NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE
1 - DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Organization
and General
Nebula
Acquisition Corporation (the “Company” or “NAC”) was incorporated in Delaware on October 2, 2017. The
Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization
or similar business combination with one or more businesses (the “Business Combination”). The Company is an “emerging
growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the “Securities Act,”
as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
At
March 31, 2020, the Company had not commenced any operations. All activity for the period from October 2, 2017 (inception) through
March 31, 2020 relates to the Company’s formation, the initial public offering (“Initial Public Offering”) described
below, and since the closing of the Initial Public Offering, the search for a prospective initial Business Combination. The Company
will not generate any operating revenues until after completion of its initial Business Combination, at the earliest. The Company
will generate non-operating income in the form of investment income from the proceeds derived from the Initial Public Offering.
The fiscal year of the Company is the twelve- month calendar period from January 1 through December 31.
Sponsor
and Financing
The
Company’s sponsor is Nebula Holdings, LLC, a Delaware limited liability company (the “Sponsor”). The registration
statement for the Initial Public Offering was declared effective by the United States Securities and Exchange Commission (the
“SEC”) on January 9, 2018. The Company consummated its Initial Public Offering of 27,500,000 Units, including
the issuance of 2,500,000 Units as a result of the underwriters’ partial exercise of their over-allotment option at $10.00
per Unit, generating gross proceeds of $275 million and incurring offering costs of approximately $15.7 million, inclusive of
$9.625 million in deferred underwriting commissions (Note 3).
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”)
of 5,000,000 warrants (the “Private Placement Warrants”), at a price of $1.50 per Private Placement Warrant,
with the Sponsor, generating gross proceeds of $7.5 million (Note 4).
The
Trust Account
Funds
from the Initial Public Offering have been placed in a trust account (“Trust Account”) with American Stock Transfer
and Trust Company. The proceeds held in the Trust Account may only be invested in U.S. government treasury bills with a maturity
of one hundred eighty (180) days or less or in money market funds that meet certain conditions under Rule 2a-7 under the Investment
Company Act of 1940, as amended (the “Investment Company Act”) and that invest only in direct U.S. government obligations.
Funds will remain in the Trust Account until the earlier of (i) the consummation of the initial Business Combination or (ii) the
distribution of the Trust Account proceeds as described below. The remaining proceeds outside the Trust Account may be used to
pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses.
The
Company’s amended and restated certificate of incorporation provides that, other than the withdrawal of interest to pay
franchise and income taxes (less up to $500,000 of interest released to the Company for working capital purposes, all of which
was withdrawn by the Company in December 2019, and $100,000 of interest to pay dissolution expenses, if any), none of the funds
held in the Trust Account will be released until the earlier of: (i) the completion of the initial Business Combination; (ii)
the redemption of any shares of Class A common stock included in the Units (the “Public Shares”) sold in the Initial
Public Offering that have been properly tendered in connection with a stockholder vote to amend the Company’s amended and
restated certificate of incorporation to modify the substance or timing of its obligation to redeem 100% of such shares of Class
A common stock if it does not complete the initial Business Combination within the Combination Period (defined below); and (iii)
the redemption of 100% of the shares of Class A common stock included in the Units sold in the Initial Public Offering if the
Company is unable to complete an initial Business Combination within the Combination Period (subject to the requirements of law).
The proceeds deposited in the Trust Account could become subject to the claims of the Company’s creditors, if any,
which could have priority over the claims of the Company’s public stockholders.
NEBULA
ACQUISITION CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Initial
Business Combination
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public
Offering, although substantially all of the net proceeds of the Initial Public Offering are intended to be generally applied toward
consummating an initial Business Combination. The initial Business Combination must occur with one or more target businesses that
together have an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding the deferred underwriting
commissions and taxes payable on income earned on the Trust Account) at the time of the agreement to enter into the initial Business
Combination. Furthermore, there is no assurance that the Company will be able to successfully effect an initial Business Combination.
