Item 1.
Financial Statements.
SILVERBOX
ENGAGED MERGER CORP I
CONDENSED BALANCE SHEETS
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
|
|
(Unaudited)
|
|
|
|
|
Assets—
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
Cash
|
|
$
|
1,125,984
|
|
|
$
|
200,000
|
|
Prepaid expenses
|
|
|
540,545
|
|
|
|
—
|
|
Due from sponsor
|
|
|
563
|
|
|
|
—
|
|
Total current assets
|
|
|
1,538,506
|
|
|
|
200,000
|
|
Deferred offering costs
|
|
|
—
|
|
|
|
45,000
|
|
Prepaid expenses
|
|
|
79,129
|
|
|
|
—
|
|
Cash and marketable securities held in Trust Account
|
|
|
345,033,929
|
|
|
|
—
|
|
Total Assets
|
|
$
|
346,780,150
|
|
|
$
|
245,000
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
61,332
|
|
|
|
—
|
|
Accrued offering costs and expenses
|
|
|
—
|
|
|
|
48,543
|
|
Promissory note – related party
|
|
|
—
|
|
|
|
175,000
|
|
Taxes payable
|
|
|
100,000
|
|
|
|
—
|
|
Due to related party
|
|
|
1,350
|
|
|
|
—
|
|
Total current liabilities
|
|
|
162,682
|
|
|
|
223,543
|
|
Warrant liability
|
|
|
13,793,134
|
|
|
|
—
|
|
Deferred underwriters’ discount
|
|
|
12,075,000
|
|
|
|
—
|
|
Total liabilities
|
|
|
26,030,816
|
|
|
|
223,543
|
|
|
|
|
|
|
|
|
|
|
Commitments
|
|
|
|
|
|
|
|
|
Class A Common Stock subject to possible redemption, 34,500,000 and 0 shares at redemption value, respectively
|
|
|
345,000,000
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity:
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
|
|
|
—
|
|
|
|
—
|
|
Class B common stock, $0.0001 par value; 10,000,000 shares authorized; 8,625,000 shares issued and outstanding
|
|
|
863
|
|
|
|
863
|
|
Additional paid-in capital
|
|
|
24,137
|
|
|
|
24,137
|
|
Accumulated deficit
|
|
|
(24,275,666
|
)
|
|
|
(3,543
|
)
|
Total stockholders’ equity
|
|
|
(24,250,666
|
)
|
|
|
21,457
|
|
Total Liabilities and stockholders’ equity
|
|
$
|
346,780,150
|
|
|
$
|
245,000
|
|
See
accompanying notes to unaudited condensed financial statements.
SILVERBOX
ENGAGED MERGER CORP I
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
For the
six months
ended
June 30,
2021
|
|
|
For the
three months ended
June 30,
2021
|
|
|
|
|
|
|
|
|
Formation and operating costs
|
|
$
|
438,267
|
|
|
$
|
310,727
|
|
Loss from operations
|
|
|
(438,267
|
)
|
|
|
(310,727
|
)
|
|
|
|
|
|
|
|
|
|
Other income/(expense)
|
|
|
|
|
|
|
|
|
Unrealized gain on change in fair value of warrants
|
|
|
8,389,772
|
|
|
|
8,604,126
|
|
Transaction costs allocated to warrant liabilities
|
|
|
(820,691
|
)
|
|
|
-
|
|
Interest income
|
|
|
33,929
|
|
|
|
25,475
|
|
Total other income
|
|
|
7,603,010
|
|
|
|
8,629,601
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
7,164,743
|
|
|
$
|
8,318,874
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption
|
|
|
34,500,000
|
|
|
|
34,500,000
|
|
Basic and diluted net income per share, Class A common stock subject to possible redemption
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
Basic and diluted, weighted average shares outstanding – Class A and Class B non-redeemable common stock
|
|
|
8,258,287
|
|
|
|
8,625,000
|
|
Basic and diluted net income per share, common stock
|
|
$
|
0.86
|
|
|
$
|
0.96
|
|
See
accompanying notes to unaudited condensed financial statements.
SILVERBOX
ENGAGED MERGER CORP I
CONDENSED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
FOR
THE SIX MONTHS ENDED JUNE 30, 2021
|
|
Common Stock
|
|
|
Additional
|
|
|
|
|
|
Total
|
|
|
|
Class A
|
|
|
Class B
|
|
|
Paid-In
|
|
|
Accumulated
|
|
|
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
Balance—December 31, 2020
|
|
|
—
|
|
|
$
|
—
|
|
|
|
8,625,000
|
|
|
$
|
863
|
|
|
$
|
24,137
|
|
|
$
|
(3,543
|
)
|
|
$
|
21,457
|
|
Sale of 34,500,000 Units on March 2, 2021 net of Public Warrant fair value and offering costs
|
|
|
34,500,000
|
|
|
|
3,450
|
|
|
|
—
|
|
|
|
—
|
|
|
|
311,989,575
|
|
|
|
—
|
|
|
|
311,993,025
|
|
Excess of cash received over fair value of Private Placement Warrants:
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,570,109
|
|
|
|
—
|
|
|
|
1,570,109
|
|
Net income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,164,743
|
|
|
|
7,164,743
|
|
Class A common stock subject to possible redemption
|
|
|
(34,500,000
|
)
|
|
|
(3,450
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(313,559,684
|
)
|
|
|
(31,436,866
|
)
|
|
|
(345,000,000
|
)
|
Balance as of June 30, 2021
|
|
|
—
|
|
|
$
|
—
|
|
|
|
8,625,000
|
|
|
$
|
863
|
|
|
$
|
24,137
|
|
|
$
|
(24,275,666
|
)
|
|
$
|
(24,250,666
|
)
|
FOR
THE THREE MONTHS ENDED JUNE 30, 2021
|
|
Common Stock
|
|
|
Additional
|
|
|
|
|
|
Total
|
|
|
|
Class A
|
|
|
Class B
|
|
|
Paid-In
|
|
|
Accumulated
|
|
|
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
Balance—March 31, 2021
|
|
|
—
|
|
|
$
|
—
|
|
|
|
8,625,000
|
|
|
$
|
863
|
|
|
$
|
24,137
|
|
|
$
|
(32,594,540
|
)
|
|
$
|
(32,569,540
|
)
|
Net income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,318,874
|
|
|
|
8,318,874
|
|
Balance as of June 30, 2021
|
|
|
—
|
|
|
$
|
—
|
|
|
|
8,625,000
|
|
|
$
|
863
|
|
|
$
|
24,137
|
|
|
$
|
(24,275,666
|
)
|
|
$
|
(24,250,666
|
)
|
See
accompanying notes to unaudited condensed financial statements.
