Filing identity and business context
Important: The supplied filing is ACON S2 Acquisition Corp.’s Form 10-Q, not an ESS Tech, Inc. filing. ACON S2 was a newly formed blank-check company seeking a business combination, initially focused on businesses with a strategic approach to sustainability. The report covers July 21, 2020 (inception) through September 30, 2020; it reports no operating business or revenue. Its initial public offering closed September 21, 2020.
Financial position and results
| Metric | Reported amount |
|---|---|
| Revenue | None; the company had not commenced operations. |
| General and administrative expense / net loss | $41,854 / $(41,854); basic and diluted loss per share was $(0.01). |
| Cash and cash equivalents outside the trust | $1,746,458 at September 30, 2020. |
| Cash held in trust | $250.0 million, invested in U.S. government securities or qualifying money market funds. |
| Operating cash flow | $(26,800) used during the inception-to-quarter-end period. |
| Current assets / current liabilities | $2,167,049 / $816,145; management reported working capital of approximately $1.4 million. |
| Total liabilities | $9,566,145, including $8.75 million of deferred underwriting commissions. |
| Debt | No long-term debt reported. A sponsor note of approximately $112,000 was repaid at the IPO closing; no working-capital loans were outstanding. |
The company raised $250.0 million gross in its IPO and $7.0 million from a private placement of warrants. IPO offering costs were approximately $14.4 million, including deferred underwriting commissions. Of the Class A shares, 23,760,090 shares, valued at $237.6 million, were classified as subject to possible redemption outside shareholders’ equity. No meaningful prior comparable operating period is presented because the company was formed in July 2020.
Changes, outlook, and risks
- The underwriters’ over-allotment option expired unexercised on October 31, 2020; 937,500 founder shares were consequently forfeited after quarter-end.
- In October 2020, the company entered into an agreement for financial advisory services related to acquisition-target analysis and paid approximately $467,000.
- Management expected available working capital and potential sponsor or affiliate borrowing capacity to meet needs through the earlier of a business combination or one year from the filing. The company also had a $10,000-per-month administrative services agreement with its sponsor.
- The company had 24 months from the IPO closing, or until September 21, 2022, to complete a business combination; otherwise, it generally would redeem public shares and liquidate. Public shareholders had redemption rights, subject to stated limits.
- Management said COVID-19 could negatively affect the search for a target, but the impact was not readily determinable. The filing reported no material change to previously disclosed risk factors, no legal proceedings, and no off-balance-sheet arrangements.
- Disclosure controls were assessed as effective, with no material change in internal control over financial reporting reported for the period.
Key facts for investors to verify
- Confirm the issuer: this filing is for ACON S2 Acquisition Corp., not ESS Tech, Inc.
- Review the trust balance, redemption terms, liquidation deadline, and the effect of post-quarter-end forfeiture of founder shares.
- Check the treatment and payment conditions for the $8.75 million deferred underwriting commission and the October advisory-services payment.
- Assess the company’s ability to fund target searches and transaction expenses from cash outside the trust or potential related-party loans.