NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
1. Description of Organization and Business
Operations
Organization and General
Tortoise Acquisition
Corp. (the “Company”) was incorporated in Delaware on November 7, 2018. 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 June 30, 2020,
the Company had not commenced any operations. All activity for the period from November 7, 2018 (date of inception) to June
30, 2020 relates to the Company’s formation and the initial public offering (the “Initial Public Offering”) described
below, and since the closing of the Initial Public Offering, the identification and evaluation of prospective acquisition targets
for an Initial Business Combination, including the Proposed Transactions (as defined below), 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 interest income earned on investments from the net proceeds
derived from the Initial Public Offering. The Company has selected December 31st as its fiscal year end.
Sponsor and Initial Public Offering
The Company’s
sponsor is Tortoise Sponsor LLC, a Delaware limited liability company (the “Sponsor”). As described in Note 3, on March
4, 2019, the Company consummated the Initial Public Offering of 23,300,917 of its units (the “Units”), including 800,917
Units that were issued pursuant to the underwriters’ partial exercise of their over-allotment option, generating gross proceeds
of approximately $233.0 million. As described in Note 4, on March 4, 2019, simultaneously with the closing of the Initial Public
Offering, Tortoise Borrower LLC, a Delaware limited liability company and an affiliate of the Sponsor (“Tortoise Borrower”),
purchased an aggregate of 6,660,183 warrants (the “Private Placement Warrants”) at a purchase price of $1.00 per warrant,
generating gross proceeds to the Company of approximately $6.66 million (the “Private Placement”).
The Company intends
to finance its Initial Business Combination with proceeds from the Initial Public Offering, the Private Placement, the private
placement of forward purchase securities (described in Note 5), and from additional issuances, if any, of the Company’s capital
stock, debt or a combination of the foregoing.
Trust Account
Upon the closing of
the Initial Public Offering and the Private Placement, approximately $233.0 million was placed in a trust account (the “Trust
Account”), with Continental Stock Transfer & Trust Company acting as trustee. The proceeds held in the Trust Account
are invested only in U.S. government securities with a maturity of 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. 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 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 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 Initial Public Offering (the “Public Shares”) that
have been properly tendered in connection with a stockholder vote seeking to amend the Company’s amended and restated certificate
of incorporation to affect the substance or timing of its obligation to redeem 100% of such Public Shares if it has not consummated
an Initial Business Combination within 24 months from the closing of the Initial Public Offering (the “Combination Period”);
and (iii) the redemption of 100% of the Public Shares if the Company is unable to complete an Initial Business Combination within
the Combination Period. 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.
Initial Business Combination
The Company’s
management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering, although
substantially all of the net proceeds of the Initial Public Offering are intended to be generally applied toward consummating an
Initial Business Combination. The New York Stock Exchange (the “NYSE”) rules require that the Initial Business Combination
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. 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 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 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 NYSE 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 would 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 such holder’s Public Shares for an amount in cash equal to such holder’s 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 as temporary equity upon the completion of the Initial Public Offering, in accordance with the Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, “Distinguishing
Liabilities from Equity.”
Notwithstanding the
foregoing, the Company’s amended and restated 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 their shares with respect to more than an aggregate of 20% or more of the shares of Class A common stock sold in
the Initial Public Offering, without the prior consent of the Company.
The Sponsor, Tortoise
Borrower, the Company’s officers and directors and Atlas Point Energy Infrastructure Fund, LLC (“Atlas Point Fund”)
(collectively, the “Initial Stockholders”) agreed not to propose an amendment to the amended and restated 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 an Initial Business Combination, unless the Company provides the public stockholders the opportunity
to redeem their shares of Class A common stock in conjunction with any such amendment.
Pursuant to the Company’s
amended and restated certificate of incorporation, if the Company is unable to complete an Initial Business Combination within
the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably
possible but no more than 10 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 the 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 Initial Stockholders have entered into a letter agreement
with the Company, pursuant to which they 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 the Combination Period. However, if any of the Initial Stockholders acquire shares of Class A common stock in or after the
Initial 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 Combination Period.
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 and not previously released to the Company to pay the Company’s franchise and income
taxes, upon the completion of the Initial Business Combination, subject to the limitations described herein.
Commencing April 22,
2019, holders of the Units were permitted to elect to separately trade the shares of Class A common stock and Warrants (as defined
below) included in the Units. No fractional shares will be issued upon separation of the Units and only whole Warrants will trade.
