References to the "Company," "our," "us" or "we" refer to Seaport Calibre
Materials Acquisition Corp. The following discussion and analysis of the
Company's financial condition and results of operations should be read in
conjunction with the unaudited financial statements and the notes thereto
contained elsewhere in this report. Certain information contained in the
discussion and analysis set forth below includes forward-looking statements that
involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). We have based these forward-looking statements on
our current expectations and projections about future events. These
forward-looking statements are subject to known and unknown risks, uncertainties
and assumptions about us that may cause our actual results, levels of activity,
performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by such
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "should," "could," "would," "expect,"
"plan," "anticipate," "believe," "estimate," "continue," or the negative of such
terms or other similar expressions. Such statements include, but are not limited
to, possible business combinations and the financing thereof, and related
matters, as well as all other statements other than statements of historical
fact included in this Form 10-Q. Factors that might cause or contribute to such
a discrepancy include, but are not limited to, those described in our other
Securities and Exchange Commission ("SEC") filings.
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. We intend to effectuate our initial business combination
using cash from the proceeds of our IPO and the private placement of the Private
Placement Warrants, the proceeds of the sale of our shares in connection with
our initial business combination (pursuant to forward purchase agreements or
backstop agreements we may enter into), shares issued to the owners of the
target, debt issued to bank or other lenders or the owners of the target, or a
combination of the foregoing.
The issuance of additional shares in connection with an initial Business
Combination to the owners of the target or other investors:
may significantly dilute the equity interest of investors in our IPO, which
? dilution would increase if the anti-dilution provisions in the Class B common
stock resulted in the issuance of Class A shares on a greater than one-to-one
basis upon conversion of the Class B common stock;
? may subordinate the rights of holders of our common stock if preferred stock is
issued with rights senior to those afforded our common stock;
could cause a change in control if a substantial number of shares of our common
? stock is issued, which may affect, among other things, our ability to use our
net operating loss carry forwards, if any, and could result in the resignation
or removal of our present officers and directors;
may have the effect of delaying or preventing a change of control of us by
? diluting the stock ownership or voting rights of a person seeking to obtain
control of us; and
? may adversely affect prevailing market prices for our Class A common stock
and/or warrants.
Similarly, if we issue debt securities or otherwise incur significant debt to
bank or other lenders or the owners of a target, it could result in:
? default and foreclosure on our assets if our operating revenues after an
initial Business Combination are insufficient to repay our debt obligations;
acceleration of our obligations to repay the indebtedness even if we make all
? principal and interest payments when due if we breach certain covenants that
require the maintenance of certain financial ratios or reserves without a
waiver or renegotiation of that covenant;
? our immediate payment of all principal and accrued interest, if any, if the
debt security is payable on demand;
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our inability to obtain necessary additional financing if the debt security
? contains covenants restricting our ability to obtain such financing while the
debt security is outstanding;
? our inability to pay dividends on our common stock;
using a substantial portion of our cash flow to pay principal and interest on
? our debt, which will reduce the funds available for dividends on our common
stock if declared, our ability to pay expenses, make capital expenditures and
acquisitions, and fund other general corporate purposes;
? limitations on our flexibility in planning for and reacting to changes in our
business and in the industry in which we operate;
? increased vulnerability to adverse changes in general economic, industry and
competitive conditions and adverse changes in government regulation;
limitations on our ability to borrow additional amounts for expenses, capital
? expenditures, acquisitions, debt service requirements, and execution of our
strategy; and
? other purposes and other disadvantages compared to our competitors who have
less debt.
We expect to continue to incur significant costs in the pursuit of our initial
Business Combination plans. We cannot assure you that our plans to raise capital
or to complete our initial Business Combination will be successful.
On November 1, 2021, we completed our IPO of 13,000,000 units. The units were
sold at a price of $10.00 per unit, generating gross proceeds to us of
$130,000,000. We incurred offering costs of $8,710,365, inclusive of $5,200,000
for the business combination marketing fee.
On November 1, 2021, simultaneously with the consummation of our IPO, we
completed the private sale of 4,700,000 private placement warrants at a purchase
price of $1.50 per warrant to our sponsor, generating gross proceeds to us of
$7,050,000.
