Hyliion Holdings Corp. (formerly Tortoise Acquisition Corp.) — Form 10-Q Summary
Reporting period: Quarter ended June 30, 2020; filed August 6, 2020. This filing reports the SPAC’s pre-combination results, not Hyliion’s operating results. Tortoise was a shell company and had not commenced operating activities or generated operating revenue.
Financial position and results
| Metric | Q2 2020 / June 30, 2020 | Comparable period / prior balance |
|---|---|---|
| Operating revenue | None | None |
| Net income (loss) | Q2: $(2.26) million; first half: $(1.98) million | Q2 2019: $0.81 million; first half 2019: $1.00 million |
| Investment income | Q2: $0.11 million; first half: $0.87 million | Q2 2019: $1.31 million; first half 2019: $1.70 million |
| General and administrative expense | Q2: $2.27 million; first half: $2.53 million | Q2 2019: $0.15 million; first half 2019: $0.22 million |
| Cash and trust investments | Operating cash: $0.23 million; trust: $236.64 million | December 31, 2019: cash $0.92 million; trust $236.05 million |
| Working capital | Deficit of approximately $1.7 million | Prior comparable value not provided |
| Debt | No long-term debt; sponsor loan repaid in 2019 | — |
For the six months ended June 30, 2020, operating cash used was $0.97 million. Cash decreased by $0.69 million from year-end 2019. The filing reports no operating revenue, so operating margins are not meaningful. Current liabilities were $2.04 million, including $1.90 million of accounts payable. Additional disclosed obligations include $8.13 million of deferred underwriting commissions and $0.15 million of deferred legal fees, generally payable upon a completed business combination. The $236.64 million trust balance was invested in a money-market fund holding U.S. Treasury securities and is not ordinary operating liquidity.
Changes versus prior periods
- Q2 2020 shifted to a $2.26 million net loss from $0.81 million net income in Q2 2019; first-half results shifted to a $1.98 million loss from $1.00 million income in first-half 2019.
- Q2 general and administrative expense rose to $2.27 million from $0.15 million, primarily increasing the SPAC’s reported loss. Investment income fell to $0.11 million from $1.31 million, reflecting lower trust investment income.
- Accounts payable increased to $1.90 million from $8,097 at December 31, 2019; operating cash declined to $231,081 from $916,226.
Transaction, outlook, and risks
- On June 18, 2020, Tortoise agreed to combine with Hyliion, which designs and sells electrified powertrain solutions for Class 8 trucks. The transaction contemplated issuing 100 million shares to Hyliion holders, subject to the agreement and closing conditions. The company expected to change its name to Hyliion Holdings Corp. upon closing; the filing does not report a completed transaction.
- Investors committed to a $307.5 million PIPE at $10 per share, and Atlas Point agreed to purchase $17.5 million of forward purchase units. Funding was contingent on closing conditions. A preliminary proxy statement was filed July 10, 2020.
- The SPAC had until March 4, 2021 to complete a business combination, after which it would be required to redeem public shares and liquidate if no transaction closed. Management stated the working-capital deficit and mandatory liquidation raised substantial doubt about the company’s ability to continue as a going concern.
- COVID-19 could disrupt negotiations, due diligence, financing, or closing. Management provided no operating guidance or financial projections in this filing.
- Public-share redemptions could reduce cash available for the transaction. The filing also describes warrant dilution and possible adjustment provisions, registration rights, and lock-up arrangements. Trust assets could be subject to creditor claims that may have priority over public stockholders.
- Disclosure controls and procedures were deemed effective as of June 30, 2020; no material change in internal control over financial reporting was reported. No legal proceedings were reported.
Important facts for investors to verify
- Whether the merger and the PIPE and forward-purchase financings ultimately closed, and the final cash proceeds after redemptions, fees, and transaction costs.
- Final post-combination share count, including rollover shares, founder-share conversion, PIPE shares, warrants, and options, and the resulting dilution.
- Hyliion’s operating performance, cash needs, and forecasts in the separate merger materials and subsequent filings; this 10-Q does not provide Hyliion results or guidance.
- The SPAC’s limited operating cash, working-capital deficit, deferred transaction-related fees, and March 4, 2021 liquidation deadline as of the reporting period.
- Any changes in COVID-19 effects, closing conditions, redemption levels, financing commitments, or risks disclosed after June 30, 2020.