SILVERBOX
ENGAGED MERGER CORP I
CONDENSED
STATEMENT OF CASH FLOWS
(UNAUDITED)
|
|
For
the
six months
ended
June 30,
2021
|
|
Cash Flows from Operating Activities:
|
|
(Unaudited)
|
|
Net Income
|
|
$
|
7,164,743
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
|
Interest earned on cash held in Trust Account
|
|
|
(33,929
|
)
|
Unrealized gain on change in fair value of warrants
|
|
|
(8,389,772
|
)
|
Transaction costs allocated to warrant liabilities
|
|
|
820,691
|
|
Changes in operating assets and liabilities
|
|
|
|
|
Prepaid assets
|
|
|
(619,674
|
)
|
Taxes payable
|
|
|
100,000
|
|
Due from Sponsor
|
|
|
(563
|
)
|
Due to related party
|
|
|
(173,650
|
)
|
Accounts payable and accrued expenses
|
|
|
57,789
|
|
Net cash used in operating activities
|
|
|
(1,074,365
|
)
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
Investments and marketable securities held in Trust
|
|
|
(345,000,000
|
)
|
Net cash used in investing activities
|
|
|
(345,000,000
|
)
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
Proceeds from sale of Units, net of offering costs
|
|
|
344,500,349
|
|
Proceeds from issuance of Private Placement Warrants
|
|
|
9,400,000
|
|
Payment of underwriter discount
|
|
|
(6,900,000
|
)
|
Net cash provided by financing activities
|
|
|
347,000,349
|
|
|
|
|
|
|
Net Change in Cash
|
|
|
925,984
|
|
Cash, beginning of the period
|
|
|
200,000
|
|
Cash, end of period
|
|
$
|
1,125,984
|
|
|
|
|
|
|
Supplemental Disclosure of Non-cash Financing Activities:
|
|
|
|
|
Initial classification of Class A common stock subject to possible redemption
|
|
$
|
345,000,000
|
|
Deferred underwriters’ discount payable charged to additional paid in capital
|
|
$
|
12,075,000
|
|
See
accompanying notes to unaudited condensed financial statements.
SILVERBOX
ENGAGED MERGER CORP I
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE
30, 2021
Note
1 — Organization and Business Operation
SilverBox
Engaged Merger Corp I (the “Company”) is a newly organized blank check company incorporated as a Delaware corporation on
December 3, 2020. The Company was incorporated for the purpose of effecting 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 selected any specific Business Combination target and it has not, nor has anyone on its behalf, engaged in any substantive
discussions, directly or indirectly, with any business combination target with respect to an initial business combination with the Company.
As
of June 30, 2021, the Company had not commenced any operations. All activity for the period from December 3, 2020 (inception) through
June 30, 2021 relates to the Company’s formation and the initial public offering (“IPO”). The Company will not generate
any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income
in the form of interest income on cash and cash equivalents from the proceeds derived from the IPO and unrealized gains and losses on
the change in fair value of it warrants.
The
Company has selected December 31 as its fiscal year end.
The Company’s sponsor is SilverBox Engaged Sponsor LLC, a Delaware
limited liability company (the “Sponsor”). The registration statement for the Company’s IPO was declared effective on
February 25, 2021 (the “Effective Date”). On March 2, 2021, the Company consummated the IPO of 34,500,000 units
(the “Units”), which includes the full exercise by the underwriters of the over-allotment option to purchase an additional
4,500,000 Units, at $10.00 per Unit, generating gross proceeds of $345,000,000, which is discussed in Note 2.
The
Company has entered into a Forward Purchase Agreement, with Engaged Capital, LLC (“Engaged Capital”), pursuant to which Engaged
Capital has agreed to purchase from the Company, in a private placement for an aggregate amount of $100,000,000 to occur simultaneously
with the consummation of an Initial Business Combination, 10,000,000 Forward Purchase Shares at $10.00 per share.
Simultaneously with the closing of the IPO, the Company consummated
the sale of 6,266,667 warrants (the “Private Warrants”), at a price of $1.50 per Private Warrant, generating gross proceeds
of $9,400,000, which is discussed in Note 3. Each warrant entitles the holder to purchase one share of common stock at a price of
$11.50 per share.
Offering
costs of the IPO amounted to $19,474,651 consisting of $6,900,000 of underwriting discount, $12,075,000 of deferred underwriting discount,
and $499,651 of other offering costs. Of the offering costs, $820,691 is included in offering costs on the statement of operations and
$18,653,960 is included in equity.
Management
has agreed that an amount equal to at least $10.00 per Unit sold in the IPO, including the proceeds of the Private Placement Warrants,
will be held in a Trust Account (“Trust Account”), located in the United States with Continental Stock Transfer &
Trust Company acting as trustee, and will invest only in U.S. government securities, within the meaning set forth in Section 2(a)(16)
of 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. Except with respect to interest earned
on the funds held in the Trust Account that may be released to the Company as described below, the funds held in the Trust Account will
not be released from the Trust Account until the earliest of (i) the completion of an initial Business Combination, (ii) the
redemption of any public shares properly submitted in connection with a stockholder vote to amend the Company’s amended and restated
certificate of incorporation (i) to modify the substance or timing of the Company’s obligation to provide for the redemption
of the public shares in connection with an initial Business Combination or to redeem 100% of the Company’s public shares if the
Company do not complete its initial Business Combination within the Completion Period (as defined below) or (ii) with respect to
any other material provisions relating to the rights of holders of the Company’s Class A Common Stock prior to the initial
Business Combination or pre-initial Business Combination business activity; (iii) the redemption of the Company’s public shares
if it is unable to complete its initial Business Combination within the completion window, subject to applicable law. The proceeds deposited
in the Trust Account could become subject to the claims of the Company’s creditors, if any, which could have priority over the
claims of the Company’s public stockholders.
