NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note
1 — Description of Organization, Business Operations and Basis of Presentation
Switchback
Energy Acquisition Corporation (the “Company”) was incorporated in Delaware on May 10, 2019. The Company was formed
for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses (the “Business Combination”). Although the Company is not limited to a particular
industry or sector for purposes of consummating a Business Combination, the Company intends to focus its search for a target business
in the energy industry in North America. The Company is an emerging growth company and, as such, the Company is subject to all
of the risks associated with emerging growth companies.
As
of June 30, 2020, the Company had not commenced any operations. All activity for the period from May 10, 2019 (inception) through
June 30, 2020 relates to the Company’s formation and the initial public offering (the “Initial Public Offering”),
and, since the closing of the Initial Public Offering, the search for a prospective initial Business Combination.
The
Company’s sponsor is NGP Switchback, LLC, a Delaware limited liability company (the “Sponsor”). The registration
statement for the Initial Public Offering was declared effective on July 25, 2019. On July 30, 2019, the Company consummated the
Initial Public Offering of 30,000,000 units (the “Units” and, with respect to the shares of Class A common stock included
in the Units, the “Public Shares”) at $10.00 per Unit, generating gross proceeds of $300.0 million. The underwriters
were granted a 45-day option from the date of the final prospectus relating to the Initial Public Offering to purchase up to 4,500,000
additional Units to cover over-allotments, if any, at $10.00 per Unit, less underwriting discounts and commissions. On September
4, 2019, the underwriters partially exercised the over-allotment option and, on September 6, 2019, the underwriters purchased
an additional 1,411,763 units (the “Over-allotment Units”), generating gross proceeds of approximately $14.1 million,
and the remaining over-allotment option subsequently expired. The Company incurred offering costs of approximately of approximately
$17.7 million, inclusive of $10.9 million in deferred underwriting commissions (Note 5).
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the sale (the “Private Placement”) of 5,333,333
warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) at a
price of $1.50 per Private Placement Warrant in a private placement to the Sponsor, generating gross proceeds of approximately
$8.0 million (Note 4). Simultaneously with the closing of the sale of the Over-allotment Units, the Sponsor purchased an additional
188,235 Private Placement Warrants at a price of $1.50 per Private Placement Warrant, generating gross proceeds of approximately
$282,000.
Approximately
$314.1 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering (including the Over-allotment Units) and certain
of the proceeds of the Private Placement was placed in a trust account (“Trust Account”) located in the United States
with Continental Stock Transfer & Trust Company acting as trustee, and invested only in U.S. “government securities,”
within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company
Act”), with a maturity of 185 days or less, or in money market funds meeting the conditions of paragraphs (d)(1), (d)(2),
(d)(3) and (d)(4) of Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations,
as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of
the Trust Account as described below.
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public
Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied
generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business
Combination successfully. The Company must complete one or more initial Business Combinations having an aggregate fair market
value of at least 80% of the net assets held in the Trust Account (net of amounts disbursed to management for working capital
purposes and excluding the amount of any deferred underwriting discount held in trust) at the time of the agreement to enter into
the initial Business Combination. However, the Company will only complete a Business Combination if the post-transaction company
owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in
the target sufficient for it not to be required to register as an investment company under the Investment Company Act.
The
Company will provide holders of the Company’s outstanding Public Shares (the “Public Stockholders”) with the
opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection
with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether
the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely
in its discretion. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount
then held in the Trust Account (initially anticipated to be $10.00 per Public Share). The per-share amount to be distributed to
Public Stockholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will
pay to the underwriters (as discussed in Note 5). These Public Shares were recorded at a redemption value and classified as temporary
equity upon the completion of the Initial Public Offering. In such case, the Company will only proceed with a Business Combination
if, among other things, the Company has net tangible assets of at least $5,000,001 upon consummation of such Business Combination
and a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by law
and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to
its Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”), conduct the redemptions
pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents
with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law,
or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in
conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each
public stockholder may elect to redeem its Public Shares irrespective of whether they vote for or against the proposed transaction.
If the Company seeks stockholder approval in connection with a Business Combination, the Initial Stockholders (as defined below)
have agreed to vote their Founder Shares (as defined below in Note 4) and any Public Shares purchased during or after the Initial
Public Offering in favor of a Business Combination. In addition, the Initial Stockholders have agreed to waive their redemption
rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination.
