References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Exchange Act, 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 Form 10-Q 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 Annual Report on Form 10-K for the year ended
Overview
We are a blank check company incorporated on
The issuance of additional shares in a Business Combination:
? may significantly dilute the equity interest of investors in this
offering, which dilution would increase if the anti-dilution provisions in
the shares of Class B Common Stock resulted in the issuance of shares of
Class A Common Stock on a greater than one-to-one basis upon conversion of
the shares of Class B Common Stock;
? may subordinate the rights of holders of shares of Class A Common Stock if
preference shares are issued with rights senior to those afforded our
shares of Class A Common Stock;
? could cause a change in control if a substantial number of our shares of
Class A Common Stock are issued, which may affect, among other things, our
ability to use our net operating loss carry forwards, if any, and could
result in the resignation or removal of our present officers and
directors;
? may have the effect of delaying or preventing a change of control of us by
diluting the share ownership or voting rights of a person seeking to
obtain control of us;
? may adversely affect prevailing market prices for our units, shares of
Class A Common Stock and/or warrants; and
? may not result in adjustment to the exercise price of our warrants.
Similarly, if we issue debt or otherwise incur significant debt, it could result in:
? default and foreclosure on our assets if our operating revenues after an
initial Business Combination are insufficient to repay our debt obligations;
? acceleration of our obligations to repay the indebtedness even if we make all
principal and interest payments when due if we breach certain covenants that
require the maintenance of certain financial ratios or reserves without a
waiver or renegotiation of that covenant;
? our immediate payment of all principal and accrued interest, if any, if the
debt is payable on demand; 15
? our inability to obtain necessary additional financing if the debt contains
covenants restricting our ability to obtain such financing while the debt is
outstanding;
? our inability to pay dividends on our shares of Class A Common Stock;
? using a substantial portion of our cash flow to pay principal and interest on
our debt, which will reduce the funds available for dividends on our shares of
Class A Common Stock if declared, expenses, capital expenditures, acquisitions
and other general corporate purposes;
? limitations on our flexibility in planning for and reacting to changes in our
business and in the industry in which we operate;
? increased vulnerability to adverse changes in general economic, industry and
competitive conditions and adverse changes in government regulation; and
? limitations on our ability to borrow additional amounts for expenses, capital
expenditures, acquisitions, debt service requirements, execution of our
strategy and other purposes and other disadvantages compared to our competitors
who have less debt. Results of Operations
Our entire activity through
For the three months ended
For the period
Liquidity and Capital Resources
Until the consummation of our Initial Public Offering, our only source of liquidity was an initial purchase of shares of Class B Common Stock by our Sponsor and loans from our Sponsor.
On
For the period
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 taxes payable and deferred underwriting commissions), to complete our initial Business Combination. We may withdraw interest income (if any) to pay taxes, if any. Our annual tax obligations will depend on the amount of interest and other income earned on the amounts held in the trust account. We expect the interest income earned on the amount in the trust account (if any) will be sufficient to pay our taxes. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our initial Business Combination, the remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
At
Prior to the completion of our initial Business Combination, we will have
available to us the
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We do not believe we will need to raise additional funds following this offering
in order to meet the expenditures required for operating our business prior to
our initial Business Combination, other than funds available from loans from our
Sponsor, its affiliates or members of our management team. However, if our
estimates of the costs of identifying a target business, undertaking in-depth
due diligence and negotiating an initial Business Combination are less than the
actual amount necessary to do so, we may have insufficient funds available to
operate our business prior to our initial Business Combination. In order to fund
working capital deficiencies or finance transaction costs in connection with an
intended initial 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 our initial Business
Combination, we may repay such loaned amounts out of the proceeds of the trust
account released to us. In the event that our initial 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
Moreover, we may need to obtain additional financing to complete our initial Business Combination, either because the transaction requires more cash than is available from the proceeds held in our trust account, or because we become obligated to redeem a significant number of our public shares upon completion of the Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. If we have not consummated our initial Business Combination within the required time period because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account.
Related Party Transactions Class B Common Stock
On
The Sponsor has agreed, subject to limited exceptions, not to transfer, assign
or sell any of the Founder Shares until the earliest of: (A) one year after the
completion of a Business Combination and (B) subsequent to a Business
Combination, (x) if the closing price of the shares of Class A Common Stock
equals or exceeds
Private Placement
Simultaneously with the closing of the Initial Public Offering, the Sponsor
purchased 4,162,500 Private Placement Warrants at a price of
17 Related Party Loans
The Sponsor had agreed to loan us up to
In addition, 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 officers and directors may, but are not obligated to, loan the Company
funds as may be required ("Working Capital Loans"). If we complete a Business
Combination, we would repay the Working Capital Loans out of the proceeds of the
trust account released to us. In the event that a Business Combination does not
close, we may use a portion of proceeds held outside the trust account to repay
the Working Capital Loans but no proceeds held in the trust account would be
used to repay the Working Capital Loans. Up to
Administrative Services Fee
We agreed, commencing on the effective date of the Initial Public Offering
through the earlier of our consummation of a Business Combination or our
liquidation, to pay an affiliate of the Sponsor a monthly fee of
Registration Rights
Pursuant to a registration and stockholder rights agreement entered into on
Deferred Underwriting Fees
The underwriter was paid a cash underwriting discount of 2.00% of the gross
proceeds of the Initial Public Offering, or
Off-Balance Sheet Arrangements
As of
Critical Accounting Policies
The preparation of condensed financial statements and related disclosures in
conformity with accounting principles generally accepted in
Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of our financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
We issued 7,906,250 public warrants to investors in our Initial Public Offering
and issued 4,162,500 Private Placement Warrants. All of our outstanding warrants
are recognized as derivative liabilities in accordance with ASC 815-40.
Accordingly, we recognize the warrant instruments as liabilities at fair value
and adjust the instruments to fair value at each reporting period. The
liabilities are subject to re-measurement at each balance sheet date until
exercised, and any change in fair value is recognized in our statement of
operations. The Company's valuation of the warrant liabilities utilized a
Binomial Lattice in a risk-neutral framework (a special case of the Income
Approach). The fair value of the Private Placement Warrants utilized Level 3
inputs as it is based on the significant inputs not observable in the market as
of
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Common Stock Subject to Possible Redemption
We account for our common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification ("ASC") Topic 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 common stock (including common stock that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, common stock is classified as shareholders' equity. Our common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented as temporary equity, outside of the shareholders' equity section of our condensed balance sheets.
Net Income (Loss) Per Share of Common Stock
We apply the two-class method in calculating earnings per share. Net income per share of common stock, basic and diluted for shares of Class A redeemable common stock is calculated by dividing the interest income earned on the Trust Account by the weighted average number of shares of Class A redeemable common stock outstanding since original issuance. Net loss per share of common stock, basic and diluted, for shares of Class B non-redeemable common stock is calculated by dividing the net income (loss), less income attributable to shares of Class A redeemable common stock, by the weighted average number of shares of Class B non-redeemable common stock outstanding for the periods presented.
Recently Adopted Accounting Standards
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 our unaudited condensed financial statements.
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 an
affiliate of the Sponsor a monthly fee of
The underwriters are entitled to a deferred fee of
Pursuant to a registration and stockholder rights agreement entered into on
JOBS Act
On
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 auditor'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, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of executive compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering or until we are no longer an "emerging growth company," whichever is earlier.
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