The
Company, after signing a definitive agreement for an initial Business Combination, will either (i) seek stockholder approval of
the initial Business Combination at a meeting called for such purpose in connection with which stockholders may seek to redeem
their shares, regardless of whether they vote for or against the initial Business Combination, for cash equal to their pro rata
share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the initial
Business Combination, including interest earned on the funds held in the Trust Account and not previously released to the Company
to pay its franchise and income taxes and up to $500,000 of interest which may be released to the Company for working capital
purposes, all of which was withdrawn by the Company in December 2019, or (ii) 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) for an amount
in cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior
to the consummation of the initial Business Combination, including interest (which interest shall be net of taxes payable and
up to $500,000 for working capital purposes, all of which was withdrawn by the Company in December 2019). The decision as to whether
the Company will seek stockholder approval of the initial Business Combination or will allow stockholders to sell their Public
Shares in a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such
as the timing of the transaction and whether the terms of the transaction would otherwise require the Company to seek stockholder
approval, unless a vote is required by law or under NASDAQ rules. If the Company seeks stockholder approval, it will complete
its initial Business Combination only if a majority of the outstanding shares of common stock voted are voted in favor of the
initial Business Combination. However, in no event will the Company redeem its Public Shares in an amount that would cause its
net tangible assets to be less than $5,000,001 upon consummation of the initial Business Combination. In such case, the Company
would not proceed with the redemption of its Public Shares and the related initial Business Combination, and instead may search
for an alternate initial Business Combination.
If
the Company holds a stockholder vote or there is a tender offer for shares in connection with an initial Business Combination,
a public stockholder will have the right to redeem its shares for an amount in cash equal to its pro rata share of the aggregate
amount then on deposit in the Trust Account as of two business days prior to the consummation of the initial Business Combination,
including interest earned on the funds held in the trust account and not previously released to the Company to pay its franchise
and income taxes (less up to $500,000 of interest released to the Company for working capital purposes, all of which was withdrawn
by the Company in December 2019). As a result, such shares of Class A common stock have been recorded at redemption amount and
classified as temporary equity upon the completion of the Initial Public Offering, in accordance with the Financial Accounting
Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, “Distinguishing Liabilities
from Equity.”
Pursuant
to the Company’s amended and restated certificate of incorporation, the Company originally had 24 months from the closing
of the Initial Public Offering to complete the initial Business Combination. On January 9, 2020, the Company held a special meeting
of stockholders (the “Meeting”), at which the stockholders approved an amendment (the “Charter Amendment”)
to the Company’s amended and restated certificate of incorporation to extend the date by which the Company has to consummate
a business combination (the “Extension”) for an additional five months, from January 12, 2020 to June 12, 2020 (the
“Combination Period”). If the Company is unable to complete the initial Business Combination within the Combination
Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible
but no more than ten business days thereafter subject to lawfully available funds therefor, redeem the Public Shares, at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds
held in the Trust Account and not previously released to the Company to pay its franchise and income taxes (less $100,000 of interest
to pay dissolution expenses, and up to $500,000 of interest released to the Company for working capital purposes, which was withdrawn
by the Company in December 2019), divided by the number of then outstanding Public Shares, which redemption will completely extinguish
public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any),
subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of
the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each
case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law. The Sponsor and the Company’s officers and directors entered into a letter agreement with the Company, pursuant to
which they agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares
(as defined below) held by them if the Company fails to complete the initial Business Combination within the Combination Period.
However, if the Sponsor or any of the Company’s directors, officers or affiliate acquires shares of Class A common stock
in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect
to such shares if the Company fails to complete the initial Business Combination within the Combination Period.
