Business context and reporting period
The supplied filing is Petra Acquisition, Inc.’s unaudited Form 10-Q for the three and six months ended June 30, 2021—not a filing for Revelation Biosciences, Inc. Petra is a shell company formed to pursue a business combination; it had no operating revenue or business operations as of quarter-end.
Financial highlights
- Revenue: None; management expected no operating revenue before a business combination.
- Net loss: $1.331 million for Q2 2021, versus $521 for Q2 2020. For the first half, net loss was $153,000, versus $7,681 in 2020.
- Expenses and warrant valuation: Q2 general and administrative expense was $842,000, and the change in fair value of warrant liabilities was a $491,000 loss. First-half general and administrative expense was $1.311 million, partly offset by a $1.171 million gain from the warrant-liability revaluation.
- Cash flow: Operating activities used $218,000 in the first half of 2021. Cash and cash equivalents were zero at June 30; marketable securities outside the trust were $302,000.
- Liquidity and liabilities: Trust assets were $73.515 million, primarily in U.S. Treasury securities, and were intended principally to fund a business combination. Current liabilities were $3.313 million; management reported a $2.939 million working-capital deficiency. Total liabilities were $6.224 million, including $2.911 million of deferred underwriting commissions payable only if a business combination closes. The company reported no long-term debt.
- Equity: $73.509 million of public shares was classified as temporary equity subject to possible redemption. Stockholders’ deficit was $5.845 million.
Material changes versus the prior comparable period
Costs increased substantially as the company operated as a public SPAC and pursued a target; the prior-year periods reflected only minimal pre-IPO expenses. The Q2 loss also included a warrant fair-value charge, while the first-half result benefited from a warrant revaluation gain. The company’s reported financial statements had previously been restated to classify derivative warrants as liabilities; the filing says the related control weakness remained outstanding.
Outlook, risks and unusual items
- The company had until 12 months after its October 13, 2020 IPO closing to complete a business combination. If it failed to do so, it was required to cease operations, redeem public shares from the trust and liquidate; warrants could expire worthless.
- Management believed available working capital and borrowing capacity would cover needs through a business combination or one year from the filing. However, outside-trust cash was zero, the company reported a working-capital deficit, and sponsor or insider loans were optional, not committed.
- Management warned it might need financing to complete a transaction or cover redemptions. Issuing shares could dilute holders; debt could add repayment, covenant and default risks.
- Disclosure controls were deemed ineffective because of a material weakness associated with the prior restatement. Management described remediation plans but gave no assurance they would be effective.
- The filing reported no pending legal proceedings and no material changes to previously disclosed risk factors. A business-combination marketing fee of 4% of IPO gross proceeds would be payable upon a completed transaction.
Important facts for investors to verify
- Confirm the issuer identity: this source is Petra Acquisition, Inc., despite the request metadata naming Revelation Biosciences, Inc.
- Check whether Petra completed a business combination before its stated deadline and the resulting redemption, liquidation or extension outcome.
- Review the prior restatement, warrant-liability valuation assumptions and progress remediating the material weakness.
- Assess usable funds outside the trust, accrued transaction expenses, potential insider financing and the terms and dilution effects of any business-combination financing.