statements and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following as our critical accounting policies:
Class A Common Stock Subject to Possible Redemption
We account for our common stock subject to possible redemption in accordance
with the guidance enumerated in ASC 480, "Distinguishing Liabilities from
Equity." Common stock subject to mandatory redemption is classified as a
liability instrument and is measured at fair value. Conditionally redeemable
shares of common stock (including shares of common stock that feature redemption
rights that are either within the control of the holder or subject to redemption
upon the occurrence of uncertain events not solely within the issuer's control)
are classified as temporary equity. At all other times, shares of common stock
are classified as stockholders' equity. The Class A Common Stock features
certain redemption rights that are considered by us to be outside of our control
and subject to the occurrence of uncertain future events. Accordingly, as of
Net Income per Common Share
Net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period, excluding shares of common stock subject to forfeiture. The Company has not considered the effect of the Public Warrants sold in the Initial Public Offering and the Private Placement Warrants sold in the Private Placement to purchase an aggregate of 16,000,000 shares of the Class A Common Stock in the calculation of diluted loss per share, since the inclusion of such Warrants would be anti-dilutive.
The Company's condensed statements of operations include a presentation of net income per share for common stock subject to possible redemption in a manner similar to the two-class method of net income per share. Net income per common share, basic and diluted, for common stock subject to possible redemption is calculated by dividing the proportionate share of income or loss on marketable securities held in the Trust Account, net of applicable franchise and income taxes, by the weighted average number of shares of common stock subject to possible redemption outstanding since original issuance.
Net income per share, basic and diluted, for non-redeemable common stock is calculated by dividing the net income, adjusted for income or loss on marketable securities attributable to common stock subject to possible redemption, by the weighted average number of non-redeemable common stock outstanding for the period.
Non-redeemable common stock includes the Founder Shares and non-redeemable shares of common stock as these shares do not have any redemption features. Non-redeemable common stock participates in the income or loss on marketable securities based on non-redeemable shares' proportionate interest.
23 Table of Contents Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. US GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
? Level 1-defined as observable inputs such as quoted prices (unadjusted) for
identical instruments in active markets;
Level 2-defined as inputs other than quoted prices in active markets that are
? either directly or indirectly observable, such as quoted prices for similar
instruments in active markets or quoted prices for identical or similar
instruments in markets that are not active; and
Level 3-defined as unobservable inputs in which little or no market data
? exists, therefore requiring an entity to develop its own assumptions, such as
valuations derived from valuation techniques in which one or more significant
inputs or significant value drivers are unobservable.
Derivative Financial Instruments
We evaluate our 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 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 twelve (12) months of the balance sheet date.
The accounting treatment of derivative financial instruments requires that we record a derivative liability upon the closing of the Initial Public Offering. Accordingly, we classified each Warrant as a liability at its fair value and the Warrants were allocated a portion of the proceeds from the issuance of the Units equal to their fair value determined by the Monte Carlo simulation. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the Warrant liability will be adjusted to fair value, with the change in fair value recognized in our statements of operations. We will reassess the classification at each balance sheet date. If the classification changes as a result of events during the period, the Warrants will be reclassified as of the date of the event that causes the reclassification.
Recent Accounting Standards
In
Our management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
24 Table of Contents JOBS Act
The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an "emerging growth company" and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We elected to delay the adoption of new or revised accounting standards and, as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the
other reduced reporting requirements provided by the JOBS Act. Subject to
certain conditions set forth in the JOBS Act, if, as an "emerging growth
company," we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an independent registered public accounting firm's
attestation report on our system of internal controls over financial reporting
pursuant to Section 404 of the Sarbanes-Oxley Act, (ii) provide all of the
compensation disclosure that may be required of non-emerging growth public
companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act of
2010, as amended, (iii) comply with any requirement that may be adopted by the
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an administrative services
agreement to pay monthly recurring expenses of up to
The underwriters are entitled to deferred underwriting fees of
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