Cayman Islands | 001-40927 | 98-1601409 | ||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification Number) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Units, each consisting of one Class A ordinary share, $0.0001 par value, and one-half of one redeemable warrant | ESACU | The Nasdaq Stock Market LLC | ||
Class A ordinary shares included as part of the units | ESAC | The Nasdaq Stock Market LLC | ||
Warrants included as part of the units, each whole warrant exercisable for one Class A ordinary share at an exercise price of $11.50 | ESACW | The Nasdaq Stock Market LLC |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
Emerging growth company | ☒ |
March 31, 2022 | December 31, 2021 | |||||||
ASSETS | ||||||||
Cash | $ | 1,086,084 | $ | 1,323,903 | ||||
Prepaid expenses | 478,819 | 550,434 | ||||||
Total current assets | 1,564,903 | 1,874,337 | ||||||
Prepaid expenses, non-current | — | 26,081 | ||||||
Marketable securities held in trust account | 281,540,308 | 281,522,137 | ||||||
Total Assets | $ | 283,105,211 | $ | 283,422,555 | ||||
Liabilities, Redeemable Ordinary Shares and Shareholders’ Deficit | ||||||||
Current liabilities | ||||||||
Accrued offering costs and expenses | $ | 918,891 | $ | 411,416 | ||||
Due to related party | 54,193 | 24,193 | ||||||
Promissory note – related party | 171,346 | 171,346 | ||||||
Total current liabilities | 1,144,430 | 606,955 | ||||||
Warrant liabilities | 7,240,800 | 13,976,160 | ||||||
Deferred underwriter’s discount | 9,660,000 | 9,660,000 | ||||||
Total liabilities | 18,045,230 | 24,243,115 | ||||||
Commitments and Contingencies (Note 7) | ||||||||
Class A ordinary shares subject to possible redemption, 27,600,000 shares at redemption value of $10.20 | 281,540,308 | 281,520,000 | ||||||
Shareholders’ Deficit: | ||||||||
Preferred share, $0.0001 par value; 1,000,000 shares authorized; 0ne issued or outstanding | 0 | 0 | ||||||
Class A ordinary share, $0.0001 par value; 250,000,000 shares authorized; 0ne issued or outstanding (excluding 27,600,000 shares subject to possible redemption) | 0 | 0 | ||||||
Class B ordinary share, $0.0001 par value; 25,000,000 shares authorized;6,900,000 shares issued and outstanding | 690 | 690 | ||||||
Additional paid-in capital | — | — | ||||||
Accumulated deficit | (16,481,017 | ) | (22,341,250 | ) | ||||
Total shareholders’ deficit | (16,480,327 | ) | (22,340,560 | ) | ||||
Total Liabilities, Redeemable Ordinary Shares and Shareholders’ Deficit | $ | 283,105,211 | $ | 283,422,555 | ||||
September 30, 2022 | December 31, 2021 | |||||||
ASSETS | ||||||||
Cash | $ | 890,273 | $ | 1,323,903 | ||||
Prepaid expenses—current | 174,257 | 550,434 | ||||||
Total current assets | 1,064,530 | 1,874,337 | ||||||
Prepaid expenses, non-current | — | 26,081 | ||||||
Marketable securities held in trust account | 283,154,827 | 281,522,137 | ||||||
Total Assets | $ | 284,219,357 | $ | 283,422,555 | ||||
Liabilities, Redeemable Ordinary Shares and Shareholders’ Deficit | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued expenses | $ | 1,089,536 | $ | 411,416 | ||||
Due to related party | 114,193 | 24,193 | ||||||
Promissory note – related party | 171,346 | 171,346 | ||||||
Total current liabilities | 1,375,075 | 606,955 | ||||||
Warrant liabilities | 2,367,600 | 13,976,160 | ||||||
Deferred underwriter’s discount | 9,660,000 | 9,660,000 | ||||||
Total liabilities | 13,402,675 | 24,243,115 | ||||||
Commitments and Contingencies (Note 7) | ||||||||
Class A ordinary shares subject to possible redemption, 27,600,000 shares at redemption value | 283,154,827 | 281,520,000 | ||||||
Shareholders’ Deficit: | ||||||||
Preferred share, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding | — | — | ||||||
Class A ordinary share, $0.0001 par value; 250,000,000 shares authorized; none issued or outstanding (excluding 27,600,000 shares subject to possible redemption) | — | — | ||||||
Class B ordinary share, $0.0001 par value; 25,000,000 shares authorized; 6,900,000 shares issued and outstanding | 690 | 690 | ||||||
Additional paid-in capital | — | — | ||||||
Accumulated deficit | (12,338,835 | ) | (22,341,250 | ) | ||||
Total shareholders’ deficit | (12,338,145 | ) | (22,340,560 | ) | ||||