NEBULA
ACQUISITION CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
In
the event of a liquidation, dissolution or winding up of the Company after an initial Business Combination, the Company’s
stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities
and after provision is made for each class of stock, if any, having preference over the common stock. The Company’s stockholders
have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the common stock, except that
the Company will provide its stockholders with the opportunity to redeem their Public Shares for cash equal to their pro rata
share of the aggregate amount then on deposit in the Trust Account, upon the completion of the initial Business Combination, subject
to the limitations described herein.
Business
Combination Agreement
On
January 5, 2020, the Company, BRP Hold 11, Inc., a Delaware corporation (“Blocker”), the Blocker’s sole stockholder
(the “Blocker Holder”), Nebula Parent Corp., a Delaware corporation (“ParentCo”), NBLA Merger Sub LLC,
a Texas limited liability company (“Merger Sub LLC”), NBLA Merger Sub Corp., a Delaware corporation (“Merger
Sub Corp”), Open Lending, LLC, a Texas limited liability company (the “Target” or “Open Lending”),
and Shareholder Representative Services LLC, a Colorado limited liability company, as the Securityholder Representative, entered
into a business combination agreement (as amended, the “Agreement”) pursuant to which NAC will acquire the Target
for consideration of a combination of cash and shares, as disclosed in a Form 8-K filed on January 6, 2020. On March 18, 2020,
the Company entered into Amendment No. 1 and Waiver to the Agreement, as disclosed in the Form 8-K filed on March 18, 2020. On
March 26, 2020, the Company entered into Amendment No. 2 and Consent to the Agreement, as disclosed in the Form 8-K filed on March
27, 2020.
In
addition, pursuant to the terms of the Agreement, all SEC and other regulatory filing fees incurred in connection with the proxy
statement shall be paid by the Company; provided, however, if the closing of the Business Combination (the “Closing”)
occurs, fifty percent of such fees shall be deemed to be the Company’s expenses and fifty percent of such fees shall be
deemed to be Open Lending’s expenses. As of March 31, 2020, the Company has paid $446,906 in regulatory filings fees in
connection with such events, and expected to receive a reimbursement of $223,453 from Open Lending if the Closing occurs. In connection
with the Proposed Transactions, ParentCo filed a Registration Statement on Form S-4 with the SEC on March 18, 2020, which contains
a preliminary proxy statement for the Company’s stockholders and warrantholders.
Notice
of Delisting or Failure to Satisfy a Continued Listing Rule or Standard
On
March 6, 2020, the Company notified the Nasdaq Stock Market (“Nasdaq”) of the death of one of its director’s.
As a result of such event, the Company is temporarily not in compliance with the continued listing requirements as set forth in
Nasdaq Listing Rules 5605(b)(1) and 5605(d)(2)(A) regarding the composition of the board and its compensation committee, respectively,
because a majority of the board is not comprised of independent directors and the compensation committee is not comprised of at
least two independent directors. The Company has determined to rely on the cure periods set forth in Nasdaq Listing Rules 5605(b)(1)(A)
and 5605(d)(4) with respect to the composition of the board and its compensation committee, respectively.
On
March 6, 2020, the Company received a response letter from Nasdaq acknowledging the Company's non-compliance with Nasdaq Listing
Rule 5605. The Nasdaq letter further provided that consistent with Nasdaq Listing Rules 5605(b)(1)(A) and 5605(d)(4), Nasdaq will
provide the Company with a cure period in order to regain compliance until the earlier to occur of (i) its next annual stockholders
meeting or March 2, 2021; or (ii) if the next annual shareholders' meeting is held before August 31, 2020, then the Company must
evidence compliance no later than August 31, 2020.
The
Company expects to regain compliance with Nasdaq Listing Rule 5605 prior to the expiration of the cure period provided by Nasdaq.
NEBULA
ACQUISITION CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Going
Concern Consideration
As
of March 31, 2020, the Company had approximately $616,000 in its operating bank account, approximately $7.3 million of investment
income available in the Trust Account to pay for franchise and income taxes (less $100,000 of investment income to pay dissolution
expenses, and up to $500,000 of investment income released to the Company for working capital purposes, which was withdrawn by
the Company in December 2019), and working capital deficit of approximately $692,000.
