☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 001-39948 | 85-3310839 | ||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (IRS Employer Identification No.) |
515 North Flagler Drive, Suite 520 West Palm Beach, FL | 33401 | |
(Address Of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Units, each consisting of one Class A common share, $0.0001 par value, and one-third of one redeemable warrant | TLGA.U | NYSE | ||
Class A common shares included as part of the units | TLGA | NYSE | ||
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
Emerging growth company | ☒ |
TLG ACQUISITION ONE CORP.
Form
For the Quarter Ended March 31, 2022
Page | ||||||
Item 1. | 1 | |||||
1 | ||||||
2 | ||||||
3 | ||||||
4 | ||||||
5 | ||||||
Item 2. | ||||||
Item 3. | ||||||
Item 4. | ||||||
PART II. OTHER INFORMATION | ||||||
Item 1. | ||||||
Item 1A. | ||||||
Item 2. | ||||||
Item 3. | ||||||
Item 4. | ||||||
Item 5. | ||||||
Item 6. | ||||||
Item 1. | Condensed Consolidated Financial Statements |
March 31, 2023 | December 31, 2022 | |||||||
(Unaudited) | ||||||||
Assets: | ||||||||
Current assets: | ||||||||
Cash | $ | 15,406 | $ | 19,750 | ||||
Prepaid expenses | 155,465 | 108,156 | ||||||
Total current assets | 170,871 | 127,906 | ||||||
Cash and investments held in Trust Account | 82,988,329 | 80,945,242 | ||||||
Total Assets | $ | 83,159,200 | $ | 81,073,148 | ||||
Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit: | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 229,642 | $ | 276,917 | ||||
Accrued expenses | 5,373,916 | 4,472,261 | ||||||
Working Capital Loan - related party | 3,897,451 | 2,330,370 | ||||||
Income tax payable | 1,173,779 | 1,055,680 | ||||||
Franchise tax payable | 50,050 | 50 | ||||||
Total current liabilities | 10,724,838 | 8,135,278 | ||||||
Derivative warrant liabilities | 1,400,000 | 800,000 | ||||||
Deferred underwriting commissions | 14,000,000 | 14,000,000 | ||||||
Total Liabilities | 26,124,838 | 22,935,278 | ||||||
Commitments and Contingencies | ||||||||
Class A common stock subject to possible redemption, $0.0001 par value; 7,948,405 shares at redemption value of approximately $10.27 and $10.03 per share as of March 31, 2023 and December 31, 2022, respectively | 81,614,773 | 79,739,786 | ||||||
Stockholders’ Deficit: | ||||||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding as of March 31, 2023 and December 31, 2022 | — | — | ||||||
Class A common stock, $0.0001 par value; 200,000,000 shares authorized; no non-redeemable shares issued andoutstanding as of March 31, 2023 and December 31, 2022 (excluding 7,948,405 shares subject to possible redemption), respectively | — | — | ||||||
Class F common stock, $0.0001 par value; 20,000,000 shares authorized; 5,000,000 and 10,000,000 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively | 500 | 1,000 | ||||||
Additional paid-in capital | — | — | ||||||
Accumulated deficit | (24,580,911 | ) | (21,602,916 | ) | ||||
Total stockholders’ deficit | (24,580,411 | ) | (21,601,916 | ) | ||||
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit | $ | 83,159,200 | $ | 81,073,148 | ||||
For The Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
General and administrative expenses | $ | 1,384,702 | $ | 74,233 | ||||
General and administrative expenses—related party | 21,000 | 20,500 | ||||||
Franchise tax expenses | 50,000 | 88,844 | ||||||
Loss from operations | (1,455,702 | ) | (183,577 | ) | ||||
Change in fair value of working capital loan - related party | 457,919 | — | ||||||
Change in fair value of derivative warrant liabilities | (600,000 | ) | 6,600,000 | |||||
Income from cash and investments held in Trust Account | 612,374 | 32,647 | ||||||
Net (loss) income before income taxes | (985,409 | ) | 6,449,070 | |||||
Income tax expense | (118,099 | ) | — | |||||
Net (loss) income | $ | (1,103,508 | ) | $ | 6,449,070 | |||
Weighted average shares outstanding of Class A common stock | 7,948,405 | 40,000,000 | ||||||
Basic and diluted net (loss) income per share, Class A common stock | $ | (0.08 | ) | $ | 0.13 | |||
Weighted average shares outstanding of Class F common stock | 6,611,111 | 10,000,000 | ||||||
