UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30,
2019
Landcadia Holdings II, Inc.
(Exact name of registrant as specified in
its charter)
001-38893
(Commission File Number)
Delaware
|
83-3593048
|
(State or other jurisdiction
of incorporation or organization)
|
(IRS Employer
Identification No.)
|
1510 West Loop South, Houston, Texas
77027
(Address of principal executive offices,
including zip code)
Registrant’s telephone number, including
area code:
713-850-1010
Not Applicable
(Former name, former address and former
fiscal year, if changed since last report)
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 redeemable warrant
|
|
LCAHU
|
|
The Nasdaq Stock Market LLC
|
Class A common stock, par value $0.0001 per share
|
|
LCA
|
|
The Nasdaq Stock Market LLC
|
Warrants, each whole warrant exercisable for one share of Class A common stock, each at an exercise price of $11.50 per share
|
|
LCAHW
|
|
The Nasdaq Stock Market LLC
|
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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.
x
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).
x
Yes
¨
No
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the 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
x
|
Smaller reporting company
x
|
Emerging growth company
x
|
|
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).
x
Yes
¨
No
As of August 8, 2019, 7,906,250 shares
of Class B common stock, par value $0.0001 per share, and 31,625,000 shares of Class A common stock, par value $0.0001 per share,
were issued and outstanding.
LANDCADIA HOLDINGS II, INC.
FORM 10-Q FOR THE QUARTER ENDED JUNE
30, 2019
TABLE OF CONTENTS
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
Landcadia
Holdings II, inc.
Balance
Sheets
|
|
June 30,
|
|
December 31,
|
|
|
2019
|
|
2018
|
|
|
(unaudited)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
1,859,343
|
|
|
$
|
-
|
|
Prepaid assets
|
|
|
4,451
|
|
|
|
-
|
|
Total current assets
|
|
|
1,863,794
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash and investments held in trust account
|
|
|
317,413,475
|
|
|
|
-
|
|
Total Assets
|
|
$
|
319,277,269
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
156,353
|
|
|
$
|
-
|
|
Accounts payable, affiliates
|
|
|
20,000
|
|
|
|
-
|
|
Income taxes payable
|
|
|
218,382
|
|
|
|
-
|
|
Total current liabilities
|
|
|
394,735
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Deferred underwriting commissions
|
|
|
11,068,750
|
|
|
|
-
|
|
Total Liabilities
|
|
|
11,463,485
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Class A common stock subject to possible redemptions, 30,191,153 shares at redemption value of $10.03
|
|
|
302,813,774
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity:
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value, 1,000,000 authorized, no shares issued or outstanding
|
|
|
-
|
|
|
|
-
|
|
Common stock:
|
|
|
|
|
|
|
|
|
Class A common stock, $0.0001 par value,
200,000,000 shares authorized, 1,433,847 shares issued and outstanding (excluding 30,191,153 shares subject to
possible redemption) at June 30, 2019
|
|
|
143
|
|
|
|
-
|
|
Class B common stock, $0.0001 par value 20,000,000
shares authorized, 7,906,250 and 3,815,625 issued and outstanding, respectively
|
|
|
791
|
|
|
|
382
|
|
Additional paid-in capital
|
|
|
4,177,542
|
|
|
|
618
|
|
Retained Earnings
|
|
|
821,534
|
|
|
|
-
|
|
Stock subscription receivable, affiliates
|
|
|
-
|
|
|
|
(1,000
|
)
|
Total Stockholders' equity
|
|
|
5,000,010
|
|
|
|
-
|
|
Total liabilities and stockholders' equity
|
|
$
|
319,277,269
|
|
|
$
|
-
|
|
The accompanying notes are an integral part
of these financial statements.
Landcadia
Holdings II, Inc.
Statements
of Operations
(Unaudited)
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
$
|
102,585
|
|
|
$
|
-
|
|
|
$
|
123,559
|
|
|
$
|
-
|
|
Loss from operations
|
|
|
(102,585
|
)
|
|
|
-
|
|
|
|
(123,559
|
)
|
|
|
-
|
|
Other income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
1,163,475
|
|
|
|
-
|
|
|
|
1,163,475
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes
|
|
|
1,060,890
|
|
|
|
-
|
|
|
|
1,039,916
|
|
|
|
-
|
|
Tax provision
|
|
|
(218,382
|
)
|
|
|
-
|
|
|
|
(218,382
|
)
|
|
|
-
|
|
Net income
|
|
$
|
842,508
|
|
|
$
|
-
|
|
|
$
|
821,534
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share available to common shares
|
|
$
|
(0.01
|
)
|
|
$
|
-
|
|
|
$
|
(0.01
|
)
|
|
$
|
-
|
|
Basic and diluted weighted average number of shares
|
|
|
8,282,500
|
|
|
|
3,317,875
|
|
|
|
6,698,270
|
|
|
|
3,317,875
|
|
The accompanying notes are an integral part
of these financial statements.
Landcadia
Holdings II, Inc.