Through
March 31, 2020, the Company’s liquidity needs have been satisfied through receipt of a $25,000 capital contribution from
the Sponsor in exchange for the issuance of the Founder Shares (Note 5) to the Sponsor, and an aggregate of approximately $242,000
in advances due to related party, which is discussed in Note 4, approximately $291,000 in loans from the Sponsor, the net proceeds
from the consummation of the Private Placement not held in Trust, and proceeds from investment income released from Trust Account
since inception of approximately $3.2 million and $500,000 for taxes and working capital purposes. The Company repaid the loans
from the Sponsor in full in February 2018. The Company may need to obtain additional loans from the Sponsor or obtain funding
from other sources in order to satisfy its working capital requirements through June 12, 2020, the mandatory liquidation date.
On
January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain
of coronavirus (the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based
on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak continues to evolve. The impact of the COVID-19
outbreak on the Company’s results of operations, financial position and cash flows will depend on future developments, including
the duration and spread of the outbreak and related advisories and restrictions. These developments and the impact of the COVID-19
outbreak on the financial markets and the overall economy are highly uncertain and cannot be predicted. If the financial markets
and/or the overall economy are impacted for an extended period, the Company’s results of operations, financial position
and cash flows may be materially adversely affected.
In
connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard
Board’s Accounting Standards Updated (“ASU”) 2014-15, “Disclosure of Uncertainties about an Entity’s
Ability to Continue as a Going Concern”, management has determined that the working capital deficit, mandatory liquidation
and subsequent dissolution raises substantial doubt about the Company’s ability to continue as a going concern. No adjustments
have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after June 12, 2020.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally
accepted accounting principles (“U.S. GAAP”) for interim financial information and pursuant to rules and regulations
of the SEC. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP. In the opinion of management,
all adjustments (consisting of normal accruals) considered for a fair presentation have been included. Operating results for the
three months ended March 31, 2020 is not necessarily indicative of the results that may be expected through December 31, 2020.
Principles
of Consolidation
The
condensed consolidated financial statements of the Company include all of its wholly-owned subsidiaries, which were
incorporated in Delaware on December 23, 2019 in connection with the planned merger. All inter-company accounts and
transactions are eliminated in consolidation.
NEBULA
ACQUISITION CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Emerging
Growth Company
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 an 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 financial statement
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.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution,
which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on these
accounts and management believes the Company is not exposed to significant risks on such accounts.
Financial
Instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC 820, “Fair
Value Measurements and Disclosures,” approximates the carrying amounts represented in the condensed consolidated balance
sheets.
Fair
Value Measurements
Fair
value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction
between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the
inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
These tiers include:
|
●
|
Level
1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
|
|
|
|
|
●
|
Level
2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as
quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that
are not active; and
|
|
|
|
|
●
|
Level
3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own
assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value
drivers are unobservable.
|
In
some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy.
In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest
level input that is significant to the fair value measurement.
Use
of Estimates
The
preparation of the condensed consolidated financial statements in conformity with GAAP requires the Company’s 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 condensed consolidated financial statements. Actual results could differ from those estimates.
NEBULA
ACQUISITION CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Offering
Costs
The
Company complies with the requirements of the FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A-Expenses of Offering.”
Offering costs consist of costs incurred in connection with formation and preparation for the Initial Public Offering. These costs,
together with the underwriter discount, was charged to additional paid-in capital upon completion of the Initial Public Offering.