Basic and diluted net (loss) income per share, Class F common stock | $ | (0.08 | ) | $ | 0.13 | |||
Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders’ Deficit | |||||||||||||||||||||||||
Class A | Class F | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance—December 31, 2022 | — | $ | — | 10,000,000 | $ | 1,000 | $ | — | $ | (21,602,916 | ) | $ | (21,601,916 | ) | ||||||||||||||
Increase in redemption value of Class A common stock subject to possible redemption | — | — | — | — | (500 | ) | (1,874,487 | ) | (1,874,987 | ) | ||||||||||||||||||
Forfeiture of Class F shares | (5,000,000 | ) | (500 | ) | 500 | |||||||||||||||||||||||
Net loss | — | — | — | — | — | (1,103,508 | ) | (1,103,508 | ) | |||||||||||||||||||
Balance—March 31, 2023 (unaudited) | — | $ | — | 5,000,000 | $ | 500 | $ | — | $ | (24,580,911 | ) | $ | (24,580,411 | ) | ||||||||||||||
Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders’ Deficit | |||||||||||||||||||||||||
Class A | Class F | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance—December 31, 2021 | — | $ | — | 10,000,000 | $ | 1,000 | $ | — | $ | (27,942,377 | ) | $ | (27,941,377 | ) | ||||||||||||||
Net income | — | — | — | — | — | 6,449,070 | 6,449,070 | |||||||||||||||||||||
Balance—March 31, 2022 (unaudited) | — | $ | — | 10,000,000 | $ | 1,000 | $ | — | $ | (21,493,307 | ) | $ | (21,492,307 | ) | ||||||||||||||
March 31, 2022 | December 31, 2021 | |||||||
(unaudited) | ||||||||
Assets: | ||||||||
Current assets: | ||||||||
Cash | $ | 71,468 | $ | 48,491 | ||||
Prepaid expenses | 832,926 | 105,654 | ||||||
Total current assets | 904,394 | 154,145 | ||||||
Investments held in Trust Account | 400,056,330 | 400,023,684 | ||||||
Total Assets | $ | 400,960,724 | $ | 400,177,829 | ||||
Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit: | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 94,135 | $ | 48,917 | ||||
Accrued expenses | 1,988,896 | 2,428,864 | ||||||
Working Capital Loan - related party | 2,320,000 | 920,000 | ||||||
Franchise tax payable | 50,000 | 121,425 | ||||||
Total current liabilities | 4,453,031 | 3,519,206 | ||||||
Derivative warrant liabilities | 4,000,000 | 10,600,000 | ||||||
Deferred underwriting commissions | 14,000,000 | 14,000,000 | ||||||
Total Liabilities | 22,453,031 | 28,119,206 | ||||||
Commitments and Contingencies | 0 | 0 | ||||||
Class A common stock subject to possible redemption, $0.0001 par value; 40,000,000 shares at redemption value of $10.00 per share as of March 31, 2022 and December 31, 2021 | 400,000,000 | 400,000,000 | ||||||
Stockholders’ Deficit: | ||||||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; NaNissued and outstanding as of March 31, 2022 and December 31, 2021 | 0— | 0 | ||||||
Class A common stock, $0.0001 par value; 200,000,000 shares authorized; 0 non-redeemable shares issued and outstanding as of March 31, 2022 and December 31, 2021 | 0 | 0 | ||||||
Class F common stock, $0.0001 par value; 20,000,000 shares authorized; 10,000,000 shares issued and outstanding as of March 31, 2022 and December 31, 2021 | 1,000 | 1,000 | ||||||
Additional paid-in capital | 0 | 0 | ||||||
Accumulated deficit | (21,493,307 | ) | (27,942,377 | ) | ||||
Total stockholders’ deficit | (21,492,307 | ) | (27,941,377 | ) | ||||
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit | $ | 400,960,724 | $ | 400,177,829 | ||||
For The Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net (loss) income | $ | (1,103,508 | ) | $ | 6,449,070 | |||
Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||
Change in fair value of derivative warrant liabilities | 600,000 | (6,600,000 | ) | |||||
Change in fair value of working capital loan - related party | (457,919 | ) | — | |||||
Income from investments held in Trust Account | (612,374 | ) | (32,647 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses | (47,309 | ) | (727,272 | ) | ||||
Accounts payable | (47,275 | ) | 45,218 | |||||
Accrued expenses | 901,655 | (439,967 | ) | |||||
Income tax payable | 118,099 | — | ||||||
Franchise tax payable | 50,000 | (71,425 | ) | |||||
Net cash used in operating activities | (598,631 | ) | (1,377,023 | ) | ||||
Cash Flows from Investing Activities | ||||||||
Cash deposited in Trust Account | (1,430,713 | ) | — | |||||