Notwithstanding
the foregoing, the Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder
or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares
with respect to more than an aggregate of 20% of the Public Shares.
The
Sponsor and the Company’s officers and directors (the “Initial Stockholders”) have agreed not to propose an
amendment to the Certificate of Incorporation that would affect the substance or timing of the Company’s obligation to redeem
100% of the Public Shares if the Company does not complete a Business Combination within the time frame described below, unless
the Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.
If
the Company is unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or
July 30, 2021 (the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding
up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds
held in the Trust Account and not previously released to the Company to pay its franchise and income taxes (less up to $100,000
of interest to pay dissolution expenses), divided by the number of then-outstanding Public Shares, which redemption will completely
extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions,
if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval
of the Company’s remaining stockholders and its board of directors, dissolve and liquidate, subject in each case to the
Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
The
Initial Stockholders have agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to
complete a Business Combination within the Combination Period. However, the Initial Stockholders will be entitled to liquidating
distributions from the Trust Account with respect to any Public Shares that they hold if the Company fails to complete a Business
Combination within the Combination Period. The underwriters have agreed to waive their rights to the deferred underwriting commission
(see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination
Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available
to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the
residual assets remaining available for distribution (including Trust Account assets) will be only $10.00. In order to protect
the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a
third party (except for the Company’s independent registered public accounting firm) for services rendered or products sold
to the Company, or a prospective target business with which the Company has entered into a letter of intent, confidentiality or
other similar agreement or business combination agreement (a “Target”), reduce the amount of funds in the Trust Account
to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account due to
reductions in the value of the trust assets as of the date of the liquidation of the Trust Account, in each case including interest
earned on the funds held in the Trust Account and not previously released to the Company to pay its franchise and income taxes,
less franchise and income taxes payable. This liability will not apply with respect to any claims by a third party or Target that
executed an agreement waiving claims against and all rights to seek access to the Trust Account whether or not such agreement
is enforceable or to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against
certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). The
Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors
by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which the Company
does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held
in the Trust Account.
Basis
of Presentation
The
accompanying unaudited condensed financial statements are presented in U.S. dollars in conformity with accounting principles
generally accepted in the United States of America (“GAAP”) for financial information and pursuant to the rules
and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP. In the
opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal
recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Operating
results for the three and six months ended June 30, 2020 are not necessarily indicative of the results that may be expected
through December 31, 2020.
The
accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and
notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the
SEC on March 30, 2020.
Emerging
Growth Company
The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart
Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting
requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to,
not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of
the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements,
and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval
of any golden parachute payments not previously approved.
Further,
section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared
effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition
period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable.
The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised
and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt
the new or revised standard at the time private companies adopt the new or revised standard.
This
may make comparison of the Company’s financial statements with another public company that is neither an emerging growth
company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because
of the potential differences in accounting standards used.
Going
Concern Consideration
The
accompanying unaudited condensed financial statements have been prepared assuming that the Company will continue as a going concern,
which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business.
Through June 30, 2020, the Company’s liquidity needs have been satisfied through receipt of a $25,000 capital contribution
from the Sponsor in exchange for the issuance of the Founder Shares (Note 4) to the Sponsor, approximately $251,000 in loans from
the Sponsor (which were fully repaid on August 12, 2019), and the net proceeds from the consummation of the Private Placement
not held in the Trust Account.
As of June 30, 2020,
the Company had approximately $42,000 in its operating bank account, approximately $3.4 million of gain on marketable securities,
dividends and interest held in Trust Account available to fund a Business Combination (less up to $100,000 of interest to pay
dissolution expenses and net of taxes payable), and a working capital deficit of approximately $693,000 (including approximately
$816,000 in tax obligations, which will be paid using investment income held in the Trust Account). In addition, in order to finance
transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s
officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”).
As of June 30, 2020, there were no amounts outstanding under any Working Capital Loan.
