| 001-40927 | 98-1601409 | ||
| ||||
|
|
|
|
|
|
|
|
|
| |
(State or other jurisdiction of
|
|
|
|
| ||||
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
Title of each class |
|
| ||
|
|
| ||
|
|
| ||
|
|
|
☐ Large accelerated filer ☐☐☒ No ☒S-T (§S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐☐Accelerated filer ☐ Non-accelerated filer☒☒ Smaller reporting company ☒ Emerging growth company ☒
ESGEN ACQUISITION CORPORATION
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 20212023
TABLE OF CONTENTS
|
| |||
| Page | ||||
| ||||
|
|
| ||
| ||||
|
|
| ||
Condensed Balance |
| |||
|
|
| ||
| ||||
|
|
| ||
| ||||
|
|
| ||
| ||||
|
|
| ||
| ||||
|
|
| ||
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations |
| |||
|
|
| ||
Item 3.Quantitative and Qualitative Disclosures about Market Risk |
| |||
|
|
| ||
| ||||
|
|
| ||
| ||||
|
|
| ||
| ||||
|
|
| ||
| ||||
|
|
| ||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
| |||
|
|
| ||
| ||||
|
|
| ||
| ||||
|
|
| ||
| ||||
|
|
| ||
| ||||
|
|
| ||
| 30 | |||
i
i
| SHEETS (UNAUDITED)
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| | | | | | |
| | | | | For the | |
| | | | | Period | |
| | | | | from | |
| | | | | April 19, 2021 | |
| | For the | | (Inception) | ||
| | three months ended | | through | ||
| | September 30, | | September 30, | ||
|
| 2021 | | 2021 | ||
Formation costs | | $ | 1,690 | | $ | 15,393 |
Total expenses | | | (1,690) | | | (15,393) |
| | | | | | |
Net loss | | $ | (1,690) | | $ | (15,393) |
| |
| | |
| |
Basic and diluted weighted average shares outstanding(1) | |
| 5,000,000 | |
| 5,000,000 |
Basic and diluted net loss per share | | $ | (0.00) | | $ | (0.00) |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Legal and professional fees | $ | 707,780 | $ | 145,588 | $ | 3,752,583 | $ | 937,110 | ||||||||
Insurance | 2,913 | 133,302 | 25,479 | 395,559 | ||||||||||||
Other operating costs | 88,307 | 20,385 | 296,231 | 181,339 | ||||||||||||
Operating cost—related party | 30,000 | 30,000 | 90,000 | 90,000 | ||||||||||||
Loss from operations | (829,000 | ) | (329,275 | ) | (4,164,293 | ) | (1,604,008 | ) | ||||||||
Other income (expense): | ||||||||||||||||
Dividends earned on marketable securities held in Trust Account | 413,940 | 1,245,745 | 1,719,810 | 1,632,690 | ||||||||||||
Recovery of offering costs related to the IPO allocated to warrants | — | — | 425,040 | — | ||||||||||||
Change in fair value of warrant liabilities | 1,046,784 | 3,345,600 | (206,016 | ) | 11,608,560 | |||||||||||
Total other income, net | 1,460,724 | 4,591,345 | 1,938,834 | 13,241,250 | ||||||||||||
Net income (loss) | $ | 631,724 | $ | 4,262,070 | $ | (2,225,459 | ) | $ | 11,637,242 | |||||||
Basic and diluted weighted average shares outstanding of Class A ordinary shares | 2,896,555 | 27,600,000 | 4,615,842 | 27,600,000 | ||||||||||||
Basic and diluted net income (loss) per share, Class A | $ | 0.25 | $ | 0.13 | $ | (1.03 | ) | $ | 0.35 | |||||||
Basic and diluted weighted average shares outstanding of Class B ordinary shares | 6,900,000 | 6,900,000 | 6,900,000 | 6,900,000 | ||||||||||||
Basic and diluted net income (loss) per share, Class B | $ | (0.01 | ) | $ | 0.09 | $ | 0.37 | $ | 0.29 | |||||||
| | | | | | | | | | | | | | |
| | Class B | | Additional | | | | | Total | |||||
| | Ordinary Shares | | Paid-in | | Accumulated | | Shareholder’s | ||||||
|
| Shares(1) |
| Amount |
| Capital |
| Deficit |
| Equity | ||||
Balance as of April 19, 2021 | | — | | $ | — | | $ | 0 | | $ | 0 | | $ | — |
Class B ordinary shares issued to initial shareholder | | 5,750,000 | | | 575 | | | 24,425 | | | 0 | | | 25,000 |
Net loss |
| — | | | — | |
| 0 | |
| (13,703) | |
| (13,703) |
Balance as of June 30, 2021 |
| 5,750,000 | | $ | 575 | | $ | 24,425 | | $ | (13,703) | | $ | 11,297 |
Net loss |
| — | | | — | |
| 0 | |
| (1,690) | |
| (1,690) |
Balance as of September 30, 2021 | | 5,750,000 | | $ | 575 | | $ | 24,425 | | $ | (15,393) | | $ | 9,607 |
ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION AND SHAREHOLDERS’ DEFICIT
Class A ordinary shares subject to possible redemption | Class B ordinary shares | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Deficit | ||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||
Balance as of December 31, 2022 | 27,600,000 | $ | 285,506,568 | 6,900,000 | $ | 690 | $ | — | $ | (11,993,568 | ) | $ | (11,992,878 | ) | ||||||||||||||||||||||
Accretion of ordinary shares subject to possible redemption | — | 1,288,233 | — | — | — | (1,288,233 | ) | (1,288,233 | ) | |||||||||||||||||||||||||||
Redemption of Class A ordinary shares subject to possible redemption | (24,703,445 | ) | (255,875,758 | ) | — | — | — | — | — | |||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (1,446,111 | ) | (1,446,111 | ) | |||||||||||||||||||||||||||
Balance as of March 31, 2023 | 2,896,555 | 30,919,043 | 6,900,000 | 690 | — | (14,727,912 | ) | (14,727,222 | ) | |||||||||||||||||||||||||||
Accretion of ordinary shares subject to possible redemption | — | 712,810 | — | — | — | (712,810 | ) | (712,810 | ) | |||||||||||||||||||||||||||
Waiver of deferred underwriters fee | — | — | — | — | — | 9,234,960 | 9,234,960 | |||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (1,411,072 | ) | (1,411,072 | ) | |||||||||||||||||||||||||||
Balance as of June 30, 2023 | 2,896,555 | 31,631,853 | 6,900,000 | 690 | — | (7,616,834 | ) | (7,616,144 | ) | |||||||||||||||||||||||||||
Accretion of ordinary shares subject to possible redemption | — | 761,527 | — | — | — | (761,527 | ) | (761,527 | ) | |||||||||||||||||||||||||||
Net income | — | — | — | — | — | 631,724 | 631,724 | |||||||||||||||||||||||||||||
Balance as of September 30, 2023 | 2,896,555 | $ | 32,393,380 | 6,900,000 | $ | 690 | $ | — | $ | (7,746,637 | ) | $ | (7,745,947 | ) | ||||||||||||||||||||||
Class A ordinary shares subject to possible redemption | Class B ordinary shares | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Deficit | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance as of December 31, 2021 | 27,600,000 | $ | 281,520,000 | 6,900,000 | $ | 690 | $ | — | $ | (22,341,250 | ) | $ | (22,340,560 | ) | ||||||||||||||
Accretion of ordinary shares subject to possible redemption | — | 20,308 | — | — | — | (20,308 | ) | (20,308 | ) | |||||||||||||||||||
Net income | — | — | — | — | — | 5,880,541 | 5,880,541 | |||||||||||||||||||||
Balance as of March 31, 2022 | 27,600,000 | 281,540,308 | 6,900,000 | 690 | $ | — | (16,481,017 | ) | (16,480,327 | ) | ||||||||||||||||||
Accretion of ordinary shares subject to possible redemption | — | 368,774 | — | — | — | (368,774 | ) | (368,774 | ) | |||||||||||||||||||
Net income | — | — | — | — | — | 1,494,631 | 1,494,631 | |||||||||||||||||||||
Balance as of June 30, 2022 | 27,600,000 | 281,909,082 | 6,900,000 | 690 | — | (15,355,160 | ) | (15,354,470 | ) | |||||||||||||||||||
Accretion of ordinary shares subject to possible redemption | — | 1,245,745 | — | — | — | (1,245,745 | ) | (1,245,745 | ) | |||||||||||||||||||
Net income | — | — | — | — | — | 4,262,070 | 4,262,070 | |||||||||||||||||||||
Balance as of September 30, 2022 | 27,600,000 | $ | 283,154,827 | 6,900,000 | $ | 690 | $ | — | $ | (12,338,835 | ) | $ | (12,338,145 | ) | ||||||||||||||
| | | |
| | For the Period | |
| | from April 19, | |
| | 2021 (Inception) | |
| | through | |
| | September 30, | |
| | 2021 | |
Cash flows from Operating Activities: |
|
| |
Net loss | | $ | (15,393) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| |
Formation costs paid by Sponsor | | | 11,693 |
Changes in current assets and liabilities | | | |
Accrued expenses | | | 3,700 |
Net cash used in operating activities | |
| 0 |
| | | |
Net change in cash | |
| 0 |
Cash, beginning of the period (inception) | |
| 0 |
Cash, end of the period | | $ | 0 |
| |
| |
Supplemental disclosure of noncash investing and financing activities: | |
| |
Deferred offering costs paid by Sponsor in exchange for issuance of Class B ordinary shares | | $ | 25,000 |
Deferred offering costs included in accrued offering costs and expenses | | $ | 462,712 |
Accrued expenses paid by Sponsor under the promissory note | | $ | 243,913 |
For the Nine Months Ended September 30, | ||||||||
2023 | 2022 | |||||||
Cash flows from operating activities: | ||||||||
Net (loss) income | $ | (2,225,459 | ) | $ | 11,637,242 | |||
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | ||||||||
| Dividends earned on marketable securities held in Trust Account | — | (1,632,690 | ) | |||||
Recovery of offering costs related to the IPO allocated to warrants | (425,040 | ) | — | |||||
Change in fair value of warrant liabilities | 206,016 | (11,608,560 | ) | |||||
Changes in current assets and liabilities: | ||||||||
Prepaid expenses | 26,849 | 402,258 | ||||||
Accounts payable and accrued expenses | 3,429,046 | 678,120 | ||||||
Due to related party | 165,000 | 90,000 | ||||||
Net cash provided by (used in) operating activities | 1,176,412 | (433,630 | ) | |||||
Cash flows from investing activities: | ||||||||
Reinvestment of marketable securities held in Trust Account | (1,719,810 | ) | — | |||||
Extension funding of Trust Account | (1,042,760 | ) | — | |||||
Cash withdrawn from Trust Account in connection with redemption | 255,875,758 | — | ||||||
Net cash provided by investing activities | 253,113,188 | — | ||||||
Cash flows from financing activities: | ||||||||
Redemption of Class A ordinary shares subject to possible redemption | (255,875,758 | ) | — | |||||
Proceeds from note payable-related party | 1,238,449 | — | ||||||
Net cash used in financing activities | (254,637,309 | ) | — | |||||
Net change in cash | (347,709 | ) | (433,630 | ) | ||||
Cash, beginning of the period | 614,767 | 1,323,903 | ||||||
Cash, end of the period | $ | 267,058 | $ | 890,273 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Change in value of Class A ordinary shares subject to possible redemption | $ | 2,762,570 | $ | 1,634,827 | ||||
Impact of the waiver of deferred underwriters fee | $ | 9,234,960 | $ | — | ||||