Net cash used in investing activities | (1,430,713 | ) | — | |||||
Cash Flows from Financing Activities: | ||||||||
Proceeds received from Working Capital Loan—related party | 2,025,000 | 1,400,000 | ||||||
Net cash provided by financing activities | 2,025,000 | 1,400,000 | ||||||
Net change in cash | (4,344 | ) | 22,977 | |||||
Cash—beginning of the period | 19,750 | 48,491 | ||||||
Cash—end of the period | $ | 15,406 | $ | 71,468 | ||||
For The Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
General and administrative expenses | $ | 74,233 | $ | 273,069 | ||||
General and administrative expenses - related party | 20,500 | 14,000 | ||||||
Franchise tax expenses | 88,844 | 97,996 | ||||||
Loss from operations | (183,577 | ) | (385,065 | ) | ||||
Offering costs associated with derivative warrant liabilities | 0 | (1,413,340 | ) | |||||
Change in fair value of derivative warrant liabilities | 6,600,000 | 12,866,660 | ||||||
Income from investments held in Trust Account | 32,647 | 3,874 | ||||||
Earnings before income taxes | 6,449,070 | 11,072,129 | ||||||
Income tax expense | 0 | 0 | ||||||
Net income | $ | 6,449,070 | $ | 11,072,129 | ||||
Weighted average shares outstanding of Class A common stock, basic and diluted | 40,000,000 | 26,222,222 | ||||||
Basic and diluted net income per share, Class A common stock | $ | 0.13 | $ | 0.31 | ||||
Weighted average shares outstanding of Class F common stock, basic | 10,000,000 | 9,569,444 | ||||||
Basic net income per share, Class F common stock | $ | 0.13 | $ | 0.31 | ||||
Weighted average shares outstanding of Class F common stock, diluted | 10,000,000 | 10,000,000 | ||||||
Diluted net income per share, Class F common stock | $ | 0.13 | $ | 0.31 | ||||
Common Stock | Additional | Total | ||||||||||||||||||||||||||
Class A | Class F | Paid-In | Accumulated | Stockholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
Balance - December 31, 2021 | 0 | $ | 0 | 10,000,000 | $ | 1,000 | $ | 0 | $ | (27,942,377 | ) | $ | (27,941,377 | ) | ||||||||||||||
Net income | — | — | — | — | 0 | 6,449,070 | 6,449,070 | |||||||||||||||||||||
Balance - March 31, 2022 (unaudited) | 0 | $ | 0 | 10,000,000 | $ | 1,000 | $ | 0 | $ | (21,493,307 | ) | $ | (21,492,307 | ) | ||||||||||||||
Common Stock | Additional | Total | ||||||||||||||||||||||||||
Class A | Class F | Paid-In | Accumulated | Stockholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
Balance - January 1, 2021 | 0 | $ | 0 | 10,000,000 | $ | 1,000 | $ | 24,000 | $ | (3,329 | ) | $ | 21,671 | |||||||||||||||
Accretion of Class A common stock subject to possible redemption amount | — | — | — | — | (24,000 | ) | (45,861,780 | ) | (45,885,780 | ) | ||||||||||||||||||
Net income | — | — | — | — | 0 | 11,072,129 | 11,072,129 | |||||||||||||||||||||
Balance - March 31, 2021 (unaudited) | 0 | $ | 0 | 10,000,000 | $ | 1,000 | $ | 0 | $ | (34,792,980 | ) | $ | (34,791,980 | ) | ||||||||||||||
For The Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 6,449,070 | $ | 11,072,129 | ||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
General and administrative expenses paid by related party under note payable | 0 | 1,530 | ||||||
Offering costs allocated to derivative warrant liabilities | 0 | 1,413,340 | ||||||
Change in fair value of derivative warrant liabilities | (6,600,000 | ) | (12,866,660 | ) | ||||
Income from investments held in Trust Account | (32,647 | ) | (3,874 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses | (727,272 | ) | (785,836 | ) | ||||
Accounts payable | 45,218 | 18,000 | ||||||
Accrued expenses | (439,967 | ) | 21,250 | |||||
Franchise tax payable | (71,425 | ) | 48,270 | |||||
Net cash used in operating activities | (1,377,023 | ) | (1,081,851 | ) | ||||
Cash Flows from Investing Activities | ||||||||
Cash deposited in Trust Account | 0 | (400,000,000 | ) | |||||
Net cash used in investing activities | 0 | (400,000,000 | ) | |||||
Cash Flows from Financing Activities: | ||||||||
Repayment of note payable to related party | 0 | (192,312 | ) | |||||
Proceeds received from initial public offering, gross | 0 | 400,000,000 | ||||||
Proceeds received from private placement | 0 | 10,000,000 | ||||||