Management has determined that the Company has access to funds
from the Sponsor that are sufficient to fund the working capital needs of the Company until the consummation of an initial Business
Combination or for a minimum of one year from the date of issuance of these unaudited condensed financial statements. However,
in connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standards
Board Accounting Standards Update 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a
Going Concern,” management has determined that the Company’s mandatory liquidation and subsequent dissolution raise
substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying
amounts of assets or liabilities should the Company be required to liquidate and dissolve after July 30, 2021.
Note
2 — Summary of Significant Accounting Policies
Use
of Estimates
The
preparation of these financial statements in conformity with GAAP requires the Company’s management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the balance sheet and the reported amounts of revenue and expenses during the reporting period. It is at least reasonably
possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the balance
sheet, which management considered in formulating its estimate, could change due to one or more future events. Actual results
could differ from these estimates.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution,
which, at times, may exceed the Federal Deposit Insurance Corporation limit of $250,000, and investments held in the Trust Account.
At June 30, 2020, the Company has not experienced losses on these accounts, and management believes that the Company is not exposed
to significant risks on such accounts. The Company’s investments held in the Trust Account as of June 30, 2020 is comprised
of money market funds which invest only in direct U.S. government treasury obligations.
Investments
Held in the Trust Account
The
Company’s portfolio of investments held in the Trust Account is comprised of U.S. government securities, within the meaning
set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market
funds that invest in U.S. government securities, or a combination thereof. The Company’s investments held in the Trust Account
are classified as trading securities. Trading securities are presented on the balance sheets at fair value at the end of each
reporting period. Gains and losses resulting from the change in fair value of these securities is included in gain on marketable
securities, dividends and interest held in Trust Account in the accompanying unaudited condensed statement of operations. The
estimated fair values of investments held in the Trust Account are determined using available market information.
Fair
Value of Financial Instruments
Fair
value is defined as the price that would be received for the sale of an asset or paid for the transfer of a liability in an orderly
transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes
the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets
for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
These tiers include:
|
●
|
Level
1, defined as observable inputs such as quoted prices for identical instruments in active
markets;
|
|
●
|
Level
2, defined as inputs other than quoted prices in active markets that are either directly
or indirectly observable such as quoted prices for similar instruments in active markets
or quoted prices for identical or similar instruments in markets that are not active;
and
|
|
●
|
Level
3, defined as unobservable inputs in which little or no market data exists, therefore
requiring an entity to develop its own assumptions, such as valuations derived from valuation
techniques in which one or more significant inputs or significant value drivers are unobservable.
|
In
some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy.
In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest
level input that is significant to the fair value measurement.
As
of June 30, 2020, the carrying values of cash, prepaid expenses, accounts payable, accrued expenses, and taxes payable approximate
their fair values due to the short-term nature of the instruments. The Company’s portfolio of investments held in the Trust
Account is comprised of investments in U.S. Treasury securities with an original maturity of 185 days or less, or
in money market funds which invest only in direct U.S. government treasury obligations, and are recognized at fair value.
The fair value for trading securities is determined using quoted market prices in active markets.
Offering
Costs Associated with the Initial Public Offering
Offering
costs consist of legal, accounting, underwriting fees and other costs that were directly related to the Initial Public Offering
and that were charged to stockholders’ equity upon the completion of the Initial Public Offering in July and September 2019.
Shares
of Class A Common Stock Subject to Possible Redemption
Shares
of the Company’s Class A common stock subject to mandatory redemption (if any) are classified as liability instruments and
are measured at fair value. Conditionally redeemable shares of the Company’s Class A common stock (including shares of the
Company’s Class A common stock that feature redemption rights that are either within the control of the holder or subject
to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary
equity. At all other times, shares of the Company’s Class A common stock are classified as stockholders’ equity. Shares
of the Company’s Class A common stock feature certain redemption rights that are considered to be outside of the Company’s
control and subject to the occurrence of uncertain future events. Accordingly, at June 30, 2020 and December 31, 2019, 30,082,207
and 30,047,981 shares of the Company’s Class A common stock subject to possible redemption, respectively, are presented
as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheets.
Net
Income (Loss) Per Share of Common Stock
Net
income (loss) per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding
during the periods. The Company has not considered the effect of the warrants sold in the Initial Public Offering (including the
consummation of the over-allotment) and Private Placement to purchase an aggregate of 15,992,155 shares of the Company’s
Class A common stock in the calculation of diluted income per share, since their inclusion would be anti-dilutive under the treasury
stock method.
