References to the "Company," "our," "us" or "we" refer to PropTech Investment
Corporation II The following discussion and analysis of the Company's financial
condition and results of operations should be read in conjunction with the
unaudited condensed 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.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). We have based these forward-looking statements on
our current expectations and projections about future events. These
forward-looking statements are subject to known and unknown risks, uncertainties
and assumptions about us that may cause our actual results, levels of activity,
performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by such
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "should," "could," "would," "expect,"
"plan," "anticipate," "believe," "estimate," "continue," or the negative of such
terms or other similar expressions. Such statements include, but are not limited
to, possible business combinations and the financing thereof, and related
matters, as well as all other statements other than statements of historical
fact included in this Form 10-Q. Factors that might cause or contribute to such
a discrepancy include, but are not limited to, those described in our other
Securities and Exchange Commission ("SEC") filings.
Overview
We are a blank check company incorporated in Delaware on August 6, 2020 for the
purpose of effecting a merger, capital stock exchange, asset acquisition, stock
purchase, reorganization or similar business combination with one or more
businesses. We are an emerging growth company and, as such, we are subject to
all of the risks associated with emerging growth companies.
Our sponsor is HC PropTech Partners II LLC, a Delaware limited liability company
controlled by certain of our officers, directors and advisors. The registration
statement for our initial public offering was declared effective on December 3,
2020. On December 8, 2020, we consummated our initial public offering of
23,000,000 units, including 3,000,000 additional units to cover over-allotments,
at $10.00 per unit, generating gross proceeds of $230.0 million, and incurring
offering costs of approximately $13.2 million, inclusive of approximately $8.1
million in deferred underwriting commissions.
Simultaneously with the closing of our initial public offering, we consummated
the private placement (the "private placement") of 4,833,333 warrants (each, a
"private placement warrant" and collectively, the "private placement warrants")
at a price of $1.50 per private placement warrant to our sponsor, generating
proceeds of approximately $7.3 million.
Upon the closing of our initial public offering and the private placement,
$230.0 million ($10.00 per unit) of the net proceeds of our initial public
offering and certain of the proceeds of the private placement was placed in a
trust account established for the benefit of our public stockholders (the "trust
account") and was invested in permitted United States "government securities"
within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as
amended, having a maturity of 185 days or less or in money market funds meeting
certain conditions under Rule 2a-7 promulgated under the Investment Company Act
that invest only in direct U.S. government treasury obligations.
Our management has broad discretion with respect to the specific application of
the net proceeds of our initial public offering and the sale of the private
placement warrants, although substantially all of the net proceeds are intended
to be applied generally toward consummating our initial business combination.
18
We will only have 24 months from the closing of our initial public offering, or
December 8, 2022, to complete our initial business combination (the "Combination
Period"). If we do not complete our initial business combination within this
period of time, we will (i) cease all operations except for the purposes of
winding up; (ii) redeem the public shares, at a per-share price, payable in
cash, equal to the aggregate amount then on deposit in the trust account,
including interest earned on the funds held in the trust account and not
previously released to us to pay taxes (less up to $100,000 of interest to pay
dissolution expenses), divided by the number of then outstanding public shares,
which redemption will completely extinguish public stockholders' rights as
stockholders (including the right to receive further liquidation distributions,
if any), subject to applicable law, and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of the remaining stockholders
and our board of directors, proceed to commence a voluntary liquidation and
thereby a formal dissolution of our Company, subject in each case to its
obligations to provide for claims of creditors and the requirement of applicable
law. The representative of the underwriters agreed to waive its rights to the
deferred underwriting commission held in the trust account in the event we do
not complete our initial business combination within the Combination Period and,
in such event, such amounts will be included with the funds held in the trust
account that will be available to fund the redemption of the public shares. In
the event of such distribution, it is possible that the per share value of the
assets remaining available for distribution will be less than the initial public
offering price per unit ($10.00 per unit).