Working Capital Loan - related party | 1,400,000 | 0 | ||||||
Offering costs paid | 0 | (8,467,900 | ) | |||||
Net cash provided by financing activities | 1,400,000 | 401,339,788 | ||||||
Net change in cash | 22,977 | 257,937 | ||||||
Cash - beginning of the period | 48,491 | 500 | ||||||
Cash - end of the period | $ | 71,468 | $ | 258,437 | ||||
Supplemental disclosure of noncash activities: | ||||||||
Deferred offering costs included in accrued expenses | $ | 0 | $ | 85,000 | ||||
Deferred offering costs paid by related party under promissory note | $ | 0 | $ | 51,890 | ||||
Accounts payable paid through promissory note | $ | 0 | $ | 750 | ||||
Deferred underwriting commissions in connection with the initial public offering | $ | 0 | $ | 14,000,000 |
For The Three Months Ended March 31, 2022 | ||||||||
Class A | Class F | |||||||
Basic and diluted net income per common stock: | ||||||||
Numerator: | ||||||||
Allocation of net income | $ | 5,159,256 | $ | 1,289,814 | ||||
Denominator: | ||||||||
Basic and diluted weighted average common stock outstanding | 40,000,000 | 10,000,000 | ||||||
Basic and diluted net income per common stock | $ | 0.13 | $ | 0.13 | ||||
For the Three Months Ended March 31, | ||||||||||||||||
2023 | 2022 | |||||||||||||||
Class A | Class F | Class A | Class F | |||||||||||||
Basic and diluted net (loss) income per common stock: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net (loss) income, basic and diluted | $ | (602,433) | $ | (501,075) | $ | 5,159,256 | $ | 1,289,814 | ||||||||
Denominator: | ||||||||||||||||
Basic and diluted weighted average common stock outstanding | 7,948,405 | 6,611,111 | 40,000,000 | 10,000,000 | ||||||||||||
Basic and diluted net (loss) income per common stock | $ | (0.08 | ) | $ | (0.08 | ) | $ | 0.13 | $ | 0.13 | ||||||
For The Three Months Ended March 31, 2021 | ||||||||
Class A | Class F | |||||||
Basic and diluted net income per common stock: | ||||||||
Numerator: | ||||||||
Allocation of net income, basic | $ | 8,111,828 | $ | 2,960,302 | ||||
Allocation of net income, diluted | 8,015,407 | 3,056,723 | ||||||
Denominator: | ||||||||
Basic weighted average common stock outstanding | 26,222,222 | 9,569,444 | ||||||
Diluted weighted average common stock outstanding | 26,222,222 | 10,000,000 | ||||||
Basic net income per common stock | $ | 0.31 | $ | 0.31 | ||||
Diluted net income per common stock | $ | 0.31 | $ | 0.31 | ||||
Gross proceeds from Initial Public Offering | $ | 400,000,000 | ||
Less: | ||||
Fair value of Public Warrants at issuance | (24,533,330 | ) | ||
Offering costs allocated to Class A common stock subject to possible redemption | (21,284,250 | ) | ||
Plus: | ||||
Accretion on Class A common stock subject to possible redemption amount | 45,817,580 | |||
Class A common stock subject to possible redemption | $ | 400,000,000 | ||
Gross proceeds from Initial Public Offering | $ | 400,000,000 | ||
Less: | ||||
Fair value of Public Warrants at issuance | (24,533,330 | ) | ||
Offering costs allocated to Class A common stock subject to possible redemption | (21,284,250 | ) | ||
Plus: | ||||
Accretion on Class A common stock subject to possible redemption amount | 45,817,580 | |||
Class A common stock subject to possible redemption, as of December 31, 2021 | 400,000,000 | |||
Plus: | ||||
Accretion on Class A common stock subject to possible redemption amount | 4,101,927 | |||
Less: | ||||
Redemption of Class A common stock subject to possible redemption amount | (324,362,141 | ) | ||
Class A common stock subject to possible redemption, as of December 31, 2022 | 79,739,786 | |||
Plus: | ||||
Accretion on Class A common stock subject to possible redemption amount | 1,874,987 | |||
Class A common stock subject to possible redemption, as of March 31, 2023 | $ | 81,614,773 | ||
Significant Other | Significant Other | |||||||||||||||||||||||
Quoted Prices in Active Markets | Observable Inputs | Unobservable Inputs | ||||||||||||||||||||||
Description | (Level 1) | (Level 2) | (Level 3) | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | ||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Investments held in Trust Account - Money market fund | $ | 400,056,330 | $ | — | $ | — | ||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||