The
Company’s unaudited condensed statements of operations includes a presentation of income per share for common stock subject
to redemption in a manner similar to the two-class method of income per share. Net income per share, basic and diluted for the
Company’s Class A common stock for the three months ended June 30, 2020 is calculated by dividing (i) the gain on marketable
securities, dividends and interest held in Trust Account of approximately $130,000, net of applicable taxes and funds available
to be withdrawn from the Trust Account for franchise and income tax obligations of approximately $77,000, resulting in an aggregate
of approximately $53,000, by (ii) the weighted average number of shares of the Company’s Class A common stock outstanding
for the period of 31,411,763 shares. Net loss per share, basic and diluted for the Company’s Class B common stock for the
three months ended June 30, 2020 is calculated by dividing (i) the net loss of approximately $124,000, less income attributable
to Public Shares of approximately $53,000, resulting in a net loss of approximately $177,000, by (ii) the weighted average number
of shares of the Company’s Class B common stock outstanding for the period of 7,852,941 shares.
Net
loss per share of common stock for the period from May 10, 2019 (inception) through June 30, 2019 is computed by dividing net
loss by the weighted average number of shares of common stock outstanding during the period. At June 30, 2019, the Company did
not have any dilutive securities and other contracts that could, potentially, be exercised or converted into common stock and
then share in the earnings of the Company. As a result, diluted loss per share is the same as basic loss per share for the period
presented.
Net
income per share, basic and diluted for the Company’s Class A common stock for the six months ended June 30, 2020 is calculated
by dividing (i) the gain on marketable securities, dividends and interest held in Trust Account of approximately $1.1 million,
net of applicable taxes and funds available to be withdrawn from the Trust Account for franchise and income tax obligations of
approximately $337,000, resulting in an aggregate of approximately $792,000, by (ii) the weighted average number of shares of
the Company’s Class A common stock outstanding for the period of 31,411,763 shares. Net loss per share, basic and diluted
for the Company’s Class B common stock for the six months ended June 30, 2020 is calculated by dividing (i) the net income
of approximately $342,000, less income attributable to Public Shares of approximately $792,000, resulting in a net loss of approximately
$449,000, by (ii) the weighted average number of shares of the Company’s Class B common stock outstanding for the period
of 7,852,941 shares.
Income
Taxes
The Company follows
the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated
future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation
allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. As of June 30,
2020, and December 31, 2019, the Company had a deferred tax asset of approximately $338,000 and $223,000, respectively, which
had a full valuation allowance recorded against it of approximately $338,000 and $223,000, respectively.
For
tax benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities.
There were no unrecognized tax benefits as of June 30, 2020 and December 31, 2019. The Company recognizes accrued interest and
penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and
penalties as of June 30, 2020 and December 31, 2019. The Company is currently not aware of any issues under review that could
result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations
by major taxing authorities since inception.
Recent
Accounting Pronouncements
Management does not believe
that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material impact
on the Company’s unaudited condensed financial statements.
Note
3 — Initial Public Offering
On
July 30, 2019, the Company sold 30,000,000 Units at a price of $10.00 per Unit in the Initial Public Offering. Each Unit consists
of one share of Class A common stock and one-third of one redeemable warrant (each, a “Public Warrant”). Each Public
Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment
(see Note 6). Certain officers and directors of the Company purchased 200,000 (the “Affiliated Units”) of the 30,000,000
Units sold in the Initial Public Offering for an aggregate purchase price of $2.0 million.
The
Company granted the underwriters a 45-day option from the date of the final prospectus relating to the Initial Public Offering
to purchase up to 4,500,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price, less underwriting
discounts and commissions. On September 4, 2019, the underwriters partially exercised the over-allotment option and, on September
6, 2019, the underwriters purchased the Over-allotment Units, generating gross proceeds of approximately $14.1 million. The remaining
over-allotment option subsequently expired.
