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
for Section 27A of the Securities Act 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 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 the Risk
Factors section of the Company's
Overview
We are a newly organized blank check company incorporated on
The issuance of additional shares in connection with an initial Business Combination to the owners of the target or other investors:
? may significantly dilute the equity interest of investors in our 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 our 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 is 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 ? may adversely affect prevailing market prices for our Class A common stock and/or warrants. 21
Similarly, if we issue debt securities or otherwise incur significant debt to banks 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 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.
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete our initial Business Combination will be successful.
Agreement and Plan of Merger for a Business Combination
On
The Merger Entities are each wholly owned subsidiaries of Shelf. The Merger
Agreement provides for, among other things, (a) MS 1 to be merged with and into
the Company, with the Company surviving the merger; (b) MS 2 to be merged with
and into Holdings, with Holdings surviving the merger; (c) MS 3 to be merged
with and into NEA Blocker, with NEA Blocker surviving the merger; (d) MS 4 to be
merged with and into Oak Blocker, with Oak Blocker surviving the merger; (e) MS
5 to be merged with and into
22
As a result of the Transactions, the Company, NEA Blocker, Oak Blocker,
The aggregate consideration to be paid to the equity holders of Holdings, NEA
Blocker, Oak Blocker,
Pursuant to the Company's amended and restated certificate of incorporation and in accordance with the terms of the Merger Agreement, the Company will be providing its public stockholders with the opportunity to redeem, upon the closing of the Transactions, their shares of Class A common stock for cash equal to their pro rata share of the aggregate amount on deposit as of two business days prior to the consummation of the Transactions in the Trust Account (which holds the proceeds of the Company's IPO, less taxes payable).
Upon the consummation of the Business Combination, the Company intends to change
its name to "
The consummation of the Business Combination is subject to certain conditions as further described in the Merger Agreement.
Concurrently with the execution and delivery of the Merger Agreement, certain
institutional investors entered into subscription agreements (the "PIPE")
pursuant to which they have committed to subscribe for and purchase 20.5 million
PIPE shares at a purchase price per share of
For additional information regarding
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational activities and those necessary to prepare for our IPO, and identifying a target for our initial Business Combination. We do not expect to generate any operating revenues until after completion of our initial 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 in connection with completing our initial Business Combination.
For the three months ended
Liquidity and Capital Resources
Until the consummation of the IPO, the Company's only sources of liquidity were the proceeds from the initial purchase of Class B common stock by our Sponsor and loans from our Sponsor.
On
23
For the nine-month period ending
As of
As of
In order to fund working capital deficiencies or finance transaction costs in
connection with our initial Business Combination, our Sponsor has agreed to loan
us funds as may be required in the form of working capital loans. The Company
entered into an agreement with the Sponsor for the first working capital loan
("First Working Capital Loan") of
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
Based on its currently available cash on hand, access to the Working Capital Loans, and extended payment terms with certain vendors, the Company believes it has sufficient liquidity in order to meet the expenditures required for operating our 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 our Business Combination. Moreover, the Company may need to obtain additional financing either to complete a Business Combination or because it becomes obligated to redeem a significant number of the public shares upon consummation of our Business Combination, in which case the Company may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, the Company would only complete such financing simultaneously with the completion of our Business Combination. If the Company is unable to complete the Business Combination because it does not have sufficient funds available, the Company will be forced to cease operations and liquidate the Trust Account. In addition, following the Business Combination, if cash on hand is insufficient, the Company may need to obtain additional financing in order to meet our obligations.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of
24 Contractual Obligations
We do not have any long-term debt (other than the First Working Capital Loan),
capital lease obligations, operating lease obligations or long-term liabilities,
other than an agreement to pay an affiliate of our Sponsor a monthly fee of
The underwriter is entitled to deferred commissions of
Critical Accounting Estimates
Management's discussion and analysis of our results of operations and liquidity
and capital resources are based on our unaudited financial information. We
describe our significant accounting policies in Note 3 - Summary of Significant
Accounting Policies, of the Notes to Unaudited Condensed Financial Statements
included in this report. Our unaudited condensed financial statements have been
prepared in accordance with accounting principles generally accepted in
Warrant Accounting
Pursuant to Accounting Standards Codification Subtopic 815-40 the Company classifies its warrants as derivative liabilities in its financial statements. Under this accounting treatment, the Company is required to measure the fair value of the warrants at the end of each reporting period and recognize changes in the fair value from the prior period in the Company's operating results for the current period.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on our condensed financial statements.
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