Business context and reporting period
This is Fortress Value Acquisition Corp.’s unaudited Form 10-Q for the quarter ended June 30, 2020—not an operating-company filing by MP Materials. Fortress was a blank-check company formed to pursue a business combination. It completed its IPO on May 4, 2020, raising $345.0 million gross, and reported that it had no operating revenue and was seeking a target.
After quarter-end, on July 15, 2020, Fortress announced a definitive merger agreement with MP Materials, which owns and operates Mountain Pass. The proposed transaction was unanimously approved by Fortress’s board in July, but remained subject to closing conditions, including any required regulatory approvals.
Financial metrics
| Metric | Reported amount or detail |
|---|---|
| Revenue | None; Fortress said it would not generate operating revenue before a business combination. |
| Net loss | $316,341 for the three months ended June 30, 2020; $321,841 from inception on January 24 through June 30. |
| Quarter expenses and income | General and administrative expenses of $266,402 and franchise tax expense of $86,814, partly offset by $36,875 of interest income. |
| Cash and trust assets | $1.43 million cash outside the Trust Account; $345.04 million in Trust Account investments, principally held for a business combination or redemptions. |
| Liquidity | Working capital surplus of $809,216. Management believed available cash and borrowing capacity would cover needs through a business combination or one year from issuance of the statements. |
| Cash flow | From inception through June 30, net cash used in operating activities was $388,966; net cash used in investing activities was $345.0 million, reflecting the Trust Account deposit; net cash provided by financing activities was $346.82 million. |
| Debt and obligations | No Working Capital Loans were outstanding at June 30. A $211,382 sponsor loan had been repaid. The balance sheet included $12.075 million of deferred underwriting commissions, payable only if a business combination is completed. |
No operating margins are meaningful because the company had no operating revenue. The filing gives no MP Materials revenue, profit, cash flow, debt, or operating metrics.
Changes versus prior comparable period
The filing does not provide a prior-year quarter comparison; Fortress was incorporated in January 2020 and completed its IPO in May. The inception-to-date results include pre-IPO formation activity as well as the quarter’s activity, so they are not a like-for-like prior-period comparison.
Outlook, risks, and unusual items
- Fortress intended to use substantially all Trust Account proceeds, subject to redemptions and transaction terms, to complete its initial business combination. It had 24 months from the IPO closing—through May 2022—to do so or redeem public shares and wind up.
- Public stockholders could redeem shares for a pro rata share of the Trust Account in connection with a transaction. Significant redemptions or higher-than-expected transaction costs could leave Fortress needing additional financing; such financing was not assured.
- The proposed MP Materials transaction might not close, might be delayed, or might not deliver anticipated benefits. The filing cites regulatory and other closing conditions, potential litigation, transaction costs, and risks to MP Materials’ business and competitive position.
- COVID-19 was identified as a source of economic and market uncertainty that could adversely affect results, cash flows, or the search for a target; the specific impact was not determinable.
- Trust Account funds were invested in short-term U.S. government securities or qualifying money-market funds. Fortress stated it was not then subject to material market or interest-rate risk.
- Management reported effective disclosure controls and no material change in internal control over financial reporting during the quarter. No legal proceedings were reported.
Important facts for investors to verify
- Review the July 15, 2020 merger agreement and subsequent filings for transaction consideration, financing, closing conditions, redemption levels, and status of required approvals.
- Confirm the amount of Trust Account funds available after redemptions, transaction expenses, and the deferred underwriting commission.
- Assess whether Fortress’s outside-trust cash and any available sponsor financing are sufficient for transaction and public-company costs.
- Use MP Materials’ own filings and transaction disclosures to evaluate its operating results, debt, liquidity, capital needs, and business risks; these are not reported in this 10-Q.
- Consider the SPAC’s liquidation deadline and the consequences for public shares and warrants if no business combination is completed.