Upon the closing of our IPO, an aggregate of $131,950,000 of the net proceeds
from our IPO and the private placement was deposited in a trust account
established for the benefit of our public stockholders.
If we are unable to complete our initial business combination by February 1,
2023 (or May 1, 2023 if the period of time to consummate a business combination
is extended), we will (i) cease all operations except for the purpose of winding
up, (ii) as promptly as reasonably possible but not more than ten business days
thereafter, 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 us to pay our taxes (less up to $100,000 of interest to pay
dissolution expenses), 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 our remaining stockholders
and our board of directors, dissolve and liquidate, subject in each case to our
obligations under Delaware law to provide for claims of creditors and the
requirements of other applicable law. There will be no redemption rights or
liquidating distributions with respect to our warrants, which will expire
worthless if we fail to complete our initial business combination by February 1,
2023 (or May 1, 2023 if the period of time to consummate a business combination
is extended). The representative of the underwriters has agreed to waive its
rights to the Marketing Fee held in the Trust Account in the event we do not
complete our initial business combination by February 1, 2023 (or May 1, 2023 if
the period of time to consummate a business combination is extended) and, in
such event, such amounts will be included with the funds held in the Trust
Account that will be available to fund the redemption of the public shares. In
the event of such distribution, it is possible that the per share value of the
assets remaining available for distribution will be less than $10.15.
Our amended and restated certificate of incorporation provides that we will have
only 15 months from the closing of our IPO, or 18 months if the period of time
to consummate a business combination is extended (or until February 1, 2023, or
May 1, 2023 if the period of time to consummate a Business Combination is
extended) to complete our initial business combination. If we are unable to
complete our initial business combination by February 1, 2023 (or May 1, 2023 if
the period of time to consummate a Business Combination is extended), we will:
(i) cease all operations except for the purpose of winding up, (ii) as promptly
as reasonably possible but not more than ten business days thereafter, 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 us to pay our
taxes (less up to $100,000 of interest to pay dissolution expenses), 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 our remaining stockholders and our board of directors,
dissolve and liquidate, subject in each case to our obligations under Delaware
law to provide for claims of creditors and the requirements of other applicable
law. There will be no redemption rights or
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liquidating distributions with respect to our warrants, which will expire
worthless if we fail to complete our initial Business Combination by February 1,
2023, (or May 1, 2023 if the period of time to consummate a Business Combination
is extended).
Results of Operations and Known Trends or Future Trends
We have neither engaged in any significant operations nor generated any
operating revenue to date. Our only activities from inception related to our
formation and our IPO, and since the closing of IPO, the search for a
prospective initial Business Combination. Although we have not generated
operating revenue, we have generated non-operating income in the form of
investment income from investments held in the trust account. We expect to incur
increased expenses as a result of being a public company, as well as costs in
the pursuit of an initial Business Combination.
We classify the warrants issued in connection with our IPO as liabilities at
their fair value and adjust the warrant instrument to fair value at each
reporting period. This liability is subject to re-measurement at each balance
sheet date until exercised, and any change in fair value is recognized in our
statement of operations.
For the three months ended June 30, 2022, we had net income of $1,197,634, which
consisted of $187,870 of interest earned on the balance of the trust account and
$1,377,720 change in fair value of the warrants, offset by $307,102 in general
and administrative expenses, $56,822 in franchise tax expense and $4,032 in
income tax expense.
For the six months ended June 30, 2022, we had net income of $3,439,562, which
consisted of $204,552 of interest earned on the balance of the trust account and
$4,002,983 change in fair value of the warrants, offset by $655,389 in general
and administrative expenses, $108,552 in franchise tax expense and $4,032 in
income tax expense.
For the three and six months ended June 30, 2021, we had a net loss of $(6,512)
consisting of formation and operating costs.
Liquidity, Capital Resources and Going Concern
On November 1, 2021, we consummated our initial public offering ("IPO") of
13,000,000 units. Each unit consists of one share of Class A common stock of the
Company, par value $0.0001 per share, and one half of one redeemable warrant of
the Company, with each whole warrant entitling the holder thereof to purchase
one Class A common stock for $11.50 per share. The units were sold at a price of
$10.00 per unit, generating gross proceeds to the Company of $130,000,000.
Underwriters were granted a 45-day option to purchase additional units that
expired unexercised on December 11, 2021.
