Eos Energy Enterprises, Inc. — 2020 Q2 filing summary
Important entity clarification: This Form 10-Q is for B. Riley Principal Merger Corp. II, a blank-check company, not Eos Energy Enterprises. It reports the SPAC’s quarter ended June 30, 2020 and contains limited information about Eos in connection with a proposed business combination.
Business context and proposed transaction
- The SPAC completed its IPO on May 22, 2020 and was evaluating acquisition targets. It had no operating revenue or business operations as of June 30.
- On June 24, 2020, it signed a letter of intent with privately held Eos Energy Storage LLC, described as a long-duration energy-storage provider. The proposed transaction contemplated an Eos valuation of approximately $290 million and approximately $225 million of additional equity financing, including a $50 million private placement backstopped by B. Riley Financial, assuming no public-share redemptions.
- The SPAC also had a separate forward purchase agreement for an affiliate to buy $25 million of units at the business-combination closing. The filing expected the transaction in Q4 2020, but it remained subject to a definitive agreement, shareholder approval and other conditions; completion was not assured.
Financial results and liquidity
| Metric | Three months ended June 30, 2020 | Six months ended June 30, 2020 |
|---|---|---|
| Revenue | None | None |
| Operating costs | $96,677 | $97,131 |
| Interest income | $11,388 | $11,388 |
| Net loss | $85,289 | $85,743 |
| Basic and diluted loss per share | $0.01 | $0.01 |
- At June 30, the SPAC reported cash of $496,557, prepaid expenses of $257,884, and $176.8 million in its trust account. Total assets were $177.5 million.
- Current liabilities were $78,038; the balance sheet reported no long-term debt. The $100,000 sponsor note had been repaid after the IPO.
- Management reported working capital of $698,877 excluding $22,474 of Delaware franchise taxes payable. Based on the balance-sheet current assets and liabilities, net working capital is $676,403; investors should reconcile this difference with the filing’s presentation.
- Operating cash use was $277,254 for the six months. Financing activities provided $177.5 million, primarily from the IPO and private placement; $176.75 million was deposited into the trust account.
Changes, outlook and key risks
- Compared with the inception-to-June 2019 period, the SPAC had begun operations as a public company and recognized offering proceeds, trust assets, interest income and operating expenses. The prior-period statements show no operating costs or loss.
- The SPAC’s public shares were redeemable in connection with a business combination and classified as temporary equity: 17,074,119 shares, recorded at approximately $172.4 million. Public shareholders could redeem shares, subject to the $5,000,001 net-tangible-assets floor.
- The SPAC had until November 22, 2021 to complete a business combination; otherwise it generally had to redeem public shares and liquidate. Warrants would expire worthless if no combination was completed.
- Management expected continued costs while pursuing a transaction and warned available operating funds could prove insufficient if costs exceeded estimates. Additional financing might be needed, including if substantial public-share redemptions occurred.
- The filing reported no material changes to previously disclosed risk factors, no legal proceedings, no off-balance-sheet arrangements, and no material market or interest-rate risk. Management concluded disclosure controls were effective as of June 30.
Important facts for investors to verify
- Do not treat this SPAC filing as Eos’s operating results; review Eos’s own financial statements and subsequent filings for revenue, margins, cash flow, debt and operating outlook.
- Check whether the letter of intent became a definitive agreement and whether the proposed transaction closed, on what terms, and with what shareholder redemptions and financing.
- Verify the proposed $225 million financing package, the $50 million backstop and the separate $25 million forward purchase for overlap, conditions and actual funding.
- Reconcile reported working capital with the balance-sheet amounts and confirm trust funds available after redemptions, expenses and taxes.