UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 2021
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission file number: 001-39754
CAPITOL INVESTMENT CORP. V
(Exact Name of Registrant as Specified in Its Charter)
|
Delaware |
|
84-1956909 |
(State or other jurisdiction of
incorporation or organization) |
|
(I.R.S. Employer
Identification No.) |
1300 17th Street, Suite 820
Arlington, VA 22209
(Address of principal executive offices)
(202) 654-7060
(Issuer’s telephone number)
Securities registered pursuant to Section 12(b) of the Act:
|
Title of Each
Class |
|
Trading Symbol(s) |
|
Name of each Exchange on which
Registered |
| Units,
each consisting of one share of Class A common stock and one-third
of one warrant |
|
CAP.U |
|
The
New York Stock Exchange |
| Class A common stock,
par value $0.0001 per share |
|
CAP |
|
The
New York Stock Exchange |
Warrants, each whole warrant exercisable for one
share of
Class A common stock at an exercise price of $11.50 per
share |
|
CAP
WS |
|
The
New York Stock Exchange |
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12
months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☒ No
☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). Yes ☒ No
☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company or an emerging growth company. See
definitions of “large accelerated filer”, “accelerated filer”,
“smaller reporting company”, and “emerging growth company” in Rule
12b-2 of the Exchange Act.
|
Large accelerated filer |
☐ |
Accelerated filer |
☐ |
| Non-accelerated filer |
☒ |
Smaller reporting company |
☒ |
|
|
Emerging growth company |
☒ |
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No
☐
As of May 17, 2021, 34,500,000 shares of Class A common stock, par
value $0.0001 per share, and 8,625,000 shares of Class B common
stock, par value $0.0001 per share, were issued and outstanding,
respectively.
CAPITOL INVESTMENT CORP. V
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2021
TABLE OF CONTENTS
PART I - FINANCIAL
INFORMATION
CAPITOL INVESTMENT
CORP. V
CONDENSED BALANCE SHEETS
| |
|
March
31, |
|
|
December 31, |
|
| |
|
2021 |
|
|
2020 |
|
| |
|
|
|
|
|
|
| ASSETS |
|
|
|
|
|
|
| Current Assets |
|
|
|
|
|
|
|
|
|
Cash |
|
$ |
86,962 |
|
|
$ |
632,387 |
|
|
Prepaid expenses |
|
|
666,008 |
|
|
|
695,350 |
|
|
Total Current Assets |
|
|
752,970 |
|
|
|
1,327,737 |
|
| |
|
|
|
|
|
|
|
|
| Marketable
securities held in Trust Account |
|
|
345,006,438 |
|
|
|
345,012,580 |
|
|
TOTAL ASSETS |
|
$ |
345,759,408 |
|
|
$ |
346,340,317 |
|
| |
|
|
|
|
|
|
|
|
|
LIABILITIES, TEMPORARY EQUITY AND PERMANENT EQUITY |
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
| Accounts payable
and accrued expenses |
|
$ |
228,753 |
|
|
$ |
115,461 |
|
|
Promissory note – related party |
|
|
400,000 |
|
|
|
— |
|
| Total Current
Liabilities |
|
|
628,753 |
|
|
|
115,461 |
|
| |
|
|
|
|
|
|
|
|
| Deferred underwriting payable |
|
|
12,075,000 |
|
|
|
12,075,000 |
|
| Warrant
liabilities |
|
|
23,400,000 |
|
|
|
30,680,000 |
|
| Total
Liabilities |
|
|
36,103,753 |
|
|
|
42,870,461 |
|
| |
|
|
|
|
|
|
|
|
|
Commitments and Contingencies |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Temporary Equity |
|
|
|
|
|
|
|
|
| Class A common
stock subject to possible redemption 30,465,565 shares at
redemption value as of March 31, 2021 and 29,846,985 shares at
redemption value as of December 31, 2020 |
|
|
304,655,650 |
|
|
|
298,469,850 |
|
| |
|
|
|
|
|
|
|
|
|
Permanent Equity |
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; no
shares issued and outstanding |
|
|
— |
|
|
|
— |
|
|
Class A common stock, $0.0001 par value 400,000,000 shares
authorized; 4,034,435 issued and outstanding (excluding 30,465,565
shares subject to possible redemption) as of March 31, 2021
and 4,653,015 issued and outstanding (excluding 29,846,985 shares
subject to possible redemption) as of December 31, 2020 |
|
|
403 |
|
|
|
465 |
|
| Class B
common stock, $0.0001 par value; 50,000,000 shares authorized;
8,625,000 shares issued and outstanding as of March 31, 2021 and
December 31, 2020 |
|
|
863 |
|
|
|
863 |
|
| Additional paid-in capital |
|
|
7,469,090 |
|
|
|
13,654,828 |
|
| Accumulated
deficit |
|
|
(2,470,351 |
) |
|
|
(8,656,150 |
) |
| Total
Permanent Equity |
|
|
5,000,005 |
|
|
|
5,000,006 |
|
|
TOTAL LIABILITIES, TEMPORARY EQUITY AND PERMANENT EQUITY |
|
$ |
345,759,408 |
|
|
$ |
346,340,317 |
|
The accompanying notes are an integral part of the financial
statements.
CAPITOL INVESTMENT
CORP. V
CONDENSED STATEMENTS OF OPERATIONS
| |
|
Three Months Ended
March 31, |
|
| |
|
2021 |
|
|
2020 |
|
| |
|
|
|
|
|
|
|
Formation and operating costs |
|
$ |
1,139,720 |
|
|
$ |
20 |
|
|
Loss from operations |
|
|
(1,139,720 |
) |
|
|
(20 |
) |
| |
|
|
|
|
|
|
|
|
| Other income (expenses): |
|
|
|
|
|
|
|
|
| Interest earned on
marketable securities held in Trust Account |
|
|
47,359 |
|
|
|
— |
|
| Change in fair
value of warrant liabilities |
|
|
7,280,000 |
|
|
|
— |
|
|
Unrealized loss on marketable securities held in Trust Account |
|
|
(1,840 |
) |
|
|
— |
|
| Other
income, net |
|
|
7,325,519 |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
| Net
income (loss) |
|
$ |
6,185,799 |
|
|
$ |
(20 |
) |
| |
|
|
|
|
|
|
|
|
| Basic and diluted
weighted average shares outstanding, Class A common stock subject
to possible redemption |
|
|
29,846,985 |
|
|
|
— |
|
| Basic
and diluted net loss per share, Class A common stock subject to
possible redemption |
|
$ |
0.00 |
|
|
$ |
— |
|
| |
|
|
|
|
|
|
|
|
| Basic and diluted
weighted average shares, non-redeemable common stock |
|
|
13,278,015 |
|
|
|
7,500,000 |
|
|
Basic and diluted net loss per
share, non-redeemable common stock(1) |
|
$ |
0.47 |
|
|
$ |
(0.00 |
) |
| |
(1) |
At
March 31, 2021, excludes an aggregate of 30,465,565 shares
subject to possible redemption. |
The accompanying notes are an integral part of the financial
statements.
CAPITOL INVESTMENT
CORP. V
CONDENSED STATEMENTS OF CHANGES IN TEMPORARY EQUITY AND
PERMANENT EQUITY
| |
|
Class
A |
|
|
Class
B |
|
|
Additional |
|
|
|
|
|
Total |
|
|
|
|
|
| |
|
Common Stock |
|
|
Common Stock
(1) |
|
|
Paid-in |
|
|
Accumulated |
|
|
Permanent |
|
|
|
Temporary Equity |
|
| |
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Equity |
|
|
|
Shares |
|
|
Amount |
|
|
Balance – December 31, 2020 |
|
|
4,653,015 |
|
|
$ |
465 |
|
|
|
8,625,000 |
|
|
$ |
863 |
|
|
$ |
13,654,828 |
|
|
$ |
(8,656,150 |
) |
|
$ |
5,000,006 |
|
|
|
|
29,846,985 |
|
|
$ |
298,469,850 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in value of Class A common stock subject to possible
redemption |
|
|
(618,580 |
) |
|
|
(62 |
) |
|
|
— |
|
|
|
— |
|
|
|
(6,185,738 |
) |
|
|
— |
|
|
|
(6,185,800 |
) |
|
|
|
618,580 |
|
|
|
6,185,800 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,185,799 |
|
|
|
6,185,799 |
|
|
|
|
— |
|
|
|
— |
|
|
Balance – March 31, 2021 |
|
|
4,034,435 |
|
|
$ |
403 |
|
|
|
8,625,000 |
|
|
$ |
863 |
|
|
$ |
7,469,090 |
|
|
$ |
(2,470,351 |
) |
|
$ |
5,000,005 |
|
|
|
|
30,465,565 |
|
|
$ |
304,655,650 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Class
A |
|
|
Class
B |
|
|
Additional |
|
|
|
|
|
Total |
|
|
|
|
|
| |
|
Common Stock |
|
|
Common Stock
(1) |
|
|
Paid-in |
|
|
Accumulated |
|
|
Permanent |
|
|
|
Temporary Equity |
|
| |
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Equity |
|
|
|
Shares |
|
|
Amount |
|
| Balance –
December 31, 2019 |
|
|
— |
|
|
$ |
— |
|
|
|
8,625,000 |
|
|
|
863 |
|
|
$ |
24,137 |
|
|
|
(11,142 |
) |
|
|
13,858 |
|
|
|
|
— |
|
|
$ |
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(20 |
) |
|
|
(20 |
) |
|
|
|
— |
|
|
|
— |
|
|
Balance – March 31, 2020 |
|
|
— |
|
|
$ |
— |
|
|
|
8,625,000 |
|
|
$ |
863 |
|
|
$ |
24,137 |
|
|
$ |
(11,162 |
) |
|
$ |
13,838 |
|
|
|
|
— |
|
|
$ |
— |
|
|
(1) |
As of
December 31, 2019 and as of March 31, 2020, this number
included an aggregate of up to 1,125,000 shares that were subject
to forfeiture if the over-allotment option was not exercised by the
underwriters in full. The over-allotment option was
exercised by the underwriters in full. |
The accompanying notes are an integral part of the financial
statements.