Derivative warrant liabilities - Public warrants | $ | 2,666,670 | — | — | $ | 933,330 | $ | — | $ | — | ||||||||||||||
Derivative warrant liabilities - Private placement warrants | $ | — | $ | 1,333,330 | $ | $ | — | $ | 466,670 | $ | — | |||||||||||||
Working Capital L oan - related party | $ | — | $ | — | $ | 2,320,000 | ||||||||||||||||||
Working Capital Loan - related party | $ | — | $ | — | $ | 3,897,451 |
Significant Other | Significant Other | |||||||||||
Quoted Prices in Active Markets | Observable Inputs | Unobservable Inputs | ||||||||||
Description | (Level 1) | (Level 2) | (Level 3) | |||||||||
Assets: | ||||||||||||
Investments held in Trust Account - Money market fund | $ | 400,023,684 | $ | — | $ | — | ||||||
Liabilities: | ||||||||||||
Derivative warrant liabilities—Public warrants | $ | 6,933,330 | — | — | ||||||||
Derivative warrant liabilities - Private placement warrants | $ | — | $ | — | $ | 3,666,670 | ||||||
Working Capital L oan - related party | $ | — | $ | — | $ | 920,000 |
Description | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||
Liabilities: | ||||||||||||
Derivative warrant liabilities - Public warrants | $ | 533,330 | $ | — | $ | — | ||||||
Derivative warrant liabilities - Private placement warrants | $ | — | $ | 266,670 | $ | — | ||||||
Working Capital Loan - related party | $ | — | $ | — | $ | 2,330,370 |
December 31, 2021 | ||||
Exercise price | $ | 11.50 | ||
Stock price | $ | 9.73 | ||
Term (yrs) | 5 | |||
Volatility | 10.5 | % | ||
Risk-free rate | 1.44 | % |
March 31, 2023 | December 31, 2022 | |||||||
Working Capital Loan: | ||||||||
Warrant price | $ | 0.04 | $ | 0.04 | ||||
Volatility | 0.01 | % | 0.01 | % | ||||
Risk-free rate | 3.57 | % | 3.99 | % | ||||
Discount rate | 15.76 | % | 15.76 | % | ||||
Probability of Business Combination | 80.00 | % | 80.00 | % | ||||
Term (years) | 0.25 | 0.25 |
Working Capital Loans- Related Party | ||||
Level 3 - Instruments December 31, 2022 | $ | 2,330,370 | ||
Borrowings of working capital loan - related party | 2,025,000 | |||
Change in fair value of working capital loan - related party | (457,919 | ) | ||
Level 3 - Instruments at March 31, 2023 | $ | 3,897,451 | ||
Derivative Warrant Liabilities | Working Capital Loan- Related Party | |||||||
Level 3 - Liabilities at December 31, 2021 | $ | 3,666,670 | $ | 920,000 | ||||
Transfer of Private Placement Warrants from Level 3 to Level 2 | (3,666,670 | ) | 0 | |||||
Working Capital Loan - related party | 0 | 1,400,000 | ||||||
Level 3 - Liabilities at March 31, 2022 | $ | 0 | $ | 2,320,000 | ||||
Level 3 - Derivative warrant liabilities at January 1, 2021 | $ | 0 | ||
Issuance of Public and Private Warrants | 34,533,330 | |||
Transfer of Public Warrants to Level 1 | (24,533,330 | ) | ||
Change in fair value of derivative warrant liabilities | 4,066,670 | |||
Level 3 - Derivative warrant liabilities at March 31, 2021 | $ | 14,066,670 | ||
Derivative Warrant Liabilities | Working Capital Loans- Related Party | |||||||
Level 3 - Instruments December 31, 2021 | $ | 3,666,670 | $ | 920,000 | ||||
Transfer of Private Placement Warrants from Level 3 to Level 2 | (3,666,670 | ) | — | |||||
Working capital loan - related party | — | 1,400,000 | ||||||
Level 3 - Instruments at March 31, 2022 | $ | — | $ | 2,320,000 | ||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
References to the “Company,” “TLG Acquisition One Corp.,” “TLG Acquisition,” “our,” “us” or “we” refer to TLG Acquisition One Corp. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited interim condensed consolidated financial statements and the notes thereto contained elsewhere in this 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 FormAct.Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in “Risk Factors,” “Cautionary Note Regarding Forward-Looking Statements,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form
Overview
We are a blank check company incorporated in Delaware on October 2, 2020. We were formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). We are an emerging growth company and, as such, we are subject to all of the risks associated with emerging growth companies.
