INDEX TO FINANCIAL STATEMENT
Audited Financial Statement of Silver Eagle Acquisition Corp.
(a corporation in the development stage):
|Report of Independent Registered Public Accounting Firm
|Balance Sheet as of July 30, 2013
|Notes to Balance Sheet
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Silver Eagle Acquisition Corp.
have audited the accompanying balance sheet of Silver Eagle Acquisition Corp. (a corporation in the development stage) (the “Company”)
as of July 30, 2013. This financial statement is the responsibility of the Company’s management. Our responsibility is to
express an opinion on this balance sheet based on our audit.
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material
misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statement, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
our opinion, the financial statement referred to above present fairly, in all material respects, the financial position of Silver
Eagle Acquisition Corp. (a corporation in the development stage) as of July 30, 2013, in conformity with accounting principles
generally accepted in the United States of America.
August 5, 2013
SILVER EAGLE ACQUISITION CORP.
(A Corporation in the Development Stage)
July 30, 2013
|| || |
|| || |
|| || || |
| Cash and cash equivalents||
| Prepaid insurance||
|| ||16,400|| |
| Total current assets||
|| ||1,235,212|| |
|| || || |
Cash held in Trust Account
|| ||325,000,000|| |
| Total assets||
|| || || |
|LIABILITIES AND STOCKHOLDERS’ EQUITY:||
|| || || |
|| || || |
|| || || |
| Accrued expenses and liabilities||
|| || || |
Deferred underwriting compensation
|| ||12,125,000|| |
|| || || |
|| ||12,252,434|| |
|| || || |
|Common stock subject to possible redemption; 30,898,277 shares (at redemption value of approximately $10.00 per share)||
|| ||308,982,770|| |
|| || || |
|| || || |
|Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued |
|| ||—|| |
|Common stock, $0.0001 par value; 400,000,000 shares authorized; |
9,726,723 shares issued and outstanding (excluding 30,898,277 shares
subject to possible redemption)
|| ||973|| |
| Additional paid-in capital||
|| ||4,999,035|| |
| Deficit accumulated during the development stage||
|| ||-|| |
| Total stockholders’ equity, net||
|| ||5,000,008|| |
| Total liabilities and stockholders’ equity||
See accompanying notes to balance sheet.
SILVER EAGLE ACQUISITION CORP.
(A Corporation in the Development Stage)
NOTES TO BALANCE SHEET
1. Organization and Business Operations
Silver Eagle Acquisition Corp. (the “Company”),
a corporation in the development stage, was incorporated in Delaware on April 11, 2013.
The Company’s sponsor is Global
Eagle Acquisition LLC, a Delaware limited liability company (the “Sponsor”). Members of the Sponsor include Harry
E. Sloan, the Company’s Chairman and Chief Executive Officer, Jeff Sagansky, the Company’s President, and James
A. Graf, the Company’s Vice President, Chief Financial Officer, Treasurer and Secretary.
Fiscal Year End
The Company has selected December 31 as
its fiscal year end.
The Company was formed for the purpose
of acquiring, through a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business
combination, one or more operating businesses or assets that the Company has not yet identified (“Business Combination”).
The Company has neither engaged in any operations nor generated significant revenue to date. The Company is considered to be in
the development stage as defined in FASB Accounting Standard Codification, or ASC 915, “Development Stage Entities,”
and is subject to the risks associated with activities of development stage companies.
The Company’s management has broad
discretion with respect to the Business Combination. However, there is no assurance that the Company will be able to successfully
effect a Business Combination.
The registration statement for the Company’s
initial public offering (the “Public Offering”) (as described in Note 3) was declared effective by the United States
Securities and Exchange Commission on July 25, 2013. On July 23, 2013, our Sponsor and Mr. Dennis A. Miller agreed to purchase
simultaneously with the closing of the Public Offering $7,500,000 of warrants in a private placement (Note 4).
Upon the closing of the Public Offering
and the private placement, $325,000,000 was placed in the Trust Account (discussed below).
The trust account (the “Trust Account”)
can be invested in permitted United States “government securities” within the meaning of Section 2(a)(16) of the Investment
Company Act of 1940, as amended (the “Investment Company Act”), having a maturity of 180 days or less or in money market
funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S.
government treasury obligations.