CAPITOL INVESTMENT
CORP. V
CONDENSED STATEMENTS OF CASH FLOWS
| |
|
Three Months Ended |
|
| |
|
March 31,
2021
|
|
|
March 31,
2020
|
|
| Cash Flows from
Operating Activities: |
|
|
|
|
|
|
| Net income (loss) |
|
$ |
6,185,799 |
|
|
$ |
(20 |
) |
| Adjustments to reconcile net loss
to net cash used in operating activities: |
|
|
|
|
|
|
|
|
| Interest
earned on marketable securities held in Trust Account |
|
|
(47,359 |
) |
|
|
— |
|
| Change in fair
value of warrant liabilities |
|
|
(7,280,000 |
) |
|
|
— |
|
| Unrealized
loss on marketable securities held in Trust Account |
|
|
1,840 |
|
|
|
— |
|
| Changes in
operating assets and liabilities: |
|
|
|
|
|
|
|
|
| Prepaid
expenses |
|
|
29,342 |
|
|
|
— |
|
|
Accounts payable and accrued expenses |
|
|
113,292 |
|
|
|
128 |
|
|
Net cash (used in) provided by operating activities |
|
|
(997,086 |
) |
|
|
108 |
|
| |
|
|
|
|
|
|
|
|
| Cash Flows from
Investing Activities: |
|
|
|
|
|
|
|
|
| Cash
withdrawn from Trust Account for franchise taxes |
|
|
51,661 |
|
|
|
— |
|
|
Net cash provided by investing activities |
|
|
51,661 |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
| Cash Flows from
Financing Activities: |
|
|
|
|
|
|
|
|
| Proceeds from promissory notes –
related party |
|
|
400,000 |
|
|
|
50,000 |
|
| Payment of
offering costs |
|
|
— |
|
|
|
(128 |
) |
|
Net cash provided by financing activities |
|
|
400,000 |
|
|
|
49,872 |
|
| |
|
|
|
|
|
|
|
|
| Net Change in
Cash |
|
|
(545,425 |
) |
|
|
49,980 |
|
| Cash –
Beginning |
|
|
632,387 |
|
|
|
26,794 |
|
| Cash
– Ending |
|
$ |
86,962 |
|
|
$ |
76,774 |
|
| |
|
|
|
|
|
|
|
|
| Non-cash
investing and financing activities: |
|
|
|
|
|
|
|
|
| Deferred underwriting fee payable |
|
$ |
12,075,000 |
|
|
$ |
— |
|
| Change in value
of Class A common stock subject to possible redemption |
|
|
6,185,800 |
|
|
|
|
|
The accompanying notes are an integral part of the financial
statements.
NOTE 1 — DESCRIPTION OF
ORGANIZATION AND BUSINESS OPERATIONS
Capitol Investment Corp. V (the “Company”) was originally
incorporated in the Cayman Islands on May 1, 2017 as a
blank check company. In May 2019, the Company was
redomesticated from the Cayman Islands to the state of Delaware.
The Company’s objective is to acquire, through a merger, stock
exchange, asset acquisition, stock purchase, recapitalization,
reorganization or other similar business combination, one or more
businesses or entities (a “Business Combination”).
As of March 31, 2021, the Company had not commenced any
operations. All activity through March 31, 2021 relates to the
Company’s formation and the initial public offering (“Initial
Public Offering”), which is described below. The Company will
not generate any operating revenues until after the completion of a
Business Combination, at the earliest. The Company will generate
non-operating income in the form of interest income from the
proceeds derived from the Initial Public Offering.
The registration statement for the Company’s Initial Public
Offering was declared effective on December 1, 2020. On December 4,
2020, the Company consummated the Initial Public Offering of
34,500,000 units (the “Units” and, with respect to the
shares of Class A common stock included in the Units sold, the
“Public Shares”), which includes the full exercise by the
underwriters of their over-allotment option in the amount of
4,500,000 Units, at $10.00 per Unit, generating gross proceeds of
$345,000,000, which is described in Note 3.
Simultaneously with the closing of the Initial Public Offering, the
Company consummated the private placement of 5,833,333 warrants
(each, a “Private Placement Warrant” and, collectively, the
“Private Placement Warrants”) at a price of $1.50 per
Private Placement Warrant in a private placement to Capitol
Acquisition Management V LLC, which is controlled by Mark D. Ein,
the Company’s Chief Executive officer and chairman of the board of
directors, and Capitol Acquisition Founder V LLC, which is
controlled by L. Dyson Dryden, the President and Chief Financial
Officer and a member of the board of directors (the
“Sponsors”), and the independent directors, generating gross
proceeds of $8,750,000, which is described in Note 4.
Transaction costs amounted to $19,469,085, consisting of $6,900,000
of underwriting fees, $12,075,000 of deferred underwriting fees and
$494,085 of other offering costs. Of the $19,469,085 of transaction
costs, $873,424 were allocable to warrant liabilities and
expensed.
Following the closing of the Initial Public Offering on December 4,
2020, an amount of $345,000,000 ($10.00 per Unit) from the net
proceeds of the sale of the Units in the Initial Public Offering
and the sale of the Private Placement Warrants was placed in a
trust account (the “Trust Account”), and may be invested
only in U.S. “government securities” within the meaning of
Section 2(a)(16) of the Investment Company Act of 1940, as
amended (the “Investment Company Act”), having a maturity of
180 days or less or in money market funds meeting certain
conditions under Rule 2a-7 promulgated under the Investment
Company Act until the earlier of (i) the consummation of the
Company’s first Business Combination and (ii) the Company’s
failure to consummate a Business Combination within the prescribed
time.
The Company’s management has broad discretion with respect to the
specific application of the net proceeds of the 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 a Business Combination. There is no
assurance that the Company will be able to complete a Business
Combination successfully.
Placing funds in the Trust Account may not protect those funds from
third-party claims against the Company. Although the Company will
seek to have all vendors, service providers, prospective target
businesses or other entities it engages execute agreements with the
Company waiving any claim of any kind in or to any monies held in
the Trust Account, there is no guarantee that such persons will
execute such agreements. The Sponsors have agreed that they will be
liable jointly and severally to the Company if and to the extent
any claims by a third party for services rendered or products sold
to the Company, or a prospective target business with which the
Company has entered into a written letter of intent,
confidentiality or other similar agreement or business combination
agreement, reduce the amount of funds in the Trust Account to below
the lesser of (i) $10.00 per Public Share and (ii) the actual
amount per share held in the Trust Account as of the date of the
liquidation of the Trust Account, if less than $10.00 per
share due to reductions in the value of the trust assets, less
taxes payable, provided that such liability will not apply to any
claims by a third party or prospective target business who executed
a waiver of any and all rights to the monies held in the Trust
Account (whether or not such waiver is enforceable) nor will it
apply to any claims under the Company’s indemnity of the
underwriters of the Initial Public Offering against certain
liabilities, including liabilities under the Securities Act of
1933, as amended (the “Securities Act”). However, there can
be no assurance that they will be able to satisfy those obligations
should they arise. The remaining net proceeds (not held in the
Trust Account) may be used to pay for business, legal and
accounting due diligence on prospective acquisitions and continuing
general and administrative expenses. In addition, interest income
on the funds held in the Trust Account can be released to the
Company to pay the Company’s tax obligations.
In connection with any proposed initial Business Combination, the
Company will either (1) seek stockholder approval of such
initial Business Combination at a meeting called for such purpose
or (2) provide stockholders with the opportunity to sell their
Public Shares to the Company by means of a tender offer (and
thereby avoid the need for a stockholder vote), in each case where
stockholders may seek to convert their Public Shares into their
pro rata share of the aggregate amount then on deposit in
the Trust Account, less any taxes then due but not yet paid. If the
Company determines to engage in a tender offer, such tender offer
will be structured so that each stockholder may tender any or all
of his, her or its Public Shares rather than some pro rata
portion of his, her or its shares. In that case, the Company will
file tender offer documents with the U.S. Securities and Exchange
Commission (the “SEC”) which will contain substantially the
same financial and other information about the initial Business
Combination as is required under the SEC’s proxy rules. The
decision as to whether the Company will seek stockholder approval
of a proposed Business Combination or will allow stockholders to
sell their shares to it in a tender offer will be made by the
Company based on a variety of factors such as the timing of the
transaction or whether the terms of the transaction would otherwise
require it to seek stockholder approval. Notwithstanding the
foregoing, if the Company seeks stockholder approval of an initial
Business Combination, a public stockholder, together with any
affiliate of his or any other person with whom he is acting in
concert or as a “group” (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) will be restricted
from seeking redemption rights with respect to 20% or more of the
Public Shares without the Company’s prior written consent. The
Company will proceed with a Business Combination only if it has net
tangible assets of at least $5,000,001 immediately prior to or upon
consummation of the Business Combination and, if the Company seeks
stockholder approval, a majority of the outstanding common stock of
the Company voted are voted in favor of the Business Combination.
