SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JuneSeptember 30, 2021
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to
________Commission File Number: (Exact name of Delaware incorporation or organization) (I.R.S. Employer Identification Securities registered pursuant to Section 12(b) of the Act: Indicate by check mark whether the Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes As of June 30, 2021 The accompanying notes are an integral part of these (1) For The Three June 30, For The Six June 30, The accompanying notes are an integral part of these The accompanying notes are an integral part of these The accompanying notes are an integral part of these Archaea Energy Inc. ("Archaea" or the "Company"), a Delaware corporation (formerly named Rice Acquisition Corp.), is an industry-leading RNG platform primarily focused on capturing and converting waste emissions from landfills and anaerobic digesters into low-carbon RNG and electricity. As of Archaea, is as follows: NOTE 2 - Basis of Presentation Archaea Merger and Aria Merger. The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make the comparison of the Company’s consolidated condensed Use of Estimates The preparation of consolidated condensed financial statements in conformity with US GAAP requires The fair value of asset retirement obligations are measured using expected cash outflows associated with the ARO. ARO estimates are derived from historical costs and management’s expectations of future cost elements, and therefore, the Company has designated these liabilities as Level 3 financial liabilities. The significant inputs to this fair value measurement include cost estimates of assets removal, site clean-up, transportation and remediation costs, inflation estimates, and the Company's credit-adjusted risk-free rate. Derivative the Business Combinations. For the Three Months Ended June 30, Each Class A Common Stock Class B Common Stock each asset or liability. December 31, 2020 Contractual Obligations This Off-Balance Sheet Arrangements As of The Management’s Evaluation of Disclosure Controls and Procedures As a smaller reporting company, we are not required to disclose any material changes from risk factors as previously disclosed in Not applicable. Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto Rice Acquisition Corp.registrantRegistrant as specified in its charter)Delaware85-286726685-2867266 (State or other jurisdiction of Number)102 East Main Street, Second StoryCarnegie, Pennsylvania15106(Address of principal executive offices)(Zip Code)(713) 446-6259Registrant’sRegistrant's telephone number, including area code)Not Applicableor former address and former fiscal year, if changed since last report)Title of each class registeredTrading Symbol(s) Name of each exchange on which registered Units, each consisting of one share of Class A common stock and one-half of one warrantCommon Stock, par value $0.0001 per shareRICE ULFGThe New York Stock Exchange Class A common stock, par value $0.0001 per shareRICEThe New York Stock ExchangeWarrants, each whole exercisable for one share of Class A common stockCommon Stock at an exercisea price of $11.50 per shareRICELFG WSThe New York Stock Exchange registrantRegistrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ No ☐a smaller reporting company, or an emerging growth company. See the definitions of “large"large accelerated filer,” “accelerated" "accelerated filer,” “smaller" "smaller reporting company,”" and “emerging"emerging growth company”company" in Rule 12b-2 of the Exchange Act.Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☒ ☒☐ No ☐August 13,November 8, 2021, 23,727,500there were 53,590,976 shares of Class A common stock par value $0.0001, and 5,931,35062,281,735 shares of Class B common stock par value $0.0001, were issued and outstanding.Page No.TABLE OF CONTENTS 1Page1Archaea Energy Inc. 152637Aria Energy LLC (Predecessor) 438542205522722272242474247424742574257425742574SIGNATURESCAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTSThisThe information in this Quarterly Report on Form 10-Q (this “Report”"Report"), including, without limitation, statements under the heading “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). TheseStatements that do not relate strictly to historical or current facts are forward-looking statements can beand usually identified by the use of forward-looking terminology, including the words “believes,such as “anticipate,” “estimates,“estimate,” “anticipates,“could,” “expects,“would,” “intends,“should,” “plans,“will,” “may,” “will,“forecast,” “potential,“approximate,” “projects,“expect,” “predicts,“project,” “continue,“intend,” “plan,” “believe” and other similar words. Forward-looking statements may relate to expectations for future financial performance, business strategies or “should,” or, in each case, their negative orexpectations for the Company’s business. Specifically, forward-looking statements may include statements concerning market conditions and trends, earnings, performance, strategies, prospects and other variations or comparable terminology. There can be no assurance that actual results will not materially differ from expectations. Such statements include, but are not limited to, any statements relating to our ability to consummate any acquisition or otheraspects of the business combination and any other statements that are not statements of current or historical facts. Thesethe Company. Forward looking statements are based on management’s current expectations, butestimates, projections, targets, opinions and/or beliefs of the Company, and such statements involve known and unknown risks, uncertainties and other factors.mayto differ materially due to various factors, including, but not limited to:●our ability to complete an initial business combination, including our proposed business combination with Aria Energy LLC and Archaea Energy LLC;●our expectations around the performance of the prospective target business or businesses;●our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination;●our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination;●our potential ability to obtain additional financing to complete our initial business combination;●our pool of prospective target businesses;●the ability of our officers and directors to generate a number of potential investment 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, including following our initial business combination.The forward-looking statements contained in this Report are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertaintiesforward looking statements include, but are not limited to: (a) the ability to recognize the anticipated benefits of the Business Combinations and any transactions contemplated thereby, which may be affected by, among other things, competition, the ability of the Company to grow and manage growth profitably and retain its management and key employees; (b) the possibility that the Company may be adversely affected by other economic, business and/or competitive factors; (c) the Company’s ability to develop and operate new projects; (d) the reduction or elimination of government economic incentives to the renewable energy market; (e) delays in acquisition, financing, construction and development of new projects; (f) the length of development cycles for new projects, including the design and construction processes for the Company’s projects; (g) the Company’s ability to identify suitable locations for new projects; (h) the Company’s dependence on landfill operators; (i) existing regulations and changes to regulations and policies that affect the Company’s operations; (j) decline in public acceptance and support of renewable energy development and projects; (k) demand for renewable energy not being sustained; (l) impacts of climate change, changing weather patterns and conditions, and natural disasters; (m) the ability to secure necessary governmental and regulatory approvals; (n) the Company’s expansion into new business lines and (o) other risks and uncertainties indicated in the Registration Statement on Form S-1 (File No. 333-260094), originally filed by the Company with the SEC on October 6, 2021, as subsequently amended on October 18, 2021 and declared effective by the SEC on October 21, 2021 (the “Registration Statement”), including those factors listed above and others described under the heading “Risk Factors” in Item 1Atherein, and other documents filed or to be filed with the SEC by the Company.Part I in Amendment No. 1 to our Annual Report on Form 10-K/A for the year ended December 31, 2020. 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. Wesubsequent date. The Company does not undertake noany obligation to update or revise any forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. These risks and others described under “Risk Factors” may not be exhaustive.By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guaranteesfuture performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this Report. In addition, even if our results or operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this Report, those results or developments may not be indicative of results or developments in subsequent periods.ContentsiiPART I - FINANCIAL INFORMATION(in thousands, except shares and per share data) September 30,
2021December 31,
