References in this report (this "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 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 Quarterly
Report including, without limitation, statements in this "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
regarding the completion of the Proposed Business Combination (as defined
below), 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, including that the
conditions of the Proposed Business Combination are not satisfied. 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 final prospectus for
its Initial Public Offering filed with the
This Management's Discussion and Analysis of Financial Condition and Results of
Operations has been amended and restated to give effect to the restatement of
our financial statements as of
Overview
We are a blank check company formed under the laws of the
While we may pursue a Business Combination in any region or sector, we intend to
focus our efforts on businesses in
We intend to effectuate our Business Combination using cash from the proceeds of the Initial Public Offering and the sale of the Private Warrants, our capital stock, debt or a combination of cash, stock and debt.
The issuance of additional shares of our stock in a Business Combination:
? may significantly reduce the equity interest of our stockholders; ? may subordinate the rights of holders of common stock if we issue preferred shares with rights senior to those afforded to our shares of common stock; 22 ? will likely cause a change in control if a substantial number of our shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and most likely will also result in the resignation or removal of our present officers and directors; and ? may adversely affect prevailing market prices for our securities.
Similarly, if we issue debt securities or otherwise incur significant indebtedness, it could result in:
? default and foreclosure on our assets if our operating revenues after a Business Combination are insufficient to pay our debt obligations; ? acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security contains covenants that required the maintenance of certain financial ratios or reserves and we breach any such covenant 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; and ? our inability to obtain additional financing, if necessary, if the debt security contains covenants restricting our ability to obtain additional financing while such security is outstanding.
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.
Recent Developments Proposed Business Combination
On
Merger Consideration
Pursuant to the Merger Agreement, subject to the satisfaction or waiver of
certain closing conditions set forth therein, at the closing of the Proposed
Business Combination (the "Closing"), the Company will acquire all of the
outstanding equity interests of Presto, and stockholders of Presto will receive
In addition to the Aggregate Base Consideration, Presto stockholders may be
entitled to receive, as additional consideration, and without any action on
behalf of the Company, Ventoux Merger Sub, Ventoux Merger Sub II or the
Company's stockholders, 15,000,000 additional shares of common stock of New
Presto (the "Presto Earnout Shares"), to be issued as follows: (A) 7,500,000
Presto Earnout Shares, if, during the period from and after the Closing until
the third anniversary of the Closing, the Volume Weighted Average Price ("VWAP"
as defined in the Merger Agreement) of New Presto common stock is greater than
or equal to
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Equity Awards, Presto Convertible Notes and Warrants
Pursuant to the Merger Agreement, at the time the First Merger becomes effective (the "Effective Time"), each option exercisable for Presto equity that is outstanding and unexercised immediately prior to the Effective Time will be assumed and converted into a newly issued option exercisable for common stock of New Presto. At the Effective Time, each warrant of Presto that is outstanding and unexercised immediately prior to the Effective Time shall, in accordance with its terms, either be (i) cancelled and converted into the right to receive common stock of New Presto, or (ii) assumed and converted into a newly issued warrant exercisable for common stock of New Presto. Immediately prior to the Effective Time, each convertible promissory note convertible for Presto equity that is issued and outstanding shall be cancelled and converted into the right to receive common stock of New Presto in accordance with the terms therein.
Subscription Agreements
The Company entered into equity subscription agreements (the "Equity
Subscription Agreements") each dated as of
The Company also entered into a convertible note subscription agreement (the
"Convertible Note Subscription Agreement" and, together with the Equity
Subscription Agreements, the "Subscription Agreements"), each dated as of
At any time prior to the close of business on the second trading day immediately
preceding the maturity date of the Notes, the Notes will be convertible, at each
holder's option, into shares of common stock of New Presto at an initial
conversion price equal to the lesser of (i)
At any time on or after the first anniversary of the issuance of the Notes until the second business day prior to maturity, the Notes will be convertible, in whole but not in part, at the Company's option (a "Mandatory Conversion") if the closing price of common stock is greater than or equal to 130% of the conversion price of the Notes for 20 trading days during any 30-consecutive-trading-day period ending on day before the notice of the Mandatory Conversion is given. The Conversion Rate in connection with a Mandatory Conversion will be increased by a number of additional shares pursuant to the make-whole table described above.
