References to the "Company," "our," "us" or "we" refer to
Cautionary Note Regarding Forward-Looking Statements
This Report includes "forward-looking statements" 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 Report including, without
limitation, statements in this "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. 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. For information identifying important factors that
could cause actual results to differ materially from those anticipated in the
forward-looking statements, please refer to "Cautionary Note Regarding Forward
Looking Statements and Risk Factor Summary," "Item 1A. Risk Factors" and
elsewhere in this Report . The Company's securities filings can be accessed on
the EDGAR section of the
Overview
We are a blank check company incorporated on
The issuance of additional shares of Class A common stock, Class A Units and
Class
• may significantly dilute the equity interest of investors in our Public Offering, which dilution would increase if the anti-dilution provisions in the ClassB Units of Opco initially acquired by our Sponsor prior to our Public Offering (or the Class A Units of Opco into which such ClassB Units will convert) and a corresponding number of shares of our Class V common stock ("founder shares") resulted in an increase in the number of Class A Units of Opco into which the ClassB Units of Opco will convert; • may subordinate the rights of holders of our Class A common stock and Class V common stock ("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 are 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 64
--------------------------------------------------------------------------------
• may adversely affect prevailing market prices for our Class A common stock
and/or warrants.
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 Class A 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.
As of
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities for the year ended
For the year ended
65
--------------------------------------------------------------------------------
Liquidity, Capital Resources and Going Concern
On
For the year ended
For the period from
There were no investing activities for the year ended
For the period from
For the year ended
For the period from
As of
In order to fund working capital deficiencies or finance transaction costs in
connection with an intended initial business combination or to finance possible
costs in connection with the contribution of an addition amount to be held in
the trust account if we extend our time to complete an initial 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 ("Working Capital Loans"). If we complete our initial business
combination, we would repay such loaned amounts. In the event that our initial
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
66
--------------------------------------------------------------------------------
funding loans may be convertible into warrants of the post business combination
entity at a price of
The Company has incurred and expects to continue to incur significant costs in
pursuit of its acquisition plans. The Company anticipates that the cash held
outside of the Trust Account as of
Management plans to address this uncertainty through a Business Combination as
discussed above, although it is uncertain that we will be able to consummate a
Business Combination by
Related Party Transactions
Administrative Support Agreement
We have entered into an Administrative Support Agreement pursuant to which we
will reimburse our Sponsor or an affiliate thereof in an amount up to
Our Sponsor, officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments that were made to our Sponsor, officers, directors or their affiliates and will determine which expenses and the amount of expenses that will be reimbursed. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf.
Related Party Loans
On
In addition, in order to finance transaction costs in connection with an intended initial business combination or possible costs in connection with the contribution of an additional amount to be held in the trust account if we extend our time to complete an initial 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 initial
67
--------------------------------------------------------------------------------
business combination, we would repay such loaned amounts. In the event that our
initial 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
Private Placement Warrants
Our Sponsor purchased an aggregate of 12,225,000 private placement warrants at a
price of
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of
Contractual Obligations
Registration and Stockholder Rights Agreement
The holders of the founder shares, Sponsor shares, private placement warrants
and warrants that may be issued upon conversion of Working Capital Loans (and
any shares of our Class A common stock issuable upon the exercise of the private
placement warrants or exchange of the founder shares issued upon exercise of the
private placement warrants and warrants that may be issued upon conversion of
Working Capital Loans and upon exchange of the founder shares) are entitled to
registration rights pursuant to a registration rights agreement signed on the
effective date of our Public Offering, requiring us to register such securities
for resale (in the case of the founder shares, only after the founder shares
become exchangeable for the shares of Class A common stock). The holders of
these securities, having at least
Underwriting Agreement
The underwriter purchased 3,000,000 Units to cover over-allotments at the initial public offering price, less the underwriting commissions.
The underwriter was paid a cash underwriting discount of two percent (2%) of the
gross proceeds of the initial public offering, or
68
--------------------------------------------------------------------------------
Critical Accounting Policies
The preparation of consolidated financial statements and related disclosures in
conformity with accounting principles generally accepted in
Warrants
We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant's specific terms and applicable authoritative guidance in Accounting Standards Codification ("ASC") Topic 480, Distinguishing Liabilities from Equity ("ASC 480") and ASC 815, Derivatives and Hedging ("ASC 815"). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company's own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. The warrants sold as part of the units in our Public Offering ("public warrants") and private placement warrants are equity classified.
Class A common stock subject to redemption
All of the 23,000,000 shares of Class A common stock sold as part of the units
in our initial public offering and the 1,250 shares of Class A common stock
purchased by an affiliate of our Sponsor on
We recognize changes in redemption value as it occurs and adjust the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Such changes are reflected in retained earnings, or in the absence of retained earnings, in additional paid-in capital.
Net Income (Loss) Per Share of Common Stock
Net income (loss) per common share is computed by dividing net income (loss) by
the weighted-average number of shares of common stock outstanding during the
period. We have not considered the effect of the warrants sold in the Initial
Public Offering and private placement to purchase an aggregate of 23,725,000
shares in the calculation of diluted income (loss) per share, since the exercise
of the warrants is contingent upon the occurrence of future events. In order to
determine the net income (loss) attributable to both the Class A common stock
and Class V common stock, we first considered the total income (loss) allocable
to both sets of shares. This is calculated using the total net income (loss)
less any dividends paid. For purposes of calculating net income (loss) per
share, any remeasurement of the accretion to redemption value of the Class A
common stock subject to possible redemption was considered to be dividends paid
to the holders of the Class A common stock. Subsequent to calculating the total
income (loss) allocable to both sets of shares, the Company split the amount to
be allocated pro rata between Class A and Class V common stock for the year
ended
69
--------------------------------------------------------------------------------
Income Tax Expense
As of
In assessing the realization of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which temporary differences representing future deductible amounts become
deductible. Management considers the scheduled reversal of deferred tax assets,
projected future taxable income and tax planning strategies in making this
assessment. After consideration of all the information available, management
believes that significant uncertainty exists with respect to future realization
of the deferred tax assets and has therefore established a full valuation
allowance. For the year ended
Recent Accounting Standards
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company's consolidated financial statements.
JOBS Act
The Jumpstart Our Business Startups Act of 2012 (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 a result, our consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
As an "emerging growth company," we are not required to, among other things, (i) provide an independent registered public accounting firm's attestation report on our internal controls over financial reporting pursuant to Section 404, (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 PCAOB regarding mandatory audit firm rotation or a supplement to the independent registered public accounting firm's report providing additional information about the audit and the consolidated 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 Chief Executive Officer's compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of the Offering or until we are no longer an "emerging growth company," whichever is earlier. Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item. Item 8. Financial Statements and Supplementary Data.
Reference is made to Pages F-1 through F-23 comprising a portion of this Report.
© Edgar Online, source