Filing Overview
Filing entity: Sandbridge Acquisition Corporation, not Owlet, Inc. The provided Form 10-Q covers the quarter ended September 30, 2020, and the period from June 23, 2020, inception, through September 30, 2020. Sandbridge was a newly formed special purpose acquisition company (SPAC) seeking a business combination and had not commenced operating activities.
Financial Position and Results
| Metric | September 30, 2020 / Period-to-date |
|---|---|
| Operating revenue | None |
| General and administrative expense | $36,307 |
| Interest income | $6,152 |
| Net loss | $30,155 |
| Class B basic and diluted loss per share | $0.01 |
| Cash outside trust account | $1,438,624 |
| Cash and marketable securities in trust account | $230,006,152 |
| Total assets | $231,747,731 |
| Total liabilities | $8,101,692 |
| Deferred underwriting fee payable | $8,050,000 |
| Class A shares subject to possible redemption | 21,864,603 shares at $10.00 per share, or $218,646,030 |
| Stockholders’ equity | $5,000,009 |
Cash used in operating activities from inception through September 30, 2020 was $322,595. Investing cash outflows were $230.0 million, reflecting funding of the trust account. Financing activities provided $231.8 million, including the initial public offering, private placement warrants and sponsor funding, net of offering costs. The filing does not provide meaningful operating margins because the company had no operating revenue.
Material Changes and Capital Transactions
- On September 17, 2020, Sandbridge completed its initial public offering of 23.0 million units at $10.00 per unit, generating gross proceeds of $230.0 million, including the underwriters’ full 3.0 million-unit over-allotment.
- The sponsor purchased 6.6 million private placement warrants for $6.6 million. Public and private warrants generally have an $11.50 exercise price, subject to adjustment provisions.
- $230.0 million was placed in the trust account and invested primarily in short-term U.S. Treasury securities.
- Total offering and transaction costs were $12,948,806, including $4,204,000 of upfront underwriting fees, $8,050,000 of deferred underwriting fees and $694,806 of other offering costs.
- The sponsor’s $250,000 promissory note was repaid at the IPO closing. No working capital loans were outstanding at September 30, 2020.
- There is no prior comparable operating period because the company was incorporated on June 23, 2020.
Outlook, Risks and Contingencies
- Management intended to use the trust proceeds to complete a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination. No target or transaction was identified in the provided filing.
- The company had until September 17, 2022, subject to any approved extension, to complete a business combination. If unsuccessful, it generally would liquidate and redeem public shares using the trust account; the warrants would expire worthless.
- Public stockholders may redeem shares in connection with a business combination. The company must generally maintain at least $5,000,001 of net tangible assets and acquire a target or targets meeting the stated minimum value requirement.
- The $8,050,000 deferred underwriting fee would become payable from the trust account only if a business combination is completed.
- Sandbridge had a $10,000 monthly administrative services arrangement with a sponsor affiliate, continuing until a business combination or liquidation.
- Management stated that COVID-19 could negatively affect the company’s financial position, results, or target search, but the specific impact was not determinable at the reporting date.
- The company reported no long-term debt, capital lease obligations, operating lease obligations or off-balance-sheet arrangements. It stated that it did not expect to need additional funds for planned expenditures, but acknowledged potential future financing needs.
- Disclosure controls and procedures were assessed as effective at a reasonable assurance level, with no material change in internal control over financial reporting reported during the quarter.
Investor Verification Checklist
- Verify the issuer identity: the supplied filing is for Sandbridge Acquisition Corporation rather than Owlet, Inc.
- Confirm the status, terms and ultimate completion of Sandbridge’s proposed business combination, including any subsequent amendments or liquidation developments.
- Reconcile trust account assets, redemption obligations, deferred underwriting fees and the amount available per redeemable public share.
- Review sponsor economics, founder-share conversion terms, warrant dilution and potential working capital loan conversions.
- Assess whether the COVID-19 impact, target-search costs or additional financing needs altered the company’s ability to complete a business combination.