References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Acamar Partners Acquisition Corp. References to our
"management" or our "management team" refer to our officers and directors,
references to the "Sponsor" refer to Acamar Partners Sponsor I LLC. The
following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with the financial
statements and the notes thereto contained elsewhere in this Quarterly Report.
Certain information contained in the discussion and analysis set forth below
includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report 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"), 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 Form 10-Q 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 Annual Report of Form 10-K for the year ended December 31, 2019 filed
with the U.S. Securities and Exchange Commission (the "SEC"). The Company's
securities filings can be accessed on the EDGAR section of the SEC's website at
www.sec.gov. Except as expressly required by applicable securities law, the
Company disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information, future events
or otherwise.
Overview
We are a blank check company formed under the laws of the State of Delaware on
November 7, 2018 for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar Business
Combination with one or more target businesses. We intend to effectuate our
Business Combination using cash from the proceeds of our Initial Public Offering
and the sale of the Private Placement Warrants, our capital stock, debt or a
combination of cash, stock and debt.
The issuance of additional shares of our stock in a Business Combination:
· may significantly dilute the equity interest of investors, which dilution
would increase if the anti-dilution provisions in the Class B common stock
resulted in the issuance of Class A shares on a greater than one-to-one
basis upon conversion of the Class B common stock;
· may subordinate the rights of holders of common stock if preferred stock is
issued with rights senior to those afforded our common stock;
· could cause a change of control if a substantial number of shares of our
common stock are 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.
Similarly, if we issue debt securities or otherwise incur significant debt to
bank 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 is payable on demand;
· our inability to obtain necessary additional financing if the debt contains
covenants restricting our ability to obtain such financing while the debt
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, expenses, capital expenditures, acquisitions and
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;
and
· limitations on our ability to borrow additional amounts for expenses,
capital expenditures, acquisitions, debt service requirements, execution of
our strategy and other purposes and other disadvantages compared to our
competitors who have less debt.
16
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete a Business
Combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from inception to March 31, 2020 were organizational
activities, those necessary to prepare for the Initial Public Offering,
described below, and identifying a target company for a Business Combination. We
do not expect to generate any operating revenues until after the completion of
our 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 a Business Combination.
For the three months ended March 31, 2020, we had net income of $11,236, which
consisted of interest income on marketable securities held in the Trust Account
of $1,185,986, offset by operating costs of $936,005 and a provision for income
taxes of $238,745.
For the three months ended March 31, 2019, we had net income of $406,165, which
consists of interest income on marketable securities held in the Trust Account
of $651,492, offset by operating costs of $119,100 and a provision for income
taxes of $126,227.
Liquidity and Capital Resources
Until the consummation of the Initial Public Offering, the Company's only source
of liquidity was an initial purchase of Class B common stock by the Sponsor and
an advance and loans from our Sponsor.
On February 26, 2019, we consummated the Initial Public Offering of 30,000,000
Units at a price of $10.00 per Unit, generating gross proceeds of $300,000,000.
Simultaneously with the closing of the Initial Public Offering, we consummated
the sale of 6,000,000 Private Placement Warrants to the Sponsor at a price of
$1.50 per unit, generating gross proceeds of $9,000,000.
On April 9, 2019, in connection with the underwriters' election to partially
exercise of their option to purchase additional Units, we consummated the sale
of an additional 557,322 Units and the sale of an additional 74,310 Private
Placement Warrants, generating total gross proceeds of $5,684,685.
Following the Initial Public Offering, including the exercise of the option to
purchase additional Units and the sale of the Private Placement Warrants, a
total of $305,573,220 was placed in the Trust Account. We incurred $17,437,018
in transaction costs, including $6,111,465 of underwriting fees, $10,695,063 of
deferred underwriting fees and $630,490 of other costs, inclusive of $111,465 in
cash underwriting fees and $195,063 of additional deferred underwriting fees
incurred upon the underwriters' election to partially exercise their option to
purchase additional Units on April 9, 2019.