SILVERBOX
ENGAGED MERGER CORP I
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE
30, 2021
The
Company will provide its public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion
of the initial Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination
or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a proposed Business
Combination or conduct a tender offer will be made by the Company, solely in its discretion. The stockholders will be entitled to redeem
all or a portion of their public shares upon the completion of the initial Business Combination at a per-share price, payable in
cash, equal to the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the initial
Business Combination, including interest (net of permitted withdrawals), divided by the number of then outstanding public shares, subject
to the limitations described herein. The amount in the Trust Account is initially anticipated to be $10.00 per public share. The per
share amount the Company will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting
commissions the Company will pay to the representative of the underwriters.
The
shares of common stock subject to redemption are recorded at a redemption value and classified as temporary equity in accordance with
Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case, the
Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation
of a Business Combination and, if the Company seeks stockholder approval, a majority of the issued and outstanding shares voted are voted
in favor of the Business Combination.
In
connection with the closing of the IPO, the Company has entered into a forward purchase agreement (“FPA”) with Engaged Capital,
LLC (the “Purchaser” or “Engaged Capital”). Engaged Capital (and/or its affiliates), a member of the Company’s
sponsor, has agreed to commit to purchase, in a private placement for gross proceeds of $100,000,000 to occur concurrently with the consummation
of the initial business combination, 10,000,000 forward purchase Class A common shares at $10.00 per share. The FPA shares shall have
the same terms as a public share, but they do not have any rights of redemption, rights to conversion into cash, or rights to any liquidating
distributions from any funds held in the trust account established by the Company for the benefit of the Company’s public stockholders
upon the closing of the IPO.
Following
guidance in ASC 480-10-S99-3A, with the commitment of $100,000,000 of equity funds at the time of the IPO, (which is sufficient funds
to redeem all outstanding redeemable stock) the Company reports all of its Class A common stock as redeemable stock.
The
Company will have only 24 months from the closing of the IPO to complete the initial Business Combination, which may be extended
by an additional three months to 27 months if the Company enters into a letter of intent within 24 months from the closing
of the IPO (the “Combination Period”). However, if the Company is unable to complete the initial Business Combination within
the Combination Period, the Company 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 (net of permitted withdrawals and up to $100,000
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 liquidation distributions, if any), and (iii) as
promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and
the Company’s board of directors, liquidate and dissolve, subject, in each case, to the Company’s obligations under Delaware
law to provide for claims of creditors and the requirements of other applicable law.
The
initial stockholders, officers and directors have agreed to (i) waive their redemption rights with respect to any Founder Shares
and public shares held by them in connection with the completion of the initial Business Combination, (ii) waive their redemption
rights with respect to any Founder Shares and public shares held by them in connection with a stockholder vote to approve an amendment
to the Company’s amended and restated certificate of incorporation, (iii) waive their rights to liquidating distributions
from the Trust Account with respect to any Founder Shares held by them if the Company fails to complete the initial Business Combination
within the Combination Period (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 its initial Business Combination within the Completion Period), and (iv) vote
their Founder Shares and any public shares purchased during or after the Proposed Public Offering in favor of the initial Business Combination.
SILVERBOX
ENGAGED MERGER CORP I
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE
30, 2021
The
Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party (other than the Company’s
independent registered public accounting firm) 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 other 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 and (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 IPO
against certain liabilities, including liabilities under the Securities Act. However, the Company has not asked the Sponsor to reserve
for such indemnification obligations, nor has the Company independently verified whether the Sponsor has sufficient funds to satisfy
its indemnity obligations and the Company believes that the Sponsor’s only assets are securities of the Company. Therefore, the
Company cannot assure that the Sponsor would be able to satisfy those obligations. None of the Company’s officers or directors
will indemnify the Company for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Risks
and Uncertainties
Management
is currently evaluating the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that
the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target
company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Liquidity
and Capital Resources
As
of June 30, 2021, the Company had approximately $1.1 million in its operating bank account, and working capital of approximately
$1.4 million.
The Company’s liquidity needs up to June 30, 2021 had been satisfied
through a capital contribution from the Sponsor of $25,000 (see Note 4) for the founder shares and the loan under an unsecured promissory
note from the Sponsor for $175,000 (see Note 4). The promissory note from the Sponsor was paid in full as of March 2, 2021. In addition,
in order to finance offering costs in connection with a Business Combination, the Company’s Sponsor or an affiliate of the Sponsor
or certain of the Company’s officers and directors may, but are not obligated to, provide the Company Working Capital Loans (see
Note 4). To date, there were no amounts outstanding under any Working Capital Loans.
Based
on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity to meet its needs
through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, the Company will
be using these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates,
performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with
or acquire, and structuring, negotiating and consummating the Business Combination.
SILVERBOX
ENGAGED MERGER CORP I
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE
30, 2021
Note 2 — Summary of Significant
Accounting Policies
Basis
of Presentation
The
accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form
10-Q and Article 10 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements
prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial
reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position,
results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include
all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating
results and cash flows for the periods presented.
The
accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Prospectus for the period
of inception to December 31, 2020 as filed with the SEC on March 1, 2021, which contains the audited financial statements and notes thereto.
The interim results for the six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the year
ending December 31, 2021 or for any future interim periods.
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 auditor 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 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 statement 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.
Use
of Estimates
The
preparation of financial statement in conformity with US GAAP 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 statement.
Making
estimates requires management to exercise significant judgement. It is at least reasonably possible that the estimate of the effect of
a condition, situation or set of circumstances that existed at the date of the financial statement, which management considered in formulating
its estimate, could change in the near term one or more future confirming events. Accordingly, the actual results could differ significantly
from those estimates.
SILVERBOX ENGAGED MERGER CORP I
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
Cash and Cash Equivalents
The Company considers all short-term investments with an original
maturity of three months or less when purchased to be cash equivalents. The Company had approximately $1.1 million and $0.2 million in
cash and did not have any cash equivalents as of June 30, 2021 and December 31, 2020.
Marketable Securities Held in Trust Account
At June 30, 2021, the assets held in the Trust
Account were substantially held in U.S. Treasury bills.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal
Depository Insurance Corporation limit of $250,000. At June 30 2021, the Company has not experienced losses on this account and management
believes the Company is not exposed to significant risks on such account.
Class A Common Stock Subject to Possible Redemption
The Company accounts for its Class A common
stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480
“Distinguishing Liabilities from Equity.” Class A common stock subject to mandatory redemption (if any) is classified
as a liability instrument and is measured at fair value. Conditionally redeemable Class A common stock (including 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 the Company’s control) is classified as temporary equity. At all other times, Class A common
stock is classified as stockholders’ equity. The Company’s Class A common stock feature certain redemption rights that
is considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, Class A
common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity
section of the Company’s balance sheet.