Class
A Common Stock subject to possible redemption
As
discussed in Note 1, all of the 27,500,000 common shares sold as part of a Unit in the Initial Public Offering contain a redemption
feature which allows for the redemption of common shares under the Company’s Liquidation or Tender Offer/Stockholder Approval
provisions. In accordance with FASB ASC 480, redemption provisions not solely within the control of the Company require the security
to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all
of the entity’s equity instruments, are excluded from the provisions of FASB ASC 480. Although the Company did not specify
a maximum redemption threshold, its charter provides that in no event will it redeem its Public Shares in an amount that would
cause its net tangible assets (stockholders’ equity) to be less than $5,000,001.
The
Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of the security at the
end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock shall be affected by charges
against additional paid-in capital. Accordingly, at March 31, 2020 and December 31, 2019, 26,695,125 and 26,711,895 of the 27,500,000
Public Shares were classified outside of permanent equity, respectively.
Net
Income(Loss) per Share
Net
income (loss) per share is computed by dividing net income by the weighted-average number of common stock outstanding during the
periods. The Company has not considered the effect of the warrants sold in the initial Public Offering (including the consummation
of the over-allotment) and Private Placement to purchase an aggregate of 14,166,667 shares of the Company’s Class A common
stock in the calculation of diluted income per share, since their inclusion would be anti-dilutive under the treasury stock method.
The
Company’s condensed consolidated statements of operations include a presentation of income per share for common stock
subject to redemption in a manner similar to the two-class method of income per share. Net income per share, basic and
diluted, for Class A common stock for the three months ended March 31, 2020 and 2019 is calculated by dividing the interest
income earned on the Trust Account of approximately $1.0 million and approximately $1.5 million, net of applicable taxes of
approximately $342,000 and approximately $359,000, and funds available to be withdrawn from Trust for working capital
purposes of $500,000 and approximately $102,000, resulted in a net income of approximately $197,000 and approximately $1.1
million, respectively, by the weighted average number of Class A common stock outstanding for the periods. Net income per
share, basic and diluted, for Class B common stock for the three months ended March 31, 2020 and 2019 is calculated by
dividing the net loss of approximately $168,000 and net income of approximately $1.1 million, less income attributable to
Public Shares of approximately $197,000 and approximately $1.1 million, resulted in a net loss of approximately $365,000 and
$0, by the weighted average number of Class B common stock outstanding for the periods.
Income
Taxes
The
Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.”
Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between
the financial statement’s 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. Management has determined that a full valuation allowance
on the deferred tax asset (related to start up costs) is appropriate at this time after consideration of all available positive
and negative evidence related to the realization of the deferred tax asset.
NEBULA
ACQUISITION CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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. There were no unrecognized tax benefits as of March 31,
2020 or December 31, 2019. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income
tax expense. No amounts were accrued for the payment of interest and penalties at March 31, 2020 or December 31, 2019. 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.
Recent
Accounting Pronouncements
Management
does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have
an effect on the Company’s condensed consolidated financial statements.
Note
3 - Public Offering
On
January 12, 2018, the Company sold 27,500,000 Units, including the issuance of 2,500,000 Units as a result of the underwriters’
partial exercise of their over-allotment option, at a price of $10.00 per Unit.
Each
Unit consists of one share of the Company’s Class A common stock, $0.0001 par value, and one-third of one redeemable warrant
(each, a “Warrant” and, collectively, the “Warrants”). Each whole Warrant entitles the holder to purchase
one share of Class A common stock at a price of $11.50 per share. No fractional shares will be issued upon separation of the Units
and only whole Warrants will trade. Each Warrant will become exercisable on the later of 30 days after the completion of the Company’s
initial Business Combination or 12 months from the closing of the Initial Public Offering and will expire five years after the
completion of the Company’s initial Business Combination or earlier upon redemption or liquidation. Once the Warrants become
exercisable, the Company may redeem the outstanding Warrants in whole and not in part at a price of $0.01 per Warrant upon a minimum
of 30 days’ prior written notice of redemption, if and only if the last sale price of the Company’s Class A common
stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day
prior to the date on which the Company sent the notice of redemption to the Warrant holders.