Our sponsor is TLG Acquisition Founder LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for our Initial Public Offering was declared effective on January 27, 2021. On February 1, 2021, we consummated our Initial Public Offering of 40,000,000 units (the “Units” and, with respect to the Class A common stock included in the Units being offered, the “Public Shares”), including 5,000,000 additional Units to cover over-allotments (the “Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds of $400.0 million, and incurring offering costs of approximately $22.7 million, of which $14.0 million was for deferred underwriting commissions.
Simultaneously with the closing of the Initial Public Offering, we consummated the private placement (“Private Placement”) of 4,666,667 and 2,000,000 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) to the Sponsor and RBC Capital Markets, LLC, in its capacity as a purchaser of Private Placement Warrants (“RBC”), respectively, at a price of $1.50 per Private Placement Warrant, generating total proceeds of $10.0 million.
Upon the closing of the Initial Public Offering and the Private Placement, $400.0 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement waswere placed in a Trust Account,trust account (the “Trust Account”), and will beuntil December 28, 2022, were invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less or in money market funds investing solely in U.S. Treasuries and meeting certain conditions under Rule
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Our management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that we will be able to complete a Business Combination successfully. We must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (net of amounts disbursed to management for working capital purposes, if any, and excluding the amount of any deferred underwriting discount held in trust) at the time of the agreement to enter into the initial Business Combination. However, we will only complete a Business Combination if the post-business combination company owns or acquires 50% or more of the voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act.
If we are unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or Februaryby June 1, 2023 (the(as such period may be extended to August 1, 2023, 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, subject to lawfully available funds therefor, redeem 100% of the Public Shares, at a
Trust Account Redemptions and Extension of Combination Period
On December 19, 2022, we held a special meeting of stockholders at which such time our stockholders approved the proposal to amend our amended and restated certificate of incorporation giving the Company the right to extend the Business Combination deadline on a monthly basis up to six times from February 1, 2023 to August 1, 2023 by depositing into the Trust Account the lesser of (i) an aggregate of $600,000 or (ii) $0.06 for each issued and outstanding Public Share that has not been redeemed for each one-month extension (the “Extension”). The Company has elected to extend the Business Combination deadline four times and has deposited $476,904 for each monthly extension, or approximately $1.9 million in the aggregate, into the Trust Account in order to extend the Business Combination deadline to June 1, 2023.
In connection with such vote, the holders of an aggregate of 32,051,595 Public Shares exercised their right to redeem their shares for an aggregate of approximately $324.4 million in cash held in the Trust Account. Additionally, upon shareholder approval of the Extension, our Sponsor agreed that they would forfeit for no consideration 5,000,000 shares of Class F common stock in connection with the Extension, which shares of Class F common stock will be cancelled (the “Forfeiture”). The Forfeiture occurred on January 30, 2023.
Proposed Business Combination
On November 13, 2022, we entered into a Merger Agreement (as amended by that First Amendment to Merger Agreement, dated December 23, 2022, the Second Amendment to Merger Agreement, dated March 22, 2023, and as it may be further amended, supplemented or otherwise modified from time to time in accordance with its terms, the “Merger Agreement”) with Electriq Power, Inc., a Delaware Corporation (“Electriq”), as disclosed in a Current Report on Form 8-K as filed with the U.S. Securities and Exchange Commission (the “SEC”) by the Company on November 14, 2022.
If the transactions contemplated by the Merger Agreement are completed (the “Transactions”), Electriq will survive such merger as a wholly owned subsidiary of the Company (the “Merger”). As a result of the Merger, and upon consummation of the Merger and the other Transactions contemplated by the Merger Agreement (together with the Merger, the “Proposed Business Combination”), the separate corporate existence of Electriq will cease and the holders of Electriq common stock, preferred stock, options and warrants will become equityholders of the Company, which will change its name to “Electriq Power Holdings, Inc.” in connection with the Proposed Business Combination.
