EVEREST CONSOLIDATOR ACQUISITION CORPORATION You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in Part I, Item 1A, "Risk Factors" and other factors set forth in other parts of this Annual Report on Form 10-K.
Overview
We are a blank check company incorporated on
The issuance of additional shares of our common stock in a business combination:
may significantly dilute the equity interest of investors in the IPO, which
? dilution would increase if the anti-dilution provisions in the Class B common
stock resulted in the issuance of Class A common stock on a greater than
one-to-one basis upon conversion of the Class B common stock;
may subordinate the rights of holders of shares of our Class A common stock if
? shares of preferred stock are issued with rights senior to those afforded our
Class A common stock;
could cause a change in control if a substantial number of shares of our Class
? A 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 share ownership or voting rights of a person seeking to obtain
control of us; and
May adversely affect prevailing market prices for our units, shares of Class A
? common stock and/or warrants; and may not result in adjustment to the exercise
price of our warrants.
Similarly, if we issue debt or otherwise incur significant debt, 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 is payable on demand;
our inability to obtain necessary additional financing if the debt contains
? covenants restricting our ability to obtain such financing while the debt 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 Class A
common stock if declared, expenses, capital expenditures, acquisitions and
other general corporate purposes;
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? 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; and
limitations on our ability to borrow additional amounts for expenses, capital
? expenditures, acquisitions, debt service requirements, execution of our
strategy and other purposes and other disadvantages compared to our competitors
who have less debt. Recent Developments
Initial Extension of Time to Complete an Initial Business Combination
Pursuant to the terms of our amended and restated certificate of incorporation
and the trust agreement entered into between us and
On
Results of Operations and Known Trends or Future Events
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from
For the period ended
For the period from
Liquidity, Capital Resources and Going Concern
Our liquidity needs were satisfied prior to the completion of our IPO through
We generated net proceeds of
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proceeds held in the trust account are invested only in
For the year 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 taxes payable and deferred underwriting commissions), to complete our initial business combination. We may withdraw interest income (if any) to pay franchise and income taxes. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the trust account. We expect the interest income earned on the amount in the trust account (if any) will be sufficient to pay our taxes. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our initial 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.
The
The Company believes that the proceeds raised in the initial public offering and the funds potentially available from loans from the sponsor or any of their affiliates will be sufficient to allow the Company to meet the expenditures required for operating its business. However, if the estimate 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, the Company may have insufficient funds available to operate its business prior to the initial Business Combination. Moreover, the Company may need to obtain additional financing either to complete the Business Combination or because the Company becomes obligated to redeem a significant number of public shares upon completion of the Business Combination, in which case the Company may issue additional securities or incur debt in connection with such Business Combination.
Giving effect to the Initial Extension, we have 18 months from the closing of
the IPO, or
We may need to raise additional capital through loans or additional investments from its sponsor, stockholders, officers, directors, or third parties. Our officers, directors and sponsor may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet our working capital needs. Accordingly, we may not be able to obtain additional financing. If we are unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. We cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all.
Management has determined that our liquidity condition, potential mandatory
liquidation and subsequent dissolution raise substantial doubt about the
Company's ability to continue as a going concern, assuming a Business
Combination is not consummated before
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adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Contractual Obligations and Commitments
Registration Rights
The holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans) are entitled to registration rights pursuant to a registration rights agreement entered into prior to the closing of the Initial Public Offering. The holders of these securities may at any time, and from time to time, request in writing that the Company register the resale of any or all of these securities on Form S-3 or any similar short form registration statement that may be available at such time; provided, however, that the Company shall not be obligated to effect such request through an underwritten offering. In addition, the holders have certain "piggy-back" registration rights with respect to registration statements filed subsequent to the completion of the initial business combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Deferred Underwriting Commissions
The underwriters are entitled to a deferred fee of
Administrative Services Agreement
We have entered into an Administrative Services Agreement pursuant to which the
Company pays an affiliate of the sponsor a total of
Conditional Guarantee Agreement
In connection with the Initial Extension and our sponsor's deposit of the
extension funds into the trust account, we entered into a Conditional Guaranty
Agreement (the "Conditional Guaranty Agreement") in favor of the Noteholder
(defined below) in respect of a promissory note with an aggregate original
principal amount of
Due Diligence Agreement
We have entered into an agreement relating to due diligence and other
professional services in connection with our search for potential business
combination targets. Our payment obligations under this arrangement are not
contingent upon, or deferrable until, the completion of an initial business
combination. As of
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Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with
Class A Common Stock Subject to Possible Redemption
The Company accounts for its common stock subject to possible redemption in
accordance with the guidance in ASC Topic 480 "Distinguishing Liabilities from
Equity." Shares of common stock subject to mandatory redemption, if any, is
classified as a liability instrument and is 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, as of
The Class A common stock subject to possible redemption reflected on the balance
sheet as
Gross proceeds$ 172,500,000
Less:
Class A common stock issuance costs (10,100,667) Fair value of Public Warrants at issuance (4,672,162)
Plus:
Re-measurement of carrying value to redemption value 18,222,829 Accretion of trust earnings
1,717,994
Class A common stock subject to possible redemption
The Class A common stock subject to possible redemption reflected on the balance
sheet as
Gross proceeds$ 172,500,000
Less:
Class A common stock issuance costs (10,100,667) Fair value of Public Warrants at issuance (4,672,162)
Plus:
Re-measurement of carrying value to redemption value 18,222,829
Class A common stock subject to possible redemption.
Net income (loss) Per Share of Common Stock
We comply with accounting and disclosure requirements of FASB ASC Topic 260, "Earnings Per Share." Net income per common share is computed by dividing net income 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 in the calculation of diluted income per share, because the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti- dilutive. Accretion associated with the redeemable Class A common stock is excluded from earnings per share as the redemption value approximates fair value.
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Income Taxes
Income taxes are recorded in accordance with ASC 740, Income Taxes ("ASC 740"), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities and net operating and capital loss carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The valuation allowance is reduced when it is determined that it is more likely than not that the deferred tax asset will be realized.
The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. The Company recognizes any interest and penalties accrued related to unrecognized tax benefits as income tax expense.
There were no unrecognized tax benefits as of
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 financial statements. See Note 2 to the audited financial statements included elsewhere in this Annual Report on Form 10-K for additional information regarding these and our other significant accounting policies.
Jumpstart Our Business Startups Act of 2012
Under the JOBS Act, an "emerging growth company" can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an "emerging growth company" to delay the adoption of new or revised accounting standards that have different transition dates for public and private companies until those standards would otherwise apply to private companies. We meet the definition of an "emerging growth company" and have elected to use this extended transition period for complying with new or revised accounting standards until the earlier of the date we (x) are no longer an emerging growth company, or (y) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements and the reported results of operations contained therein may not be directly comparable to those of other public companies.
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