Simultaneously with the closing of the IPO, the Company consummated the sale of
4,700,000 warrants at a price of $1.50 per Private Placement Warrant in a
private placement to SGAM and Calibre Group and certain of their controlled
affiliates, generating gross proceeds of $7,050,000.
A total of $131,950,000 of the net proceeds from the IPO and the Private
Placement was placed in a trust account established for the benefit of the
Company's public stockholders, with Continental Stock Transfer & Trust Company
acting as trustee.
As of June 30, 2022, we had $45,138 in our operating account held outside of the
Trust Account and working capital of $398,889 (including $49,315 of tax
obligations).
Through June 30, 2022, our liquidity needs have been satisfied through $400,000
in loans from SGAM and the net proceeds from the private placement not held in
the trust account. The balance of $400,000 in loans was paid in full at the
closing of our IPO on November 1, 2021.
For the six months ended June 30, 2022, cash used in operating activities was
$507,164, which was primarily a result of net income of $3,439,562, offset by
interest earned on the balance of the Trust Account of ($204,552), change in
fair value of warrant liabilities of ($4,002,983), and changes in operating
assets and liabilities, which generated a positive offset of $260,809 of cash
from operating activities.
The Company anticipates that the $45,138 outside of the Trust Account as of June
30, 2022, will not be sufficient to allow the Company to operate for at least
the next 12 months from the issuance of these financial statements, assuming
that a Business Combination is not consummated during that time. Until
consummation of its Business Combination, the Company will be using the
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funds held in bank accounts and not held in the Trust Account, and any
additional Working Capital Loans (as defined in Note 5) from the initial
stockholders, the Company's officers and directors, or their respective
affiliates (which is described in Note 5), for identifying and evaluating
prospective acquisition candidates, performing business due diligence on
prospective target businesses, traveling to and from the offices, plants or
similar locations of prospective target businesses, reviewing corporate
documents and material agreements of prospective target businesses, selecting
the target business to acquire and structuring, negotiating and consummating the
Business Combination.
As such, the possibility exists that within the coming 12 months the Company
will need to raise additional capital through loans or additional investments
from its Sponsor, stockholders, officers, directors, or third parties. In order
to fund working capital deficiencies or finance transaction costs in connection
with a Business Combination, the initial stockholders or their affiliates may,
but are not obligated to, loan us funds as may be required. If we complete a
Business Combination, we would repay such loaned amounts. In the event that a
Business Combination does not close, we may use a portion of the working capital
held outside the Trust Account to repay such loaned amounts but no proceeds from
our Trust Account would be used for such repayment. Up to $2,000,000 of such
loans may be convertible into warrants identical to the Private Placement
Warrants, at a price of $1.50 per warrant at the option of the lender.
Accordingly, the Company may not be able to obtain additional financing if and
when needed. If the Company is unable to raise additional capital, it may be
required to take additional measures to conserve liquidity, which could include,
but not necessarily be limited to, curtailing operations, suspending the pursuit
of a potential transaction, and reducing overhead expenses. The Company cannot
provide any assurance that new financing will be available to it on commercially
acceptable terms, if at all. These conditions raise substantial doubt about the
Company's ability to continue as a going concern through one year and one day
from the date of issuance of these financial statements. These conditions raise
substantial doubt about our ability to continue as a going concern. These
financial statements do not include any adjustments relating to the recovery of
the recorded assets or the classification of the liabilities that might be
necessary should the Company be unable to continue as a going concern.
In connection with our assessment of going concern considerations in accordance
with the authoritative guidance in Financial Accounting Standard Board ("FASB")
Accounting Standards Update ("ASU") 2014-15, "Disclosures of Uncertainties about
an Entity's Ability to Continue as a Going Concern," management has determined
that the mandatory liquidation and subsequent dissolution, should we be unable
to complete a business combination, raises substantial doubt about the our
ability to continue as a going concern. We have until February 1, 2023 to
consummate a Business Combination (or May 1, 2023 if the period of time to
consummate a business combination is extended). It is uncertain that we will be
able to consummate a Business Combination by this time. If a Business
Combination is not consummated by this date, there will be a mandatory
liquidation and subsequent dissolution. No adjustments have been made to the
carrying amounts of assets or liabilities should the Company be required to
liquidate after February 1, 2023 (or May 1, 2023 if the period of time to
consummate a business combination is extended).
