SEC Filing Summary
Registrant and period: Sandbridge Acquisition Corporation, a Delaware blank-check company that subsequently proposed to become Owlet, Inc. The filing is a Form 10-K for the fiscal year ended December 31, 2020, covering the period from inception on June 23, 2020 through December 31, 2020. It is not an operating-company filing for Owlet Baby Care Inc.; the registrant had not commenced operations.
Business Context
Sandbridge was formed to identify and complete a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination. Its stated focus included modern consumer brands, disruptive consumer technologies, beauty and personal care, luxury, and health and wellness.
On February 15, 2021, after the reporting period, Sandbridge entered into an agreement to merge with Owlet Baby Care Inc., a data-driven connectivity platform for parents and nursery products. Subject to stockholder approval and customary closing conditions, the combined company would be renamed Owlet, Inc., with closing expected in the second quarter of 2021.
Financial Performance and Liquidity
| Metric | Period ended December 31, 2020 |
|---|---|
| Operating revenue | None; the company had not begun operations |
| General and administrative expenses | $480,436 |
| Interest income from trust investments | $53,249 |
| Net loss | $427,187 |
| Net loss per non-redeemable Class A and Class B share | $0.08 |
| Net cash used in operating activities | $455,960 |
| Cash outside the trust account | $1,287,234 |
| Cash and investments in trust account | $230,053,249 |
| Total assets | $231,614,335 |
| Total liabilities | $8,365,328 |
| Deferred underwriting fee payable | $8,050,000 |
| Stockholders’ equity | $5,000,007 |
The company completed its initial public offering on September 17, 2020, selling 23,000,000 units at $10.00 per unit for gross proceeds of $230.0 million. It also sold 6,600,000 private placement warrants for $6.6 million. Approximately $230.0 million was deposited into the trust account. Total offering and transaction costs were $12,948,806, including $4,204,000 of paid underwriting fees, $8,050,000 of deferred underwriting fees and $694,806 of other offering costs.
Trust investments consisted primarily of U.S. Treasury securities. The company reported no long-term debt, capital lease obligations, operating lease obligations or off-balance-sheet arrangements. It paid an affiliate of its sponsor $10,000 per month for office space, utilities and administrative support and incurred $40,000 under that arrangement during the reporting period.
Material Changes and Subsequent Developments
- Because the company was incorporated in June 2020, there is no meaningful prior comparable operating period. The filing does not provide a prior-year revenue or profit comparison.
- The company transitioned from formation and IPO activities to pursuing a specific business combination with Owlet after year-end.
- In connection with the proposed Owlet transaction, Sandbridge entered into agreements to issue 13,000,000 Class A shares at $10.00 per share in a PIPE financing, for expected gross proceeds of $130 million.
- The proposed merger would convert the 5,750,000 Class B founder shares into Class A shares on a one-for-one basis, subject to applicable adjustment provisions. Owlet options would generally be assumed and converted based on the transaction exchange ratio; certain vested options could instead receive cash, subject to an aggregate $10 million cap.
Guidance, Outlook and Key Risks
Management did not provide operating revenue, earnings, margin or cash-flow guidance for Owlet in this filing. Sandbridge stated that it did not expect operating revenues until after completion of a business combination.
- The merger remained subject to stockholder approval and other customary closing conditions; the filing does not guarantee completion.
- Sandbridge was required to complete a business combination by September 17, 2022, unless the period was extended through a stockholder-approved amendment. If no transaction were completed, public shares would generally be redeemed from the trust account and the warrants would expire worthless.
- Public stockholders could redeem shares for their pro rata portion of the trust account, initially expected to be approximately $10.00 per share, subject to minimum net tangible asset requirements and other conditions.
- Third-party creditor claims, bankruptcy proceedings, negative investment returns, taxes and liquidation expenses could reduce the amount available for redemption below $10.00 per share. The sponsor’s indemnification commitment may not be collectible because the company had not verified that the sponsor had sufficient assets.
- High redemption levels could reduce cash available for the merger or prevent the transaction from satisfying minimum cash or net-worth conditions, potentially requiring additional equity or debt financing.
- The transaction and post-combination company would face dilution from founder shares, public warrants, private placement warrants, PIPE shares and potentially additional financing.
- COVID-19 could affect the search for and closing of a business combination, financing availability, valuations and the operations of any target business.
- Potential conflicts existed because the sponsor, directors and officers were involved with other investment vehicles and another blank-check company, Sandbridge 2. The sponsor and initial stockholders controlled approximately 27% of voting power and agreed to vote in favor of a proposed business combination if a vote were held.
- The company’s disclosure controls and procedures were evaluated as effective as of December 31, 2020. The filing did not include management’s assessment or an auditor attestation of internal control over financial reporting because of the applicable transition period for newly public companies.
Important Facts for Investors to Verify
- Whether the Owlet merger closed, on what date, and under what final valuation, exchange ratio and ownership structure.
- Actual public-share redemptions, remaining trust-account proceeds and PIPE financing proceeds at closing.
- Owlet’s historical and projected revenue, gross margin, operating losses, cash burn, debt and liquidity, which are not presented in this Sandbridge 10-K.
- The treatment and potential dilution from founder shares, public warrants, private placement warrants, options and any additional financing.
- The final terms and payment of the $8.05 million deferred underwriting fee and the approximately $1.35 million third-party consulting arrangement, 90% of which was contingent on closing.
- Any material changes in Owlet’s regulatory, product-liability, intellectual-property, supply-chain, cybersecurity or COVID-19 risks before and after the proposed merger.