Notes
to Condensed Financial Statements
NOTE
1. Description of Organization and Business Operations
Organization
and General
Spartan
Energy Acquisition Corp. (the “Company”) was incorporated in Delaware on October 13, 2017. 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 “Initial Business Combination”). The Company is an “emerging
growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act’),
as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
As
of March 31, 2020, the Company had not commenced any operations. All activity for the period from October 13, 2017 (inception)
through March 31, 2020 relates to the Company’s formation and the initial public offering (the “Public Offering”)
described below, the identification and evaluation of prospective acquisition targets for an Initial Business Combination and
ongoing administrative and compliance matters. The Company will not generate any operating revenues until after completion of
its Initial Business Combination, at the earliest. The Company generates non-operating income in the form of income earned on
investments from the net proceeds derived from the Public Offering. The Company has selected December 31st as
its fiscal year end.
Sponsor
and Public Offering
The
Company’s sponsor is Spartan Energy Acquisition Sponsor LLC, a Delaware limited liability company (the “Sponsor”).
As described in Note 3, on August 14, 2018, the Company consummated the Public Offering of 55,200,000 of its units (the “Units”),
including 7,200,000 Units that were issued pursuant to the underwriters’ full exercise of their over-allotment option, generating
gross proceeds of $552,000,000. As described in Note 4, on August 14, 2018, simultaneously with the closing of the Public Offering,
the Sponsor purchased an aggregate of 9,360,000 warrants (the “Private Placement Warrants”) at a purchase price
of $1.50 per warrant, or approximately $14,040,000 in the aggregate (the “Private Placement”).
The
Company intends to finance its Initial Business Combination with proceeds from the Public Offering, the Private Placement, the
private placement of forward purchase units (described in Note 4), the Company’s capital stock, debt or a combination of
the foregoing.
The
registration statement for the Company’s Public Offering (as described in Note 3) was declared effective by the U.S. Securities
and Exchange Commission (the “SEC”) on August 9, 2018.
Trust
Account
Upon
the closing of the Public Offering and the Private Placement, $552,000,000 was placed in a trust account (the “Trust
Account”). The proceeds held in the Trust Account will be invested only in U.S. government securities with a maturity
of one hundred eighty (180) days or less or in money market funds that meet certain conditions under Rule 2a-7 under the Investment
Company Act of 1940, as amended, which invest only in direct U.S. government treasury obligations, as determined by the Company.
Funds will remain in the Trust Account until the earlier of (i) the consummation of the Initial Business Combination or (ii) the
distribution of the Trust Account proceeds as described below. The remaining proceeds outside the Trust Account may be used to
pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses.
The
Company’s amended and restated certificate of incorporation provides that, except for the withdrawal of interest to pay
franchise and income taxes, none of the funds held in the Trust Account (including the interest earned on the funds held in the
Trust Account) will be released from the Trust Account until the earlier of: (i) the completion of the Initial Business Combination;
(ii) the redemption of any shares of Class A common stock included in the Units sold in the Public Offering (the “Public
Shares”) that have been properly tendered in connection with a stockholder vote seeking to amend any provisions of the
Company’s amended and restated certificate of incorporation relating to stockholders’ rights or pre-Initial Business
Combination activity; or (iii) the redemption of 100% of the Public Shares if the Company is unable to complete an Initial Business
Combination within 24 months from the closing of the Public Offering. The proceeds deposited in the Trust Account could become
subject to the claims of the Company’s creditors, if any, which could have priority over the claims of the Company’s
public stockholders.
SPARTAN ENERGY ACQUISITION CORP.
Notes
to Condensed Financial Statements―CONTINUED
Initial
Business Combination
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering,
although substantially all of the net proceeds of the Public Offering are intended to be generally applied toward consummating
an Initial Business Combination. The Initial Business Combination must occur with one or more target businesses that together
have a fair market value of at least 80% of the assets held in the Trust Account (excluding the deferred underwriting discounts
and commissions and taxes payable on the interest earned on the Trust Account) at the time of the agreement to enter into the
Initial Business Combination. Furthermore, there is no assurance that the Company will be able to successfully effect an Initial
Business Combination.
