References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Ventoux CCM Acquisition Corp. References to our "management"
or our "management team" refer to our officers and directors, and references to
the "co-sponsors" refer to Ventoux Acquisition Holdings LLC ("Ventoux
Acquisition") and Chardan International Investments, LLC ("Chardan
Investments"). 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 Quarterly
Report. Certain information contained in the discussion and analysis set forth
below includes forward-looking statements that involve risks and uncertainties.
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 Form 10-Q
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 U.S. Securities and Exchange Commission (the "SEC"). The
Company's securities filings can be accessed on the EDGAR section of the SEC's
website at www.sec.gov. Except as expressly required by applicable securities
law, the Company disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information, future events
or otherwise.
Overview
We are a blank check company formed under the laws of the State of Delaware on
July 10, 2019 for the purpose of effecting a merger, share exchange, asset
acquisition, stock purchase, recapitalization, reorganization or other similar
business transaction with one or more businesses or entities that the Company
has not yet identified (a "Business Combination").
While we may pursue a Business Combination in any region or sector, we intend to
focus our efforts on businesses in North America within the hospitality,
leisure, travel and dining sectors with an emphasis on consumer branded
businesses that have attractive growth characteristics. In addition, we intend
to pursue technology companies operating in these sectors, such as business and
consumer services and infrastructure. However, we do not intend to invest in
businesses with large exposure to investments in physical real estate. We intend
to focus on established and high-growth businesses that have an aggregate
enterprise value of approximately $500 million to $2.0 billion and would benefit
from access to public markets and the operational and strategic expertise of our
management team and board of directors. We will seek to capitalize on the
significant experience of our management team in consummating a Business
Combination with the ultimate goal of pursuing attractive returns for our
stockholders.
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;
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? 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.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities through March 31, 2021 were organizational activities, those
necessary to prepare for the Initial Public Offering, described below, and
identifying a target company for a Business Combination. We do not expect to
generate any operating revenues until after the completion of our Business
Combination. We generate non-operating income in the form of interest income on
marketable securities held in the Trust Account. We incur expenses as a result
of being a public company (for legal, financial reporting, accounting and
auditing compliance), as well as for due diligence expenses.
For the three months ended March 31, 2021, we had a net income of $3,461,107,
which consists of change in fair value of warrant liabilities of $3,818,250 and
interest earned on marketable securities held in our Trust Account of $26,175,
offset by general and administrative expenses of $216,976, loss on issuance of
private warrants of $162,000, and an income tax expense of $4,342.
Liquidity and Capital Resources
On December 30, 2020, we completed the Initial Public Offering of 15,000,000
Units at $10.00 per Unit, generating gross proceeds of $150,000,000.
Simultaneously with the closing of the Initial Public Offering, we completed the
sale of 6,000,000 Private Warrants at a price of $1.00 per Private Warrant in a
private placement to the co-sponsors, generating gross proceeds of $6,000,000.
On January 5, 2021, in connection with the underwriters' exercise of their
over-allotment option in full, we completed the sale of an additional 2,250,000
Units, at $10.00 per Unit, and the sale of an additional 675,000 Private
Warrants, at $1.00 per Private Warrant, generating total gross proceeds of
$23,175,000.
Following the Initial Public Offering, the full exercise of the over-allotment
option, and the sale of the Private Units, a total of $174,225,000 was placed in
the Trust Account. We incurred $3,993,017 in Initial Public Offering related
costs, including $3,450,000 of underwriting fees and $543,017 of other costs.
For the three months ended March 31, 2021, cash used in operating activities was
$344,507. Net income of $3,461,107 was affected by interest earned on marketable
securities held in the Trust Account of $26,175, loss on initial issuance of
private warrants of $162,000 and change in fair value of warrant liabilities of
$3,818,250. Changes in operating assets and liabilities used $123,189 of cash
for operating activities.