Total Liabilities, Redeemable Ordinary Shares and Shareholders’ Deficit | $ | 284,219,357 | $ | 283,422,555 | ||||
Formation and operating costs | $ | 842,990 | ||
Operating cost—related party | 30,000 | |||
Loss from operations | (872,990 | ) | ||
Other income | ||||
Interest income on marketable securities held in Trust Account | 18,171 | |||
Change in fair value of warrant liabilities | 6,735,360 | |||
Total other income, net | 6,753,531 | |||
Net income | $ | 5,880,541 | ||
Basic and diluted weighted average shares outstanding of Class A ordinary shares | 27,600,000 | |||
Basic and diluted net income per ordinary share, Class A | $ | 0.17 | ||
Basic and diluted weighted average shares outstanding of Class B ordinary shares | 6,900,000 | |||
Basic and diluted net income per ordinary share, Class B | $ | 0.17 | ||
Three Months Ended September 30, | Nine Months Ended September 30, | For the Period from April 19, 2021 (Inception) through September 30, | ||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Legal and professional fees | $ | 145,588 | $ | — | $ | 937,110 | $ | — | ||||||||
Insurance | 133,302 | 395,559 | ||||||||||||||
Other operating costs | 20,385 | 181,339 | ||||||||||||||
Formation and operating costs | — | 1,690 | — | 15,393 | ||||||||||||
Operating cost—related party | 30,000 | — | 90,000 | — | ||||||||||||
Loss from operations | (329,275 | ) | (1,690 | ) | (1,604,008 | ) | (15,393 | ) | ||||||||
Other income: | ||||||||||||||||
Interest income on marketable securities held in Trust Account | 1,245,745 | — | 1,632,690 | — | ||||||||||||
Change in fair value of warrant liabilities | 3,345,600 | — | 11,608,560 | — | ||||||||||||
Total other income | 4,591,345 | — | 13,241,250 | — | ||||||||||||
Net income (loss) | $ | 4,262,070 | $ | (1,690 | ) | $ | 11,637,242 | $ | (15,393 | ) | ||||||
Basic and diluted weighted average shares outstanding of Class A ordinary shares | 27,600,000 | — | 27,600,000 | — | ||||||||||||
Basic and diluted net income per share, Class A | 0.13 | — | 0.35 | — | ||||||||||||
Basic and diluted weighted average shares outstanding of Class B ordinary shares (1) | 6,900,000 | 6,900,000 | 6,900,000 | 6,900,000 | ||||||||||||
Basic and diluted net income (loss) per share, Class B | 0.09 | (0.00 | ) | 0.29 | (0.00 | ) | ||||||||||
(1) | 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 no consideration, an aggregate of 1,437,500 Class B ordinary shares, leaving 5,750,000 Founder Shares outstanding. In October 2021, a share dividend was issued which resulted in 6,900,000 Founder Shares outstanding; of which 900,000 were subject to surrender if the underwriter had not exercised their full over-allotment option. The underwriters exercised their over-allotment option in full on October 21, 2021. All share values and related amounts have been retroactively restated to reflect the dividend. |
Class A Ordinary share subject to possible redemption | Class B Ordinary share | Additional Paid-in | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Equity (Deficit) | ||||||||||||||||||||||
Balance as of December 31, 2021 | 27,600,000 | $ | 281,520,000 | 6,900,000 | 690 | $ | 0 | $ | (22,341,250 | ) | $ | (22,340,560 | ) | |||||||||||||||
Accretion of ordinary share 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 | $ | 0 | $ | (16,481,017 | ) | $ | (16,480,327 | ) | |||||||||||||||
Cash flows from operating activities: | ||||
Net income | $ | 5,880,541 | ||
Adjustments to reconcile net income to net cash used in operating activities: | ||||
Interest earned on cash held in Trust Account | (18,171 | ) | ||
Change in fair value of warrant liabilities | (6,735,360 | ) | ||
Changes in current assets and liabilities: | ||||
Prepaid expenses | 97,696 | |||
Accrued expenses | 507,475 | |||
Due to related party | 30,000 | |||
Net cash used in operating activities | (237,819 | ) | ||
Net change in cash | (237,819 | ) | ||
Cash, beginning of the period | 1,323,903 | |||
Cash, end of the period | $ | 1,086,084 | ||
Class A Ordinary share subject to possible redemption | Class B Ordinary share | Additional Paid-in | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||||
