Landsea Homes (LSEA) - 2019 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Interim Financial Statements (Unaudited) The unaudited interim financial statements for the period ended June 30, 2019, detail the company's financial position and operational results as a blank check company Unaudited Condensed Balance Sheets As of June 30, 2019, the company held $160.9 million in marketable securities in its Trust Account, with total assets of $161.4 million and total liabilities of $6.2 million Condensed Balance Sheet Data (Unaudited) | Balance Sheet Items | June 30, 2019 ($) | December 31, 2018 ($) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | 179,418 | 196,804 | | Marketable securities held in Trust Account | 160,946,100 | 159,718,098 | | Total Assets | 161,408,087 | 159,958,116 | | Liabilities & Equity | | | | Total current liabilities | 572,951 | 314,792 | | Deferred underwriting commissions | 5,433,750 | 5,433,750 | | Total Liabilities | 6,209,060 | 5,748,542 | | Class A common stock subject to possible redemption | 150,199,018 | 149,209,569 | | Total Stockholders' Equity | 5,000,009 | 5,000,005 | Unaudited Condensed Interim Statements of Operations For the three and six months ended June 30, 2019, the company generated net income primarily from interest earned on Trust Account investments, contrasting with net losses in 2018 Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended June 30, 2019 ($) | Six Months Ended June 30, 2019 ($) | | :--- | :--- | :--- | | Interest earned on investments | 965,040 | 1,900,169 | | Loss from operations | (245,018) | (532,117) | | Income tax expense | 193,059 | 378,599 | | Net Income (Loss) | 526,963 | 989,453 | | Basic and diluted net income per share, Class A | 0.05 | 0.09 | Unaudited Condensed Statement of Changes in Stockholders' Equity (Deficit) For the six months ended June 30, 2019, total stockholders' equity remained stable, increasing nominally due to net income offset by redemption adjustments - Total stockholders' equity was $5,000,009 as of June 30, 2019, compared to $5,000,005 at December 31, 2018[15] Unaudited Condensed Interim Statement of Cash Flows For the six months ended June 30, 2019, operating activities used cash, while investing and financing activities provided cash, resulting in a net decrease in cash Cash Flow Summary for the Six Months Ended June 30 (Unaudited) | Cash Flow Activity | 2019 ($) | 2018 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | (1,089,103) | (273,187) | | Net cash provided by (used in) investing activities | 671,717 | (158,355,000) | | Net cash provided by financing activities | 400,000 | 159,515,687 | | Net (decrease) increase in cash | (17,386) | 887,500 | Notes to Condensed Interim Financial Statements (Unaudited) The notes detail the company's blank check structure, IPO terms, business combination deadline, and significant accounting policies, highlighting substantial doubt about its ability to continue as a going concern - The Company is a blank check company formed to effect a business combination, with a focus on the commercial banking and financial technology industries[21] - The company's IPO on June 22, 2018, generated gross proceeds of $155.25 million and net proceeds of $158.355 million (including private placement proceeds) were placed in a Trust Account[23][25] - If a Business Combination is not completed by June 22, 2020, the company will cease operations and redeem 100% of its outstanding Public Shares[31] - Management has determined that the mandatory liquidation requirement raises substantial doubt about the Company's ability to continue as a going concern[38] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's status as a blank check company, its financial results driven by Trust Account interest, and liquidity challenges, including substantial doubt about its ability to continue as a going concern - The company is a blank check company formed to effect a business combination, with an intended focus on the commercial banking and financial technology industries[97] - The company must complete a Business Combination by June 22, 2020, or it will be required to liquidate[102] - Management has determined that the mandatory liquidation provision raises substantial doubt about the company's ability to continue as a going concern[111] Results of Operations For the six months ended June 30, 2019, the company reported net income primarily from interest earned on investments, contrasting with a net loss in the prior year Comparison of Results for the Six Months Ended June 30 ($) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Interest Earned | ~1,900,000 | 1 | | General & Administrative Costs | ~432,000 | ~191,000 | | Franchise Tax Expense | 100,000 | ~99,000 | | Net Income (Loss) | ~989,000 | (~290,000) | Liquidity and Going Concern As of June 30, 2019, the company faced a working capital deficit, relying on Sponsor loans for liquidity, with mandatory liquidation raising substantial doubt about its ability to continue as a going concern - As of June 30, 2019, the company had a working capital deficit of approximately $111,000 and cash of approximately $179,000[109] - The company's liquidity is supplemented by loans from its Sponsor, receiving $400,000 in loan proceeds on March 4, 2019, under a convertible note of up to $1.5 million[110] Critical Accounting Policies and Estimates Management identifies net income per share calculation and the classification of redeemable Class A common stock as critical accounting policies - Net income (loss) per share is computed using a two-class method, allocating interest income earned on the Trust Account (net of taxes) to the Class A common stock subject to redemption[121] - Class A common stock subject to possible redemption is classified as temporary equity because the redemption features are outside of the company's control, with 14,483,994 shares classified as such as of June 30, 2019[122][123] Quantitative and Qualitative Disclosures About Market Risk The company states it has no material market or interest rate risk due to short-term investments in U.S. government securities - The company does not believe it has material exposure to interest rate risk due to the short-term nature of its investments in U.S. government securities[127] Controls and Procedures As of June 30, 2019, disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of the end of the quarter ended June 30, 2019[128] - No material changes to the company's internal control over financial reporting occurred during the fiscal quarter[130] PART II. OTHER INFORMATION Legal Proceedings The company reported no legal proceedings - None[132] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Form 10-K - No material changes to the risk factors disclosed in the Form 10-K filed on March 5, 2019[133] Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities This section details the unregistered issuance of founder shares and private placement warrants, and the deposit of IPO proceeds into the Trust Account - The company issued 3,881,250 shares of Class B Common Stock (founder shares) to its sponsor and an anchor investor in unregistered transactions[134] - The Sponsor and anchor investor purchased an aggregate of 7,760,000 Private Placement Warrants at $1.00 per warrant in a private placement concurrent with the IPO[134] - Net proceeds of $158.355 million from the IPO and private placement were deposited into the Trust Account[136] Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[137] Mine Safety Disclosures The company reported no mine safety disclosures - None[138] Other Information The company reported no other information - None[139] Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files