Net Income Per Common Stock
Net income per common stock is computed by dividing
net income by the weighted average number of common stock outstanding for each of the periods.
The Company’s statements of operations include
a presentation of net income per share for Class A Common Stock subject to possible redemption in a manner similar to the two-class method
of net income per common stock. Net income per Class A common stock, basic and diluted, for redeemable Class A Common Stock is calculated
by dividing the interest income earned on the Trust Account, by the weighted average number of redeemable Class A Common Stock outstanding
since original issuance. Net income per common stock, basic and diluted, for non-redeemable Class A and Class B Common Stock is calculated
by dividing the net income, adjusted for income attributable to redeemable Class A Common Stock, by the weighted average number of non-redeemable
Class A and Class B Common Stock outstanding for the periods. Non-redeemable Class B Common Stock include the Founder Shares as these
common stocks do not have any redemption features and do not participate in the income earned on the Trust Account.
SILVERBOX ENGAGED MERGER CORP I
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
|
|
For the
six months ended
June 30,
2021
|
|
|
For the
three months ended
June 30,
2021
|
|
Common stock subject to possible redemption
|
|
|
|
|
|
|
Numerator: Net income allocable to Class A common stock subject to possible redemption
|
|
|
|
|
|
|
Accretion of interest income on marketable securities held in trust
|
|
$
|
33,929
|
|
|
$
|
25,475
|
|
Less: interest available to be withdrawn for payment of taxes
|
|
|
(33,929
|
)
|
|
|
(25,475
|
)
|
Net income allocable to Class A common stock subject to possible redemption
|
|
$
|
-
|
|
|
$
|
-
|
|
Denominator: Weighted Average Redeemable Class A common stock
|
|
|
|
|
|
|
|
|
Redeemable Class A Common Stock, Basic and Diluted
|
|
|
34,500,000
|
|
|
|
34,500,000
|
|
Redeemable Class A Common Stock, basic and diluted weighted average shares outstanding
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
Non-Redeemable Common Stock
|
|
|
|
|
|
|
|
|
Numerator: Net Income minus Redeemable Net Earnings
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
7,164,743
|
|
|
$
|
8,318,874
|
|
Less: Net income allocable to Class A common stock subject to possible redemption
|
|
|
(33,929
|
)
|
|
|
(25,475
|
)
|
Non-Redeemable Net Income
|
|
$
|
7,130,814
|
|
|
$
|
8,293,399
|
|
Denominator: Weighted Average Non-Redeemable Class A and Class B common stock
|
|
|
|
|
|
|
|
|
Non-Redeemable Class A and Class B common stock, basic and diluted weighted average shares outstanding
|
|
|
8,258,287
|
|
|
|
8,625,000
|
|
Basic and diluted net income per share, Class A and Class B common stock
|
|
$
|
0.86
|
|
|
$
|
0.96
|
|
Offering Costs associated with the Initial
Public Offering
The Company complies with the requirements of
the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A—“Expenses of Offering”. Offering
costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the Public
Offering. Offering costs are charged to stockholders’ equity or the statement of operations based on the relative value of the Public
Warrants to the proceeds received from the Units sold upon the completion of the IPO. Accordingly, as of June 30, 2021, offering costs
totaling $19,474,651 (consisting of $6,900,000 of underwriting discount, $12,075,000 of deferred underwriting discount, and $499,651 of
other offering costs) were recognized with $820,691 which was allocated to the Public Warrants and Private Warrants, included in the statement
of operations and $18,653,960 included in stockholders’ equity.
Fair Value of Financial Instruments
The fair value of the Company’s assets and
liabilities approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.
Derivative Financial Instruments
The Company evaluates its financial instruments
to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic
815, “Derivatives and Hedging”. Derivative instruments are recorded at fair value on the grant date and re-valued at each
reporting date, with changes in the fair value reported in the statements of operations. Derivative assets and liabilities are classified
in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required
within 12 months of the balance sheet date. The Company has determined the warrants are a derivative instrument.
FASB ASC 470-20, Debt with Conversion and Other
Options addresses the allocation of proceeds from the issuance of convertible debt into its equity and debt components. The Company applies
this guidance to allocate IPO proceeds from the Units between Class A common stock and warrants, using the residual method by allocating
IPO proceeds first to fair value of the warrants and then the Class A common stock.
SILVERBOX ENGAGED MERGER CORP I
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
Fair Value Measurements
Fair value is defined as the price that would
be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement
date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives
the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the
lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
|
●
|
Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
|
|
●
|
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
|
|
●
|
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
|
Income Taxes
The Company accounts for income taxes under ASC
740 Income Taxes (“ASC 740”). ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s
financial statement and prescribes a recognition threshold and measurement process for financial statement recognition and measurement
of a tax position 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. ASC 740 also provides guidance on derecognition, classification, interest and penalties,
accounting in interim period, disclosure and transition.
The Company recognizes accrued interest and penalties
related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest
and penalties as of June 30, 2021. 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 has identified the United States as
its only “major” tax jurisdiction.
The Company may be subject to potential examination
by federal and state taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing
and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s
management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Recent Accounting Standards
In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion
and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for
Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies accounting for convertible
instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are
required for equity-linked contracts to qualify for scope exception, and it simplifies the diluted earnings per share calculation in certain
areas. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted
beginning on January 1, 2021. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position,
results of operations or cash flows.
Note 3 — Initial Public Offering
On March 2, 2021, the Company sold 34,500,000
units, which includes 4,500,000 units issued pursuant to the full exercise by the underwriters of their over-allotment option, at a purchase
price of $10.00 per Unit, generating gross proceeds of $345,000,000. Each Unit consists of one share of Class A common stock, and one-third
of one redeemable warrant. Each whole warrant entitles the holder thereof to purchase one share of Class A common stock at a price of
$11.50 per share, subject to adjustment. No fractional warrants will be issued upon separation of the Units and only whole warrants will
trade. The warrants will become exercisable on the later of 30 days after the completion of the initial Business Combination or 12 months
from the closing of the IPO, March 2, 2021, and will expire five years after the completion of the initial Business Combination, or earlier
upon redemption or liquidation (see Note 6).
