QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Cayman Islands | ||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |
955 Fifth Avenue New York, New York | 10075 | |
(Address of principal executive offices) | (Zip Code) |
Title of Each Class: | Trading Symbol(s) | Name of Each Exchange on Which Registered: | ||
Units, each consisting of one Class A ordinary share, $0.0001 par value, and one-third of one redeemable warrant | SCRMU | The Nasdaq Stock Market LLC | ||
Class A ordinary shares, 0.0001 par value | SCRM | The Nasdaq Stock Market LLC | ||
Warrants, each whole warrant exercisable for one Class A ordinary share at an exercise price of $11.50 per share | SCRMW | The Nasdaq Stock Market LLC |
Large accelerated filer | Accelerated filer | |||||||
Non-accelerated filer | Smaller reporting company | |||||||
Emerging growth company |
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ITEM 1. | INTERIM FINANCIAL STATEMENTS |
| 2022 | 2021 |
(1) | Shares February 19, |
Three months ended June 30, 2022 | Six months ended June 30, 2022 | |||||||
Operating costs | $ | 345,832 | $ | 793,184 | ||||
Loss from operations | (345,832 | ) | (793,184 | ) | ||||
Other income (expense): | ||||||||
Interest from investments held in Trust Account | 168,744 | 305,023 | ||||||
Allocation of offering costs to warrant liability | — | (20,182 | ) | |||||
Change in fair value of warrant liability | 2,229,333 | 12,437,333 | ||||||
Net income | $ | 2,052,245 | $ | 11,928,990 | ||||
Weighted average number of Class A ordinary shares subject to possible redemption outstanding | 75,000,000 | 71,250,000 | ||||||
Basic and diluted net income per share, Class A ordinary shares subject to redemption | $ | 0.02 | $ | 0.13 | ||||
Weighted average number of Class B ordinary shares outstanding (1) | 18,750,000 | 18,750,000 | ||||||
Basic and diluted net income per share, Class B ordinary shares | $ | 0.02 | $ | 0.13 | ||||
(1) | Shares outstanding reflect the issuance of 4,312,500 Class B ordinary shares in a share recapitalization on December 13, 2021 and the surrender of 2,812,500 Class B ordinary shares for February 19, |
Ordinary Shares | Deficit | Shareholders’ Equity (Deficit) | ||||||||||||||||||||||||||
Class A Ordinary Shares | Class B Ordinary Shares | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Equity (Deficit) | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance at December 31, 2021 (1) | — | $ | — | 21,562,500 | $ | 2,156 | $ | 22,844 | $ | (5,000 | ) | $ | 20,000 | |||||||||||||||
Forfeiture of Class B shares (2) | — | — | (2,812,500 | ) | (281 | ) | 281 | — | — | |||||||||||||||||||
Cash received in excess of fair value of private warrants | — | — | — | — | 117,334 | — | 117,334 | |||||||||||||||||||||
Fair value of public warrants at issuance | — | — | — | — | 36,750,000 | — | 36,750,000 | |||||||||||||||||||||
Accretion of Class A ordinary shares subject to possible redemption | — | — | — | — | (36,890,459 | ) | (41,969,575 | ) | (78,860,034 | ) | ||||||||||||||||||
Net income | — | — | — | — | — | 9,876,745 | 9,876,745 | |||||||||||||||||||||
Balance at March 31, 2022 | — | — | 18,750,000 | 1,875 | — | (32,097,830 | ) | (32,095,955 | ) | |||||||||||||||||||
Accretion of Class A ordinary shares subject to possible redemption | — | — | — | — | — | (305,023 | ) | (305,023 | ) | |||||||||||||||||||
Net income | — | — | — | — | — | 2,052,245 | 2,052,245 | |||||||||||||||||||||
Balance at June 30, 2022 | — | $ | — | 18,750,000 | $ | 1,875 | $ | — | $ | (30,350,608 | ) | $ | (30,348,733 | ) | ||||||||||||||
(1) | Shares 4,312,500 Class B ordinary shares in a share recapitalization on December 13, 2021 (see Note 5). |
(2) | Reflects the surrender of 2,812,500 Class B ordinary shares for 0 consideration on February 19, 2022 (see Note 5). |
SCREAMING EAGLE ACQUISITION CORP. | ||
CONDENSED STATEMENT OF CASH FLOWS | ||
FOR THE SIX MONTHS ENDED JUNE 30, 2022 | ||
(UNAUDITED) |
Cash flows from operating activities: | ||||
Net income | $ | 11,928,990 | ||
Adjustments to reconcile net income to net cash used in operating activities: | ||||
Interest income from investments held in Trust Account | (305,023 | ) | ||
Change in fair value of warrant liability | (12,437,333 | ) | ||
Warrant issuance transaction costs | 20,182 | |||
Changes in operating assets and liabilities: | ||||
Prepaid expenses | (922,448 | ) | ||
Accounts payable and accrued expenses | 626,912 | |||
Net cash used in operating activities | (1,088,720 | ) | ||
Cash flows from investing activities: | ||||
Principal deposited in Trust Account | (750,000,000 | ) | ||
Net cash used in investing activities | (750,000,000 | ) | ||
Cash flows from financing activities: | ||||
Proceeds from private placement of warrants | 17,600,000 | |||
Proceeds from sale of units in initial public offering | 750,000,000 | |||
