The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
We are a blank check company incorporated as a
We presently have no revenue, have had losses since inception from incurring formation and operating costs and have had no operations other than identifying and evaluating suitable acquisition transaction candidates. We have relied upon the sale of our securities and loans from the Sponsor to fund our operations.
On
The Trust Funds include
Our management has broad discretion with respect to the specific application of the proceeds of the Private Placement that are held out of the Trust Account, although substantially all the net proceeds are intended to be applied generally towards consummating an initial business combination and working capital.
Extension of the Period of Time to Consummate Initial Business Combination
On
In connection with the Extension Payment, the Company issued an unsecured promissory note (the "Note") to the Sponsor.
The Note is non-interest bearing and payable (subject to the waiver against
trust provisions) upon the date on which the Company consummates its initial
business combination. The principal balance may be prepaid at any time, at the
election of the Company. The holder of the Note has the right, but not the
obligation, to convert the Note, in whole or in part, into Private Units of the
Company, as described in the Prospectus of the Company, by providing the Company
with written notice of its intention to convert the Note at least two business
days prior to the closing of the Company's initial business combination. The
number of Private Units to be received by the holder in connection with such
conversion shall be an amount determined by dividing (x) the sum of the
outstanding principal amount payable to the holder, by (y)
Among
16 Results of Operations
Our entire activity from inception up to date was related to the Company's formation, the IPO and general and administrative activities. Since the IPO, our activity has been limited to the evaluation of initial business combination candidates, and we will not be generating any operating revenues until the closing and completion of our initial business combination. We generate non-operating income in the form of interest income earned on investment held in the Trust Account. We are incurring expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the period from
Liquidity and Capital Resources and Going Concern
The Company's liquidity needs up to
On
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, excluding deferred underwriting commissions, to complete our Business Combination. We may withdraw interest from the Trust Account to pay taxes, if any. To the extent that our share capital or debt is used, in whole or in part, as consideration to complete a 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.
We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a 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 the Company completes the initial Business
Combination, it will repay such loaned amounts. 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
the Trust Account would be used for such repayment. Up to
If our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination is 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 Business Combination or because we become obligated to redeem a significant number of our public shares upon completion of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination, all of which raise substantial doubt about our ability to continue as a going concern.
In addition, under our amended and restated certificate of incorporation
provides that we will have only nine months from the closing of the IPO to
complete the initial Business Combination, which may be extended up to
three times by an additional three-month each time to a total of 18 months from
the closing of IPO. If we are unable to complete a Business Combination by
As a result, management has determined that the liquidity concern and mandatory liquidation both raise substantial doubt about the Company's ability to continue as a going concern. The financial statement does not include any adjustments that might result from the outcome of this uncertainty.
17
Off-Balance Sheet Financing Arraignments
We have no obligations, assets or liabilities that would be considered
off-balance sheet arrangements as of
Contractual Obligations
As of
We are obligated to pay the Representatives the deferred underwriting
compensation equal to 3.5% of the IPO Proceeds which amounted to
Critical Accounting Policies and Estimates
Use of Estimates
The preparation of financial statements in conformity with
Investments held in Trust Account
At
We classify its
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 ASC 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, whether they 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 our own Class A Common Stock and whether the warrant holders could potentially require "net cash settlement" in a circumstance outside of our control, 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 equity 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 as liabilities 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.
We accounted for the 9,775,000 Warrants issued with the IPO and 498,875 warrants
issued with the Private Placement as equity instruments We accounted for the
Warrants as an expense of the IPO and Private Placement resulting in a charge
directly to stockholders' equity. We estimated that the fair value of the
Warrants issued with the IPO was approximately
The fair value of the Warrants was estimated as of the date of grant using the
following assumptions: (1) expected volatility of 0.1%, (2) risk-free interest
rate of 3.39%, (3) expected life of 6.09 years, (4) exercise price of
18
Common Stock Subject to Possible Redemption
We account for our Class A Common Stock subject to possible redemption in
accordance with the guidance in ASC Topic 480, "Distinguishing Liabilities from
Equity." Class A Common Stock subject to mandatory redemption (if any) are
classified as a liability instrument and are measured at fair value.
Conditionally redeemable Class A Common Stock (including Class A Common Stock
that feature 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) are classified as temporary equity. At all other times,
Class A Common Stock are classified as stockholders' equity. Our Public Shares
feature certain redemption rights that are considered to be outside of our
control and subject to occurrence of uncertain future events. Accordingly, as of
Fair Value of Financial Instruments
The fair value of our assets and liabilities approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.
The fair value of our financial assets and liabilities reflects management's estimate of amounts that we would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, we seek to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
? Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active market. ? Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. ? Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value. Income Taxes
We account for income taxes under ASC 740, Income Taxes ("ASC 740"). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
We recognize accrued interest and penalties related to unrecognized tax benefits
as income tax expense. There were no unrecognized tax benefits and no amounts
accrued for interest and penalties as of
We have identified
We may be subject to potential examination by federal and state taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. Our management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
We are incorporated in the
19 Net Income (Loss) per Share
We comply with accounting and disclosure requirements of ASC 260, Earnings Per Share. In order to determine the net income (loss) attributable to both the redeemable shares and non-redeemable shares, we first considered the undistributed income (loss) allocable to both the redeemable Class A Common Stock and non-redeemable Class A Common Sock and the undistributed income (loss) is calculated using the total net loss less any dividends paid. We then allocated the undistributed income (loss) ratably based on the weighted average number of shares outstanding between the redeemable and non-redeemable Class A Common Stock. 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 public stockholders.
Recent Accounting Pronouncements
In
Management does not believe that any other recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
© Edgar Online, source