In connection with any stockholder vote required to approve any
Business Combination, the Sponsors and any other initial
stockholders of the Company (collectively, the “Initial
Stockholders”) will agree (i) to vote any of their
respective shares in favor of the initial Business Combination and
(ii) not to convert any of their respective shares (or sell
their shares to the Company in any related tender offer). Holders
of warrants sold as part of the Units will not be entitled to vote
on the proposed Business Combination and will have no conversion or
liquidation rights with respect to their common stock underlying
such warrants.
The Company’s certificate of incorporation was amended prior to the
Initial Public Offering to provide that the Company will continue
in existence only until December 4, 2022 or during any extended
time that the Company has to consummate a Business Combination
beyond December 4, 2022 as a result of a stockholder vote to amend
its amended and restated certificate of incorporation. If the
Company has not completed a Business Combination by such date, the
Company will (i) cease all operations except for the purpose
of winding down, (ii) as promptly as reasonably possible but
not more than ten business days thereafter, redeem 100% of the
outstanding Public Shares, at a per-share price, payable in cash,
equal to the aggregate amount then on deposit in the Trust Account,
including any interest not previously released to the Company but
net of taxes payable and up to $100,000 of interest to pay
dissolution expenses, divided by the number of then-outstanding
Public Shares, which redemption will completely extinguish the
rights of public 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 Company’s remaining
stockholders and its board of directors, dissolve and liquidate,
subject (in the case of (ii) and (iii) above) to the
Company’s obligations under Delaware law to provide for claims of
creditors and the requirements of other applicable law. In the
event of a liquidation, the Public Stockholders will be entitled to
receive a full pro rata interest in the Trust Account
(initially anticipated to be approximately $10.00 per share, plus
any pro rata interest earned on the Trust Fund not
previously released to the Company net of taxes payable).
On March 2, 2021, Capitol announced that it entered into a
definitive merger agreement for its initial business combination
with Doma Holdings, Inc., or Doma, a leading force for disruptive
change in the residential real estate industry. Doma uses machine
intelligence to replace large portions of the antiquated
residential real estate closing process with instant technology
solutions. Doma’s machine intelligence algorithms are being trained
and optimized on 30 years of historical anonymized closing
transaction data, allowing Doma to make underwriting decisions in
less than a minute and significantly reduce the time, effort and
cost of the entire process. In connection with the transaction,
Capitol entered into various subscription agreements with certain
third-party investors (the “PIPE Investors”) pursuant to which the
PIPE Investors have committed to make private investments in public
equity in the form of Class A common stock in the aggregate amount
of $300 million, for which the PIPE Investors will receive an
aggregate of 30 million shares of common stock in the combined
company. It is expected that Mark D. Ein will join the combined
company’s board of directors upon completion of the
transaction.
Liquidity
As of March 31, 2021, the Company had $86,962 in its operating bank
accounts, $345,006,438 in marketable securities held in the Trust
Account to be used for a Business Combination or to repurchase or
redeem stock in connection therewith, and working capital of
$174,217, which excludes franchise and income taxes payable of
$50,000, as such amounts may be paid from interest earned on the
Trust Account. For the quarter ended March 31, 2021, interest
income which is available to pay the Company’s tax obligations
amounted to approximately $45,160. Through March 31, 2021, the
Company had withdrawn approximately $51,700 from the Trust Account
to pay franchise taxes.
In February 2021, the Sponsors and the independent directors
collectively committed to provide the Company an aggregate of
$970,000 in loans. In May 2021, the Sponsors and the independent
directors collectively committed to provide the Company an
additional $756,000 in loans. The loans, if issued, as well as any
future loans that may be made by the Company’s officers and
directors (or their affiliates), will be evidenced by notes and
would either be repaid upon the consummation of a Business
Combination or up to $2,000,000 of the notes may be converted into
warrants at a price of $1.50 per warrant at the option of the
lender. As of March 31, 2021, the Company had an outstanding
balance of $400,000 under such promissory notes. On April 20, 2021,
the Company issued an additional $300,000 under such promissory
notes. None of the notes had been converted to warrants.
The Company may raise additional capital through loans or
additional investments from the Sponsors or its stockholders,
officers, directors, or third parties. The Company’s officers and
directors and the Sponsors may, but are not obligated to (except as
described above), loan the Company funds, from time to time, in
whatever amount they deem reasonable in their sole discretion, to
meet the Company’s working capital needs.
Based on the foregoing, the Company believes it will have
sufficient cash to meet its needs through the earlier of
consummation of a Business Combination or May 17, 2022.
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19
pandemic and has concluded that while it is reasonably possible
that the virus could have a negative effect on the Company’s
financial position, results of its operations and/or search for a
target company, the specific impact is not readily determinable as
of the date of the financial statements. The financial statements
do not include any adjustments that might result from the outcome
of this uncertainty.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial statements have been
prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP”) for interim
financial information and in accordance with the instructions to
Form 10-Q and Article 10 of Regulation S-X of the Securities and
Exchange Commission (“SEC”). Certain information or footnote
disclosures normally included in financial statements prepared in
accordance with GAAP have been condensed or omitted, pursuant to
the rules and regulations of the SEC for interim financial
reporting. Accordingly, they do not include all the information and
footnotes necessary for a comprehensive presentation of financial
position, results of operations, or cash flows. In the opinion of
management, the accompanying unaudited condensed financial
statements include all adjustments, consisting of a normal
recurring nature, which are necessary for a fair presentation of
the financial position, operating results and cash flows for the
periods presented.
The accompanying unaudited condensed financial statements should be
read in conjunction with the Company’s Annual Report on Form 10-K/A
for the year ended December 31, 2020 as filed with the SEC on May
11, 2021, which contains the audited financial statements and notes
thereto. The financial information as of December 31, 2020 is
derived from the audited financial statements presented in the
Company’s Annual Report on Form 10-K/A for the year ended December
31, 2020. The interim results for the three months ended March 31,
2021 are not necessarily indicative of the results to be expected
for the year ending December 31, 2021 or for any future interim
periods.
Emerging Growth Company and Smaller Reporting
Company
The Company is an “emerging growth company,” as defined in
Section 2(a) of the Securities Act, as modified by the
Jumpstart Our Business Startups Act of 2012 (the “JOBS
Act”), and it may take advantage of certain exemptions from
various reporting requirements that are applicable to other public
companies that are not emerging growth companies including, but not
limited to, not being required to comply with the independent
registered public accounting firm attestation requirements of
Section 404 of the Sarbanes-Oxley Act, reduced disclosure
obligations regarding executive compensation in its periodic
reports and proxy statements, and exemptions from the requirements
of holding a nonbinding advisory vote on executive compensation and
stockholder approval of any golden parachute payments not
previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging
growth companies from being required to comply with new or revised
financial accounting standards until private companies (that is,
those that have not had a Securities Act registration statement
declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or
revised financial accounting standards. The JOBS Act provides that
a company can elect to opt out of the extended transition period
and comply with the requirements that apply to non-emerging growth
companies but any such election to opt out is irrevocable. The
Company has elected not to opt out of such extended transition
period which means that when a standard is issued or revised and it
has different application dates for public or private companies,
the Company, as an emerging growth company, can adopt the new or
revised standard at the time private companies adopt the new or
revised standard. This may make comparison of the Company’s
condensed financial statements with another public company which is
neither an emerging growth company nor an emerging growth company
which has opted out of using the extended transition period
difficult or impossible because of the potential differences in
accounting standards used.
Additionally, the Company is a “smaller reporting company” as
defined in Item 10(f)(1) of Regulation S-K. Smaller reporting
companies may take advantage of certain reduced disclosure
obligations, including, among other things, providing only two
years of audited financial statements. The Company will remain a
smaller reporting company until the last day of the fiscal year in
which (1) the market value of its Class A common stock
held by non-affiliates exceeds $250 million as of the end of that
fiscal year’s second fiscal quarter, or (2) the Company’s
annual revenues exceeded $100 million during such completed fiscal
year and the market value of its Class A common stock held by
non-affiliates exceeds $700 million as of the end of that fiscal
year’s second fiscal quarter.
Use of Estimates
The preparation of financial statements in conformity with GAAP
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 financial
statements and the reported amounts of revenues and expenses during
the reporting period.
Making estimates requires management to exercise significant
judgment. It is at least reasonably possible that the estimate of
the effect of a condition, situation or set of circumstances that
existed at the date of the financial statements, which management
considered in formulating its estimate, could change in the near
term due to one or more future confirming events. Accordingly, the
actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with an original
maturity of three months or less when purchased to be cash
equivalents. The Company did not have any cash equivalents as of
March 31, 2021 and December 31, 2020.
Marketable Securities Held in Trust Account
At March 31, 2021 and December 31, 2020, the assets in the Trust
Account were held in cash and U.S. Treasury Bills.