The
Company, after signing a definitive agreement for an Initial Business Combination, will either (i) seek stockholder approval of
the Initial Business Combination at a meeting called for such purpose in connection with which stockholders may seek to redeem
their Public Shares, regardless of whether they vote for or against the Initial Business Combination, for cash equal to their
pro rata share of the aggregate amount on deposit in the Trust Account as of two business days prior to the consummation of the
Initial Business Combination, including interest not previously released to the Company to pay its franchise and income taxes,
or (ii) provide stockholders with the opportunity to sell their Public Shares to the Company by means of a tender offer (and thereby
avoid the need for a stockholder vote) for an amount in cash equal to their pro rata share of the aggregate amount on deposit
in the Trust Account as of two business days prior to the consummation of the Initial Business Combination, including interest
not previously released to the Company to pay its franchise and income taxes. The decision as to whether the Company will seek
stockholder approval of the Initial Business Combination or will allow stockholders to sell their Public Shares in a tender offer
will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction
and whether the terms of the transaction would otherwise require the Company to seek stockholder approval, unless a vote is required
by law or under New York Stock Exchange rules. If the Company seeks stockholder approval, it will complete its Initial Business
Combination only if a majority of the outstanding shares of common stock voted are voted in favor of the Initial Business Combination.
However, in no event will the Company redeem its Public Shares in an amount that would cause its net tangible assets to be less
than $5,000,001. In such case, the Company would not proceed with the redemption of its Public Shares and the related Initial
Business Combination, and instead may search for an alternate Initial Business Combination.
If
the Company holds a stockholder vote or there is a tender offer for shares in connection with an Initial Business Combination,
a stockholder will have the right to redeem his, her or its Public Shares for an amount in cash equal to his, her or its pro rata
share of the aggregate amount on deposit in the Trust Account as of two business days prior to the consummation of the Initial
Business Combination, including interest not previously released to the Company to pay its franchise and income taxes. As a result,
such Public Shares are recorded at redemption amount and classified as temporary equity upon the completion of the Public Offering,
in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
480, “Distinguishing Liabilities from Equity.”
Pursuant
to the Company’s amended and restated certificate of incorporation, if the Company is unable to complete an Initial Business
Combination within 24 months from the closing of the Public Offering (until August 14, 2020), the Company will (i) cease all operations
except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter subject
to lawfully available funds therefor, 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 the Company’s franchise and income taxes (less up to $100,000 of such net 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 the Company’s 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 Sponsor and
the Company’s officers and directors have entered into a letter agreement with the Company, pursuant to which they have
agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares (as defined
below) held by them if the Company fails to complete the Initial Business Combination within 24 months of the closing of the Public
Offering. However, if the Sponsor or any of the Company’s directors, officers or affiliates acquires shares of Class A common
stock in or after the Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect
to such shares if the Company fails to complete the Initial Business Combination within the prescribed time period.
SPARTAN ENERGY ACQUISITION CORP.
Notes
to Condensed Financial Statements―CONTINUED
In
the event of a liquidation, dissolution or winding up of the Company after an Initial Business Combination, the Company’s
stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities
and after provision is made for each class of stock, if any, having preference over the common stock. The Company’s stockholders
have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the common stock, except that
the Company will provide its stockholders with the opportunity to redeem their Public Shares for cash equal to their pro rata
share of the aggregate amount then on deposit in the Trust Account, upon the completion of the Initial Business Combination, subject
to the limitations described herein.
Going
Concern and Liquidity Considerations
As
of March 31, 2020, the Company had $405,416 in its operating bank account, approximately $17 million of cumulative investment
income available in the Trust Account to pay for franchise and income taxes (less up to $100,000 of investment income to pay dissolution
expenses), and working deficit of $373,751.
Through
March 31, 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 5) to the Sponsor, an aggregate of approximately $1.6 million
in advances due to related party, which is discussed in Note 4, and the net proceeds from investment income released from Trust
Account since inception of approximately $3.9 million for taxes. The Company repaid the loans from the Sponsor in full in February
2018. The Company may not have sufficient liquidity to meets its future obligations and anticipates that it may need to obtain
additional loans from the Sponsor or obtain funding from other sources in order to satisfy our working capital requirements through
August 14, 2020, our mandatory liquidation date, if the Company does not consummate a business combination.
Management
is currently evaluating the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that it could
have a negative effect on the Company’s financial position, results of operations and/or search for a target company, the
specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
In
connection with the Company’s assessment of going concern considerations in accordance with FASB’s Accounting Standards
Update 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the
Company determined that the liquidity, mandatory liquidation and subsequent dissolution provisions discussed above 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 after August 14, 2020.
