References to the "Company," "us," "our" or "we" refer to Ventoux CCM
Acquisition Corp. The following discussion and analysis of our financial
condition and results of operations should be read in conjunction with our
audited financial statements and related notes included herein.
In this Amendment No. 2 ("Amendment No. 2") to the Annual Report on Form 10-K
of Ventoux CCM Acquisition Corp. (the "Company") for the period ended December
31, 2020, we are restating (i) the Post IPO Balance Sheet, as previously
restated in the 2020 Form 10-K/A No. 1, and (ii) FY 2020 statements as
previously restated in the 2020 Form 10-K/A No. 1.
We have re-evaluated our application of ASC 480-10-S99-3A to our accounting and
classification of the Public Shares, issued as part of the units sold in the
initial public offering on December 30, 2020. Historically, a portion of the
Public Shares was classified as permanent equity to maintain stockholders'
equity greater than $5 million on the basis that we will not redeem our Public
Shares in an amount that would cause our net tangible assets to be less than
$5,000,001, as described in the Charter. Previously, the Company did not
consider redeemable stock classified as temporary equity as part of net tangible
assets. Effective with these financial statements, the Company revised this
interpretation to include temporary equity in net tangible assets. Pursuant to
such re-evaluation, our management has determined that the Public Shares include
certain provisions that require classification of all of the Public Shares as
temporary equity. In addition, in connection with the change in presentation for
the Public Shares, management determined it should restate earnings per share
calculation to allocate income and losses shared pro rata between the two
classes of common stock. This presentation contemplates a Business Combination
as the most likely outcome, in which case, both classes of common stock share
pro rata in the income and losses of our Company.
On November [ ], 2021, the Audit Committee concluded, after discussion with the
Company's management, that our previously issued (i) Post IPO Balance sheet, as
previously restated in the 2020 Form 10-K/A No. 1, (ii) FY 2020 Financial
Statements as previously restated in the 2020 Form 10-K/A No. 1, (iii) Q1 2021
Financial Statements included in our Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2021, filed with the SEC on June 22, 2021 and
(iv) Q2 Financial Statements included in our Quarterly Report on Form 10-Q for
the quarterly period ended June 30, 2021, filed with the SEC on August 12, 2021,
should be restated to report all Public Shares as temporary equity and should no
longer be relied upon. As such, the Company is restating the Post IPO Balance
Sheet and the FY 2020 Financial Statements herein and intends to restate the Q1
2021 Financial Statements and the Q2 2021 Financial Statements in the Q3 Form
10-Q/A.
The restatement does not have an impact on our cash position.
Our management has concluded that in light of the classification error described
above, a material weakness exists in our internal control over financial
reporting and that our disclosure controls and procedures were not effective.
In connection with the restatement, our management reassessed the effectiveness
of our disclosure controls and procedures for the periods affected by the
restatement. As a result of that reassessment, we determined that our disclosure
controls and procedures for such periods were not effective with respect to our
internal controls around the proper accounting and classification of complex
financial instruments. For more information, see Item 9A included in this
Amendment No. 2.
The restatement is more fully described in Note 2 of the notes to the financial
statements included herein.
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, share purchase, reorganization or similar business combination with
one or more businesses. We intend to effectuate our initial business combination
using cash from the proceeds of the IPO and the sale of the Private Warrants,
our capital stock, debt or a combination of cash, stock and 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 an initial
business combination will be successful.
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Results of Operations
We have neither engaged in any operations (other than searching for a target for
our initial business combination after our IPO) nor generated any revenues to
date. Our only activities from July 10, 2019 (inception) through December 31,
2020 were organizational activities, including those necessary to prepare for
the IPO. We do not expect to generate any operating revenues until after the
completion of our initial business combination. We expect to generate
non-operating income in the form of interest earned on investments held since
the IPO. 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.
As a result of the restatement described in Note 2 of the notes to the financial
statements included herein, we classify the Private Warrants issued in
connection with our Initial Public Offering as liabilities at their fair value
and adjust the warrant instrument 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.
For the year ended December 31, 2020, we had a net loss of $1,363,061, which
consisted of operating costs of $18,208, a change in fair value of warrant
liabilities of $180,000, loss on initial issuance of private warrants of
$1,140,000, and transaction costs allocable to warrant liabilities of $24,853.
For the period from July 10, 2019 (inception) through December 31, 2019, we had
net loss of $1,450, which consisted of formation and operational costs.
Liquidity and Capital Resources
On December 30, 2020, we consummated the IPO of 15,000,000 Units at a price of
$10.00 per Unit, generating gross proceeds of $150,000,000. Simultaneously with
the closing of the IPO, we consummated the sale of 6,000,000 Private Warrants,
at a price of $1.00 per Private Warrant, in a private placement to our initial
stockholders, generating gross proceeds of $6,000,000.
Following the IPO, a total of $151,500,000 was placed in the Trust Account. We
incurred $3,543,017 in transaction costs, including $3,000,000 in cash
underwriting fees and $543,017 of other offering costs.
On December 29, 2020, the underwriters notified the Company of their intent to
fully exercise their over-allotment option. Closing of the over-allotment option
occurred on January 5, 2021, when the Company consummated 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. A total of $22,725,000 of the net proceeds was
deposited into the trust account, bringing the aggregate proceeds held in the
trust account to $174,225,000. Transaction costs related to the underwriters'
exercise of their over-allotment option were $450,000, consisting of
underwriting fees. As a result of the underwriters' election to exercise their
over-allotment option in full, 562,500 founder shares are no longer subject to
forfeiture.