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 share 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 NINE MONTHS ENDED SEPTEMBER 30, 2022 | ||||||||||||||||||||||||||||||
Class A Ordinary share subject to possible redemption | Class B Ordinary share | Additional Paid-in | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||||
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 share subject to possible redemption | — | 1,634,827 | — | — | — | (1,634,827 | ) | (1,634,827 | ) | |||||||||||||||||||||
Net income | — | — | — | — | — | 11,637,242 | 11,637,242 | |||||||||||||||||||||||
Balance as of September 30, 2022 | 27,600,000 | $ | 283,154,827 | 6,900,000 | $ | 690 | $ | — | $ | (12,338,835 | ) | $ | (12,338,145 | ) | ||||||||||||||||
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021 | ||||||||||||||||||||||||||||||
Class A Ordinary share subject to possible redemption | Class B Ordinary share | Additional Paid-in | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||||
Shares | Amount | Shares (1) | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||||
Balance as of June 30, 2021 | — | $ | — | 6,900,000 | $ | 690 | $ | 24,310 | $ | (13,703 | ) | $ | 11,297 | |||||||||||||||||
Net loss | — | — | — | — | — | (1,690 | ) | (1,690 | ) | |||||||||||||||||||||
Balance as of September 30, 2021 | — | $ | — | 6,900,000 | $ | 690 | $ | 24,310 | $ | (15,393 | ) | $ | 9,607 | |||||||||||||||||
FOR THE PERIOD FROM APRIL 19, 2021 (INCEPTION) THROUGH SEPTEMBER 30, 2021 | ||||||||||||||||||||||||||||||
Class A Ordinary share subject to possible redemption | Class B Ordinary share | Additional Paid-in | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||||
Shares | Amount | Shares (1) | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||||
Balance as of April 19, 2021 (inception) | — | $ | — | 6,900,000 | $ | 690 | $ | 24,310 | $ | — | $ | 25,000 | ||||||||||||||||||
Net loss | — | — | — | — | — | (15,393 | ) | (15,393 | ) | |||||||||||||||||||||
Balance as of September 30, 2021 | — | $ | — | 6,900,000 | $ | 690 | $ | 24,310 | $ | (15,393 | ) | $ | 9,607 | |||||||||||||||||
(1) | 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 no consideration, an aggregate of 1,437,500 Class B ordinary shares, leaving 5,750,000 Founder Shares outstanding. In October 2021, a share dividend was issued which resulted in 6,900,000 Founder Shares outstanding; of which 900,000 were subject to surrender if the underwriter had not exercised their full over-allotment option. The underwriters exercised their over-allotment option in full on October 21, 2021. All share values and related amounts have been retroactively restated to reflect the dividend. |
Nine Months Ended September 30, 2022 | For the Period from April 19, 2021 (Inception) through September 30, 2021 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | 11,637,242 | $ | (15,393 | ) | |||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
Formation costs paid by Sponsor | 11,693 | |||||||
Interest earned on cash held in Trust Account | (1,632,690 | ) | — | |||||
Change in fair value of warrant liabilities | (11,608,560 | ) | — | |||||
Changes in current assets and liabilities: | ||||||||
Prepaid expenses | 402,258 | — | ||||||
Accrued expenses | 678,120 | 3,700 | ||||||
Due to related party | 90,000 | — | ||||||
Net cash used in operating activities | (433,630 | ) | — | |||||
Net change in cash | (433,630 | ) | — | |||||
Cash, beginning of the period | 1,323,903 | — | ||||||
Cash, end of the period | $ | 890,273 | $ | — | ||||
Supplemental disclosure of cash flow information: | ||||||||
Change in value of Class A ordinary shares subject to possible redemption | $ | 1,634,827 | $ | — | ||||
Deferred offering costs paid by Sponsor in exchange for issuance of Class B ordinary shares | $ | — | $ | 25,000 | ||||
Deferred offering costs paid by Sponsor under the promissory note | $ | — | $ | 243,913 | ||||
Deferred offering costs included in accrued offerings costs | $ | — | $ | 462,712 | ||||
Three Months Ended March 31, 2022 | ||||
Net income | $ | 5,880,541 | ||
Accretion of temporary equity to redemption value | (18,171 | ) | ||
Net income including accretion of temporary equity to redemption value | $ | 5,862,370 | ||