The Company’s amended and restated
certificate of incorporation provides that, other than the withdrawal of interest to pay income taxes, if any, and a one-time release
of amounts necessary to pay Delaware franchise taxes for 2013 on a timely basis, none of the funds held in trust will be released
until the earlier of: (i) the completion of the Business Combination; or (ii) the redemption of 100% of the shares of common stock
included in the Units being sold in the Proposed Offering if the Company is unable to complete a Business Combination within 21
months from the closing of the Proposed Offering, or 24 months from the closing of this offering if we have executed a letter of
intent, agreement in principle or definitive agreement for an initial business combination within 21 months from the closing of
this offering but have not completed the initial business combination within such 21-month period (subject to the requirements
A Business Combination is subject to the
following size, focus and stockholder approval provisions:
Size/Control — The Company’s
Business Combination must occur with one or more target businesses that together have a fair market value of at least 80% of the
assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the income earned on the
Trust Account) at the time of the agreement to enter into the Business Combination. The Company will not complete a Business Combination
unless it acquires a controlling interest in a target company or is otherwise not required to register as an investment company
under the Investment Company Act.
Focus — The Company’s efforts
in identifying prospective target businesses will initially be focused on businesses in the media and entertainment industries
but the Company may pursue opportunities in other business sectors.
Tender Offer/Stockholder Approval —
The Company, after signing a definitive agreement for a Business Combination, will either (i) seek stockholder approval of the
Business Combination at a meeting called for such purpose in connection with which stockholders may seek to redeem their shares,
regardless of whether they vote for or against the Business Combination, for cash equal to their pro rata share of the aggregate
amount then on deposit in the Trust Account, including interest but less franchise and income taxes payable, or (ii) provide stockholders
with the opportunity to sell their shares to the Company by means of a tender offer (and thereby avoid the need for a stockholder
vote) for an amount in cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, including
interest but less franchise and income taxes payable. The decision as to whether the Company will seek stockholder approval of
the Business Combination or will allow stockholders to sell their shares in a tender offer will be made by the Company, solely
in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the
transaction would otherwise require the Company to seek stockholder approval. If the Company seeks stockholder approval, it will
complete its Business Combination only if a majority of the outstanding shares of common stock voted are voted in favor of the
Business Combination. However, in no event will the Company redeem its public shares in an amount that would cause its net tangible
assets to be less than $5,000,001. In such case, the Company would not proceed with the redemption of its public shares and the
related Business Combination, and instead may search for an alternate Business Combination.
Regardless of whether the Company holds a stockholder vote or
a tender offer in connection with a Business Combination, a public stockholder will have the right to redeem their shares for an
amount in cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, including interest but
less franchise and income taxes payable. As a result, such shares of common stock are recorded at conversion/tender value and classified
as temporary equity upon the completion of the Public Offering, in accordance with Financial Accounting Standards Board, or FASB,
ASC Topic 480, “Distinguishing Liabilities from Equity.”
If the Company does not complete
a Business Combination by April 30, 2015, or July 30, 2015 if the Company has executed a letter of intent, agreement in
principle or definitive agreement for a Business Combination on or prior to April 30, 2015, the Company will (i) cease
all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten
business days thereafter, redeem 100% of the common stock sold as part of the units in the Public Offering, at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest but net of
franchise and income taxes payable (less up to $100,000 of such net interest which may be distributed to the Company to
pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will
completely extinguish public stockholders’ rights as stockholders (including the right to receive further
liquidation distributions, if any), subject to applicable law, and subject to the requirement that any refund of income taxes
that were paid from the Trust Account which is received after such redemption shall be distributed to the former public
stockholders, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the
Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each
case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other
In the event of liquidation, it is likely
that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less
than the initial public offering price per share in the Public Offering (assuming no value is attributed to the warrants contained
in the units to be offered in the Public Offering discussed in Note 3).
Emerging Growth Company
Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies
(that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities
registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act
provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging
growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition
period which means that when a standard is issued or revised and it has different application dates for public or private companies,
we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised
standard. This may make comparison of our financial statements with another public company which is neither an emerging growth
company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because
of the potential differences in accountant standards used.