For the three months ended March 31, 2020, cash used in operating activities was
$821,516, resulting primarily from net income of $11,236 and interest earned on
marketable securities held in the Trust Account of $1,185,986. Changes in
operating assets and liabilities provided $353,234 of cash from operating
activities.
For the three months ended March 31, 2019, cash used in operating activities was
$168,683, resulting primarily from net income of $406,165 and interest earned on
marketable securities held in the Trust Account of $651,492. Changes in
operating assets and liabilities provided $76,644 of cash from operating
activities.
As of March 31, 2020, we had cash and marketable securities held in the Trust
Account of $310,818,556. Interest income on the balance in the Trust Account may
be used by us to pay taxes. Through March 31, 2020, we withdrew approximately
$1,472,000 of interest earned on the Trust Account to pay for our franchise and
income tax obligations, of which approximately $208,000 was withdrawn during the
three months ended March 31, 2020. We intend to use substantially all of the
funds held in the Trust Account, including any amounts representing interest
earned on the Trust Account (which interest shall be net of taxes payable and
less deferred underwriting commissions) to complete our Business Combination. To
the extent that our capital stock or debt is used, in whole or in part, as
consideration to complete our 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.
17
As of March 31, 2020, we had $987,122 of cash held outside of the Trust Account.
We will use these funds primarily to identify and evaluate target businesses,
perform business due diligence on prospective target businesses, travel to and
from the offices 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, and to pay taxes to the extent the interest earned on the Trust
Account is not sufficient to pay our taxes. A portion of these funds will also
be used to pay our obligations pursuant to the administrative services agreement
described below.
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 we complete a Business Combination, we
would repay such loaned amounts. In the event that a 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 $2,000,000 of such loans may be
convertible into units identical to the Placement Units, at a price of $10.00
per unit at the option of the lender.
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 in-depth due diligence
and negotiating a 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 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 consummation
of our Business Combination, in which case we may issue additional securities or
incur debt in connection with such Business Combination. Subject to compliance
with applicable securities laws, we would only complete such financing
simultaneously with the completion of our Business Combination. If we are unable
to complete our 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 Business Combination, if cash on hand is
insufficient, we may need to obtain additional financing in order to meet our
obligations.
Going Concern
We have until February 26, 2021 to consummate a Business Combination. It is
uncertain that we will be able to consummate a Business Combination by this
time. If a Business Combination is not consummated by this date, there will be a
mandatory liquidation and subsequent dissolution. Management has determined that
the mandatory liquidation, should a Business Combination not occur, and
potential subsequent dissolution raises substantial doubt about our ability to
continue as a going concern. No adjustments have been made to the carrying
amounts of assets or liabilities should we be required to liquidate after
February 26, 2021.
Off-balance sheet financing arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of March 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 an
affiliate of the Sponsor a monthly fee of $37,000 for office space,
administrative support and salaries to be paid to employees of such affiliate
for due diligence and related services in connection with the Company's search
for a target company (although no salaries or fees will be paid from the monthly
fee to members of the Company's management team). We began incurring these fees
on February 21, 2019 and will continue to incur these fees monthly until the
earlier of the completion of the Business Combination and the Company's
liquidation.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or
$10,695,063 in the aggregate. The deferred fee will become payable to the
underwriters from the amounts held in the Trust Account solely in the event that
we complete a Business Combination, subject to the terms of the underwriting
agreement. Of such amount, up to approximately $0.10 per Unit, or up to
$3,055,732, may be paid to third parties not participating in Initial Public
Offering (but who are members of FINRA) that assist us in consummating a
Business Combination. The election to make such payments to third parties will
be solely at our discretion, and such third parties will be selected by us in
its sole discretion.
18
Critical Accounting Policies
The preparation of condensed 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 not identified any critical accounting policies.
Recent accounting pronouncements
Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on our
condensed financial statements.
© Edgar Online, source Glimpses