Warrant Liabilities
The Company evaluated the Public Warrants and Private Placement
Warrants (collectively, “Warrants”, which are discussed in Note 3,
Note 4, Note 7 and Note 8) in accordance with ASC 815-40,
“Derivatives and Hedging — Contracts in Entity’s Own Equity”, and
concluded that a provision in the Warrant Agreement related to
certain tender or exchange offers precludes the Warrants from being
accounted for as components of equity. As the Warrants meet the
definition of a derivative as contemplated in ASC 815, the Warrants
are recorded as derivative liabilities on the condensed balance
sheet and measured at fair value at inception (on the date of the
IPO) and at each reporting date in accordance with ASC 820, “Fair
Value Measurement”, with changes in fair value recognized in the
consolidated statement of operations in the period of change.
Class A Common Stock Subject to Possible
Redemption
The Company accounts for its Class A common stock subject to
possible redemption in accordance with the guidance in Accounting
Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity.” Shares of Class A 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 Class A 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,
Class A common stock subject to possible redemption is presented at
redemption value as temporary equity, outside of the stockholders’
equity section of the Company’s condensed balance sheet.
Income Taxes
The Company follows the asset and liability method of accounting
for income taxes under ASC 740, “Income Taxes.” Deferred tax assets
and liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial
statements carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
income in the period that included the enactment date. Valuation
allowances are established, when necessary, to reduce deferred tax
assets to the amount expected to be realized.
FASB ASC 740 prescribes a recognition threshold and a measurement
attribute for the financial statement recognition and measurement
of tax positions 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.
The Company recognizes 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 March 31, 2021 and December 31, 2020. The
Company is currently not aware of any issues under review that
could result in significant payments, accruals or material
deviation from its position. The Company is subject to income tax
examinations by major taxing authorities since inception.
Net Income (Loss) per Common Share
Net income (loss) per common share is computed by dividing net loss
by the weighted average number of common shares outstanding for the
period. The Company applies the two-class method in calculating
earnings per share. Shares of common stock subject to possible
redemption at March 31, 2021 and December 31, 2020, which are
not currently redeemable and are not redeemable at fair value, have
been excluded from the calculation of basic net income (loss) per
common share since such shares, if redeemed, only participate in
their pro rata share of the Trust Account earnings. The Company has
not considered the effect of warrants sold in the Initial Public
Offering and the private placement to purchase 17,333,333 shares of
common stock in the calculation of diluted loss per share, since
the exercise of the warrants into shares of common stock is
contingent upon the occurrence of future events and the inclusion
of such warrants would be anti-dilutive. As a result, diluted net
income (loss) per common share is the same as basic net income
(loss) per common share for the period presented.
The Company’s condensed statement of operations includes a
presentation of income (loss) per share for common shares subject
to possible redemption in a manner similar to the two-class method
of income (loss) per share. Net income (loss) per common share,
basic and diluted, for common stock subject to possible redemption
is calculated by dividing the proportionate share of income or loss
on marketable securities held by the Trust Account by the weighted
average number of common stock subject to possible redemption
outstanding since the original issuance.
Net income (loss) per share, basic and diluted, for non-redeemable
common stock is calculated by dividing the net loss, adjusted for
income or loss on marketable securities attributable to common
stock subject to possible redemption, by the weighted average
number of non-redeemable common stock outstanding for the period.
Non-redeemable common stock includes Founder Shares and
non-redeemable Class A common stock as these shares do not have any
redemption features. Non-redeemable common stocks participate in
the income or loss on marketable securities based on non-redeemable
shares’ proportionate interest.
The following table reflects the calculation of basic and diluted
net income (loss) per common stock (in dollars, except per share
amounts):
| |
|
Three Months Ended |
|
| |
|
March 31,
2021
|
|
|
March 31,
2020
|
|
| Class A common stock subject to
possible redemption |
|
|
|
|
|
|
| Numerator: Earnings allocable to Class
A common stock subject to possible redemption |
|
|
|
|
|
|
|
Interest earned on marketable securities held in Trust Account, net
of franchise taxes |
|
$ |
— |
|
|
$ |
— |
|
| Net
income allocable to Class A common stock subject to possible
redemption |
|
$ |
— |
|
|
$ |
— |
|
| Denominator:
Weighted Average Class A common stock subject to possible
redemption |
|
|
|
|
|
|
|
|
| Basic and
diluted weighted average shares outstanding |
|
|
29,846,985 |
|
|
|
— |
|
| Basic
and diluted net income per share |
|
$ |
0.00 |
|
|
$ |
— |
|
|
Non-Redeemable Common Stock |
|
|
|
|
|
|
|
|
| Numerator:
Earnings allocable to non-redeemable common stock |
|
|
|
|
|
|
|
|
| Net income
(loss) |
|
$ |
6,185,799 |
|
|
$ |
(20 |
) |
|
Less: Net income allocable to Class A common stock subject to
possible redemption |
|
|
— |
|
|
|
— |
|
|
Non-redeemable net income (loss) |
|
$ |
6,185,799 |
|
|
$ |
(20 |
) |
| Denominator:
Weighted Average Non-redeemable common stock |
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding,
Non-redeemable common stock |
|
|
13,278,015 |
|
|
|
7,500,000 |
|
| Basic
and diluted net income (loss) per share, Non-redeemable common
stock |
|
$ |
0.47 |
|
|
$ |
(0.00 |
) |
Concentration of Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist of a cash account in a
financial institution, which, at times, may exceed the Federal
Depository Insurance Coverage of $250,000. The Company has not
experienced losses on this account and management believes the
Company is not exposed to significant risks on such account.
Fair Value of Financial Instruments
The Company follows the guidance in ASC Topic 820, “Fair Value
Measurement”, for its financial assets and liabilities that are
re-measured and reported at fair value at each reporting period,
and non-financial assets and liabilities that are re-measured and
reported at fair value at least annually.
The fair value of the Company’s financial assets and liabilities
reflects management’s estimate of amounts that the Company 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, the Company seeks 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: |
Quoted prices in active markets for
identical assets or liabilities. An active market for an asset or
liability is a market in which transactions for the asset or
liability occur with sufficient frequency and volume to provide
pricing information on an ongoing basis. |
| |
|
|
Level 2: |
Observable inputs other than Level 1
inputs. Examples of Level 2 inputs include quoted prices in active
markets for similar assets or liabilities and quoted prices for
identical assets or liabilities in markets that are not
active. |
| |
|
|
Level 3: |
Unobservable inputs based on our
assessment of the assumptions that market participants would use in
pricing the asset or liability. |
See Note 8 for additional information on assets and liabilities
measured at fair value.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet
effective, accounting standards, if currently adopted, would have a
material effect on the Company’s financial statements.
NOTE 3 — INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company sold
34,500,000 Units, which included a full exercise by the
underwriters of their over-allotment option in the amount of
4,500,000 Units, at a purchase price of $10.00 per unit. Each unit
consists of one share of Class A common stock in the Company
and one third of one redeemable warrant (the “Warrants”).
Each whole Warrant entitles the holder to purchase one share of
Class A common stock at a price of $11.50. In addition, if
(x) the Company issues additional shares of Class A
common stock or equity-linked securities for capital raising
purposes in connection with the closing of the initial Business
Combination at an issue price or effective issue price of less than
$9.20 per share of Class A common stock (with such issue price
or effective issue price to be determined in good faith by the
board of directors and, in the case of any such issuance to the
Initial Stockholders or their respective affiliates, without taking
into account any founder shares held by the Initial Stockholders or
such affiliates, as applicable, prior to such issuance) (the
“Newly Issued Price”), (y) the aggregate gross proceeds
from such issuances represent more than 60% of the total equity
proceeds, and interest thereon, available for the funding of the
initial Business Combination on the date of the consummation of the
initial Business Combination (net of redemptions) and (z) the
volume-weighted average trading price of the Class A common
stock during the ten-trading day period starting on the trading day
after the day on which the Company consummated the initial business
Combination (such price, the “Market Value”) is below $9.20
per share, then the exercise price of the warrants will be adjusted
(to the nearest cent) to be equal to 115% of the higher of the
Market Value and the Newly Issued Price, and the $18.00 per share
redemption trigger price will be adjusted (to the nearest cent) to
be equal to 180% of the higher of the Market Value and the Newly
Issued Price, and the $10.00 per share redemption trigger price
will be adjusted (to the nearest cent) to be equal to the higher of
the Market Value and the Newly Issued Price.
The Warrants are exercisable commencing on the later of
30 days after the Company’s completion of a Business
Combination and 12 months from the closing of the Initial Public
Offering and expire five years from the completion of a Business
Combination. Only whole Warrants are exercisable. No fractional
Warrants will be issued upon separation of the Units and only whole
Warrants will trade.
Redemption of Warrants When the Price Per Share of
Class A Common Stock Equals or Exceeds $18.00. Once
the Warrants become exercisable, the Company may call the Warrants
for redemption:
| |
● |
in
whole and not in part; |
| |
|
|
| |
● |
at a
price of $0.01 per Warrant; |
| |
|
|
| |
● |
upon
not less than 30 days’ prior written notice of redemption to
each Warrant holder; and |
| |
|
|
| |
● |
if,
and only if, the last reported sale price of the Class A
common stock equals or exceeds $18.00 per share (as adjusted for
stock splits, stock dividends, reorganizations, recapitalizations
and the like and for certain issuances of Class A common stock
and equity-linked securities as described above) for any
20 trading days within a 30-trading day period ending three
business days before the Company sends to the notice of redemption
to the Warrant holders. |
The Company will not redeem the Warrants as described above unless
a registration statement under the Securities Act covering the
issuance of the shares of Class A common stock issuable upon a
cashless exercise of the Warrants is then effective and a current
prospectus relating to those shares of Class A common stock is
available throughout the 30-day redemption period, except if the
Warrants may be exercised on a cashless basis and such cashless
exercise is exempt from registration under the Securities Act.