obligations. To mitigate the risk of being deemed to have been operating as an unregistered investment company under the Investment Company Act, on October 16, 2023, the Company instructed the Trustee with respect to the Trust Account, to liquidate the U.S. government securities or money market funds held in the Trust Account and thereafter to hold all funds in the Trust Account in demand deposits (i.e., in one or more bank accounts) until the earliest of ESGEN’s completion of an initial business combination or J1one or more businesses or entities (the “Business Combination”). The Company has not selected any Business Combination target and the Company has not, nor has anyone on its behalf, initiated any substantive discussions, directly or indirectly, with any Business Combination target. The Company will not be limited to a particular industry or geographic region in its identification and acquisition of a target company.2021,2023, the Company had not commenced any operations. All activity for the period from April 19, 2021 (inception) through September 30, 2021,2023, relates to the Company’s formation and the initial public offering (“Public Offering” or “IPO”) described below.below and since the closing of the IPO, the search for a prospective initial Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate The Company has selected December 31 as its fiscal year end.2021 (the “Effective Date”).2021. On October 22, 2021, the Company consummated its IPO of 27,600,000 units (the “Units” and, with respect to the ordinary shares included in the Units being offered, the “Public Shares”) at $10.00 per Unit (which included the full exercise of the underwriters’ over-allotment option), which is discussed in Notes 3 (the “Public Offering”) and Note 11 (“Subsequent Events”), and the sale of 14,040,000 warrants (the “Private Placement Warrants”) each exercisable to purchase one Class A ordinary share at $11.50 per share, at a price of $1.00 per Private Placement Warrant in a private placement to the Sponsor that closed simultaneously with the Public Offering.Transaction costs amounted to $16,138,202 consisting of $5,520,000 of underwriting commissions, $9,660,000 of deferred underwriting commissions and $958,202 of other cash offering costs. Of this amount, $15,428,121 was charged to shareholder’s deficit and $710,081 was allocated to the warrants and expensed. underwriting commissions willuntil October 16, 2023, was only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations (see Note 11).
5
provision relating to the rights of holders of the Class A ordinary shares, and (c) the redemption of the public shares if the Company has not consummated the Business Combination within Combination Period, subject to applicable law. Public shareholders who redeem their Class A ordinary shares in connection with a shareholder vote described in clause (b) in the preceding sentence shall not be entitled to funds from the Trust Account upon the subsequent completion of an initial Business Combination or liquidation if the Company has not consummated an initial Business Combination within Combination Period, with respect to such Class A ordinary shares so redeemed.
6
by a third party or prospective target business that executed a waiver of any and all rights to seek access to the Trust Account nor will it apply to any claims under the Company’s indemnity of the underwriters of the Public Offering against certain liabilities, including liabilities under the Securities Act.Act of 1933, as amended (the “Securities Act”). In the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. However, the Company has not asked the Sponsor to reserve for such indemnification obligations, nor has the Company independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and the Company believe that the sponsor’sSponsor’s only assets are securities of the Company. Therefore, the Company cannot assure you that the Sponsor would be able to satisfy those obligations. None of the Company’s officers or directors will indemnify the Company for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Liquidity and Capital Resources
As of September 30, 2021, the Company had 0 cash and a working capital deficit of $722,018. Following the consummation of the IPO on
The Company’s liquidity needs up to September 30, 2021 had been satisfied through a payment from the Sponsor of $25,000 to cover certain offering costs in consideration for the Founder Shares and the loan under an unsecured promissory note from the Sponsor of $300,000 (see Note 5). In addition, in order to finance transaction costs in connection with a Business Combination,20, 2023, at the Company’s Sponsor or an affiliateextraordinary general meeting, the shareholders approved, among other proposals, (i) (a) the extension (such proposal, the “Extension Proposal”) of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, provide the Company Working Capital Loans, as defined below (see Note 5). As of September 30, 2021, there were no amounts outstanding under any Working Capital Loans.
Based on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period the Company will be using these funds for paying existing accounts payable, identifying and evaluating prospectivehas to complete an initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selectingfrom October 22, 2023 to January 22, 2024 (the “Charter Amendment”) and (b) in the target businessevent that the Company has not consummated an initial Business Combination by January 22, 2024, to merge with or acquire, and structuring, negotiating and consummatingallow the Business Combination.
Risks and Uncertainties
Management is currently evaluating the impactCompany, by resolution of the COVID-19 pandemicBoard and, has concluded that while it is reasonably possible that the pandemic could have a negative effect on the Company’s financial position, results of its 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 includewithout any adjustments that might result from the outcome of this uncertainty.
Note 2 — Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s final prospectus, which contains the initial audited financial statements and notes thereto for the period from April 19, 2021 (inception) to June 30, 2021, as filed with the SEC on October 21, 2021. The interim results for the three months ended September 30, 2021 and for the period from April 19, 2021 (inception) through September 30, 2021 are not necessarily indicative of the results to be expected for the period ending December 31, 2021 or for any future interim periods.
7
Emerging Growth Company Status
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that 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 whichshareholders, upon five days’ advance notice prior to each Additional Extension, to complete six Additional Extensions, provided that the Sponsor or the Sponsor’s affiliates or permitted designees will deposit into the Trust Account for each Additional Extension Date the lesser of (x) $35,000 or (y) $0.0175 for each Public Share that is neither an emerging growth company nor an emerging growth company which has opted out of usingthen-outstanding, in exchange for one or more non-interest bearing, unsecured promissory notes issued by a Lender, and (ii) the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of this financial statement in conformity with US GAAP requires 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 statement and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did 0t have any cash equivalents as of September 30, 2021.
Offering Costs Associated with Initial Public Offering
The Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A—"Expenses of Offering”. Offering costs consist of legal, accounting, underwriting and other costs incurred through the balance sheet date that are related to the Public Offering. On October 22, 2021, upon consummation of the IPO, offering costs amounted to $16,138,202 and of this, $15,428,121 was charged to shareholder’s deficit and $710,081 was deemed allocable to the warrants and charged to expense (see Note 11).
Net Loss Per Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net loss per share is computed by dividing net loss by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares subject to forfeiture by the Sponsor. Weighted average shares were reduced for the effect of an aggregate of 900,000 Class B ordinary shares that are subject to forfeiture if the over-allotment option was not exercised by the underwriters (see Note 5). As of September 30, 2021, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary shares and then share in the earnings of the Company. As a result, diluted loss per share is the same as basic loss per share for the period presented.
Fair Value of Financial Instruments
The fair valueamendment of the Company’s assetsamended and liabilities,restated memorandum and articles of association to change certain provisions which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” approximatesrestrict the carrying amounts represented in the balance sheet, primarily due to its short-term nature.
8
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). The Company’s financial instruments are classified as either Level 1, Level 2 or Level 3. These tiers include:
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. The Company’s derivative instruments are recorded at fair value on the balance sheet with changes in the fair value reported in the statements of operations. Derivative assets and liabilities are classified on the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.
Warrant Liability
The Company accounts for the Public and Private Placement warrants issued in connection with the Public Offering in accordance with the guidance contained in ASC 815-40. Such guidance provides that because the warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability. Accordingly, the Company will classify each warrant as a liability at its fair value. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in the Company’s statement of operations.