Proposed Business Combination
On May 17, 2022, the Company entered into a business combination agreement (as
the same may be amended, supplemented or otherwise modified from time to time,
the "Business Combination Agreement") with RW National Holdings, LLC, a Delaware
limited liability company (the "Renters Warehouse"), and Lake Street Landlords,
LLC, a Delaware limited liability company ("Lake Street"), in its capacity as
the representative of the Rolling Company Unitholders (as defined in the
Business Combination Agreement) (in such capacity, the "Sellers'
Representative").
The Business Combination Agreement provides that, among other things, and upon
the terms and subject to the conditions thereof, the following transactions will
occur:
(i) Concurrent with the execution of the Business Combination Agreement, the
Sponsor, Other Class B Shareholders of the Company (as defined in the Business
Combination Agreement), the Company, and Renters Warehouse, among others, have
entered into the sponsor letter agreement (as the same may be amended,
supplemented or otherwise modified from time to time, the "Sponsor Letter
Agreement"), pursuant to which, among other things, the Sponsor and each Other
Class B Shareholders have agreed to (a) vote all Company shares owned by the
Sponsor and each Other Class B Shareholder in favor of the Business Combination
Agreement and the contemplated transactions, (b) subject to, and conditioned
upon the Effective Time (as defined in the Business Combination Agreement),
waive any adjustment to the conversion ratio set forth in the Company's
governing documents or waive any anti-dilution or similar protection with
respect to the Company's shares of Class B common stock, par value $0.0001 (the
"Class B Shares") and (c) subject to, and conditioned upon the closing,
terminate certain existing agreements or arrangements, in each case, on the
terms and subject to the conditions set forth in the Sponsor Letter Agreement;
(ii) Immediately prior to the closing, the Company shall form Appreciate
Intermediate Holdings, LLC ("NewCo LLC") for purposes of consummating the
transactions contemplated by the Business Combination Agreement and the related
ancillary documents (the "Ancillary Documents"), on the terms and subject to the
conditions set forth in the Business Combination Agreement;
(iii) On the closing date, (a) Rolling Company Unitholders will contribute all
of their existing Renters Warehouse Interests to NewCo LLC in exchange for
non-voting Class B Units of NewCo LLC (the "NewCo LLC Class B Units"), (b) the
Limited Liability Agreement of NewCo LLC (the Amended and Restated NewCo LLC
Agreement") will be amended and restated in the required form, (c) the Company
will contribute the Closing Date Contribution Amount (as defined in the Business
Combination Agreement) to NewCo LLC in exchange for Class A Units of NewCo LLC
(the NewCo LLC Class A Units") and (d) the NewCo LLC unitholders (other than the
Company) will receive a number of the Company's Class B Shares equal to the
Transaction Equity Security
Amount (as defined in the Business Combination Agreement), on the terms and
subject to the conditions set forth in the Business Combination Agreement;
(iv) At closing, the Company, Renters Warehouse, NewCo LLC, certain of the
Company unitholders (excluding St. Cloud Capital Partners III SBIC, L.P. ("St.
Cloud")) and Lake Street will enter into an income tax receivable agreement (as
the same may be amended, supplemented or otherwise modified from time to time,
the "Tax Receivable Agreement");
(v) At the closing, certain Renters Warehouse unitholders will enter into an
Investor Rights Agreement (as the same may be amended, supplemented or otherwise
modified from time to time, the "Investor Rights Agreement") pursuant to which,
among other things, such Renters Warehouse unitholders will agree not to effect
any sale or distribution of any equity securities of the Company or NewCo LLC
held by any of them during the lock-up period described therein;
(vi) In connection with the transactions contemplated by the Business
Combination Agreement, the Company will file a proxy statement (the "Proxy
Statement") relating to the transactions contemplated by the Business
Combination Agreement and the Ancillary Documents and it is a condition to the
consummation of the transactions contemplated by the Business Combination
Agreement that the Company obtain the requisite stockholder approvals; and
(vii)Subject to the terms set forth in the Business Combination Agreement, the
Sellers' Representative will serve as the representative of the Rolling Company
Unitholders.