NOTE
2. Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited condensed interim financial statements of the Company are presented in U.S. dollars in conformity with
accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the accounting
and disclosure rules and regulations of the SEC, and reflect all adjustments, consisting only of normal recurring adjustments,
which are, in the opinion of management, necessary for a fair presentation of the financial position as of March 31, 2020 and
the results of operations and cash flows for the periods presented. Certain information and disclosures normally included in financial
statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. Interim results are not
necessarily indicative of results for a full year.
SPARTAN ENERGY ACQUISITION CORP.
Notes
to Condensed Financial Statements―CONTINUED
The
accompanying unaudited condensed interim financial statements should be read in conjunction with the audited financial statements
and notes thereto included in the Form 10-K filed by the Company with the SEC on March 12, 2020.
Emerging
Growth Company
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 Securities Exchange Act of 1934, as amended) are required to comply
with the new or revised financial accounting standards. The JOBS Act provides that a 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 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 which is neither an emerging growth company nor an emerging
growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences
in accounting standards used.
Net
Income Per Share of Common Stock
The
Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net
income per share is computed by dividing net income applicable to common stockholders by the weighted average number of shares
of common stock outstanding for the period. The Company has not considered the effect of the warrants sold in the Public Offering
and Private Placement Warrants to purchase an aggregate of 27,760,000 shares of Class A common stock in the calculation of diluted
earnings per share, since their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted earnings
per share is the same as basic earnings per share for the period.
The
Company’s statements of operations include a presentation of income per share for Class A 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 Class A common stock
is calculated by dividing the investment income earned on the Trust Account of $4,359,732 and $3,219,442, respectively, net of
applicable taxes of $954,935 and $715,042, respectively, by the weighted average number of 55,200,000 shares of Class A common
stock outstanding since the initial issuance for the three months ended March 31, 2020 and 2019, respectively. Net loss per share,
basic and diluted for Class B common stock is calculated by dividing the net income, less income attributable to Class A common
stock, by the weighted average number of shares of Class B common stock outstanding for the period.
Cash
and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution
which, at times, may exceed the Federal depository insurance coverage of $250,000. As of March 31, 2020, the Company has not experienced
losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
SPARTAN ENERGY ACQUISITION CORP.
Notes
to Condensed Financial Statements―CONTINUED
Financial
Instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820,
“Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet.
Fair
Value Measurements
Fair
value is defined as the price that would be received for sale of an asset or paid for 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:
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●
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Level
1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
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●
|
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
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●
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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
are unobservable.
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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.
Use
of Estimates
The
preparation of the 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 financial statements and the reported amounts of expenses during the reporting period. Actual results could differ
from those estimates.
Class
A Common Stock Subject to Possible Redemption
The
Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480
“Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption
(if any) are classified as liability instruments and are measured at fair value. Shares of conditionally redeemable Class A common
stock (including 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 Class A common stock are classified as stockholders’ equity. The Company’s Class
A common stock features certain redemption rights that are considered to be outside of the Company’s control and subject
to the occurrence of uncertain future events.
As
discussed in Note 1, all of the 55,200,000 Public Shares contain a redemption feature which allows for the redemption of Class
A common stock under the Company’s liquidation or tender offer/stockholder approval provisions. In accordance with FASB
ASC 480, redemption provisions not solely within the control of the Company require the security to be classified outside of permanent
equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity’s equity instruments,
are excluded from the provisions of FASB ASC 480. Although the Company has not specified a maximum redemption threshold, its amended
and restated certificate of incorporation provides that in no event will the Company redeem its Public Shares in an amount that
would cause its net tangible assets to be less than $5,000,001.
SPARTAN ENERGY ACQUISITION CORP.
Notes
to Condensed Financial Statements―CONTINUED
The
Company recognizes changes in redemption value immediately as they occur and will adjust the carrying value of the security at
the end of each reporting period. Increases or decreases in the carrying amount of redeemable shares of Class A common stock shall
be affected by charges against additional paid-in capital.
At
March 31, 2020 and December 31, 2019, 54,477,851 and 54,133,917, respectively, of the 55,200,000 outstanding shares of Class A
common stock were classified outside of permanent equity.
Income
Taxes
The
Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “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 income 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. Management has determined that a full valuation allowance
on the deferred tax asset (related to start-up costs) is appropriate at this time after consideration of all available positive
and negative evidence related to the realization of the deferred tax asset.
