Energy Vault Holdings, Inc. — filing summary
Important issuer mismatch: The supplied Form 10-Q is for Novus Capital Corporation II, a blank-check company, not Energy Vault Holdings, Inc. The filing covers the quarter ended March 31, 2021.
Business context and reporting period
Novus had not begun operations and was seeking a business combination. It completed its IPO in February 2021 and reported no operating revenue for the quarter. It intended to focus on technology and related sectors, including sustainable smart-city systems, but was not limited to a particular industry.
Key financial metrics
| Metric | Three months ended March 31, 2021 or period-end |
|---|---|
| Operating revenue | None |
| Operating and formation costs | $186,183 |
| Net loss | $1,628,037 |
| Net loss per share, non-redeemable common stock | $0.21 |
| Cash outside Trust Account | $1,281,731 |
| Marketable securities in Trust Account | $287,501,085 |
| Total assets | $289,009,712 |
| Total liabilities | $17,918,922, including $17,773,332 of warrant liability |
| Cash flow from operating activities | $(303,451) |
| Cash flow from investing activities | $(287,500,000) |
| Cash flow from financing activities | $288,912,328 |
The loss included a $1,201,666 expense from the increase in warrant fair value and $241,311 of warrant-related transaction costs. Interest income was only $1,123. Operating margins are not meaningful because the company had no operating revenue. The filing reports no long-term debt; its main reported liability was the warrant liability.
Changes versus the prior period
The filing does not provide a comparable first-quarter 2020 income or cash-flow period. Compared with December 31, 2020, cash rose from $172,854 to $1,281,731, while total assets rose from $209,896 to $289,009,712, principally reflecting the February IPO and funding of the Trust Account. Warrant liabilities were newly recognized following the accounting restatement described below.
Outlook, risks, contingencies, and unusual items
- Business-combination deadline: Novus had until February 8, 2023 to complete a transaction; otherwise, it generally must redeem public shares and liquidate. Public warrants could expire worthless.
- Funding: Management said it did not expect to need additional funds for operating expenditures, but noted that higher-than-expected search costs, a transaction, or substantial shareholder redemptions could require additional financing. The filing provides no operating or financial guidance.
- Restatement and controls: After the SEC’s April 12, 2021 staff statement, the company concluded that its public and private warrants should be classified as liabilities rather than equity. It recognized changes in fair value through earnings and reported a material weakness in internal control over financial reporting. Management concluded disclosure controls were not effective and described remediation plans, with no assurance they would succeed.
- Other risks: Management said COVID-19 could adversely affect the company or its target search, but the impact was not readily determinable. The filing also cites competition for SPAC targets, rising directors’ and officers’ insurance costs, warrant-valuation volatility, and potential litigation related to the control weakness or accounting change. It reported no pending legal proceedings.
- Contingencies and fees: The underwriters were entitled to a deferred $5.75 million fee and a 3.5% business-combination advisory fee, payable upon a completed combination. Trust funds were intended primarily for a business combination and were subject to public-share redemption rights.
Important facts for investors to verify
- Confirm the issuer: this filing is for Novus Capital Corporation II, not Energy Vault Holdings, Inc.
- Review the warrant restatement, valuation assumptions, and the reported $17.8 million warrant liability, including its potential effects on earnings.
- Assess remediation of the material weakness and whether subsequent filings report effective financial controls.
- Reconcile inconsistent offering descriptions in the filing: the financial statements and notes report $7.75 million from 5,166,666 private-placement warrants at $1.50 each, while the “Unregistered Sales” section states materially different figures.
- Verify any later business-combination, financing, redemption, or liquidation developments; this filing describes the company’s position as of March 31, 2021.