19
As a result of the transactions contemplated by the Business Combination
Agreement, among other things:
(i) The Company will hold limited liability company interests in NewCo LLC
("Company Units") and will be the managing member of NewCo LLC; and
(ii) Renters Warehouse unitholders will hold (i) non-voting NewCo LLC Class B
Units that are exchangeable on a one-for-one basis for the Company's Class A
common stock, par value $0.0001 per share (the "Class A Shares") (subject to
surrendering a corresponding number of shares of the Company's Class B Shares
for cancellation) that will be subject to certain conditions as specified in the
Amended and Restated NewCo LLC Agreement, and (ii) a number of shares of the
Company's Class B Shares corresponding to the number of non-voting NewCo LLC
Class B Units held.
Upon completion of the transactions contemplated by the Business Combination
Agreement, the Company will be renamed as Appreciate Holdings, Inc. and will
become the managing member of NewCo LLC in an "Up-C" structure. Appreciate
Holdings, Inc. will continue Renters Warehouse's business, operated under the
Renters Warehouse name, of making available a tech-enabled full-service property
management and residential leasing marketplace company for both individual
owners of and institutional investors in single-family rental houses.
Results of Operations
Our entire activity since inception up to June 30, 2022 was in preparation for
our formation, our initial public offering, and since the closing of our initial
public offering, a search for business combination candidates. We will not
generate any operating revenues until the closing and completion of our initial
business combination. We generate non-operating income in the form of interest
income and dividends on investments held in 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.
For the three months ended June 30, 2022, we had a net loss of approximately
$7.6 million, which consisted of approximately $2.0 million of a gain from the
change in fair value of derivative warrant liabilities, and approximately
$327,000 of net gain from investments held in the Trust Account, offset by
approximately $9.8 million of general and administrative expenses, $45,000 of
administrative expenses - related party, and approximately $40,000 of franchise
tax expenses.
For the six months ended June 30, 2022, we had a net loss of approximately $3.8
million, which consisted of approximately $6.2 million of a gain from the change
in fair value of derivative warrant liabilities, and approximately $365,000 of
net gain from investments held in the Trust Account, offset by approximately
$10.1 million of general and administrative expenses, $90,000 of administrative
expenses - related party, and approximately $90,000 of franchise tax expenses.
For the three months ended June 30, 2021, we had a net loss of approximately
$2.7 million, which consisted of approximately $2.4 million of change in fair
value of derivative warrant liabilities, and approximately $253,000 of general
and administrative expenses, $45,000 of administrative expenses - related party,
and approximately $32,000 of franchise tax expenses, partially offset by
approximately $8,000 of net gain from investments held in the Trust Account.
For the six months ended June 30, 2021, we had net income of approximately $6.2
million, which consisted of approximately $6.7 million of change in fair value
of derivative warrant liabilities, and approximately $21,000 of net gain from
investments held in the Trust Account, partially offset by approximately
$396,000 of general and administrative expenses, $90,000 of administrative
expenses - related party, and approximately $83,000 of franchise tax expenses.
20
Liquidity and Capital Resources
As of June 30, 2022, we had approximately $0.2 million in our operating bank
account and working capital of approximately $(9.2) million (not taking into
account tax obligations that may be paid using the interest income earned from
investments in the Trust Account).
In addition, in order to finance transaction costs in connection an intended
initial business combination, our sponsor may, but is not obligated to, provide
us working capital loans. Up to $1.5 million of such working capital loans may
be convertible into warrants of the post-business combination entity at a price
of $1.50 per warrant at the option of the lender. Such warrants would be
identical to the Private Placement Warrants. Except for the foregoing, the terms
of such loans, if any, have not been determined and no written agreements exist
with respect to such loans to date. As of June 30, 2022, the Company had no
working capital loans outstanding.
Prior to the completion of our initial public offering, our liquidity needs were
satisfied through the proceeds of $25,000 from our sponsor in exchange for the
issuance of founder shares, and loan proceeds from our sponsor of $163,000 under
a promissory note, which we fully repaid on December 8, 2020. After the
consummation of our initial public offering, our liquidity needs have been
satisfied with the net proceeds from our initial public offering and the private
placement not held in the Trust Account.