2020ASSETS Current Assets Cash and cash equivalents $ 153,644 $ 1,496 Restricted cash 17,156 — Accounts receivable, net 30,244 1,780 Inventory 9,285 — Prepaid expenses and other current assets 29,311 4,730 Total Current Assets 239,640 8,006 Property, plant and equipment, net 281,610 52,368 Intangible assets, net 592,123 8,693 Goodwill 27,011 2,754 Equity method investments 237,265 — Other non-current assets 9,596 2,460 Total Assets $ 1,387,245 $ 74,281 LIABILITIES AND EQUITY Current Liabilities Accounts payable - trade $ 3,630 $ 14,845 Current portion of long-term debt, net 8,546 1,302 Accrued and other current liabilities 21,587 8,270 Total Current Liabilities 33,763 24,417 Long-term debt, net 329,254 14,773 Derivative liabilities 160,630 — Below market contracts 108,392 — Asset retirement obligations 3,904 306 Other long-term liabilities 8,009 3,294 Total Liabilities 643,952 42,790 Commitments and Contingencies 0 0 Redeemable Noncontrolling Interests 1,179,616 — Equity Members' Equity — 34,930 Members' Accumulated Deficit — (4,156) Stockholders' Equity Preferred stock, $0.0001 par value; 10,000,000 authorized; none issued and outstanding — — Class A common stock, $0.0001 par value; 900,000,000 shares authorized; 52,847,195 shares and no shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively 5 — Class B common stock, $0.0001 par value; 190,000,000 shares authorized; 62,281,735 shares and no shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively 6 — Additional paid in capital — — Accumulated deficit (436,461) — Total Stockholders' Equity (436,450) — Nonredeemable noncontrolling interests 127 717 Total Equity (436,323) 31,491 Total Liabilities, Redeemable Noncontrolling Interests and Equity $ 1,387,245 $ 74,281 Item 1. Condensed Consolidated Financial StatementsRICE ACQUISITION CORP.CONDENSED CONSOLIDATED BALANCE SHEETS December 31,
2020 (unaudited) Assets: Current assets: Cash $ 5,290 $ 1,335,167 Prepaid expenses 469,693 662,865 Total current assets 474,983 1,998,032 Investments held in Trust Account 237,351,433 237,308,171 Total Assets $ 237,826,416 $ 239,306,203 Liabilities and Stockholders’ Equity: Current liabilities: Accrued expenses $ 7,950,051 $ 118,446 Accounts payable 71,571 217,918 Franchise tax payable 99,452 65,481 Total current liabilities 8,121,074 401,845 Deferred legal fees 187,500 187,500 Deferred underwriting commissions in connection with the initial public offering 7,610,750 7,610,750 Derivative warrant liabilities 138,965,647 42,588,487 Total liabilities 154,884,971 50,788,582 Commitments and Contingencies Class A common stock; 7,794,144 and 18,351,762 shares subject to possible redemption at $10.00 per share as of June 30, 2021 and December 31, 2020, respectively 77,941,440 183,517,620 Stockholders’ Equity: Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding - - Class A common stock, $0.0001 par value; 250,000,000 shares authorized; 15,933,356 and 5,375,738 shares issued and outstanding (excluding 7,794,144 and 18,351,762 shares subject to possible redemption) as of June 30, 2021 and December 31, 2020, respectively 1,594 538 Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 5,931,350 shares issued and outstanding as of June 30, 2021 and December 31, 2020 593 593 Additional paid-in capital 133,067,223 27,492,099 Accumulated deficit (123,144,622 ) (21,629,069 ) Total Rice Acquisition Corp. equity 9,924,788 5,864,161 Non-controlling interest in subsidiary (4,924,783 ) (864,160 ) Total stockholders’ equity 5,000,005 5,000,001 Total Liabilities and Stockholders’ Equity $ 237,826,416 $ 239,306,203 unaudited condensed consolidated financial statements.
ARCHAEA ENERGY INC.1Three Months Ended
September 30,Nine Months Ended
September 30,(in thousands, except shares and per share data) 2021 2020 2021 2020 Revenues and Other Income Energy revenue $ 10,916 $ — $ 13,975 $ — Other revenue 865 1,904 4,588 4,496 Amortization of intangibles and below-market contracts 205 — 205 — Total Revenue and Other Income 11,986 1,904 18,768 4,496 Equity Investment Income, Net 879 — 879 — Cost of Operations Cost of energy 9,478 52 12,625 87 Cost of other revenues 615 1,202 2,976 2,490 Depreciation, amortization and accretion 3,142 34 4,077 101 Total Cost of Operations 13,235 1,288 19,678 2,678 General and administrative expenses 9,053 1,205 20,097 3,652 Operating Income (Loss) (9,423) (589) (20,128) (1,834) Other Income (Expense) Interest expense, net (1,586) — (1,606) — Gain (loss) on derivative contracts (10,413) — (10,413) — Other income (expense) 81 (13) 377 15 Total Other Income (Expense) (11,918) (13) (11,642) 15 Income (Loss) Before Income Taxes (21,341) (602) (31,770) (1,819) Income tax benefit — — — — Net Income (Loss) (21,341) (602) (31,770) (1,819) Net income (loss) attributable to nonredeemable noncontrolling interests (335) 258 (589) 386 Net income (loss) attributable to Legacy Archaea (5,733) (860) (15,908) (2,205) Net income (loss) attributable to redeemable noncontrolling interests (8,262) — (8,262) — Net Income (Loss) Attributable to Class A Common Stock $ (7,011) $ — $ (7,011) $ — Net income (loss) per Class A common share: $ (0.13) $ — $ (0.13) $ — $ (0.13) $ — $ (0.13) $ — Weighted average shares of Class A Common Stock outstanding: 52,847,195 — 52,847,195 — 52,847,195 — 52,847,195 — RICE ACQUISITION CORP.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSFOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021
Months Ended
2021
Months Ended
2021 General and administrative expenses $ 6,168,889 $ 9,168,480 Franchise tax expense 33,973 73,799 Total operating expenses (6,202,862 ) (9,242,279 ) Other income (expense) Change in fair value of derivative warrant liabilities (108,151,160 ) (96,377,160 ) Interest earned on investments held in Trust Account 5,752 43,263 Net loss (114,348,270 ) (105,576,176 ) Net loss attributable to non-controlling interest in subsidiary (4,398,010 ) (4,060,622 ) Net loss attributable to Rice Acquisition Corp. $ (109,950,260 ) $ (101,515,554 ) Weighted average shares outstanding of redeemable Class A common stock 23,725,000 23,725,000 Basic and diluted net income per share, redeemable Class A common stock $ 0.00 $ 0.00 Weighted average shares outstanding of non-redeemable Class A and Class B common stock 5,933,850 5,933,850 Basic and diluted net loss per share, non-redeemable Class A and Class B common stock $ (19.27 ) $ (17.79 ) unaudited condensed consolidated financial statements.Total Equity Total Stockholders' Equity (in thousands) Members' Accumulated Deficit Balance - December 31, 2020 $ — $ 34,930 $ (4,156) $ — $ — $ — $ — $ 717 $ 31,491 Net income (loss) prior to Closing — — (15,908) — — — — (534) (16,442) Members' equity contributions — 70 — — — — — — 70 Share-based compensation expense prior to Closing — 2,349 — — — — — — 2,349 Reclassification in connection with reverse recapitalization — (37,349) 20,064 — 3 37,346 (20,064) — — Net cash contribution from the reverse recapitalization and PIPE Financing, net of warrant liability — — — 5 1 346,239 — — 346,245 Issuance of Class B Common Stock in Aria Merger — — — — 2 394,908 — — 394,910 Reclassification to redeemable noncontrolling interest 410,296 — — — — (430,360) 20,064 — (410,296) Net income (loss) after Closing (8,262) — — — — — (7,011) (56) (7,067) Adjustment of redeemable noncontrolling interest to redemption amount 777,582 — — — — (348,133) (429,450) — (777,583) Balance - September 30, 2021 $ 1,179,616 $ — $ — $ 5 $ 6 $ — $ (436,461) $ 127 $ (436,323) Total Equity Total Stockholders' Equity (in thousands) Members' Accumulated Deficit Balance - December 31, 2019 $ — $ 2,470 $ (1,683) $ — $ — $ — $ — $ — $ 787 Net income (loss) — — (2,205) — — — — 386 (1,819) Members' equity contributions — 32,460 — — — — — — 32,460 Noncontrolling interest in acquired business acquisition — — — — — — — 480 480 Balance - September 30, 2020 $ — $ 34,930 $ (3,888) $ — $ — $ — $ — $ 866 $ 31,908 RICE ACQUISITION CORP.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITYFOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 Common Stock Additional Non-controlling Total Class A Class B Paid-In Accumulated Interest in Stockholders’ Shares Amount Shares Amount Capital Deficit Subsidiary Equity Balance - December 31, 2020 5,375,738 $ 538 5,931,350 $ 593 $ 27,492,099 $ (21,629,069 ) $ (864,160 ) $ 5,000,001 Change in common stock subject to possible redemption (877,200 ) (88 ) - - (8,772,002 ) - - (8,772,090 ) Net loss - - - - - 8,434,707 337,387 8,772,094 Balance - March 31, 2021 4,498,538 450 5,931,350 593 18,720,097 (13,194,362 ) (526,773 ) 5,000,005 Change in common stock subject to possible redemption 11,434,818 1,144 - - 114,347,126 - - 114,348,270 Net loss - - - - - (109,950,260 ) (4,398,010 ) (114,348,270 ) Balance - June 30, 2021 15,933,356 $ 1,594 5,931,350 $ 593 $ 133,067,223 $ (123,144,622 ) $ (4,924,783 ) $ 5,000,005 unaudited condensed consolidated financial statements.