Related Party Transactions
Founder Shares
In connection with the formation of the Initial LLC in 2019, and for additional
consideration in 2020, SGAM received 100% of its limited liability company
interests for nominal consideration of $479. As part of the conversion of the
Initial LLC in April 2021, the limited liability company interests held by SGAM
were converted into 5,750,000 Founder Shares, of which 3,267,500 were
transferred to Calibre Group and certain initial stockholders in June 2021
(including the transfer of 287,500 shares to Stephen Smith) and 503,125
transferred to certain other initial stockholders in July 2021 for an aggregate
purchase price of $27,019 (or $0.007 per share). In July 2021, our initial
stockholders forfeited an aggregate of 1,437,500 shares (including the
forfeiture of 71,875 shares by Stephen Smith), thereby resulting in 4,312,500
remaining founder shares. Subsequently, in September 2021, certain initial
stockholders transferred an aggregate of 464,620 founder shares to Calibre Group
and its controlled affiliates (including 31,110 shares transferred by Stephen
Smith), resulting in 184,515 shares and 1,430,875 shares held by Stephen Smith
and SGAM respectively. In October 2021, our initial stockholders forfeited an
aggregate of 575,000 shares (including 51,252 shares by Stephen Smith), thereby
resulting in 3,737,500 remaining Founder Shares. Also in October 2021, certain
initial stockholders transferred an aggregate of 222,647 Founder Shares to
Calibre Group and its controlled affiliates (including 17,769 transferred by
Stephen Smith), resulting in 115,494 shares and 1,231,730 shares held by Stephen
Smith and SGAM, respectively. The underwriters did not exercise the
over-allotment option, and as a result, 487,500 additional shares were
forfeited, resulting in 3,250,000 Founder Shares outstanding, of which 100,429
and 1,071,070 shares are held by Stephen Smith and SGAM, respectively.
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Our initial stockholders have agreed not to transfer, assign or sell any of
their Founder Shares until the earlier to occur of (A) one year after the
completion of our initial business combination or (B) subsequent to our initial
business combination, (x) if the last reported sale price of our 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 our
initial business combination, or (y) the date on which we complete a
liquidation, merger, capital stock exchange, reorganization or other similar
transaction that results in all of our stockholders having the right to exchange
their shares of common stock for cash, securities or other property. Any
permitted transferees will be subject to the same restrictions and other
agreements of our initial stockholders with respect to any Founder Shares.
Private Placement Warrants
Simultaneously with the consummation of our IPO, we completed the Private
Placement of warrants to our sponsors, generating gross proceeds of $7,050,000.
Each Private Placement Warrant is exercisable for one share of our Class A
common stock at an exercise price of $11.50 per share. A portion of the purchase
price of the Private Placement Warrants was added to the proceeds from our
initial public offering held in the trust account. If our initial business
combination is not completed by February 1, 2023 (or May 1, 2023 if the period
of time to consummate a Business Combination is extended), 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 for cash and exercisable on a
cashless basis so long as they are held by the sponsor or its permitted
transferees.
Our sponsors agreed, subject to limited exceptions, not to transfer, assign or
sell any of their Private Placement Warrants until 30 days after the completion
of our initial business combination.
Promissory Note - Related Party
In May 2021, SGAM agreed to loan the Company an aggregate of up to $400,000 to
cover expenses related to the IPO pursuant to a promissory note. The
non-interest bearing Note was repaid upon completion of the IPO on November 1,
2021.
Administrative Support Agreement
We agreed to pay $10,000 a month for office space, utilities, and secretarial
and administrative support to an affiliate of our sponsors. Services commenced
on the date the securities were first listed on the Nasdaq and will terminate
upon the earlier of our initial business combination or our liquidation. The
amount expensed in the statement of operations for the three and six months
ended June 30, 2022 was $30,000 and $60,000, respectively.
Critical Accounting Policies and Estimates
Investments Held in Trust Account
Our portfolio of investments held in Trust Account are comprised mainly of U.S.
government securities, within the meaning set forth in Section 2(a)(16) of the
Investment Company Act, with a maturity of 185 days or less, classified as
trading securities. Trading securities are presented on the balance sheets at
fair value at the end of each reporting period. The fair value for trading
securities is determined using quoted market prices in active markets.
