References to "we," "us," "our" or the "Company" are to Seaport Calibre
Materials Acquisition Corp., except where the context requires otherwise.
References to our "management" or our "management team" are to our officers and
directors. The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with the 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.
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;
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.
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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 million. We incurred offering costs of $8,710,365, inclusive of
$5,200,000 for the 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 million.
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 (the "trust account").
If we are unable to complete our initial business combination by February 1,
2023, 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 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.
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For the year ending December 31, 2021, we had net income of $2,045,199, which
consisted of $11,120 of interest earned on the balance of the trust account and
$2,811,682 change in fair value of the warrants, offset by $637,329 in general
and administrative expenses, and $140,274 in franchise tax expense.
Liquidity and Capital Resources
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 (each, a "private placement warrant" and collectively, the
"private placement warrants") at a price of $1.50 per Private Placement Warrant
in a private placement to Seaport Global Asset Management, LLC ("SGAM") and
Calibre Group, LLC ("Calibre Group") (collectively, the "sponsors") and certain
of their controlled affiliates, generating gross proceeds of $7,050,000
("private placement").
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 December 31, 2021, we had $552,302 in our operating account held outside
of the Trust Account and working capital of $964,515 (including $140,274 of tax
obligations).
Through December 31, 2021, 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 year ended December 31, 2021, cash used in operating activities was
$1,037,333, which was primarily a result of net income of $2,045,199, interest
earned on the balance of the Trust Account of $11,120, change in fair value of
warrant liabilities of ($2,811,682), and changes in operating assets and
liabilities, which used $614,560 of cash from operating activities.
Based on the foregoing, we expect that we will have sufficient working capital
and borrowing capacity to meet our needs through the earlier of the consummation
of our initial business combination or one year from this filing. However, there
is no commitment on the part of any financing source to provide additional
capital and no assurances can be provided that such additional capital will
ultimately be available. Over this time period, these funds will be used for
payment of general and administrative expenses as well as expenses associated
with identifying and evaluating prospective initial business combination
candidates, performing due diligence on prospective target businesses and
structuring, negotiating and consummating our initial business combination.
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 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 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 and
its controlled affiliates, including 17,769 transferred by Stephen Smith,
resulting in 115,494 shares and 1,231,730 shares
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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 100,429 and 1,071,070 shares held by Stephen Smith and
SGAM, respectively.
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
million. 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 parrants 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 "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. We
incurred approximately $20,000 for expenses in connection with such services for
the year ending December 31, 2021, which is reflected in the accompanying
statements of operations.
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. Gains and losses resulting from
the change in fair value of these securities is included in investment income
from investments held in Trust Account in our statement of operations. 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
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outside of the Company's control and subject to occurrence of uncertain future
events. Accordingly, at December 31, 2021, 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.
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, is not expected to 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 December 31, 2021. We do not participate
in transactions that create relationships with unconsolidated entities or
financial partnerships, often referred to as variable interest entities, which
would have been established for the purpose of facilitating off-balance sheet
arrangements. We have not entered into any off-balance sheet financing
arrangements, established any special purpose entities, guaranteed any debt or
commitments of other entities, or purchased any non-financial assets.
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.
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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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