Note
4 — Related Party Transactions
Founder
Shares
On
May 16, 2019, the Sponsor purchased 8,625,000 shares (the “Founder Shares”) of the Company’s Class B common
stock, par value $0.0001 per share, for an aggregate price of $25,000. The Initial Stockholders agreed to forfeit up to 1,125,000
Founder Shares to the extent that the over-allotment option was not exercised in full by the underwriters. The forfeiture was
adjusted to the extent that the over-allotment option was not exercised in full by the underwriters so that the Founder Shares
would represent 20.0% of the Company’s issued and outstanding shares after the Initial Public Offering. On September 6,
2019, the underwriters purchased the Over-allotment Units, and the remaining over-allotment option subsequently expired. As a
result, an aggregate of 772,059 Founder Shares were forfeited accordingly.
The
Initial Stockholders agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until one
year after the date of the consummation of the initial Business Combination or earlier if, subsequent to the initial Business
Combination, (i) the last sale price of the Company’s Class A common stock equals or exceeds $12.00 per share (as adjusted
for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading
day period commencing at least 150 days after the initial Business Combination or (ii) the Company consummates a subsequent liquidation,
merger, stock exchange or other similar transaction which results in all of the Company’s stockholders having the right
to exchange their shares of common stock for cash, securities or other property.
Private
Placement Warrants
Simultaneously
with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 5,333,333 Private Placement Warrants at
a price of $1.50 per Private Placement Warrant, generating gross proceeds of approximately $8.0 million. Simultaneously with the
closing of the sale of the Over-allotment Units, the Sponsor purchased an additional 188,235 Private Placement Warrants at a price
of $1.50 per Private Placement Warrant, generating gross proceeds of approximately $282,000.
Each
whole Private Placement Warrant is exercisable for one whole share of Class A common stock at a price of $11.50 per share. A portion
of the proceeds from the sale of the Private Placement Warrants to the Sponsor was added to the proceeds from the Initial Public
Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the
Private Placement Warrants will expire worthless. The Private Placement Warrants will be non-redeemable for cash and exercisable
on a cashless basis so long as they are held by the Sponsor or its permitted transferees.
The
Sponsor and the Company’s officers and directors agreed, subject to limited exceptions, not to transfer, assign or sell
any of their Private Placement Warrants until 30 days after the completion of the initial Business Combination.
Related
Party Loans
On
May 16, 2019, the Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover organizational expenses and expenses
related to the Initial Public Offering pursuant to a promissory note (the “Note”). This loan was non-interest bearing
and payable on the completion of the Initial Public Offering. The Company borrowed approximately $251,000 under the Note, and
then repaid the Note in full to the Sponsor on August 12, 2019.
In
addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the
Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may
be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the
Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would
be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company
may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust
Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if
any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either
be repaid upon consummation of a Business Combination or, at the lender’s discretion, up to $1.5 million of such Working
Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.50 per warrant. The warrants
would be identical to the Private Placement Warrants. To date, the Company had no borrowings under the Working Capital Loans.
Administrative
Services Agreement
Commencing on the date
that the securities of the Company were first listed on the New York Stock Exchange and continuing until the earlier of the Company’s
consummation of its initial Business Combination or the Company’s liquidation, the Company has agreed to pay the Sponsor
a total of $10,000 per month for office space, utilities, secretarial support and administrative services. The Company recorded
an aggregate of $30,000 and $60,000 during the three and six months ended June 30, 2020, respectively, in general and administrative
expenses in connection with the related agreement in the accompanying unaudited condensed statements of operations. As of June
30, 2020, the Company recorded an aggregate of approximately $17,000 in related party accrued expenses.
Note
5 — Commitments and Contingencies
Risks
and Uncertainties
On
January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain
of coronavirus (the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based
on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak continues to evolve. The impact of the COVID-19
outbreak on the Company’s results of operations, financial position and cash flows will depend on future developments, including
the duration and spread of the outbreak and related advisories and restrictions. These developments and the impact of the COVID-19
outbreak on the financial markets and the overall economy are highly uncertain and cannot be predicted. If the financial markets
and/or the overall economy are impacted for an extended period, the Company’s financial position, results of operations,
financial position and cash flows may be materially adversely affected. Additionally, the Company’s ability to complete
an initial Business Combination may be materially adversely affected due to significant governmental measures being implemented
to contain the COVID-19 outbreak or treat its impact, including travel restrictions, the shutdown of businesses and quarantines,
among others, which may limit the Company’s ability to have meetings with potential investors or affect the ability of a
potential target company’s personnel, vendors and service providers to negotiate and consummate an initial Business Combination
in a timely manner. The Company’s ability to consummate an initial Business Combination may also be dependent on the ability
to raise additional equity and debt financing, which may be impacted by the COVID-19 outbreak and the resulting market downturn.