Class A Common Stock Subject to Possible Redemption
The Company accounts for its common stock subject to possible redemption in
accordance with the guidance in Accounting Standards Codification ("ASC") Topic
480 "Distinguishing Liabilities from Equity." Conditionally redeemable common
stock (including common stock that features redemption rights that is either
within the control of the holder or subject to redemption upon the occurrence of
uncertain events not solely within the Company's control) is classified as
temporary equity. At all other times, common stock is classified as
stockholders' deficit. The Company's common stock feature certain redemption
rights that are considered to be outside of the Company's control and subject to
occurrence of uncertain future events. Accordingly, at June 30, 2022, common
stock subject to possible redemption is presented at redemption value as
temporary equity, outside of the stockholders' deficit section of the Company's
balance sheet.
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Warrant Liability
The Company accounts for warrants as either equity-classified or
liability-classified instruments based on an assessment of the warrant's
specific terms and applicable authoritative guidance in Financial Accounting
Standards Board ("FASB") Accounting Standards Codification ("ASC") 480,
Distinguishing Liabilities from Equity ("ASC 480") and ASC 815, Derivatives and
Hedging ("ASC 815"). The assessment considers whether the warrants are
freestanding financial instruments pursuant to ASC 480, meet the definition of a
liability pursuant to ASC 480, and whether the warrants meet all of the
requirements for equity classification under ASC 815, including whether the
warrants are indexed to the Company's own common shares and whether the warrant
holders could potentially require "net cash settlement" in a circumstance
outside of the Company's control, among other conditions for equity
classification. This assessment, which requires the use of professional
judgment, is conducted at the time of warrant issuance and as of each subsequent
quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity
classification, the warrants are required to be recorded as a component of
additional paid-in capital at the time of issuance. For issued or modified
warrants that do not meet all the criteria for equity classification, the
warrants are required to be recorded at their initial fair value on the date of
issuance, and each balance sheet date thereafter. Changes in the estimated fair
value of the warrants are recognized as a non-cash gain or loss on the
statements of operations.
Recent Accounting Pronouncements
In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740):
Simplifying the Accounting for Income Taxes ("ASU 2019-12"), which is intended
to simplify various aspects related to accounting for income taxes. ASU 2019-12
removes certain exceptions to the general principles in Topic 740 and also
clarifies and amends existing guidance to improve consistent application. This
guidance is effective for fiscal years, and interim periods within those fiscal
years, beginning after December 15, 2021, with early adoption permitted. The
adoption of ASU 2019-12, effective January 1, 2022, did not have a material
impact on the Company's financial statements and related footnote disclosures.
We do not believe that any other recently issued, but not yet effective,
accounting pronouncements, if currently adopted, would have a material impact on
our financial statements.
Off-Balance Sheet Arrangements; Commitments and Contractual Obligations
We did not have any off-balance sheet arrangements as defined in Item
303(a)(4)(ii) of Regulation S-K, as of June 30, 2022. We do not participate in
transactions that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or purchased any non-financial assets.
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We qualify as an "emerging growth company" and
under the JOBS Act and are allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded)
companies. We are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting
standards on the relevant dates on which adoption of such standards is required
for non-emerging growth companies. As a result, our financial statements may not
be comparable to those of companies that comply with new or revised accounting
pronouncements as of public company effective dates.
In addition, Section 107 of the JOBS Act also provides that an "emerging growth
company" can take advantage of the extended transition period provided in
Section 7(a)(2)(B) of the Securities Act for complying with new or revised
accounting standards. In other words, an "emerging growth company" can delay the
adoption of certain accounting standards until those standards would otherwise
apply to private companies. We intend to take advantage of the benefits of this
extended transition period. We will remain an emerging growth company until the
earlier of (1) the last day of the fiscal year (a) following November 26, 2024,
(b) in which we have total annual gross revenue of at least $1.07 billion, or
(c) in which we are deemed to be a large accelerated filer, which means the
market value of our Class A common stock that is held by non-affiliates exceeds
$700 million as of the prior June 30th, and (2) the date on which we have issued
more than $1.0 billion in non-convertible debt securities during the prior
three-year period.
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