Statements
of CHANGES IN STOCKHOLDERS’ EQUITY
|
|
Class A Common Stock
|
|
Class B Common Stock
|
|
Additional
|
|
Retained
|
|
Stock subscription
|
|
|
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Paid-in Capital
|
|
Earnings
|
|
receivable, affiliates
|
|
Total
|
Balance, December 31, 2018
|
|
|
-
|
|
|
$
|
-
|
|
|
|
3,815,625
|
|
|
$
|
382
|
|
|
$
|
618
|
|
|
$
|
-
|
|
|
$
|
(1,000
|
)
|
|
$
|
-
|
|
Class B shares issued
|
|
|
-
|
|
|
|
-
|
|
|
|
4,090,625
|
|
|
|
409
|
|
|
|
9,591
|
|
|
|
-
|
|
|
|
(10,000
|
)
|
|
|
-
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(20,974
|
)
|
|
|
-
|
|
|
|
(20,974
|
)
|
Balance, March 31, 2019 (unaudited)
|
|
|
-
|
|
|
$
|
-
|
|
|
|
7,906,250
|
|
|
$
|
791
|
|
|
$
|
10,209
|
|
|
$
|
(20,974
|
)
|
|
$
|
(11,000
|
)
|
|
$
|
(20,974
|
)
|
Sponsor warrants issued included in Units
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,825,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,825,000
|
|
Class A shares issued
|
|
|
31,625,000
|
|
|
|
3,163
|
|
|
|
-
|
|
|
|
-
|
|
|
|
316,246,837
|
|
|
|
-
|
|
|
|
-
|
|
|
|
316,250,000
|
|
Underwriters commissions and offering costs
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(18,093,750
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(18,093,750
|
)
|
Class A shares subject to redemption
|
|
|
(30,191,153
|
)
|
|
|
(3,020
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(302,810,754
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(302,813,774
|
)
|
Payment of stock subscription receivable, affiliates
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,000
|
|
|
|
11,000
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
842,508
|
|
|
|
-
|
|
|
|
842,508
|
|
Balance, June 30, 2019 (unaudited)
|
|
|
1,433,847
|
|
|
$
|
143
|
|
|
|
7,906,250
|
|
|
$
|
791
|
|
|
$
|
4,177,542
|
|
|
$
|
821,534
|
|
|
$
|
-
|
|
|
$
|
5,000,010
|
|
|
|
Class A Common Stock
|
|
Class B Common Stock
|
|
Additional
|
|
Retained
|
|
Stock subscription
|
|
|
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Paid-in Capital
|
|
Earnings
|
|
receivable,
affiliates
|
|
Total
|
Balance, December 31, 2017
|
|
|
-
|
|
|
$
|
-
|
|
|
|
3,815,625
|
|
|
$
|
382
|
|
|
$
|
618
|
|
|
$
|
-
|
|
|
$
|
(1,000
|
)
|
|
$
|
-
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Balance, March 31, 2018 (unaudited)
|
|
|
-
|
|
|
$
|
-
|
|
|
|
3,815,625
|
|
|
$
|
382
|
|
|
$
|
618
|
|
|
$
|
-
|
|
|
$
|
(1,000
|
)
|
|
$
|
-
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Balance, June 30, 2018 (unaudited)
|
|
|
-
|
|
|
$
|
-
|
|
|
|
3,815,625
|
|
|
$
|
382
|
|
|
$
|
618
|
|
|
$
|
-
|
|
|
$
|
(1,000
|
)
|
|
$
|
-
|
|
The accompanying notes are an integral part
of these financial statements.
Landcadia
Holdings II, Inc.
Statements
of Cash Flows
(Unaudited)
|
|
Six months ended June 30,
|
|
|
2019
|
|
2018
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
821,534
|
|
|
$
|
-
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Trust account interest income
|
|
|
(1,163,475
|
)
|
|
|
-
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Decrease (increase) in prepaid expenses
|
|
|
(4,451
|
)
|
|
|
-
|
|
Increase (decrease) in accounts payable and accrued liabilities
|
|
|
53,000
|
|
|
|
-
|
|
Increase (decrease) in income taxes payable
|
|
|
218,382
|
|
|
|
-
|
|
Increase (decrease) in accounts payable to affiliate
|
|
|
20,000
|
|
|
|
-
|
|
Net cash used in operating activities
|
|
|
(55,010
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Cash deposited in trust account
|
|
|
(316,250,000
|
)
|
|
|
-
|
|
Net cash used in investing activities
|
|
|
(316,250,000
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from public offering
|
|
|
316,250,000
|
|
|
|
-
|
|
Proceeds from sale of private placement warrants
|
|
|
8,825,000
|
|
|
|
-
|
|
Proceeds from sale of common stock to sponsor
|
|
|
10,000
|
|
|
|
-
|
|
Payment for underwriting discounts
|
|
|
(6,325,000
|
)
|
|
|
-
|
|
Payment of offering costs
|
|
|
(513,177
|
)
|
|
|
-
|
|
Payment of notes payable, affiliates
|
|
|
(83,470
|
)
|
|
|
-
|
|
Proceeds from stock subscriptions receivable, affiliates
|
|
|
1,000
|
|
|
|
-
|
|
Net cash provided by financing activities
|
|
|
318,164,353
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
1,859,343
|
|
|
|
-
|
|
Cash and cash equivalents at beginning of period
|
|
|
-
|
|
|
|
-
|
|
Cash and cash equivalents at end of period
|
|
$
|
1,859,343
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Supplemental schedule of non-cash financing activities:
|
|
|
|
|
|
|
|
|
Change in value of common shares subject to possible conversion
|
|
$
|
855,614
|
|
|
$
|
-
|
|
Initial classification of common shares subject to possible conversion
|
|
$
|
301,958,160
|
|
|
$
|
-
|
|
Deferred underwriting commissions
|
|
$
|
11,068,750
|
|
|
$
|
-
|
|
Accrued offering costs
|
|
$
|
103,353
|
|
|
$
|
-
|
|
Offering costs included in Notes payable, affiliates
|
|
$
|
83,470
|
|
|
|
-
|
|
The accompany notes are an integral part
of these financial statements.
