References to "we," "us," "our" or the "Company" are to Seaport Global
Acquisition Corp., except where the context requires otherwise. References to
our "management" or our "management team" are to our officers and directors, and
references to the "sponsor" are to Seaport Global SPAC, LLC. 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 initial public offering 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
initial public offering, 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;
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? 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 December 2, 2020, we completed our initial public offering of 14,375,000
units, including 1,875,000 units that were issued pursuant to the underwriters'
full exercise of their over-allotment option. The units were sold at a price of
$10.10 per unit, generating gross proceeds to us of $145,187,500 million. We
incurred offering costs of approximately $8.4 million, inclusive of
approximately $5.0 million in deferred underwriting commissions.
On December 2, 2020 simultaneously with the consummation of our initial public
offering, we completed the private sale (the "private placement") of 6,062,500
private placement warrants at a purchase price of $1.00 per warrant to our
sponsor, generating gross proceeds to us of $6.1 million.
Upon the closing of our initial public offering, an aggregate of $145.2 million
of the net proceeds from our initial public offering 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 June 2, 2022,
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 June 2, 2022. The
representative of the underwriters has agreed to waive its rights to the
deferred underwriting commission held in the trust account in the event we do
not complete our initial business combination by June 2, 2022 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 $10.10.
Our amended and restated certificate of incorporation provides that we will have
only 18 months from the closing of our initial public offering (or until June 2,
2022) to complete our initial business combination. If we are unable to complete
our initial business combination by June 2, 2022, 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 June 2, 2022.
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Results of Operations
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 initial public offering, and since the closing of our initial
public offering, 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.
For the period from July 24, 2020 (inception) through December 31, 2020, we had
a net loss of ($173,452), which consisted of $6,702 in investment income, offset
by $180,154 in general and administrative expenses and offering costs associated
with our initial public offering.
Liquidity and Capital Resources
As of December 31, 2020, we had approximately $0.9 million in our operating
account, $6,702 of investment income earned from investments held in the trust
account that may be released to us to pay our taxes (less up to $100,000 of such
net interest to pay dissolution expenses), and working capital of approximately
$1.1 million (including approximately $88,000 of tax obligations).
Through December 31, 2020, our liquidity needs have been satisfied through
proceeds of $25,000 from our sponsor for issuance of the founder shares,
$275,000 in loans from our sponsor, and the net proceeds from the private
placement not held in the trust account. The balance of $275,000 in loans was
paid in full at the closing of our initial public offering on December 2, 2020.
Based on the foregoing, we believe 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. 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 July 2020, our sponsor paid $25,000 in offering expenses on our behalf in
exchange for the issuance of 3,593,750 founder shares.
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 initial public offering, we
completed the private placement of warrants to our sponsor, generating gross
proceeds of $6.1 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 June 2, 2022, 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 sponsor agreed, subject to limited exceptions, not to transfer, assign or
sell any of its Private Placement Warrants until 30 days after the completion of
our initial business combination.
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Promissory Note - Related Party
On July 24, 2020, our sponsor agreed to loan us an aggregate of up to $300,000
to cover expenses related to the our initial public offering pursuant to a
promissory note (the "Note"). The Note was non-interest bearing and was due upon
the completion of our initial public offering. We borrowed $275,000 under the
Note. The Note balance was paid in full at closing of our initial public
offering on December 2, 2020.
Administrative Support Agreement
We agreed to pay $10,000 a month for office space, utilities, and secretarial
and administrative support to our sponsor. 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 $10,000 for expenses in connection with such services for the
period from July 24, 2020 (inception) through December 31, 2020, which is
reflected in the accompanying statement 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
We account for the Class A common stock subject to possible redemption in
accordance with the Financial Accounting Standards Board ("FASB") Accounting
Standards Codification 480, "Distinguishing Liabilities from Equity." Shares of
Class A common stock subject to mandatory redemption (if any) are classified as
a liability and measured at fair value. Shares of conditionally redeemable Class
A common stock (including shares of Class A common stock that feature redemption
rights that are either within the control of the holder or subject to redemption
upon the occurrence of uncertain events not solely within our control) are
classified as temporary equity. At all other times, shares of Class A common
stock are classified as stockholders' equity. Our Class A common stock features
certain redemption rights that are considered to be outside of our control and
subject to the occurrence of uncertain future events. We recognize changes in
redemption value immediately as they occur and will adjust the carrying value of
the security at the end of each reporting period. Increases or decreases in the
carrying value of redeemable shares of Class A common stock shall be affected by
charges against additional paid-in capital. Accordingly, as of December 31,
2019, 13,494,179 shares of Class A common stock subject to conditional
redemption are presented as temporary equity, outside of the stockholders'
equity section of our balance sheet.
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, 2020, with early adoption permitted. We are
currently evaluating the impact of this standard on its financial statements and
related 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.
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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, 2019. 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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