On June 18, 2020, the
Company, SHLL Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), and
Hyliion Inc., a Delaware corporation (“Hyliion”), entered into a business combination agreement and plan of reorganization
(the “Business Combination Agreement”). See “—Proposed Business Combination” below for further discussion
of the Business Combination Agreement.
Proposed Business Combination
Business Combination Agreement
On June 18, 2020, the
Company, Merger Sub and Hyliion entered into the Business Combination Agreement, pursuant to which Merger Sub agreed to merge with
and into Hyliion (the “Merger,” together with the other transactions related thereto, the “Proposed Transactions”),
with Hyliion surviving the Merger as a wholly owned subsidiary of the Company (the “Surviving Corporation”). Hyliion
designs, develops and sells electrified powertrain solutions that can be installed on Class 8 trucks from most major commercial
vehicle original equipment manufacturers. Hyliion’s headquarters are located in Cedar Park, Texas.
At the closing of the
proposed Merger (the “Closing”), 100,000,000 shares of the Company’s Class A common stock will be issued to new
holders (the “Historical Rollover Stockholders”) in the business combination in exchange for all outstanding shares
of Hyliion common stock, or reserved for issuance in respect of new Hyliion options issued in exchange for outstanding pre-merger
Hyliion options.
As described below
in “—Amendment to IPO Forward Purchase Agreement,” concurrent with the Closing, Atlas Point Fund agreed to purchase
from the Company 1,750,000 Forward Purchase Units (as defined below), consisting of 1,750,000 shares of the Company’s Class
A common stock and warrants to purchase 875,000 shares of the Company’s Class A common stock, for an aggregate purchase price
of $17,500,000, pursuant to the FPA Amendment (as defined below). Additionally, other investors have committed to purchase from
the Company 30,750,000 shares of the Company’s Class A common stock, for an aggregate purchase price of $307,500,000.
The Closing will occur
as promptly as practicable, but in no event later than three business days following the satisfaction or waiver of all of the closing
conditions.
Stockholder Support Agreement
Contemporaneously with
the execution of the Business Combination Agreement, on June 18, 2020, the Company entered into the Stockholder Support Agreement
(the “Stockholder Support Agreement”) pursuant to which certain of the Hyliion stockholders agreed to vote all of their
shares of Hyliion common stock and Hyliion preferred stock in favor of the approval and adoption of the business combination and
the Business Combination Agreement. Additionally, such Hyliion stockholders agreed not to (a) sell, assign, transfer (including
by operation of law), pledge, dispose of, permit to exist any material lien with respect to or otherwise encumber any of their
shares of Hyliion common stock and Hyliion preferred stock (or enter into any arrangement with respect thereto), subject to certain
exceptions, or (b) deposit any of their shares of Hyliion common stock and Hyliion preferred stock into a voting trust or enter
into any voting arrangement that is inconsistent with the Stockholder Support Agreement.
A&R Registration Rights Agreement
In connection with the Closing, the Company
will enter into an amended and restated registration rights agreement (the “A&R Registration Rights Agreement”) with
the Sponsor, Tortoise Borrower and certain of the Historical Rollover Stockholders (collectively, the “Holders”), pursuant
to which the Holders will be entitled to registration rights. Pursuant to the A&R Registration Rights Agreement, the Company
will agree that, within 30 calendar days after the consummation of the business combination, the Company will file with the SEC
(at its sole cost and expense) a registration statement registering the resale of certain of the Holders’ securities of the
Company (collectively, the “Registrable Securities”), and the Company will use its reasonable best efforts to have
such registration statement declared effective by the SEC as soon as reasonably practicable after the filing thereof. Certain of
the Holders will be granted demand underwritten offering registration rights and all of the Holders will be granted piggyback registration
rights.
The A&R Registration Rights Agreement
will terminate upon the earlier of (a) ten years following the Closing or (b) the date as of which the Holders cease to hold any
Registrable Securities.