73Total Equity Total Stockholders' Equity (in thousands) Redeemable Noncontrolling Interests Members' Equity Members' Accumulated Deficit Balance - June 30, 2021 $ — $ 35,178 $ (14,331) $ — $ — $ — $ — $ 462 $ 21,309 Net income (loss) prior to Closing — — (5,733) — — — — (279) (6,012) Share-based compensation expense prior to Closing — 2,171 — — — — — — 2,171 Reclassification in connection with reverse recapitalization — (37,349) 20,064 — 3 37,346 (20,064) — — Net cash contribution from the reverse recapitalization and PIPE Financing, net of warrant liability — — — 5 1 346,239 — — 346,245 Issuance of Class B Common Stock in Aria Merger — — — — 2 394,908 — — 394,910 Reclassification to redeemable noncontrolling interest 410,296 — — — — (430,360) 20,064 — (410,296) Net income (loss) after Closing (8,262) — — — — — (7,011) (56) (7,067) Adjustment of redeemable noncontrolling interests to redemption amount 777,582 — — — — (348,133) (429,450) — (777,583) Balance - September 30, 2021 $ 1,179,616 $ — $ — $ 5 $ 6 $ — $ (436,461) $ 127 $ (436,323) Total Equity Total Stockholders' Equity (in thousands) Redeemable Noncontrolling Interests Members' Equity Members' Accumulated Deficit Balance - June 30, 2020 $ — $ 18,220 $ (3,028) $ — $ — $ — $ — $ 608 $ 15,800 Net income (loss) — — (860) — — — — 258 (602) Members' equity contributions — 16,710 — — — — — — 16,710 Balance - September 30, 2020 $ — $ 34,930 $ (3,888) $ — $ — $ — $ — $ 866 $ 31,908 RICE ACQUISITION CORP.UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE SIX MONTHS ENDED JUNE 30, 2021Cash Flows from Operating Activities: Net loss $ (105,576,176 ) Adjustments to reconcile net loss to net cash used in operating activities: Change in fair value of derivative warrant liabilities 96,377,160 Interest earned on securities held in Trust Account (43,263 ) Changes in operating assets and liabilities: Prepaid expenses 193,172 Accounts payable (146,347 ) Accrued expenses 7,831,605 Franchise tax payable 33,972 Net cash used in operating activities (1,329,877 ) Net change in cash (1,329,877 ) Cash - beginning of the period 1,335,167 Cash - end of the period $ 5,290 Supplemental disclosure of noncash financing activities: Change in value of Class A common stock subject to possible redemption $ 105,576,180 unaudited condensed consolidated financial statements.Nine Months Ended
September 30,(in thousands) 2021 2020 Cash flows from operating activities Net income (loss) $ (31,770) $ (1,819) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation, amortization and accretion expense 4,077 101 Amortization of debt issuance costs 627 — Amortization of intangibles and below-market contracts (6) — Bad debt expense 10 76 Return on investment in equity method investments 336 — Equity in earnings of equity method investments (879) — Change in fair value of derivative liabilities 10,413 — Forgiveness of Paycheck Protection Loan (201) — Stock-based compensation expense 2,887 — Changes in operating assets and liabilities: Accounts receivable (692) (1,124) Inventory (270) — Prepaid expenses and other current assets (22,315) (627) Accounts payable - trade (4,043) (335) Accrued and other liabilities (7,475) 810 Other non-current assets (3,490) — Other long-term liabilities (1,919) 98 Net cash provided by (used in) operating activities (54,710) (2,820) Cash flows from investing activities Acquisition of Aria, net of cash acquired (463,334) — Acquisition of assets and businesses, excluding Aria (31,527) (1,156) Purchases of property, plant and equipment (88,209) (9,659) Purchases of biogas rights (202) (7,892) Contributions to equity method investments (4,100) — Net cash used in investing activities (587,372) (18,707) Cash flows from financing activities Borrowings on line of credit agreement 12,478 — Repayments on line of credit agreement (12,478) — Proceeds from long-term debt, net of issuance costs 361,959 — Repayments of long-term debt (47,040) — Proceeds from PPP Loan — 691 Proceeds from reverse recapitalization and PIPE Financing 496,397 — Capital contributions 70 21,150 Distributions to noncontrolling interest — — Net cash provided by financing activities 811,386 21,841 Net increase (decrease) in cash, cash equivalents and restricted cash 169,304 314 Cash, cash equivalents and restricted cash - beginning of period 1,496 423 Cash, cash equivalents and restricted cash - end of period $ 170,800 $ 737 Supplemental cash flow information: $ 1,869 $ — Non-cash investing activities: Accruals of property, plant and equipment and biogas rights incurred but not paid $ 2,317 $ 1,597 RICE ACQUISITION CORP.NOTES TO UNAUDITED CONSOLIDATED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSNote 1—NOTE 1 - Organization and Description of Organization, Business Operations and Basis of Presentationa blank check company incorporated in Delaware on September 1, 2020. As used herein, the “Company” or “Rice” refer to Rice Acquisition Corp. and its majority-owned and controlled operating subsidiary, Rice Acquisition Holdings LLC (“RAC OpCo”), unless the context indicates otherwise. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). The Company is an emerging growth company and, as such, the Company is subject to all of the risks associatedlargest RNG producers in the U.S., with emerging growth companies.JuneSeptember 30, 2021, Archaea owns and operates a diversified portfolio of 23 LFG recovery and processing projects across 12 states, including 13 LFG to electric projects and 10 projects that produce pipeline-quality RNG.Company had not commenced any operations. All activity for the three and six months ended June 30, 2021 relates to the search for a prospective initial Business Combination, including activities in connection with the proposed acquisitions of Aria Energy LLC, a Delaware limited liability company, and Archaea Energy LLC, a Delaware limited liability company. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash, cash equivalents and investments from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end.The Company’s sponsor is Rice Acquisition Sponsor LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for the Company’s Initial Public Offering was declared effective on October 21, 2020. On October 26, 2020, the Company consummated its Initial Public Offering of 23,725,000 units (each, a “Unit” and collectively, the “Units”), including 2,225,000 additional Units that were issuedpreviously announced business combinations pursuant to the underwriters’ partial exercise of their over-allotment option (the “Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds of approximately $237.3 million, and incurring offering costs of approximately $12.5 million, inclusive of $7.6 million in deferred underwriting commissions (Note 5).Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 6,771,000 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) to the Sponsor and Atlas Point Energy Infrastructure Fund, LLC (“Atlas Point Fund”), at a price of $1.00 per Private Placement Warrant, generating gross proceeds to the Company of approximately $6.8 million (Note 4). Each Private Placement Warrant is exercisable to purchase one share of Rice’s Class A common stock or, in certain circumstances, one Class A Unit of RAC OpCo together with a corresponding number of shares of Rice’s non-economic Class B common stock.Following the Initial Public Offering, the Public Stockholders (as defined below) hold a direct economic equity ownership interest in Rice in the form of shares of Class A common stock, and an indirect ownership interest in RAC OpCo through Rice’s ownership of Class A Units of RAC OpCo. By contrast, the Initial Stockholders (as defined below) own direct economic interests in RAC OpCo in the form of Class B Units and a corresponding non-economic voting equity interest in Rice in the form of shares of Class B common stock, as well as a small direct interest through the Sponsor Shares (as defined in Note 4). Sponsor Shares were purchased for $10.00 each and, in the absence of an initial Business Combination, will generally participate in liquidation or other payments on a pari passu basis with the Public Shares (as defined below). However, given the relatively de minimis number of Sponsor Shares relative to Public Shares, in many cases the economic, governance or other effects of the Sponsor Shares are not material to the holders of Class A common stock or warrants, and for simplicity, portions of this disclosure may not fully describe or reflect these immaterial effects.Upon the closing of the Initial Public Offering and the Private Placement, approximately $237.3 million of the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants in the Private Placement were placed in a trust account (“Trust Account”) located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only in U.S. “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act (as defined below) having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.The Company’s 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 the Company will be able to complete a Business Combination successfully. The Company 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 (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, the Company will only complete a Business Combination if the post-business combination company controls 50% or more of the voting securities of the target or is otherwise not required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”).5RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSThe Company will provide the holders of the Company’s Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. Unless otherwise stated herein, the term “Public Shares” includes the 2,500 shares of Class A common stock, par value $0.0001 per share, of the Company held by the Sponsor and forming part of the Sponsor Shares. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then held in the Trust Account (initially anticipated to be $10.00 per Public Share). The per-share amount to be distributed to Public Stockholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 5). These Public Shares will be recorded at a redemption value and classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” The Company will proceed with a Business Combination if a majority of the shares voted are voted in favor of the Business Combination. The Company will not redeem the Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks stockholder approval in connection with a Business Combination, the Initial Stockholders (as defined below) have agreed to vote their Founder Shares (as defined below in Note 4), Sponsor Shares and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination. In addition, the Initial Stockholders have agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination.The Amended and Restated Certificate of Incorporation provides that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 20% or more of the Public Shares, without the prior consent of the Company.If the Company is unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or October 26, 2022 (the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to pay franchise and income taxes of the Company or RAC OpCo (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares and Class A Units of RAC OpCo (other than those held by Rice), which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.The Sponsor, Atlas Point Fund and the Company’s officers and directors (the “Initial Stockholders”) have agreed (i) that any Founder Shares and Sponsor Shares held by them will not be entitled to redemption rights, and they will waive any such redemption rights for any Public Shares held by them, in connection with the completion of the initial Business Combination, (ii) that any Founder Shares and Sponsor Shares held by them will not be entitled to redemption rights, and they will waive any such redemption rights for any Public Shares held by them, in connection with a stockholder vote to amend our amended and restated certificate of incorporation in a manner that would affect the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company have not consummated the initial Business Combination within the Combination Period, (iii) that any Founder Shares held by them are subject to forfeiture, and thus will not be entitled to liquidating distributions from the Trust Account, and they will waive any such rights to liquidating distributions for any Founder Shares, if the Company fails to complete the initial Business Combination within the Combination Period (although they will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares and Sponsor Shares they hold if the Company fails to complete the initial Business Combination within the Combination Period), and (iv) in certain limited circumstances the Class B Units of RAC OpCo will have more limited rights to current or liquidating distributions from the Company.6RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSThe underwriters agreed to waive their rights to the deferred underwriting commission (see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and subsequently liquidates and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares and Sponsor Shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.00. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (except for the Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a letter of intent, confidentiality or other similar agreement or business combination agreement (a “Target”), reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share or Class A Unit of RAC OpCo not held by Rice and (ii) the actual amount per Public Share or Class A Unit of RAC OpCo not held by Rice held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per Public Share or Class A Unit of RAC OpCo not held by Rice due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or Target that executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable), nor will it apply to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.Business Combination AgreementsOn April 7, 2021, the Company entered into (i) the Business Combination Agreement, dated April 7, 2021 (as amended, supplemented or otherwise modified from time to time, the “Aria Merger Agreement”), by and among the Company,Rice Acquisition Corp., a Delaware corporation ("RAC"), Rice Acquisition Holdings LLC, a Delaware limited liability company and direct subsidiary of RAC OpCo,(“RAC Opco”), LFG Intermediate Co, LLC, a Delaware limited liability company and direct subsidiary of RAC OpCoOpco (“RAC Intermediate”), LFG Buyer Co, LLC, a Delaware limited liability company and a direct subsidiary of RAC Intermediate (“RAC Buyer”), Inigo Merger Sub, LLC, a Delaware limited liability company and a direct subsidiary of RAC Buyer (“Aria Merger Sub”), Aria Energy LLC, a Delaware limited liability company (“Aria”), and the Equityholder Representative (as defined therein),Aria Renewable Energy Systems LLC, a Delaware limited liability company, pursuant to which, among other things, Aria Merger Sub will mergewas merged with and into Aria, with Aria surviving the merger and becoming a direct subsidiary of RAC Buyer, on the terms and subject to the conditions set forth therein (the transactions contemplated by the Aria Merger Agreement, the “Aria Merger”), and (ii) the Business Combination Agreement, dated as of April 7, 2021 (as amended, supplemented or otherwise modified from time to time, the “Archaea Merger Agreement” and, together with the Aria Merger Agreement, the “Business Combination Agreements”), by and among the Company, RAC, OpCo,RAC Opco, RAC Intermediate, RAC Buyer, Fezzik Merger Sub, LLC, a Delaware limited liability company and direct subsidiary of RAC Buyer (“Archaea Merger Sub”), Archaea Energy LLC, (“Archaea Seller”), a Delaware limited liability company, and Archaea Energy II LLC, a Delaware limited liability company (“Legacy Archaea” and, together with Archaea Seller and Aria, the “Companies”), pursuant to which, among other things, Archaea Merger Sub will mergewas merged with and into Legacy Archaea, with Legacy Archaea surviving the merger and becoming a direct subsidiary of RAC Buyer, in each case, on the terms and subject to the conditions therein (the transactions contemplated by the Business Combination Agreements, the “Business Combinations”).ConsiderationPursuant to the terms of the Aria Merger Agreement and at the Effective Time (as defined therein), (i) all Class A Units of Aria held by a holder of Aria’s Class A Units shall be cancelled and converted into the right to receive (a) the number of Class A Units of RAC OpCo, (b) the number of Class B common stock, par value $0.0001 (“Class B Common Stock”), of the Company and (c) the amount of cash as set forth in, and in accordance with, the Aria Merger Agreement, (ii) all Class B Units of Aria held by a holder of Aria’s Class B Units shall be cancelled and converted into the right to receive (A) the number of Class A Units of RAC OpCo, (B) the number of shares of Class B Common Stock and (C) the amount of cash as set forth in, and in accordance with, the Aria Merger Agreement, and (iii) all Class C Units of Aria shall be cancelled and extinguished without any conversion thereof.Pursuant to the terms of the Archaea Merger Agreement and at the Effective Time (as defined therein), all equity interests of Archaea will be cancelled and converted into the right to receive (x) the number of Class A Units of RAC OpCo and (y) the number of shares of Class B Common Stock as set forth in, and in accordance with, the Archaea Merger Agreement.7RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSFollowing the Business Combinations, holders of Class A Units of RAC OpCo (other than the Company) will have the right (an “exchange right”), subject to certain limitations, to exchange Class A Units of RAC OpCo (and a corresponding number of shares of Class B Common Stock) for, at the Company’s option, (i) shares of Class A Common Stock on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, or (ii) a corresponding amount of cash. the Company’s decision to make a cash payment or issue shares upon an exercise of an exchange right will be made by the Company’s independent directors, and such decision will be based on facts in existence at the time of the decision, which the Company expects would include the relative value of the Class A Common Stock (including trading prices for the Class A Common Stock at the time), the cash purchase price, the availability of other sources of liquidity (such as an issuance of preferred stock) to acquire the Class A Units of RAC OpCo and alternative uses for such cash.Holders of Class A Units of RAC OpCo (other than the Company) will generally be permitted to exercise the exchange right on a quarterly basis, subject to certain de minimis allowances. In addition, additional exchanges may occur in connection with certain specified events, and any exchanges involving more than a specified number of Class A Units of RAC OpCo (subject to the Company’s discretion to permit exchanges of a lower number of units) may occur at any time upon ten business days’ advanced notice. The exchange rights will be subject to certain limitations and restrictions intended to reduce the administrative burden of exchanges upon the Company and ensure that RAC OpCo will continue to be treated as a partnership for U.S. federal income tax purposes.Following any exchange of Class A Units of RAC OpCo (and a corresponding number of shares of Class B Common Stock), RAC will retain the Class A Units of RAC OpCo and cancel the shares of Class B Common Stock. As the holders of Class A Units of RAC OpCo (other than the Company) exchange