Registration
Rights
The
holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans,
if any, and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants that
may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares will be entitled to registration
rights pursuant to a registration rights agreement. These holders will be entitled to certain demand and “piggyback”
registration rights. However, the registration rights agreement provides that the Company will not permit any registration statement
filed under the Securities Act to become effective until the termination of the applicable lock-up period for the securities to
be registered. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting
Agreement
Except
for the Affiliated Units, the underwriters were entitled to an underwriting discount of $0.20 per unit, or $5.96 million in the
aggregate, paid upon closing of the Initial Public Offering. An additional fee of approximately $282,000 in the aggregate was
due in connection with the closing of the sale of the Over-allotment Units.
In
addition, $0.35 per unit (but not including the Affiliated Units), or approximately $10.92 million in the aggregate will be payable
to the underwriters for deferred underwriting commissions. The deferred fee will become payable to the underwriters from the amounts
held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting
agreement.
Note
6 — Stockholders’ Equity
Class A Common
Stock — The Company is authorized to issue 200,000,000 shares of Class A common stock with a par value of $0.0001
per share. As of June 30, 2020, and December 31, 2019, there were 31,411,763 shares of Class A common stock issued and outstanding,
of which 30,082,207 and 30,047,981 shares of Class A common stock were classified outside of permanent equity, respectively.
Class
B Common Stock — The Company is authorized to issue 20,000,000 shares of Class B common stock. In May 2019,
the Company issued 8,625,000 shares of Class B common stock, including an aggregate of up to 1,125,000 shares of Class B common
stock that were subject to forfeiture to the Company by the Sponsor for no consideration to the extent that the underwriters’
over-allotment option for the Initial Public Offering was not exercised in full. On September 6, 2019, the underwriters purchased
the Over-allotment Units, and the remaining over-allotment option subsequently expired. As a result, an aggregate of 772,059 shares
of Class B common stock were forfeited accordingly. As of June 30, 2020, and December 31, 2019, there were 7,852,941 shares of
Class B common stock outstanding.
Prior
to the initial Business Combination, only holders of the Company’s Class B common stock will have the right to vote on the
election of directors. Holders of the Class A common stock will not be entitled to vote on the election of directors during such
time. These provisions of the Certificate of Incorporation may only be amended if approved by a majority of at least 90% of the
Company’s common stock. With respect to any other matter submitted to a vote of the Company’s stockholders, including
any vote in connection with the initial Business Combination, except as required by applicable law or stock exchange rule, holders
of the Company’s Class A common stock and holders of the Company’s Class B common stock will vote together as a single
class, with each share entitling the holder to one vote.
The
Class B common stock will automatically convert into Class A common stock at the time of the initial Business Combination on a
one-for-one basis, subject to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities,
are issued or deemed issued in excess of the amounts sold in the Initial Public Offering and related to the closing of the initial
Business Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will
be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment
with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion
of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number
of all shares of common stock outstanding upon the completion of the Initial Public Offering plus all shares of Class A common
stock and equity-linked securities issued or deemed issued in connection with the Business Combination (excluding any shares or
equity-linked securities issued, or to be issued, to any seller in the Business Combination).
Preferred
Stock — The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per share,
with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s
board of directors. As of June 30, 2020, and December 31, 2019, there were no shares of preferred stock issued or outstanding.
Warrants —
Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation
of the Units and only whole Public Warrants will trade. The Public Warrants will become exercisable 30 days after the completion
of a Business Combination; provided that the Company has an effective registration statement under the Securities Act covering
the shares of Class A common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is
available (or the Company permits holders to exercise their Public Warrants on a cashless basis and such cashless exercise is
exempt from registration under the Securities Act). The Company has agreed that as soon as practicable, but in no event later
than 15 business days after the closing of a Business Combination, the Company will use its best efforts to file with the SEC
a registration statement for the registration, under the Securities Act, of the shares of Class A common stock issuable upon exercise
of the Public Warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness
of such registration statement, and a current prospectus relating thereto, until the expiration of the Public Warrants in accordance
with the provisions of the warrant agreement. Notwithstanding the above, if the Class A common stock is at the time of any exercise
of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security”
under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise
their warrants to do so on a “cashless” basis, and, in the event the Company so elects, the Company will not be required
to file or maintain in effect a registration statement, but the Company will be required to use its best efforts to register or
qualify the shares under applicable blue sky laws to the extent an exemption is not available. The Public Warrants will expire
five years after the completion of a Business Combination or earlier upon redemption or liquidation.