2. Significant Accounting Policies
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentration of credit risk consist of cash accounts in a financial institution which, at times, may exceed the
Federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts and management believes
the Company is not exposed to significant risks on such accounts.
Fair Value of Financial Instruments
The fair value of the Company’s assets
and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,”
approximates the carrying amounts represented in the balance sheet.
The Company complies
with the requirements of the SEC Staff Accounting Bulletin (SAB) Topic 5A, “Expenses of Offering.” Deferred offering
costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the
Public Offering and that were charged to stockholders’ equity upon the completion of the Public Offering. Accordingly, at
July 30, 2013, offering costs totaling approximately $18,500,000 (including $17,875,000 in underwriters fees) have been charged
to stockholders’ equity.
Development Stage Company
The Company complies
with the reporting requirements of ASC 915, “Development Stage Entities.” At July 30, 2013, the Company has not commenced
any operations nor generated revenue to date. All activity through July 30, 2013, relates to the Company’s formation and
the public offering. Following the public offering, the Company will not generate any operating revenues until after completion
of a Business Combination, at the earliest. The Company may generate non-operating income in the form of interest income on the
designated trust account after the public offering.
Redeemable Common Stock
in Note 1, all of the 32,500,000 common shares sold as part of a Unit in the Public Offering
contained a redemption feature which allowed for the redemption of common shares under the Company's Liquidation or Tender Offer/Stockholder
Approval provisions. In accordance with ASC 480, redemption provisions not solely within the control of the Company require the
security to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation
of all of the entity's equity instruments, are excluded from the provisions of ASC 480. Although the Company did not specify a
maximum redemption threshold, its Charter provides that in no event will they redeem its Public Shares in an amount that would
cause its net tangible assets (stockholders’ equity) to be less than $5,000,001.
The Company recognizes changes in redemption value immediately
as they occur and will adjust the carrying value of the security to equal the redemption value at the end of each reporting period.
Increases or decreases in the carrying amount of redeemable common stock shall be affected by charges against retained earnings.
at July 30, 2013, 30,898,277, of the 32,500,000 Public Shares were classified outside of permanent
equity at its redemption value.
Use of Estimates
The preparation of financial statements
in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those
The Company complies with the accounting
and reporting requirements of Financial Accounting Standards Board Accounting Standard Codification, or FASB ASC, 740, “Income
Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income
tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities
that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which
the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred
tax assets to the amount expected to be realized.
There were no unrecognized tax benefits
as of July 30, 2013. FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition
and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position
must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and
penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties
at July 30, 2013. The Company is currently not aware of any issues under review that could result in significant payments, accruals
or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
Recent Accounting Pronouncements
Management does not believe that any recently
issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s
3. Public Offering
On July 30, 2013, the Company sold 32,500,000
units at a price of $10.00 per unit (the “Public Units”) in the Public Offering. Each unit consists of one share of
common stock of the Company, $0.0001 par value per share (the “Public Shares”), and one warrant to purchase one-half
of one share of common stock of the Company (the “Public Warrants”).
Under the terms of the warrant agreement,
the Company has agreed to use its best efforts to file a new registration statement under the Securities Act of 1933, as amended
(the “Securities Act”), following the completion of the Company's Business Combination. Each Warrant entitles
the holder to purchase one-half of one share of common stock at a price of $5.75. No fractional shares will be issued upon exercise
of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we
will, upon exercise, round down to the nearest whole number the number of shares of common stock to be issued to the warrant holder.
Each Warrant will become exercisable on the later of 30 days after the completion of our Business Combination or 12 months
from the closing of the Proposed Offering. However, if the Company does not complete a Business Combination on or prior
to the 21-month (or 24-month) period allotted to complete the Business Combination, the Warrants will expire at the end of such
period. If the Company is unable to deliver registered shares of common stock to the holder upon exercise of Warrants issued in
connection with the 32,500,000 Public Units during the exercise period, there will be no net cash settlement of these Warrants
and the Warrants will expire worthless, unless they may be exercised on a cashless basis in the circumstances described in the
The Company paid an upfront underwriting
discount of $0.20 per unit up to a maximum of $5,750,000 (effectively $0.177 per unit sold) in the aggregate to the underwriters
at the closing of the Proposed Offering, with an additional fee (the “Deferred Discount”) equal to the difference between
(a) the product of the number of shares of common stock sold as part of the units and $0.55 and (b) the upfront underwriting discounts
paid at the closing of $5,750,000, or a total Deferred Discount of $12,125,000 (effectively $.373 per unit sold). The Deferred
Discount will become payable to the underwriters from the amounts held in the trust account solely in the event the Company completes
a Business Combination. The underwriters are not entitled to any interest accrued on the deferred discount.