The Company paid an underwriting fee at the closing
of the IPO of $6,900,000. As of March 2, 2021, an additional fee of $12,075,000 (see Note 5) was deferred and will become payable upon
the Company’s completion of an initial Business Combination. The deferred portion of the fee will become payable to the underwriters
from the amounts held in the Trust Account solely in the event the Company completes its initial Business Combination.
SILVERBOX ENGAGED MERGER CORP I
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
Warrants
Each whole warrant entitles the holder to purchase
one share of Class A common stock at a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing on
the later of 12 months from the closing of the IPO and 30 days after the completion of the initial Business Combination, provided in each
case that the Company has an effective registration statement under the Securities Act covering the shares of Class A common stock issuable
upon exercise of the warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their
warrants on a cashless basis under the circumstances specified in the warrant agreement) and such shares are registered, qualified or
exempt from registration under the securities, or blue sky, laws of the state of residence of the holder. The warrants will expire five
years after the completion of the Company’s initial Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption
or liquidation.
The Company has agreed that as soon as practicable,
but in no event later than fifteen (15) business days after the closing of the initial Business Combination, it will use its best efforts
to file with the SEC a registration statement for the registration, under the Securities Act, of the Class A common stock issuable upon
exercise of the warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness
of such registration statement, and a current prospectus relating thereto, until the expiration or redemption of the warrants in accordance
with the provisions of the warrant agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise
of the warrants is not effective by the sixtieth (60th) business day after the closing of the initial Business Combination, warrant holders
may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain
an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities
Act or another exemption. Notwithstanding the above, if the Company’s Class A common stock are at the time of any exercise of a
warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section
18(b)(1) of the Securities Act, the Company may, at its option, require holders of public warrants who exercise their warrants to do so
on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, it
will not be required to file or maintain in effect a registration statement, and in the event the Company does not so elect, it will use
its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
In addition, if (x) the Company issues additional
shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of its initial
Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue
price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance
to the initial stockholders or their affiliates, without taking into account any Founder Shares held by the initial stockholders or such
affiliates, as applicable, prior to such issuance), (the “Newly Issued Price”), (y) the aggregate gross proceeds from such
issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the initial Business
Combination on the date of the consummation of the initial Business Combination (net of redemptions), and (z) the volume weighted average
trading price of the Company’s Class A common stock during the 20 trading day period starting on the trading day after the day on
which it consummates its initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise
price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued
Price, and the $10.00 and $18.00 per share redemption trigger price described adjacent to “Redemption of warrants when the price
per Class A common stock equals or exceeds $10.00” and “Redemption of warrants when the price per Class A common stock equals
or exceeds $18.00” will be adjusted (to the nearest cent) to be equal to 100% and 180% of the higher of the Market Value and the
Newly Issued Price, respectively.
Redemption of Warrants When the Price per Class
A Common stock Equals or Exceeds $18.00
Once the warrants become
exercisable, the Company may redeem the outstanding warrants (except with respect to the Private Placement Warrants):
|
●
|
in whole and not in part;
|
|
●
|
at a price of $0.01 per warrant;
|
|
●
|
upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder; and
|
|
●
|
if, and only if, the last reported sale price of the Class A common stock for any 20 trading days within a 30-trading day period ending three business days before the Company sends to the notice of redemption to the warrant holders (the “Reference Value”) equals or exceeds $18.00 per share (as adjusted).
|
SILVERBOX ENGAGED MERGER CORP I
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
Redemption of Warrants When the Price per Class
A Common stock Equals or Exceeds $10.00
Once the warrants become
exercisable, the Company may redeem the outstanding warrants:
|
●
|
in whole and not in part;
|
|
●
|
at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to an agreed table based on the redemption date and the “fair market value” of the Class A common stock;
|
|
●
|
if, and only if, the Reference Value equals or exceeds $10.00 per share (as adjusted); and
|
|
●
|
if the Reference Value is less than $18.00 per share (as adjusted) the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding public warrants, as described above.
|
Note 4 — Private Placement
Simultaneously with the closing of the IPO, the
Sponsor purchased an aggregate of 6,266,667 Private Warrants at a price of $1.50 per Private Warrant, for an aggregate purchase price
of $9,400,000, in a private placement. Each Private Warrant entitles the holder to purchase one share of common stock at a price of $11.50
per share. A portion of the proceeds from the private placement was added to the proceeds from the IPO held in the Trust Account. If the
Company does not complete a Business Combination within the Combination Period, the Private Warrants will expire worthless.
The Private Warrants are identical to the Public
Warrants sold in the IPO except that the Private Warrants, so long as they are held by the initial stockholders or its permitted transferees,
(i) they will not be redeemable by the Company for cash, (ii) they (including the Class A common stock issuable upon exercise of these
warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold until 30 days after the completion of the Company’s
initial Business Combination, and (iii) they may be exercised by the holders on a cashless basis. If the Private Warrants are held by
holders other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable
by the holders on the same basis as the warrants included in the Units being sold in the IPO.
Note 5 — Related Party Transactions
Founder Shares
On December 30, 2020, the
Sponsor paid $25,000 or approximately $0.003 per share, to cover certain offering costs in consideration for 8,625,000 shares of Class
B common stock, par value $0.0001 (the “Founder Shares”).
The initial stockholders have agreed not to transfer,
assign or sell any of their Founder Shares and any Class A common stock issuable upon conversion thereof until the earlier to occur of:
(A) one year after the completion of the initial Business Combination and (B) the date on which the Company completes a liquidation, merger,
capital stock exchange or other similar transaction after the Company’s initial Business Combination that results in all of the
Company’s stockholders having the right to exchange their Class A common stock for cash, securities or other property; except to
certain permitted transferees and under certain circumstances (the “Lock-up”). Any permitted transferees will be subject to
the same restrictions and other agreements of the company’s initial stockholders with respect to any Founder Shares. Notwithstanding
the foregoing, the Founder Shares will be released from the Lock-up if the closing price of the Company’s Class A common stock equals
or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for
any 20 trading days within any 30-trading day period commencing at least 120 days after the company’s initial Business Combination.
Due from Sponsor
On June 30, 2021 the Sponsor owed the Company
$563. The amount due is non-interest bearing and is due immediately.
Promissory Note — Related Party
On December 31, 2020, the Sponsor agreed to loan
the Company up to $300,000 to be used for a portion of the expenses of the IPO. These loans are non-interest bearing, unsecured and are
due at the earlier of June 30, 2021 or the closing of the IPO. At June 30, 2021, there was no balance outstanding on the note.
