References to the "Company," "Shelter," "our," "us" or "we" refer to Shelter
Acquisition Corporation I. 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 Quarterly Report on Form 10-Q. 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"). When used in this Quarterly Report on Form 10-Q,
words such as "may," "should," "could," "would," "expect," "plan," "anticipate,"
"believe," "estimate," "continue," or the negative of such terms or other
similar expressions, as they relate to us or our management, identify forward
looking statements. Factors that might cause or contribute to such a discrepancy
include, but are not limited to, those described in our other filings with the
Securities and Exchange Commission ("SEC"). Such forward looking statements are
based on the beliefs of management, as well as assumptions made by, and
information currently available to, our management. No assurance can be given
that results in any forward-looking statement will be achieved and actual
results could be affected by one or more factors, which could cause them to
differ materially. The cautionary statements made in this Quarterly Report on
Form 10-Q should be read as being applicable to all forward-looking statements
whenever they appear in this Quarterly Report. Actual results could differ
materially from those contemplated by the forward-looking statements as a result
of certain factors detailed in our filings with the SEC. All subsequent written
or oral forward-looking statements attributable to us or persons acting on our
behalf are qualified in their entirety by this paragraph.
Overview
We are a blank check company incorporated as a Delaware corporation on December
11, 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 ("Business Combination"). While we may pursue a business
combination target in any stage of its corporate evolution or in any industry or
sector, we currently intend to concentrate on identifying businesses that
provide technologically innovative solutions to the real estate industry,
broadly defined as "PropTech."
On July 2, 2021, we consummated our Initial Public Offering of 20,000,000 units
(the "Units"). Each Unit consists of one share of Class A common stock, par
value $0.0001 per share ("Class A common stock" and shares thereof sold in the
Initial Public Offering, "Public Shares"), and one-half of one redeemable
warrant ("Public Warrant"), each whole Public Warrant exercisable into one share
of Class A common stock at an exercise price of $11.50 per share. The Units were
sold at a price of $10.00 per unit, generating gross proceeds to the Company of
$200,000,000.
Simultaneously with the consummation of the Initial Public Offering and the sale
of the Units, we consummated the sale of 6,250,000 warrants (each, a "Private
Placement Warrant" and collectively, the "Private Placement Warrants"), at a
price of $1.00 per Private Placement Warrant, to Shelter Sponsor LLC, a Delaware
limited liability company (the "Sponsor"), in a private placement ("Private
Placement") generating gross proceeds of $6,250,000.
On July 14, 2021, we issued an additional 2,164,744 Units in connection with the
partial exercise by the underwriters of their over-allotment option, generating
gross proceeds of $21,647,440. Simultaneously with the closing of the
underwriters' partial exercise of the over-allotment option, we sold an
additional 432,949 Private Placement Warrants, at a price of $1.00 per Private
Placement Warrant, to the Sponsor in a private placement (together with the
Private Placement, the "Private Placements") generating gross proceeds of
$432,949.
Following the closing of the Initial Public Offering on July 2, 2021, and the
partial exercise of the over-allotment option on July 14, 2021, a total of
$221,647,440 ($10.00 per Unit) from the net proceeds of the sale of the Units in
the Initial Public Offering and pursuant to the partial exercise of the
over-allotment option, together with certain of the proceeds from the sale of
the Private Placement Warrants in the Private Placements, was placed in a trust
account (the "Trust Account") located in the United States with Continental
Stock Transfer & Trust Company acting as trustee, and invested only in U.S.
government securities with a maturity of 185 days or less or in money market
funds meeting certain conditions under Rule 2a-7 under the Investment Company
Act of 1940, as amended, which invest only in direct U.S. government treasury
obligations, until the earlier of: (i) the completion of a Business Combination
and (ii) the distribution of the Trust Account as described below.
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If we are unable to complete a Business Combination within 18 months from the
closing of the Initial Public Offering, we will: (i) cease all operations except
for the purpose of winding up, (ii) as promptly as reasonably possible but not
more than ten business days thereafter, 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 franchise and income 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
liquidating distributions, if any), subject to applicable law, and (iii) as
promptly as reasonably possible following such redemption, subject to the
approval of our remaining stockholders and the board of directors, dissolve and
liquidate, subject in each case to our obligations under Delaware law to provide
for claims of creditors and the requirements of other applicable law.
Results of Operations
As of September 30, 2021, we have not commenced any operations. All activity for
the period from December 11, 2020 (inception) through September 30, 2021 relates
to our formation and Initial Public Offering. We will not generate any operating
revenues until after the completion of our initial business combination, at the
earliest. We will generate non-operating income in the form of interest income
from the proceeds derived from the Initial Public Offering and placed in the
Trust Account.