4. Related Party Transactions
On April 16, 2013, the Sponsor and Dennis
A. Miller purchased 10,000,000 shares of common stock (the “Founder Shares”) for $25,000, or $.0025 per share. On June
18, 2013, the Sponsor and Mr. Miller contributed, on a pro rata basis, an aggregate of 2,812,500 shares of the Company’s
common stock to the Company at no cost for cancellation, resulting in the Sponsor and Mr. Miller owning an aggregate of 7,187,500
shares of the Company’s common stock. On July 10, 2013, the Sponsor and Mr. Miller transferred 35,000 Founder Shares on a
pro rata basis to each of James M. McNamara and Ernest Del, each of whom paid a purchase price of $175 for their respective shares
and agreed to serve on the Company’s board of directors upon the closing of the Proposed Offering.
On July 22, 2013, in connection
with the increase of the size of the Public Offering, the Company effected a stock dividend of 0.2 shares for each
outstanding share of common stock, resulting in our initial stockholders holding an aggregate of 8,625,000 shares of our
common stock. Each of our independent directors thereafter transferred 6,650 shares to our Sponsor and 350 shares to Mr.
Miller. All references in the accompanying financial statements to the number of shares of common stock have been
retroactively restated to reflect this transaction.
On July 30, 2013, the
Sponsor forfeited 475,000 shares and Dennis A. Miller forfeited 25,000 shares of common stock in connection with the partial
exercise of the underwriters’ over-allotment option, so that the initial stockholders, consisting of the Sponsor, Mr.
Miller and the independent directors, own 20.0% of the Company’s issued and outstanding
shares after the Public Offering.
The Founder Shares are identical to the
common stock included in the Units sold in the Public Offering except that the Founder Shares are subject to certain transfer
restrictions, as described in more detail below.
In addition, 2,031,250 Founder Shares, representing 5.0% of the Company’s issued and outstanding shares after the Public Offering,
are subject to forfeiture by the initial stockholders under certain conditions described in the Prospectus.
The initial stockholders have agreed not
to transfer, assign or sell any of their Founder Shares until the earlier of (A) one year after the completion of the Company’s
Business Combination, or earlier if, subsequent to the Company’s Business Combination, the last sales price
of the Company’s common stock (i) equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like) for any 20 trading days within any 30-trading day period after the Company’s Business
Combination, in which case fifty percent (50%) of the Founder Shares will be transferable, assignable or salable or (ii) equals
or exceeds $15.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for
any 20 trading days within any 30-trading day period after the Company’s Business Combination in which case the remaining
fifty percent (50%) of the Founder Shares will be transferable, assignable or salable or (B) the date on which the Company completes
a liquidation, merger, stock exchange or other similar transaction after the Business Combination that results in all of
the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property
(the “Lock Up Period”).
The Founder Shares are identical to the Public Shares except that (i) the Founder Shares are subject to certain transfer
restrictions, as described above, and (ii) the initial stockholders have agreed to waive their redemption
rights in connection with the Business Combination with respect to the Founder Shares and any Public Shares they may
purchase, and to waive their redemption rights with respect to the Founder Shares if the Company fails to complete a Business
Combination within 21 months (or 24 months, as applicable) from the closing of the Public Offering.
Voting — If
the Company seeks stockholder approval of a Business Combination, the initial stockholders have agreed to vote their Founder
Shares and any Public Shares purchased during or after the Public Offering in favor of the Business Combination.
— Although the initial stockholders and their permitted transferees will waive their redemption rights with
respect to the Founder Shares if the Company fails to complete a Business Combination within the prescribed time frame, they
will be entitled to redemption rights with respect to any Public Shares they may own.
