Altus Power(AMPS) - 2021 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited financial statements, management's analysis, market risk disclosures, and internal controls for the period Item 1. Financial Statements (Unaudited) The unaudited financial statements detail the company's financial position as a SPAC, highlighting trust account assets, warrant liabilities, and the subsequent Altus Power business combination agreement Balance Sheets As of June 30, 2021, assets primarily comprised $402.5 million in the Trust Account, with liabilities including $10.9 million in warrant liability and a $26.6 million stockholders' deficit Condensed Balance Sheet Data (as of June 30, 2021) | Metric | Amount (USD) | | :--- | :--- | | Assets | | | Cash | $391,397 | | Assets held in Trust Account | $402,510,957 | | Total Assets | $404,229,116 | | Liabilities & Equity | | | Total Current Liabilities | $2,302,161 | | Deferred underwriting commission | $14,087,500 | | Redeemable warrant liability | $10,867,500 | | Total Liabilities | $28,357,161 | | Class A common stock subject to possible redemption | $402,510,957 | | Total Stockholders' Deficit | ($26,639,002) | Statements of Operations Net income for the six months ended June 30, 2021, was $4.2 million, primarily due to a $7.8 million non-cash gain on warrant liability, while the three-month period saw a $4.3 million net loss Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended Jun 30, 2021 | Six Months Ended Jun 30, 2021 | | :--- | :--- | :--- | | Loss from operations | ($2,663,665) | ($3,622,908) | | Change in fair value of redeemable warrant liability | ($1,610,000) | $7,848,750 | | Interest income earned on assets held in Trust Account | $3,899 | $9,949 | | Net Income (Loss) | ($4,269,766) | $4,235,791 | | Net Income (Loss) per Share | ($0.10) | $0.10 | Statement of Changes in Stockholders' Deficit The total stockholders' deficit improved from $30.9 million at year-end 2020 to $26.6 million by June 30, 2021, driven by $4.2 million in net income - The total stockholders' deficit decreased from $30,864,844 at the end of 2020 to $26,639,002 at the end of Q2 2021, mainly driven by net income recognized during the period[19] Statement of Cash Flows Net cash used in operating activities was $1.3 million for the six months ended June 30, 2021, partially offset by $1.1 million from financing, leading to a cash balance decrease Cash Flow Summary for Six Months Ended June 30, 2021 | Cash Flow Activity | Amount (USD) | | :--- | :--- | | Net cash used in operating activities | ($1,334,519) | | Net cash provided by financing activities | $1,100,000 | | Decrease in cash | ($234,519) | | Cash at beginning of period | $625,916 | | Cash at end of period | $391,397 | Notes to Unaudited Financial Statements Notes detail SPAC formation, IPO terms, warrant reclassification to liability, related-party transactions, and the subsequent Business Combination Agreement with Altus Power - The company was formed to effect a business combination and completed its Initial Public Offering on December 15, 2020, raising $402.5 million which was placed in a trust account[24][26][27] - Following SEC guidance issued in April 2021, the company reclassified its redeemable warrants from equity to a liability, requiring them to be measured at fair value with changes reported in earnings, which led to a revision of the December 31, 2020 financial statements[36][37] - On July 12, 2021, the company entered into a definitive Business Combination Agreement with Altus Power, Inc, with the transaction supported by a $275 million PIPE investment[104][105] - The company has a $3 million promissory note facility with its Sponsor to finance transaction costs, of which $1.1 million was drawn as of June 30, 2021[81] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's blank check status, the Altus Power business combination, the impact of warrant liability fair value changes on results, and liquidity sources - The company is a blank check company that completed its IPO on December 15, 2020, and its primary activity has been identifying a business combination target[109] - On July 12, 2021, the company entered into a Business Combination Agreement to acquire Altus Power, Inc, with the deal including a concurrent $275 million PIPE investment[110][111] - Net income for the six months ended June 30, 2021 was $4.2 million, driven by a decrease in the fair value of the redeemable warrant liability, while net loss for the three-month period was $4.3 million due to an increase in the warrant liability's fair value[113] - As of June 30, 2021, the company had $391,397 in cash outside the trust account for working capital, supplemented by a $3 million promissory note from the Sponsor, of which $1.1 million was drawn[117][118] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces no material market or interest rate risk, as IPO proceeds in the trust account are invested in short-term U.S. government securities - The company's market risk is limited as funds in the trust account are invested in short-term U.S. government treasury obligations with maturities of 185 days or less[128] - Due to the short-term nature of its investments, management believes there is no material exposure to interest rate risk[128] Item 4. Controls and Procedures Disclosure controls and procedures were effective as of June 30, 2021, following the remediation of a material weakness in internal control over financial reporting related to warrant accounting - A material weakness in internal control over financial reporting related to the accounting for redeemable warrants, identified in Q1 2021, was remediated as of June 30, 2021[131] - Remediation actions included adding expertise to the management team, engaging third-party accounting advisors, and enhancing oversight and review controls for complex transactions[131] - As a result of the remediation, management concluded that disclosure controls and procedures were effective as of June 30, 2021[130] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits Item 1. Legal Proceedings The company is not currently involved in any legal proceedings - The company is not involved in any legal proceedings[133] Item 1A. Risk Factors Updated risk factors include potential conflicts of interest for the Sponsor and officers in the Altus business combination, and earnings volatility from warrant liability accounting - A key risk is that the Sponsor, directors, and officers have financial interests in the business combination that differ from public stockholders, which may have influenced their decision to approve the deal with Altus[133][134][135] - The accounting for redeemable warrants as derivative liabilities, which are re-measured to fair value each quarter, may cause significant non-cash fluctuations in reported earnings and could adversely affect the company's stock price[136][138] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the reporting period - There were no unregistered sales of equity securities[139] Item 3. Defaults Upon Senior Securities This item is not applicable to the company Item 4. Mine Safety Disclosures This item is not applicable to the company Item 5. Other Information No other information is reported for the period - There is no other information to report for the period[139] Item 6. Exhibits This section lists exhibits filed, including the Business Combination Agreement with Altus Power and related support and rights agreements - Key exhibits filed include the Business Combination Agreement dated July 12, 2021, and related documents such as the Sponsor Support Agreement, PIPE Subscription Agreement, and Investor Rights Agreement[141][145][148][149]