The
Company granted the underwriters a 45-day option to purchase up to 3,750,000 additional Units to cover any over-allotments at
the initial public offering price less the underwriting discounts and commissions. The Units that were issued in connection with
the over-allotment option are identical to the Units issued in the Initial Public Offering. On January 12, 2018, the Company was
advised by the underwriters’ that it had elected to exercise a portion of the over-allotment option for 2,500,000 additional
Units for additional gross proceeds of $25 million. The partial exercise resulted in a forfeiture of 312,500 shares of Class B
common stock.
The
Company paid an underwriting discount of 2.0% of the per Unit offering price to the underwriters at the closing of the Initial
Public Offering (or $5.5 million), with an additional fee (the “Deferred Discount”) of 3.5% of the gross offering
proceeds (or $9.625 million) payable upon the Company’s completion of an initial Business Combination. The Deferred Discount
will become payable to the underwriters from the amounts held in the Trust Account solely in the event the Company completes its
initial Business Combination.
NEBULA
ACQUISITION CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note
4 - Related Party Transactions
Founder
Shares
On
October 16, 2017, the Sponsor purchased 7,187,500 shares of Class B common stock (the “Founder Shares”) for an aggregate
price of $25,000. As used herein, unless the context otherwise requires, Founder Shares shall be deemed to include the shares
of Class A common stock issuable upon conversion thereof. The Founder Shares are identical to the Class A common stock included
in the Units sold in the Initial Public Offering except that the Founder Shares automatically convert into shares of Class A common
stock at the time of the Company’s initial Business Combination and are subject to certain transfer restrictions, as described
in more detail below. Holders of Founder Shares may also elect to convert their shares of Class B common stock into an equal number
of shares of Class A common stock, subject to adjustment as provided above, at any time. The Sponsor agreed to forfeit up to 937,500
Founder Shares to the extent that the over-allotment option was not exercised in full by the underwriters so that the Founder
Shares will represent 20% of the Company’s issued and outstanding shares after the Initial Public Offering (see Note 5).
In December 2017, the Sponsor transferred 25,000 Founder Shares to each of the Company’s then independent directors, at
the original per share purchase price. Also, in January 2018, another 25,000 Founder Shares were transferred to one of the Company’s
independent directors. The 100,000 Founder Shares held by the Company’s independent directors was not subject to forfeiture
in the event the underwriters’ over-allotment option was not exercised. On January 12, 2018, the Company was advised by
the underwriters’ that it had elected to exercise a portion of the over-allotment option for 2,500,000 additional Units
for additional gross proceeds of $25 million. The partial exercise resulted in a forfeiture of 312,500 shares of Class B common
stock.
The
Company’s initial stockholders have agreed, subject to limited exceptions, not to transfer, assign or sell any of their
Founder Shares until the earlier to occur of: (A) one year after the completion of the initial Business Combination or (B) subsequent
to the initial Business Combination, (x) if the last sale price of the Company’s Class A common stock equals or exceeds
$12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading
days within any 30-trading day period commencing at least 150 days after the initial Business Combination, or (y) the date on
which the Company completes a liquidation, merger, stock exchange or other similar transaction that results in all of the Company’s
stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Private
Placement
Simultaneously
with the closing of the Initial Public Offering on January 12, 2018, the Sponsor paid the Company $7.5 million for 5,000,000 Private
Placement Warrants at a price of $1.50 per whole warrant. Each whole Private Placement Warrant is exercisable for one whole share
of the Company’s Class A common stock at a price of $11.50 per share. A portion of the purchase price of the Private Placement
Warrants has been added to the proceeds from the Initial Public Offering held in the Trust Account. If the initial Business Combination
is not completed within the Combination Period, the proceeds from the sale of the Private Placement Warrants held in the Trust
Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private
Placement Warrants will expire worthless. The Private Placement Warrants will be non-redeemable and exercisable on a cashless
basis so long as they are held by the Sponsor or its permitted transferees.