Lock-Up Agreement
In connection with
the Closing, certain existing Hyliion investors will agree, subject to certain exceptions, not to (a) sell, offer to sell, contract
or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or
indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning
of Section 16 of the Exchange Act and the rules and regulations of the SEC promulgated thereunder, any shares of Class A common
stock held by them immediately after the effective time of the Merger (the “Effective Time”), or issuable upon the
exercise of options to purchase shares of Class A common stock held by them immediately after the Effective Time, or securities
convertible into or exercisable or exchangeable for Class A common stock held by them immediately after the Effective Time, (b)
enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership
of any of such shares of Class A common stock or securities convertible into or exercisable or exchangeable for Class A common
stock, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise or (c) publicly announce
any intention to effect any transaction specified in clause (a) or (b) until 180 days after the closing date. Thereafter until
two years after the closing date, subject to certain exceptions, Thomas Healy will also agree not to transfer more than 10% of
the number of shares of Class A common stock held by him immediately after the Effective Time, or issuable upon the exercise of
options to purchase shares of Class A common stock held by him immediately after the Effective Time
Proposed Second Amended and Restated
Charter
Pursuant to the terms
of the Business Combination Agreement, upon the Closing, the Company will amend and restate its Charter to, among other things,
(a) increase the number of authorized shares of Class A common stock from 200,000,000 shares to 250,000,000 shares, (b) reclassify
the Company’s board of directors, (c) eliminate certain provisions in the Charter relating to an Initial Business Combination
that will no longer be applicable following the Closing, (d) change the post-combination company’s name to “Hyliion
Holdings Corp.” and (e) make certain other changes that the Company’s board of directors deems appropriate for a public
operating company.
Subscription Agreements
In connection with
the execution of the Business Combination Agreement, on June 18, 2020, the Company entered into separate subscription agreements
(collectively, the “Subscription Agreements”) with a number of investors (each a “Subscriber”), pursuant
to which the Subscribers agreed to purchase, and the Company agreed to sell to the Subscribers, an aggregate 30,750,000 shares
of Class A common stock issued in the PIPE Financing (“PIPE Shares”), for a purchase price of $10.00 per share and
an aggregate purchase price of $307,500,000 million in the private offering of securities of the Surviving Corporation to certain
investors in connection with the business combination (“PIPE Financing”). The Company agreed to give certain customary
registration rights to the Subscribers with respect to the PIPE Shares pursuant to the Subscription Agreements.
Pursuant to the registration
rights granted to the Subscribers in connection with the Subscription Agreements, the Surviving Corporation will be obligated,
subject to the terms thereof and in the manner contemplated thereby, to file a registration statement registering for resale under
the Securities Act all of the PIPE Shares acquired by the Subscribers within 30 days after the consummation of the business combination,
and to use its commercially reasonable efforts to have such registration statement declared effective as soon as practicable after
the filing thereof, but no later than the earlier of (a) the 60th day following the Closing and (b) the tenth business day after
the date the Surviving Corporation is notified by the SEC that such registration statement will not be reviewed or will not be
subject to further review.
The closing of the
sale of the PIPE Shares pursuant to the Subscription Agreements is expected to occur immediately prior to the Closing and is contingent
upon, among other customary closing conditions, the satisfaction or waiver of all conditions precedent to the Closing. The purpose
of the PIPE Financing is to raise additional capital for use by the post-combination company following the Closing.
Stockholders Rights Agreement
On June 18, 2020, Vincent
T. Cubbage, Stephen Pang, certain stockholders of Hyliion and the Company entered into the Stockholder Rights Agreement (the “Stockholders
Rights Agreement”), pursuant to which the Company agreed to take all necessary action so that immediately after the Effective
Time, the board of directors, including its committees, is comprised of the individuals set forth in the Business Combination Agreement.
Pursuant to the Stockholders Rights Agreement, the Surviving Corporation will also take all necessary action to cause its board
of directors to nominate and recommend for election at its annual meeting of stockholders in 2021 Vincent T. Cubbage and Thomas
Healy. The stockholders party to the Stockholders Rights Agreement agreed to vote in favor of Messrs. Cubbage and Healy at the
annual meeting of stockholders in 2021.
Amendment to IPO Forward Purchase Agreement
On June 18, 2020,
Atlas Point Fund, the Company and Sponsor entered into the First Amendment to Amended and Restated Forward Purchase
Agreement, which amends the IPO Forward Purchase Agreement (the “FPA Amendment”). Pursuant to the FPA Amendment,
Atlas Point Fund agreed to purchase 1,750,000 units (“Forward Purchase Units”), consisting of 1,750,000 shares of
Class A common stock and warrants (“Forward Purchase Warrants”) to purchase 875,000 shares of Class A common
stock, for an aggregate purchase price of $17,500,000. At the Closing, if (a) Atlas Point Fund does not fund the $17,500,000
purchase price, Atlas Point Fund will transfer 900,000 Founder Shares back to Tortoise Borrower, such that Atlas Point Fund
will retain 365,625 Founder Shares and (b) if Atlas Point Fund does fund the $17,500,000 purchase price, Atlas Point Fund
will transfer 894,375 Founder Shares back to Tortoise Borrower. The shares of Class A common stock purchased as part of the
Forward Purchase Units will be identical to the shares of Class A common stock included in the units sold in the Initial
Public Offering, except the shares comprising the Forward Purchase Units will be subject to transfer restrictions and certain
registration rights. Each whole Forward Purchase Warrant is exercisable to purchase one share of Class A common stock at
$11.50 per share. The Forward Purchase Warrants will have the same terms as the public warrants, except that the Forward
Purchase Warrants are subject to transfer restrictions and certain registration rights.