Income Taxes
The Company accounts for income taxes under FASB ASC 740, “Income Taxes” (“ASC 740”).
ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
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 0 unrecognized tax benefits as of September 30, 2021.
The Company’s management determined that the Cayman Islands is the Company’s only major tax jurisdiction. There is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s financial statements. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of September 30, 2021, there were 0 unrecognized tax benefits and 0 amounts were accrued for the payment of interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic
9
815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.
Management does not believe that any other recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statement.
Note 3 — Public Offering
On October 22, 2021, the Company consummated its IPO of 27,600,000 Units, which included the full exercise of the underwriters’ over-allotment option, at a price of $10.00 per Unit, generating gross proceeds of $276,000,000 (see Note 11). Each Unit consists of 1 Class A ordinary share and one-half of 1 redeemable warrant (each, a “Public Warrant”). Each whole Public Warrant entitles the holder to purchase 1 Class A ordinary share at a price of $11.50 per share.
Note 4 — Private Placement
On October 22, 2021, in connection with the consummation of the IPO, the Sponsor purchased 11,240,000 warrants, which included the underwriters’ exercise of the full over-allotment option (the “Private Placement Warrants”), each exercisable to purchase 1 Class A ordinary share at $11.50 per share, subject to adjustment, at a price of $1.00 per warrant and $11,240,000 in the aggregate, in a private placement which occurred concurrently with the closing of the Public Offering. Additionally Salient Capital Advisors, LLC, acting in its capacity as investment advisor on behalf of one or more client accounts (“Salient Client Accounts”) has purchased 2,800,000 warrants on the same terms as the Sponsor in a private placement which occurred concurrently with the closing of the Public Offering (see Note 11). The private placement resulted in an aggregate of 14,040,000 warrants and $14,040,000 in proceeds, a portion of which was placed in the Trust account.
Note 5 — Related Party Transactions
Founder Shares
On April 27, 2021, the Sponsor paid $25,000, or approximately $0.004 per share, to cover certain offering costs in consideration for 5,750,000 Class B ordinary shares, par value $0.0001. In September 2021, certain shareholders surrendered, for 0 consideration,$0.0001, of the Company (the “Class B ordinary shares”) from converting to Class A ordinary shares, par value $0.0001 (the “Class A ordinary shares”) prior to the consummation of an aggregateinitial
On September 10, 2021, the Sponsor transferred 115,000 Class B ordinary shares to each of its three independent directors. Additionally, on September 27, 2021, the Company sold 831,393 Class B ordinary sharesinitial shareholders prior to the Salient Client Accounts at a price of approximately $0.004. As of October 22, 2021, the Sponsor held 4,573,607 Class B ordinary shares.
Company’s IPO.
10
the prescribed time frame). If the Company seeks shareholder approval, it will complete the Business Combination only if it is approved by an ordinary resolution or such higher approval threshold as may be required by Cayman Islands law and pursuant to the amended and restated memorandum and articles of association. In such case, the initial shareholders and each member of the management team have agreed to vote their Founder Shares and Public Shares in favor of the Business Combination.
Promissory
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net income (loss) | $ | 631,724 | $ | 4,262,070 | $ | (2,225,459 | ) | $ | 11,637,242 | |||||||
Accretion of temporary equity to redemption value | (761,527 | ) | (1,245,745 | ) | 6,472,390 | (1,632,690 | ) | |||||||||
Net income including accretion of temporary equity to redemption value | $ | (129,803 | ) | $ | 3,016,325 | $ | 4,246,931 | $ | 10,004,552 | |||||||
For the Three Months Ended September 30, | ||||||||||||||||
2023 | 2022 | |||||||||||||||
Redeemable Class A | Non-redeemable Class B | Redeemable Class A | Non-redeemable Class B | |||||||||||||
Basic and diluted net income (loss) per share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income including accretion of temporary equity | $ | (38,941 | ) | $ | (90,861 | ) | $ | 2,413,060 | $ | 603,265 | ||||||
Allocation of accretion of temporary equity to redemption value | 761,527 | — | 1,245,745 | — | ||||||||||||
Allocation of net income (loss) | $ | 722,586 | $ | (90,861 | ) | $ | 3,658,805 | $ | 603,265 | |||||||
Denominator: | ||||||||||||||||
Weighted-average shares outstanding | 2,896,555 | 6,900,000 | 27,600,000 | 6,900,000 | ||||||||||||
Basic and diluted net income (loss) per share | $ | 0.25 | $ | (0.01 | ) | $ | 0.13 | $ | 0.09 | |||||||
For the Nine Months Ended September 30, | ||||||||||||||||
2023 | 2022 | |||||||||||||||
Redeemable Class A | Non-redeemable Class B | Redeemable Class A | Non-redeemable Class B | |||||||||||||
Basic and diluted net (loss) income per share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income including accretion of temporary equity | $ | 1,698,772 | $ | 2,548,159 | $ | 8,003,642 | $ | 2,000,910 | ||||||||
Allocation of accretion of temporary equity to redemption value | (6,472,390 | ) | — | 1,632,690 | — | |||||||||||
Allocation of net (loss) income | $ | (4,773,618 | ) | $ | 2,548,159 | $ | 9,636,332 | $ | 2,000,910 | |||||||
Denominator: | ||||||||||||||||
Weighted-average shares outstanding | 4,615,842 | 6,900,000 | 27,600,000 | 6,900,000 | ||||||||||||
Basic and diluted net (loss) income per share | $ | (1.03 | ) | $ | 0.37 | $ | 0.35 | $ | 0.29 | |||||||
Transactions
note and as is included on the balance sheet as promissory note
Commencing on the date that the Company’s securities are first listed on the NASDAQ through
For the three and nine months ended September 30, 2022, the Company incurred $30,000 and $90,000, respectively. No amounts have been paid for these services. As of September 30, 2023 and December 31, 2022, the Company reported on the balance sheets $165,000 and $120,000, respectively, pursuant to this agreement, in “Due to related party”.
following:
September 30, 2023 | December 31, 2022 | |||||||
Prepaid insurance | $ | 602 | $ | 26,081 | ||||
Other prepaid expenses | 3,659 | 5,029 | ||||||
| $ | 4,261 | $ | 31,110 | |||||
September 30, 2023 | December 31, 2022 | |||||||
Legal accrual | $ | 5,041,722 | $ | 1,705,049 | ||||
Other payables and expenses | 254,316 | 161,943 | ||||||
| $ | 5,296,038 | $ | 1,866,992 | |||||
11
In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of its initial Business Combination. However, the registration and expected shareholder 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 lockup period, which occurs (i) in the case of the Founder Shares, as described in the following paragraph, and (ii) in the case of the Private Placement Warrants and the respective Class A ordinary shares underlying such warrants, 30 days after the completion of the initial Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriters
The Company granted the underwriters a 45-day option to purchase up to 3,600,000 additional Units to cover over-allotments, if any, at the Public Offering price less the underwriting discounts and commissions.
The underwriters earned an underwriting discount of two percent (2%) of the gross proceeds of the Public Offering, or $5,520,000, which was paid in cash at closing of the offering (see Note 11).
Additionally, the underwriters arewere entitled to a deferred underwriting discount
In April 2023, the underwriters waived any right to receive the deferred
operations.
12
price of the Class A ordinary shares during the 20 trading day period starting on the trading day prior to the day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption trigger price described adjacent to “Redemption of warrants when the price per Class A ordinary share equals or exceeds $18.00” will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price described adjacent to the caption “Redemption of warrants when the price per Class A ordinary share equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.
$10.00. $10.00.13
Recurring Fair Value Measurements being sold in the Public Offering. Any amendment to the terms of the Private Placement Warrants or any provision of the warrant agreement with respect to the Private Placement Warrants will require a vote of holders of at least 50% of the number of the then outstanding Private Placement Warrants.108 — Shareholder’s Equity $ 32,393,380 $ — $ — $ 32,393,380 496,800 — — 496,800 — 505,440 — 505,440 $ 496,800 $ 505,440 $ — $ 1,002,240 $ 285,506,568 $ — $ — $ 285,506,568 394,680 — — 394,680 — 401,544 — 401,544 $ 394,680 $ 401,544 $ — $ 796,224
outstanding.
outstanding other than the 2,896,555 and 27,600,000 Class A ordinary shares subject to possible redemption that are accounted for outside of the shareholders’ deficit section of the condensed balance sheets, respectively.
outstanding.
14
Note 11—Subsequent Events
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to through$2,500,000 to the date that Sponsor. The Restated Note amends, restates, replaces and supersedes
In October 2021,from time to time prior to the consummation of the IPO,Company’s initial Business Combination. The Restated Note does not bear interest, matures on the Company issued a 20% dividend which resulted in an aggregatedate of 6,900,000 Founder Shares, of which 900,000 wereconsummation the Business Combination and is subject to forfeiturecustomary events of default. The Restated Note will be repaid only to the extent that the underwriters’ over-allotment option was not exercised.
Company has funds available to it outside of its Trust Account.
Transaction costs amountedvote to $16,138,202 consistingapprove the above proposals, the holders of $5,520,0001,488,000 Class A ordinary shares of underwriting commissions, $9,660,000ESGEN properly exercised their right to redeem their shares for cash at a redemption price of deferred underwriting commissionsapproximately $11.21 per share, for an aggregate redemption amount of $16,679,055.