Landcadia
Holdings II, Inc.
Notes
to Financial Statements
|
1.
|
Nature of Business and Subsequent Events
|
Business
Landcadia Holdings II, Inc., (the “Company”),
was formed as CAPS Holding LLC, a Delaware limited liability company on August 11, 2015 and converted into a Delaware corporation
on February 4, 2019.
The Company has not had any significant operations
to date. The Company was formed to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or
similar business combination with one or more businesses (the “Business Combination”). The Company has not yet identified
a Business Combination. There is no assurance that the Company’s plans to consummate a Business Combination will be successful.
All activity through June 30, 2019 relates to the
Company’s formation and its initial public offering of units (the “Public Offering”), which is described below.
Sponsors
The Company’s sponsors are Fertitta Entertainment,
Inc. (“FEI”) and Jefferies Financial Group Inc. (“JFG” and, together with FEI, the “Sponsors”).
FEI is wholly owned by Tilman J. Fertitta, the Company’s Co-Chairman and Chief Executive Officer.
Financing
The Company intends to finance its Business Combination
in part with proceeds from its $316,250,000 Public Offering and $8,825,000 private placement (the “Private Placement”),
see Notes 4 and 5. The registration statement for the Public Offering was declared effective by the U.S. Securities and Exchange
Commission (“SEC”) on May 6, 2019. The Company consummated the Public Offering of 31,625,000 units, including the issuance
of 4,125,000 units as a result of the underwriters’ exercise of their over-allotment option in full (the “Units”),
at $10.00 per Unit on May 9, 2019, generating gross proceeds of $316,250,000. Simultaneously with the closing of the Public Offering,
the Company consummated the Private Placement of an aggregate of 5,883,333 warrants (the “Sponsor Warrants”) at a price
of $1.50 per Sponsor Warrant. Upon the closing of the Public Offering and Private Placement, $316,250,000 from the net proceeds
of the sale of the Units in the Public Offering and the Private Placement was placed in a U.S.-based trust account maintained by
Continental Stock Transfer & Trust Company, acting as trustee (the “Trust Account”).
Trust Account
The proceeds held in the Trust Account can only be
invested in permitted United States “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 185 days or less or in money market
funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S.
government treasury obligations.
The Company’s third amended and restated certificate
of incorporation (the “Charter”) provides that, other than the withdrawal of interest to pay tax obligations, none of the funds held in the Trust Account will be released until the earliest
of: (i) the completion of the Business Combination; (ii) the redemption of any shares of Class A common stock included in the Units
being sold in the Public Offering (“Public Shares”) properly submitted in connection with a stockholder vote to amend
the Charter to modify the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company
does not complete the Business Combination by May 9, 2021 (within 24 months from the closing of the Public Offering); or (iii) the redemption of the Public Shares if the Company is unable
to complete the Business Combination by May 9, 2021, subject to applicable law.
Initial Business Combination
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the Public Offering and Private Placement, 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. The Company must complete one or more initial Business
Combinations having an aggregate fair market value of at least 80% of the value of the assets held in the Trust Account (excluding
deferred underwriting commissions and taxes payable on the interest earned on the Trust Account) at the time of the Company’s
signing a definitive agreement in connection with an initial Business Combination. The Company will only complete a Business Combination
if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires
a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment
Company Act.
The Sponsors and the Company's officers and directors
have entered into a letter agreement with the Company, pursuant to which they have agreed to (i) waive their redemption rights
with respect to their Founders Shares (as defined below) and Public Shares in connection with the completion of the Business Combination,
(ii) waive their redemption rights with respect to their Founders Shares and Public Shares in connection with a stockholder vote
to approve an amendment to the Charter to modify the substance or timing of the Company's obligation to redeem 100% of the Public
Shares if the Company does not complete a Business Combination by May 9, 2021, or to provide for redemption in connection with
a Business Combination and (iii) waive their rights to liquidating distributions from the Trust Account with respect to their Founders
Shares if the Company fails to complete a Business Combination by May 9, 2021, although they will be entitled to liquidating distributions
from the Trust Account with respect to any Public Shares they hold if the Company fails to complete a Business Combination within
the prescribed time frame; and (iv) vote any Founders Shares held by them and any Public Shares purchased during or after the Public
Offering (including in open market and privately-negotiated transactions) in favor of the Business Combination.
The Company, after signing a definitive agreement
for the Business Combination, will either (i) seek stockholder approval of the 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
Business Combination, for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account calculated
as of two business days prior to the consummation of the Business Combination, including interest earned on the Trust Account and
not previously released to the Company to pay its taxes, or (ii) provide stockholders with the opportunity to sell their shares
to the Company by means of a tender offer for an amount in cash equal to their pro rata share of the aggregate amount then on deposit
in the Trust Account calculated as of two business days prior to commencement of the tender offer, including interest earned on
the Trust Account and not previously released to the Company to pay its taxes. The decision as to whether the Company will seek
stockholder approval of the Business Combination or will allow stockholders to sell their 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. If the Company seeks stockholder
approval, it will complete the Business Combination only if a majority of the outstanding shares of common stock voted are voted
in favor of the Business Combination. However, in no event will the Company redeem the Public Shares in an amount that would cause
its net tangible assets to be less than $5,000,001. In such case, the Company would not proceed with the redemption of the Public
Shares and the related Business Combination, and instead may search for an alternate Business Combination.