In addition, the Company may redeem the Notes at any time prior to the 21st trading day before maturity by paying, in cash, the principal, accrued interest, and a premium equal to, (1) through third anniversary, the present value of all remaining scheduled interest payments, computed using a discount rate equal to the Treasury Rate (to be defined in the Indenture) plus 0.50%, and warrants to purchase a number of shares equal to 50% of the number of shares into which the Notes redeemed were convertible, or (2) between third anniversary and maturity, of all remaining scheduled interest payments, computed using a discount rate equal to the Treasury Rate.
Each holder of a Note will have the right to cause the Company to repurchase for cash all or a portion of the Notes held by such holder at any time upon the occurrence of a "fundamental change," a customary definition of which will be agreed in the Indenture (a "Fundamental Change"), at a repurchase price equal to 100% of the principal amount of such Notes plus accrued and unpaid interest thereon to, but excluding, the repurchase date.
The Company will pay interest on the principal amount of the Notes in cash or in
kind, at the Company's election. If the Company elects to pay interest in cash
("Cash Interest"), the interest on the Notes will accrue at a rate of 9.0% per
annum and be payable in cash. If the Company elects to pay interest in kind
("PIK Interest"), the interest on the Notes will be increased to a rate of 11.0%
per annum. PIK Interest will be payable either (x) by increasing the principal
amount of the outstanding Notes by an amount equal to the amount of PIK Interest
for the applicable interest period (rounded up to the nearest
The Note Financing Warrants have the same terms and conditions as the Company's
outstanding publicly held warrants, except that each Note Financing Warrant is
exercisable into one whole share of common stock at an exercise price of
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Amended and Restated Warrant Agreement
At the Closing, New Presto, the Sponsors and
Amended and Restated Registration Rights Agreement
At the Closing, New Presto, the Sponsors, the Note Investor, certain investors and other holders of Presto capital stock (the "Presto Holders" and together with the Sponsors and the investors, the "Holders") will enter into an amended and restated registration rights agreement (the "Amended and Restated Registration Rights Agreement"). Pursuant to the terms of the Amended and Restated Registration Rights Agreement, New Presto will be obligated to file a registration statement to register the resale of certain securities of New Presto held by the Holders. The Amended and Restated Registration Rights Agreement also provides the Holders with certain "demand" and "piggy-back" registration rights, subject to certain requirements and customary conditions.
Sponsor Support Agreement
In connection with the execution of the Merger Agreement, the Sponsors, Presto's directors and officers and certain affiliates of the Sponsors (together, the "Sponsor Parties") entered into a Sponsor Support Agreement (the "Sponsor Agreement") with the Company and Presto, pursuant to which the Sponsor Parties agreed, among other things, to vote all shares of the Company common stock beneficially owned by them in favor of each of the proposals at the Company Special Meeting and against any proposal that would impede the Proposed Business Combination. The Sponsor Agreement also provides that the Sponsor Parties will not redeem any shares of the Company common stock.
The Sponsor Parties agreed to subject the founder shares they acquired prior to the Company initial public offering to lock-up restrictions. During the period beginning on the Closing Date until the period beginning on the Closing Date to six months after the Closing Date, the Sponsor Parties may not transfer any of its, his or her founder shares, and during the period beginning on the date that is six months after the Closing Date to 12 twelve months after the Closing Date, the Sponsor Parties may only transfer up to 50% of its, his or her founder shares, in each case except for certain limited permitted transfers. In addition, the Sponsor Parties agreed that they will not transfer any privately placed warrants, acquired prior to the Company initial public offering, during the period from the Closing Date to 12 months after the Closing Date.