The Company has incurred and expects to continue to incur significant costs in
pursuit of its Business Combination. Further, if the Company cannot complete a
Business Combination prior to December 8, 2022, it could be forced to wind up
its operations and liquidate unless it receives approval from its stockholders
to extend such date. These conditions raise substantial doubt about the
Company's ability to continue as a going concern for a period of time within one
year after the date that the financial statements are issued. The Company's plan
to deal with these uncertainties is to preserve cash by deferring payments with
anticipated cooperation from its service providers and to complete a Business
Combination prior to December 8, 2022. There is no assurance that the Company's
plans to consummate a Business Combination will be successful or successful
within the period permitted to complete the Business Combination. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty. To preserve liquidity, the Company has agreed with most of its
third-party business combination advisors to defer cash payments until the
closing of the Business Combination.
The preponderance of the current liabilities (approximately $9.6 million)
results from amounts accrued as payable to professional service firms who
indicated their intention to accept deferred payment terms, or success fees,
that are payable at the closing of the proposed Business Combination. As a
result, the Company believes, but cannot assure, that it has the liquidity to
complete a Business Combination.
The Company cannot provide any assurance that new financing will be available to
it on commercially acceptable terms, if at all. In connection with the Company's
assessment of going concern considerations in accordance with FASB's Accounting
Standards Update ("ASU") 2014-15, "Disclosures of Uncertainties about an
Entity's Ability to Continue as a Going Concern," management has determined the
date for mandatory liquidation and dissolution as well as liquidity raises
substantial doubt about the Company's ability to continue as a going concern
through December 8, 2022, the scheduled liquidation date of the Company if it
does not complete a Business Combination prior to such date. Management of the
Company plans to complete a business combination prior to the date for mandatory
liquidation. These unaudited condensed 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.
We continue to evaluate the impact of the COVID-19 pandemic and have concluded
that the specific impact is not readily determinable as of the date of the
filing. The unaudited condensed financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
21
Related Party Transactions
Founder Shares
On August 27, 2020, our Sponsor purchased 5,031,250 shares of Class B common
stock, par value $0.0001 per share, (the "Founder Shares") for an aggregate
purchase price of $25,000, or approximately $0.005 per share. On December 3,
2020, we effected a stock dividend of approximately 0.143 shares for each share
of Class B common stock outstanding, resulting in an aggregate of 5,750,000
shares of Class B common stock outstanding.
Our initial stockholders agreed not to transfer, assign or sell any of their
Founder Shares until the earlier to occur of: (A) one year after the completion
of a Business Combination or (B) subsequent to the initial Business Combination,
(x) if the last sale price of the Class A common stock equals or exceeds $12.00
per share (as adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like) for any 20 trading days within any 30-trading
day period commencing at least 150 days after the initial Business Combination,
or (y) the date on which we complete a liquidation, merger, capital stock
exchange, reorganization or other similar transaction that results in all of the
stockholders having the right to exchange their shares of common stock for cash,
securities or other property.
Private Placement Warrants
Simultaneously with the closing of the Initial Public Offering, we consummated
the Private Placement of 4,833,333 Private Placement Warrants at a price of
$1.50 per Private Placement Warrant to the Sponsor, generating proceeds of
approximately $7.3 million.
Each warrant is exercisable to purchase one share of Class A common stock at a
price of $11.50 per share. Certain proceeds from the sale of the Private
Placement Warrants were added to the proceeds from the Initial Public Offering
held in the Trust Account. If we do not complete a Business Combination within
the Combination Period, the proceeds from the sale of the Private Placement
Warrants will be used to fund the redemption of the Public Shares (subject to
the requirement of applicable law) and the Private Placement Warrants will
expire worthless.
Promissory Note Related Party
On August 6, 2020, our Sponsor agreed to loan us an aggregate of up to $300,000
to cover expenses related to the Initial Public Offering pursuant to a
promissory note (the "Note"). This loan was non-interest bearing and was due on
the earlier of March 31, 2021 or the completion of the Initial Public Offering.
We borrowed $163,000 under the Note. We fully repaid the Note on December 8,
2020 and no longer has access to borrowings under this Note.