Notwithstanding the foregoing redemption rights,
if the Company seeks stockholder approval of the Business Combination and it does not conduct redemptions in connection with the
Business Combination pursuant to the tender offer rules, the Charter provides that a public stockholder, together with any affiliate
of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined
under Section 13 of the Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its
shares with respect to more than an aggregate of 15% of the shares sold in the Public Offering, without the Company’s prior
consent.
The Public Shares have been recorded at their redemption
amount and classified as temporary equity (“Redeemable Shares”), in accordance with the Financial Accounting Standards
Board Accounting Standards Codification (“FASB ASC”) 480, ‘‘Distinguishing Liabilities from Equity.’’
The amount in the Trust Account was initially $10.00 per Public Share ($316,250,000 held in the Trust Account divided by 31,625,000
Public Shares). See Note 3.
The Company will have until May 9, 2021 to complete
the Business Combination. If the Company does not complete the Business Combination within this period of time, it shall (i) cease
all operations except for the purposes of winding up; (ii) as promptly as reasonably possible, but not more than ten business days
thereafter, redeem the Public Shares for 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 taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares,
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 each case to the Company’s obligations under
Delaware law to provide for claims to creditors and the requirements of other applicable law. The Sponsors and the Company’s
officers and directors have entered into a letter agreement with the Company, pursuant to which they have waived their rights to
liquidating distributions from the Trust Account with respect to any Founders Shares (as defined below) held by them if the Company
fails to complete its Business Combination by May 9, 2021; however, the Sponsors, officers and directors are entitled to liquidating
distributions from the Trust Account with respect to Public Shares held by them if the Company does not complete the Business Combination
within the required time period. In the event of such distribution, it is possible that the per share value of the residual assets
remaining available for distribution (including Trust Account assets) will be less than the initial public offering price per Unit
in the Public Offering.
Pursuant to the letter agreement referenced above,
the Sponsors, officers and directors agreed that, if the Company submits the Business Combination to the Company’s public
stockholders for a vote, such parties will vote their Founders Shares and any Public Shares in favor of the Business Combination.
Subsequent Events
The Company has evaluated subsequent events and transactions that occurred after the balance sheet date up to the date the financial
statements were issued. The Company did not identify any subsequent events that would have required adjustment to or
disclosure in the financial statements.
Fiscal Year End
The Company has a December 31 fiscal year-end.
|
2.
|
Summary of Significant Accounting Policies
|
Basis of Presentation
These unaudited financial statements include the
accounts of Landcadia Holdings II, Inc., and have been prepared in conformity with accounting principles generally accepted in
the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. The interim financial information
provided is unaudited, but includes all adjustments which management considers necessary for the fair presentation of the results
for these periods. Operating results for interim periods are not necessarily indicative of the results that may be expected for
the full year period and should be read in conjunction with the Company’s audited financial statements and notes thereto
included in the Company’s prospectus filed with the SEC on May 6, 2019, and the Company’s audited balance sheet and
notes thereto included in the Company’s Form 8-K filed with the SEC on May 15, 2019.
Use of Estimates
The preparation of these financial statements 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 revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Emerging Growth Company
The Company is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act of 1933, as amended (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 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 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.
Cash and Cash equivalents
The Company considers cash equivalents to be all
short-term investments with an original maturity of three months or less when purchased.
Cash consists of proceeds from the Public Offering
and Private Placement held outside of the Trust Account and may be used to pay for business, legal and accounting due diligence
for the Business Combination and continuing general and administrative expenses.
Concentration of Credit Risk
Financial instruments that potentially subject the
Company to concentrations of credit risk consist of cash accounts with a financial institution which may exceed the Federal depository
insurance coverage of $250,000. The Company has not experienced losses on these accounts and the Company believes that it is not
exposed to significant risks on such accounts.
Fair Value of Financial Instruments
The fair value of the Company’s
assets and liabilities, which qualify as financial instruments under the FASB ASC 820, “Fair Value Measurement and Disclosures,”
approximates the carrying amounts represented in the balance sheet.
Offering Costs
The Company complies with the requirements of FASB
ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A-“Expenses of Offering.” Offering costs
of approximately $700,000 consisted of costs incurred for legal, accounting, and other costs incurred in connection with the formation
and preparation of the Public Offering. These costs, together with $17,393,750 in underwriting commissions, were charged to additional
paid-in capital upon the closing of the Public Offering.
Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities were $156,353
as of June 30, 2019, and primarily consist of costs incurred for the formation and preparation of the Public Offering with corresponding
amounts charged to Offering costs.
Loss Per Common Share
Basic loss per common share
is computed by dividing net income applicable to common stockholders by the weighted average number of common shares outstanding
during the period. All shares of Class B common stock are assumed to convert to shares of Class A common stock on a one-for-one
basis. Consistent with FASB ASC 480, shares of Class A common stock subject to possible redemption, as well as their pro rata
share of undistributed trust earnings consistent with the two-class method, have been excluded from the calculation of loss per
common share for the three and six months ended June 30, 2019. Such shares, if redeemed, only participate in their pro rata share
of trust earnings, see Note 3. Diluted loss per share includes the incremental number of shares of common stock to be issued in
connection with the conversion of Class B common stock or to settle warrants, as calculated using the treasury stock method. For
the three and six months ending June 30, 2019 and 2018, the Company did not have any dilutive warrants, securities or other contracts
that could, potentially, be exercised or converted into common stock. As a result, diluted loss per common share is the same as
basic loss per common share for all periods presented. In accordance with FASB ASC 260, the loss per share calculation reflects
the effect of the stock splits as discussed in Note 3.