For the three months ended September 30, 2021, we had net income of $8,047,666
which was comprised of general and administrative expenses of $667,342,
franchise tax expense of $49,863, income from investments held in Trust Account
of $2,670, other expense relating to fair value exceeding amount paid for
warrants of $387,728, change in fair value of derivative warrant liabilities of
$9,846,431, and offering costs allocated to warrants of $696,502.
For the nine months ended September 30, 2021, we had net income of $7,998,698
which was comprised of general and administrative expenses of $716,310,
franchise tax expense of $49,863, income from investments held in Trust Account
of $2,670, other expense relating to fair value exceeding amount paid for
warrants of $387,728, change in fair value of derivative warrant liabilities of
$9,846,431, and offering costs allocated to warrants of $696,502.
Liquidity and Capital Resources
As of September 30, 2021, we had $1,010,349 in our operating bank account, and
working capital of $818,727.
Prior to the completion of the Initial Public Offering, our liquidity needs had
been satisfied through a capital contribution from the Sponsor of $25,000, to
cover certain offering costs, for the founder shares, the loan under an
unsecured promissory note from the Sponsor of $240,000. The promissory note from
the Sponsor was paid in full upon closing of the Initial Public Offering.
Subsequent to the consummation of the Initial Public Offering and Private
Placements, our liquidity needs have been satisfied through the proceeds from
the consummation of the Private Placements not held in the Trust Account.
In addition, in order to finance transaction costs in connection with a Business
Combination, our Sponsor or an affiliate of the Sponsor, or certain of our
officers and directors may, but are not obligated to, provide us Working Capital
Loans. To date, there were no amounts outstanding under any Working Capital
Loans.
Based on the foregoing, management believes that we will have sufficient working
capital and borrowing capacity to meet our needs through the earlier of the
consummation of a Business Combination or one year from this filing. Over this
time period, we 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.
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Off-Balance Sheet Arrangements
For the three and nine months ended September 30, 2021, we did not have any
off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation
S-K and did not have any commitments or contractual obligations.
Contractual Obligations
Administrative Support Agreement
We have agreed to pay the Sponsor or one or more of its affiliates, commencing
on the effective date of the registration statement for our Initial Public
Offering, a total of $20,000 per month for office space and administrative and
support services. Upon completion of a Business Combination or liquidation, we
will cease paying these monthly fees.
Registration and Stockholder Rights
The holders of the founder shares, Private Placement Warrants, and warrants that
may be issued upon conversion of Working Capital Loans (and any shares of common
stock issuable upon the exercise of the Private Placement Warrants or warrants
issued upon conversion of the Working Capital Loans and upon conversion of the
founder shares) will be entitled to registration rights pursuant to the
registration rights agreement requiring the Company to register such securities
for resale (in the case of the founder shares, only after conversion to shares
of Class A common stock). The holders of these securities will be entitled to
make up to three demands, excluding short form registration demands, that we
register such securities. In addition, these holders will have certain
"piggy-back" registration rights with respect to registration statements filed
subsequent to the completion of a Business Combination and rights to require us
to register for resale such securities pursuant to Rule 415 under the Securities
Act.
Underwriting Agreement
We granted the underwriters a 45-day option to purchase up to 3,000,000
additional Units to cover over-allotments, if any, at the Initial Public
Offering price less the underwriting discounts and commissions.
On July 2, 2021, we paid a fixed underwriting discount of $4,000,000, which was
calculated as two percent (2%) of the gross proceeds of the Initial Public
Offering. On July 14, 2021, the underwriters partially executed their
over-allotment option to purchase an additional 2,164,744 Units at a price of
$10.00 per Unit, and were paid a fixed underwriting discount of $432,949.
Additionally, the underwriters will be entitled to a deferred underwriting
discount of 3.5% of the gross proceeds of the Initial Public Offering and
over-allotment held in the Trust Account, or $7,757,660, upon the completion of
our initial business combination.
Critical Accounting Policies
The preparation of the unaudited condensed financial statements in conformity
with U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the unaudited condensed financial statements and the reported amounts of
expenses during the reporting period. Actual results could differ from those
estimates.
Our significant accounting policies are fully described in Note 3 to our
financial statements appearing elsewhere in this Quarterly Report, and we
believe those accounting policies are critical to the process of making
significant judgments and estimates in the preparation of our consolidated
financial statements.
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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 financial statements.
JOBS Act
On April 5, 2012, the Jumpstart Our Business Startups Act of 2012 (the "JOBS
Act") was signed into law. 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
such, our financial statements may not be comparable to companies that comply
with 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 of the
Sarbanes-Oxley Act, (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 Public Company Accounting Oversight Board regarding
mandatory audit firm rotation or a supplement to the auditor's report providing
additional information about the audit and the 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 principal executive officer'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.
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