Filing identity and reporting period
Important issuer mismatch: The supplied filing is ROC Energy Acquisition Corp.’s Form 10-Q, not a filing by Drilling Tools International Corp. ROC Energy was a blank-check company seeking a business combination. This unaudited report covers the quarter and six months ended June 30, 2022; it was signed August 12, 2022.
Financial performance and position
- Revenue: No operating revenue; the company had not begun operations beyond its search for a business combination.
- Net loss: $101,620 for Q2 2022 and $327,734 for the six months ended June 30, 2022. Q2 general and administrative expense was $275,968; six-month expense was $565,295. Trust-account interest income was $197,788 and $261,001, respectively.
- Cash flow: Operating activities used $1,014,287 in the first half. Cash declined by $959,236, from $1,361,137 at year-end 2021 to $401,901 at June 30, 2022. The company withdrew $66,351 of trust interest for franchise and income taxes.
- Liquidity and assets: The Trust Account held $209,281,524, mostly U.S. Treasury securities; this was largely earmarked for a business combination or shareholder redemptions, not general operating expenses. Total assets were $210,101,506.
- Debt and liabilities: No debt or working-capital loans were outstanding. Total liabilities were $231,225, including $23,415 of income taxes payable. Stockholders’ equity was $800,281, excluding $209,070,000 of redeemable shares classified as temporary equity.
- Margins: Not meaningful because the company had no operating revenue.
Changes versus prior period
The filing does not provide prior-year quarterly or six-month operating results for comparison. Compared with December 31, 2021, outside cash fell by $959,236, prepaid expenses rose to $418,081 from zero, and total assets declined by $346,505. Redeemable shares remained at $209,070,000.
Outlook, risks, and unusual items
- ROC Energy had until December 6, 2022 to complete a business combination, with potential extensions to June 6, 2023 if the Sponsor funded two $2,070,000 loans, one for each three-month extension. Failure to complete a transaction would require liquidation and redemption of public shares.
- Management stated that uncertainty over completing a transaction and potentially inadequate working capital raised substantial doubt about the company’s ability to continue as a going concern. The company warned that it might not have sufficient liquidity to fund operations through liquidation or one year from issuance of the statements.
- Risks included proposed SEC SPAC rules and possible Investment Company Act treatment, which could increase costs, delay or prevent a transaction, or lead to liquidation. The filing also cited inflation, interest rates, market volatility, the COVID-19 pandemic, the Russia-Ukraine war, and possible CFIUS or foreign-ownership review of certain U.S. targets.
- The company reported no pending or contemplated litigation known to management, no off-balance-sheet arrangements, and no material subsequent events. Management assessed disclosure controls as effective and reported no material changes in internal control during the quarter.
Key facts for investors to verify
- Confirm the filing belongs to ROC Energy Acquisition Corp.; it does not report Drilling Tools International’s results.
- Check whether ROC Energy completed a business combination or extended its deadline, given the December 6, 2022 deadline and going-concern warning.
- Distinguish the $209.3 million Trust Account from the $401,901 of cash available outside the Trust Account.
- Review the potential effect of redemptions, extension loans, transaction fees, and regulatory requirements on funds and post-combination ownership.