A reconciliation of net loss
per common share as adjusted for the portion of income that is attributable to common stock subject to redemption is as follows:
|
|
Three months ended,
|
|
Six months ended,
|
|
|
June 30,
|
|
June 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
842,508
|
|
|
$
|
-
|
|
|
$
|
821,534
|
|
|
$
|
-
|
|
Less: Income attributable to common stock subject to possible redemption
|
|
|
(902,243
|
)
|
|
|
-
|
|
|
|
(902,243
|
)
|
|
|
-
|
|
Net loss available to common shares
|
|
$
|
(59,735
|
)
|
|
$
|
-
|
|
|
$
|
(80,709
|
)
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average number of shares
|
|
|
8,282,500
|
|
|
|
3,317,875
|
|
|
|
6,698,270
|
|
|
|
3,317,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss available to common shares
|
|
$
|
(0.01
|
)
|
|
$
|
-
|
|
|
$
|
(0.01
|
)
|
|
$
|
-
|
|
Income Taxes
The Company complies with the accounting and reporting
requirements of FASB ASC, 740, “Income Taxes,” which requires an asset and liability approach to financial accounting
and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement
and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and
rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established,
when necessary, to reduce deferred tax assets to the amount expected to be realized.
There were no unrecognized tax benefits as of June
30, 2019 and December 31, 2018. 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. No amounts were accrued for the payment of interest
and penalties at June 30, 2019 and December 31, 2018. 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.
The effective tax rate for the six months ended June
30, 2019 was 21.0%. There was no income tax provision for the six month period ended June 30, 2018.
On December 22, 2017 the U.S. Tax Cuts and Jobs Act
of 2017 (“Tax Reform”) was signed into law. As a result of the Tax Reform, the U.S. statutory tax rate was lowered
from 35% to 21% effective January 1, 2018, among other changes. The Company converted to a corporation in February 2019, therefore
this Tax Reform has no effect on the Company’s financial statements.
Recent Accounting Pronouncements
Management does not believe that any recently issued,
but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial
statements.
In 2015, JFG purchased an aggregate of 1,000 shares
of the Company’s common stock (100% of the issued and outstanding shares) for $1,000. On February 14, 2019, the Company amended
the total number of authorized shares of all classes of capital stock to 221,000,000, of which 200,000,000 shares are Class A shares
at par value $0.0001 per share; 20,000,000 shares are Class B shares at par value $0.0001 per share (the “Founders Shares”);
and 1,000,000 shares are Preferred stock at par value $0.0001 per share. Simultaneously, the Company reclassified all of its issued
and outstanding shares of common stock to Founders Shares and conducted a 1:2,775 stock split. Also, on February 14, 2019, the
Company issued 2,975,000 additional Founders Shares to FEI for $10,000. On March 13, 2019, the Company conducted a 1:1.25 stock
split and on May 6, 2019 a 1:1.10 stock split of the Founders Shares. The financial statements reflect the changes from these splits
retroactively for all periods presented.
Following these
transactions, the Sponsors owned 7,906,250 issued and outstanding Founders Shares and the Company had $11,000 of invested
capital, or approximately $0.001 per share.
Redeemable Shares
All of the 31,625,000 Public Shares sold as part
of the Public Offering contain a redemption feature as defined in the Public Offering. 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. The
Company’s amended and restated certificate of incorporation provides a minimum net tangible asset threshold of $5,000,001.
The Company recognizes changes in redemption value immediately as they occur and will adjust the carrying value of the security
to equal the redemption value at the end of each reporting periods. Increases or decreases in the carrying amount of Redemption
Shares will be affected by charges against additional paid-in capital.
At June 30, 2019, there were 31,625,000 Public Shares,
of which 30,191,153 were classified as Redeemable Shares, classified outside of permanent equity, and 1,433,847 classified as Class
A common stock.
For further information on the Founders Shares, see
Note 5.
Public Units
In the Public Offering, which closed May 9, 2019,
the Company sold 31,625,000 Units 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 “Public Warrant”). Under the terms
of the warrant agreement, the Company has agreed to use its best efforts to file a new registration statement to register the
shares of common stock underlying the warrants under the Securities Act following the completion of the Business Combination.
Each Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share. Each Public Warrant
will become exercisable on the later of 30 days after the completion of the Business Combination or 12 months from the closing
of the Public Offering. However, if the Company does not complete the Business Combination on or prior to May 9, 2021, the Warrants
will expire at the end of such period. If the Company is unable to deliver registered shares of Class A common stock to the holder
upon exercise of Public Warrants issued in connection with the Units during the exercise period, there will be no net cash settlement
of these Public Warrants and the Public Warrants will expire worthless, unless they may be exercised on a cashless basis in the
circumstances described in the warrant agreement. Once the Public Warrants become exercisable, the Company may call the warrants
for redemption: (i) in whole and not in part; (ii) at a price of $0.01 per warrant; (iii) upon not less than 30 days’ prior
written notice of redemption to each warrant holder; and (iv) if, and only if, the reported closing price of the Class A common
stock equals or exceeds $18.00 value per share for any 20 trading days within a 30-trading day period ending three business days
before the Company sends the notice of redemption to the warrant holders.
Underwriting Commissions
The Company paid an underwriting discount of $6,325,000
($0.20 per Unit sold) to the underwriters at the closing of the Public Offering on May 9, 2019, with an additional fee (“Deferred
Discount”) of $11,068,750 ($0.35 per Unit sold) payable upon the Company’s completion of the 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 Business Combination. See Note 5 for further information on underwriting commissions.
|
5.
|
Related Party Transactions
|
Founders Shares
The Founders Shares are identical to the Public
Shares except that the Founders Shares are subject to certain transfer restrictions and automatically convert into shares of Class
A common stock at the time of the Business Combination on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution
rights. The initial stockholders collectively own 20% of the Company’s issued and outstanding shares of common stock after
the Public Offering.
