References to the "Company," "us," "our" or "we" refer
Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this Form
10-Q including, without limitation, statements under "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. When used in
this Form 10-Q, words such as "anticipate," "believe," "estimate," "expect,"
"intend" and similar expressions, as they relate to us or the Company's
management, identify forward-looking statements. Such forward-looking statements
are based on the beliefs of management, as well as assumptions made by, and
information currently available to, the Company's management. Actual results
could differ materially from those contemplated by the forward-looking
statements as a result of certain factors detailed in our filings with the
Overview
The Company is a blank check company formed under the laws of the
The issuance of additional shares in connection with an initial Business Combination to the owners of the target or other investors:
may significantly dilute the equity interest of investors, which dilution would
? increase if the anti-dilution provisions in the Class B common stock resulted
in the issuance of Class A shares on a greater than one-to-one basis upon
conversion of the Class B common stock;
? may subordinate the rights of holders of our common stock if preferred stock is
issued with rights senior to those afforded our common stock;
could cause a change in control if a substantial number of shares of our common
? stock is 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 stock ownership or voting rights of a person seeking to obtain
control of us; and
? may adversely affect prevailing market prices for our Class A common stock
and/or warrants. 20 Table of Contents
Similarly, if we issue debt securities or otherwise incur significant debt to bank or other lenders or the owners of a target, 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 security is payable on demand;
our inability to obtain necessary additional financing if the debt security
? contains covenants restricting our ability to obtain such financing while the
debt security is outstanding;
? our inability to pay dividends on our 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 common
stock if declared, our ability to pay expenses, make capital expenditures and
acquisitions, and fund 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;
limitations on our ability to borrow additional amounts for expenses, capital
? expenditures, acquisitions, debt service requirements, and execution of our
strategy; and
? other purposes and other disadvantages compared to our competitors who have
less debt.
We expect to continue to incur significant costs in the pursuit of our initial Business Combination plans. We cannot assure you that our plans to raise capital or to complete our initial 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
For the three and six months ended
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Liquidity and Capital Resources
On
Transaction costs of the Initial Public Offering amounted to
As of
In order to finance transaction costs in connection with the 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 the Company completes the
Business Combination, the Company would repay such loaned amounts. In the event
that the Business Combination does not close, the Company may use a portion of
the working capital held outside the trust account to repay such loaned amounts
but no proceeds from the trust account would be used for such repayment. Up to
On
22 Table of Contents
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. 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 any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities. Commencing on the date of the completion
of the Company's IPO and until completion of the Company's Business Combination
or liquidation, the Company may reimburse an affiliate of the Sponsor up to an
amount of
The Underwriter was paid a cash underwriting fee of 2% of gross proceeds of the
Public Offering, or
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with GAAP requires the Company's 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. The Company has identified the following as its critical accounting policies:
Net Income Per Share of Common Stock
Basic income per share of common stock is computed by dividing net income
applicable to common stockholders by the weighted average number of shares of
common stock outstanding during the period. Consistent with FASB 480, shares
subject to possible redemption, as well as their pro rata share of undistributed
trust earnings consistent with the two-class method, have been excluded from the
calculation of income per share of common stock for the three and six months
ended
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Derivative Financial Instruments
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 statements of income. 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 net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.
Common stock subject to possible redemption
The Company accounts for its 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 (if any) is classified as a liability instrument and is measured at
fair value. Conditionally redeemable common stock (including common stock that
features redemption rights that are either within the control of the holder or
subject to redemption upon the occurrence of events not solely within the
Company's control) is classified as temporary equity. At all other times, common
stock is classified as stockholders' equity. The Company's common stock features
certain redemption rights that are outside of the Company's control and subject
to occurrence of uncertain future events. Accordingly, at
Recent Accounting Pronouncements
In
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