Following the closingSponsor as a result of the IPO on October 22, 2021, $281,520,000 ($10.20 per Unit) fromSponsor Share Conversion and no additional amounts will be deposited into the net proceeds soldTrust Account in respect of shares of Class A ordinary shares held by the IPO, including proceedsSponsor in connection with the extension of the sale ofTermination Date to the Private Placement Warrants, was deposited in a trust account (“Trust Account”) and will only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 daysExtended Date or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations.
15
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References to the “Company,” “our,” “us” or “we” refer to ESGEN Acquisition Corporation. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this report.Quarterly Report on Form 10-Q (this “Quarterly Report”). Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statementscontains, and our officers and representatives may from time to time make, “forward-looking statements” within the meaning of Section 27Athe safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1933,1995. Forward-looking statements can be identified by words such as amended (the “Securities Act”),“anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and Section 21Esimilar references to future periods. Examples of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements include, among others, statements we make regarding:
our ability to select an appropriate target business or businesses;
our ability to complete our initial business combination;
our expectations around the performance of a prospective target business or businesses;
our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination;
our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination;
our potential ability to obtain additional financing to complete our initial business combination;
our pool of prospective target businesses;
the ability of our officers and directors to generate a number of potential business combination opportunities;
our public securities’ potential liquidity and trading;
the lack of a market for our securities;
the use of proceeds not held in the trust account or available to us from interest or dividend income on the trust account balance;
the trust account not being subject to claims of third parties; or
our financial performance following our initial public offering.
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, aboutanticipated events and trends, the economy and other future events. Theseconditions. Because forward-looking statements relate to the future, they are subject to knowninherent uncertainties, risks and unknown risks, uncertaintieschanges in circumstances that are difficult to predict and assumptions about usmany of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that maycould cause our actual results levelsand financial condition to differ materially from those indicated in the forward-looking statements include, among others, those factors described under the heading “Risk Factors.” Should one or more of activity, performancethese risks or achievements to be materially differentuncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from any future results, levels of activity, performance or achievements expressed or implied by suchthose projected in these forward-looking statements. In some cases, you can identifyWe undertake no obligation to update or revise any forward-looking statements, by terminology suchwhether as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,”a result of new information, future events or otherwise, except as may be required under applicable securities laws. You should not take any statement regarding past trends or activities as representation that the negative of such termstrends or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but areactivities will continue in the future. Accordingly, you should not limited to, those described in our other U.S. Securities and Exchange Commission (“SEC”) filings.put undue reliance on these statements.
Overview
We were incorporated as a Cayman Islands exempted company on April 19, 2021 for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities (the “Business Combination”). We have not selected any Business Combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any Business Combination target. We will not be limited to a particular industry or geographic region in our identification and acquisition of a target company.
As of September 30, 2021, we had not commenced any operations. All activity for the period from April 19, 2021 (inception) through September 30, 2021, relates to our formation and initial public offering (“Public Offering” or “IPO”). We will not generate any operating revenues until after the completion of our initial Business Combination, at the earliest. We will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the Public Offering. We have selected December 31 as our fiscal year end.
Our sponsor is ESGEN LLC, a Delaware limited liability company.company (the “Sponsor”).
21
The registration statement for our IPOinitial public offering (“initial public offering”, “IPO” or “Public Offering”) was declared effective on October 19, 2021 (the “Effective Date”).2021. On October 22, 2021, we consummated our IPOinitial public offering of 27,600,000 units (the “Units” and, with respect to the ordinary shares included in the Units being offered, the “Public Shares”) at $10.00 per Unit (which included the full exercise of the underwriters’ over-allotment option), and the sale of 14,040,000 warrants (the “Private Placement Warrants”) each exercisable to purchase one Class A ordinary share at $11.50 per share, at a price of $1.00 per Private Placement Warrant in a private placement to our Sponsor that closed simultaneously with the Public Offering.
Transaction costs amounted to $16,138,202 consisting of $5,520,000 of underwriting commissions, $9,660,000 of deferred underwriting commissions and $958,202 of other cash offering costs. Of this amount, $15,428,121 was charged to shareholder’s deficit and $710,081 was allocated to the warrants and expensed.initial public offering.
Following the closing of our IPOinitial public offering on October 22, 2021, $281,520,000 ($10.20 per Unit) from the net proceeds sold in the IPO,our initial public offering, including proceeds of the sale of the Private Placement Warrants, was deposited in a trust account (“Trust Account”) and, willuntil October 16, 2023, was only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations.
We will To mitigate the risk of being deemed to have 15 monthsbeen operating as an unregistered investment company under the Investment Company Act, on October 16, 2023, we instructed the Trustee with respect to the Trust Account, to liquidate the U.S. government securities or money market funds held in the Trust Account and thereafter to hold all funds in the Trust Account in demand deposits (i.e., in one or more bank accounts) until the earliest of ESGEN’s completion of an initial business combination or January 22, 2024 (unless otherwise extended as described inbelow), as applicable.
Prior to shareholder approval of the prospectus)First Extension Charter Amendment (as defined below), we had 15 months from the closing of our Public Offeringinitial public offering to consummate the initial Business Combination. If we have not consummated the initial Business Combination within the Combination Period, we will: (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on
16
deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay income taxes, if any (less up to $100,000 of interest or dividends to pay winding up and dissolution expenses) divided by the number of the then-outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii), to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
On January 18, 2023, the Company held an extraordinary general meeting of shareholders to consider and vote upon, among other things, a proposal to amend the Company’s amended and restated memorandum and articles of association (the “First Extension Charter Amendment”) to (i) extend the date by which the Company must consummate its initial Business Combination (the “Termination Date”) from January 22, 2023 to April 22, 2023 and (ii) in the event that the Company has not consummated an initial Business Combination by April 22, 2023, to allow the Company, by resolution of the Company’s board of directors (the “Board”) and, without any approval of the Company’s shareholders, upon five days’ advance notice prior to each Additional Extension, to extend the Termination Date up to six times (with each such extension being upon five days’ advance notice), each by one additional month (for a total of up to six additional months to complete a business combination) (each, an “Additional Extension” and such date, an “Additional Extension Date”), provided that the Sponsor or the Sponsor’s affiliates or permitted designees will deposit into the Trust Account for each Additional Extension Date the lesser of (a) $140,000 or (b) $0.04 for each Public Share that is then-outstanding, in exchange for one or more non-interest bearing, unsecured promissory notes issued by the Company to the Sponsor or the Sponsor’s affiliates or permitted designees (the “Lenders” and each a “Lender”). In connection with the vote to approve the First Extension Charter Amendment, the holders of 24,703,445 Class A ordinary shares properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.35 per share, for an aggregate redemption amount of $255,875,758. The Company currently has until January 22, 2024 (after giving effect to the second extension described below) to complete an initial Business Combination.
On October 20, 2023, the Company held an extraordinary general meeting (the “Meeting”) and approved (i) (a) the extension (such proposal, the “Extension Proposal”) of the time period the Company has to complete an initial Business Combination from October 22, 2023 to January 22, 2024 (the “Charter Amendment”) and (b) in the event that the Company has not consummated an initial Business Combination by January 22, 2024, to allow the Company, by resolution of the Board and, without any approval of the Company’s shareholders, upon five days’ advance notice prior to each Additional Extension, to complete six Additional Extensions, provided that the Sponsor or the Sponsor’s affiliates or permitted designees will deposit into the Trust Account for each Additional Extension Date the lesser of (x) $35,000 or (y) $0.0175 for each Public Share that is then-outstanding, in exchange for one or more non-interest bearing, unsecured promissory notes issued by a Lender, and (ii) the amendment of the Company’s amended and restated memorandum and articles of association to change certain provisions which restrict the Class B ordinary shares, par value $0.0001, of the Company (the “Class B ordinary shares”) from converting to Class A ordinary shares, par value $0.0001 (the “Class A ordinary shares”) prior to the consummation of an initial Business Combination (such proposal, the “Conversion Proposal”).
In connection with the vote to approve the above proposals, the holders of 1,488,000 Class A ordinary shares of ESGEN properly exercised their right to redeem their shares for cash at a redemption price of approximately $11.21 per share, for an aggregate redemption amount of $16,679,055.
In connection with the approval of the Extension Proposal at the Meeting and the adoption of the Charter Amendment, the Sponsor contributed into the Trust Account $0.0525 per share for each Class A ordinary share that was not redeemed at the Meeting, for an aggregate contribution of $73,949.
In connection with the approval of the Conversion Proposal at the Meeting and the adoption of the Charter Amendment, the Sponsor converted all of its 5,619,077 Class B ordinary shares into Class A ordinary shares (the “Sponsor Share Conversion”). As a result of the Sponsor Share Conversion and redemptions made in connection with the Extension Proposal and Conversion Proposal, 7,027,632 Class A ordinary shares remain outstanding. Notwithstanding the Sponsor Share Conversion, the Sponsor will be not entitled to receive any funds held in the Trust Account with respect to any Class A ordinary shares issued to the Sponsor as a result of the Sponsor Share Conversion and no additional amounts will be deposited into the Trust Account in respect of shares of Class A ordinary shares held by the Sponsor in connection with the extension of the Termination Date to the Extended Date or any Additional Extension Dates.
On April 19, 2023, the Company entered into a Business Combination Agreement, by and among the Company, ESGEN OpCo, LLC, a Delaware limited liability company and wholly-owned subsidiary of ESGEN (“OpCo”), Sunergy Renewables, LLC, a Nevada limited liability company (“Sunergy”), the Sunergy equity holders set forth on the signature pages thereto (collectively, “Sellers” and each, a “Seller”, and collectively with Sunergy, the “Sunergy Parties”), for limited purposes, the Sponsor, and for limited purposes, Timothy Bridgewater, an individual, in his capacity as the Sellers Representative (the “Business Combination Agreement”).