The holders of the Founders Shares have agreed not
to transfer, assign or sell any of their Founders Shares until one year after the completion of the Business Combination, or earlier
if, subsequent to the Business Combination, (i) the closing price of the Company’s 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 Business Combination or (ii) the date on which the Company
completes a liquidation, merger, stock exchange or other similar transaction after the Business Combination 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
(the ‘‘Lock Up Period’’).
The Founders Shares will automatically convert into
shares of Class A common stock concurrently with or immediately following the consummation of the Business Combination on a one-for-one
basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to
further adjustment. In the case that additional shares of Class A common stock or equity-linked securities are issued or deemed
issued in connection with the Business Combination, the number of shares of Class A common stock issuable upon conversion of all
Founders Shares will equal, in the aggregate, 20% of the total number of all shares of Class A common stock outstanding after such
conversion (after giving effect to any redemptions of shares of Class A common stock by public stockholders), including the total
number of shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked
securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial
business combination, excluding any shares of Class A common stock or equity-linked securities exercisable for or convertible into
shares of Class A common stock issued, or to be issued, to any seller in the Business Combination and any private placement-equivalent
warrants issued to the Sponsors, officers or directors upon conversion of working capital loans; provided that such conversion
of Founders Shares will never occur on a less than one-for-one basis.
Sponsor Warrants
In conjunction with the Public Offering that closed
on May 9, 2019 the Sponsors purchased an aggregate of 5,883,333 Sponsor Warrants at a price of $1.50 per warrant ($8,825,000 in
the aggregate) in the Private Placement. A portion of the purchase price of the Sponsor Warrants was added to the proceeds from
the Public Offering to be held in the Trust Account such that at closing of the Public Offering, $316,250,000 was placed in the
Trust Account.
Each Sponsor Warrant entitles the holder to purchase
one share of Class A common stock at $11.50 per share. The Sponsor Warrants (including the Class A common stock issuable upon exercise
of the Sponsor Warrants) are not transferable, assignable or salable until 30 days after the completion of the Business Combination
and they are non-redeemable so long as they are held by the initial purchasers of the Sponsor Warrants or their permitted transferees.
If the Sponsor Warrants are held by someone other than the initial purchasers of the Sponsor Warrants or their permitted transferees,
the Sponsor Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the warrants included
in the Units being sold in the Public Offering. Otherwise, the Sponsor Warrants have terms and provisions that are identical to
those of the Public Warrants except that the Sponsor Warrants may be exercised on a cashless basis. If the Company does not complete
the Business Combination, then the proceeds will be part of the liquidating distribution to the public stockholders and the Sponsor
Warrants issued to the Sponsors will expire worthless.
On June 12, 2019, FEI assigned and transferred all
of the 2,941,667 Sponsor Warrants and 4,090,625 Founders Shares held by it to Tilman J. Fertitta for the same prices originally
paid by FEI for such securities ($4,412,500.50 and $10,000, respectively). In connection with such transfer, Mr. Fertitta entered
into the registration rights agreement entered into by the Sponsors and the Company in connection with the Public Offering, which
registration rights are described below.
Registration Rights
The holders of the Founders Shares, Sponsor Warrants,
shares of Class A common stock issuable upon conversion of the Founders Shares, Sponsor Warrants or Working Capital Loans will
be entitled to registration rights. These holders will be entitled to make up to three demands, excluding short form registration
demands, that the Company register such securities for sale under the Securities Act. In addition, these holders will have ‘‘piggy-back’’
registration rights to include their securities in other registration statements filed by the Company. Notwithstanding the foregoing,
JFG may not exercise its demand and “piggyback” registration rights after five and seven years, respectively after
the effective date of the registration statement relating to the Public Offering and may not exercise its demand rights on more
than one occasion. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Commissions
Jefferies LLC is the underwriter of the Public Offering,
and its indirect parent, JFG, beneficially owns 48.25% of the Founders Shares. Jefferies LLC received all of the underwriting
discount that was due at the closing of the Public Offering, and will receive the additional Deferred Discount payable from the
Trust Account upon completion of the Business Combination. See Note 4 for further information regarding underwriting commissions.
Administrative Services Agreement
The Company entered into
an administrative services agreement in which the Company will pay FEI for office space, utilities and secretarial and
administrative support, in an amount equal to $10,000 per month ending on the earlier of the completion of a Business
Combination or May 9, 2021, if the company is unable to complete the Business Combination. The Company has recorded
administrative services fees of $50,000, of which $20,000 is included in Accounts payable, affiliates, as of June 30,
2019.
Sponsor Indemnification
The Sponsors have agreed that they will be jointly
and severally liable 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 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 or (ii) the actual amount per Public 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 Public Offering against certain liabilities, including liabilities
under the Securities Act.
Sponsor Loans
On February 14, 2019, the Sponsors agreed to loan
the Company up to an aggregate of $300,000 by the issuance of unsecured promissory notes to cover expenses related to the Public
Offering. These loans of $83,470 were repaid in full on May 14, 2019.
In addition, the Sponsors will not be prohibited
from loaning the Company funds in order to finance transaction costs in connection with the Business Combination. Up to $1,500,000
of these 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 Sponsor Warrants. The terms of such loans have not been determined
and no written agreements exist with respect to such loans. See Note 4 for the terms of the warrants.