FASB
ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement
of tax positions taken or expected to be taken in a tax return. For those 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 March 31,
2020 or 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 at March 31, 2020 or 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.
Subsequent
Events
Management
has evaluated subsequent events to determine if events or transactions occurring through the date the financial statements were
available for issuance, require potential adjustment to or disclosure in the financial statements and has concluded that all such
events that would require recognition or disclosure have been recognized or disclosed.
Recent
Accounting Pronouncements
The
Company’s management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently
adopted, would have a material effect on the Company’s financial statements.
NOTE
3. PUBLIC Offering
The
Company sold 55,200,000 Units in the Public Offering, including 7,200,000 Units that were issued pursuant to the underwriters’
full exercise of their over-allotment option, at a price of $10.00 per Unit. Simultaneously with the closing of the Public Offering,
the Sponsor purchased an aggregate of 9,360,000 Private Placement Warrants at a purchase price of $1.50 per warrant, or approximately
$14,040,000 in the aggregate.
Each
Unit consists of one share of the Company’s Class A common stock, $0.0001 par value per share, and one-third of one warrant
(each, a “Warrant” and, collectively, the “Warrants”). Each whole Warrant entitles the holder
to purchase one share of Class A common stock at a price of $11.50 per share. No fractional shares will be issued upon separation
of the Units and only whole Warrants will trade. Each Warrant will become exercisable on the later of 30 days after the completion
of an Initial Business Combination or 12 months from the closing of the Public Offering and will expire five years after the completion
of an Initial Business Combination or earlier upon redemption or liquidation. Once the Warrants become exercisable, the Company
may redeem the outstanding Warrants 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, if and only if the last sale price of the Company’s Class A common stock has been at
least $18.00 per share on each of 20 trading days within the 30 trading-day period ending on the third business day prior to the
date on which the Company sent the notice of redemption to the Warrant holders.
SPARTAN ENERGY ACQUISITION CORP.
Notes
to Condensed Financial Statements―CONTINUED
As
noted above, the underwriters exercised the 45-day option to purchase up to 7,200,000 additional Units to cover any over-allotments
at the Public Offering price less the underwriting discounts and commissions. The Units that were issued in connection with the
over-allotment option were identical to the other Units issued in the Public Offering.
The
Company paid an underwriting discount of 2.0% of the gross offering proceeds, or $11.04 million in the aggregate, to the underwriters
at the closing of the Public Offering, with an additional fee (the “Deferred Discount”) of 3.5% of the gross
offering proceeds, or $19.32 million in the aggregate, payable upon the Company’s completion of an Initial Business Combination.
The Deferred Discount will become payable to the underwriters from the amounts held in the Trust Account solely in the event the
Company completes an Initial Business Combination.
NOTE
4. Related Party Transactions
Founder
Shares
In
October 2017, the Sponsor purchased 14,375,000 shares of the Company’s Class B common stock (the “Founder Shares”)
for $25,000, or approximately $0.002 per share. In July 2018, the Sponsor surrendered 2,875,000 shares of its Class B common stock
for no consideration. In August 2018, the Company effected a stock dividend with respect to the Class B common stock of 2,300,000
shares thereof, resulting in the Sponsor holding an aggregate of 13,800,000 shares of Class B common stock. As used herein,
unless the context otherwise requires, “Founder Shares” shall be deemed to include the shares of Class A common stock
issuable upon conversion thereof. The Founder Shares are identical to the Class A common stock included in the Units sold in the
Public Offering except that the Founder Shares are shares of Class B common stock which automatically convert into shares of Class
A common stock at the time of the Initial Business Combination and are subject to certain transfer restrictions, as described
in more detail below. In August 2018, prior to the Public Offering, the Sponsor transferred 150,000 Founder Shares to each of
the Company’s two independent directors at their original purchase price. In July 2019, the Company’s Sponsor
transferred 75,000 Founder Shares to a newly appointed independent director at their original purchase price.