Three Months Ended September 30, 2022 | Nine Months Ended September 30, 2022 | Three Months Ended September 30, 2021 | For the Period from April 19, 2021 (Inception) through September 30, 2021 | |||||||||||||
Net income (loss) | $ | 4,262,070 | $ | 11,637,242 | $ | (1,690 | ) | $ | (15,393 | ) | ||||||
Accretion of temporary equity to redemption value | (1,245,745 | ) | (1,632,690 | ) | — | — | ||||||||||
Net income (loss) including accretion of temporary equity to redemption value | $ | 3,016,325 | $ | 10,004,552 | $ | (1,690 | ) | $ | (15,393 | ) | ||||||
Three Months Ended September 30, 2022 | Nine Months Ended September 30, 2022 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
Basic and diluted net income per share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income including accretion of temporary equity | $ | 2,413,060 | 603,265 | $ | 8,003,642 | $ | 2,000,910 | |||||||||
Allocation of accretion of temporary equity to redemption value | 1,245,745 | — | 1,632,690 | — | ||||||||||||
Allocation of income | $ | 3,658,805 | 603,265 | $ | 9,636,332 | $ | 2,000,910 | |||||||||
Denominator: | ||||||||||||||||
Weighted-average shares outstanding | 27,600,000 | 6,900,000 | 27,600,000 | 6,900,000 | ||||||||||||
Basic and diluted net income per share | $ | 0.13 | $ | 0.09 | $ | 0.35 | $ | 0.29 |
For the three months ended March 31, 2022 | ||||||||
Class A | Class B | |||||||
Basic and diluted net income (loss) per share: | ||||||||
Numerator: | ||||||||
Allocation of net income including accretion of temporary equity | $ | 4,689,896 | $ | 1,172,471 | ||||
Allocation of accretion of temporary equity to redemption value | 18,171 | — | ||||||
Allocation of loss | 4,708,067 | 1,172,474 | ||||||
Denominator: | ||||||||
Weighted-average shares outstanding | 27,600,000 | 6,900,000 | ||||||
Basic and diluted net income (loss) per share | $ | 0.17 | $ | 0.17 |
Three Months Ended September 30, 2021 | For the Period from April 19, 2021 (Inception) through September 30, 2021 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
Basic and diluted net loss per share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net loss including accretion of temporary equity | $ | — | (1,690 | ) | $ | — | $ | (15,393 | ) | |||||||
Allocation of accretion of temporary equity to redemption value | — | — | — | — | ||||||||||||
Allocation of loss | $ | — | (1,690 | ) | $ | — | $ | (15,393 | ) | |||||||
Denominator: | ||||||||||||||||
Weighted-average shares outstanding | — | 6,900,000 | — | 6,900,000 | ||||||||||||
Basic and diluted net loss per share | $ | — | $ | (0.00 | ) | $ | — | $ | (0.00 | ) |
Gross proceeds | $ | 276,000,000 | $ | 276,000,000 | ||||
Less: | ||||||||
Proceeds allocated to Public Warrants | (12,144,000 | ) | (12,144,000 | ) | ||||
Class A ordinary share issuance costs | (15,428,121 | ) | (15,428,121 | ) | ||||
Plus: | ||||||||
Accretion of carrying value to redemption value | 33,092,121 | 33,092,121 | ||||||
Class A ordinary shares subject to possible redemption as of December 31, 2021 | $ | 281,520,000 | $ | 281,520,000 | ||||
Accretion of carrying value to redemption value | 20,308 | 389,082 | ||||||
Class A ordinary shares subject to possible redemption as of March 31, 2022 | $ | 281,540,308 | ||||||
Class A ordinary shares subject to possible redemption as of June 30, 2022 | $ | 281,909,082 | ||||||
Accretion of carrying value to redemption value | 1,245,745 | |||||||
Class A ordinary shares subject to possible redemption as of September 30, 2022 | $ | 283,154,827 | ||||||
March 31, 2022 | December 31, 2022 | |||||||||||
Current | Current | Non-current | ||||||||||
Prepaid Insurance | $ | 424,537 | $ | 528,861 | $ | 26,081 | ||||||
Other Prepaid Items | 54,282 | 21,573 | — | |||||||||
$ | 478,819 | $ | 550,434 | $ | 26,081 | |||||||
September 30, 2022 | December 31, 2021 | |||||||||||
Current | Current | Non-current | ||||||||||
Prepaid Insurance | $ | 159,382 | $ | 528,861 | $ | 26,081 | ||||||
Other Prepaid Items | 14,875 | 21,573 | — | |||||||||
$ | 174,257 | $ | 550,434 | $ | 26,081 | |||||||