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For the year ended December 31, 2020, cash used in operating activities was
$30,735. Net loss of $1,363,061 was affected by a change in fair value of
warrant liabilities of $180,000, loss on initial issuance of private warrants of
$1,140,000,transaction costs allocable to warrant liabilities of $24,853, and
changes in operating assets and liabilities, which used $12,527 of cash from
operating activities.
As of December 31, 2020, we had cash held in the trust account of $151,500,000,
which excludes an additional $22,725,000 of net proceeds deposited on January 5,
2021. We intend to use substantially all of the funds held in the trust account,
including any amounts representing interest earned on the funds held in the
trust account, to complete our initial business combination. We may withdraw,
from time to time, any interest earned on the funds in the trust account that we
may need to pay our tax obligations. During the year ended December 31, 2020, we
did not withdraw any interest income from the trust account. To the extent that
our capital stock 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.
As of December 31, 2020, we had $1,071,253 of cash held outside of the trust
account. We intend to use the funds held outside the trust account for
identifying and evaluating prospective acquisition candidates, performing
business due diligence on prospective target businesses, traveling to and from
the offices, plants or similar locations of prospective target businesses,
reviewing corporate documents and material agreements of prospective target
businesses, selecting the target business to acquire and structuring,
negotiating and consummating the initial business combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with an initial business combination, our initial stockholders,
officers, directors or their affiliates may, but are not obligated to, loan us
funds as may be required. In the event that the 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. Such loans would be evidenced by
promissory notes. The notes would either be paid upon consummation of our
initial business combination, without interest, or, at the lender's discretion,
up to $500,000 of the notes may be converted upon consummation of our business
combination into additional private warrants to purchase shares of common stock
at a conversion price of $1.00 per private warrant. The warrants would be
identical to the Private Warrants. If we do not complete a business combination,
the loans will only be repaid with funds not held in the trust account, to the
extent available. Loans made by Chardan Capital Markets or any of its related
persons will not be convertible into private warrants, and Chardan Capital
Markets and its related persons will have no recourse with respect to their
ability to convert their loans into private warrants. Except for the foregoing,
the terms of such working capital loans, if any, have not been determined and no
written agreements exist with respect to such loans.
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 due diligence and
negotiating an initial 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 initial business combination. Moreover, we may need to
obtain additional financing either to complete our initial business combination
or to redeem a significant number of our public shares upon consummation of our
initial business combination, in which case we may issue additional securities
or incur debt in connection with such initial business combination. Subject to
compliance with applicable securities laws, we would only complete such
financing simultaneously with the completion of our initial business
combination. If we are unable to complete our initial business combination
because we do not have sufficient funds available to us, we will be forced to
cease operations and liquidate the trust account. In addition, following our
initial business combination, if cash on hand is insufficient, we may need to
obtain additional financing in order to meet our obligations.
As a result of the above, in connection with the Company's 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," management has determined
that the liquidity condition and date for mandatory liquidation and dissolution
raise substantial doubt about the Company's 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 the Company be unable to continue as a going concern.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of 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 monthly fee of $10,000 for office space, utilities,
secretarial and administrative support services. As of December 31, 2020, there
were no amounts incurred under this agreement.
The Company granted the underwriters a 45-day option from the date of the IPO to
purchase up to 2,250,000 additional Units to cover over-allotments, if any, at
the IPO price less the underwriting discounts and commissions. On January 5,
2021, the closing of the underwriters' over-allotment option occurred. The
underwriters were paid cash underwriting discount of $0.20 per Unit, or
$3,450,000 in the aggregate, upon the closing of the IPO and the over-allotment
option.
19
The Company has engaged Chardan Capital Markets, LLC as an advisor in connection
with an initial business combination to assist the Company in holding meetings
with its stockholders to discuss the potential initial business combination and
the target business's attributes, introduce the Company to potential investors
that are interested in purchasing the Company's securities in connection with
the potential initial business combination, assist the Company in obtaining
stockholder approval for the initial business combination and assist the Company
with its press releases and public filings in connection with initial business
combination. The Company will pay Chardan Capital Markets, LLC a marketing fee
for such services upon the consummation of an initial business combination in an
amount equal to, in the aggregate, 3.5% of the gross proceeds of the IPO,
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 Company consummates its initial business combination.
Critical Accounting Policies
The preparation of 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 Warrants
for periods where no observable traded price was available 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 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, at December 31, 2020, 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 (Loss) per Common Stock
We comply with accounting and disclosure requirements of FASB ASC Topic 260,
"Earnings Per Share." Net income (loss) per common stock is calculated by
dividing the net income (loss) by the weighted average number of common stock
outstanding for the respective period. We apply the two-class method in
calculating earnings per share. Accretion associated with the redeemable shares
of common stock is excluded from earnings per share as the redemption value
approximates fair value.
We did not consider the effect of the warrants issued in connection with the
initial public offering and the private placement in the calculation of diluted
income (loss) per common stock because their exercise is contingent upon future
events. As a result, diluted net income (loss) per common stock is the same as
basic net income (loss) per common stock. Accretion associated with the
redeemable a portion of common stock is excluded from income (loss) per common
stock as the redemption value approximates fair value.
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 our financial statements.
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