The
Sponsor and the Company’s officers and directors have agreed, subject to limited exceptions, not to transfer, assign or
sell any of their Private Placement Warrants until 30 days after the completion of the initial Business Combination.
Registration
Rights
The
holders of Founder Shares, Private Placement Warrants and Warrants that may be issued upon conversion of working capital loans,
if any, are entitled to registration rights (in the case of the Founder Shares, only after conversion of such shares to shares
of Class A common stock) pursuant to a registration rights agreement signed on January 12, 2018. These holders are entitled to
certain demand and “piggyback” registration rights. However, the registration rights agreement provides that the Company
will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable
lock-up period for the securities to be registered. The Company will bear the expenses incurred in connection with the filing
of any such registration statements.
Related
Party Loans
The
Company’s Sponsor had loaned the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public
Offering pursuant to a promissory note (the “Note”). This loan was non-interest bearing and payable upon the completion
of the Initial Public Offering. The Company borrowed approximately $291,000 under the Note and repaid this amount in full in February
2018.
NEBULA
ACQUISITION CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Due
to Related Party
An
affiliate of the Company paid general and administrative expenses on behalf of the Company. An aggregate of approximately
$242,000 and $204,000, as reflected in the accompanying condensed consolidated balance sheets are outstanding as of March 31,
2020 and December 31, 2019, respectively. These amounts are due on demand and are non-interest bearing.
Note
5 - Stockholders’ Equity
Common
Stock
The
authorized common stock of the Company includes up to 100,000,000 shares of Class A common stock and 10,000,000 shares of Class
B common stock. If the Company enters into an initial Business Combination, it may (depending on the terms of such an initial
Business Combination) be required to increase the number of shares of Class A common stock which the Company is authorized to
issue at the same time as the Company’s stockholders vote on the initial Business Combination to the extent the Company
seeks stockholder approval in connection with the initial Business Combination. Holders of the Company’s common stock are
entitled to one vote for each share of common stock.
On
October 16, 2017, the Sponsor purchased 7,187,500 shares of Class B common stock for $25,000. The Sponsor had agreed to forfeit
up to 937,500 Founder Shares to the extent that the over-allotment option was not exercised in full by the underwriters so that
the Founder Shares will represent 20% of the Company’s issued and outstanding shares after the Initial Public Offering.
On January 12, 2018, the Company was advised by the underwriters’ that it had elected to exercise a portion of the over-allotment
option for 2,500,000 additional Units for additional gross proceeds of $25 million. The partial exercise resulted in the
forfeiture of 312,500 shares of Class B common stock during the year ended December 31, 2019. As of March 31, 2020 and December
31, 2019, there were 6,875,000 shares of Class B common stock issued and outstanding and 27,500,000 shares of Class A common stock
outstanding and 26,695,125 and 26,711,895 of the shares of Class A common stock are classified outside of equity as redeemable
common stock, respectively.
Preferred
Stock
The
Company is authorized to issue 1,000,000 shares of preferred stock with such designations, voting and other rights and preferences
as may be determined from time to time by the Company’s board of directors. At March 31, 2020 and December 31, 2019, there
were no shares of preferred stock issued or outstanding.
Warrants
The
public warrants may only be exercised for a whole number of shares. No fractional public warrants will be issued upon separation
of the units and only whole public warrants will trade. The public warrants will become exercisable on the later of (a)
30 days after the completion of a business combination or (b) 12 months from the closing of the initial public offering; provided
in each case that the Company has an effective registration statement under the Securities Act covering the Class A common stock
issuable upon exercise of the public warrants and a current prospectus relating to them is available (or the Company permits holders
to exercise their public warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities
Act). The Company has agreed that as soon as practicable, but in no event later than 15 business days, after the closing of a
business combination, the Company will use its best efforts to file with the SEC a registration statement for the registration,
under the Securities Act, of the Class A common stock issuable upon exercise of the public warrants. The Company will use its
best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current
prospectus relating thereto, until the expiration of the public warrants in accordance with the provisions of the warrant agreement.