Related Party Loans
In order to finance transaction costs in connection with a Business Combination,
our Sponsor, an affiliate of the Sponsor, or the Company's officers and
directors may, but are not obligated to, loan us funds as may be required (the
"Working Capital Loans"). Such Working Capital Loans would be evidenced by
promissory notes. The notes would either be repaid upon consummation of a
Business Combination, without interest, or, at the lender's discretion, up to
$1.5 million of notes may be converted upon consummation of a Business
Combination into additional Private Placement Warrants at a price of $1.50 per
Warrant. In the event that a Business Combination does not close, we may use a
portion of proceeds held outside the Trust Account to repay the Working Capital
Loans but no proceeds held in the Trust Account would be used to repay the
Working Capital Loans. As of June 30, 2022 and December 31, 2021, we had no
Working Capital Loans outstanding.
22
Administrative Support Agreement
We agreed to pay $15,000 a month for office space, utilities, and secretarial
and administrative support to our Sponsor. Services commenced on the date the
securities were first listed on the Nasdaq and will terminate upon the earlier
of the consummation by our Business Combination or our liquidation. For the
three months and six months ended June 30, 2022, we incurred approximately
$45,000 and $90,000, respectively, for these services. No amounts were due as of
June 30, 2022 and December 31, 2021.
Commitments and Contingencies
Registration Rights
The holders of the Founder Shares, Private Placement Warrants and any Warrants
that may be issued upon conversion of the Working Capital Loans (and any shares
of 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 and upon conversion of the Founder Shares) are entitled to registration
rights pursuant to a registration rights agreement entered into on the effective
date of the registration statement for the Initial Public Offering. The holders
of these securities are entitled to make up to three demands, excluding short
form demands, that we register such securities. In addition, the holders have
certain "piggy-back" registration rights with respect to registration statements
filed subsequent to the consummation of a Business Combination. The registration
rights agreement does not contain liquidating damages or other cash settlement
provisions resulting from delays in registering our securities. We will bear the
expenses incurred in connection with the filing of any such registration
statements. At the Closing, the Company and the Sponsor will terminate the
registration rights agreement and replace it with the Investor Rights Agreement
(as defined below).
Investor Rights Agreement
The Company, the Sponsor, the other Founder Holders (as defined therein) and the
Sellers (as defined therein) will enter into an investor rights agreement (the
"Investor Rights Agreement") at the Closing, pursuant to which, among other
things, (a) each Holder (as defined therein) (excluding St. Cloud Capital
Partners III SBIC, L.P.) will agree not to effect any sale or distribution of
any common stock of Appreciate held by any of them during the lock-up period
described therein and (b) each Holder will be granted certain registration
rights with respect to their respective Appreciate Common Stock, in each case,
on the terms and subject to the conditions set forth therein.
Underwriting Agreement
We granted the underwriters a 45-day option to purchase up to 3,000,000
additional Units to cover over-allotments at the Initial Public Offering price,
less the underwriting discounts and commissions. The underwriters exercised the
option in full on December 8, 2020.
The underwriters were entitled to a cash underwriting discount of 2.0% of the
gross proceeds of the Initial Public Offering, or $4.6 million in the aggregate,
which was paid upon closing of the Initial Public Offering. In addition, the
representative of the underwriters will be entitled to a deferred fee of 3.5% of
the gross proceeds of the Initial Public Offering, or approximately $8.1
million. The deferred fee will become payable to the representative of the
underwriters from the amounts held in the Trust Account solely in the event that
the Company completes a Business Combination, subject to the terms of the
underwriting agreement.
Deferred Consulting Fee
In October 2020, we entered into an agreement with a third party that will
provide investor relations services pursuant to which we paid a $10,000 initial
fee upon execution and agreed to pay a deferred success fee of $50,000 upon the
consummation of the initial Business Combination.
23
Critical Accounting Policies
Investments Held in the Trust Account
The Company's portfolio of investments held in the Trust Account is comprised of
U.S. government securities, within the meaning set forth in Section 2(a)(16) of
the Investment Company Act, with a maturity of 185 days or less, or investments
in money market funds that invest in U.S. government securities, or a
combination thereof. The Company's investments held in the Trust Account are
classified as trading securities. Trading securities are presented on the
unaudited condensed balance sheet at fair value at the end of each reporting
period. Gains and losses resulting from the change in fair value of these
securities is included in net gain on investments held in the Trust Account in
the accompanying unaudited condensed statement of operations. The estimated fair
values of investments held in the Trust Account were determined using available
market information.