The
holders of the Founders Shares have agreed, subject to limited exceptions, not to transfer, assign or sell any of their Founder
Shares until the earlier to occur of: (A) one year after the completion of an Initial Business Combination or (B) subsequent to
an Initial Business Combination, (x) if the last reported 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 consummation of an Initial Business Combination,
or (y) the date on which the Company completes a liquidation, merger, stock exchange or other similar transaction that 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
Concurrently
with the closing of the Public Offering, the Sponsor purchased an aggregate of 9,360,000 Private Placement Warrants at a price
of $1.50 per warrant ($14,040,000 in the aggregate) in the Private Placement. Each Private Placement Warrant is exercisable for
one share of the Company’s Class A common stock at a price of $11.50 per share. A portion of the purchase price of the Private
Placement Warrants was added to the proceeds from the Public Offering held in the Trust Account. If the Initial Business Combination
is not completed within 24 months from the closing of the Public Offering, the proceeds from the sale of the Private Placement
Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable
law) and the Private Placement Warrants will expire worthless. The Private Placement Warrants will be non-redeemable and exercisable
on a cashless basis so long as they are held by the Sponsor or its permitted transferees.
SPARTAN ENERGY ACQUISITION CORP.
Notes
to Condensed Financial Statements―CONTINUED
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.
Registration
Rights
The
holders of the Founder Shares, Private Placement Warrants and equity securities that may be issued upon conversion of working
capital loans, if any (and any Class A common shares issuable upon the conversion of any Founder Shares and the exercise of the
Private Placement Warrants and equity securities that may be issued upon conversion of working capital loans) will be entitled
to registration rights pursuant to a registration rights agreement signed on August 9, 2018. The holders of these securities are
entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the
holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to
the consummation of an Initial Business Combination. However, the registration rights agreement provides that the Company will
not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up
period. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Advances
from Related Parties
Affiliates
of the Sponsor paid certain administrative expenses and offering costs on behalf of the Company. These advances are due on demand
and are non-interest bearing. During the three months ended March 31, 2020 and 2019, the related party paid $115,325 and $286,532,
respectively, of other expenses on behalf of the Company and the Company had repaid the related party $115,325 and $341,964, respectively,
for advances. As of March 31, 2020 and December 31, 2019, there were no amounts due to the related parties.
Prior
to the closing of the Public Offering, an affiliate of the Sponsor advanced the Company $294,354 to be used for a portion of the
expenses of the Public Offering. Upon the closing of the Public Offering, the Company repaid the affiliate of the Sponsor $294,354
in settlement of the outstanding advances.
Administrative
Service Fee
The
Company, commencing on August 10, 2018, has agreed to pay the Sponsor a total of $10,000 per month for office space, utilities,
secretarial support and administrative services. Upon completion of the Initial Business Combination or the Company’s liquidation,
the Company will cease paying these monthly fees. The Company paid the Sponsor $30,000 and $30,000 for such services for the three
months ended March 31, 2020 and 2019, respectively.
Forward
Purchase Agreement
On
August 9, 2018, the Company entered into a forward purchase agreement (the “Forward Purchase Agreement”)
pursuant to which an affiliate of the Sponsor agreed to purchase an aggregate of up to 30,000,000 shares of the Company’s
Class A common stock (the “Forward Purchase Shares”), plus an aggregate of up to 10,000,000 warrants (the “Forward
Purchase Warrants” and, together with the Forward Purchase Shares, the “Forward Purchase Units”),
for an aggregate purchase price of up to $300,000,000 or $10.00 per unit. Each Forward Purchase Warrant will have the same terms
as each of the Private Placement Warrants.
The
obligations under the Forward Purchase Agreement do not depend on whether any public stockholders elect to redeem their shares
in connection with the Initial Business Combination and provide the Company with a minimum funding level for the Initial Business
Combination. Additionally, the obligations of the affiliate of the Sponsor to purchase the Forward Purchase Units are subject
to termination prior to the closing of the sale of the Forward Purchase Units by mutual written consent of the Company and such
affiliate, or automatically: (i) if the Initial Business Combination is not consummated within 24 months from the closing of the
Public Offering, unless extended up to a maximum of sixty (60) days in accordance with the amended and restated certificate of
incorporation; or (ii) if the affiliate of the Sponsor or the Company become subject to any voluntary or involuntary petition
under the United States federal bankruptcy laws or any state insolvency law, in each case which is not withdrawn within sixty
(60) days after being filed, or a receiver, fiscal agent or similar officer is appointed by a court for business or property of
the affiliate of the Sponsor or the Company in each case which is not removed, withdrawn or terminated within sixty (60) days
after such appointment. In addition, the obligations of the affiliate of the Sponsor to purchase the Forward Purchase Units are
subject to fulfillment of customary closing conditions, including that the Initial Business Combination must be consummated substantially
concurrently with the purchase of the Forward Purchase Units.
SPARTAN ENERGY ACQUISITION CORP.