In accordance with the terms and subject to the conditions of the Business Combination Agreement, among other things: (i) prior to the consummation of the Business Combination (the “Closing”), each issued and outstanding Class B ordinary share of ESGEN will convert into one Class A ordinary share of ESGEN (the “ESGEN Share Conversion”); and (ii) following the ESGEN Share Conversion but prior to the Closing, ESGEN will, subject to the receipt of the requisite shareholder approval, transfer by way of continuation from the Cayman Islands to the State of Delaware and domesticate as a Delaware corporation (the “Domestication”) and will change its name as to be determined by the parties to the Business Combination Agreement (“New PubCo”).
In connection with the Domestication, (A) each outstanding Class A ordinary share will become one share of Class A common stock, par value $0.0001 per share, of New PubCo (the “New PubCo Class A Common Stock”), (B) each outstanding warrant to purchase one Class A ordinary share (each, an “ESGEN Warrant”) will become a warrant to purchase one share of New PubCo Class A Common Stock at an exercise price of $11.50 per share, and (C) New PubCo will file its certificate of incorporation and will adopt bylaws to serve as its governing documents upon consummation of the Domestication. In connection with the ESGEN Share Conversion and the Domestication, each issued and outstanding unit of ESGEN, each consisting of one Class A ordinary share and one-half of one ESGEN Warrant (each, an “ESGEN Unit”), that has not been previously separated into the underlying Class A ordinary shares and underlying ESGEN Warrants prior to the Domestication will be cancelled and will entitle the holder thereof to (x) one share of New PubCo Class A Common Stock and (y) one-half of one warrant representing the right to purchase one share of New PubCo Class A Common Stock at an exercise price of $11.50 per share on the terms and subject to the conditions applicable to ESGEN Warrants set forth in the Warrant Agreement, dated as of October 22, 2021, between ESGEN and Continental Stock Transfer & Trust Company (the “Trustee”).
22
In accordance with the terms and subject to the conditions of the Business Combination Agreement, Sunergy will cause all holders of any options, warrants or rights to subscribe for or purchase any equity interests of Sunergy or its subsidiaries or securities (including debt securities) convertible into or exchangeable for, or that otherwise confer on the holder any right to acquire, any equity interests of Sunergy or any subsidiary thereof (collectively, the “Sunergy Convertible Interests”) existing immediately prior to the Closing either to exchange or convert all such holder’s Sunergy Convertible Interests into limited liability interests of Sunergy (the “Sunergy Company Interests”) in accordance with the governing documents of Sunergy or the Sunergy Convertible Interests (collectively, the “Sunergy Exchanges”).
At the Closing, ESGEN will contribute to OpCo (1) all of its assets (excluding its interests in OpCo, but including the amount of cash in the Trust Account as of immediately prior to the Closing (after giving effect to the exercise of redemption rights by any ESGEN shareholders)), and (2) a number of newly issued shares of Class V common stock of ESGEN, par value $0.0001 per share, which will generally have only voting rights (the “ESGEN Class V Common Stock”), equal to the number of Seller OpCo Units (as defined in the Business Combination Agreement) (the “Seller Class V Shares”) and (y) in exchange, OpCo shall issue to ESGEN (i) a number of common units of OpCo (the “OpCo Units”) which shall equal the number of total shares of ESGEN Class A Common Stock issued and outstanding immediately after the Closing and (ii) a number of warrants to purchase OpCo Units which shall equal the number of SPAC Warrants issued and outstanding immediately after the Closing (the transactions described above in this paragraph, the “ESGEN Contribution”). Immediately following the ESGEN Contribution, (x) the Sellers will contribute to OpCo the Sunergy Company Interests and (y) in exchange therefor, OpCo will transfer to the Sellers the Seller OpCo Units and the Seller Class V Shares.
The obligation of ESGEN, the Sunergy Parties and OpCo to consummate the Business Combination is subject to certain customary closing conditions, including, but not limited to, (i) the absence of any order, law or other legal restraint or prohibition enacted, issued or promulgated by any court of competent jurisdiction or other governmental entity of competent jurisdiction having the effect of making the Business Combination illegal or otherwise prohibiting the consummation of the Business Combination, (ii) the termination or expiration of any applicable waiting period applicable to the consummation of the Business Combination under the Hart-Scott-Rodino Act, (iii) the effectiveness of the Registration Statement on Form S-4 (the “Registration Statement”) in accordance with the provisions of the Securities Act, registering the ESGEN Class A Common Stock to be issued in connection with the Business Combination Agreement, (iv) receipt of the required approvals of ESGEN’s shareholders at a meeting of the shareholders of ESGEN in connection with the Business Combination, (v) the ESGEN Class A Common Stock to be issued in connection with the Business Combination immediately after Closing shall be listed on Nasdaq and ESGEN will be able to satisfy any continued listing requirements of Nasdaq immediately after Closing, (vi) if the ESGEN shareholders do not approve the Redemption Limitation Amendment (as defined in the Business Combination Agreement), ESGEN having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) remaining immediately after any holders of the ESGEN Class A Ordinary Shares exercise their redemption rights, (vii) the members of the post-Business Combination ESGEN board of directors shall have been elected or appointed in accordance with the Business Combination Agreement and (viii) the aggregate transaction proceeds, including from the Trust Account after giving effect to the exercise of redemption rights by any ESGEN shareholders pursuant to the ESGEN amended and restated memorandum and articles of association, as amended, and the proceeds resulting from the Initial PIPE Investment (as defined below) and any financing agreements executed in furtherance of the Business Combination Agreement, shall be greater or equal to $20,000,000.
Concurrently with the execution of the Business Combination Agreement, ESGEN entered into a subscription agreement (the “Initial Subscription Agreement”) with Sponsor. Pursuant to the Initial Subscription Agreement, Sponsor agreed to subscribe for and purchase, and ESGEN agreed to issue and sell to Sponsor, concurrently with the Closing, an aggregate of 1,000,000 shares of ESGEN Class A Common Stock for a purchase price of $10.00 per share, for aggregate gross proceeds of $10,000,000 (the “Initial PIPE Investment”). The closing of the Initial PIPE Investment is contingent upon, among other things, the substantially concurrent consummation of the Business Combination. The Initial Subscription Agreement provides that ESGEN will grant Sponsor certain customary registration rights. In addition to the Initial PIPE Investment, under the Business Combination Agreement, ESGEN and Sunergy have agreed to use their reasonable best efforts to identify other investors to enter into equity financing agreements (the “Additional Financing Agreements” and, together with the Initial Subscription Agreement, the “Financing Agreements”), in form and substance reasonably acceptable to ESGEN and Sunergy, to support the transaction (such equity financing under the Financing Agreements, collectively, herein referred to as the “Private Placements”).
For additional information regarding the Business Combination Agreement, see the Company’s Current Report on Form 8-K filed with the SEC on April 20, 2023.
The Business Combination is expected to close in the first quarter of 2024, following the receipt of the required approvals by our shareholders and the fulfillment of other customary closing conditions.
On April 5, 2023, the Company issued an unsecured promissory note (the “Note”) in the principal amount of up to $1,500,000 to the Sponsor, which may be drawn down by the Company from time to time prior to the consummation of the Company’s Business Combination. The Note does not bear interest, matures on the date of consummation of the Business Combination and is subject to customary events of default. As of September 30, 2023, there was $1,238,449 outstanding under the Note.
In addition, on October 17, 2023, the Company issued an amended and restated promissory note (the “Restated Note”) in the principal amount of up to $2,500,000 to the Sponsor. The Restated Note amends, restates, replaces and supersedes the Note dated April 5, 2023. The Restated Note may be drawn down by the Company from time to time prior to the consummation of the Company’s initial Business Combination. The Restated Note does not bear interest, matures on the date of consummation the Business Combination and is subject to customary events of default. The Restated Note will be repaid only to the extent that the Company has funds available to it outside of its Trust Account.
23
Results of Operations
All of our activity from April 19, 2021 (inception) through September 30, 2023, was in preparation for our initial public offering, and since our initial public offering, including the effectuation of the Charter Amendment and the negotiation and entry into the Business Combination Agreement. We will not generate any operating revenues until the closing and completion of our initial Business Combination.
For the three months ended September 30, 2023, we had net income of $631,724, which consisted of a change in fair value of warrant liabilities of $1,046,784 and dividends earned on marketable securities held in the Trust Account of $413,940, partially offset by operating costs of $829,000.
For the three months ended September 30, 2022, we had net income of $4,262,070, which consisted of a gain on change in fair value of warrant liabilities of $3,345,600, dividends earned on marketable securities held in trust account of $1,245,745, partially offset by operating costs of $329,275.
For the nine months ended September 30, 2023, we had a net loss of $2,225,459, which consisted of a change in fair value of warrant liabilities of $206,016 and operating costs of $4,164,293, partially offset by dividends earned on marketable securities held in the Trust Account of $1,719,810 and recovery of offering costs related to the IPO allocated to warrants of $425,040.
For the nine months ended September 30, 2022, we had net income of $11,637,242, which consisted of a gain on change in fair value of warrant liabilities of $11,608,560 and dividends earned on marketable securities held in trust account of $1,632,690, partially offset by operating costs of $1,604,008.