Due to Related Party
As of June 30, 2021, the amount due to related
parties is $1,350 for the payment of certain offering costs and taxes.
SILVERBOX ENGAGED MERGER CORP I
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
Working Capital Loans
In order to finance offering costs in connection
with an intended Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors
may, but are not obligated to, loan the Company funds as may be required on a non-interest bearing basis (“Working Capital Loans”).
If the Company completes the initial Business Combination, it would repay the Working Capital Loans. In the event that the initial Business
Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay the Working Capital
Loans but no proceeds from the Trust Account would be used to repay the Working Capital Loans. Up to $1,500,000 of such Working Capital
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.
Such warrants would be identical to the Private Placement Warrants. Except as set forth above, the terms of Working Capital Loans, if
any, have not been determined and no written agreements exist with respect to such loans. As of June 30, 2021, the Company had no borrowings
under the Working Capital Loans.
Administrative Service Fee
Subsequent to the closing of the IPO, the Company
will pay its Sponsor $10,000 per month for office space, secretarial and administrative services provided to members of the management
team. Upon completion of the initial Business Combination or the Company’s liquidation, the Company will cease paying these monthly
fees. At June 30, 2021, the Company recognized and paid a $40,000 administrative fee.
Forward Purchase Agreement
In connection with the IPO, the Company has entered
into a forward purchase agreement with Engaged Capital, LLC that will provide for the aggregate purchase of $100,000,000 of Class A common
stock at $10.00 per share. Any such purchases will take place in a private placement that will close concurrently with the closing of
the Company’s initial Business Combination.
Engaged Capital, LLC, a member of the Company’s
founder group, has agreed to commit, pursuant to a forward purchase agreement with the Company, to purchase, in a private placement for
gross proceeds of $100,000,000 to occur concurrently with the consummation of the Company’s initial business combination, 10,000,000
forward purchase shares at $10.00 per share. Engaged Capital’s commitment is subject to customary closing conditions under the forward
purchase agreement. Subject to the Company’s consent, Engaged Capital has the right to transfer all or a portion of its rights and
obligation to purchase the forward purchase shares to one or more forward transferees, subject to compliance with applicable securities
laws. Such forward transferee will be subject to the same terms and conditions under the forward purchase agreement. However, in the event
of a default by any forward transferees, Engaged Capital has agreed that it shall be responsible to purchase such defaulted amount. The
forward purchase shares will be identical to the shares of the Company’s Class A common stock, except that they will be subject
to certain registration rights and transfer restrictions. The funds from the sale of the forward purchase shares will be used as part
of the consideration to the sellers in the initial Business Combination; any excess funds will be used for working capital in the post-transaction
company. This commitment is independent of the percentage of stockholders electing to redeem their public shares and provides the Company
with a minimum funding level for the initial business combination.
Special Purpose Acquisition Companies frequently
will redeem shares to the extent that their net tangible assets do not go below $5,000,001. Following guidance in ASC 480-10-S99-3A, with
the commitment of $100,000,000 of equity funds at the time of the IPO, (which is sufficient funds to redeem all outstanding redeemable
stock) the Company reports all of its Class A common stock as redeemable stock.
Note 6 — Commitments and Contingencies
Registration Rights
The holders of the founder shares, Private Placement
Warrants, and warrants that may be issued upon conversion of Working Capital Loans will have registration rights to require the Company
to register a sale of any of its securities held by them pursuant to a registration rights agreement to be signed prior to or on the effective
date of the Proposed Public Offering. These holders will be entitled to make up to three demands, excluding short form registration demands,
that the Company registers 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.
Underwriters Agreement
The underwriters are entitled to a deferred underwriting
fee of $0.35 per unit, or $12,075,000. The deferred fee will be payable to the underwriters from the amounts held in the Trust Account
solely in the event that the Company completes an initial Business Combination, subject to the terms of the underwriting agreement.
SILVERBOX ENGAGED MERGER CORP I
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
Note 7 — Stockholders’ Equity
Preferred Stock — The
Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 and provides that shares of preferred stock
may be issued from time to time in one or more series. At of June 30, 2021 and December 31, 2020 there were no preferred stock issued
or outstanding.
Class A common stock —
The Company is authorized to issue a total of 100,000,000 shares of Class A common stock at par value of $0.0001 each. At June 30, 2021
there were no shares of Class A Common Stock outstanding, excluding 34,500,000 shares of Class A common stock subject to possible redemption.
At December 31, 2020 there were no shares of Class A Common Stock outstanding.
Class B common stock —
The Company is authorized to issue a total of 10,000,000 shares of Class B common stock at par value of $0.0001 each. As of June 30, 2021
and December 31, 2020 there were 8,625,000 shares of Class B common stock issued or outstanding.
The initial stockholders have agreed not to transfer,
assign or sell any of their Founder Shares and any Class A common stock issuable upon conversion thereof until the earlier to occur of:
(A) one year after the completion of the initial Business Combination and (B) the date on which the Company completes a liquidation, merger,
capital stock exchange or other similar transaction after the Company’s initial Business Combination that results in all of the
Company’s stockholders having the right to exchange their Class A common stock for cash, securities or other property; except to
certain permitted transferees and under certain circumstances (the “Lock-up”). Any permitted transferees will be subject to
the same restrictions and other agreements of the company’s initial stockholders with respect to any Founder Shares. Notwithstanding
the foregoing, the Founder Shares will be released from the Lock-up if the closing price of the Company’s Class A common stock equals
or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for
any 20 trading days within any 30-trading day period commencing at least 120 days after the company’s initial Business Combination.
Holders of Class A common stock and holders of
Class B common stock will vote together as a single class on all matters submitted to a vote of the Company’s stockholders except
as required by law. Unless specified in the Company’s amended and restated certificate of incorporation, or as required by applicable
provisions of the DGCL or applicable stock exchange rules, the affirmative vote of a majority of the Company’s shares of common
stock that are voted is required to approve any such matter voted on by its stockholders.
The Class B common stock will automatically convert
into Class A common stock upon the consummation of the initial 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 initial Business Combination,
the number of Class A common stock issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis,
20% of the total number of shares of Class A common stock outstanding after such conversion, 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 or rights exercisable for or convertible into shares of Class A common stock issued,
or to be issued, to any seller in the initial Business Combination and any Private Placement Warrants issued to the Sponsor, officers
or directors upon conversion of Working Capital Loans; provided that such conversion of Founder Shares will never occur on a less than
one-for-one basis.