Redemption of Warrants When the Price Per Share of
Class A Common Stock Equals or Exceeds $10.00.
Once the Warrants become exercisable, the Company may redeem the
outstanding Warrants:
| |
● |
in whole and not in part; |
| |
|
|
| |
● |
at $0.10 per Warrant upon a minimum of
30 days’ prior written notice of redemption; provided that
holders will be able to exercise their Warrants prior to redemption
and receive a number of shares based on the redemption date and the
“fair market value” of Class A common stock except as
otherwise described below; |
| |
|
|
| |
● |
if, and only if, the last reported sale price of
Class A common stock equals or exceeds $10.00 per share (as
adjusted per stock splits, stock dividends, reorganizations,
reclassifications, recapitalizations and the like and for certain
issuances of Class A common stock and equity-linked securities
as described above) on the trading day prior to the date on which
the Company sends the notice of redemption to the Warrant holders;
and |
| |
|
|
| |
● |
if, and only
if, the last reported sale price of Class A common stock is less
than $18.00 per share (as adjusted for stock for stock splits,
stock dividends, reorganizations, recapitalizations and the like
and for certain issuances of Class A common stock and equity-linked
securities), the Private Placement Warrants are also concurrently
called for redemption on the same terms as the outstanding
Warrants, as described above. |
The “fair market value” of Class A common stock will mean the
volume-weighted average price of the Class A common stock for
the ten trading days immediately following the date on which the
notice of redemption is sent to the holders of Warrants. In no
event will the Warrants be exercisable in connection with this
redemption feature for more than 0.361 shares of Class A
common stock per Warrant (subject to adjustment).
In no event will the Company be required to net cash settle any
warrant. If the Company is unable to complete a Business
Combination and the Company liquidates the funds held in the Trust
Account, holders of Warrants will not receive any of such funds
with respect to their Warrants, nor will they receive any
distribution from the Company’s assets held outside of the Trust
Account with the respect to such Warrants. Accordingly, the
Warrants may expire worthless.
NOTE 4 — PRIVATE PLACEMENT
Simultaneously with the closing of the Initial Public Offering, the
Company’s Sponsors and independent directors purchased 5,833,333
Private Placement Warrants at $1.50 per warrant (for an aggregate
purchase price of $8,750,000) from the Company. $6,900,000 of the
proceeds received from the Private Placement Warrants purchases
were placed in the Trust Account. The Private Placement Warrants
are identical to the Warrants included in the Units sold in the
Initial Public Offering, except that the Private Placement
Warrants: (i) will not be redeemable by the Company and
(ii) may be exercised for cash or on a cashless basis, so long
as they are held by the initial purchasers or any of their
permitted transferees. Additionally, the holders of the Private
Placement Warrants have agreed not to transfer, assign or sell any
of the Private Placement Warrants, including the shares of common
stock issuable upon exercise of the Private Placement Warrants
(except to certain permitted transferees), until 30 days after
the completion of the Company’s initial Business Combination.
NOTE 5 — RELATED PARTY TRANSACTIONS
Administrative Services Agreement
The Company presently occupies office space provided by two
affiliates of the Company’s executive officers. Such affiliates
have agreed that, until the Company consummates a Business
Combination, they will make such office space, as well as certain
office and secretarial services, available to the Company, as may
be required by the Company from time to time. The Company agreed,
commencing on December 1, 2020, to pay such affiliates an aggregate
of up to $20,000 per month for such services. For the quarter ended
March 31, 2020, the Company incurred $60,000 in fees for these
services, of which is included in accounts payable and accrued
expenses in the accompanying condensed balance sheets.
Promissory Notes — Related Party
The Company issued an aggregate of $150,000 principal amount
unsecured promissory notes to the Sponsors on October 20, 2017, as
amended on February 21, 2020. On February 21, 2020, the Company
issued an aggregate of $50,000 principal amount unsecured
promissory notes to the Sponsors, of which $50,000 was funded on
such date. On November 3, 2020, the Company amended and restated
the October 20, 2017 promissory notes and the February 21,
2020 promissory notes, and issued an additional aggregate of
$50,000 principal amount unsecured promissory notes to the
Sponsors, for a total of $250,000 aggregate principal amount of
promissory notes (the “Promissory Notes”). The
Promissory Notes were non-interest bearing and payable on the
earliest to occur of (i) October 20, 2021, (ii) the
consummation of the Initial Public Offering and (iii) the
abandonment of the Initial Public Offering. The outstanding balance
under the Promissory Notes of $250,000 was repaid at the closing of
the Initial Public Offering on December 4, 2020.
In February 2021, the Sponsors and the independent directors
collectively committed to provide the Company an aggregate of
$970,000 in loans. In May 2021, the Sponsors and the independent
directors collectively committed to provide the Company an
additional $756,000 in loans. The loans, if issued, as well as any
future loans that may be made by the Company’s officers and
directors (or their affiliates), will be evidenced by notes and
would either be repaid upon the consummation of a Business
Combination or up to $2,000,000 of the notes may be converted into
warrants at a price of $1.50 per warrant at the option of the
lender. As of March 31, 2021, the Company had an outstanding
balance of $400,000 under such promissory notes. On April 20, 2021,
the company issued an additional $300,000 under such promissory
notes. None of the notes had been converted to warrants.
NOTE 6 — COMMITMENTS AND CONTINGENCIES
Registration Rights
Pursuant to a registration rights agreement entered into on
December 1, 2020, the holders of the shares of Class B common
stock, Private Placement Warrants and any warrants that may be
issued upon conversion of 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) will be entitled to registration rights.
The holders of these securities will be entitled to make up to
three demands, excluding short form demands, that the Company
register such securities. In addition, the holders will have
certain “piggy-back” registration rights with respect to
registration statements filed subsequent to the completion of an
initial Business Combination and rights to require the Company to
register for resale such securities pursuant to Rule 415 under the
Securities Act. The registration rights agreement does not contain
liquidating damages or other cash settlement provisions resulting
from delays in registering the Company’s securities. The Company
will bear the expenses incurred in connection with the filing of
any such registration statements.
Contingent Fee Arrangement
The Company has entered into a fee arrangement with a service
provider pursuant to which certain fees incurred by the Company
will be deferred and become payable only if the Company consummates
a Business Combination. If a Business Combination does not occur,
the Company will not be required to pay these contingent fees. As
of March 31, 2021, the amount of these contingent fees was
approximately $1,708,000. There can be no assurances that the
Company will complete a Business Combination.
Related Party Loans
In order to fund working capital deficiencies or finance
transaction costs in connection with an intended initial Business
Combination, the Company’s Sponsors, officers and directors or
their respective affiliates may, but are not obligated to, loan the
Company funds as may be required on a non-interest bearing basis.
If the Company completes its initial Business Combination, the
Company would repay such loaned amounts. In the event that the
initial Business Combination does not close, the Company 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 $2,000,000 of such 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.
Underwriting Agreement
The underwriters are entitled to a deferred underwriting discount
of 3.5% of the gross proceeds of the Initial Public Offering or an
aggregate of $12,075,000, which were placed in the Trust
Account.
Consulting Agreements
In December 2020, subsequent to the consummation of the Initial
Public Offering, the Company entered into three consulting
arrangements for services to help identify and introduce the
Company to potential targets and provide assistance with due
diligence, deal structuring, documentation and obtaining
shareholder approval for an initial Business Combination. These
agreements provide for an aggregate monthly fee of $62,500 and
aggregate success fees of $1,100,000 payable upon the consummation
of an initial Business Combination. The accrual amount under these
agreements was zero and approximately $38,300 as of March 31, 2021
and December 31, 2020, respectively.
NOTE 7 — PERMANENT EQUITY AND TEMPORARY EQUITY
Preferred Stock
The Company is authorized to issue 1,000,000 shares of preferred
stock with a par value of $0.0001 per share with such designation,
rights and preferences as may be determined from time to time by
the Company’s board of directors. As of March 31, 2021, and
December 31, 2020, there were no shares of preferred stock
issued or outstanding.
Common Stock
The Company is authorized to issue 400,000,000 shares of
Class A common stock and 50,000,000 shares of Class B
common stock, both with a par value of $0.0001 per share.
In connection with the organization of the Company, in
May 2017, a total of 8,625,000 shares of Class B common
stock were sold to the Sponsors at a price of approximately $0.003
per share, or $25,000, after giving retroactive effect to the
dividend of approximately 0.17 shares for each share of
Class B common stock outstanding in October 2017, the dividend
of one share for each share of Class B common stock
outstanding effectuated by the Company in May 2019. On November 3,
2020, the Company effected an approximately 0.8571-for-1 reverse
stock split with respect to its Class B common stock, resulting in
the Sponsors holding an aggregate of 8,625,000 founder shares. All
share and per share amounts have been retroactively restated to
reflect the stock dividends and the reverse stock split. This
number included an aggregate of 1,125,000 shares of Class B
common stock that are subject to forfeiture if the over-allotment
option is not exercised by the underwriters. As a result of the
underwriters’ election to fully exercise their over-allotment
option, a total of 1,125,000 founder shares are no longer subject
to forfeiture.
