References to the "Company," "our," "us" or "we" refer to Shelter Acquisition
Corporation I The following discussion and analysis of the Company's financial
condition and results of operations should be read in conjunction with the
financial statements and the notes thereto contained elsewhere in this Report.
Certain information contained in the discussion and analysis set forth below
includes forward-looking statements that involve risks and uncertainties.
Overview
We are a blank check company incorporated as a Delaware corporation on December
11, 2020 for the purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar business combination with
one or more businesses ("business combination"). While we may pursue a business
combination target in any stage of its corporate evolution or in any industry or
sector, we currently intend to concentrate on identifying businesses that
provide technologically innovative solutions to the real estate industry,
broadly defined as "PropTech."
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete our initial
business combination will be successful.
On July 2, 2021, we consummated our Initial Public Offering of 20,000,000 Units.
Each Unit consists of one share of Class A common stock, par value $0.0001 per
share ("Class A common stock"), and one-half of one redeemable warrant ("Public
Warrant"), each whole Public Warrant exercisable into one share of Class A
common stock at an exercise price of $11.50 per share. The Units were sold at a
price of $10.00 per unit, generating gross proceeds to the Company of
$200,000,000.
Simultaneously with the consummation of the Initial Public Offering and the sale
of the Units, we consummated the sale of 6,250,000 Private Placement Warrants,
at a price of $1.00 per Private Placement Warrant, to the Sponsor in a Private
Placement generating gross proceeds of $6,250,000.
On July 14, 2021, we issued an additional 2,164,744 Units in connection with the
partial exercise by the underwriters of their over-allotment option, generating
gross proceeds of $21,647,440. Simultaneously with the closing of the
underwriters' partial exercise of the over-allotment option, we sold an
additional 432,949 Private Placement Warrants, at a price of $1.00 per Private
Placement Warrant, to the Sponsor in the Private Placements generating gross
proceeds of $432,949.
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Following the closing of the Initial Public Offering on July 2, 2021, and the
partial exercise of the over-allotment option on July 14, 2021, a total of
$221,647,440 ($10.00 per Unit) from the net proceeds of the sale of the Units in
the Initial Public Offering and pursuant to the partial exercise of the
over-allotment option, together with certain of the proceeds from the sale of
the Private Placement Warrants in the Private Placements, was placed in a trust
account (the "Trust Account") located in the United States with Continental
Stock Transfer & Trust Company acting as trustee, and invested only in U.S.
government securities with a maturity of 185 days or less or in money market
funds meeting certain conditions under Rule 2a-7 under the Investment Company
Act of 1940, as amended, which invest only in direct U.S. government treasury
obligations, until the earlier of: (i) the completion of a business combination
and (ii) the distribution of the Trust Account as described below.
If we are unable to complete a business combination within 18 months from the
closing of our Initial Public Offering, we will: (i) cease all operations except
for the purpose of winding up, (ii) as promptly as reasonably possible but not
more than ten business days thereafter, redeem the Public Shares, at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the
Trust Account including interest earned on the funds held in the Trust Account
and not previously released to us to pay franchise and income taxes (less up to
$100,000 of interest to pay dissolution expenses), divided by the number of then
outstanding Public Shares, which redemption will completely extinguish public
stockholders' rights as stockholders (including the right to receive further
liquidating distributions, if any), subject to applicable law, and (iii) as
promptly as reasonably possible following such redemption, subject to the
approval of our remaining stockholders and the board of directors, dissolve and
liquidate, subject in each case to our obligations under Delaware law to provide
for claims of creditors and the requirements of other applicable law.
Results of Operations
As of December 31, 2021, we have not commenced any operations. All activity for
the period from December 11, 2020 (inception) through December 31, 2021 relates
to our formation and Initial Public Offering. We will not generate any operating
revenues until after the completion of our initial business combination, at the
earliest. We will generate non-operating income in the form of interest income
from the proceeds derived from the Initial Public Offering and placed in the
Trust Account.
For the year ended December 31, 2021, we had net income of $6,936,302 which was
comprised of general and administrative expenses of $918,124, franchise tax
expense of $200,050, income from investments held in Trust Account of $7,353,
other expense relating to fair value exceeding amount paid for warrants of
$387,728, unrealized gain on change in fair value of derivative warrant
liabilities of $9,138,360, and offering costs allocated to warrants of $703,509.
For the period from December 11, 2020 (inception) through December 31, 2020, we
had net loss of $970 which was comprised of general and administrative expenses
of $970.
Liquidity and Capital Resources
As of December 31, 2021, we had $905,106 in our operating bank account, and
working capital of $396,726.
Prior to the completion of the Initial Public Offering, our liquidity needs had
been satisfied through a capital contribution from the Sponsor of $25,000, to
cover certain offering costs, for the founder shares, the loan under an
unsecured promissory note from the Sponsor of $240,000. The promissory note from
the Sponsor was paid in full upon closing of the Initial Public Offering.
Subsequent to the consummation of the Initial Public Offering and Private
Placements, our liquidity needs have been satisfied through the proceeds from
the consummation of the Private Placements not held in the Trust Account.
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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, provide us Working Capital
Loans. To date, there were no amounts outstanding under any Working Capital
Loans.
Going Concern
We have until January 2, 2023 to consummate a Business Combination. It is
uncertain that we will be able to consummate a Business Combination by this
time. If a Business Combination is not consummated by this date, there will be a
mandatory liquidation and subsequent dissolution. Management has determined that
the mandatory liquidation, should a Business Combination not occur, and
potential subsequent dissolution raises substantial doubt about our ability to
continue as a going concern. No adjustments have been made to the carrying
amounts of assets or liabilities should we be required to liquidate after
January 2, 2023.