Landcadia
Holdings II, Inc.
Item 2. Management’s Discussion
and Analysis of Financial Condition and Results of Operations.
This Quarterly Report on Form 10-Q includes
forward-looking statements. These forward-looking statements are based on our current expectations and beliefs concerning future
developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that
we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control)
or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by
these forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our
management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements
that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions,
are forward-looking statements. For example, statements made relating to future business combinations, use of proceeds of past
securities offerings, future loans and conversions of warrants are forward-looking statements. The words “anticipate,”
“believe,” “continue,” “could,” “estimate,” “expect,” “intends,”
“may,” “might,” “plan,” “possible,” “potential,” “predict,”
“project,” “should,” “would” and similar expressions may identify forward-looking statements,
but the absence of these words does not mean that a statement is not forward-looking. Factors that might cause or contribute to
such forward-looking statements include, but are not limited to, those set forth in the Risk Factors section of the Company’s
final prospectus relating its initial public offering (the “Public Offering”) dated May 6, 2019 filed with the U.S.
Securities and Exchange Commission (the “SEC”) on May 8, 2019 (the “Prospectus). The following discussion should
be read in conjunction with our financial statements and related notes thereto included elsewhere in this report.
Overview
We are a blank check company incorporated
as a Delaware corporation and 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 (“Business Combination”). We consummated
the Public Offering on May 9, 2019 and are currently in the process of locating suitable targets for our Business Combination.
We intend to use the cash proceeds from our public offering and the private placement of warrants described below as well as additional
issuances, if any, of our capital stock, debt or a combination of cash, stock and debt to complete the Business Combination.
The Company’s management team is
led by Tilman Fertitta, our Co-Chairman and Chief Executive Officer, and Richard Handler, our Co-Chairman and President. Mr. Fertitta
is the sole shareholder, Chairman and Chief Executive Officer of Fertitta Entertainment, Inc. (“FEI”) and Mr. Handler
is the Chief Executive Officer of Jefferies Financial Group Inc. (“JFG”), and its largest operating subsidiary, Jefferies
Group LLC, a global investment banking firm. The Company’s sponsors are FEI and JFG (collectively, the “Sponsors”).
Liquidity and Capital Resources
On May 9, 2019 we consummated a $316,250,000
public offering consisting of 31,625,000 units at a price of $10.00 per unit (“Unit”). Each Unit consists of one share
of the Company’s Class A common stock, $0.0001 par value (the “Class A Common Stock”) and one-third of one redeemable
warrant (each, a “Public Warrant”). Simultaneously, with the closing of the Public Offering, we consummated a $8,825,000
private placement (“Private Placement”) of an aggregate of 5,883,333 warrants (“Sponsor Warrants”) at a
price of $1.50 per warrant. Upon closing of the Public Offering and Private Placement on May 9, 2019, $316,250,000 in proceeds
(including $11,068,750 of deferred underwriting commissions) from the public offering and private placement was placed in a U.S.-based
trust account maintained by Continental Stock Transfer & Trust Company, acting as trustee. The remaining $8,825,000 held outside
of trust was used to pay underwriting commissions of $6,325,000, loans to our Sponsors, and deferred offering and formation costs.
As of June 30, 2019, we had an unrestricted
balance of $1,859,343 as well as cash and accrued interest held in trust of $317,413,475. Our working capital needs will be satisfied
through the funds, held outside of the Trust Account, from the public offering. Interest on funds held in the Trust Account may
be used to pay income taxes and franchise taxes, if any. Further, our Sponsors may, but are not obligated to, loan us funds as
may be required in connection with the Business Combination. Up to $1,500,000 of these loans may be converted into warrants of
the post business combination entity at a price of $1.50 per warrant at the option of the lender and would be identical to the
sponsor warrants.
Results of Operations
We have neither engaged in
any significant business operations nor generated any revenues to date. All activities to date relate to the
Company’s formation and its initial public offering and search for a suitable Business Combination. We generate
non-operating income in the form of interest income on cash, cash equivalents, and marketable securities held in
the Trust Account. We expect to incur increased expenses as a result of being a public company (for legal, financial
reporting, accounting and auditing compliance), as well as for due diligence expenses as we locate a suitable Business
Combination.
For the three months ended June 30, 2019
and 2018, we had a net income of $842,508 and $0, respectively. For the six months ended June 30, 2019 and 2018, we had a net income
of $821,534 and $0, respectively. The income for the three and six months ended June 30, 2019 relates to earnings on the Trust
Account assets offset by general and administrative costs and management fees for administrative services.
Critical Accounting Policies
The preparation of financial statements
in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions
that affect the amounts reported in the unaudited financial statements and accompanying notes. Actual results could differ from
those estimates. The Company has identified the following as its critical accounting policies:
Redeemable Shares
All of the 31,625,000 public shares sold
as part of the public offering contain a redemption feature as described in the prospectus for the Public Offering. In accordance
with FASB ASC 480, “Distinguishing Liabilities from Equity”, redemption provisions not solely within the control of
the Company require the security to be classified outside of permanent equity. The Charter provides a minimum net tangible asset
threshold of $5,000,001. The Company recognizes changes in redemption value immediately as they occur and will adjust the carrying
value of the security to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying
amount of redeemable shares will be affected by charges against additional paid-in capital. At June 30, 2019, there were 31,625,000
public shares, of which 30,191,153 were recorded as redeemable shares, classified outside of permanent equity, and 1,433,847 were
classified as Class A common stock.