Going Concern Consideration
As of June 30, 2020,
the Company had approximately $231,000 of cash in its operating account, a working capital deficit of approximately $1.7 million,
and approximately $3.6 million of investment income in the Trust Account available to pay franchise and income taxes (less up to
$100,000 of such net interest to pay dissolution expenses).
Through June 30, 2020,
the Company’s liquidity needs have been satisfied through a $25,000 capital contribution from the Sponsor in exchange for
the issuance of the Founder Shares (as defined below and described in Note 4) to the Sponsor, an approximately $580,000 loan from
the Sponsor pursuant to an unsecured promissory note (the “Note”), the net proceeds from the consummation of the Private
Placement not held in the Trust Account and an aggregate of approximately $1.1 million of interest income released from the Trust
Account since inception to fund franchise and income tax obligations. The Company repaid the Note to the Sponsor in full on March
29, 2019.
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 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.
In connection with
the Company’s assessment of going concern considerations in accordance with FASB Accounting Standards Update (“ASU”)
2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management
has determined that the working deficit, mandatory liquidation and subsequent dissolution raises 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 March 4, 2021.
2. Summary of Significant Accounting
Policies
Basis of Presentation
The accompanying unaudited
condensed consolidated financial statements of the Company have been prepared in accordance with United States generally accepted
accounting principles (“GAAP”) for interim financial information and Article 8 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by GAAP. In the opinion of management, all adjustments (consisting
of normal accruals) considered for a fair presentation have been included. Operating results for the six months ended June 30,
2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.
The accompanying unaudited
condensed consolidated 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 U.S. Securities and
Exchange Commission (the “SEC”) on March 23, 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 Exchange Act) 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 (Loss) Per Share of Common
Stock
The Company’s
unaudited condensed consolidated statement 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.
Basic and diluted net
income per share of Class A common stock for the three months ended June 30, 2020, and 2019 is calculated by dividing the investment
income earned on the investments held in the Trust Account (approximately $110,000 and $1.3 million, respectively, net of funds
available to be withdrawn from the Trust Account for payment of franchise and income taxes, resulting in a total of approximately
$47,000 and $809,000, respectively), by the weighted average number of approximately 23.3 million shares of Class A common stock
outstanding for the periods. Basic and diluted net loss per share of Class B common stock for the three months ended June 30, 2020
and 2019 is calculated by dividing the net loss of approximately $2.3 million and net income of $809,000, less income attributable
to Class A common stock in the amount of approximately $47,000 and $809,000, resulting in a net loss of approximately $2.3 million
and $0, respectively, by the weighted average number of 5.8 million shares of Class B common stock outstanding for the periods.
Basic and diluted net
income per share of Class A common stock for the six months ended June 30, 2020, and 2019 is calculated by dividing the investment
income earned on the investments held in the Trust Account (approximately $870,000 and $1.7 million, respectively, net of funds
available to be withdrawn from the Trust Account for payment of franchise and income taxes, resulting in a total of approximately
$607,000 and $1.0 million, respectively), by the weighted average number of approximately 23.3 million shares of Class A common
stock outstanding for the periods. Basic and diluted net loss per share of Class B common stock for the six months ended June 30,
2020 and 2019 is calculated by dividing the net loss of approximately $2.0 million and net income of $1.0 million, less income
attributable to Class A common stock in the amount of approximately $607,000 and $1.0 million, resulting in a net loss of approximately
$2.0 million and $0, respectively, by the weighted average number of 5.8 million shares of Class B common stock outstanding for
the periods.
The Company has not
considered the effect of the Warrants sold in the Initial Public Offering and the Private Placement Warrants to purchase an aggregate
18,310,641 shares of Class A common stock in the calculation of diluted loss per share, since inclusion would be anti-dilutive
under the treasury stock method as of June 30, 2020.