Liquidity and Capital Resources
As of September 30, 2021,2023, we had no cash of $267,058 and a working capital deficit of $722,018. Followingowe $5,296,038 in accounts payable and accrued expenses and an additional $1,718,988 payable to related parties.
Prior to the consummationcompletion of our IPO on October 22, 2021, we had $2,387,198 of cash ininitial public offering, our operating bank account and working capital of $1,708,052.
Our liquidity needs up to September 30, 2021 had been satisfied through a paymentcapital contribution from ourthe Sponsor of $25,000 and a loan to cover certain offering costs in consideration for the Founder Shares and the loanus of up to $300,000 by our Sponsor under an unsecured promissory note, fromwhich had an outstanding balance of $171,346 at September 30, 2023 and December 31, 2022. The Sponsor has agreed to defer repayment of the loan until the close of the Business Combination. On April 5, 2023, we issued the Note in the principal amount of up to $1,500,000 to our Sponsor, which may be drawn down by us from time to time prior to the consummation of $300,000 (see Note 5). the initial Business Combination. As of September 30, 2023, there was $1,238,449 outstanding under the Note.
In addition, in order to finance transaction costs in connection with a Business Combination,business combination, our Sponsor, an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, provide us Working Capital Loans. As of September 30, 2021,2023 and December 31, 2022, there were no amounts outstanding under any Working Capital Loans.
Based on the foregoing, management believes that we will not have sufficient working capital and borrowing capacity to meet our needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, we will be using these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.
ResultsIn connection with the company’s assessment of Operations
Allgoing concern considerations in accordance with ASC Subtopic 205-40, “Presentation of Financial Statements – Going Concern”, the company has until January 22, 2024 (unless extended as described above) to consummate a Business Combination. If a Business Combination is not consummated by this date and an Additional Extension not obtained, there will be a mandatory liquidation and subsequent dissolution of the company. It is uncertain whether the Company will be able to consummate a Business Combination by this time. Management has determined that the mandatory liquidation, should a Business Combination not occur, and an extension is not obtained, as well as the potential for us to have insufficient funds available to operate our activity from April 19, 2021 (inception) through September 30, 2021, was in preparation for our Initial Public Offering,business prior to a Business Combination, and since our Initial Public Offering, our activity haspotential subsequent dissolution, raises substantial doubt about the Company’s ability to continue as a going concern. It is uncertain whether the company will be able to consummate a Business Combination or obtain an Additional Extension by this time. No adjustments have been limitedmade to the search for a prospective initial Business Combination. We willcarrying amounts of assets or liabilities should the company be required to liquidate after January 22, 2024 (unless extended as described above).
Contractual Obligations
Other than the below, we do not generatehave any long-term debt obligations, capital lease obligations, operating revenues until the closing and completion of our initial Business Combination.lease obligations, purchase obligations or long-term liabilities.
For the three months ended September 30, 2021, we had a loss of approximately $1,690, which consisted solely of general and administrative expenses.
For the period from April 19, 2021 (inception) through September 30, 2021, we had a loss of approximately $15,393, which consisted solely of general and administrative expenses
Contractual Obligations
Underwriting Agreement
We granted the underwriters a 45-day option to purchase up to 3,600,000 additional Units to cover over-allotments, if any, at the Public Offering price less the underwriting discounts and commissions. The underwriters exercised the full over-allotment at the consummation of the Public Offering on October 22, 2021.
The IPO underwriters earned an underwriting discount of two percent (2%) of the gross proceeds of the Public Offering, or $5,520,000, which we paid in cash at closing of the offering.
Additionally, the underwriters arewere entitled to a deferred underwriting discountunderwriters fee of 3.5% of the gross proceeds of the Public Offeringour IPO upon the completion of our initial Business Combination. In April 2023, the IPO underwriters waived any right to receive such deferred underwriters fee and will therefore receive no additional underwriters fee in connection with the Closing.
24
Office Space, Secretarial and Administrative Services
Commencing on the date that our securities are first listed on the NASDAQ throughThrough the earlier of consummation of ourthe initial Business Combination andor the liquidation, we are expected to pay our Sponsor a total ofthe Company incurs $10,000 per month for office space, utilities, secretarial support and administrative services provided by the Sponsor. For the three and nine months ended September 30, 2023, the Company incurred $30,000 and $90,000, respectively, pursuant to this agreement. For the three and nine months ended September 30, 2022, the Company incurred $30,000 and $90,000, respectively, pursuant to this agreement. No amounts have been paid for these services.
17
Critical Accounting PoliciesSeptember 30, 2023 and EstimatesDecember 31, 2022, the Company reported on the balance sheets $165,000 and $120,000, respectively, pursuant to this agreement, in “Due to related party”.
This management’s discussionRegistration Rights
The holders of the Founder Shares, Private Placement Warrants and analysisany warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans) are entitled to registration rights pursuant to a registration and shareholder rights agreement signed at the closing of our financial conditioninitial public offering (the “IPO Registration Rights Agreement”). The holders of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion of the initial Business Combination. However, the registration and shareholder rights agreement provides that we will not permit any registration statement filed under the Securities Act of 1933, as amended (the “Securities Act”) to become effective until termination of the applicable lock-up period, which occurs (i) in the case of the Founder Shares, and (ii) in the case of the Private Placement Warrants and the respective Class A ordinary shares issuable upon exercise of the Private Placement Warrants, 30 days after the completion of the initial Business Combination. We will bear the expenses incurred in connection with the filing of any such registration statements. The holders of the Founder Shares, Private Placement Warrants and any warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Working Capital Loans and warrants that may be issued upon conversion of Working Capital Loans) will be entitled to registration rights pursuant to a registration and expected shareholder rights agreement signed at the closing of our initial public offering. 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 completion of its initial Business Combination. However, the registration and shareholder rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lockup period, which occurs (i) in the case of the Founder Shares, as described in the following paragraph, and (ii) in the case of the Private Placement Warrants and the respective Class A ordinary shares underlying such warrants, 30 days after the completion of the initial Business Combination. We will bear the expenses incurred in connection with the filing of any such registration statements.
Except as described herein, the Sponsor and its directors and executive officers have agreed not to transfer, assign or sell any of their Founder Shares until the earliest of (A) one year after the completion of the initial Business Combination or (B) subsequent to the initial Business Combination, (x) if the closing price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share subdivisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination, or (y) the date on which we complete a liquidation, merger, share exchange or other similar transaction that results in all of operations is basedthe public shareholders having the right to exchange their ordinary shares for cash, securities or other property. Any permitted transferees would be subject to the same restrictions and other agreements of the Sponsor and its directors and executive officers with respect to any founder shares. Any permitted transferees will be subject to the same restrictions and other agreements of the Sponsor with respect to any Founder Shares.
In addition, pursuant to the registration and shareholder rights agreement, the Sponsor, upon and following consummation of an initial Business Combination, will be entitled to nominate three individuals for election to the board of directors, as long as the Sponsor holds any securities covered by the registration and shareholder rights agreement.
A&R Registration Rights Agreement
The Business Combination Agreement contemplates that, at the Closing, Sunergy, Sunergy’s underlying equityholders and the Initial Shareholders (as defined below) (collectively, the “New PubCo Holders”) and New PubCo will enter into an amended and restated IPO Registration Rights Agreement (the “A&R Registration Rights Agreement”), pursuant to which, among other things, New PubCo and the Initial Shareholders will agree to amend and restate the Registration and Shareholder Rights Agreement, dated as of October 22, 2021, entered into by them in connection with ESGEN’s IPO. Pursuant to the A&R Registration Rights Agreement, New PubCo will agree that, within 30 days following the consummation of the Business Combination, it will use its commercially reasonable efforts to file a resale shelf registration statement on our unaudited condensed financial statements, whichbehalf of Sunergy, Sunergy’s underlying equityholders and the Initial Shareholders registering (i) New PubCo’s private placement warrants, (ii) any outstanding shares of New PubCo Class A Common Stock held by the New PubCo Holders, (iii) any shares of New PubCo Class A Common Stock issued or issuable upon exchange of an equivalent number of Class B units of OpCo and Class V common stock of New PubCo, par value $0.0001 per share, issued to the Sellers pursuant to the Business Combination Agreement, (iv) any shares of New PubCo Class A Common Stock issued or to be issued to any of the New PubCo Holders in connection with the Business Combination and (v) any other equity security of New PubCo issued or issuable with respect to any of the foregoing by way of a stock dividend or stock split or in connection
25
with a combination of shares, recapitalization, merger, consolidation or reorganization (collectively, the “Registrable Securities”); provided, however, that as to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (A) a registration statement with respect to the sale of such Registrable Securities becomes effective under the Securities Act and such Registrable Securities shall have been preparedsold, transferred, disposed of or exchanged in accordance with U.S. GAAP. such registration statement, (B) such Registrable Securities shall have been otherwise transferred and such transferee is not entitled to the registration rights provided in the A&R Registration Rights Agreement, (C) such Registrable Securities shall have ceased to be outstanding, or (D) such Registrable Securities may be sold without registration pursuant to Rule 144 and Rule 145, as applicable, promulgated under the Securities Act (or any successor rule promulgated thereto) (but with no volume or other restrictions or limitations).