Notes
to Condensed Financial Statements―CONTINUED
Note
5. Deferred Underwriting COMMISSIONS
The
Company is committed to pay the Deferred Discount of 3.5% of the gross proceeds of the Public Offering, or $19,320,000, to
the underwriters of the Public Offering upon the Company’s completion of an Initial Business Combination. The underwriters
are not entitled to receive any of the interest earned on Trust Account funds that would be used to pay the Deferred Discount,
and no Deferred Discount is payable to the underwriters if an Initial Business Combination is not completed within 24 months after
the Public Offering.
NOTE
6. Stockholders’ Equity
Common
Stock
The
authorized common stock of the Company includes 200,000,000 shares of Class A common stock and 20,000,000 shares of Class B
common stock. If the Company enters into an Initial Business Combination, it may (depending on the terms of such an Initial Business
Combination) be required to increase the number of shares of Class A common stock which the Company is authorized to issue
at the same time as the Company’s stockholders vote on the Initial Business Combination to the extent the Company seeks
stockholder approval in connection with the Initial Business Combination. Holders of the Company’s common stock are entitled
to one vote for each share of common stock. At March 31, 2020, there were 55,200,000 shares of Class A common stock issued
and outstanding (of which 54,477,851 were classified outside of permanent equity) and 13,800,000 shares of Class B common
stock issued and outstanding. At December 31, 2019, there were 55,200,000 shares of Class A common stock issued and outstanding
(of which 54,133,917 were classified outside of permanent equity) and 13,800,000 shares of Class B common stock issued and
outstanding. All shares and the associated amounts have been retroactively restated to reflect: (i) the forfeiture of 2,875,000
shares of Class B common stock in July 2018; and (ii) the stock dividend of 2,300,000 shares of Class B common stock in August
2018.
Preferred
Stock
The
Company is authorized to issue 1,000,000 shares of preferred stock with such designations, voting and other rights and preferences
as may be determined from time to time by the Company’s board of directors. At March 31, 2020 and December 31, 2019, there
were no shares of preferred stock issued or outstanding.
Warrants
The
Warrants will become exercisable on the later of (a) 30 days after the completion of an Initial Business Combination or
(b) 12 months from the closing of the Public Offering; provided in each case that the Company has an effective registration statement
under the Securities Act covering the Class A common stock issuable upon exercise of the 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 its Initial 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 Class A common stock
issuable upon exercise of the 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 Warrants
in accordance with the provisions of the warrant agreement. 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 Warrants who exercise their Warrants to do
so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. The Warrants
will expire five years after the completion of an Initial Business Combination or earlier upon redemption or liquidation.
SPARTAN ENERGY ACQUISITION CORP.
Notes to
Condensed Financial Statements―CONTINUED
The Private Placement Warrants are identical
to the Warrants, except that the Private Placement Warrants and the 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 an Initial Business Combination,
subject to certain limited exceptions. Additionally, the Private Placement Warrants will be non-redeemable so long as
they are held by the Sponsor or any of 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 Warrants.
The Company may call the Warrants
for redemption (except with respect to the Private Placement Warrants):
|
●
|
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 reported sales price of the Class A common stock has been at least $18.00 per share on each of 20 trading days within the 30 trading-day period ending on the third business day prior to the date on which the Company sends the notice of redemption to the Warrant holders.
|
If the Company calls the Warrants for redemption,
management will have the option to require all holders that wish to exercise the Warrants to do so on a cashless basis. In no event
will the Company be required to net cash settle the Warrant exercise. If the Company is unable to complete an Initial Business
Combination within 24 months from the closing of the Public Offering 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 table presents information
about the Company’s assets that are measured on a recurring basis as of March 31, 2020 and December 31, 2019 and indicates
the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.
Description
|
|
Fair Value
|
|
|
Quoted
Prices
in Active
Markets
(Level 1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
|
Significant
Other
Unobservable
Inputs
(Level 3)
|
|
Investment held in Trust Account
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2020
|
|
$
|
569,472,271
|
|
|
$
|
569,472,271
|
|
|
$
|
—
|
|
|
$
|
—
|
|
December 31, 2019
|
|
$
|
565,152,589
|
|
|
$
|
565,152,589
|
|
|
$
|
—
|
|
|
$
|
—
|
|
At March 31, 2020 and December 31, 2019,
the investments held in the Trust Account were held in marketable equity securities.
Note
8. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that
occurred after the balance sheet date up to the date that the financial statements were available to be issued.