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Effective as of April 10, 2023, Truist Securities, Inc. resigned and withdrew from its role as financial advisor and structuring agent to the Company and waived its entitlement to all fees and expense reimbursements in connection with the Business Combination. Effective as of May 10, 2023, RBC waived its entitlement to the deferred underwriting commissions payable in connection with the Initial Public Offering in the amount of $14,000,000.
For additional information regarding the Merger Agreement and the Transactions contemplated therein, see the Current Reports on Form 8-K as filed with the SEC by the Company on November 14, 2022, December 23, 2022 and March 23, 2023.
Liquidity and Capital Resources
As of March 31, 2022,2023, we had approximately $71,000$15,406 in our operating bank account and a working capital deficit of approximately $3.2 million.
Our liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the payment of $25,000 from our Sponsor to cover certain of our offering costs in exchange for issuance of Class F common stock, and a loan from our Sponsor of approximately $192,000 under a promissory note. We repaid the promissory note in full upon consummation of the Private Placement. Subsequent to the consummation of the Initial Public Offering, our liquidity has been satisfied through the net proceeds from the consummation of the Initial Public Offering and the Private Placement held outside of the Trust Account. In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of our officers and directors may, but are not obligated to, loan us working capital loans as may be required. The Sponsor and the Company executed a
In connection with our assessment of going concern considerations in accordance with FASB ASC Topic
Management continues to evaluate the impact of the
On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax. Any share redemption or other share repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax. Whether and to what extent we would be subject to the excise tax in connection with a Business Combination, extension vote or otherwise will depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury. In addition, because the excise tax would be payable by us and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business Combination and in our ability to complete a Business Combination.
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Results of Operations
Our entire activity from inception up to March 31, 20222023 was in preparation for our formation and the Initial Public Offering and, after the Initial Public Offering, identifying a target company for a Business Combination. We do not expect to be generating any operating revenues until the closing and completion of our initial Business Combination.
For the three months ended March 31, 2023, we had net loss of $1,103,508, which consisted of $612,374 in interest income from investments held in the trust account, partially offset by $1,405,702 in general and administrative expenses, non-operating expense of $142,081 resulting from changes in fair value of derivative warrant liabilities and convertible note, $118,099 in income tax expense and $50,000 in franchise tax expense.
For the three months ended March 31, 2022, we had net income of approximately $6.4 million, which consisted of approximately $33,000 in interest income from investments held in the trust account and
Contractual Obligations
Administrative Support Agreement
The Sponsor, officers and directors, or any of their respective affiliates, will be reimbursed for any reasonable
Underwriting Agreement
We granted the underwriters a
The underwriters were entitled to an underwriting discount of $0.20 per Unit, or $8.0 million in the aggregate, paid upon the closing of the Initial Public Offering. In addition, the underwriters were entitled to a deferred fee of $0.35 per Unit, or $14.0 million in the aggregate. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.
Critical Accounting PoliciesEstimates
Derivative Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to the FASB ASC Topic 480 “Distinguishing Liabilities from Equity” (“ASC 480”) and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
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The preparation of financial statementswarrants issued in connection with the Initial Public Offering (the “Public Warrants”) and the Private Placement Warrants are recognized as derivative liabilities in accordance with accounting principles generally acceptedASC 815. Accordingly, we recognized the warrant instruments as liabilities at fair value and adjust the instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the United StatesCompany’s consolidated statements of America requires managementoperations. The initial fair value of the Public Warrants and Private Placement Warrants have each been measured at fair value using a modified Black-Scholes option pricing model. The fair value of the Public Warrants and Private Placement Warrants has subsequently been determined using listed prices in an active market for such warrants. Derivative warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. A summary of our significant accounting policies is included in Note 2 to our condensed financial statements in Part I, Item 1 of this Quarterly Report. Certain of our accounting policies are considered critical, as these policies are the most important to the depiction of our condensed financial statements and require significant, difficult or complex judgments, often employing the use of current assets or require the creation of current liabilities. Derivative warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.