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As of March 31, 2021, we had cash and marketable securities held in the Trust
Account of $174,251,175 (including approximately $26,175 of interest income and
unrealized gains, net of unrealized losses) consisting of U.S. Treasury Bills
with a maturity of 183 days or less. Interest income on the balance in the Trust
Account may be used by us to pay taxes. Through March 31, 2021, we have not
withdrawn any interest earned from the Trust Account.
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 March 31, 2021, we had cash of $606,741. We intend to use the funds held
outside the Trust Account primarily to identify and evaluate target businesses,
perform business due diligence on prospective target businesses, travel to and
from the offices, plants or similar locations of prospective target businesses
or their representatives or owners, review corporate documents and material
agreements of prospective target businesses, and structure, negotiate and
complete a Business Combination.
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 $500,000 of such loans may be
convertible into warrants at a price of $1.00 per unit, at the option of the
lender. The units would be identical to the Private Warrants.
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 March
30, 2022, the scheduled liquidation date of the Company if it does not complete
a Business Combination prior to such date. These financial statements do not
include any adjustments relating to the recovery of the recorded assets or the
classification of the liabilities that might be necessary should we be unable to
continue as a going concern.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of March 31, 2021 and December 31, 2020. 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 into any off-balance sheet
financing arrangements, established any special purpose entities, guaranteed any
debt or commitments of other entities, or purchased any non-financial assets.
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 Chardan
Capital Markets, LLC a total of $10,000 per month for office space, utilities
and secretarial support. We began incurring these fees on December 23, 2020 and
will continue to incur these fees monthly until the earlier of the completion of
the Business Combination and our liquidation.
We have engaged Chardan Capital Markets, LLC as an advisor in connection with a
Business Combination to assist us in holding meetings with stockholders to
discuss the potential Business Combination and the target business's attributes,
introduce us to potential investors that are interested in purchasing our
securities in connection with the potential Business Combination, assist us in
obtaining stockholder approval for the Business Combination and assist us with
press releases and public filings in connection with the Business Combination.
We will pay Chardan Capital Markets, LLC a marketing fee for such services upon
the completion of a Business Combination in an amount equal to, in the
aggregate, 3.5% of the gross proceeds of the Initial Public Offering, including
proceeds from the exercise of the underwriters' over-allotment option. As a
result, Chardan Capital Markets, LLC will not be entitled to such fee unless the
Business Combination is consummated.
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Critical Accounting Policies
The preparation of unaudited condensed financial statements and related
disclosures in conformity with accounting principles generally accepted in the
United States of America 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 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 statement of operations. The Private Placement
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. 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 March 31, 2021, common stock subject to possible redemption is
presented as temporary equity, outside of the stockholders' equity section of
the Company's balance sheet.
Net Income Per Common Share
We apply the two-class method in calculating earnings per share. Net income
(loss) per common share, basic and diluted for common stock subject to possible
redemption is calculated by dividing the interest income earned on the Trust
Account, net of applicable taxes, if any, by the weighted average number of
shares of common stock subject to possible redemption outstanding for the
period. Net income (loss) per common share, basic and diluted for and
non-redeemable common stock is calculated by dividing net loss less income
attributable to common stock subject to possible redemption, by the weighted
average number of shares of non-redeemable common stock outstanding for the
period presented.
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.
In August 2020, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") 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) ("ASU 2020-06") to simplify accounting for
certain financial instruments. ASU 2020-06 eliminates the current models that
require separation of beneficial conversion and cash conversion features from
convertible instruments and simplifies the derivative scope exception guidance
pertaining to equity classification of contracts in an entity's own equity. The
new standard also introduces additional disclosures for convertible debt and
freestanding instruments that are indexed to and settled in an entity's own
equity. ASU 2020-06 amends the diluted earnings per share guidance, including
the requirement to use the if-converted method for all convertible instruments.
ASU 2020-06 is effective January 1, 2022 and should be applied on a full or
modified retrospective basis, with early adoption permitted beginning on January
1, 2021. We are currently assessing the impact, if any, that ASU 2020-06 would
have on its financial position, results of operations or cash flows.
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