SILVERBOX ENGAGED MERGER CORP I
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
Note 8 — Recurring Fair Value Measurements
Investment Held in Trust Account
As of June 30, 2021, the investments in the Company’s
Trust Account consisted of $268 in cash and $345,033,661 in U.S. Treasury Bills. All of the U.S. Treasury Bills mature on July 29, 2021.
The Company classifies its U.S. Treasury securities as held-to-maturity in accordance with FASB ASC 320 “Investments — Debt
and Equity Securities.” Held-to-maturity treasury securities are recorded at amortized cost and adjusted for the amortization or
accretion of premiums or discounts. The Company considers all investments with original maturities of more than three months but less
than one year to be short-term investments. The carrying value approximates the fair value due to its short-term maturity. The carrying
value, excluding gross unrealized holding loss and fair value of held to maturity securities on June 30, 2021 are as follows:
|
|
Carrying
Value/
Amortized
Cost
|
|
|
Gross
Unrealized
Loss
|
|
|
Fair Value
as of
June 30,
2021
|
|
|
Amortization
of Bond
Discount
|
|
U.S. Money Market
|
|
$
|
268
|
|
|
$
|
—
|
|
|
$
|
268
|
|
|
$
|
—
|
|
U.S. Treasury Securities
|
|
|
345,033,661
|
|
|
|
(4,476
|
)
|
|
|
345,029,185
|
|
|
|
33,929
|
|
|
|
$
|
345,033,929
|
|
|
$
|
(4,476
|
)
|
|
$
|
345,029,453
|
|
|
$
|
33,929
|
|
Fair values of its investments
are classified as Level 1 utilizing quoted prices (unadjusted) in active markets for identical assets.
Warrant Liability
At June 30, 2021, the Company’s warrants
liability was valued at $13,793,134. Under the guidance in ASC 815-40 the warrants do not meet the criteria for equity treatment. As such,
the warrants must be recorded on the balance sheet at fair value. This valuation is subject to re-measurement at each balance sheet date.
With each re-measurement, the warrant valuation will be adjusted to fair value, with the change in fair value recognized in the Company’s
statement of operations.
Recurring Fair Value Measurements
All of the Company’s permitted investments consist of U. S. Treasury
Bills. Fair values of these investments are determined by Level 1 inputs utilizing quoted prices (unadjusted) in active markets for identical
assets. The Company’s warrant liability for the Private is based on a valuation model utilizing management judgment and pricing
inputs from observable and unobservable markets with less volume and transaction frequency than active markets. Significant deviations
from these estimates and inputs could result in a material change in fair value. The fair value of the Private Placement Warrant liability
is classified within Level 3 of the fair value hierarchy. The Company’s warrant liability for the Public Warrants is based on unadjusted
quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. The fair value of the
Public Warrant liability is classified within Level 1 of the fair value hierarchy. During the six months ending June 30, 2021 the Public
Warrants were reclassified from a Level 3 to a Level 1 classification.
The following table presents fair value information
as of June 30, 2021 of the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis
and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.
|
|
Carrying
Value
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments held in Trust Account – U.S. Treasury Bills
|
|
|
345,033,929
|
|
|
$
|
345,033,929
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private Placement Warrants
|
|
|
4,938,134
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,938,134
|
|
Public Warrants
|
|
|
8,855,000
|
|
|
|
8,855,000
|
|
|
|
—
|
|
|
|
—
|
|
SILVERBOX ENGAGED MERGER CORP I
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
Measurement
The Company established the initial fair value
for the Warrants on March 2, 2021, the date of the consummation of the Company’s IPO, using a Monte Carlo simulation model to value
the Public and Private warrants. In April 2021 the Company announced that holders of the Company’s Units may separately trade shares
of the Company’s Class A common stock and Public Warrants included in the Units on the Nasdaq Capital Market under the symbols SBEA
and SBEAW, respectively. With the trading of the Public Warrants on an open market, At June 30, 2021 the Public Warrants were valued based
on an unadjusted market price.
The Company used a Monte Carlo simulation model
to value the Private Warrants.
The key inputs into the Monte
Carlo simulation model for the Private Warrants were as follows at initial measurement and at June 30, 2021:
Input
|
|
March 2,
2021
(Initial
Measurement)
|
|
|
June 30,
2021
|
|
Risk-free interest rate
|
|
|
1.01
|
%
|
|
|
1.06
|
%
|
Expected term (years)
|
|
|
6.46
|
|
|
|
6.13
|
|
Stock price
|
|
$
|
9.584
|
|
|
$
|
9.7000
|
|
Probability of completing business combination
|
|
|
80
|
%
|
|
|
80
|
%
|
Expected volatility
|
|
|
24.2
|
%
|
|
|
16.0
|
%
|
Exercise price
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
The change in the fair value
of the warrant liabilities for the period ended June 30, 2021 is summarized as follows:
Fair Value at December 31, 2020
|
|
$
|
-
|
|
Fair value at issuance March 2 2021
|
|
|
22,182,906
|
|
Public Warrants reclassified to level 1(1)
|
|
|
(8,855,000
|
)
|
Change in fair value
|
|
|
(8,389,772
|
)
|
Fair Value at June 30, 2021
|
|
$
|
4,938,134
|
|
|
(1)
|
Assumes the Public Warrants were reclassified on June 30, 2021.
|
Note 9 — Subsequent Events
The Company evaluated subsequent
events and transactions that occurred after the balance sheet date up to the date that the financial statement was issued. Based upon
this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statement.
Item 2. Management’s Discussion and Analysis
of Financial Condition and Results of Operations.
References to the “Company,” “our,” “us”
or “we” refer to SilverBox Engaged Merger Corp I. The following discussion and analysis of the Company’s financial condition
and results of operations should be read in conjunction with the unaudited condensed 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, 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 in Delaware on December 3,
2020 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses (the “Business Combination”). Our Sponsor is SilverBox Engaged Sponsor LLC, a Delaware
limited liability company.
The registration statement for our initial public offering (“Initial
Public Offering”) was declared effective on February 25, 2021. On March 2, 2021, we consummated the Initial Public Offering
of 34,500,000 units (including 4,500,000 units issued to the Underwriters pursuant to the exercise in full of the over-allotment option
granted to the Underwriters) (“Units” and, with respect to the Class A common stock included in the Units being offered,
the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $345.0 million, and incurring offering costs of
approximately $19,474,651, inclusive of $12,075,000 in deferred underwriting commissions.