Concentration of Credit Risk
Financial instruments
that potentially subject the Company to credit risk consist principally of cash and investments held in the Trust Account. Cash
is maintained in accounts with financial institutions, which, at times may exceed the federal depository insurance coverage of
$250,000. The Company has not experienced losses on its cash accounts and management believes, based upon the quality of the financial
institutions, that the credit risk with regard to these deposits is not significant. The Company’s investments held in the
Trust Account consist entirely of an investment in a money market fund that comprises only U.S. treasury securities.
Investments Held in Trust Account
Investments held in
the Trust Account are classified as trading securities and are comprised solely of an investment in a money market fund that invests
only in U.S. treasury securities. Trading securities are presented on the unaudited condensed consolidated 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 investment income from investments held in the Trust Account in the accompanying unaudited condensed consolidated statement
of operations. The fair value for trading securities is determined using quoted market prices in active markets.
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:
|
●
|
Level
1, defined as observable inputs such as quoted prices (unadjusted) 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,
and December 31, 2019, the recorded values of cash, accounts payable, and accrued expenses approximate their fair values due to
the short-term nature of the instruments.
Principles of Consolidation
The unaudited condensed
consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All significant inter-company
transactions and balances have been eliminated in consolidation.
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 unaudited
condensed consolidated balance sheet and the reported amounts of revenues 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 unaudited condensed consolidated balance sheet, which management considered in formulating its estimate, could change due
to one or more future confirming events. Actual results could differ from estimates.
Offering Costs
Offering costs consist
of expenses incurred in connection with preparation of the Initial Public Offering, of which approximately $13.36 million consisted
principally of underwriter discounts of $12.77 million (including $8.13 million of which payment is deferred) and approximately
$583,000 consisted of professional, printing, filing, regulatory and other costs. These expenses, together with the underwriting
discounts and commissions, were charged to equity upon completion of the Initial Public Offering.
Class A Common Stock Subject
to Possible Redemption
The Company accounts
for its Class A common stock subject to possible redemption in accordance with FASB ASC 480, “Distinguishing Liabilities
from Equity.” Shares of Class A common stock subject to mandatory redemption (if any) are classified as a liability
and measured at fair value. Shares of conditionally redeemable Class A common stock (including shares of 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. The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of the
security at the end of each reporting period. Increases or decreases in the carrying value of redeemable shares of Class A common
stock shall be affected by charges against additional paid-in capital. Accordingly, as of June 30, 2020 and December 31, 2019,
22,168,376 and 22,366,276 shares of Class A common stock subject to conditional redemption, respectively, are presented as
temporary equity, outside of the stockholders’ equity section of the Company’s unaudited condensed consolidated balance
sheet.
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 unaudited
condensed consolidated balance sheets 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 during 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.
FASB ASC 740, “Income
Taxes,” 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 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.
As of June 30, 2020,
and December 31, 2019, the Company had gross deferred tax assets related to federal and state net operating loss carryforwards
for income tax purposes of approximately $662,000 and $119,000, respectively. The Company has not performed a detailed analysis
to determine whether an ownership change under Section 382 of the Internal Revenue Code has occurred. Following the Merger, the
Company anticipates that its net operating loss carryforwards and certain other tax attributes (such as losses and deductions that
have accrued in the current year prior to the Merger) will be subject to limitation under Section 382 of the Internal Revenue Code
as a result of an “ownership change” by reason of the Merger. The effect of an ownership change would be the imposition
of an annual limitation on the use of net operating loss carryforwards attributable to periods before the change.
In assessing the realization
of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets
will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during
the period in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax
liabilities, projected future taxable income, any limitation on the use of net operating losses under Section 382 of the Internal
Revenue Code, and taxing strategies in making this assessment. In case the deferred tax assets will not be realized in future periods,
the Company has provided a valuation allowance for the full amount of the deferred tax assets as of June 30, 2020 and December
31, 2019.
Recent Accounting Pronouncements
In December 2019, the
FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU
2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain
exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.
This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020,
with early adoption permitted. The Company is currently evaluating the impact of this standard on its financial statements and
related disclosures.
Management does not
believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material
impact on the Company’s unaudited condensed consolidated financial statements.
3. Initial Public Offering
The Company sold 23,300,917
Units in the Initial Public Offering, including 800,917 Units that were issued pursuant to the underwriters’ partial exercise
of their over-allotment option, at a price of $10.00 per Unit, generating gross proceeds of approximately $233.0 million,
and incurring offering costs of approximately $13.36 million, inclusive of approximately $8.13 million in deferred underwriting
commissions.