if, and only if, the closing price of the Class A ordinary shares equals or exceeds $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described under the heading “Description of Securities—Warrants—Public Shareholders’ Warrants—Anti-dilution Adjustments”) for any 20 trading days within a30-tradingday period ending three trading days before the Company sends the notice of redemption to the warrant holders. |
March 31, 2022 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Liabilities: | ||||||||||||||||
Public warrant liabilities | $ | 3,450,000 | $ | — | $ | — | $ | 3,450,000 | ||||||||
Private warrant liabilities | — | — | 3,790,800 | 3,790,800 | ||||||||||||
Total warrant liabilities | $ | 3,450,000 | $ | — | $ | 3,790,800 | $ | 7,240,800 | ||||||||
September 30, 2022 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | ||||||||||||||||
Marketable securities held in trust account | $ | 283,154,827 | $ | — | $ | — | $ | 283,154,827 | ||||||||
Liabilities: | ||||||||||||||||
Public Warrants | $ | 1,104,000 | $ | — | $ | — | $ | 1,104,000 | ||||||||
Private Warrants | — | 1,263,600 | — | 1,263,600 | ||||||||||||
Total liabilities | $ | 1,104,000 | $ | 1,263,600 | $ | — | $ | 2,367,600 | ||||||||
December 31, 2021 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | ||||||||||||||||
Marketable securities held in trust account | $ | 281,522,137 | $ | — | $ | — | $ | 281,522,137 | ||||||||
Liabilities: | ||||||||||||||||
Public Warrants | $ | 6,900,000 | $ | — | $ | — | $ | 6,900,000 | ||||||||
Private Warrants | — | — | 7,076,160 | 7,076,160 | ||||||||||||
Total liabilities | $ | 6,900,000 | $ | — | $ | 7,076,160 | $ | 13,976,160 | ||||||||
December 31, 2021 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Liabilities: | ||||||||||||||||
Public warrant liabilities | $ | 6,900,000 | $ | — | $ | — | $ | 6,900,000 | ||||||||
Private warrant liabilities | — | — | 7,076,160 | 7,076,160 | ||||||||||||
Total warrant liabilities | $ | 6,900,000 | $ | — | $ | 7,076,160 | $ | 13,976,160 | ||||||||
Private Placement Warrants | Public Warrants | Warrant Liabilities | ||||||||||
Warrant liability – initial measurement | $ | 12,776,400 | $ | 12,144,000 | $ | 24,920,400 | ||||||
Change in fair value of warrant liabilities | (5,700,240 | ) | (5,244,000 | ) | (10,944,240 | ) | ||||||
Transfer to Level 1 | — | (6,900,000 | ) | (6,900,000 | ) | |||||||
Warrant liabilities at December 31, 2021 | $ | 7,076,160 | $ | — | $ | 7,076,160 | ||||||
Change in fair value of warrant liabilities | (3,285,360 | ) | — | (3,285,360 | ) | |||||||
Warrant liabilities at March 31, 2022 | $ | 3,790,800 | $ | — | $ | 3,790,800 | ||||||
Change in fair value of warrant liabilities | (561,600 | ) | — | (561,600 | ) | |||||||
Warrant liabilities at June 30, 2022 | $ | 3,229,200 | $ | — | $ | 3,229,200 | ||||||
Change in fair value of warrant liabilities (1) | (1,965,600 | ) | — | (1,965,600 | ) | |||||||
Transfer to Level 2 | (1,263,600 | ) | — | (1,263,600 | ) | |||||||
Warrant liabilities at September 30, 2022 | $ | — | $ | — | $ | — | ||||||
(1) | Assumes the Private Placement Warrants were transferred on September 30, 2022. |
Private Placement Warrants | Public Warrants | Warrant Liabilities | ||||||||||
Warrant liability – initial measurement | $ | 12,776,400 | $ | 12,144,000 | $ | 24,920,400 | ||||||
Change in fair value of warrant liabilities | (5,700,240 | ) | (5,244,000 | ) | (10,944,240 | ) | ||||||
Transfer to Level 1 | — | (6,900,000 | ) | (6,900,000 | ) | |||||||
Warrant liabilities at December 31, 2021 | $ | 7,076,160 | $ | — | $ | 7,076,160 | ||||||
Change in fair value of warrant liabilities | (3,285,360 | ) | — | (3,285,360 | ) | |||||||
Warrant liabilities at March 31, 2022 | $ | 3,790,800 | $ | — | $ | 3,790,800 | ||||||
March 31, 2022 | December 31, 2021 | |||||||
Exercise price | $ | 11.50 | $ | 11.50 | ||||
Share price | $ | 10.01 | $ | 9.92 | ||||
Risk-free rate | 2.39 | % | 1.32 | % | ||||
Expected volatility | 5.10 | % | 8.3 | % | ||||
Term (years) | 5.56 | 5.81 | ||||||
December 31, 2021 | ||||
Exercise price | $ | 11.50 | ||
Share price | $ | 9.92 | ||
Risk-free rate | 1.32 | % | ||
Expected volatility | 8.3 | % | ||
Term (years) | 5.81 |
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 Quarterly Report on Form