The holders of the founder shares have agreed that the founder
shares will not be transferred, assigned or sold until one year
after the date of the consummation of an initial Business
Combination or earlier if, subsequent to an initial Business
Combination, (i) the last sales price of the Company’s
Class A common stock equals or exceeds $12.00 per share (as
adjusted for stock splits, stock dividends, reorganizations and
recapitalizations) for any 20 trading days within any 30-trading
day period commencing at least 150 days after the initial
Business Combination or (ii) the Company consummates a
subsequent liquidation, merger, stock exchange or other similar
transaction which results in all of the Company’s stockholders
having the right to exchange their common stock for cash,
securities or other property.
The Class B common stock will automatically convert into
Class A common stock on the first business day following the
consummation of the Company’s initial Business Combination on a
one-for-one basis, subject to adjustment. In the case that
additional shares of Class A common stock, or equity-linked
securities convertible or exercisable for shares of Class A
common stock, are issued or deemed issued in excess of the amounts
offered in the Initial Public Offering and related to the closing
of an initial Business Combination, the ratio at which the
Class B common stock will convert into Class A common
stock will be adjusted so that the number of shares of Class A
common stock issuable upon conversion of such Class B common
stock will equal, in the aggregate, 20% of the sum of the shares of
common stock outstanding upon the completion of the Initial Public
Offering plus the number of shares of Class A common stock and
equity-linked securities issued or deemed issued in connection with
the initial Business Combination (net of redemptions), excluding
any shares of Class A common stock or equity-linked securities
issued, or to be issued, to any seller in the initial Business
Combination and any Private Placement Warrants.
As of March 31, 2021, and December 31, 2020, there were 4,034,435
shares and 4,653,015 shares of Class A common stock issued and
outstanding, respectively, excluding 30,465,565 shares and
29,846,985 shares of Class A common stock subject to possible
redemption, respectively. As of March 31, 2021, and
December 31, 2020, there was 8,625,000 shares of Class B
common stock issued and outstanding.
NOTE 8 — FAIR VALUE MEASUREMENTS
The following tables present information about the Company’s assets
that are measured at fair value on a recurring basis at March 31,
2021 and at December 31, 2020, and indicates the fair value
hierarchy of the valuation inputs the Company utilized to determine
such fair value:
|
Description |
|
Level |
|
March 31,
2021 |
|
| Assets: |
|
|
|
|
|
| Marketable
securities held in Trust Account (1) |
|
1 |
|
$ |
345,006,438 |
|
|
Liabilities: |
|
|
|
|
|
|
| Private
Placement Warrants (2) |
|
2 |
|
|
7,875,000 |
|
| Public
Warrants (2) |
|
1 |
|
|
15,525,000 |
|
|
Description |
|
Level |
|
December 31,
2020 |
|
| Assets: |
|
|
|
|
|
| Marketable
securities held in Trust Account (1) |
|
1 |
|
$ |
345,012,580 |
|
|
Liabilities: |
|
|
|
|
|
|
| Private
Placement Warrants (2) |
|
3 |
|
|
10,325,000 |
|
| Public
Warrants (2) |
|
3 |
|
|
20,355,000 |
|
|
(1) |
The fair value of the marketable
securities held in Trust account approximates the carrying amount
primarily due to their short-term nature. |
|
(2) |
Measured at fair value on a
recurring basis. |
Warrants
The Warrants are accounted for as liabilities in accordance with
ASC 815-40 and are presented within warrant liabilities on the
condensed balance sheet. The warrant liabilities are measured at
fair value at inception and on a recurring basis, with changes in
fair value presented within change in fair value of warrant
liabilities in the condensed statement of operations.
Subsequent Measurement
The Warrants are measured at fair value on a recurring basis
and were initially
measured at fair value as Level 3 financial liabilities using a
Monte Carlo simulation model through December 31, 2020.
The subsequent measurement of the Public Warrants as of March 31,
2020 is classified as Level 1 due to the use of an observable
market quote in an active market under the ticker CAP.WS. As the
transfer of Private Placement Warrants to anyone outside of a small
group of individuals who are permitted transferees would result in
the Private Placement Warrants having substantially the same terms
as the Public Warrants, the Company determined that the fair value
of each Private Placement Warrant is equivalent to that of each
Public Warrant, with an insignificant adjustment for short-term
marketability restrictions. As such, the Private Placement Warrants
are classified as Level 2.
As of March 31, 2021, and December 31, 2020, the aggregate fair
values of the Private Placement Warrants were $7.9 million and
$10.3 million, respectively, and Public Warrants were $15.5 million
and $20.4 million, respectively.
The following table presents the changes in the fair value of
warrant liabilities:
| |
|
Private Placement |
|
|
Public |
|
|
Warrant Liabilities |
|
| Fair value as of
December 31, 2020 |
|
$ |
10,325,000 |
|
|
$ |
20,355,000 |
|
|
$ |
30,680,000 |
|
|
Change in
valuation inputs or other assumptions(1)(2) |
|
|
(2,450,000 |
) |
|
|
(4,830,000 |
) |
|
|
(7,280,000 |
) |
| Fair value as
of March 31, 2021 |
|
$ |
7,875,000 |
|
|
$ |
15,525,000 |
|
|
$ |
23,400,000 |
|
| (1) |
Changes in valuation
inputs or other assumptions are recognized in change in fair value
of warrant liabilities in the condensed statement of
operations. |
| (2) |
Transfers to/from Levels
1, 2 and 3 are recognized at the end of the reporting period. The
estimated fair value of the Public Warrants transferred from a
Level 3 measurement to a Level 1 measurement and the estimated fair
value of the Private Placement Warrants transferred from a Level 3
measurement to a Level 2 measurement during the three months ended
March 31, 2021 when the Public Warrants were separately listed and
traded. |
NOTE 9 — SUBSEQUENT EVENTS
On April 20, 2021, the Company issued an aggregate of $300,000 of
convertible promissory notes pursuant to the existing commitment
letters made by Capitol Acquisition Management V LLC, an affiliate
of Mark D. Ein, Capitol Acquisition Founder V LLC, an affiliate of
L. Dyson Dryden, and Lawrence Calcano, Richard C. Donaldson, Raul
J. Fernandez and Thomas S. Smith, Jr., each a member of the board
of directors of the Company, to evidence loans in such amount made
by the lenders.
The Company evaluated subsequent events and transactions that
occurred after the balance sheet date up to the date that the
financial statements were issued. Based upon this review, other
than as described in these financial statements, the Company did
not identify any subsequent events that would have required
adjustment or disclosure in the financial statements.
Item 2. Management’s
Discussion and Analysis
References in this report (the “Quarterly Report”) to “we,” “us”
or the “Company” refer to Capitol Investment Corp. V. 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.
Forward-Looking Statements
All statements other than statements of historical fact included in
this Form 10-Q including, without limitation, statements under
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” regarding our financial position, business
strategy and the plans and objectives of management for future
operations, are forward looking statements. When used in this Form
10-Q, words such “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 SEC
filings. References to “we”, “us”, “our” or the “Company” are to
Capitol Investment Corp. V, except where the context requires
otherwise. 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
herein. For these statements, we claim the protection of the safe
harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act. 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 Securities and Exchange Commission. 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 formed for the purpose of effecting a
merger, stock exchange, asset acquisition, stock purchase,
reorganization or similar business combination with one or more
businesses or entities. We are not limited to any particular
industry or geographic location in selecting a target business with
which to engage in a business combination.
We consummated the Offering on December 4, 2020. All activity
through December 4, 2020 relates to our formation, the Offering (as
defined below) and simultaneous private placement of private
placement warrants, as described below, our search for a target
business with which to complete an initial business combination and
activities in connection with the proposed business combination
with Doma Holdings, Inc. (“Doma”).
Recent Developments
Doma
On March 2, 2021, we entered into a definitive merger agreement
(the “Merger Agreement”) with Capitol V Merger Sub, Inc., a
Delaware corporation and our direct wholly owned subsidiary
(“Merger Sub”), and Doma. The Merger Agreement, among other things,
provides that:
|
● |
we will amend and
restate our amended and restated certificate of incorporation to,
among other things, change the name of the Company to Doma
Holdings, Inc.; |
|
● |
we will replace our
bylaws by adopting amended and restated bylaws for the
post-combination company; |
|
● |
we have entered into
various subscription agreements with certain third-party investors
(the “PIPE Investors”) pursuant to which the PIPE Investors have
committed to make private investments in public equity in the form
of Class A common stock in the aggregate amount of $300 million,
for which the PIPE Investors will receive an aggregate of 30
million shares of common stock in the combined company (“New Doma
Common Stock”); and |
|
● |
(i) without any action
on the part of any holder of our warrant, each warrant that is
issued and outstanding immediately prior to the closing of the
initial business combination with Doma will become a warrant of the
post-combination company, exercisable for New Doma Common Stock in
accordance with its terms; and (ii) without any action on the part
of the holders of our Class B common stock, each share of Class B
common stock that is issued and outstanding immediately prior to
the closing of the initial business combination with Doma will
automatically convert into one share of New Doma Common
Stock. |
The business combination with Doma will be consummated subject to
certain conditions as further described in the Merger
Agreement.