The Sponsors also agreed to subject their founder shares to vesting and
forfeiture provisions as set forth in the Sponsor Agreement based on the number
of public shares redeemed at the closing of the Proposed Business Combination
(such shares, the "Sponsors' Earnout Shares"). Pursuant to the Sponsor
Agreement, at the Closing, (i) in the case of redemptions of public shares of
90% or more, 15% of the Sponsors' founder shares that are owned immediately
after the Closing will be subject to vesting, (ii) in the case of redemptions of
public shares of between 80% and 90%, 10% of the Sponsors' founder shares that
are owned immediately after the Closing will be subject to vesting, (iii) in the
case of redemptions of public shares of between 70% and 80%, 5% of the Sponsors'
founder shares that are owned immediately after the Closing will be subject to
vesting and (iv) in the case of redemptions of public shares of less than 70%,
none of the Sponsors' founder shares will be subject to vesting. The Sponsors'
Earnout Shares will vest if, during the period from and after the Closing until
the fifth anniversary of the Closing, the VWAP of New Presto common stock is
greater than or equal to
Presto Stockholder Support Agreement
In connection with the execution of the Merger Agreement, certain stockholders of Presto (collectively, the "Presto Supporting Stockholders") entered into support agreements (collectively, the "Stockholder Support Agreements"), pursuant to which each Presto Supporting Stockholder agreed to, among other things, vote in favor of the Merger Agreement and the transactions contemplated thereby (including the Proposed Business Combination), not to transfer his, her or its Presto shares prior to the Closing Date, and to execute the Amended and Restated Registration Rights Agreement (as defined below) at the Closing Date.
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The Presto Stockholder Support Agreements provide that during the period beginning on the Closing Date and ending on the date that is six months after the Closing Date, the Presto Supporting Stockholders may not transfer any of their shares of New Presto common stock, and during the period beginning on the date that is six months after the Closing Date and ending on the date that is 12 months after the Closing Date, the Presto Supporting Stockholders may only transfer up to 50% of their New Presto common stock, in each case, except for certain limited permitted transfers.
Governance Agreement
At the Closing, New Presto,
The Proposed Business Combination is expected to be consummated after receipt of
the required approvals by the stockholders of the Company and Presto and the
satisfaction or waiver of certain other customary conditions. For full details
and the filed agreements, refer to our Current Report on 8-K announcing the
Merger Agreement filed on
No Offer or Solicitation
This Quarterly Report on Form 10-Q is not intended to and shall not constitute a proxy statement or the solicitation of a proxy, consent or authorization with respect to any securities in respect of the Proposed Business Combination and shall not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities or a solicitation of any vote of approval, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities through
For the three months ended
For the nine months ended
For the nine months ended
Liquidity and Capital Resources
On
On
Following the Initial Public Offering, the full exercise of the over-allotment
option, and the sale of the Private Units, a total of
For the nine months ended
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For the nine months ended
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 (less income taxes payable), to complete our Business Combination. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our 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.
As of
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, the co-sponsors, or certain of our
officers and directors or their affiliates may, but are not obligated to, loan
us funds as may be required. If we complete a Business Combination, we would
repay such loaned amounts. In the event that a Business Combination is not
consummated, 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
If we are unable to raise additional capital, we may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, suspending the pursuit of a Business Combination. We cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all.
As a result of the above, in connection with our assessment of going concern
considerations in accordance with Financial Accounting Standard Board's
Accounting Standards Update ("ASU") 2014-15, "Disclosures of Uncertainties about
an Entity's Ability to Continue as a Going Concern," we have determined that the
liquidity condition and date for mandatory liquidation and dissolution raise
substantial doubt about our ability to continue as a going concern through
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
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 agreement to pay
We have engaged
27 Critical Accounting Policies
The preparation of unaudited 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 warrants to purchase shares of common stock, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815. We account for the Private Warrants in accordance with the guidance contained in ASC 815-40 under which the Private Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, we classify the Private Warrants as liabilities at their fair value and adjust the Private Warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statements of operations. The Private Warrants are valued using a Modified Black Scholes model.
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." Shares of common stock subject to
mandatory redemption are classified as a liability instrument and are 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 the Company's control) is classified as temporary equity. At all other
times, common stock is classified as stockholders' equity. Certain of the
Company's common stock features certain redemption rights that are considered to
be outside of the Company's control and subject to occurrence of uncertain
future events. Accordingly, at
Net Income (loss) Per Share of Common Stock
Net income (loss) per common stock is computed by dividing net income (loss) by the weighted average number of common stock outstanding for the period. Accretion associated with the redeemable shares of common stock is excluded from earnings per share as the redemption value approximates fair value.
Recent Accounting Standards
In
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 unaudited condensed financial statements.
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