Simultaneously with the closing of the Initial Public Offering, we
consummated the private placement (“Private Placement”) of 6,266,667 warrants at a price of $1.50 per warrant (“Private
Placement Warrants, and together with the warrants included in the Units, the “Warrants”) to the Sponsor, generating gross
proceeds of approximately $9,400,000.
Upon the closing of the Initial Public Offering and the Private Placement
on March 2, 2021, $345.0 million ($10.00 per Unit) of the net proceeds of the sale of the Units in the Initial Public Offering and the
Private Placement were placed in a trust account (“Trust Account”) located in the United States with Continental Stock
Transfer & Trust Company acting as trustee, and invested only in U.S. “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, as determined by the Company, until the earlier of: (i) the completion of a
Business Combination and (ii) the distribution of the Trust Account as described below.
If we have not completed a Business Combination within 24 months from
the closing of the Initial Public Offering, or March 2, 2021 (or 27 months from the closing of the Initial Public Offering if we have
executed a letter of intent for an initial Business Combination within 24 months from the closing of the Initial Public Offering), 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 its 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), and (iii) as promptly as reasonably possible following such redemption, subject to the
approval of the remaining stockholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under
Delaware law to provide for claims of creditors and the requirements of other applicable law.
Recent Developments
On April 12, 2021, the Staff of the Securities and Exchange Commission
(“SEC”) released the Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition
Companies (“SPACs”) (the “Statement”). The SEC Staff Statement addresses certain accounting and reporting considerations
related to warrants of a kind similar to those issued by the Company at the time of its initial public offering in March 2021.
The Warrants were classified as equity in the Company’s previously
issued audited balance sheet as of March 2, 2021. In light of the Statement and guidance in Accounting Standards Codification (“ASC”)
815-40, “Derivatives and Hedging — Contracts in Entity’s Own Equity”, in particular as applicable to certain provisions
in the Warrants related to tender or exchange offer provisions as well as provisions that provided for potential changes to the settlement
amounts dependent upon the characteristics of the holder of the warrant, the Company evaluated the terms of the Warrant Agreement entered
into in connection with the Company’s IPO and concluded that the Company’s Warrants include provisions that, based on ASC
815-40, preclude the Warrants from being classified as components of equity. The Warrants are not eligible for an exception from derivative
accounting, and therefore should be classified as a liability measured at fair value, with changes in fair value reported each period
in earnings.
Results of Operations
For the six months ended June 30, 2021, we had a net income of $7,164,743
. Our business activities from inception to June 31, 2021 consisted primarily of our formation and completing our Initial Public Offering,
and since the offering, our activity has been limited to identifying and evaluating prospective acquisition targets for a Business Combination.
Liquidity and Capital Resources
As of June 30, 2021, we had approximately $1.1 million in our
operating bank account and a working capital of approximately $1.4 million.
The Company’s liquidity needs up to March 2, 2021 had been satisfied
through a capital contribution from the Sponsor of $25,000 for the founder shares and the loan under an unsecured promissory note from
the Sponsor for $175,000. The promissory note from the Sponsor was outstanding at March 1, 2021, and paid in full as of March 2, 2021.
Subsequent to the consummation of the Initial Public Offering, our liquidity needs had been satisfied through the net proceeds from the
consummation of the Private Placement not held in the Trust Account. In addition, in order to finance offering costs in connection with
a Business Combination, our Sponsor or an affiliate of our Sponsor, or certain of our officers and directors may, but are not obligated
to, provide us working capital loans. As of June 30, 2021, there were no amounts outstanding under any working capital loan.
Based on the foregoing, management believes that the Company will have
sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of a Business Combination
or one year from this filing. Over this time period, we will be using these funds held outside of the Trust Account for paying existing
accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective
target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating
and consummating the Business Combination.
Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations,
operating lease obligations, purchase obligations or long-term liabilities.
Critical Accounting Policies
This management’s discussion and analysis of our financial condition
and results of operations is based on our unaudited condensed financial statements, which have been prepared in accordance with U.S. GAAP.
The preparation of these unaudited condensed financial statements requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our unaudited condensed
financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to fair value of financial
instruments and accrued expenses. We base our estimates on historical experience, known trends and events and various other factors that
we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different
assumptions or conditions. Except as set forth below, there have been no significant changes in our critical accounting policies as discussed
in the final prospectus filed by us with the SEC on March 1, 2021.
Warrants Liability
We evaluated the Warrants in accordance with ASC 815-40, “Derivatives
and Hedging — Contracts in Entity’s Own Equity”, and concluded that a provision in the Warrant Agreement related to
certain tender or exchange offers as well as provisions that provided for potential changes to the settlement amounts dependent upon the
characteristics of the holder of the warrant, precludes the Warrants from being accounted for as components of equity. As the Warrants
meet the definition of a derivative as contemplated in ASC 815 and are not eligible for an exception from derivative accounting, the Warrants
are recorded as derivative liabilities on the Balance Sheet and measured at fair value at inception (on the date of the IPO) and at each
reporting date in accordance with ASC 820, “Fair Value Measurement”, with changes in fair value recognized in the Statement
of Operations in the period of change.
Forward Purchase Agreement
Special Purpose Acquisition Companies frequently will redeem shares
to the extent that their net tangible assets do not go below $5,000,001. Following guidance in ASC 480-10-S99-3A, with the commitment
of $100,000,000 of equity funds at the time of the IPO, (which is sufficient funds to redeem all outstanding redeemable stock) the Company
reports all of its Class A common stock as redeemable stock.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion
and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for
Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies accounting for convertible
instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are
required for equity-linked contracts to qualify for scope exception, and it simplifies the diluted earnings per share calculation in certain
areas. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted
beginning on January 1, 2021. We are currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results
of operations or cash flows.
Off-Balance Sheet Arrangements
As of June 30, 2021, we did not have any off-balance sheet arrangements as defined
in Item 303(a)(4)(ii) of Regulation S-K.
JOBS Act
The Jumpstart Our Business Startups Act of 2012 (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 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, the unaudited condensed financial statements may not be comparable to companies that comply
with new or revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying
on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as
an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide
an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide
all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform
and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation
or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion
and analysis) and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and
performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period
of five years following the completion of our Initial Public Offering or until we are no longer an “emerging growth company,”
whichever is earlier.