Aeva Technologies, Inc. annual report, FY2020

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Business context and reporting period

This is InterPrivate Acquisition Corp.’s Form 10-K for the year ended December 31, 2020—not an operating-company 10-K filed by Aeva Technologies. InterPrivate was a blank-check company formed to complete a business combination; it had not commenced operating activities or generated revenue. Aeva is discussed as the target of a proposed merger.

InterPrivate signed the Aeva business combination agreement on November 2, 2020. Stockholders approved the transaction on March 11, 2021, after year-end; closing was expected on March 12, 2021. The transaction valued Aeva at $1.7 billion, subject to the agreement’s terms. If completed, Aeva stockholders were expected to own a majority of the combined company.

Financial results and liquidity

  • Revenue: None. InterPrivate did not expect operating revenue before completing a business combination.
  • 2020 results: Operating and formation costs were $2.52 million; trust-account interest income was $1.79 million; income-tax provision was $0.20 million; and net loss was $0.93 million. The 2019 comparison covers only inception through December 31, 2019, when net loss was $1,000, so it is not a full-year comparison.
  • Cash flow: Cash used in operating activities was $1.41 million. Cash at year-end was $694. The filing’s MD&A contains a conflicting $923,821 net-loss figure in its cash-flow discussion; the audited statements report net loss of $932,821.
  • Assets and liquidity: Year-end assets were $243.14 million, principally $243.13 million in trust-account securities. The company reported a $1.11 million working-capital deficit and $1.33 million in current liabilities.
  • Debt and funding: No long-term debt was reported. A sponsor affiliate had advanced $353,994 by year-end; a subsequent convertible note allowed borrowings up to $1.5 million, and the filing says the remaining availability was drawn after January 29, 2021, with conversion into units intended at closing.
  • Margins: Operating and profit margins are not meaningful for this pre-combination blank-check company.

Material changes, outlook and risks

  • InterPrivate completed its IPO and over-allotment in February 2020, raising $241.5 million in public-unit gross proceeds, and placed $241.5 million in the trust account. At year-end, trust assets had increased to $243.13 million, including interest and unrealized gains.
  • Proposed merger financing included a November 2020 PIPE of approximately $120 million and a December 2020 PIPE described as approximately $200 million. A subsequent-events note also describes a January 2021 $200 million private placement; the filing text does not clearly establish whether this is separate from, or replaces, the December commitment.
  • The filing estimated approximately $52 million of transaction expenses payable at closing. This includes an $8.45 million fee payable to EarlyBirdCapital, subject to the agreement’s terms.
  • Going concern: The auditor and management cited substantial doubt about InterPrivate’s ability to continue as a going concern through November 6, 2021 if it failed to complete a business combination. The company depended on additional financing for working capital; sponsor and insider loans were discretionary, not assured. Trust funds were generally restricted to a business combination or public-share redemptions.
  • Contingencies: Two stockholder lawsuits alleged incomplete or misleading merger disclosures and sought, among other relief, to block the transaction. InterPrivate said it believed the claims were without merit and intended to defend them. Aeva could owe a $68 million termination fee in certain circumstances if the merger agreement were terminated.
  • Other risks: Management said the potential impact of COVID-19 on the company and its search for a target was not readily determinable. Public warrants could expire worthless if no business combination occurred. InterPrivate reported effective disclosure controls and internal control over financial reporting; the auditor did not provide an internal-control attestation because of the company’s emerging-growth-company exemption.

Important facts for investors to verify

  1. Confirm whether the merger closed as expected and the final share issuance, redemption level, and cash available to the combined company.
  2. Reconcile the December 2020 and January 2021 $200 million PIPE disclosures, and verify which commitments funded at closing.
  3. Review final transaction expenses, including advisory and placement fees, against the approximately $52 million estimate.
  4. Check the status and resolution of the stockholder lawsuits and any resulting changes to merger disclosures or terms.
  5. Verify the post-closing capitalization, warrant terms, lock-ups, and conversion of the sponsor-affiliate note.