Canoo (GOEV) - 2019 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents the unaudited financial statements and management's analysis for the company's initial operational period following its IPO Item 1. Financial Statements This section presents the unaudited condensed financial statements for Hennessy Capital Acquisition Corp. IV as of June 30, 2019, and for the three and six months then ended Condensed Balance Sheets As of June 30, 2019, total assets were $306.6 million, primarily from $305.0 million in cash and investments in the trust account, with liabilities increasing to $10.3 million Condensed Balance Sheet Highlights (as of June 30, 2019 vs. December 31, 2018) | Metric | June 30, 2019 (unaudited) | December 31, 2018 | | :--- | :--- | :--- | | Assets | | | | Cash | $1,521,000 | $6,000 | | Cash and investments held in trust account | $305,017,000 | $0 | | Total Assets | $306,646,000 | $238,000 | | Liabilities | | | | Deferred underwriting compensation | $10,179,000 | $0 | | Total Liabilities | $10,322,000 | $216,000 | | Common stock subject to possible redemption | $291,324,000 | $0 | | Total Stockholders' Equity | $5,000,000 | $22,000 | Condensed Statements of Operations For the three and six months ended June 30, 2019, net income was $1.1 million and $1.4 million respectively, driven by interest income from the trust account with no operational revenue Statement of Operations Summary (unaudited) | Metric | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | Revenues | $0 | $0 | | General and administrative expenses | $360,000 | $472,000 | | Loss from operations | ($360,000) | ($472,000) | | Interest income on Trust Account | $1,855,000 | $2,385,000 | | Net income | $1,115,000 | $1,433,000 | | Net income per Class A common share | $0.05 | $0.06 | Condensed Statement of Changes in Stockholders' Equity Stockholders' equity increased to $5.0 million by June 30, 2019, primarily due to the sale of public units and private placement warrants, offset by underwriting discounts and reclassification of redeemable common stock - Key equity events during the first six months of 2019 included the sale of 30,015,000 public units for $300.15 million and 13,581,500 private placement warrants for $13.58 million[14] - A significant portion of equity raised, approximately $290.2 million, was reclassified as 'Common stock subject to possible redemption', reflecting the rights of public stockholders[14] Condensed Statement of Cash Flows For the six months ended June 30, 2019, net cash provided by financing activities was $305.1 million, primarily from the IPO, while $302.6 million was used in investing activities for the trust account Cash Flow Summary for the Six Months Ended June 30, 2019 (unaudited) | Category | Amount | | :--- | :--- | | Net cash used in operating activities | ($922,000) | | Net cash used in investing activities | ($302,632,000) | | Net cash provided by financing activities | $305,069,000 | | Net increase in cash | $1,515,000 | | Cash at end of period | $1,521,000 | Notes to Condensed Financial Statements The notes detail the company's formation as a SPAC, its 18-month timeline to complete a Business Combination, specifics of the March 2019 Public Offering, related-party transactions, and trust account management - The Company is a special purpose acquisition company (SPAC) formed to effect a Business Combination and has not commenced any operations as of June 30, 2019[18][19] - The Company has 18 months from the closing of its Public Offering (until September 5, 2020) to complete an initial Business Combination, or it will be required to liquidate and return funds from the Trust Account to public stockholders[27] - The Company adopted ASU 2017-11, which enabled it to classify warrants as equity instruments[44] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, highlighting its limited activities as a blank check company and sufficient working capital for the next twelve months - The company is a blank check company formed for the purpose of effecting an Initial Business Combination, with activities to date consisting of formation, the Public Offering, and identifying a suitable target[72][75] - As of June 30, 2019, the company had approximately $1.52 million in cash outside of the Trust Account available for operating expenses[74] - The company has until September 5, 2020, to complete an Initial Business Combination, otherwise it will be forced to liquidate[82] Results of Operations The company generated no operating revenue, with net income derived solely from $1.9 million and $2.4 million in interest income from the Trust Account for the three and six months ended June 30, 2019, respectively Key Financial Metrics (For the periods ended June 30, 2019) | Metric | Three Months | Six Months | | :--- | :--- | :--- | | Interest Earned on Trust Account | ~$1,855,000 | ~$2,385,000 | | Travel Costs for Target Search | ~$93,000 | ~$98,000 | | Governance & Public Reporting Costs | ~$86,000 | ~$128,000 | - Trust assets are invested in U.S. government treasury bills maturing in September 2019, yielding approximately 2.45% annually[77] Liquidity and Capital Resources On March 5, 2019, the company raised $300.15 million from its Public Offering and $13.58 million from a Private Placement, with $303.2 million deposited into the Trust Account, leaving $1.52 million in cash for operations - The company consummated its Public Offering of 30,015,000 Units at $10.00 per unit, generating gross proceeds of approximately $300.15 million[78] - A simultaneous Private Placement of 13,581,500 warrants at $1.00 per warrant generated gross proceeds of approximately $13.58 million[78] - At June 30, 2019, approximately $1,521,000 of cash was available outside the Trust Account to fund activities[79] Critical Accounting Policies The company's critical accounting policies include its status as an 'emerging growth company', the two-class method for net income per share, accounting for public offering costs, income taxes, and the classification of redeemable common stock - The company is an 'emerging growth company' and has elected to use the extended transition period for complying with new or revised financial accounting standards[92] - Net income per share is calculated using a two-class method, allocating interest income from the Trust Account (net of taxes) to Class A common stock and the remaining net income/loss to Class B common stock[94] - Common stock subject to redemption is classified outside of permanent equity in accordance with FASB ASC 480, with changes in redemption value adjusted through additional paid-in capital[100][101] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's market risk is minimal, primarily related to interest rate fluctuations on short-term U.S. government treasury bills held in the Trust Account, yielding approximately 2.45% annually as of June 30, 2019 - The company's primary market risk exposure is related to interest rate changes on the funds held in the Trust Account[104] - Trust Account funds are invested in short-term U.S. government treasury bills, minimizing risk; as of the reporting date, these investments yielded approximately 2.45% per year[104] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2019, with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2019[106] - No material changes to the company's internal control over financial reporting occurred during the three months ended June 30, 2019[107] PART II – OTHER INFORMATION This section details legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits Item 1. Legal Proceedings The company reports that there are no legal proceedings to disclose - The company has no legal proceedings to report[109] Item 1A. Risk Factors The company states that there have been no material changes to the risk factors previously disclosed in its Prospectus filed with the SEC on March 4, 2019 - There have been no material changes to the risk factors disclosed in the company's Prospectus from March 4, 2019[110] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities or changes in the use of proceeds - The company reports none[111] Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities - The company reports none[112] Item 4. Mine Safety Disclosures The company reports that this item is not applicable - The company reports none[113] Item 5. Other Information The company reports no other information - The company reports none[114] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, which include officer certifications pursuant to the Sarbanes-Oxley Act of 2002 and XBRL interactive data files - Exhibits filed include certifications from the Principal Executive Officer and Principal Financial Officer, as well as XBRL data files[115]