Business Context and Reporting Period
This filing is the Form 10-K of Software Acquisition Group Inc., not CuriosityStream Inc. It covers the period from incorporation on May 9, 2019 through December 31, 2019. The company was an early-stage blank check company formed to complete an initial business combination and had not commenced operating activities or selected a target.
The company intended to focus primarily on software businesses with enterprise values of approximately $300 million to $750 million. Its units began trading on Nasdaq in November 2019; its Class A common stock and warrants began trading separately on January 6, 2020.
Financial Metrics and Liquidity
| Metric | Period-end or period result |
|---|---|
| Operating revenue | None |
| Interest income | $219,910 |
| Operating and formation costs | $210,617 |
| Income tax provision | $1,952 |
| Net income | $7,341 |
| Basic and diluted net loss per share | $(0.02), after allocation of trust-account income to redeemable shares |
| Cash outside trust account | $1,093,408 |
| Marketable securities in trust account | $149,719,910 |
| Total assets | $150,941,451 |
| Total liabilities | $5,414,333 |
| Common stock subject to possible redemption | $140,527,112 |
| Stockholders’ equity | $5,000,006 |
| Cash used in operating activities | $158,869 |
| Debt | No long-term debt, capital lease obligations or operating lease obligations reported |
The company raised $149.5 million through its initial public offering of 14.95 million units at $10.00 per unit and $4.74 million from the sale of private placement warrants. Offering and transaction costs totaled $8.745 million, including $5.233 million of deferred underwriting fees payable only if a business combination is completed.
Funds available for an initial business combination were reported as $144.487 million after the deferred underwriting fees, before transaction expenses. The trust account was invested primarily in short-term U.S. Treasury-related money market securities. The company reported no material market or interest-rate risk because of the short-term nature of those investments.
Material Changes Versus the Prior Comparable Period
No meaningful prior comparable operating period exists because the company was incorporated on May 9, 2019 and had no operating history or revenue. During the reporting period, it completed its initial public offering, funded the trust account, began identifying potential targets and incurred public-company and transaction-related costs.
Guidance, Outlook, Risks and Unusual Items
- The company expected to generate no operating revenue until after completing a business combination.
- It had not selected a target and had not initiated substantive discussions with a target as of the filing date.
- The company was required to complete a business combination by May 22, 2021. If unsuccessful, it would cease operations, redeem public shares from the trust account and liquidate; warrants would expire worthless.
- Public stockholders generally had redemption rights at approximately the pro rata trust-account value, reported as approximately $10.01 per share at December 31, 2019, subject to legal, creditor and transaction limitations.
- Completion of a transaction depended on satisfying, among other conditions, a minimum $5,000,001 net tangible asset requirement and Nasdaq’s requirement that the target represent at least 80% of the trust-account value, excluding specified amounts.
- The sponsor, officers and directors owned 3,737,500 founder shares, representing approximately 20% of common stock, and agreed to vote in favor of a proposed business combination. This creates potential conflicts of interest.
- The company could issue additional equity or incur debt to complete a transaction, potentially diluting existing holders or increasing leverage. Up to $1.5 million of potential working-capital loans could be converted into private-placement-equivalent warrants.
- The sponsor agreed to pay or reimburse certain expenses and received a $10,000 monthly administrative support fee beginning November 19, 2019. The company also had a deferred underwriting fee of $5.233 million.
- Trust-account funds could be reduced by creditor claims, bankruptcy proceedings or unenforceable waivers. The sponsor’s indemnification obligation was not funded or independently verified.
- The filing identifies COVID-19 as a subsequent risk that could disrupt the search for and completion of a business combination. The audited financial statements state that no subsequent event required adjustment or disclosure through March 20, 2020.
- Management concluded that disclosure controls and procedures were effective as of December 31, 2019. An independent auditor attested to the financial statements but not to internal control over financial reporting.
Most Important Facts for Investors to Verify
- Verify the issuer identity: the supplied filing is for Software Acquisition Group Inc. and does not report CuriosityStream operating results.
- Confirm whether a business combination was subsequently completed, amended, extended or abandoned, and whether the May 22, 2021 deadline changed.
- Reconcile trust-account assets, deferred underwriting fees, redemption amounts and cash available for a transaction.
- Review any subsequent filings for the target, transaction terms, shareholder redemptions, financing, dilution and changes to the warrant terms.
- Assess sponsor conflicts, founder-share conversion provisions, related-party fees and the sponsor’s ability to satisfy any trust-account indemnification obligations.
- Confirm the effect of COVID-19 and broader market conditions on the company’s transaction timetable and liquidity.