Class A Common Stock Subject to Possible Redemption
We account for 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) is classified as a
liability instrument and measured at fair value. Conditionally redeemable Class
A common stock (including Class A 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, Class A common stock is classified as
stockholders' equity. Our Class A common stock features certain redemption
rights that are considered to be outside of our control and subject to the
occurrence of uncertain future events. Accordingly, at June 30, 2022 and
December 31, 2021, 23,000,000 and 23,000,000 shares of Class A common stock
subject to possible redemption is presented as temporary equity, outside of the
stockholders' equity section of the unaudited condensed balance sheet.
Derivative Warrant liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or
foreign currency risks. We evaluate all of our financial instruments, including
issued stock purchase warrants, to determine if such instruments are derivatives
or contain features that qualify as embedded derivatives, pursuant to ASC 480
and ASC 815-15. The classification of derivative instruments, including whether
such instruments should be recorded as liabilities or as equity, is re-assessed
at the end of each reporting period.
We issued 12,500,000 common stock warrants in connection with our Initial Public
Offering (7,666,667) and Private Placement (4,833,333) which are recognized as
derivative liabilities in accordance with ASC 815-40. Accordingly, we recognize
the warrant instruments as liabilities at fair value and adjust the instruments
to fair value at each reporting period. The liabilities are subject to
re-measurement at each unaudited condensed balance sheet date until exercised,
and any change in fair value is recognized in the Company's unaudited condensed
statements of operations. The fair value of warrants issued in connection with
the Public Offering and Private Placement have initially been estimated using
Monte-Carlo simulations at each measurement date. The fair value of Public
Warrants issued in connection with the Initial Public Offering have been
measured based on the listed market price of such warrants, a Level 1
measurement, since January 25, 2021.
Net Income Per Common Share
Net income (loss) per common share is computed by dividing net income (loss) by
the weighted-average number of common stock outstanding during the periods. We
have not considered the effect of the warrants sold in our initial public
offering and Private Placement to purchase an aggregate of 12,500,000 shares of
Class A common stock in the calculation of diluted earnings per common share,
since their inclusion would be anti-dilutive under the treasury stock method. As
a result, diluted earnings per common share is the same as basic earnings per
common share for the periods presented.
The Company complies 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 for the period. The Company applies the two-class method in
calculating earnings per share. Accretion associated with the redeemable shares
of Class A common stock is excluded from earnings per share as the redemption
value approximates fair value.
Recent Accounting Pronouncements
Our management does not believe that any recently issued, but not yet effective,
accounting standards if currently adopted would have a material effect on the
accompanying unaudited condensed financial statements.
24
Off-Balance Sheet Arrangements
As of June 30, 2022, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K.
JOBS Act
The Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We qualify as an "emerging growth company" and
under the JOBS Act are allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded)
companies. We are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting
standards on the relevant dates on which adoption of such standards is required
for non-emerging growth companies. As a result, the unaudited condensed
financial statements may not be comparable to companies that comply with new or
revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the
other reduced reporting requirements provided by the JOBS Act. Subject to
certain conditions set forth in the JOBS Act, if, as an "emerging growth
company," we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an auditor's attestation report on our system of
internal controls over financial reporting pursuant to Section 404, (ii) provide
all of the compensation disclosure that may be required of non-emerging growth
public companies under the Dodd-Frank Wall Street Reform and Consumer Protection
Act, (iii) comply with any requirement that may be adopted by the PCAOB
regarding mandatory audit firm rotation or a supplement to the auditor's report
providing additional information about the audit and the unaudited condensed
financial statements (auditor discussion and analysis) and (iv) disclose certain
executive compensation related items such as the correlation between executive
compensation and performance and comparisons of the CEO's compensation to median
employee compensation. These exemptions will apply for a period of five years
following the completion of our Initial Public Offering or until we are no
longer an "emerging growth company," whichever is earlier.
© Edgar Online, source Glimpses
PROH INV 
