Filing summary
Important entity mismatch: The supplied filing is Empower Ltd.’s Form 10-Q, not Holley Inc.’s operating-company 10-Q. It covers the quarter ended March 31, 2021. Holley Intermediate Holdings, Inc. appears as the proposed merger target; this filing does not report Holley’s operating results.
Business context and financial results
Empower was a blank-check company seeking a business combination and had not commenced operations. It signed a merger agreement with Holley on March 11, 2021. Empower reported no operating revenue for the quarter.
- Net loss: $3.0 million, including $2.9 million of formation and operating costs, a $436,667 non-cash warrant-liability loss, and a $300,000 non-cash gain on the forward purchase agreement liability. Trust-account interest and unrealized gains totaled about $56,500.
- Cash flow: $53,691 used in operating activities. Cash outside the trust account fell to $1.03 million from $1.08 million at year-end.
- Assets and liquidity: Total assets were $251.5 million, including $250.1 million held in trust. Current liabilities were $3.0 million; the company disclosed a $1.65 million working-capital deficit.
- Liabilities and equity: Total liabilities were $29.0 million, including $15.5 million of warrant liabilities, $1.75 million of forward purchase agreement liability, and $8.75 million of deferred underwriting fees. No long-term debt was reported. Redeemable Class A shares of $217.4 million were presented outside shareholders’ equity; shareholders’ equity was $5.0 million.
- Profit margins are not meaningful because Empower had no operating revenue. The filing provides no Holley-specific revenue, profit, cash-flow, debt, or margin figures.
Changes, transaction and outlook
- Compared with December 31, 2020, trust assets rose slightly to $250.1 million; warrant liabilities increased from $15.1 million to $15.5 million, while the forward purchase liability declined from $2.05 million to $1.75 million. Accrued expenses rose to $3.0 million from $174,000.
- The proposed merger contemplated up to $387.5 million cash and at least $577.5 million of stock consideration for Holley’s owner, subject to adjustments. Planned funding included a $240 million PIPE and a $50 million forward purchase commitment. Closing depended on customary approvals and conditions, including at least $350 million of trust funds net of redemptions plus PIPE and forward-purchase proceeds.
- Management gave no operating guidance. It said substantial doubt existed about Empower’s ability to continue as a going concern if the business combination did not close; additional financing was uncertain. The SPAC’s stated deadline to complete a business combination was October 9, 2022.
- Management said COVID-19 could adversely affect the company or its target search, but the impact was not determinable. Warrant holders could lose their investment if no transaction closed.
Controls and unusual items
Empower restated prior financial statements after revising its accounting for warrants and the forward purchase agreement. It said the non-cash adjustments did not affect previously reported cash, total assets, revenue, or cash flows. Management concluded disclosure controls were ineffective at March 31, 2021 and identified a material weakness in accounting for these instruments; remediation efforts were underway, with no assurance they would be effective.
Key facts for investors to verify
- Confirm the intended filing: this is Empower Ltd.’s SPAC filing, not Holley Inc.’s operating-company results.
- Review Holley’s separate financial statements and the merger’s final terms, funding, redemption levels, and closing conditions.
- Check the status and effectiveness of Empower’s control remediation and any subsequent filings concerning the restatement.
- Assess whether the PIPE and forward purchase funding closed and whether transaction proceeds met the stated minimum condition.