References in this report (the "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 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 Embark 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
Overview
We are a blank check company formed under the laws of the
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 Personnel Services Agreement
We entered to a Personnel Services Agreement, dated
The Sponsor, our 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. 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.
Forward Purchase Agreements
On
20
Pursuant to the Forward Purchase Agreements, if the Company determines to raise
capital by the private placement of equity securities in connection with the
closing of its initial business combination (subject to certain limited
exceptions), the members of NGC (institutional investors that also are members
of the Company's Sponsor) and the parties to the additional Forward Purchase
Agreements have the first right to purchase an aggregate amount of up to
7,500,000 "forward purchase units" of the Company (under all Forward Purchase
Agreements, taken together) for
In addition, if a private placement of equity securities in connection with the
Company's initial business combination exceeds
Each Forward Purchase Agreement that the holders of the shares of common stock
and warrants included in the forward purchase units will be entitled to
registration rights pursuant to the terms of any registration rights agreement
applicable to any equity securities issued by way of private placement in
connection with the closing of the Company's initial business combination or, in
the absence of the foregoing, pursuant to the terms of the registration rights
agreement entered into by the Company, Sponsor and NGC in connection with the
Company's initial public offering (the "Registration Rights Agreement").
Pursuant to the foregoing, on
Each Forward Purchase Agreement contains representations and warranties by each party, conditions to closing, and additional provisions that are customary for agreements of this nature. The terms of all of the Forward Purchase Agreements are substantively the same, except that the NGC Forward Purchase Agreement gives NGC board observation rights prior to the Company's initial business combination, and gives the members of NGC a priority right to subscribe for any of the forward purchase units that any other prospective purchasers do not elect to purchase under any of the other Forward Purchase Agreements.
Proposed Business Combination
On
On the date of closing of the Merger (the "Closing") immediately prior to the
effective time of the Merger (the "Effective Time"), we will amend and restate
our certificate of incorporation (the "Post-Closing Charter"), pursuant to
which, among other things, (i) we will have a dual class share structure with
(x) shares of Class A common stock that will carry voting rights in the form of
one vote per share (the "New Class A Common Stock"), and (y) shares of Class B
common stock that will carry voting rights in the form of ten votes per share
(the "New Class B Common Stock" and, together with the New Class A Common Stock,
the "New Common Stock") and (ii) all outstanding shares of our common stock will
be reclassified into shares of New Class A Common Stock. At Closing, we will
also change our name to
Consummation of the transactions contemplated by the Merger Agreement is subject to customary conditions of the respective parties, including the approval of the Embark Business Combination by our stockholders.
Subscription Agreements
In connection with the execution of the Merger Agreement, we and Embark entered
into separate subscription agreements (collectively, the "Subscription
Agreements") with a number of investors (the "
In addition, in connection with the execution of the Merger Agreement, and
pursuant to the Forward Purchase Agreements, certain
The closing of the sale of the PIPE Shares pursuant to the Subscription
Agreements and PIPE Units pursuant to the Forward Purchase Agreements is
contingent upon, among other customary closing conditions, the substantially
concurrent consummation of the Embark Business Combination. The purpose of the
PIPE is to raise additional capital for use by the
21
Sponsor Support Agreement and Foundation Investor Support Agreement
In connection with the Merger Agreement, we, Embark and the Sponsor entered into the Sponsor Support Agreement pursuant to which Sponsor agreed to vote all of its shares of NGA Common Stock in favor of the approval and adoption of the Business Combination. Additionally, Sponsor agreed, among other things, not to (i) transfer any of its shares of New Class A Common Stock or warrants for certain periods of time as set forth in the Sponsor Support Agreement, subject to certain customary exceptions or (ii) enter into any voting arrangement that is inconsistent with the commitment under the Sponsor Support Agreement to vote in favor of the approval and adoption of the Business Combination. Sponsor also agreed to forfeit, immediately prior to Closing, (i) a relative percentage of up to 1,130,239 Founder Shares to the extent that the Sponsor's institutional investors fail to hold, at the Closing, at least one-half of the shares of NGA Common Stock issued to such investors in connection with our initial public offering, and (ii) up to 627,910 Founder Shares (currently expected to be 393,025 Founder Shares) in connection with the Forward Purchase Agreement investment. The Sponsor Support Agreement will terminate upon the termination of the Merger Agreement if the Closing does not occur.