Doma is a leading force for disruptive change in the residential
real estate industry. Doma uses machine intelligence to replace
large portions of the antiquated residential real estate closing
process with instant technology solutions. Doma’s machine
intelligence algorithms are being trained and optimized on 30 years
of historical anonymized closing transaction data, allowing Doma to
make underwriting decisions in less than a minute and significantly
reduce the time, effort and cost of the entire process. It is
expected that Mark D. Ein will join the combined company’s board of
directors upon completion of the transaction.
Additional information regarding Doma and the potential business
combination with Doma is available in the proxy
statement/prospectus most recently filed by the Company with the
SEC.
Promissory Notes
On March 12, 2021 and April 20, 2021, the directors of the Company
agreed to loan the Company an aggregate of $400,000 and $300,000,
respectively, for an aggregate of $700,000. The promissory notes
are provided to cover certain expenses related to the business
combination pursuant to a promissory note (the “Note”). Each
Promissory Note is non-interest bearing and is payable at the
consummation by the Company of a business combination. Upon
consummation of a business combination, the lenders will have the
option to convert up to $2,000,000 of the principal balance of such
Promissory Notes into warrants at a price of $1.50 per warrant. The
terms of any such warrants would be identical to the warrants
issued by the Company in the Offering except that such warrants
will be non-redeemable by the Company and will be exercisable for
cash or on a “cashless” basis, in each case, so long as such
warrants are held by the initial holder or such holder’s permitted
transferees. If a business combination is not consummated, all
outstanding amounts under any Promissory Notes issued to the
lenders will be forgiven except to the extent that the Company has
funds available to it outside of its trust account established in
connection with the Offering to repay such amounts.
Results of Operations
We will not generate any operating revenues until the closing and
completion of our business combination. 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 three months ended March 31, 2021, we had net income of
$6,185,799, which consists of interest income on marketable
securities held in the trust account of $47,359 and a gain from the
change in fair value of warrant liabilities of $7,280,000, offset
by an unrealized loss on marketable securities held in the trust
account of $1,840 and operating costs of $1,139,720.
For the three months ended March 31, 2020, we had a net loss of
$20, which consists of operating costs.
Liquidity and Capital Resources
Until the consummation of the Offering, our only source of
liquidity was an initial purchase of ordinary shares by Capitol
Acquisition Management V LLC and Capitol Acquisition Founder V LLC
(collectively, the “Sponsors”), and loans and advances from related
parties.
On December 4, 2020, we consummated our initial public offering
(the “Offering”) of 34,500,000 Units. The Units were sold at a
price of $10.00 per Unit, generating gross proceeds to us of
$345,000,000. Simultaneously with the consummation of the Offering
on December 4, 2020, we completed a private placement of 5,833,333
private placement warrants at a purchase price of $1.50 per private
placement warrant, to our Sponsors and our independent directors,
generating gross proceeds to us of $8,750,000. Approximately $338.1
million of the net proceeds from the Offering and $6.9 million of
the proceeds from the sale of the private placement warrants have
been deposited in a trust account maintained by Continental Stock
Transfer & Trust Company, acting as trustee, established for
the benefit of our public stockholders. After paying expenses
associated with the Offering and the private placement, we had
approximately $1.0 million of cash held outside the trust account
for working capital.
Except for the withdrawal from the trust account of interest earned
on the funds held therein necessary to pay taxes, if any, the funds
in the trust account will not be released to us until the earlier
of the completion of a business combination or our liquidation upon
our failure to consummate a business combination within the
required time period (which may not occur until December 4,
2022).
For the three months ended March 31, 2021, cash used in operating
activities was $997,086. Net income of $6,185,799 was affected by
interest earned on marketable securities held in the trust account
of $47,359, an unrealized loss on marketable securities of $1,840,
a gain from the change in fair value of warrant liabilities of
$7,280,000 and changes in operating assets and liabilities, which
provided of $142,634 of cash.
For the three months ended March 31, 2020, cash provided by
operating activities was $108. Net loss of $20 was offset by
changes in operating assets and liabilities, which provided $128 of
cash from operating activities.
As of March 31, 2021, we had cash and marketable securities held in
the trust account of $345,006,438. We intend to use substantially
all of the funds held in the trust account, including any amounts
representing interest earned on the trust account not previously
released to us (less taxes payable and deferred underwriting
commissions) to complete our initial business combination. We may
withdraw interest to pay our taxes. To the extent that our equity
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 March 31, 2021, we had cash of $86,962 outside of the trust
account. 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 and structure, negotiate and complete a business
combination.
We do not believe we will need to raise additional funds in order
to meet the expenditures required for operating our business prior
to our initial business combination. However, if our estimates of
the costs of identifying a target business, undertaking in-depth
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. In order to fund working capital
deficiencies or finance transaction costs in connection with an
intended initial business combination, our sponsors, officers and
directors or their respective affiliates may, but are not obligated
to, loan us funds as may be required on a non-interest basis. In
February 2021, the Sponsors and the independent directors
collectively committed to provide us an aggregate of $970,000 in
loans. In May 2021, the Sponsors and the independent directors
collectively committed to provide an additional $756,000 in loans.
These loans, if issued, as well as any future loans that may be
made by our officers and directors (or their affiliates), will be
evidenced by notes and if we complete our initial business
combination, we would repay such loaned amounts. In the event that
our 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. Up to $2,000,000 of such 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.
The warrants would be identical to the private placement warrants.
Prior to the completion of our initial business combination, we do
not expect to seek loans from parties other than our sponsors,
officers, directors or their respective affiliates as we do not
believe third parties will be willing to loan such funds and
provide a waiver against any and all rights to seek access to funds
in our trust account.
Based on the loan commitment provided by the Sponsors and the
independent directors, we believe we will have sufficient cash to
meet the Company’s working capital needs through the earlier of
consummation of a Business Combination or May 17, 2022.
We may need to obtain additional financing to complete our initial
business combination, either because the transaction requires more
cash than is available from the proceeds held in our trust account
or because we become obligated to redeem a significant number of
our public shares upon completion of the business combination, in
which case we may issue additional securities or incur debt in
connection with such 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.
Off-balance sheet financing arrangements
We did not have any off-balance sheet arrangements as of March 31,
2021. 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 two affiliates of our executive officers an
aggregate monthly fee of $20,000 for office space and secretarial
support provided to the Company. We began incurring these fees on
December 4, 2020 and will continue to incur these fees monthly
until the earlier of the completion of a business combination and
the Company’s liquidation.
The underwriters are entitled to a deferred underwriting discount
of 3.5% of the gross proceeds of the Offering or an aggregate of
$12,075,000, which were placed in the trust account.
We entered into a fee arrangement with a service provider pursuant
to which certain fees incurred by us will be deferred and become
payable only if we consummate a business combination. If a business
combination does not occur, we will not be required to pay these
contingent fees. As of March 31, 2021, the amount of these
contingent fees was approximately $1,708,000. There can be no
assurances that we will complete a business combination.
In December 2020, subsequent to the consummation of our Offering,
we entered into three consulting arrangements for services to help
identify and introduce us to potential targets and provide
assistance with due diligence, deal structuring, documentation and
obtaining shareholder approval for an initial business combination.
These agreements provide for an aggregate monthly fee of $62,500
and aggregate success fees of $1,100,000 payable upon the
consummation of an 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 warrants issued in connection with our initial
public offering in accordance with Accounting Standards
Codification (“ASC”) 815-40, “Derivatives and
Hedging—Contracts in Entity’s Own Equity” (“ASC 815”), under
which the warrants do not meet the criteria for equity
classification and must be recorded as liabilities. As the warrants
meet the definition of a derivative as contemplated in ASC 815, the
Warrants are measured at fair value at inception and at each
reporting date in accordance with ASC 820, Fair Value Measurement,
with changes in fair value recognized in the statement of
operations in the period of change.
Class A Common Stock Subject to Possible Redemption
We account for our shares of Class A common stock subject to
possible redemption in accordance with the guidance in Accounting
Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity.” Shares of Class A 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 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,
common stock is classified as stockholders’ equity. Our common
stock features certain redemption rights that are considered to be
outside of our control and subject to occurrence of uncertain
future events. Accordingly, the Class A common stock subject to
possible redemption is presented as temporary equity, outside of
the stockholders’ equity section of our balance sheets.
Net Loss per Common Share
We apply the two-class method in calculating earnings per share.
Net loss per common share, basic and diluted for Class A
redeemable common stock is calculated by dividing the interest
income earned on the Trust Account, net of applicable taxes, by the
weighted average number of shares of Class A redeemable common
stock outstanding for the periods. Net loss per common share, basic
and diluted for and Class B non-redeemable common stock is
calculated by dividing net loss less income attributable to
Class A redeemable common stock, by the weighted average
number of shares of Class B non-redeemable common stock
outstanding for the period presented.
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.
Item 3. Quantitative
and Qualitative Disclosures About Market Risk
The net proceeds of the Offering and the sale of the private
placement warrants held in the trust account may be invested only
in U.S. government treasury obligations with a maturity of 180 days
or less or in money market funds meeting certain conditions under
Rule 2a-7 under the Investment Company Act which invest only in
direct U.S. government treasury obligations. Due to the short-term
nature of these investments, we believe there is no associated
material exposure to interest rate risk.
