Business context and reporting period
Registrant mismatch: This filing is for VPC Impact Acquisition Holdings, a Cayman Islands blank-check company, not an operating-company 10-Q for Bakkt, Inc. It covers the period from inception on July 31, 2020 through September 30, 2020; there is no prior comparable period. The company had not commenced operations and had not selected a business-combination target or begun substantive target discussions.
Financial results and position
- Revenue: No operating revenue. The company expects no operating revenue until after a business combination.
- Profit: Net loss was $17,379, comprising $17,543 of operating costs, partly offset by $164 of trust-account interest. Margins are not meaningful for this pre-operating SPAC.
- Cash flow: Operating activities used $289,300; investing activities used $200.0 million to fund the trust account; financing activities provided $201.5 million. Period-end cash outside the trust was $1.23 million.
- Assets and liquidity: Total assets were $201.5 million, including $200.0 million in trust-account cash and U.S. Treasury money-market investments. Prepaid expenses were $278,363. Management expected outside-trust cash to fund search and transaction costs, but noted actual costs could exceed estimates.
- Liabilities and equity: Total liabilities were $7.0 million, mainly a $7.0 million deferred underwriting fee payable only if a business combination is completed. Shareholders’ equity was $5.0 million; 18.95 million Class A shares, or $189.5 million at $10 per share, were classified as subject to possible redemption outside permanent equity. No long-term debt was reported.
Material changes and unusual items
The company completed its IPO on September 25, 2020, selling 20.0 million units for $200.0 million, and raised $6.0 million through private-placement warrants. On October 1, after quarter-end, underwriters exercised part of the over-allotment option: an additional 737,202 units and 147,440 private warrants generated $7.52 million gross, with $7.37 million added to the trust. The trust balance consequently rose to $207.37 million after quarter-end. The remaining over-allotment option was forfeited, with 565,700 founder shares forfeited and 184,300 no longer subject to forfeiture.
Outlook, risks and contingencies
- The company had until September 25, 2022 to complete a business combination; otherwise, it must cease operations and redeem public shares, subject to stated terms. Warrants could expire worthless if no combination is completed.
- Management said it did not expect to need additional funds for ordinary operating expenditures, but warned that search costs may exceed estimates and additional financing may be needed to complete a transaction or address redemptions.
- COVID-19 could adversely affect the company’s financial position or target search, but the specific impact was not determinable. The filing added that negative interest rates could reduce trust assets and cause redemptions below $10 per public share.
- The company pays its Sponsor up to $10,000 monthly for administrative services. It had no outstanding working-capital loans at quarter-end. The Sponsor’s trust-protection indemnity has stated exclusions and may not cover all third-party claims.
- Management reported disclosure controls were effective and no material change in internal control. No legal proceedings or material risk-factor changes beyond the negative-interest-rate risk were reported.
Important facts for investors to verify
- Confirm the intended issuer: this document identifies VPC Impact Acquisition Holdings, not Bakkt, Inc.
- Verify the post-quarter over-allotment proceeds, $207.37 million trust balance, and founder-share adjustment against subsequent filings.
- Review the terms and potential dilution from public and private warrants, founder-share conversion, and any future financing.
- Assess the business-combination deadline, redemption mechanics, deferred underwriting fee, and the risks that no transaction is completed or trust value declines.