In addition, in connection with the Merger Agreement, the Sponsor expects
certain of its institutional investors to enter into separate Support Agreements
pursuant to which such investors will agree, among other things, to vote all
shares of our common stock held by such investor at the time of such vote (i) in
favor of the approval and adoption of the Business Combination, the Merger
Agreement and each of the Transaction Proposals (as defined in the Merger
Agreement), (ii) against any other business combination proposal or related
proposals; and (iii) against any proposal, action or agreement that would
reasonably be expected to impede, frustrate, or prevent the Merger or the
satisfaction of any of the conditions thereto. Each such investor is further
expected to represent and agree that such investor has not entered into, and
will not enter, any agreement that would restrict, limit or interfere with the
voting agreement made in the Support Agreement. The Business Combination
Agreement and related agreements are further described in the Form 8-K filed by
the Company on
Embark Holders Support Agreement
In connection with the Merger Agreement, we, Embark and certain stockholders of Embark (the "Embark Holders") entered into the Company Holders Support Agreement (the "Embark Holders Support Agreement") pursuant to which the Embark Holders each agreed to (i) vote his, her or its shares of Embark common stock in favor of the approval and adoption of the Business Combination, (ii) not transfer, subject to limited exceptions, any shares of Embark common stock prior to the Closing or termination of the Merger Agreement, (iii) deliver a duly executed counterpart to the Registration Rights Agreement at Closing and (iv) be bound by certain other covenants and agreements related to the Business Combination. The Embark Holders Support Agreement will terminate upon the termination of the Merger Agreement if the Closing does not occur.
Registration Rights Agreement
In connection with the Closing, we will enter into a Registration Rights
Agreement with the Sponsor and certain former Embark Holders. The Registration
Rights Agreement, subject to the terms thereof, will require the
On
Other than as specifically discussed, this report does not assume the closing of the Embark Business Combination.
Working Capital Warrants
On
22 Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from
For the three months ended
For the nine months ended
Liquidity and Capital Resources
On
Following the Initial Public Offering and the full exercise of the
over-allotment option, and, a total of
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
23
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, the Sponsor, 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 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
Based on the foregoing, management believes that the Company will have
sufficient working capital and borrowing capacity from the sponsor or an
affiliate of the Sponsor, or certain of the Company's officers and directors to
meet its needs through the earlier of the consummation of a Business Combination
or one year from this filing. Over this time period, the Company will be using
these funds for paying existing accounts payable, identifying and evaluating
prospective initial Business Combination candidates, performing due diligence on
prospective target businesses, paying for travel expenditures, selecting the
target business to merge with or acquire, and structuring, negotiating and
consummating the Business Combination. On
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 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, we may have insufficient funds available to operate our business prior to our Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of our Public Shares upon consummation of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination.
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 the Sponsor
or an affiliate of the Sponsor a monthly fee of
The underwriters are entitled to a deferred fee of 3.5% of the gross proceeds of
the Initial Public Offering, or
In connection with the Initial Public Offering, the Company entered into the NGC Forward Purchase Agreement with NGC, which NGC Forward Purchase Agreement was subsequently amended and restated as described under "-Recent Developments-Forward Purchase Agreements" above.
The forward purchase transaction is not dependent upon or affected by the
percentage of stockholders electing to redeem their Public Shares and may
provide the Company with an increased minimum funding level for the initial
Business Combination. The forward purchase transaction is subject to conditions,
including the forward purchase investor giving the Company its irrevocable
written confirmation, confirming its commitment to purchase forward purchase
securities and the amount thereof, no later than fifteen days after the Company
notifies it of the Company's intention to raise capital through the issuance of
equity securities in connection with the closing of an initial Business
Combination. The forward purchase investor may grant or withhold its consent and
confirmation entirely within its sole discretion. Accordingly, if the forward
purchase investor does not consent to and confirm the purchase, it will not be
obligated to purchase any of the forward purchase securities. In connection with
the proposed Embark Business Combination, certain
24 Critical Accounting Policies
The preparation of condensed consolidated financial statements and related
disclosures in conformity with accounting principles generally accepted in
Warrant Liability
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
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.
Common Stock Subject to Possible Redemption
We account for our common stock subject to possible conversion in accordance with the guidance in Accounting Standards Codification ("ASC") Topic 480 "Distinguishing Liabilities from Equity." Common stock subject to mandatory redemption is classified as a liability instrument and measured at fair value. Conditionally redeemable common stock (including common stock that features 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) is classified as temporary equity. At all other times, common stock is classified as stockholders' equity. Our common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders' equity section of our condensed consolidated balance sheets.
Net Income Per Common Share
Net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. We apply the two-class method in calculating earnings per share. Accretion associated with the redeemable shares 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 condensed consolidated financial statements.
25
© Edgar Online, source