Filing summary
Important entity clarification: Although the request identifies SAB Biotherapeutics, Inc., this 10-Q is filed by Big Cypress Acquisition Corp., a SPAC that had agreed to merge with SAB. It does not report SAB’s standalone operating results. The reporting period is the quarter and six months ended June 30, 2021.
Business context and transaction
Big Cypress was formed to pursue a business combination and had no operating business or operating revenue during the period. On June 21, 2021, it agreed to merge with SAB Biotherapeutics; Big Cypress expected the transaction to close in the fourth quarter of 2021, subject to stockholder approval and customary conditions. The agreement assigned SAB an equity value of $300 million and provided for up to 12 million additional earnout shares tied to post-closing share-price targets of $15, $20, $25 and $30.
Financial results and position
| Metric | Three months ended June 30, 2021 | Six months ended June 30, 2021 |
|---|---|---|
| Operating costs | $256,847 | $368,459 |
| Operating loss | $256,847 | $368,459 |
| Other income (expense), net | $(1,945,314) | $1,139,518 |
| Net income (loss) | $(2,202,161) | $771,059 |
| Basic and diluted income (loss) per share | $(0.50) | $0.18 |
| Net cash used in operating activities | Not separately reported for the quarter | $464,411 |
Quarterly other expense was primarily a $1,948,210 loss from remeasuring warrant liabilities; the six-month result included a $1,494,077 gain from that remeasurement. These are non-cash valuation changes, not operating revenue.
At June 30, cash outside the trust was $756,803; trust investments, principally U.S. Treasury money-market funds, were $116,155,315. Total assets were $117,091,985. Liabilities totaled $9,904,485, including $5,531,106 of warrant liabilities and a $4,220,500 deferred underwriting fee payable if a business combination closes. Common stock subject to possible redemption was presented as temporary equity at $102,187,499. The company reported no long-term debt.
Six-month cash flow included $116,150,000 invested in the trust account and $117,286,378 of financing cash inflows, primarily from the IPO and private placement. The filing reports no off-balance-sheet arrangements. It provides no revenue or operating-margin measures because the SPAC had not begun operations.
Changes, outlook and risks
- The company completed its $115 million IPO in January 2021 and raised another $4.172 million through private-placement units. Trust assets increased from none at December 31, 2020 to $116.155 million at June 30, 2021. The filing has no 2020 quarterly income-statement comparison.
- Management expected the SAB merger to close in Q4 2021 but gave no assurance it would be completed. The agreement could be terminated in specified circumstances, including if not consummated by December 15, 2021. The SPAC’s combination period was 15 months from the IPO closing, with extensions potentially allowing up to 21 months.
- The company restated its January 14, 2021 balance sheet after changing its accounting for public and private warrants from equity to fair-value liabilities. It reported a material weakness in internal control over financial reporting and said disclosure controls were ineffective as of June 30. Management described remediation steps planned for 2021 but cautioned they might not be sufficient.
- The filing identifies risks that the merger may fail, transaction costs may leave insufficient working capital, and the SPAC may be unable to find another target before its deadline. Warrant remeasurement may cause volatile reported earnings. Management also said COVID-19 could negatively affect the company’s financial position or target search, although the impact was not readily determinable.
- The Sponsor’s stated indemnity for certain trust-account claims is not assured: the company had not verified the Sponsor’s ability to pay and believed its only assets were company securities. No legal proceedings were reported.
Investor facts to verify
- Confirm the filing entity: this is Big Cypress Acquisition Corp.’s SPAC report, not SAB Biotherapeutics’ standalone 10-Q.
- Review the merger agreement, required approvals, closing conditions, termination deadline, redemption provisions and final transaction consideration.
- Verify cash available outside the trust, potential redemptions, transaction expenses and any need for additional financing.
- Assess the warrant-liability restatement and whether the disclosed internal-control material weakness has been remediated.
- Check the final merger-related disclosures for SAB’s operating results, risks and the detailed terms of earnout shares.