Off-Balance Sheet Arrangements
For the year ended December 31, 2021, we did not have any off-balance sheet
arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have
any commitments or contractual obligations.
Contractual Obligations
Administrative Support Agreement
We have agreed to pay the Sponsor or one or more of its affiliates, commencing
on the effective date of the registration statement for our Initial Public
Offering, a total of $20,000 per month for office space and administrative and
support services. Upon completion of a Business Combination or liquidation, we
will cease paying these monthly fees.
Registration and Stockholder Rights
The holders of the founder shares, Private Placement Warrants, and warrants that
may be issued upon conversion of Working Capital Loans (and any shares of common
stock issuable upon the exercise of the Private Placement Warrants or warrants
issued upon conversion of the Working Capital Loans and upon conversion of the
founder shares) will be entitled to registration rights pursuant to the
registration rights agreement requiring the Company to register such securities
for resale (in the case of the founder shares, only after conversion to shares
of Class A common stock). The holders of these securities will be entitled to
make up to three demands, excluding short form registration demands, that we
register such securities. In addition, these holders will have certain
"piggy-back" registration rights with respect to registration statements filed
subsequent to the completion of a Business Combination and rights to require us
to register for resale such securities pursuant to Rule 415 under the Securities
Act.
Underwriting Agreement
On July 2, 2021, we paid a fixed underwriting discount of $4,000,000, which was
calculated as two percent (2%) of the gross proceeds of the Initial Public
Offering. On July 14, 2021, the underwriters partially executed their
over-allotment option to purchase an additional 2,164,744 Units at a price of
$10.00 per Unit, and were paid a fixed underwriting discount of $432,949.
Additionally, the underwriters will be entitled to a deferred underwriting
discount of 3.5% of the gross proceeds of the Initial Public Offering and
over-allotment held in the Trust Account, or $7,757,660, upon the completion of
our initial business combination.
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Critical Accounting Policies
The preparation of the financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of expenses during the reporting period.
Actual results could differ from those estimates.
Class A Common Stock Subject to Possible Redemption
All of our 22,164,744 Class A common stock sold as part of the Units in the
Initial Public Offering contain a redemption feature which allows for the
redemption of such public shares in connection with the Company's liquidation,
if there is a stockholder vote or tender offer in connection with the Business
Combination and in connection with certain amendments to the Company's amended
and restated certificate of incorporation. In accordance with ASC 480-10-S99,
redemption provisions not solely within the control of the Company require
common stock subject to redemption to be classified outside of permanent equity.
Therefore, all Class A common stock has been classified outside of permanent
equity.
We recognize 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. Increases or decreases in the carrying amount
of redeemable common stock are affected by charges against additional paid in
capital and accumulated deficit.
Derivative Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or
foreign currency risk. We evaluate all of our financial instruments to determine
if such instruments are derivatives or contain features that qualify as embedded
derivatives in accordance with Financial Accounting Standards Board ("FASB")
Accounting Standards Codification ("ASC") Topic 480, "Distinguishing Liabilities
from Equity" ("ASC 480") and FASB ASC Topic 815, "Derivatives and Hedging" ("ASC
815"). 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.
We account for the 17,765,321 warrants issued in connection with the Initial
Public Offering (including the partial exercise of the underwriters'
over-allotment option) and Private Placements as derivative liabilities in
accordance with the guidance contained in ASC 815. Accordingly, the we classify
the warrant instruments as liabilities at fair value and adjusts the instruments
to fair value at each reporting period. The liabilities will be re-measured at
each balance sheet date until the warrants are exercised or expire, and any
change in fair value will be recognized in our statements of operations. The
fair value of Private Placement Warrants are estimated using an internal
valuation model. The valuation model utilizes inputs and other assumptions and
may not be reflective of the price at which they can be settled. Such warrant
classification is also subject to re-evaluation at each reporting period.
Derivative warrant liabilities are classified as non-current liabilities as
their liquidation is not reasonably expected to require the use of current
assets or require the creation of current liabilities.
Net Income Per Share of Common Stock
We have two classes of common stock, which are referred to as Class A common
stock and Class B common stock. Earnings are shared pro rata between the two
classes of common stock. The 17,765,321 shares of common stock issuable upon the
exercise of our outstanding warrants were excluded from diluted earnings per
share for the year ended December 31, 2021 and 2020 because the warrants are
contingently exercisable, and the contingencies have not yet been met. As a
result, diluted net loss per common share is the same as basic net loss per
common share for the periods.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU No. 2020-06, "Debt-Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in
Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments
and Contracts in an Entity's Own Equity" ("ASU 2020-06"), which simplifies
accounting for convertible instruments by removing major separation models
required under current GAAP. ASU 2020-06 removes certain settlement conditions
that are required for equity contracts to qualify for the derivative scope
exception, and it also simplifies the diluted earnings per share calculation in
certain areas. This guidance is effective as of January 1, 2022 (early adoption
is permitted effective January 1, 2021). We are currently evaluating the effect
the updated standard will have on our financial position, results of operations
or financial statement disclosure.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our consolidated financial statements.
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JOBS Act
On April 5, 2012, the Jumpstart Our Business Startups Act of 2012 (the "JOBS
Act") was signed into law. 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 are electing 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
such, our financial statements may not be comparable to companies that comply
with 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 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 Public Company Accounting Oversight Board 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 the principal executive officer's 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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SHELTER ACQUISITION CORPORATION I 