Each Unit consists
of one share of the Company’s Class A common stock, par value $0.0001 per share, and one-half of one redeemable warrant (each,
a “Warrant” and, collectively, the “Warrants”). Each whole Warrant entitles the holder to purchase one
share of Class A common stock at an exercise 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 the Company’s Initial Business Combination and 12 months from the closing of the Initial Public Offering and will
expire five years after the completion of the Company’s Initial Business Combination or earlier upon redemption or liquidation.
Once the Warrants become exercisable, the Company may redeem the outstanding Warrants in whole, but 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 reported sale price
of the Company’s Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 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 warrantholders.
Of the Units sold in
the Initial Public Offering, an aggregate of 77,750 Units (the “Affiliated Units”) were purchased by certain employees
of affiliates of the Company.
The underwriters of
the Initial Public Offering were entitled to underwriting discounts and commissions of 5.5%, of which 2.0% (approximately $4.64
million) was paid at the closing of the Initial Public Offering and 3.5% (approximately $8.13 million) was deferred.
On March 4, 2019, the
underwriters partially exercised their over-allotment option and on March 7, 2019, the underwriters waived the remainder of their
over-allotment option. In connection therewith, the Sponsor forfeited 643,520 shares of the Company’s Class B common stock
(the “Founder Shares”) for cancellation by the Company.
4. Related Party Transactions
Founder Shares
In November 2018, the
Sponsor paid $25,000 in offering expenses on behalf of the Company in exchange for the issuance of 5,750,000 Founder Shares, or
approximately $0.004 per share. In February 2019, the Company effected a stock dividend of 718,750 shares of Class B common stock,
resulting in the Sponsor holding an aggregate of 6,468,750 Founder Shares (up to 843,750 shares of which were subject to forfeiture
to the extent the underwriters did not exercise their over-allotment option). On March 4, 2019, the underwriters partially exercised
their over-allotment option and on March 7, 2019, the underwriters waived the remainder of their over-allotment option. In connection
therewith, the Sponsor forfeited 643,520 Founder Shares for cancellation by the Company. 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 shares of Class A common stock included in the Units sold in the Initial 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.
The holders of the
Founder Shares have agreed, subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares until the
earlier to occur of: (i) one year after the completion of the Initial Business Combination and (ii) subsequent to the Initial Business
Combination, (a) 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 the Initial Business Combination, or (b)
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 Warrants
Concurrently with the
closing of the Initial Public Offering, Tortoise Borrower purchased an aggregate of 6,660,183 Private Placement Warrants at a price
of $1.00 per warrant, generating gross proceeds of approximately $6.66 million, in the Private Placement. Each Private Placement
Warrant is exercisable for one share of the Company’s Class A common stock at an exercise price of $11.50 per share. A portion
of the purchase price of the Private Placement Warrants was added to the proceeds from the Initial Public Offering held in the
Trust Account. If the Initial Business Combination is not completed within the Combination Period, 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 for cash and exercisable on a cashless basis so long as they are held by Tortoise Borrower or its permitted
transferees.
Tortoise Borrower agreed,
subject to limited exceptions, not to transfer, assign or sell any of its Private Placement Warrants until 30 days after the completion
of the Initial Business Combination.
Related Party Loans
Prior to the consummation
of the Initial Public Offering, the Sponsor agreed to loan the Company funds to cover expenses related to the Initial Public Offering
and certain operating expenses. This loan was non-interest bearing and payable upon the closing of the Initial Public Offering.
The Company borrowed approximately $580,000 from the Sponsor, and repaid the loan in full on March 29, 2019.
Administrative Services Agreement
Pursuant to an Administrative
Services Agreement between the Company and the Sponsor, dated February 27, 2019 (the “Administrative Services Agreement”),
the Company agreed to pay the Sponsor a total of $10,000 per month for office space, utilities and administrative support. Upon
completion of the Initial Business Combination or the Company’s liquidation, the agreement will terminate. The Company incurred
$30,000 and $30,000 for expenses in connection with the Administrative Services Agreement for the three months ended June 30, 2020
and 2019, respectively, which is reflected in the accompanying unaudited condensed consolidated statements of operations. The Company
incurred $60,000 and $40,000 for expenses in connection with the Administrative Services Agreement for the six months ended June
30, 2020 and 2019, respectively, which is reflected in the accompanying unaudited condensed consolidated statements of operations.