their Class A Units of RAC OpCo, the Company’s membership interest in RAC OpCo will be correspondingly increased, the number of shares of Class A Common Stock outstanding will be increased, and the number of shares of Class B Common Stock outstanding will be reduced.Conditions to Consummation of the Business CombinationsConsummation of the Business Combinations is generally subject to customary conditions of the respective parties, and conditions customary to special purpose acquisition companies, including (i) expiration or termination of all applicable waiting periods under HSR, (ii) the absence of any law or governmental order, threatened or pending, preventing the consummation of the Business Combinations, (iii) completion of the Company Share Redemptions (as defined in the Business Combination Agreements), (iv) receipt of requisite shareholder approval for consummation of the Business Combinations, (v) the consummation of the LES Sale (as defined in the Aria Merger Agreement) by Aria and (vi) the issuance by the Federal Energy Regulatory Commission of an order granting authorization for the Business Combinations pursuant to Section 203 of the Federal Power Act of 1935. In addition, the parties also have the right to not consummate the Business Combinations in the event that the cash on the balance sheet of the combined company following the closing of the Business Combinations (the “Combined Company”) would be less than $150,000,000, subject to the terms of the Business Combination Agreements. Furthermore, the closing of the transactions contemplated by the Aria Merger Agreement is expressly conditioned on the closing of the transactions contemplated by the Archaea Merger Agreement and vice versa.TerminationEach of the Business Combination Agreements may be terminated by the parties thereto under certain customary and limited circumstances at any time prior to the closing of the Business Combinations, including, without limitation, by mutual written consent or if the Business Combinations have not been consummated within 150 days from the date of the Business Combination Agreements (subject to certain extensions for up to 30 days for delays as set forth in the Business Combination Agreements).Stockholders AgreementIn connection with the closing of the Business Combinations, the Company, RAC Buyer, RAC OpCo, Sponsor, and certain other individuals affiliated with the Companies (the “Company Holders”) will enter into a stockholders agreement (the “Stockholders Agreement”) pursuant to which, among other things, (i) the board of directors of the Combined Company (the “Board”) will consist of seven members, (ii) the holders of a majority of the Company Interests (as defined in the Stockholders Agreement) held by the RAC Sponsor Holders (as defined in the Stockholders Agreement) will have the right to designate two directors (the “RAC Sponsor Directors”) for appointment or election to the Board during the term of the Stockholders Agreement, (iii) the Ares Investors (as defined in the Stockholders Agreement) will have the right to designate one director (the “Ares Director”) for appointment or election to the Board for so long as the Ares Investors hold at least 50% of the Registrable Securities (as defined in the Stockholders Agreement) held by them on the date that the Business Combinations are consummated (the “Ares Fall-Away Date”), (iv) the Board shall take all necessary action to designate the person then serving as the Chief Executive Officer of the Combined Company (the “CEO Director”) for appointment or election to the Board during the term of the Stockholders Agreement and (v) the Board shall designate three independent directors (the “Independent Directors”) to serve on the Board during the term of the Stockholders Agreement. The Ares Investors shall have the right to consult on the persons to be designated as Independent Directors prior to the Ares Fall-Away Date.8RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSPIPE FinancingOn April 7, 2021, the Company entered into subscription agreements (each, a “Subscription Agreement”) with certain investors (the “PIPE Investors”) pursuant to which, among other things, the PIPE Investors have agreed to subscribe for and purchase, and Rice has agreed to issue and sell to the PIPE Investors, an aggregate of 30,000,000 shares of Class A Common Stock, par value $0.0001 per share (“Class A Common Stock”), of the Company for an aggregate purchase price of $300,000,000 on the date of Closing (as defined in each Subscription Agreement), on the terms and subject to the conditions set forth therein (the “PIPE Financing”transactions contemplated by the Archaea Merger Agreement, the “Archaea Merger” and, together with the Aria Merger, the “Business Combinations”). Each Subscription Agreement contains customary representationsAs further discussed in Note 4 - Business Combinations and warrantiesReverse Recapitalization, Legacy Archaea was determined to be the accounting acquirer of the Company, onBusiness Combinations, and Aria was the one hand,predecessor to the Company.PIPE Investor, onequity interests in RAC Buyer are held by RAC Intermediate, all of the other hand,equity interests in RAC Intermediate are held by Opco and customary conditions to closing, includingArchaea’s only assets are its equity interests in Opco. In connection with the consummation of the Business Combinations.Additionally, on April 7, 2021,Combinations, Opco, or Rice Acquisition Holdings LLC was renamed LFG Acquisition Holdings LLC. In accordance with Accounting Standards Codification ("ASC") 810 - Consolidation, Opco is considered a variable interest entity ("VIE") where Archaea is the Company, RAC OpCo, Sponsorsole managing member of Opco, and Atlas Point Energy Infrastructure Fund, LLC, a Delaware limited liability company (“Atlas”), entered into an Amendment to Forward Purchase Agreement (the “FPA Amendment”) pursuant to whichtherefore, the Forward Purchase Agreement, dated as of September 30, 2020 (the “Original Agreement”), by and amongprimary beneficiary. As such, parties was amended to provide that Atlas shall purchase a total of $20,000,000 of Forward Purchase Securities (as defined in the Original Agreement)Archaea consolidates Opco, and the Forward Purchase Warrants (as defined inremaining unitholders that hold economic interest directly at Opco are presented as redeemable noncontrolling interests on the Original Agreement) will consistCompany’s financial statements.StockUnits as part of the consideration in the Business Combinations. The ownership structure of Opco upon closing of the Business Combinations, which gives rise to the redeemable noncontrolling interest at an exercise price of $11.50 per share).Equity Holder Class A Common Units % Interest Archaea 52,847,195 45.9 % Total controlling interests 52,847,195 45.9 % Aria Holders 23,000,000 20.0 % Legacy Archaea Holders 33,350,385 29.0 % Sponsor, Atlas and RAC independent directors 5,931,350 5.2 % Total redeemable noncontrolling interests 62,281,735 54.1 % Total 115,128,930 100.0 % The accompanying consolidated financial statements of the Company have beenand notes are prepared in accordance with accounting principles generally accepted in the United States generally accepted accounting principles (“GAAP”of America ("US GAAP") forand in accordance with the rules and regulations of the SEC. These unaudited interim financial information and Article 8 of Regulation S-X. Accordingly, they do not includestatements reflect all of the information and footnotes required by GAAP. Inadjustments which are, in the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentation have been included. The interim operatingnecessary to present fairly the results for the threeinterim periods presented. The Company's accounting policies conform to US GAAP and six months ended June 30, 2021 are not necessarily indicativehave been consistently applied in the presentation of financial statements. The Company's consolidated condensed financial statements include all wholly-owned subsidiaries and all variable interest entities that the Company determined it is the primary beneficiary. Certain information and disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted.results that may be expectednet assets acquired from Aria as of the Business Combination Closing Date, and goodwill was recorded. See Note 4 - Business Combinations and Reverse Recapitalization for additional information regarding the year ending December 31, 2021 or any future periods.accompanying unauditedconsolidated condensed consolidated financial statements should be read in conjunction withinclude the Company’s Amendment No. 1 to Annual Reportassets, liabilities and results of operations of the Company and its consolidated subsidiaries beginning on Form 10-K/A for the period ended December 31, 2020 as filed with the SEC on May 13,September 15, 2021, which containsincludes 16 days of the audited financial statementscombined results of the businesses of Legacy Archaea and notes thereto.Aria as operated by the Company after the Business Combination. The financial informationconsolidated assets, liabilities and results of operations prior to the September 15, 2021 reverse recapitalization are those of Legacy Archaea, the accounting acquirer.of December 31, 2020 is derived from the audited financial statements presentedredeemable noncontrolling interests due to certain redemption features. Entities that are majority-owned by Opco are consolidated. Certain investments in entities are accounted for as equity method investments and included separately in the Company’s Amendment No. 1 to Annual Report on Form 10-K/A for the period ended December 31, 2020. consolidated financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.9RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSRisk and UncertaintiesOn January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus (the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak continues to evolve. The impact of the COVID-19 outbreak on the Company’s results of operations, financial position and cash flows will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions. These developments and the impact of the COVID-19 outbreak on the financial markets and the overall economy are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, the Company’s results of operations, financial position and cash flows may be materially adversely affected. Additionally, the Company’s ability to complete an initial Business Combination may be materially adversely affected due to significant governmental measures being implemented to contain the COVID-19 outbreak or treat its impact, including travel restrictions, the shutdown of businesses and quarantines, among others, which may limit the Company’s ability to have meetings with potential investors or affect the ability of a potential target company’s personnel, vendors and service providers to negotiate and consummate an initial Business Combination in a timely manner. The Company’s ability to consummate an initial Business Combination may also be dependent on the ability to raise additional equity and debt financing, which may be impacted by the COVID-19 outbreak and the resulting market downturn.Liquidity and Capital ResourcesAs of June 30, 2021, we had approximately $5,000 in our operating bank account and a working capital deficit of approximately $7.6 million.The Company’s liquidity needs to date had been satisfied through the payment of $26,000 from the Sponsor to purchase the Founder Shares and Sponsor Shares (see Note 4), the loan under the Note of approximately $290,000 (see Note 4), and the net proceeds from the consummation of the Private Placement not held in the Trust Account. The Company repaid the Notewill re-evaluate its status as an emerging growth company in full on November 10, 2020. In addition, in order to finance transaction costs in connection with a Business Combination, the Company’s officers, directorsJune 2022 and initial stockholders may but are not obligated to, provide the Company Working Capital Loans (see Note 4). As of June 30, 2021, there were no amounts outstanding under any Working Capital Loans.Based on the foregoing, management believes that the Company will have sufficient borrowing capacity to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing, and management has the intent and ability to support the Company through such time period. Over this time period, the Company will be using the funds held outside of the Trust Account 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.Note 2—Summary of Significant Accounting PoliciesPrinciples of Consolidation and Financial Statement PresentationThe unaudited condensed consolidated financial statements include the accounts of the Company and its majority-owned and controlled operating subsidiary after elimination of all intercompany transactions and balances as of June 30, 2021 and December 31, 2020. The ownership interest of noncontrolling participants in the operating subsidiary is included as a separate component of stockholders’ equity. The noncontrolling participants’ share of the net loss is included as “Net loss attributable to noncontrolling interest in subsidiary” on the accompanying unaudited condensed consolidated statement of operations. the Company’s management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and liabilities and disclosure ofexpenses, as well as contingent assets and liabilities atliabilities. The estimates and assumptions used in the accompanying financial statements are based upon management’s evaluation of the relevant facts and circumstances as of the date of the financial statements. MakingActual results may differ from the estimates requires managementand assumptions used in preparing the accompanying consolidated condensed financial statements.exercisethe stockholder's equity of the Company. Noncontrolling interests are initially recorded at the transaction price which is equal to their fair value, and the amount is subsequently adjusted for the proportionate share of earnings and other comprehensive income attributable to the noncontrolling interests and any dividends or distributions paid to the noncontrolling interests. Effective with the Business Combinations, noncontrolling interest includes the economic interest of Opco Class A units not owned by the Company, which has been classified as redeemable noncontrolling interest due to certain provisions that allow for cash settlement at the Company's election. See Note 4 - Business Combinations and Reverse Recapitalization.judgment. It is at least reasonably possibleto the measurement in its entirety.estimateCompany has the ability to access.effectasset.a condition, situationthe significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or setliability.circumstancesinput that existedis significant for the fair value measurement. The Company reflects transfers between the three levels at the datebeginning of the condensed consolidated financial statements,reporting period in which management considered in formulating its estimate, could changethe availability of observable inputs no longer justifies classification in the near term due to one or more future confirming events. Accordingly,original level. There were no transfers between fair value hierarchy levels for the actual results could differ significantly from those estimates.Cash and Cash EquivalentsThe Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. There are no cash equivalents as of Juneperiods ended September 30, 2021 and December 31, 2020.
The Company generates revenues from the production and of sales of RNG, renewable electricity generation (“Power”), and associated Environmental Attributes, as well as the performance of other landfill energy operations and maintenance (“O&M”) services. The Company also manufactures and sells customized pollution control equipment and performs associated maintenance agreement services. Based on requirements of US GAAP, a portion of revenue is accounted for under ASC 840 - Leases and a portion under ASC 606 - Revenue from Contracts with Customers. Under ASC 840, lease revenue is recognized generally upon delivery of RNG, electricity and their related renewable Environmental Attributes. Under ASC 606, revenue is recognized when (or as) the Company satisfies its performance obligation(s) under the contract by transferring the promised product or service either when (or as) its customer obtains control of the product or service. A performance obligation is a promise in a contract to transfer a distinct product or service to a customer. A contract’s transaction price is allocated to each distinct performance obligation. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring its products or services. Based on the terms of the related sales agreements, the amounts recorded under ASC 840 as lease revenue are generally consistent with revenue recognized under ASC 606. For the nine months ended September 30, 2021, approximately 82% of revenue was accounted for under ASC 606 and 18% under ASC 840. For the nine months ended September 30, 2020, 100% of revenue was accounted for under ASC 606.10RICE ACQUISITION CORP. CONSOLIDATED FINANCIAL STATEMENTSInvestments HeldThe Company also earns revenue by selling Environmental Attributes, including RINs and LCFS credits, which are generated when producing and selling RNG for use in Trust AccountportfolioPower production commenced in April 2021 following the acquisition of investments is comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16)PEI Power LLC ("PEI") and has expanded as a result of the Investment Company Act,acquisition of Aria, which at the time of the Business Combinations owned or operated 12 operating landfill gas to electric facilities.A significant portion of the electricity generated is sold and delivered under the terms of Power Purchase Agreements (“PPAs”) or other contractual arrangements. Revenue is recognized based upon the amount of electricity delivered at rates specified under the contracts. Certain PPAs are accounted for as operating leases and have no minimum lease payments. All of the rental income under these leases is recorded as revenue when the electricity is delivered. Power not covered by PPAs is typically sold under a market-based contract with a maturityregional transmission organization or in the wholesale markets. When the performance obligation is satisfied through the delivery of 185 daysPower to the customer, revenue is recognized. The Company receives payments from the sale of power production within one month after delivery.less, or investments in moneyPower from the project.funds that invest in U.S. government securities and generally havedata, a readily determinable fair value,discounted cash flow method, or a combination thereof. Whenof the two. In the discounted cash flow method, estimated future cash flows are based on management’s expectations for the future and can include estimates of future biogas production, commodity prices, operating and development costs, and a risk-adjusted discount rate. Revenues and costs of the acquired companies are included in the Company's operating results from the date of acquisition.investments heldbusiness plans for the asset. Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or estimated useful life of the asset. Subsequent changes in regulations, business strategies or other factors could lead to a change in the Trust Accountuseful life of an asset.comprisedcapitalized during the construction period. Capitalized costs include direct costs including engineering, pipeline and plant construction, wages and benefits, consulting, equipment, and other overhead costs. When a biogas plant is placed in service, the costs associated with the biogas plant will be transferred from construction in progress to property and equipment and depreciated over its expected useful life.U.S. government securities,improvements that extend the investmentslives of existing properties are classifiedcapitalized, whereas maintenance and repairs are expensed as trading securities. Whenincurred.Company’s investmentscarrying amount of an asset may not be recoverable. Recoverability of assets to be held inand used is measured by comparing the Trust Accountcarrying amount of an asset or asset group to future undiscounted cash flows expected to be generated by the asset or asset group. Such estimates are comprisedbased on certain assumptions, which are subject to uncertainty and may materially differ from actual results. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented onassets exceeds the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securitiesthe assets.income on investments heldDepreciation, amortization and accretion in the Trust Account in the accompanying unauditedconsolidated condensed consolidated statementsstatement of operations. The estimated fair valuesCompany has recognized asset retirement obligations ("AROs") arising from legal or regulatory requirements to perform certain asset retirement activities at the time that certain contracts terminate, including the costs of investments heldremoving our facilities from the landfill property and returning the land to the state it was in the Trust Account are determined using available market information.Fair Value of Financial Instrumentswhich qualify asare recognized for the future tax consequences attributable to the differences between the financial instruments under ASC 820, “Fair Value Measurementsstatement carrying amount of existing assets and Disclosures,” equal or approximate the carrying amounts representedliabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the condensed consolidated balance sheets.Offering Costs Associated withJudgment is required in determining the Initial Public OfferingOffering costs consisted of legal, accounting, underwriting feesprovisions for income and other costs incurred throughtaxes and related accruals, and deferred tax assets and liabilities. In the Initial Public Offeringordinary course of business, there are transactions and calculations where the ultimate tax outcome is uncertain. Additionally, the Company's various tax returns are subject to audit by various tax authorities. Although the Company believes that were directly related to the Initial Public Offering. Offering costs were allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with derivative warrant liabilities were expensed as incurred and presented as non-operating expenses in the condensed statements of operations. Offering costs associated with the Class A common stock issued were charged to stockholders’ equity upon the completion of the Initial Public Offering. The Company classifies deferred underwriting commissions 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.Warrant LiabilitiesThe Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives under US GAAP. Derivative instruments are recognized on the consolidated balance sheets at fair value, with subsequent changes included in earnings. Certain contracts that are used to manage exposure to commodity prices are accounted for as derivatives, unless they meet the normal purchase/normal sale criteria and are designated and documented as such.ASC 480which, among other things, the Initial PIPE Investors agreed to subscribe for and FASB ASC Topic 815, “Derivativespurchase, and Hedging”the Company agreed to issue and sell to the Initial PIPE Investors, an aggregate of 30.0 million shares of the Company’s Class AASC 815”Atlas”), entered into an Amendment to Forward Purchase Agreement (the “FPA Amendment”) pursuant to which the Forward Purchase Agreement, dated as of September 30, 2020 (the “Original FPA Agreement” and, together with the FPA Amendment, the “FPA”), by and among such parties was amended to provide that Atlas shall purchase a total of $20.0 million of Forward Purchase Securities (as defined in the Original FPA Agreement) and the Forward Purchase Warrants (as defined in the Original FPA Agreement) will consist of one-eighth of one redeemable warrant (where each whole redeemable warrant is exercisable to purchase one share of Class A Common Stock at an exercise price of $11.50 per share). Atlas satisfied its obligation to purchase the Forward Purchase Securities by participating in the PIPE Financing, and upon consummation of the Combinations, Atlas received 250,000 warrants (each exercisable for one share of Class A Common Stock at a price of $11.50).(in thousands) At September 15, 2021 Issuance of Opco Class A units $ 394,910 Cash consideration 377,122 Repayment of Aria debt at Closing 91,115 Total Purchase Price Consideration $ 863,147 (in thousands) Fair value of assets acquired: Cash and cash equivalents $ 4,903 Account receivable, net 27,331 Inventory 9,015 Prepaid expenses and other current assets 3,834 Property, plant and equipment, net 120,517 Intangible assets, net 585,398 Equity method investments 232,619 Other non-current assets 861 Goodwill 24,257 Amount attributable to assets acquired $ 1,008,735 Fair value of liabilities assumed: Accounts payable $ 2,760 Accrued and other current liabilities 25,069 Below-market contracts 108,880 Other long-term liabilities 8,879 Amount attributable to liabilities assumed 145,588 Net assets acquired 863,147 Total Aria Merger consideration $ 863,147 (Unaudited Pro Forma) Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2021 2020 2021 2020 Total Revenues $ 48,538 $ 37,474 $ 143,525 $ 115,237 Net Income (Loss) $ (9,098) $ (3,825) $ 61,181 $ (9,017) (in thousands) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 RNG, including RINs and LCFSs $ 5,525 $ — $ 6,346 $ — Gas O&M service 110 — 110 — Power, including RECs 5,125 — 7,363 — Electric O&M service 156 — 156 — Equipment and associated services 865 1,904 4,588 4,496 Total $ 11,781 $ 1,904 $ 18,563 $ 4,496 (in thousands) September 30,
2021December 31,
2020Contract assets (included in Prepaid expenses and other current assets) $ 104 $ 48 Contract liabilities (included in Accrued and other current liabilities) $ (520) $ (1,423) (in thousands) September 30,
2021December 31,
2020Machinery and equipment $ 151,248 $ 376 Buildings and improvements 16,827 88 Furniture and fixtures 569 13 Construction in progress 115,337 51,927 Land 86 1 Total cost 284,067 52,405 Less: Accumulated depreciation (2,457) (37) Property, plant and equipment, net $ 281,610 $ 52,368 (in thousands) September 30,
2021Assets $ 200,106 Liabilities 20,531 Net assets $ 179,575 Company's share of equity in net assets $ 89,787 (in thousands) Three Months Ended
September 30, 2021Nine Months Ended
September 30, 2021Total revenues $ 4,786 $ 4,786 Net income $ 2,259 $ 2,259 Company's share of net income $ 1,130 $ 1,130 (in thousands) September 30, 2021 Net Biogas rights agreements $ 554,745 $ 1,560 $ 553,185 Electricity off-take agreements 23,400 113 23,287 Operations and maintenance contracts 8,620 11 8,609 RNG purchase contract 6,920 199 6,721 Customer relationships 350 125 225 Trade names 150 54 96 Total $ 594,185 $ 2,062 $ 592,123 (in thousands) December 31, 2020 Net Biogas rights agreements $ 8,293 $ — $ 8,293 Customer relationships 350 70 280 Trade names 150 30 120 Total $ 8,793 $ 100 $ 8,693 (in thousands) September 30, 2021 Gross Liability Net Gas off-take agreements $ 108,880 $ 488 $ 108,392 (in thousands) Remainder of 2021: $ 207 2022 633 2023 114 2024 21 2025 — Thereafter — Total future minimum lease payments $ 975 (in thousands) Remainder of 2021: $ 794 2022 7,085 2023 2,975 2024 2,975 2025 2,975 Thereafter 23,388 Total future payments $ 40,192 (in thousands) September 30,
2021December 31,
2020New Credit Agreement - Term Loan $ 220,000 $ — Wilmington Trust – 4.47% Term Note 60,828 — Wilmington Trust – 3.75% Term Note 66,558 — Comerica Bank – Specific Advance Facility Note — 4,319 Comerica Term Loan — 12,000 Kubota Corporation – Term Notes — 46 347,386 16,365 Less unamortized debt issuance costs (9,586) (291) Long-term debt less debt issuance costs 337,800 16,074 Less current maturities, net (8,546) (1,301) Total long-term debt $ 329,254 $ 14,773 (in thousands) Remainder of 2021 $ 1,375 2022 12,752 2023 17,108 2024 17,371 2025 17,598 Thereafter 281,182 Total $ 347,386 classificationSAF Loan and the Comerica Term Loan bear interest at LIBOR plus 4.5%. In addition to the Comerica Term Loan and the SAF Loan, the Bank has also made available to the borrowers a corporate credit card program with a credit limit of derivative instruments,$3.5 million for use by the borrowers in connection with the operation of the business (the “Corporate Credit Account”). As of September 30, 2021 and December 31, 2020, the Company received total proceeds under the SAF Loan and Comerica Term Loan of approximately $17.0 million and approximately $16.3 million, respectively. The Boyd County Creditwhether such instruments should be recorded as liabilities or as equity, is re-assessedthe SAF Loan and the Comerica Term Loan, was repaid in full at the endclosing of each reporting period. the Private Placement Warrants contain exercise and settlement features that preclude them from being classified within in shareholders’ equity, and therefore are recognized as derivative liabilities in accordance with ASC 815. Accordingly, theliabilities. The Company recognizes thethese warrant instruments as liabilities at fair value and adjusts the carrying value of the instruments towith changes in fair value at each reporting period until they are exercised. The initial fair valueincluded within other income (loss) in the Company’s consolidated condensed statements of the Public Warrants issued in connection with the Initial Public Offering were estimated using a Monte Carlo simulation model. The fair value of the Public Warrants as of June 30, 2021 is based on observable listed prices for such warrants. The fair value of the Private Placement Warrants as of June 30, 2021 is determined using Black-Scholes option pricing model. The determination of the fair value of the warrant liability may be subject to change as more current information becomes available and accordingly the actual results could differ significantly.operations. 