LiveVox, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Reverse Recapitalization

Reverse Recapitalization

9 Months Ended

Sep. 30, 2021

Pursuant to ASC 805, Business Combinations, the merger between Old LiveVox and Crescent was accounted for as a Reverse Recapitalization, rather than a business combination, for financial accounting and reporting purposes. Accordingly, Old LiveVox was deemed the accounting acquirer (and legal acquiree) and Crescent was treated as the accounting acquiree (and legal acquirer). Under this method of accounting, the Reverse Recapitalization was treated as the equivalent of Old LiveVox issuing stock for the net assets of Crescent, accompanied by a recapitalization. The net assets of Crescent are stated at historical cost, with no goodwill or other intangible assets recorded. The consolidated assets, liabilities and results of operations prior to the Merger are those of Old LiveVox. The shares and corresponding capital amounts and earnings per share available for common stockholders, prior to the Merger, have been retroactively restated as shares reflecting the exchange ratio established in the Merger Agreement.

As a result of the Merger, the Company’s stockholders received shares of Class A common stock, with an aggregate value of $666.4 million, or $10.00 per share. Additionally, the Company received net cash proceeds of $157.4 million, of which $0.2 million cash awards are payable and 116,787 shares of Class A common stock are to be delivered under the VCIP and OBIP plans as of September 30, 2021. The following table reconciles the elements of the Merger to the consolidated statements of cash flows and the consolidated statements of stockholders’ equity for the nine months ended September 30, 2021 (dollars in thousands):


	Recapitalization
Cash proceeds from Crescent
Crescent’s cash in trust account	$	253,395
Crescent’s cash and cash equivalents	20
Less: redemptions	(155,372)
Cash proceeds from PIPE Investment (1)	75,000
Cash proceeds from Forward Purchase Agreement (2)	25,000
Less: Cash payments to escrow	(2,000)
Less: Cash payments to stockholder representative expense holdback	(100)
Less: Cash payments of Merger transaction costs	(38,560)
Net cash proceeds from Merger and PIPE financing	157,383
Merger transaction costs not impacting additional paid-in capital	2,308
Non-cash VCIP/OBIP stock bonus	32,637
Non-cash net assets assumed from Crescent	36
Non-cash offering cost associated with warrant liability (3)	41
Less: warrant liability	(2,008)
Net contribution from Merger and PIPE financing	$	190,397

(1) Proceeds of $75.0 million from the Company’s private placement of an aggregate of 7,500,000 shares of Class A common stock at a per share price of $10.00 (the “PIPE Investment”).

(2) Proceeds of $25.0 million from the Company’s private placement of an aggregate of 2,500,000 shares of Class A common stock at a per share price of $10.00 and 833,333 warrants (the “Forward Purchase Agreement”).

(3) Capitalized offering costs related to Forward Purchase Warrants which have been expensed in the consolidated statement of operations and comprehensive loss.

In connection with the Merger, the Company issued 74,962,092 shares of Class A common stock. Immediately following the Merger, there were 87,084,637 shares of the Company’s Class A common stock outstanding. The following table presents the number of shares of the Company’s common stock outstanding as of the Closing Date (in thousands):


			Number of Shares

Class A common stock of Crescent, outstanding prior to Closing			24,988
Less: Redemption of Crescent Class A common stock			(15,321)
Class A common stock issued in PIPE Investment (1)			7,500
Class A common stock issued under Forward Purchase Agreement (2)			2,500
Shares of Crescent common stock prior to Closing			19,667
Class F common stock of Crescent converted into Class A common stock on a one-for-one basis (3)			6,250
Less: cancellation of Class F common stock of Crescent			(2,925)
Earn-Out Shares placed into an escrow account (4)			5,000
Recapitalization of Old LiveVox common stock into Class A common stock (5)			66,637
Shares of newly issued Class A common stock in connection with Closing			74,962
Shares of Class A common stock outstanding as of the Closing Date, including Escrowed Shares			94,629
Less: Escrowed Shares (6)			(7,544)
Total shares of Class A common stock outstanding as of the Closing Date, excluding Escrowed Shares			87,085

(1) See footnote (1) to the preceding table.

(2) See footnote (2) to the preceding table.

(3) Includes a total of 2,543,750 shares of converted Class A common stock held by the SPAC sponsor and certain independent directors (the “Lock-Up Shares”) immediately following the closing, which were placed in an escrow account to be subject to release only if the price of Class A common stock trading on the Nasdaq exceeds certain thresholds during the seven-year period beginning June 18, 2021 through June 18, 2028. No contingent consideration shares were issued or released during the nine months ended September 30, 2021.

(4) As additional consideration payable to the LiveVox Stockholder, the Company issued 5,000,000 shares of Class A common stock (the “Earn-Out Shares”) held in an escrow account to be released only if the price of Class A common stock trading on the Nasdaq exceeds certain thresholds during the seven-year period beginning June 18, 2021 through June 18, 2028. No contingent consideration shares were issued or released during the nine months ended September 30, 2021.

(5) The number of Old LiveVox shares was determined from 1,000 shares of Old LiveVox common stock outstanding immediately prior to the closing of the Merger converted at the exchange ratio of 66,637 established in the Merger.

(6) 2,543,750 Lock-Up Shares and 5,000,000 Earn-Out Shares (collectively, the “Escrowed Shares”) are accounted for as equity classified equity instruments, were included as merger consideration as part of the Reverse Recapitalization, and are recorded in additional paid-in capital. Any Escrowed Shares not released from escrow within the seven-year period beginning June 18, 2021 through June 18, 2028 will be forfeited and canceled for no consideration. The Escrowed Shares are treated as equity-linked instruments as opposed to shares outstanding, and as such are not included in shares outstanding on the Company’s consolidated balance sheets.

In connection with the Merger, the Company incurred direct and incremental costs of approximately $4.5 million, including $2.6 million during the nine months ended September 30, 2021, related to the equity issuance, consisting primarily of filing, registration, listing, legal, accounting and other professional fees, which were deducted from the Company’s additional paid-in capital as a reduction of cash proceeds rather than expensed as incurred. In addition, the Company incurred $2.0 million in costs, including $1.3 million during the nine months ended September 30, 2021, related to accounting, investor relations and other fees. Since these costs were not incremental or directly attributable to the Merger, they were expensed as incurred and recorded to operating expenses within the Company’s consolidated statements of operations and comprehensive loss. There were no transaction costs capitalized or expensed for the three months ended September 30, 2021.