Additionally, the A&R Registration Rights Agreement will also provide, subject to certain underwriter cutbacks and suspension periods, (i) certain demand rights entitling the New PubCo Holders the right to require New PubCo to effect an underwritten offering and (ii) certain piggyback rights entitling the New PubCo Holders the right to include such New PubCo Holder’s Registrable Securities in any underwritten offering that New PubCo proposes to consummate for its own account or for the account of its stockholders.
Amendment to the Letter Agreement
Concurrently with the execution of the Business Combination Agreement, the Sponsor, the independent directors of the board of directors of ESGEN and one or more client accounts of Westwood Group Holdings, Inc. (successor to Salient Capital Advisors, LLC) (collectively, the “Initial Shareholders”) entered into an amendment (as amended, the “Amendment to the Letter Agreement”) to that certain Letter Agreement, dated as of October 22, 2021, by and between the Initial Shareholders, pursuant to which, among other things, each of the Initial Shareholders agreed (i) not to transfer his, her or its ESGEN Class B ordinary shares (or the ESGEN Class A Common Stock issuable in exchange for such ESGEN Class B ordinary shares pursuant to the Business Combination Agreement) prior to the earlier of (A) six months after the Closing or (B) subsequent to the Closing (x) if the last sale price of the ESGEN Class A Common Stock quoted on Nasdaq is greater than or equal to $12 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-consecutive trading day period commencing at least 90 days after Closing, or (y) the date on which ESGEN completes a liquidation, merger, share exchange or other similar transaction that results in all of the Company’s shareholders having the right to exchange their ESGEN Class A ordinary shares (including any shares of ESGEN Class A Common Stock issuable in exchange for such ESGEN Class A ordinary shares) for cash, securities or other property and (ii) each Initial Shareholder agreed to waive any adjustment to the conversion ratio set forth in the governing documents of ESGEN with respect to the ESGEN Class B ordinary shares prior to the earlier of the ESGEN Share Conversion or the Closing.
Critical Accounting Estimates
The preparation of these financial statements in conformity with US GAAP requires usmanagement to make estimates and judgmentsassumptions that affect the reported amounts of assets and liabilities revenues and expenses and the disclosure of contingent assets and liabilities in ourat the date of the financial statements. On an ongoing basis, we evaluate our estimatesstatements and judgments, including those related to fair valuethe reported amounts of financial instruments and accrued expenses. We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable underexpenses during the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.reporting period. Actual results maycould differ from these estimates under different assumptions or conditions.those estimates. We have not identified the following as ourany critical accounting policies:estimates.
Offering Costs Associated with Initial Public Offering
We comply with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A—"Expenses of Offering”. Offering costs consist of legal, accounting, underwriting and other costs incurred through the balance sheet date that are related to our Public Offering. On October 22, 2021, upon consummation of the IPO, offering costs amounted to $16,138,202 and of this, $15,428,121 was charged to shareholder’s deficit and $710,081 was deemed allocable to the warrants and charged to expense upon the completion of the IPO.
Recent Accounting Pronouncements
In August 2020,Refer to Note 2 (“Significant Accounting Policies”) in the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplifyfinancial statements for the recent accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. We are currently assessing the impact, if any, that ASU 2020-06 would have on our financial position, results of operations or cash flows.pronouncements.
We do not believe that any other recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
Off-Balance Sheet Arrangements
As of September 30, 2021, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and are not required to provide the information otherwise required under this item. As of September 30, 2021,2023, we were not subject to any market or interest rate risk. The net proceeds of the Initial Public Offering, including amounts in the Trust Account, waswere invested in U.S. government securities with a maturity of 185 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, that invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.
We have not engaged in any hedging activities since our inception, and we do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.
18
26
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended September 30, 2021, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial officer has concluded that during the period covered by this report, our disclosure controls and procedures were effective.
Disclosure controls andare procedures that are designed to ensurewith the objective of ensuring that information required to be disclosed by us in our reports filed under the Exchange Act, reportssuch as this Quarterly Report, is recorded, processed, summarized and reported within the time periodsperiod specified in the SEC’s rules and forms, andforms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including our principal executive officerthe Chief Executive Officer and principal financial officer or persons performing similar functions,Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our principal executive officer and principal financial and accounting officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of September 30, 2023, pursuant to Rule 13a-15(b) under the Exchange Act and determined that our disclosures controls and procedures were not effective as the material weakness identified as of December 31, 2022 and detailed in our Annual Report on Form 10-K continues to exist as of September 30, 2023. A material weakness, as defined in the SEC regulations, is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
ChangesAs previously disclosed in Internal Controlour Annual Report on Form 10-K for the year ended December 31, 2022, our disclosure controls and procedures were not effective because of the identification of a material weakness in our internal control over Financial Reporting
There was no changefinancial reporting. We identified material weaknesses in our internal control over financial reporting, specifically, we did not design and maintain an effective control environment to prevent or detect material misstatements to the financial statements. Specifically, we lacked a sufficient complement of personnel with an appropriate level of internal controls and accounting knowledge, training and experience commensurate with our financial reporting requirements. Specifically, management did not design and maintain effective controls over the calculation of earnings per share and classification of the reinvestment of interest and dividend income in the Trust Account in the statement of cash flows.
Remediation Plan
Management plans to remediate the material weakness identified above by enhancing our processes to identify and appropriately apply applicable accounting requirements and increased communication among our personnel and third-party professionals with whom we consult regarding accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that occurredthese initiatives will ultimately have the intended effects.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in Internal Control over Financial Reporting
Other than the remediation plan described above, there were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter ended September 30, 2021 covered by this Quarterly Report on Form 10-Q that hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors.
ThereAs of the date of this Quarterly Report, except as described below, there have been no material changes from the risk factors previously disclosed in the Company’s final prospectus for the Initial Public OfferingAnnual Report on Form 10-K as filed with the SEC on October 21, 2021.March 31, 2023 (the “Annual Report”).
27
There are no assurances that the approval of the Charter Amendment or the execution of the Business Combination Agreement will enable us to complete our proposed Business Combination.
In connection with the Charter Amendment, our amended and restated memorandum and articles of association were amended to, among other things, (i) extend the date by which the Company must consummate its initial Business Combination from January 22, 2023 to the Extended Date and (ii) in the event that the Company has not consummated an initial Business Combination by the Extended Date, to allow the Company, by resolution of the Board and, without any approval of the Company’s shareholders, upon five days’ advance notice prior to the Extended Date, to extend the Extended Date up to six times (with each such extension being upon five days’ advance notice), each by one additional month (for a total of up to six additional months to complete a business combination), provided that the Lenders will deposit into the Trust Account for each Additional Extension Date the lesser of (a) $140,000 or (b) $0.04 for each Public Share that is then-outstanding, in exchange for one or more non-interest bearing, unsecured promissory notes issued by the Company to the Lender. The purpose of the Charter Amendment is to allow the Company more time to complete its initial Business Combination and reduce the amount of funds to be deposited in the Trust Account to secure the extension.
Even though such extension was approved by our shareholders, the Company can provide no assurances that we will be able to complete our proposed Business Combination prior to the final Additional Extension Date. Our ability to consummate the Business Combination is dependent on a variety of factors, many of which are beyond our control. Additionally, we will be required to offer stockholders redemption rights again in connection with any stockholder vote to approve our proposed Business Combination. Other than in connection with a redemption offer or liquidation, our stockholders may be unable to recover their investment except through sales of our shares on the open market. The price of our shares may be volatile, and there can be no assurance that stockholders will be able to dispose of our shares at favorable prices, or at all.
We and our proposed target pursuant to the Business Combination Agreement will incur significant transaction and transition costs in connection with the proposed Business Combination.
We and our proposed target pursuant to the Business Combination Agreement expect to incur significant, non-recurring costs in connection with consummating the Business Combination and operating as a public company following the consummation of the Business Combination. We and such company may also incur additional costs to retain key employees. We will incur and be responsible for the expenses and fees as set forth in, and in connection with, the Business Combination Agreement. There can be no assurance that such fees and expenses will not be greater than expected or that there will be no unexpected costs related to the Business Combination.
If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our initial Business Combination.
If we are deemed to be an investment company under the Investment Company Act of 1940 (the “Investment Company Act”), our activities may be restricted, including:
restrictions on the nature of our investments; and
restrictions on the issuance of securities, each of which may make it difficult for us to complete our initial Business Combination.
In addition, we may have imposed upon us burdensome requirements, including:
registration as an investment company with the SEC;
adoption of a specific form of corporate structure; and
reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations that we are currently not subject to.
In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business other than investing, reinvesting or trading of securities and that our activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis.
We do not believe that our principal activities and the Business Combination will subject us to the Investment Company Act. To this end, the proceeds held in the Trust Account may only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations. Pursuant to the trust agreement, the Trustee is not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment Company Act. An investment in our securities is not intended for persons who are seeking a return on investments in government securities or investment securities. The Trust Account is intended as a holding place for funds pending the earliest to occur of either: (i) the completion of our initial Business Combination (which shall be the Business Combination pursuant to the Business Combination Agreement should it occur); (ii) the redemption of any Class A ordinary shares properly tendered in connection with a shareholder vote to amend the Existing Charter (a) to modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial Business Combination (which shall be the Business Combination pursuant to the Business Combination Agreement should it occur) or to redeem 100% of our Class A ordinary shares if we do not complete our initial Business Combination by July 22, 2024 (assuming the Sponsor deposits the required amount into the Trust Account for each Additional Extension Date and unless shareholders approve one or more further Additional Extensions) or (b) with respect to any other provision relating to the rights of holders of our Class A ordinary shares; or (iii) absent an initial Business Combination (which shall be the Business Combination pursuant to the Business Combination Agreement should it occur) by July 22, 2024 (assuming the Sponsor deposits the required amount into the Trust Account for each Additional Extension Date and unless shareholders approve one or more further Additional Extensions), our return of the funds held in the Trust Account to the public shareholders as part of our redemption of the Class A ordinary shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to complete a Business Combination. If we are unable to complete a Business Combination, the public shareholders may only receive their pro rata portion of the funds in the Trust Account that are available for distribution to the public shareholders, and our warrants will expire worthless.
