Canoo (GOEV) - 2020 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements Presents unaudited condensed consolidated financial statements for Q3 2020, detailing balance sheets, operations, equity, cash flows, and notes on the Canoo merger Condensed Consolidated Balance Sheets Reports total assets of $307.0 million as of September 30, 2020, with $306.6 million in trust, and $15.2 million in liabilities Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2020 (unaudited) | Dec 31, 2019 | | :--- | :--- | :--- | | Assets | | | | Cash | $355 | $1,124 | | Cash and investments held in trust account | $306,566 | $307,338 | | Total Assets | $306,971 | $308,512 | | Liabilities & Equity | | | | Total Liabilities | $15,239 | $12,460 | | Common stock subject to possible redemption | $286,732 | $291,052 | | Total Stockholders' Equity | $5,000 | $5,000 | | Total Liabilities and Stockholders' Equity | $306,971 | $308,512 | Condensed Consolidated Statements of Operations Reports no revenue and a net loss of $2.14 million for the nine months ended September 30, 2020, driven by expenses Condensed Consolidated Statements of Operations Highlights (in thousands) | Metric | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Revenues | $0 | $0 | | General and administrative expenses | ($3,680) | ($2,803) | | Interest income on Trust Account | $1,906 | $4,130 | | Net (Loss) Income | ($2,143) | $492 | Condensed Consolidated Statements of Changes in Stockholders' Equity Total stockholders' equity remained constant at $5.0 million for the nine months ended September 30, 2020, despite net loss and redemptions - Total stockholders' equity was unchanged at $5.0 million as of September 30, 2020, compared to December 31, 2019[12] - During the nine months ended September 30, 2020, 211,561 shares of Class A common stock were redeemed, reducing additional paid-in capital by approximately $2.18 million[12] Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $1.27 million, resulting in a net decrease in cash of $0.77 million for the nine months ended September 30, 2020 Cash Flow Summary for the Nine Months Ended Sep 30, 2020 (in thousands) | Cash Flow Category | Amount | | :--- | :--- | | Net cash used in operating activities | ($1,271) | | Net cash provided by investing activities | $2,678 | | Net cash used by financing activities | ($2,176) | | Net decrease in cash | ($769) | | Cash at end of period | $355 | Notes to Condensed Consolidated Financial Statements Details the company's blank check status, the pending merger with Canoo, going concern doubts, and a stockholder lawsuit related to the transaction - The company is a blank check company formed to effect a business combination and has not commenced any operations as of September 30, 2020[18][19] - On August 17, 2020, the company entered into a Merger Agreement with Canoo Holdings Ltd., an electric vehicle company, for a proposed business combination[34][35] - The company has until December 31, 2020, to complete its initial business combination, raising substantial doubt about its ability to continue as a going concern[31][33] - A stockholder lawsuit was filed on October 2, 2020, alleging breach of fiduciary duty in connection with the proposed merger with Canoo[93] Management's Discussion and Analysis of Financial Condition and Results of Operations Discusses the company's blank check status, the Canoo merger agreement, the extended business combination deadline, and going concern uncertainties - The company is a blank check company with the primary purpose of effecting an initial Business Combination[96] - A definitive Merger Agreement was signed with electric vehicle company Canoo Holdings Ltd. on August 17, 2020, anticipated to close in Q4 2020[102][107] - The deadline to consummate a business combination was extended from September 5, 2020, to December 31, 2020, following stockholder approval[100] - The company's liquidity is limited, with approximately $355 thousand in cash outside the trust account, raising substantial doubt about its ability to continue as a going concern[120][122] Quantitative and Qualitative Disclosures About Market Risk Primary market risk is interest rate fluctuations on the $306.6 million in the Trust Account, invested in U.S. government obligations - The company's primary market risk exposure is to interest rate changes on the funds held in the Trust Account[144] - As of September 30, 2020, the Trust Account held approximately $306.6 million, invested in a money market fund comprised of U.S. government obligations, minimizing interest rate risk[144] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2020, with no material changes in Q3 2020 - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2020[146] - There were no material changes to the company's internal control over financial reporting during the three months ended September 30, 2020[147] PART II – OTHER INFORMATION Legal Proceedings Discloses a stockholder lawsuit filed October 2, 2020, alleging breach of fiduciary duty regarding the proposed Canoo business combination - On October 2, 2020, a stockholder filed a lawsuit against the company and its board of directors in connection with the proposed business combination[150] - The complaint alleges breach of fiduciary duty, a flawed sales process, and that the initial S-4 registration statement was materially misleading[150] Risk Factors No material changes to risk factors from the 2019 Form 10-K are reported, except those in the S-4 Registration Statement for the business combination - No material changes to risk factors from the Annual Report on Form 10-K are reported, except for those disclosed in the S-4 Registration Statement concerning the business combination[151] Exhibits Lists exhibits filed with the Form 10-Q, including the Merger Agreement with Canoo and related subscription and support agreements - Key exhibits filed include the Merger Agreement and Plan of Reorganization with Canoo Holdings Ltd., dated August 17, 2020[157] - Other exhibits include the Form of Subscription Agreement for the PIPE financing and the Sponsor Warrant Exchange Agreement[157]