Business context and reporting period
EVgo Inc. filed this Form 10-Q for the quarter ended June 30, 2021. The financial statements principally reflect Climate Change Crisis Real Impact I Acquisition Corporation, a SPAC that had not commenced EVgo’s charging-network operations or generated operating revenue by quarter-end. The business combination with EVgo Holdings closed on July 1, 2021, after the reporting period.
Financial results and liquidity
- Revenue: No operating revenue was reported for the three or six months ended June 30, 2021.
- Net loss: $25.8 million for Q2 and $56.7 million for the first six months. Operating and formation costs were $4.4 million and $6.3 million, respectively.
- Key unusual expense: Noncash warrant fair-value losses were $21.4 million in Q2 and $50.4 million for the six months, the principal drivers of reported net loss. The filing does not provide a meaningful operating margin for EVgo’s business for this period.
- Cash flow: Operating activities used $1.1 million in the first six months. Financing activities provided $264.3 million, including reported PIPE proceeds of $264.1 million and a $0.28 million note payable. Period-end cash was $264.3 million.
- Assets and liquidity: Total assets were $494.5 million, including $230.0 million held in the Trust Account. The Trust Account was substantially used to complete the business combination on July 1.
- Liabilities: Total liabilities were $361.6 million, including an $83.3 million warrant liability, a $264.1 million PIPE Investment liability, and $8.1 million in deferred underwriting fees. The $0.28 million note payable to Holdings was repaid in connection with the July 1 closing. No long-term debt was reported.
Material changes and comparability
Compared with December 31, 2020, cash increased from $1.0 million to $264.3 million, while the warrant liability rose from $32.8 million to $83.3 million. The filing presents no prior-year comparable income statement; the reported results are those of a pre-combination SPAC and should not be read as EVgo’s operating performance. The business combination and related PIPE occurred at or after quarter-end, so the reported balance sheet and results do not represent the post-combination company’s ongoing operations.
Outlook, risks and other notable items
- The filing provides no EVgo operating guidance or quantitative outlook. Management said it did not expect to need additional funds for expenditures after completion of the business combination.
- Management noted that COVID-19 could adversely affect financial position, results, or the search for a target, but said the specific impact was not readily determinable.
- Warrants are accounted for as liabilities and remeasured at fair value each reporting date; changes can materially affect reported earnings without affecting cash flows.
- Disclosure controls were deemed ineffective as of June 30, 2021 because of a material weakness in warrant accounting. The company had previously concluded that its 2020 financial statements should not be relied upon due to that accounting issue and described remediation plans, with no assurance they would be effective.
- The company reported no material legal proceedings and no material changes to previously disclosed risk factors.
Important facts for investors to verify
- Review post-combination filings for EVgo’s operating revenue, network growth, profitability, cash burn, and liquidity; this quarter’s statements do not provide those operating results.
- Reconcile the $400 million gross PIPE subscription commitment with the $264.1 million of PIPE proceeds and PIPE liability reflected in this filing, including closing adjustments and transaction costs.
- Check how the July 1 closing affected cash available to EVgo, deferred underwriting fees, and other transaction liabilities.
- Monitor warrant fair-value movements and the company’s progress in remediating the disclosed material weakness.