TMC The Metals Co Inc. quarterly report, Q3 FY2020

Filing identity and business context

Important identity mismatch: The supplied filing is for Sustainable Opportunities Acquisition Corp. (SOAC), a Cayman Islands blank-check company, not TMC The Metals Co Inc. It reports the quarter ended September 30, 2020 and was filed November 13, 2020. Verify that this is the intended filing before relying on this summary.

SOAC had not begun operating activities or identified a business combination as of quarter-end. It intended to seek a target, with a stated focus on businesses with strong environmental, social and governance profiles. Its IPO closed May 8, 2020.

Financial results and position

At September 30, 2020, cash outside the trust was $1.650 million; trust investments were $300.065 million; total assets were $302.000 million; current liabilities were $943,090; and working capital was approximately $1.0 million. The balance sheet showed $10.5 million of deferred underwriting commissions, payable only if a business combination is completed. No working-capital loans were outstanding. No operating margin is meaningful because the company had no operating revenue.

For the nine months, operating cash use was $984,868, investing cash use was $300.0 million (the trust deposit), and financing cash provided was $302.635 million. Ending cash was $1.650 million. The company raised $300 million in its IPO and $9.5 million from private-placement warrants; IPO costs were approximately $17.4 million, including deferred underwriting commissions.

Changes, outlook, and risks

• There is no prior-year comparable operating period presented in the statements; SOAC was formed in December 2019 and completed its IPO in May 2020. The filing therefore does not provide a like-for-like prior-period comparison.
• Management expected available working capital and potential sponsor or insider borrowing capacity to fund operations through a business combination or one year from the filing. Such future loans were discretionary, not committed.
• SOAC had until November 8, 2021—18 months after its IPO—to complete a business combination. If it failed, public shares generally were to be redeemed from the trust, subject to specified deductions and legal claims; warrants could expire worthless.
• The company reported a $697,400 accrued potential termination fee under its consulting agreement. It had paid a nonrefundable $350,000 fee and would owe a further $2.65 million only upon completion of a business combination. The deferred $10.5 million underwriting commission was also contingent on completing a combination.
• Management reported no material change to previously disclosed risk factors except the risk that negative interest rates could reduce trust assets and public-share redemption value below $10 per share. The filing also describes uncertainty in finding and completing a suitable transaction.
• The filing reported no legal proceedings, no off-balance-sheet arrangements, and effective disclosure controls; it said internal control over financial reporting had not materially changed during the quarter.

Investor facts to verify

• Confirm that SOAC’s 2020 Form 10-Q, rather than a TMC filing, is the intended document.
• Verify trust assets, the number of public shares subject to redemption (28,555,717 at quarter-end), and the redemption terms.
• Review the business-combination deadline and liquidation provisions, including the possibility that warrants become worthless.
• Check the consulting termination-fee accrual, contingent consulting payment, and deferred underwriting commission against subsequent filings and transaction disclosures.
• Assess whether the stated sponsor funding capacity became an actual commitment; the filing says no working-capital loans were outstanding and future loans were not obligatory.