Filing Summary
Business context and reporting period
This is Pivotal Investment Corporation II’s unaudited Form 10-Q for the quarter ended June 30, 2019, signed August 26, 2019. Although the request identifies Spruce Power Holding Corp, the filing itself is for Pivotal Investment Corporation II, a shell company formed to pursue a business combination. It had not begun operating or generating revenue as of quarter-end; its search focus was North American businesses facing disruption from digital technology.
Financial position and results
- At June 30, 2019, cash was $37,045, deferred offering costs were $133,736, and total assets were $170,781.
- Current liabilities were $146,235, including a $125,000 non-interest-bearing related-party promissory note. Stockholders’ equity was $24,546. The company reported no long-term debt or lease obligations.
- Net loss was $79 for the three months ended June 30 and $454 from inception on March 20 through June 30, consisting of formation and operating costs. There was no revenue; margins were not meaningful. Basic and diluted loss per share was reported as $(0.00).
- From inception through June 30, operating cash use was $79 and financing provided $37,124, leaving $37,045 cash. The filing gives no comparative prior-year results, consistent with the company’s recent formation.
Material developments and outlook
- After quarter-end, on July 16, 2019, the company completed an IPO of 23 million units at $10 each, raising $230 million gross, and a private placement of warrants raising $6.35 million. It deposited $230 million in trust and held $1,304,815 outside the trust for working capital. IPO transaction costs were $13,185,704. The $125,000 related-party note was repaid at the IPO closing.
- Management expects no operating revenue until a business combination, with interest income anticipated on trust assets and higher public-company, diligence, and transaction costs. It stated it did not expect to need additional funds for pre-combination expenditures, but warned that cost overruns or a need for additional transaction financing could require new securities or debt.
- The company must complete a business combination by January 16, 2021. If it does not, it must cease operations and redeem public shares from the trust, subject to applicable terms; warrants would expire worthless. There is no assurance a transaction will be completed.
- A sponsor-affiliated party agreed to consider a forward purchase of up to $150 million of securities at a business combination, but the commitment is conditional and the party may decline, requiring alternate financing. Public shareholders may redeem shares in connection with a transaction; the company must meet a $5,000,001 net tangible asset threshold to complete one.
- Management reported disclosure controls were effective as of June 30, 2019 and no material change in internal control during the quarter. The company reported no off-balance-sheet arrangements and no material market-risk exposure at quarter-end.
Important facts to verify
- Confirm the issuer identity: this filing is for Pivotal Investment Corporation II, not Spruce Power Holding Corp.
- Review subsequent IPO disclosures and the use of trust and outside-trust proceeds, including the stated transaction costs.
- Assess the January 16, 2021 business-combination deadline, redemption mechanics, and the risk that a transaction may not close.
- Verify the conditions and availability of the potential $150 million forward purchase and any need for alternative financing.