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Spruce Power (SPRU) - 2019 Q3 - Quarterly Report
Spruce Power Spruce Power (US:SPRU)2019-11-14 22:02

PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS This section presents the unaudited condensed financial statements for Pivotal Investment Corporation II as of September 30, 2019, including the balance sheet, statements of operations, changes in stockholders' equity, and cash flows, along with detailed notes, reflecting the company's financial position following its IPO in July 2019 Condensed Balance Sheet As of September 30, 2019, the company's total assets were approximately $232 million, dominated by $231 million in marketable securities held in the Trust Account, with total liabilities at $8.16 million, primarily a deferred underwriting fee of $8.05 million, and a significant portion of equity, $218.85 million, classified as common stock subject to possible redemption Condensed Balance Sheet Highlights (September 30, 2019) | Category | Amount (USD) | | :--- | :--- | | Total Assets | $232,009,871 | | Marketable securities held in Trust Account | $230,974,128 | | Cash | $929,568 | | Total Liabilities | $8,155,748 | | Deferred underwriting fee | $8,050,000 | | Common stock subject to possible redemption | $218,854,115 | | Total Stockholders' Equity | $5,000,008 | Condensed Statements of Operations For the three months ended September 30, 2019, the company reported a net income of $665,511, primarily driven by $974,128 in other income from interest and unrealized gains on marketable securities in the Trust Account, offsetting operating costs of $131,890, resulting in a cumulative net income of $664,827 since inception on March 20, 2019 Statement of Operations Summary | Description | Three Months Ended Sep 30, 2019 | Period from Mar 20, 2019 (Inception) to Sep 30, 2019 | | :--- | :--- | :--- | | Loss from operations | $(131,890) | $(132,574) | | Interest income on marketable securities | $951,166 | $951,166 | | Unrealized gain on marketable securities | $22,962 | $22,962 | | Provision for income taxes | $(176,727) | $(176,727) | | Net Income | $665,511 | $664,827 | Condensed Statements of Changes in Stockholders' Equity Stockholders' equity evolved from an initial $25,000 investment by the Sponsor to $5,000,008 by September 30, 2019, driven by the sale of 23 million units in the IPO, the sale of private placement warrants, and the reclassification of $218.85 million to common stock subject to possible redemption - Key activities impacting stockholders' equity include the sale of 23,000,000 Units, the sale of 6,350,000 Private Placement Warrants, and the reclassification of 21,797,092 shares to common stock subject to possible redemption17 Condensed Statement of Cash Flows For the period from inception to September 30, 2019, net cash provided by financing activities was $231.25 million, primarily from the IPO and private warrant sales, while net cash used in investing activities was $230 million for the investment of cash into the Trust Account, and operating activities used $319,728, resulting in $929,568 in cash at period-end Cash Flow Summary (Inception to Sep 30, 2019) | Activity | Net Cash Flow (USD) | | :--- | :--- | | Net cash used in operating activities | $(319,728) | | Net cash used in investing activities | $(230,000,000) | | Net cash provided by financing activities | $231,249,296 | | Net Change in Cash | $929,568 | Notes to Condensed Financial Statements The notes provide critical details on the company's operations, accounting policies, and specific transactions, including its status as a blank-check company formed to effect a business combination, the terms of its IPO and private placements, related-party transactions with its Sponsor, and commitments such as underwriting fees and registration rights, with a deadline of January 16, 2021, to consummate a business combination - The company is a blank-check company formed to effect a business combination and is focusing its search on North American companies in industries ripe for disruption by digital technology2223 - On July 16, 2019, the company consummated its IPO of 23,000,000 units at $10.00 per unit, generating gross proceeds of $230,000,000, with an amount of $230,000,000 placed in a trust account2527 - The company has until January 16, 2021 (the "Combination Period") to consummate a Business Combination, or it will be required to cease operations and redeem the public shares35 - The Sponsor purchased 5,750,000 Founder Shares for $25,000 and an affiliate loaned the company $125,000, which was repaid post-IPO6366 - The underwriters are entitled to a deferred fee of $8,050,000, payable upon completion of a Business Combination70 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section details management's perspective on the company's financial condition and results, noting that as a blank-check company, activities since inception on March 20, 2019, have been limited to organizational tasks and the IPO, with net income derived solely from interest on the Trust Account, and as of September 30, 2019, the company had $929,568 in cash for working capital and $230.97 million in the Trust Account, which management believes is sufficient to operate until a business combination is identified - The company is a blank check company formed to effect a merger, share exchange, or similar business combination, focusing on North American companies in industries being disrupted by digital technology8990 Financial Results Summary | Period | Net Income (USD) | Key Drivers | | :--- | :--- | :--- | | Three months ended Sep 30, 2019 | $665,511 | Interest income of $951,166 and unrealized gains of $22,962, offset by operating costs and taxes | | Inception (Mar 20, 2019) to Sep 30, 2019 | $664,827 | Interest income of $951,166 and unrealized gains of $22,962, offset by operating costs and taxes | - As of September 30, 2019, the company had $230,974,128 in marketable securities held in the Trust Account and $929,568 in cash held outside the trust for working capital purposes100102 - The Sponsor or affiliates may loan the company funds for working capital, which can be converted into warrants at $1.50 per warrant, up to a maximum of $1,500,000 of such loans103 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The company reports no material exposure to market or interest rate risk as of September 30, 2019, as funds held in the Trust Account are invested in U.S. government treasury bills with maturities of 180 days or less or in money market funds investing solely in U.S. treasuries, minimizing potential interest rate risk - The company is not subject to any material market or interest rate risk111 - Proceeds in the trust account are invested in short-term U.S. government treasury securities (maturity of 180 days or less) or money market funds, minimizing exposure to interest rate fluctuations111 ITEM 4. CONTROLS AND PROCEDURES Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of September 30, 2019, concluding that these controls were effective in ensuring timely recording, processing, and reporting of information required for SEC filings, with no material changes to internal control over financial reporting occurring during the quarter - Based on an evaluation as of September 30, 2019, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective113 - There were no changes in the company's internal control over financial reporting during the most recently completed fiscal quarter that materially affected, or are reasonably likely to materially affect, internal controls114 PART II. OTHER INFORMATION ITEM 5. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This section describes equity securities sold without registration under the Securities Act and the use of proceeds from the IPO, including the Sponsor's purchase of 5,750,000 Class B shares for $25,000 in March 2019, and concurrently with the IPO in July 2019, the Sponsor's purchase of 4,233,333 private placement warrants for $6.35 million, with proceeds primarily placed in the Trust Account and the remainder used for working capital - In March 2019, the Sponsor purchased 5,750,000 shares of Class B common stock for $25,000 in an unregistered transaction117 - Simultaneously with the IPO, the Sponsor purchased 4,233,333 Private Placement Warrants at $1.50 each, for total proceeds of $6,350,000, in an unregistered transaction119 - The IPO of 23,000,000 units generated gross proceeds of $230,000,000, with total transaction costs of $13,185,704, including $8,050,000 in deferred underwriting fees118120 ITEM 6. EXHIBITS This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act of 2002, as well as XBRL data files - Exhibits filed with the report include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, along with XBRL data files123 SIGNATURES Signatures The report is duly signed and authorized by the company's management, with Jonathan J. Ledecky, Chief Executive Officer, and James Brady, Chief Financial Officer, as signatories, dated November 14, 2019 - The Form 10-Q was signed on November 14, 2019, by Jonathan J. Ledecky (Chief Executive Officer) and James Brady (Chief Financial Officer)128