Loss Per Common Share
Basic loss per common share is
computed by dividing net income applicable to common stockholders by the weighted average number of common shares outstanding
during the period. All shares of Class B common stock are assumed to convert to shares of Class A common stock on a
one-for-one basis. Consistent with FASB ASC 480, shares of Class A common stock subject to possible redemption, as well as
their pro rata share of undistributed trust earnings consistent with the two-class method, have been excluded from the
calculation of loss per common share for the three and six months ended June 30, 2019. Such shares, if redeemed, only
participate in their pro rata share of trust earnings. Diluted loss per share included the incremental number of shares of
common stock to be issued to be issued in connection with the conversion of Class B common stock or to settle warrants, as
calculated using the treasury stock method. For the three and six months ending June 30, 2019 and 2018, the Company did not
have any dilutive warrants, securities or other contracts that could, potentially, be exercised or converted into common
stock. As a result, diluted loss per common share is the same as basic loss per common share for all periods presented. For
the three and six months ended June 30, 2019 the Company reported a loss available to common share holders of $0.01.
Recent Accounting Pronouncements
Management does not believe that any recently
issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial
statements.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements
as of June 30, 2019.
Contractual Obligations
As of June 30, 2019, we did not have any
long-term debt, capital or operating lease obligations.
We entered into an administrative services
agreement in which the Company will pay the FEI Sponsor for office space, secretarial and administrative services provided to members
of the Company’s management team, in an amount not to exceed $10,000 per month.
Item 3. Quantitative and Qualitative
Disclosures About Market Risk.
As of June 30, 2019, we were not subject
to any market or interest rate risk. On May 9, 2019, the net proceeds of the Public Offering and the Private Placement, including
amounts in the Trust Account, were invested only in U.S. government securities with a maturity of 185 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, that invest only
in direct U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there was no associated
material exposure to interest rate risk.
We have not engaged in any hedging activities
since our inception. We do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and
Procedures
Disclosure controls and procedures are
controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under
the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer (who serves as our principal
executive officer) and Chief Financial Officer (who serves as our principal financial and accounting officer), to allow timely
decisions regarding required disclosure.
As required by Rules 13a-15 and 15d-15
under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness
of the design and operation of our disclosure controls and procedures as of June 30, 2019. Based upon their evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Exchange Act) were effective.
Changes in Internal Control over Financial
Reporting
There was no change in our internal control
over financial reporting that occurred during the quarter ending June 30, 2019 that has materially affected, or is reasonable 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 Quarterly Report on Form 10-Q are any of the risks described in the Prospectus. Any of
these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional
risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.
As of the date of this Quarterly Report
on Form 10-Q, there have been no material changes to the risk factors disclosed in the Prospectus. We may disclose changes to such
risk factors or disclose additional risk factors from time to time in our future filings with the SEC.
Item 2. Unregistered Sales of Equity
Securities and Use of Proceeds
Unregistered Sales of Equity Securities
On February 14, 2019, we sold 2,975,000
shares of our Class B common stock (the “Founders Shares”) to FEI for $10,000. On March 13, 2019, we conducted a 1:1.25
stock split of the Founders Shares and on May 6, 2019 we conducted a 1:1.10 stock split of the Founders Shares, resulting in the
Sponsors owning an aggregate of 7,906,250 Founds Shares. Simultaneously with the closing of the Public Offering, the Sponsors purchased
an aggregate of 5,883,333 Sponsor Warrants at a price of $1.50 per Sponsor Warrant for an aggregate purchase price of $8,825,000
in the Private Placement. These securities were issued in connection with our incorporation pursuant to the exemption from registration
contained in Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). Each of our Sponsors
is an accredited investor for purposes of Rule 501 of Regulation D.
Use of Proceeds
On May 6, 2019, we consummated the Public
Offering of 31,625,000 Units, including the issuance of 4,125,000 Units as a result of the underwriters’ exercise of their
over-allotment option in full. Each Unit consists of one share of Class A Common Stock and one-third of one Public Warrant, each
whole Public Warrant entitling the holder thereof to purchase one share of Class A Common Stock for $11.50 per share, subject to
adjustment. The Units were sold at a price of $10.00 per Unit, generating gross proceeds to us of $316,250,000. Jefferies LLC served
as the sole book-running manager of the Public Offering. The securities sold in the Public Offering were registered under the Securities
Act on a registration statement on Form S-1 (File No. 333-230946). The SEC declared the registration statement effective on May
6, 2019.
Following the closing of the Public Offering
and the Private Placement, $316,250,000 was placed in the Trust Account, comprised of $309,925,000 of the proceeds from the Public
Offering (which amount includes $11,068,750 of the underwriters’ deferred discount) and $6,325,000 of the proceeds of the
Private Placement. We paid $6,325,000 in underwriting discounts and recorded $616,530 for other costs and expenses related to the
Public Offering. We also repaid $83,470 in non-interest bearing loans made to us by the Sponsors to cover expenses related to the
Public Offering. There has been no material change in the planned use of proceeds from the public offering as described in the
Prospectus.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
None.
Item 6. Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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LANDCADIA HOLDINGS II, INC.
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By:
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/s/ Tilman J. Fertitta
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Name:
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Tilman J. Fertitta
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Title:
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Chief Executive Officer
(principal executive officer)
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By:
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/s/ Richard H. Liem
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Name:
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Richard H. Liem
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Title:
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Vice President and Chief Financial Officer
(principal financial officer and principal accounting officer)
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Dated: August 8, 2019
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