If a registration statement covering the Class A common stock issuable upon exercise of the warrants is not effective by the sixtieth
(60th) day after the closing of the initial business combination, warrant holders may, until such time as there is
an effective registration statement and during any period when the Company will have failed to maintain an effective registration
statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another
exemption. The public warrants will expire five years after the completion of a business combination or earlier upon redemption
or liquidation.
NEBULA
ACQUISITION CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The
private placement warrants are identical to the public warrants underlying the units sold in the initial public offering, except
that the private placement warrants and the Class A common stock issuable upon exercise of the private placement warrants will
not be transferable, assignable or salable until 30 days after the completion of a business combination, subject to certain limited
exceptions. Additionally, the private placement warrants will be non-redeemable so long as they are held by the initial purchasers
or such purchasers’ permitted transferees. If the private placement warrants are held by someone other than the initial
shareholders or their permitted transferees, the private placement warrants will be redeemable by the Company and exercisable
by such holders on the same basis as the public warrants.
The
Company may call the public warrants for redemption (except with respect to the private placement warrants):
|
●
|
in
whole and not in part
|
|
|
|
|
●
|
at
a price of $0.01 per warrant;
|
|
|
|
|
●
|
upon
a minimum of 30 days’ prior written notice of redemption; and
|
|
|
|
|
●
|
if,
and only if, the last reported closing price of the common stock equals or exceeds $18.00 per share for any 20 trading days
within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of
redemption to the warrant holders.
|
If
the Company calls the public warrants for redemption, management will have the option to require all holders that wish to exercise
the public warrants to do so on a “cashless basis,” as described in the warrant agreement.
The
exercise price and number of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances
including in the event of a share dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants
will not be adjusted for issuance of Class A common stock at a price below its exercise price. Additionally, in no event will
the Company be required to net cash settle the warrants shares. If the Company is unable to complete a business combination within
the Combination Period 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
6-Fair Value Measurements
The
following table presents information about the Company’s assets that are measured on a recurring basis as of March 31, 2020
and December 31, 2019 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine
such fair value.
March
31, 2020
|
|
Quoted Prices
in Active
Markets
|
|
|
Significant
Other
Observable
Inputs
|
|
|
Significant
Other
Unobservable
Inputs
|
|
Description
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Investment held in Trust Account
|
|
$
|
282,267,853
|
|
|
|
-
|
|
|
|
-
|
|
December
31, 2019
|
|
Quoted Prices
in Active
Markets
|
|
|
Significant
Other
Observable
Inputs
|
|
|
Significant
Other
Unobservable
Inputs
|
|
Description
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Investment held in Trust Account
|
|
$
|
281,229,266
|
|
|
|
-
|
|
|
|
-
|
|
At
March 31, 2020 and December 31, 2019, the investments held in the Trust Account were held in marketable equity securities.
NEBULA
ACQUISITION CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note
7 - Subsequent Events
Nasdaq
Delisting Extension Notification
Aside
for the following, the Company evaluated subsequent events and transactions that occurred after the balance sheet date up to
the date that the condensed consolidated financial statements were available to be issued, and determined that there have
been no events that have occurred that would require adjustments to the disclosures in the condensed consolidated financial
statements, except as disclosed in Note 1.
On
February 18, 2020, the Company received a notification from the staff of the Nasdaq Stock Market (the "Staff") indicating
that the Company was no longer in compliance with Nasdaq Listing Rule 5550(a)(3) (the “Rule”), which requires the
Company to have a minimum of 300 public holders. On April 3, 2020, the Company submitted materials illustrating its plan to gain
compliance with the Rule and requesting an extension to regain compliance with the Rule. On April 14, 2020, the Company received
a notification from the Staff that it has granted the Company an extension to regain compliance with the Rule on or before August
17, 2020.