On March 29, 2019, the Sponsor assigned all of its rights, interests and obligations under the Administrative Services Agreement
to Tortoise Capital Advisors, L.L.C.
5. Commitments & Contingencies
IPO Forward Purchase Agreement
The Company entered
into an amended and restated forward purchase agreement (the “IPO Forward Purchase Agreement”) with Atlas Point Fund,
pursuant to which Atlas Point Fund, which is a fund managed by CIBC National Trust but is not affiliated with the Company or the
Sponsor, agreed to purchase up to an aggregate maximum amount of $150,000,000 of either (i) a number of units (the “IPO Forward
Purchase Units”), consisting of one share of Class A common stock (the “IPO Forward Purchase Shares”) and one-half
of one redeemable warrant (the “IPO Forward Purchase Warrants”), for $10.00 per unit or (ii) a number of IPO Forward
Purchase Shares for $9.67 per share (such IPO Forward Purchase Shares valued at $9.67 per share or the IPO Forward Purchase Units,
as the case may be, the “IPO Forward Purchase Securities”), in a private placement that will close simultaneously with
the closing of the Initial Business Combination. The IPO Forward Purchase Warrants will have the same terms as the Warrants and
the IPO Forward Purchase Shares will be identical to the shares of Class A common stock included in the Units sold in the Initial
Public Offering, except the IPO Forward Purchase Shares and the IPO Forward Purchase Warrants will be subject to transfer restrictions
and certain registration rights. The proceeds from the sale of the IPO Forward Purchase Securities may be used as part of the consideration
to the sellers in the Initial Business Combination, and any excess funds may be used for the working capital needs of the post-transaction
company. This agreement is independent of the percentage of stockholders electing to redeem their Public Shares and may provide
the Company with an increased minimum funding level for the Initial Business Combination. The IPO Forward Purchase Agreement is
subject to conditions, including Atlas Point Fund giving the Company its irrevocable written consent to purchase the IPO Forward
Purchase Securities no later than five days after the Company notifies it of the Company’s intention to meet to consider
entering into a definitive agreement for a proposed Initial Business Combination. Atlas Point Fund may grant or withhold its consent
to the purchase entirely within its sole discretion. Accordingly, if Atlas Point Fund does not consent to the purchase, it will
not be obligated to purchase the IPO Forward Purchase Securities.
On June 18, 2020, Atlas
Point Fund and the Company entered into the FPA Amendment. See “Proposed Business Combination—Amendment to IPO
Forward Purchase Agreement” in Note 1.
Registration Rights
The holders of the
Founder Shares, the 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) will be entitled to registration rights pursuant to a registration rights agreement entered
into on February 27, 2019 (the “Registration Rights Agreement”). 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.
In connection with
the Closing, the Company will enter into the A&R Registration Rights Agreement. See “Proposed Business Combination—A&R
Registration Rights Agreement” in Note 1.
Underwriting Agreement
The Company granted
the underwriters a 45-day option to purchase up to 3,375,000 additional Units to cover any over-allotments at the Initial
Public Offering price of $10.00 per Unit, less the underwriting discounts and commissions. On March 4, 2019, the underwriters partially
exercised their over-allotment option to purchase 800,917 additional Units, and on March 7, 2019, the underwriters notified the
Company of their intent to waive the remainder of their over-allotment option.
The underwriters were
entitled to an underwriting discount for each Unit sold in the Initial Public Offering, except for the Affiliated Units. An aggregate
of approximately $4.64 million (or $0.20 per Unit), was paid to the underwriters upon the closing of the Initial Public Offering.
An additional fee of approximately $8.13 million (or $0.35 per Unit), 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 an Initial Business Combination, subject to the terms of the underwriting agreement.
Deferred Legal Fees Associated with
the Initial Public Offering
The Company entered
into an engagement letter to obtain legal advisory services, pursuant to which the Company’s legal counsel agreed to defer
half of their fees until the closing of the Initial Business Combination. As of June 30, 2020, the Company recorded an aggregate
of $150,000 in connection with such arrangement as deferred legal fees in the accompanying unaudited condensed consolidated balance
sheets.