Payment of underwriters’ discount | (15,000,000 | ) | ||
Payment of offering costs | (545,679 | ) | ||
Repayment of advances from Sponsor | (14,537 | ) | ||
Repayment of promissory note - related party | (300,000 | ) | ||
Net cash provided by financing activities | 751,739,784 | |||
Net change in cash | 651,064 | |||
Cash at beginning of period | — | |||
Cash at end of period | $ | 651,064 | ||
Supplemental disclosure of non-cash investing and financing activities: | ||||
Deferred underwriting fee payable | $ | 26,250,000 | ||
1 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2022 | June 30, 2022 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
Basic and diluted net income per ordinary share | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income (loss) as adjusted | $ | 1,641,796 | $ | 410,449 | $ | 9,443,784 | $ | 2,485,206 | ||||||||
Denominator: | ||||||||||||||||
Basic and diluted weighted average shares outstanding | 75,000,000 | 18,750,000 | 71,250,000 | 18,750,000 | ||||||||||||
Basic and diluted net income (loss) per ordinary share | $ | 0.02 | $ | 0.02 | $ | 0.13 | $ | 0. 13 |
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. |
Carrying Value | Gross Unrealized Holding (Loss) | Quoted Prices in Active Markets (Level 1) | ||||||||||
U.S. Government Treasury Securities as of June 30, 2022 (1) | $ | 750,037,970 | $ | 195,233 | $ | 750,233,203 |
Unrealized Holding (Loss) | in Active Markets (Level 1) | |||||||||||
(1) | Maturity date |
(1) | in whole and not in part; |
(2) | at a price of $0.01 per Public Warrant; |
(3) | upon not less than 30 |
(4) | if, and only if, the reported closing price of the ordinary shares equals or exceeds $18.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a30-trading day period ending three business days before the Company send to the notice of redemption to the warrant holders. |
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January 10, 2022 | June 30, 2022 | |||||||
Ordinary share stock price | $ | 9.44 | $ | 9.59 | ||||
Exercise price | $ | 11.50 | $ | 11.50 | ||||
Volatility ( 1 ) | 24.5 | % | 27.9 | % | ||||
Term | 6.33 | 5.87 | ||||||
Risk-free rate | 1.7 | % | 3.02 | % | ||||
Dividend yield | 0 | % | 0 | % | ||||
Probability of completing Business Combination | 76 | % ( 2 ) | 17 | % ( 3 ) |
(1) | ||||||||
2022 | ||||||||
The change in the fair value of the warrant liabilities for the
Note 11-Subsequent EventsThe Company evaluated subsequent events and transactions that occurred after the balance sheet date up to 19
References in this report (the Special Note Regarding Forward-Looking Statements This Quarterly Report includes Overview We are a blank check company incorporated on November 3, 2021 as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. Our efforts to identify a prospective initial business combination target will not be limited to a particular industry, sector or geographic region. While we may pursue an initial business combination opportunity in any industry or sector, we intend to capitalize on the ability of our management team to identify and combine with a business or businesses that can benefit from our management We intend to effectuate our initial business combination using cash from the proceeds of the 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 following the consummation of the Initial Public Offering or otherwise), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, other securities issuances, or a combination of the foregoing. The issuance of additional shares in connection with a business combination to the owners of the target or other investors:
may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us; and
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:
As indicated in the accompanying financial statements, at Results of Operations We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational activities and those necessary to prepare for the Initial Public Offering. We will not generate any operating revenues until after completion of our initial business combination. We have generated non-operating income in the form of interest income on cash and cash equivalents after the Initial Public Offering. There has been no significant change in our financial or trading position and no material adverse change has occurred since the date of our audited financial statements. