Business context and reporting period
This is Novus Capital Corporation II’s unaudited Form 10-Q for the quarter ended September 30, 2021—not an operating-company report from Energy Vault Holdings, Inc. Novus was a blank-check company with no operations or operating revenue. On September 8, 2021, it agreed to combine with Energy Vault, Inc.; the transaction had not closed by quarter-end.
Financial results and position
- Revenue and margins: No operating revenue; operating margins are not applicable. Novus reported operating and formation costs of $318,126 for the quarter and $779,783 for the nine months.
- Profit (loss): Third-quarter net income was $1.065 million, or $0.03 per share, mainly reflecting a noncash $1.379 million gain from the change in fair value of warrant liabilities. Nine-month net loss was $568,873, or $0.02 per share.
- Cash flow: Cash used in operating activities was $667,597 for the nine months. Cash at September 30 was $882,585; marketable securities in the Trust Account were $287.510 million.
- Liquidity and debt: Working capital was $779,120. Current liabilities were $256,519; the balance sheet reports no outstanding promissory note or long-term debt. Warrant liabilities were $16.129 million. Class A shares subject to redemption, $287.5 million, were presented as temporary equity.
- Assets and equity: Total assets were $288.536 million and stockholders’ deficit was $15.350 million.
Changes versus the prior comparable period
The filing compares 2021 results with the period from Novus’s September 2020 inception through September 30, 2020, when it reported no costs or cash flows. The quarter’s reported profit followed operating losses in the first half of 2021 and was driven primarily by warrant revaluation, rather than business operations. The company completed its $287.5 million IPO in February 2021 and announced the Energy Vault transaction in September.
Outlook, risks, contingencies and unusual items
- Proposed transaction financing: Investors agreed to buy 10,000,005 shares for $100.0 million in a PIPE, conditional on closing the business combination. The agreement also provides for up to 9 million earn-out shares if specified post-closing share-price targets are met.
- Going concern: The filing states that limited cash and expected transaction-search costs raise substantial doubt about Novus’s ability to continue as a going concern for at least one year after issuance. Sponsor, officer or director loans were possible but not committed. Novus’s MD&A also said it did not believe additional funds would be needed for operating expenditures, while acknowledging that estimates could prove insufficient.
- Restatement and controls: Novus restated prior-period financial statements after misclassifying redeemable Class A shares; it also restated earnings-per-share allocations. Management reported a material weakness in internal control over financial reporting related to complex financial instruments, and disclosure controls were deemed ineffective.
- Fees and transaction costs: Closing would trigger a 3.5% underwriting-advisory fee on IPO gross proceeds, as well as other contingent vendor fees disclosed in the filing, including a $7.5 million advisory fee plus expenses and additional fees tied to the PIPE or transaction closing.
- Other risks: Public shareholders could redeem shares in connection with a business combination. If Novus failed to complete a transaction by February 8, 2023, it would be required to liquidate and redeem public shares; warrants would expire worthless. Management said the potential financial effects of COVID-19 were not readily determinable.
Important facts for investors to verify
- Confirm the status and final terms of the proposed Energy Vault business combination, PIPE financing, redemptions and transaction-related fees.
- Review the restated statements and the remediation progress for the material weakness in financial reporting controls.
- Assess cash available outside the Trust Account, expected costs and the going-concern disclosure; trust assets are principally for a business combination or shareholder redemptions.
- Reconcile apparent inconsistencies in the filing text: the MD&A contains an IPO unit-count figure that conflicts with the financial statements and other disclosures, and the unregistered-sales section gives private-warrant figures that conflict with the notes.