Item 4. Controls and
Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that
information required to be disclosed by us in our Exchange Act
reports is recorded, processed, summarized, and reported within the
time periods specified in the SEC’s rules and forms, and that such
information is accumulated and communicated to our management,
including our principal executive officer and principal financial
officer or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management,
including our principal executive officer and principal financial
and accounting officer, we conducted an evaluation of the
effectiveness of our disclosure controls and procedures as of the
end of the quarter ended March 31, 2021, as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this
evaluation, our principal executive officer and principal financial
and accounting officer have concluded that during the period
covered by this report, our disclosure controls and procedures were
not effective, due solely to the material weakness in our internal
control over financial reporting as described in our Annual Report
on Form 10-K/A for the year ended December 31, 2020, as filed on
May 11, 2021. In light of this material weakness, we performed
additional analysis as deemed necessary to ensure that our
financial statements were prepared in accordance with U.S.
generally accepted accounting principles. Accordingly, management
believes that the financial statements included in this Quarterly
Report on Form 10-Q present fairly in all material respects our
financial position, results of operations and cash flows for the
period presented.
Changes in Internal Control Over Financial
Reporting
There was no change in our internal control over financial
reporting that occurred during the most recently completed fiscal
quarter covered by this Quarterly Report on Form 10-Q that has
materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting.
PART II - OTHER
INFORMATION
Item 1. Legal
Proceedings.
None.
Item 1A. Risk
Factors.
Factors that could cause our actual results to differ materially
from those in this report include the risk factors described in our
Annual Report on Form 10-K for the year ended December 31, 2020
filed with the SEC on March 1, 2021.
Item 2. Unregistered
Sales of Equity Securities and Use of Proceeds
Our Sponsors were issued an aggregate of 8,625,000 founder shares,
or Class B common stock, (after taking into account (i) a stock
dividend of approximately 0.17 shares of Class B common stock for
each share of Class B common stock effectuated in October 2017,
(ii) a stock dividend of one share of Class B common stock for each
outstanding share of Class B common stock effectuated in May 2019
and (iii) an approximately 0.8571-for-1 reverse stock split with
respect to our Class B common stock effectuated in November 2020)
for which we received a capital contribution of an aggregate of
$25,000. Our Sponsors subsequently transferred a portion of these
founders’ shares to certain individuals, including our independent
directors, for the same per share purchase price originally paid
for such shares.
On December 4, 2020, we consummated the Offering of 34,500,000
Units. Each Unit consists of one share of our Class A common stock,
par value $0.0001 per share, and one-third of one redeemable
warrant, with each whole Warrant entitling the holder thereof to
purchase one whole share of Class A common stock for $11.50 per
share. The Units were sold at a price of $10.00 per Unit,
generating gross proceeds to us of $345,000,000.
Simultaneously with the consummation of the Offering on December 4,
2020, we completed the Private Placement of 5,833,333 Private
Placement Warrants at a purchase price of $1.50 per Private
Placement Warrant, to our Sponsors and our independent directors,
generating gross proceeds to us of $8,750,000.
Approximately $338.1 million of the net proceeds from the Offering
and $6.9 million of the proceeds from the sale of the Private
Placement Warrants have been deposited in a trust account
maintained by Continental Stock Transfer & Trust Company,
acting as trustee, established for the benefit of our public
stockholders. After paying expenses associated with the Offering
and the Private Placement, we had approximately $1.0 million of
cash held outside of the trust account for working capital.
Except for the withdrawal from the trust account of interest earned
on the funds held therein necessary to pay our taxes, if any, the
funds in the trust account will not be released to us until the
earlier of the completion of a business combination or our
liquidation upon our failure to consummate a business combination
within the required time period (which may not occur until December
4, 2022).
We incurred a total of $6,900,000 in underwriting discounts and
commissions at the closing of the Offering (up to an additional
$12,075,000 of deferred underwriting expenses may be paid upon the
completion of a business combination) and $494,085 for other costs
and expenses related to our formation, transaction costs, and the
Offering.
We intend to use substantially all of the funds held in the trust
account, including any amounts representing interest earned on the
trust account not previously released to us (less taxes payable and
deferred underwriting commissions) to complete our initial business
combination. We may withdraw interest to pay our taxes, if any. To
the extent that our equity 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.
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,
and structure, negotiate and complete a business combination.
For a description of the use of the proceeds generated in our
Offering, see Part I, Item 2 of this Form 10-Q.
Item 3. Defaults Upon
Senior Securities.
None.
Item 4. Mine Safety
Disclosures.
Not Applicable.
Item 5. Other
Information.
Item 2.03 Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
On May 16, 2021, each of our directors, including Mark D. Ein, our
Chairman of the Board and Chief Executive Officer, and L. Dyson
Dryden, our President and Chief Financial Officer, committed (each,
a “Commitment Letter”) to lend the Company an aggregate of an
additional $756,000, if such funds are needed by the Company. Any
amount loaned by such directors to the Company pursuant to such
Commitment Letter will be evidenced by unsecured promissory notes
(“Promissory Notes”) issued to the lenders thereof. Each Promissory
Note would be non-interest bearing and would be payable at the
consummation by the Company of a merger, stock exchange, asset
acquisition, stock purchase, reorganization or similar business
combination with one or more businesses or entities (a “Business
Combination”). As indicated in the Company’s final prospectus,
dated December 1, 2020, relating to the Company’s IPO, upon
consummation of a Business Combination, the lenders would have the
option to convert up to $2,000,000 of the principal balance of such
Promissory Notes into warrants at a price of $1.50 per warrant. The
terms of any such warrants would be identical to the warrants
issued by the Company in the IPO except that such warrants would be
non-redeemable by the Company and would be exercisable for cash or
on a “cashless” basis, in each case, so long as such warrants were
held by the initial holder or such holder’s permitted transferees.
If a Business Combination is not consummated, all outstanding
amounts under any Promissory Notes issued to the lenders would be
forgiven except to the extent that the Company has funds available
to it outside of its trust account established in connection with
the IPO to repay such amounts.
The foregoing description of the Commitment Letters and the
Promissory Notes does not purport to be complete and is qualified
in its entirety by the terms and conditions of the forms of
Commitment Letter and the Promissory Note, copies of which are
attached hereto as Exhibit 10.5 and 10.6, respectively, and are
incorporated herein by reference.
Item 6.
Exhibits
|
Exhibit
No. |
|
Description |
|
|
|
|
|
2.1 |
|
Agreement
and Plan of Merger, dated as of March 2,
2021. (Incorporated by reference from Exhibit 2.1 in
Form 8-K filed on March 3, 2021) |
|
|
|
|
|
2.1.1 |
|
Amendment
No. 1 to Agreement and Plan of Merger, dated as of March 18, 2021.
(Incorporated by reference from Exhibit 2.1 in Form 8-K filed on
March 19, 2021) |
|
|
|
|
|
10.1 |
|
Form
of Subscription Agreement (Incorporated by reference from Exhibit
10.1 in Form 8-K filed on March 3, 2021) |
|
|
|
|
|
10.2 |
|
Sponsor
Support Agreement, dated as of March 2, 2021 (Incorporated by
reference from Exhibit 10.2 in Form 8-K filed on March 3,
2021) |
|
|
|
|
|
10.3 |
|
Form
of Company Support Agreement (Incorporated by reference from
Exhibit 10.3 in Form 8-K filed on March 3, 2021) |
|
|
|
|
|
10.4 |
|
Form
of Lock-Up Agreement (Incorporated by reference from Exhibit 10.4
in Form 8-K filed on March 3, 2021) |
|
|
|
|
|
10.5 |
|
Form
of Commitment Letter. (Incorporated by reference from Exhibit 10.1
in Form 8-K filed on March 12, 2021) |
|
|
|
|
|
10.6 |
|
Form
of Promissory Note. (Incorporated by reference from Exhibit 10.2 in
Form 8-K filed on March 12, 2021) |
|
|
|
|
|
31.1 |
|
Certification
of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
31.2 |
|
Certification
of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
32 |
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
101.INS |
|
XBRL
Instance Document |
|
|
|
|
|
101.SCH |
|
XBRL
Taxonomy Extension Schema Document |
|
|
|
|
|
101.CAL |
|
XBRL
Taxonomy Extension Calculation Linkbase Document |
|
|
|
|
|
101.DEF |
|
XBRL
Taxonomy Extension Definition Linkbase Document |
|
|
|
|
|
101.LAB |
|
XBRL
Taxonomy Extension Label Linkbase Document |
|
|
|
|
|
101.PRE |
|
XBRL
Taxonomy Extension Presentation Linkbase Document |
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
| |
CAPITOL
INVESTMENT CORP. V |
|
|
|
|
|
Date:
May 17, 2021 |
By: |
/s/
Mark D. Ein |
| |
Name: |
Mark
D. Ein |
| |
Title: |
Chief
Executive Officer
(Principal Executive Officer) |
| |
|
|
| |
By: |
/s/
L. Dyson Dryden |
| |
Name: |
L.
Dyson Dryden |
| |
Title: |
Chief
Financial Officer
(Principal Financial and Accounting Officer) |
27
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