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.For the three months ended non-operating income of non-operating income of $12,722,174, comprised of a change in fair value of warrant liability of $12,437,333 and interest earned in the Trust Account of $305,023 offset by warrant issuance costs of $20,182.Through Liquidity and Capital Resources As of On January 10, 2022, the Company consummated the Initial Public Offering of 75,000,000 units at $10.00 per unit and a private sale of 11,733,333 private placement warrants at a purchase price of $1.50 per warrant. A total of $750,000,000 comprised of $735,000,000 of the proceeds from the Initial Public Offering (which amount includes $26,250,000 of the 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations.We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account (excluding deferred underwriting commissions) to complete our initial business combination. We may withdraw interest to pay our taxes, if any. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the trust account. We expect the interest earned on the amount in the trust account will be sufficient to pay our income taxes. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our initial business combination, the remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies. We will use the funds held outside the trust account to primarily identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a business combination. 22 We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business prior to our initial business combination. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay such loaned amounts. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment. Such loans may be convertible into private placement 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. The terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our Sponsor or an affiliate of our Sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account. We expect our primary liquidity requirements during that period to include approximately $416,000 for legal, accounting, due diligence, travel and other expenses associated with structuring, negotiating and documenting successful business combinations, $360,000 for administrative and support services, and approximately $224,000 for Nasdaq and other regulatory fees and approximately $850,000 for director and officer liability insurance premiums. We will also reimburse an affiliate of our Sponsor for office space and administrative services provided to members of our management team in an amount not to exceed $15,000 per month in the event such space and/or services are utilized and we do not pay a third party directly for such services. These amounts are estimates and may differ materially from our actual expenses. In addition, we could use a portion of the funds not being placed in trust to pay commitment fees for financing, fees to consultants to assist us with our search for a target business or as a down payment or to fund a Moreover, we may need to obtain additional financing to complete our initial business combination, either because the transaction requires more cash than is available from the proceeds held in our trust account or because we become obligated to redeem a significant number of our public shares upon completion of the business combination, in which case we may issue additional securities or incur debt in connection with such business combination. In addition, we intend to target businesses with enterprise values that are greater than we could acquire with the net proceeds of the Initial Public Offering and the sale of the private placement units, and, as a result, if the cash portion of the purchase price exceeds the amount available from the trust account, net of amounts needed to satisfy any redemptions by public shareholders, we may be required to seek additional financing to complete such proposed initial business combination. We may also obtain financing prior to the closing of our initial business combination to fund our working capital needs and transaction costs in connection with our search for and completion of our initial business combination. There is no limitation on our ability to raise funds through the issuance of equity or equity-linked securities or through loans, advances or other indebtedness in connection with our initial business combination, including pursuant to forward purchase agreements or backstop agreements we may enter into following consummation of the Initial Public Offering. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our initial business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In addition, following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations. Commitments and Contractual Obligations; Quarterly Results We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities. No unaudited quarterly operating data is included in this Quarterly Report as we have not conducted any operations to date. Administrative Services and Indemnification Fee On January 5, 2022, the Company entered into an Administrative Services and Indemnification Agreement. We agreed to pay an affiliate of our Sponsor $15,000 per month for office space, utilities, secretarial and administrative support services and to provide indemnification to the Sponsor from