Business context and reporting period
Entity mismatch: The supplied filing is for Good Works Acquisition Corp., not Cipher Digital Inc. It is a 10-Q for the quarter ended September 30, 2020, signed December 3, 2020. Good Works was a newly formed SPAC seeking a business combination and had not begun operations by quarter-end.
Financial results and position
- Revenue: None; the company had not commenced operations. Revenue and operating margins are therefore not meaningful.
- Expenses and loss: Formation and operating costs were $3,576, producing a net loss of $3,576 for both the quarter and the period from inception (June 24, 2020) through September 30. Basic and diluted loss per share was reported as $(0.00).
- Cash flow: Operating cash used was $3,576. Financing activities provided $40,391 during the quarter and $65,391 from inception. Cash at September 30 was $61,815.
- Balance sheet and liquidity: Total assets were $281,424, including $219,609 of deferred offering costs. Current liabilities were $260,000 ($125,000 accrued expenses and a $135,000 related-party note); stockholders’ equity was $21,424. Management reported a working-capital deficit of approximately $198,000.
- Debt: No long-term debt was reported. The $135,000 non-interest-bearing related-party note was repaid from IPO proceeds on October 22, 2020.
Changes, subsequent events, and outlook
There is no comparable prior-year period because the company was incorporated in June 2020. After quarter-end, Good Works completed a $150 million IPO on October 22, 2020 and a private placement. Underwriters subsequently exercised the over-allotment option for an additional $20 million of gross proceeds. The filing says $170 million was placed in trust; it also reports net proceeds of $171.4 million, including the private placement, after specified offering costs. The company intended to use substantially all trust funds toward a business combination and was searching for a target.
The company had 21 months from the IPO closing to complete a business combination or liquidate and redeem public shares. It disclosed a 4.5% of IPO gross proceeds business-combination marketing fee payable to I-Bankers upon a completed transaction, and an administrative-services fee of up to $5,000 per month beginning after the IPO. Management said existing resources were expected to cover operating needs, but costs could exceed estimates and additional financing might be needed to complete a transaction or meet redemption obligations. Failure to complete a transaction could require liquidation.
Risks, contingencies, and other disclosures
- Management stated that COVID-19 could adversely affect the company’s financial position, operations, or target search, but the impact was not determinable; the statements included no related adjustments.
- Public shareholders would have redemption rights in connection with a business combination. Warrants would receive no trust-account distribution if the company liquidated and could expire worthless.
- The sponsor agreed to limited protection against certain third-party claims that reduce trust funds below $10 per public share, subject to stated exceptions.
- No legal proceedings or material changes to previously disclosed risk factors were reported. Management concluded disclosure controls were effective and reported no material change in internal control over financial reporting.
- The filing contains inconsistent private-placement amounts: $2.28 million in the notes and other disclosures versus $2.228 million in the MD&A. The source text also has a garbled description of the trust-account investment maturity; verify against the filed exhibits or prospectus.
Important facts for investors to verify
- Confirm the issuer identity: this filing is Good Works Acquisition Corp., not Cipher Digital Inc.
- Reconcile the private-placement amount and the reported IPO, trust-account, and net-proceeds figures.
- Review the post-quarter IPO and over-allotment details, trust balance, redemption terms, and the 21-month business-combination deadline.
- Assess the related-party arrangements, contingent transaction fees, potential financing needs, and liquidation/warrant-loss risks.