If we are deemed to be an investment company for purposes of the Investment Company Act, we may be forced to abandon our efforts to complete an initial Business Combination and instead be required to liquidate ESGEN. To mitigate the risk of that result, on or about the 24-month anniversary of the effective date of the IPO Registration Statement, we will instruct the Trustee to liquidate the securities held in the Trust Account and instead hold all funds in the Trust Account in cash. As a result, following such change, we will likely receive minimal, if any, interest, on the funds held in the Trust Account, which would reduce the dollar amount that the public shareholders would have otherwise received upon any redemption or liquidation of ESGEN if the assets in the Trust Account had remained in U.S. government securities or money market funds.
On March 30, 2022, the SEC issued proposals (the “SPAC Rule Proposals”), relating, among other things, to circumstances in which SPACs such as us could potentially be subject to the Investment Company Act and the regulations thereunder. The SPAC Rule Proposals would provide a safe harbor for such companies from the definition of “investment company” under Section 3(a)(1)(A) of the Investment Company Act, provided that a SPAC satisfies certain criteria. To comply with the duration limitation of the proposed safe harbor, a SPAC would have a limited time period to announce and complete a Business Combination transaction. Specifically, to comply with the safe harbor, the SPAC Rule Proposals would require a company to file a report on Form 8-K announcing that it has entered into an agreement with a target company for an initial Business Combination no later than 18 months after the effective date of the registration statement filed in connection with the IPO (the “IPO Registration Statement”). ESGEN would then be required to complete its initial Business Combination no later than 24 months after the date of the IPO Registration Statement.
There is currently uncertainty concerning the applicability of the Investment Company Act to a SPAC, such as ESGEN. As indicated above, we completed the IPO in October 2021 and have operated as a blank check company searching for a target business with which to consummate an initial Business Combination since such time (or approximately 24 months after the effective date of the IPO, as of the date hereof). As a result, it is possible that a claim could be made that we have been operating as an unregistered investment company. Furthermore, in connection with the approval of the Extension Proposal, the Company has until July 22, 2024 to consummate an initial Business Combination, which is a total of up to 33 months from the consummation of the Company’s IPO to complete an initial Business Combination. If we were deemed to be an investment company for purposes of the Investment Company Act, we might be forced to abandon our efforts to complete an initial Business Combination and instead be required to liquidate ESGEN. If we are required to liquidate ESGEN, our investors would not be able to realize the benefits of owning shares in a successor operating business, including the potential appreciation in the value of our shares and warrants or rights following such a transaction, and our warrants or rights would expire worthless.
The funds in the Trust Account have, since the IPO, been held only in cash or U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less or in money market funds investing solely in U.S. government treasury obligations and meeting certain conditions under Rule 2a-7 under the Investment Company Act. To mitigate the risk of us being deemed to have been operating as an unregistered investment company under the Investment Company Act, prior to October 22, 2023, we instructed the Trustee with respect to the Trust Account, to liquidate the U.S. government securities or money market funds held in the Trust Account and thereafter to hold all funds in the Trust Account in cash (i.e., in one or more bank accounts) until the earliest of ESGEN’s completion of an initial Business Combination or July 22, 2024, as applicable. Following such liquidation of the assets in the Trust Account, we will likely receive minimal interest, if any, on the funds held in the Trust Account, which would reduce the dollar amount the public shareholders would have otherwise received upon any redemption or liquidation of ESGEN if the assets in the Trust Account had remained in U.S. government securities or money market funds. This means that the amount available for redemption will not increase at the same rate in the future.
In addition, even prior to the 24-month anniversary of the effective date of the IPO Registration Statement, we may be deemed to be an investment company. The longer that the funds in the Trust Account are held in short-term U.S. government treasury obligations or in money market funds invested exclusively in such securities, even prior to the 24-month anniversary of the effective date of the IPO Registration Statement, the greater the risk that we may be considered an unregistered investment company under Section 3(a)(1)(A) of the Investment Company Act, in which case we may be required to liquidate ESGEN. If we are required to liquidate, our shareholders will miss the opportunity to benefit from an investment in a target company and the potential appreciation in value of such investment through a Business Combination. Additionally, if we are required to liquidate, there will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless in the event of our winding up. The risk of being deemed subject to the Investment Company Act may increase the longer ESGEN holds securities, and also may increase to the extent the funds in the Trust Account are not held in cash (which may include an interest-bearing demand deposit account at a national bank).
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities
Subsequent to the quarterly period covered by this report, on October 22, 2021, we consummated the Initial Public Offering of 27,600,000 Units, including the Over-Allotment Units. The Units were sold at a price of $10.00 per Unit, generating gross proceeds of $276,000,000 million. The underwriters were granted a 45-day option from the date of the final prospectus relating to the Initial Public Offering to purchase up to 3,600,000 additional Units to cover over-allotments, if any, at $10.00 per Unit, less underwriting discounts and commissions. Simultaneously with the closing of the Initial Public Offering, the underwriters fully exercised the over-allotment option and, on October 22, 2021, the underwriters purchased the Over-Allotment Units.None
On October 22, 2021, simultaneously with the closing of the Initial Public Offering and pursuant to separate Private Placement Warrants Purchase Agreement, dated October 22, 2021, by and among the Company, the Sponsor and the Salient Clients, the Company completed the private sale of an aggregate of 14,040,000 Private Placement Warrants at a purchase price of $1.00 per Private Placement Warrant to the Sponsor and Salient Clients, generating gross proceeds of $14,040,000.
Barclays Capital Inc. and Citibank Global Markets Inc. served as underwriters for the Initial Public Offering. The securities sold in the Initial Public Offering were registered under the Securities Act on a registration statement on Form S-1 (File No. 333-259836). The SEC declared the registration statement effective on October 19, 2021.
From April 19, 2021 (inception) through the closing of the Initial Public Offering, we incurred approximately $16.1 million for costs and expenses related to the Initial Public Offering. In connection with the closing of the Initial Public Offering, we paid a total of approximately $5.5 million in underwriting discounts and commissions. In addition, the underwriters agreed to defer approximately $9.7 million in underwriting discounts and commissions, which amount will be payable upon consummation of the initial Business Combination. There has been no material change in the planned use of proceeds from the Initial Public Offering as described in our final prospectus filed with the SEC on October 21, 2021.
19
In connection with the Initial Public Offering, we incurred offering costs of approximately $16.1 million, inclusive of approximately $9.7 million in deferred underwriting commissions. Other incurred offering costs consisted principally of preparation fees related to the Initial Public Offering. After deducting the underwriting discounts and commissions (excluding the deferred portion, which amount will be payable upon consummation of the Initial Business Combination, if consummated) and the Initial Public Offering expenses, $281.5 million of the net proceeds from our Initial Public Offering and certain of the proceeds from the private placement of the Private Placement Warrants (or $10.00 per Unit sold in the Initial Public Offering) was placed in the Trust Account. The net proceeds of the Initial Public Offering and certain proceeds from the sale of the Private Placement Warrants are held in the Trust Account and invested as described elsewhere in this Quarterly Report on Form 10-Q.
There has been no material change in the planned use of the proceeds from the Initial Public Offering and Private Placement as is described in the Company’s final prospectus related to the Initial Public Offering.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
2028
Item 6. Exhibits
|
| ||
No. |
|
| |
|
| ||
|
|
| |
|
| ||
|
|
| |
|
| ||
|
|
| |
|
| ||
|
|
| |
|
| ||
|
|
| |
|
| ||
|
|
| |
|
| ||
|
|
| |
|
| ||
|
|
| |
31.2* |
| ||
|
|
| |
32.1** |
| ||
|
|
| |
32.2** |
| ||
|
|
| |
101.INS |
| Inline XBRL Instance Document | |
|
|
| |
101.SCH |
| Inline XBRL Taxonomy Extension Schema Document | |
|
|
| |
101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
|
|
| |
101.DEF |
| Inline XBRL Taxonomy Extension Definition Document | |
|
|
| |
101.LAB |
| Inline XBRL Taxonomy Extension Label Linkbase Document | |
|
|
| |
101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
|
|
| |
EX-104 |
| Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | |
| * | Filed herewith. |
| ** | Furnished herewith. |
* Filed herewith.
** Furnished.
(1) Previously filed as an exhibit to our Current Report on Form 8-K filed on October 25, 2021 and incorporated by reference herein.
2129
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Date: | ESGEN Acquisition Corporation | |||||
|
|
| ||||
|
|
| ||||
| By: | /s/ Andrea Bernatova | ||||
|
| Andrea Bernatova | ||||
|
| Chief Executive Officer | ||||
|
|
| ||||
Date: | ESGEN Acquisition Corporation | |||||
|
|
| ||||
|
|
| ||||
| By: | /s/ Nader Daylami | ||||
|
| Nader Daylami | ||||
|
| Chief Financial Officer | ||||
2230