Working Capital Loan-Related Party
We have elected the fair value option to account for borrowings under the Working Capital Loan with our affiliates. As a result of applying the fair value option, we recognize each borrowing, when drawn, at fair value with a gain or loss recognized at issuance, and subsequent changes in fair value are recognized as change in the fair value of Working Capital Loan-related party in the consolidated statements of operations. The fair value is based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own estimates about the effects of matters that are inherently uncertain. Such policies are summarizedassumptions a market participant would use in pricing the Management’s Discussion and Analysis of Financial Condition and Results of Operations section in our Annual Report on Form
Recent Accounting Pronouncements
See Note 2 to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report for a discussion of recent accounting pronouncements.
Off-Balance
As of March 31, 2022,2023, we did not have any
JOBS Act
The Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for
Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of
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Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
We are a smaller reporting company as defined by Rule
Item 4. | Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended March 31, 2022,2023, as such term is defined in Rules
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended March 31, 20222023 covered by this Quarterly Report on Form
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PART
Item 1. | Legal Proceedings. |
None.
Item 1A. | Risk Factors. |
As of the date of this Quarterly Report on Form
Truist Securities, Inc. has resigned from its financial advisory role in laws or regulations, or a failureconnection with the Business Combination and its structuring agent role in connection with the financings related to complythe Business Combination, and investors should not put any reliance on the fact that any such investment bank was involved with any lawsaspect of the Business Combination. Although not formally retained in connection with the Business Combination, RBC has waived its entitlement to the deferred underwriting commissions payable in connection with our Initial Public Offering.
Effective April 10, 2023, Truist Securities, Inc. (“Truist”) resigned from, and ceased or regulations, may adversely affect our business, investmentsrefused to act in, every capacity and resultsrelationship in which it was described in the Registration Statement on Form S-4 filed in connection with the Business Combination and the proxy statement contained therein (collectively, the “Registration Statement / Proxy Statement”) and waived all rights to all fees under its engagement letter with TLG. Effective as of operations.
Truist and RBC waived their entitlement to certain fees which would be owed upon completion of the Business Combination, which were comprised of approximately $3.3 million for Truist, as a financial advisory fee, and $14.0 million for RBC, as a deferred underwriting fee. Such a fee waiver for services already rendered is unusual. The waiver of these fees will result in a reduction of costs after the closing of the Business Combination. Aside from underwriting fees paid to RBC in connection with our Initial Public Offering, neither Truist nor RBC has received any fees in connection with the Business Combination, notwithstanding that their services have been largely complete an initial business combination, and, resultsas such, their fee waiver could be characterized as gratuitous upon completion of operations.the Business Combination.
Truist claims no remaining role in the Business Combination and has disclaimed any responsibility for any portion of the Registration Statement/Proxy Statement filed by TLG with the SEC. RBC has also has disclaimed any responsibility for any portion of the Registration Statement/Proxy Statement. Furthermore, TLG and, following completion of the Business Combination, the surviving company, will remain liable for the provisions of the engagement letter with Truist and the underwriting agreement with RBC that survive their resignation, including, for example, with respect to indemnity and contribution.
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Because Truist’s financial advisory services on the Business Combination were substantially complete, and increasingRBC never rendered any such financial advisory services on the potential liabilityBusiness Combination, TLG and Electriq do not believe that these resignations will impact in any way the consummation of certain participantsthe Business Combination and neither TLG nor Electriq expects to hire additional financial advisors in proposed business combination transactions. These rules, if adopted, whether inconnection with the form proposedBusiness Combination. Nonetheless, it is possible that Truist’s resignation or in revised form,RBC’s waiver may materially adversely affect our abilitymarket perception of the Business Combination generally. If market perception of the Business Combination is negatively impacted, an increased number of TLG stockholders may vote against the proposed Business Combination or seek to negotiate and complete our initial business combination and may increase the costs and time related thereto.
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities. |
Simultaneously with the closing of the Initial Public Offering, we consummated the Private Placement of 4,666,667 and 2,000,000 Private Placement Warrants to the Sponsor and RBC, respectively, at a price of $1.50 per Private Placement Warrant, generating total proceeds of $10.0 million. Such securities were issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
In connection with the Initial Public Offering, our sponsor had agreed to loan us an aggregate of up to $300,000 pursuant to a promissory note. This loan is
We paid a total of approximately $8.7 million in underwriting discounts and commissions related to the Initial Public Offering. In addition, the underwriters agreed to defer $14.0 million in underwriting discounts and commissions.
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. |
* | These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. |
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SIGNATURE
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 hereunto duly authorized.
Dated: May | TLG ACQUISITION ONE CORP. | |||||
By: | /s/ John Michael Lawrie | |||||
John Michael Lawrie | ||||||
Title: | Chief Executive Officer (Principal Executive Officer) |
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