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report contains, and our officers and representatives may from time to time make, “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Examples of 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;
• | our ability to consummate an initial business combination due to the uncertainty resulting from the COVID-19pandemic, as well as from the emergence of variant strains of COVID-19, including the efficacy and adoption of recently developed vaccines with respect to COVID-19 and variant strains thereof; |
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 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, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many 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 could cause our actual results and 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 these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as 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 trends or activities will continue in the future. Accordingly, you should not 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. We will not be limited to a particular industry or geographic region in our identification and acquisition of a target company.
Our sponsor is ESGEN LLC, a Delaware limited liability company (the “Sponsor”).
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The registration statement for our initial public offering (“initial public offering” or “Public Offering”) was declared effective on October 19, 2021 (the “Effective Date”).2021. On October 22, 2021, we consummated our initial 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- allotmentover-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 initial 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.
Following the closing of our initial public offering on October 22, 2021, $281,520,000 ($10.20 per Unit) from the net proceeds sold in our initial public offering, including proceeds of the sale of 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 days or less or in money market funds meeting certain conditions under Rule
We will have 15 months (unless otherwise extended) from the closing of our initial 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
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Results of Operations
All of our activity from April 19, 2021 (inception) through March 31,September 30, 2022, was in preparation for our initial public offering, and since our initial public offering, our activity has been limited to the search for a prospective initial Business Combination. We will not generate any operating revenues until the closing and completion of our initial Business Combination.
For the three months ended March 31,September 30, 2022, we had an income of $5,880,541,$4,262,070, which consisted of a gain on change in fair value of warrant liabilities of $6,735,360,$3,345,600, interest income from marketable securities held in trust account of $18,171,$1,245,745, partially offset by operating costs of $329,275.
For the nine months ended September 30, 2022, we had income of $11,637,242, which consisted of a gain on change in fair value of warrant liabilities of $11,608,560, interest income from marketable securities held in trust account of $1,632,690, partially offset by operating costs of $1,604,008.
For the three months ended September 30, 2021, we had net loss of $1,690, which consisted of formation and operating costscosts.
For the period from April 19, 2021 (inception) to September 30, 2021, we had a loss of $842,990.
Liquidity and Capital Resources
As of March 31,September 30, 2022, wethe Company had $1,086,084cash of $890,273 and owes $1,089,536 in cashaccrued offering costs and a working capital of $420,473.
Prior to the completion of our initial public offering, our liquidity needs had been satisfied through a capital contribution from the Sponsor of $25,000 and a loan to us of up to $300,000 by our Sponsor under an unsecured promissory note, which had an outstanding balance of $171,346 at March 31,September 30, 2022. In addition, in order to finance transaction costs in connection with a 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 March 31,September 30, 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.