any claims arising out of or relating to the Initial Public Offering or the Underwriting Agreement On January 5, 2022, the Company entered into an Underwriting Agreement. The underwriters were paid a cash underwriting discount of two percent (2.0%) of the gross proceeds of the Initial Public Offering, or $15,000,000. Additionally, the underwriters will be entitled to a deferred underwriting commission of 3.5% or $26,250,000 of the gross proceeds of the Initial Public Offering held in the Trust Account upon the completion of the Registration Rights Agreement The holders of the founder shares, private placement warrants, warrants that may be issued upon conversion of working capital loans (and any Class A ordinary shares issuable upon the exercise of the private placement warrants and warrants that may be issued upon conversion of working capital loans and upon conversion of the founder shares) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of this offering, requiring us to register such securities and any of our other securities they hold or acquire prior to the consummation of our initial business combination for resale. The holders of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain Critical Accounting Policies The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and Class A Ordinary Shares Subject to Redemption The Company accounts for its Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of Class A ordinary shares to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable ordinary shares are affected by charges against additional paid in capital and accumulated deficit. Recent Accounting Standards Financial Instruments - Credit Losses In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
Not applicable.
Evaluation of Disclosure Controls and Procedures Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Quarterly Report, is recorded, processed, summarized, and reported within the time period specified in the the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. This Quarterly Report does not include a report of Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) andPART II
We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us or any of our officers or directors in their corporate capacity.
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in our Annual Report on Form 10-K filed with the SEC on March 28, 2022. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in Annual Report on Form 10-K filed with the SEC on March 28, 2022. However, we may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
On January 10, 2022, we consummated our Initial Public Offering of 75,000,000 units. The units were sold at an offering price of $10.00 per unit, generating total gross proceeds of $750,000,000. Goldman Sachs S-1 333-261671). The SEC declared the registration statement effective on January 5, 2022.Simultaneously with the consummation of the Initial Public Offering, we consummated the private placement of 11,733,333 private placement warrants to the Sponsor at a purchase price of $1.50 per private placement warrant, generating gross proceeds of $17,600,000. Such securities were issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. The private placement warrants are identical to the public warrants, except that (i) the private placement warrants will not be redeemable by the Company, (ii) the private placement warrants and the Class A ordinary shares issuable upon the exercise of the private placement warrants will not be transferable, assignable or salable until 30 days after the completion of our initial business combination, subject to certain limited exceptions, (iii) the private placement warrants will be exercisable on a cashless basis, (iv) will use a different Black-Scholes Warrant Model for purposes of calculating the Black-Scholes Warrant Value (as defined in the warrant agreement relating to the warrants) and (v) the private placement warrants and the Class A ordinary shares issuable upon exercise of the private placement warrants will be entitled to registration rights. If the private placement warrants are held by someone other than the initial purchasers or their permitted transferees, the private placement warrants will be redeemable by the Company and exercisable by such holders on the same basis as the public warrants. Of the gross proceeds received from the Initial Public Offering and private placement of private placement warrants, $750,000,000 was placed in a trust account. We paid a total of $15,000,000 in underwriting fees and $880,216 for other costs and expenses related to the Initial Public Offering. In addition, the underwriters agreed to defer $26,250,000 in underwriting fees.
None.
Not applicable.
None.
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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