The
Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants and the shares of
Class A common stock issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable
until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private
Placement Warrants will be non-redeemable for cash so long as they are held by the Sponsor or its permitted transferees. If the
Private Placement Warrants are held by someone other than the Sponsor or its permitted transferees, the Private Placement Warrants
will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
The
Company may call the Public Warrants for redemption:
|
●
|
in
whole and not in part;
|
|
●
|
at
a price of $0.01 per warrant;
|
|
●
|
upon
a minimum of 30 days’ prior written notice of redemption; and
|
|
●
|
if,
and only if, the last sales price of the Class A common stock equals or exceeds $18.00
per share on each of 20 trading days within the 30-trading day period ending on the third
trading day prior to the date on which the Company sends the notice of redemption to
the warrant holders.
|
If
the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise
the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.
In
addition, commencing 90 days after the warrants become exercisable, the Company may redeem the outstanding warrants for shares
of Class A common stock (including both Public Warrants and Private Placement Warrants):
|
●
|
in
whole and not in part;
|
|
●
|
at
a price equal to a number of shares of Class A common stock to be determined by reference to the agreed table set forth in the
warrant agreement based on the redemption date and the “fair market value” of the Class A common stock;
|
|
●
|
upon
a minimum of 30 days’ prior written notice of redemption; and
|
|
●
|
if,
and only if, the last sale price of the Class A common stock equals or exceeds $10.00 per share (as adjusted) on the trading day
prior to the date on which the Company sends the notice of redemption to the warrant holders.
|
The
exercise price and number of common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including
in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. In addition, if the Company issues
additional shares of common stock or equity-linked securities for capital raising purposes in connection with the closing of the
initial Business Combination at an issue price or effective issue price of less than $9.20 per share of common stock (with such
issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case
of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such
affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), the exercise price of the warrants
will be adjusted (to the nearest cent) to be equal to 115% of the Newly Issued Price.
In
no event will the Company be required to net cash settle any warrant. If the Company is unable to complete a Business Combination
within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive
any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held
outside of the Trust Account with respect to such warrants. Accordingly, the warrants may expire worthless.
Note
7 — Fair Value Measurements
The
following tables present information about the Company’s financial assets that are measured at fair value on a recurring
basis as of June 30, 2020 and December 31, 2019 and indicate the fair value hierarchy of the valuation techniques that the Company
utilized to determine such fair value.
June
30, 2020
Description
|
|
Quoted Prices in Active Markets
(Level 1)
|
|
|
Significant Other Observable Inputs
(Level 2)
|
|
|
Significant Other Unobservable Inputs
(Level 3)
|
|
Investments held in Trust Account
|
|
|
|
|
|
|
|
|
|
Money Market Funds
|
|
$
|
317,439,598
|
|
|
$
|
-
|
|
|
$
|
-
|
|
December
31, 2019
Description
|
|
Quoted Prices in Active Markets
(Level 1)
|
|
|
Significant Other Observable Inputs
(Level 2)
|
|
|
Significant Other Unobservable Inputs
(Level 3)
|
|
Investments held in Trust Account
|
|
|
|
|
|
|
|
|
|
Money Market Funds
|
|
$
|
316,398,889
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Transfers
to/from Levels 1, 2, and 3 are recognized at the end of the reporting periods. There were no transfers between levels of the
hierarchy for the three and six months ended June 30, 2020.
Note
8 — Subsequent Events
Management
has evaluated subsequent events to determine if events or transactions occurring through the date the unaudited condensed
financial statements were available for issuance require potential adjustment to or disclosure in the unaudited condensed
financial statements and has concluded that all such events that would require recognition or disclosure have been recognized
or disclosed.