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 23,300,917 shares of Class A common stock issued and outstanding, of which 22,168,376 and 22,366,276
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 with a par value of $0.0001 per share. Holders of Class B common stock
are entitled to one vote per share of Class B common stock. In November 2018, the Company issued 5,750,000 shares of Class B common
stock. In February 2019, the Company effected a stock dividend of 718,750 shares of Class B common stock. As of March 4, 2019,
there were 6,468,750 shares of Class B common stock outstanding (up to 843,750 shares of which were subject to forfeiture
to the extent the underwriters did not exercise their over-allotment option). On March 4, 2019, the underwriters partially exercised
their over-allotment option to purchase 800,917 additional Units. On March 7, 2019, the underwriters waived the remainder of their
over-allotment option and in connection therewith, the Sponsor forfeited 643,520 shares of Class B common stock for cancellation
by the Company. As of June 30, 2020, and December 31, 2019, there were 5,825,230 shares of Class B common stock outstanding.
Holders of Class A
common stock and holders of Class B common stock will vote together as a single class on all matters submitted to a vote of the
Company’s stockholders, except as required by law or stock exchange rule; provided that only holders of Class B common stock
have the right to vote on the election of the Company’s directors prior to the Initial Business Combination.
The shares of Class
B common stock will automatically convert into shares of 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 Initial Business Combination (excluding
the IPO Forward Purchase Securities and any shares or equity-linked securities issued, or to be issued, to any seller in the
Initial Business Combination).
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. As of June 30, 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 (i) 30 days after the completion of the Initial Business Combination or (ii) 12 months from the
closing of the Initial Public Offering; provided in each case 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 Warrants and a current prospectus relating
to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws
of the state of residence of the holder (or the Company permits holders to exercise their Warrants on a cashless basis under the
circumstances specified in the warrant agreement). The Company has agreed that as soon as practicable, but in no event later than
15 business days, after the closing of the 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 shares of Class A common stock issuable upon
exercise of the Warrants. The Company will use its best efforts to cause the same to become effective, but in no event later than
60 business days after the closing of the Initial Business Combination, 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. Notwithstanding the above, if the Company’s 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 the Initial Business Combination or earlier upon redemption or liquidation.
The Private Placement
Warrants are identical to the 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 the Initial Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be
non-redeemable for cash and exercisable on a cashless basis so long as they are held by Tortoise Borrower or Tortoise Borrower’s
permitted transferees. If the Private Placement Warrants are held by someone other than Tortoise Borrower 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 exercise price
and number of shares of Class A common stock issuable upon exercise of the Warrants may be adjusted in certain circumstances including
in the event of a share capitalization, or recapitalization, reorganization, merger or consolidation. In addition, if the Company
issues additional shares of Class A 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 Class
A 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.
The
Company may call the Warrants for redemption for cash (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 sale price of the Company’s Class A common stock
equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like) for any 20 trading days within a 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 warrantholders.
|
Commencing
90 days after the Warrants become exercisable, the Company may redeem the outstanding Warrants (including both the Warrants and
the 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 table set forth in the Company’s prospectus relating to the Initial Public Offering based
on the redemption date and the “fair market value” of the Company’s Class A common stock, upon a minimum of
30 days’ prior written notice of redemption and if, and only if, the last reported sale price of the Company’s Class
A common stock equals or exceeds $10.00 per share (as adjusted per share splits, share dividends, reorganizations, recapitalizations
and the like) on the trading day prior to the date on which the Company sends the notice of redemption to the warrantholders.
The “fair market value” of the Company’s Class A common stock is the average last reported sale price of the
Company’s Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice
of redemption is sent to the holders of Warrants.
If the Company calls
the Warrants for redemption for cash, management will have the option to require all holders that wish to exercise the Warrants
to do so on a “cashless basis,” as described in the warrant agreement. Additionally, in no event will the Company be
required to net cash settle any Warrants. If the Company is unable to complete the Initial 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 the respect to such Warrants. Accordingly, the Warrants may expire worthless.
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 by level within the fair value hierarchy.
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 Fund
|
|
$
|
236,643,898
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total
|
|
$
|
236,643,898
|
|
|
$
|
—
|
|
|
$
|
—
|
|
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 Fund
|
|
$
|
236,054,346
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total
|
|
$
|
236,054,346
|
|
|
$
|
—
|
|
|
$
|
—
|
|
As of June 30, 2020,
and December 31, 2019, the investments held in the Trust Account were comprised solely of an investment in a money market fund
that invests only in U.S. treasury securities.
8. Subsequent Events
Management has evaluated
subsequent events to determine if events or transactions occurring through the date the unaudited condensed consolidated financial
statements were available for issuance require potential adjustment to or disclosure in the unaudited condensed consolidated financial
statements and has concluded that all such events that would require recognition or disclosure have been recognized or disclosed.