Private Placement Warrants
The Sponsor and Dennis A. Miller
have purchased from the Company an aggregate of 15,000,000 Warrants at a price of $0.50 per Warrant (a purchase price of
$7.5 million), in a private placement that occurred simultaneously with the completion of the Public Offering (the
“Private Placement Warrants”). Each Private Placement Warrant entitles the holder to purchase one-half of one
share of common stock at $5.75 per half share. The purchase price of the Private Placement Warrants was added to the proceeds
from the Public Offering held in the trust account pending completion of the Company's Business Combination. The Private
Placement Warrants (including the common stock issuable upon exercise of the Private Placement Warrants) will not be
transferable, assignable or salable until 30 days after the completion of the Business Combination and they will be
non-redeemable so long as they are held by the initial purchasers of the Private Placement Warrants or their permitted
transferees. If the Private Placement Warrants are held by someone other than the initial purchasers of the Private Placement
Warrants 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 Warrants included in the Units being sold in the Public Offering. Otherwise, the
Private Placement Warrants have terms and provisions that are identical to those of the Warrants being sold as part of the
Units in the Public Offering and have no net cash settlement provisions.
If the Company does not complete a
Business Combination, then the proceeds will be part of the liquidating distribution to the public stockholders and the
Private Placement Warrants will expire worthless.
The holders of the Founder
Shares, Private Placment Warrants and warrants that may be issued upon conversion of working capital loans will hold
registration rights to require the Company to register the sale of any of the securities held by them pursuant to a
registration rights agreement. The holders of these securities will be entitled to make up to three demands, excluding
short form demands, that the Company register such securities for sale under the Securities Act. In addition, these
stockholders will have “piggy-back” registration rights to include their securities in other registration
statements filed by the Company. The Company will bear the costs and expenses of filing any such registration
The Sponsor also agreed to loan the Company
up to an aggregate of $200,000 by the issuance of an unsecured promissory note (the “Note”) to cover expenses related
to this Proposed Offering. These loans were payable without interest on the earlier of October 1, 2013 or
the completion of the Proposed Offering. From inception through July 30, 2013, the Sponsor loaned a total of $157, 873 to the Company,
which was repaid in full upon closing of the Public Offering. At July 30, 2013, there were no outstanding borrowings under the
The Company has agreed to pay Mr.
Graf, or an entity owned and controlled by him, a monthly consulting fee of $15,000 plus, in the event that Mr. Graf is no
longer receiving medical insurance from an employer, an additional amount per month to reimburse Mr. Graf for the purchase of
such insurance, for services prior to the completion of a Business Combination (regardless of the amount of
services provided), including preparation of the Company’s financial statements, SEC filings, financial due diligence
of targets for a Business Combination and negotiations of an agreement for a Business Combination.
Additionally, the Company will reimburse our Sponsor for office space, secretarial and administrative services provided to
members of our management team by our Sponsor, members of our Sponsor, and our management team or their affiliates in an
amount not to exceed $10,000 per month in the event such space and/or services are utilized and we do not pay a third party
directly for such services. Upon completion of a Business Combination or our liquidation, we will cease paying
these monthly fees.
5. Commitments & Contingencies
The Company is committed to pay the Deferred
Discount totaling $12,125,000, or 3.73% of the gross offering proceeds of the Public Offering, to the underwriters upon the Company’s
consummation of a Business Combination. The underwriters will not be entitled to any interest accrued on the Deferred Discount,
and no Deferred Discount is payable to the underwriters if there is no Business Combination.
6. Trust Account
A total of $325,000,000, which includes $317,500,000
of the net proceeds from the Public Offering and $7,500,000 from the sale of the Private Placement Warrants, has been placed in
the Trust Account. As of July 30, 2013, the balance in the Trust Account was $325,000,000.
7. Stockholders’ Equity
Common Stock —
The authorized common stock of the Company includes up to 400,000,000 shares. Holders of the Company’s common stock are entitled
to one vote for each share of common stock. At July 30, 2013, there were 40,625,000 shares of common stock outstanding, including
30,898,277 shares subject to possible redemption.
Preferred Shares —
The Company is authorized to issue 1,000,000 preferred shares with such designations, voting and other rights and preferences as
may be determined from time to time by the Board of Directors.