In connection with the Company’s assessment of going concern considerations in accordance with ASC Subtopic205-40, “Presentation of Financial Statements – Going Concern”, the Company has until January 22, 2023 (unless extended) to consummate a Business Combination. If a Business Combination is not consummated by this date and an extension not obtained, there will be a mandatory liquidation and subsequent dissolution of the Company. Although the Company intends to consummate a Business Combination on or before January 22, 2023, 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 business prior to a Business Combination, and potential 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 extension by this time. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after January 22, 2023.
Contractual Obligations
Other than the below, we do not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities.
Underwriting Agreement
We granted the underwriters a
The underwriters earned an underwriting discount of two percent (2%) of the gross proceeds of our initial public offering, or $5,520,000, which we paid in cash at closing of the offering.
Additionally, the underwriters are entitled to a deferred underwriting discount of 3.5% of the gross proceeds of our initial public offering upon the completion of our initial Business Combination.
Office Space, Secretarial and Administrative Services
Commencing on the date that our securities are first listed on the NASDAQ through the earlier of consummation of our initial Business Combination and the liquidation, we are expected to pay our Sponsor a total of $10,000 per month for office space, utilities, secretarial support and administrative services. As of March 31,September 30, 2022, we had incurred $54,193$114,193 pursuant to this agreement, which was accrued in “Due to related party”.
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Registration Rights
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 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 initial public offering. 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
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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
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
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.
Going Concern
As of March 31,September 30, 2022, the Company had $1,086,084cash of $890,273 and owes $1,089,536 in cash held outside of the Trust Accountaccrued offering costs and working capital of $420,473.expenses and an additional $285,539 to related parties. The Company anticipates that the cash held outside of the Trust Account as of March 31,September 30, 2022 will not be sufficient to allow the Company to operate for at least the next 12 months from the issuance of the financial statements, assuming that a Business Combination is not consummated during that time. The Company has incurred and expects to continue to incur significant costs in pursuit of its acquisition plans. There is no assurance that the Company’s plans to consummate an initial Business Combination will be successful or successful within the Combination Period.
In connection with the Company’s assessment of going concern considerations in accordance with ASC Subtopic205-40, “Presentation of Financial Statements – Going Concern”, the Company has until January 22, 2023 (unless extended) to consummate a Business Combination. If a Business Combination is not consummated by this date and an extension not obtained, there will be a mandatory liquidation and subsequent dissolution of the Company. Although the Company intends to consummate a Business Combination on or before January 22, 2023, 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 business prior to a Business Combination, and potential subsequent dissolution, raises substantial doubt about the Company’s ability to continue as a going concern forconcern. It is uncertain whether the Company will be able to consummate a period of time within one year after the date that the financial statements are issued. Management plans to address this uncertainty through the initial Business Combination as discussed above. There is no assurance thator obtain an extension by this time. No adjustments have been made to the Company’s planscarrying amounts of assets or liabilities should the Company be required to consummate an initial Business Combination will be successful or successful within the Combination Period. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.liquidate after January 22, 2023.
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Critical Accounting Policies
The preparation of these financial statements in conformity with 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 statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. We have identified the following critical accounting policies:
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
Offering Costs Associated with Initial Public Offering
We comply with the requirements of Accounting Standards Codification (“ASC”)
Class A Ordinary Shares Subject to Possible Redemption
We account for our Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholder’s equity. Our Class A ordinary shares sold in our initial public offering feature certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly, as of March 31,September 30, 2022 and December 31, 2021, 27,600,000 Class A ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholder’s (deficit) equity (deficit) section of our balance sheets.
Net Income (Loss) Per Ordinary Share
We apply the
Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board (“FASB”)FASB issued Accounting Standards Update (“ASU”)
Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statement.
Off-Balance
As of March 31,September 30, 2022, we did not have any
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule
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.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Quarterly Report, is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the Chief Executive Officer and 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 March 31,September 30, 2022, pursuant to Rule
As previously disclosed in the Form
In light of this material weakness, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted accounting principles. 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 these 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 material weakness described above, there were no changes in our internal control over financial reporting (as such term is defined in Rules
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors.
There have been no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities
Subsequent to the quarterly period covered by this report,Quarterly Report, on October 22, 2021, we consummated the Initial Public Offering of 27,600,000 Units, including the Over-Allotmentover-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
On October 22, 2021, simultaneously with the closing of the Initial Public Offering and pursuant to a 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.
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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
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 Annual Report.
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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 Initialinitial 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.
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 Annual Report.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
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Item 6. Exhibits
* | Filed herewith. |
** | Furnished. |
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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 |
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