References in this report to "we," "us" or the "Company" refer to
Special Note Regarding Forward-Looking Statements
This discussion contains forward-looking statements reflecting our current
expectations, estimates and assumptions concerning events and financial trends
that may affect our future operating results or financial position. Our
forward-looking statements include, but are not limited to, statements regarding
our or our management team's expectations, hopes, beliefs, intentions or
strategies regarding the future. In addition, any statements that refer to
projections, forecasts or other characterizations of future events or
circumstances, including any underlying assumptions, are forward-looking
statements. The words "anticipate," "believe," "continue," "could," "estimate,"
"expect," "intends," "may," "might," "plan," "possible," "potential," "predict,"
"project," "should," "would" and similar expressions may identify
forward-looking statements, but the absence of these words does not mean that a
statement is not forward-looking. The forward-looking statements contained in
this report are based on our current expectations and beliefs concerning future
developments and their potential effects on us. There can be no assurance that
future developments affecting us will be those that we have anticipated. Actual
results and the timing of events may differ materially from those contained in
these forward-looking statements due to a number of factors, including those
discussed in the sections entitled "Risk Factors" and "Cautionary Note Regarding
Forward-Looking Statements" appearing in our Annual Report on Form 10-K filed
with the
Overview
We are a blank check company, originally incorporated in
Following the closing of our initial public offering (the "IPO"), on
Our management has broad discretion with respect to the specific application of the net proceeds of the IPO and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.
Proposed Business Combination with Latch
On
20
--------------------------------------------------------------------------------
Table of Contents
Latch surviving the merger as a wholly owned subsidiary of the Company (the "Merger") If (i) the Merger Agreement is adopted and the transactions contemplated thereby, including the Merger, are approved by the Company's and Latch's stockholders, (ii) the Merger Agreement and the transactions contemplated thereby, including the issuance of Class A common stock to be issued as the merger consideration, pursuant to the Subscription Agreements, and pursuant to the conversion of Class B common stock, are approved by the Company's stockholders, and (iii) the Merger is subsequently completed, Merger Sub will merge with and into Latch, with Latch surviving the merger as a wholly owned subsidiary of the Company.
Latch is an enterprise technology company focused on revolutionizing the way people experience spaces by making spaces better places to live, work, and visit. Latch has created a full-building operating system, LatchOS, that addresses the essential needs of modern buildings by streamlining building operations, enhancing the resident experience, and enabling more efficient interactions with service providers. Latch's product offerings are designed to optimize the resident experience and include smart access, delivery and guest management, smart home and sensors, connectivity, and resident experience. Latch combines hardware, software, and services into a holistic system believed to make spaces more enjoyable for residents, more efficient and profitable for building operators, and more convenient for service providers.
Under the terms of the Merger Agreement, immediately prior to the effective time of the Merger (the "Effective Time"), (i) Latch will cause each share of Latch preferred stock issued and outstanding to be automatically converted into a number of shares of Latch common stock in accordance with Latch's certificate of incorporation (the "preferred stock conversion") and (ii) Latch will cause the outstanding principal and accrued but unpaid interest due on Latch's convertible notes immediately prior to the Effective Time to be automatically converted into a number of shares of Latch common stock in accordance with the terms of the applicable Latch convertible note (the "convertible note conversion").
As part of the Merger, Latch equityholders will receive aggregate consideration
of
On
See Note 1 to our condensed financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information about the Merger.
21
--------------------------------------------------------------------------------
Table of Contents
Results of Operations
As of
For the period from
Liquidity and Capital Resources
As of
We intend to use substantially all of the funds held in the Trust Account,
including any amounts representing interest earned on the Trust Account
(excluding deferred underwriting commissions) to complete our Business
Combination. We may withdraw interest to pay our taxes. We estimate our annual
franchise tax obligations, based on the number of shares of our common stock
authorized and outstanding after the completion of the IPO, to be
Further, our Sponsor, officers and directors or their respective affiliates may,
but are not obligated to, loan us funds as may be required (the "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.
Otherwise, the Working Capital Loans would be repaid only out of funds held
outside the Trust Account. 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. Except for the foregoing, the terms of
such Working Capital Loans, if any, have not been determined and no written
agreements exist with respect to such loans. The Working Capital Loans would
either be repaid upon consummation of a Business Combination or, at the lender's
discretion, up to
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimates of
the costs of identifying a target business, undertaking in-depth due diligence
and negotiating a 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 Business Combination. In order to fund working capital deficiencies or
finance transaction costs in connection with an intended 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 Business Combination, we would repay such loaned amounts. In the
event that our 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
22
--------------------------------------------------------------------------------
Table of Contents
Off-Balance Sheet Financing Arrangements
We did not have any off-balance sheet arrangement as of
Contractual Obligations
As of
We entered into an administrative services agreement pursuant to which we will
pay our Sponsor for office space and secretarial and administrative services
provided to members of our management team, in an amount not to exceed
Critical Accounting Policies and Estimates
The preparation of condensed financial statements and related disclosures in conformity with GAAP 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 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:
Warrant Liabilities
We account for the warrants issued in connection with our IPO in accordance with Accounting Standards Codification ("ASC") 815-40, "Derivatives and Hedging-Contracts in Entity's Own Equity" ("ASC 815"), under which the warrants do not meet the criteria for equity classification and must be recorded as liabilities. As the warrants meet the definition of a derivative as contemplated in ASC 815, the warrants are measured at fair value at issuance and at each reporting date in accordance with ASC 820, Fair Value Measurement, with changes in fair value recognized in our statement of operations in the period of change.
Class A Common Stock Subject to Possible Redemption
We account for our common stock subject to possible redemption in accordance
with the guidance in the FASB ASC Topic 480 "Distinguishing Liabilities from
Equity." Common stock subject to mandatory redemption (if any) are classified as
liability instruments and are measured at fair value. Conditionally redeemable
Class A common stock (including Class A 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 our control) are
classified as temporary equity. At all other times, Class A common stock is
classified as stockholders' equity. Our Class A common stock feature certain
redemption rights that are considered to be outside of our control and subject
to the occurrence of uncertain future events. Accordingly, at
Net Loss Per Common Share
Net income (loss) per common stock is computed by dividing net income (loss) by the weighted average number of common stock outstanding for each of the periods. The calculation of diluted income (loss) per common stock does not consider the effect of the warrants issued in connection with the (i) IPO, and (ii) Private Placement Warrants since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive. The warrants are exercisable to purchase 5,333,334 shares of Class A common stock in the aggregate.
Our statements of operations include a presentation of income (loss) per share for Class A common stock subject to possible redemption in a manner similar to the two-class method of income (loss) per common stock. Net income per common stock, basic and diluted, for redeemable Class A common stock is calculated by dividing the interest income earned on the Trust Account, by the weighted average number of redeemable Class A common stock outstanding since original issuance. Net loss per common stock, basic and diluted, for non-redeemable Class B common stock is calculated by dividing the net income (loss), adjusted for income attributable to redeemable Class B common stock, by the weighted average number of non-redeemable Class B common stock outstanding for the periods. Non-redeemable Class B common stock include the Founder Shares as these common stocks do not have any redemption features and do not participate in the income earned on the Trust Account.
23
--------------------------------------------------------------------------------
Table of Contents
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 condensed financial statements.
24
--------------------------------------------------------------------------------
Table of Contents
© Edgar Online, source