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.Net Income Per Share As of Common StockThe Company’s condensed consolidated statements of operations include a presentation of net income (loss) per share for Class A common stock subject to possible redemption in a manner similar toSeptember 30, 2021, the two-class method of net income (loss) per common stock. Net income (loss) per common stock, basicCompany had 12,112,492 total Public Warrants and diluted, for redeemable Class A common stock is calculated by dividingForward Purchase Warrants (together the interest income earned on the Trust Account, less interest available to be withdrawn for the payment of taxes, by the weighted average number of redeemable Class A common stock outstanding for the periods. Net income (loss) per common stock, basic"Redeemable Warrants") and diluted, for non-redeemable Class A and Class B common stock is calculated by dividing the net income (loss), adjusted for income attributable to redeemable Class A common stock, by the weighted average number of non-redeemable Class A and Class B common stock outstanding for the periods. Non-redeemable Class A common stock includes shares sold in the Private Placement Units and Class B common stock include the Founder Shares as these common stocks do not have any redemption features and do not participate in the income earned on the Trust Account.The Company has not considered the effect of the warrants sold in the Public Offering (including the consummation of the over-allotment) and6,771,000 Private Placement Warrants to purchase 18,633,500 shares of the Company’s Class A common stock in the calculation of diluted income (loss) per share, since theoutstanding. Redeemable Warrants have an exercise of the warrants and the conversion of the rights into shares of common stock is contingent upon the occurrence of future events.11RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSThe following table reflects the calculation of basic and diluted net income (loss) per share of common stock:
2021 For the Six
Months Ended
June 30,
2021 Redeemable Class A common stock Numerator: Income allocable to redeemable Class A common stock Income from investments held in Trust Account $ 5,752 $ 43,263 Less: Company’s portion available to be withdrawn to pay taxes (5,752 ) (43,263 ) Net income attributable to redeemable Class A common stock $ $ - Denominator: Weighted average redeemable Class A common stock Basic and diluted weighted average shares outstanding, redeemable Class A common stock 23,725,000 23,725,000 Basic and diluted net income per share, redeemable Class A common stock $ 0.00 $ 0.00 Non-redeemable Class A and Class B common stock Numerator: Net income (loss) minus net income allocable to redeemable Class A common stock Net income (loss) $ (114,348,270 ) $ (105,576,176 ) Net income allocable to redeemable Class A common stock - - Net income (loss) attributable to non-redeemable Class A and Class B common stock $ (114,348,270 ) $ (105,576,176 ) Denominator: Weighted average non-redeemable Class A and Class B common stock Basic and diluted weighted average shares outstanding, non-redeemable Class A and Class B common stock 5,933,850 5,933,850 Basic and diluted net loss per share, non-redeemable Class A and Class B common stock $ (19.27 ) $ (17.79 ) Income TaxesThe Company follows the asset and liability method of accounting for income taxes under ASC Topic 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. As of June 30, 2021 and December 31, 2020, the Company had deferred tax assets of approximately $1,932,000 and $618,000, respectively, with a full valuation allowance against them.12RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSFASB ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of June 30, 2021. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of June 30, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.The provision for income taxes was de minimis for the three and six months ended June 30, 2021.Recent Accounting PronouncementsIn August 2020, the FASB issued Accounting Standard Update (the “ASU”) No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. The Company early adopted the ASU on January 1, 2021. Adoption of the ASU did not impact the Company’s financial position, results of operations or cash flows.Management does not believe that any other recently issued, but not yet effective, accounting pronouncement if currently adopted would have a material effect on the Company’s condensed consolidated financial statements.Note 3—Initial Public OfferingOn October 26, 2020, the Company consummated its Initial Public Offering of 23,725,000 Units, including 2,225,000 Over-Allotment Units that were issued pursuant to the underwriters’ partial exercise of their over-allotment option, at $10.00 per Unit, generating gross proceeds of approximately $237.3 million, and incurring offering costs of approximately $12.5 million, inclusive of $7.6 million in deferred underwriting commissions. Of the 23,725,000 Units sold, affiliates of the Sponsor and Atlas Point Fund had purchased 1,980,000 Units (the “Affiliated Units”) and 2,128,500 Units (the “Atlas Units”), respectively, at the Initial Public Offering price. The underwriters did not receive any underwriting discounts or commissions on the 1,980,000 Affiliated Units.Each Unit consists of one share of Class A common stock and one-half of one redeemable warrant (each, a “Public Warrant”). Each whole Public Warrant entitles the holder to purchase one share of Rice’s Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 6).Note 4—Related Party TransactionsFounder Sharesadjustments, and Sponsor SharesInwill expire on September 2020, the Sponsor paid $25,000 to cover for certain of expenses of15, 2026, or earlier upon redemption or liquidation. The Redeemable Warrants became exercisable on October 26, 2021, and the Company in exchange for issuance of (i) 5,750,100 shares of Rice’s Class B common stock, par value $0.0001 per share, and (ii) 2,500 shares of Rice’s Class A common stock, par value $0.0001 per share. In September 2020,may redeem the Sponsor received 5,750,000 Class B Units of RAC OpCo (which are profits interest units only). In October 2020, the Sponsor forfeited 90,000 Class B Units of RAC OpCo, and 30,000 Class B Units of RAC OpCo were issued to each of the independent director nominees. The Sponsor transferred a corresponding number of shares of Class B common stock to the independent director nominees. In October 2020,outstanding Redeemable Warrants even if the Company effected a dividend, resulting in an aggregate of (i) 6,181,350 shares of Rice’s Class B common stock, and (ii) 2,500 shares of Rice’s Class A common stock outstanding. All shares and associated amounts have been retroactively restatedis unable to reflectregister or qualify the dividend. Upon a liquidation of RAC OpCo, distributions generally will be made to the holders of RAC OpCo Units on a pro rata basis, subject to certain limitations with respect to the Class B Units of RAC OpCo, including that, prior to the completion of the initial Business Combination, such Class B Units will not be entitled to participate in a liquidating distribution.Also, in September 2020, Rice paid $25,000 to RAC OpCo in exchange for issuance of 2,500 Class A Units of RAC OpCo. In September 2020, the Sponsor received 100 Class A Units of RAC OpCo in exchange for $1,000.The Company refers to the 6,181,250 shares of Class B common stock and corresponding number of Class B Units of RAC OpCo (or the Class A Units of RAC OpCo into which such Class B Units will convert) collectively as the “Founder Shares”. The Founder Shares consist of Class B Units of RAC OpCo (and any Class A Units of RAC OpCo into which such Class B Units are converted) and a corresponding number of shares of Class B common stock, which together will be exchangeable for shares of Rice’s Class A common stock after the time of the initial Business Combination on a one-for-one basis, subject to adjustment as provided herein. The Company refers to the 2,500 shares of Rice’s Class A common stock and the 100 Class A Units of RAC OpCo and a corresponding number of shares of Rice’s non-economic Class B common stock (which together will be exchangeable into shares of Class A common stock after the initial Business Combination on a one-for-one basis) collectively as the “Sponsor Shares”.13RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUpon the closing of the Initial Public Offering, the Sponsor forfeited 309,063 Class B Units of RAC OpCo, and 309,063 Class B Units of RAC OpCo were issued to Atlas Point Fund. The Sponsor transferred a corresponding number of shares of Class B common stock to Atlas Point Fund.The Initial Stockholders agreed to forfeit up to 806,250 Founder Shares to the extent that the over-allotment option is not exercised in full by the underwriters, so that the Founder Shares will represent 20.0% of the Company’s issued and outstanding shares after the Initial Public Offering (excluding the Sponsor Shares). On October 26, 2020, the underwriters partially exercised the over-allotment option to purchase as additional 2,225,000 Units; thus, only 250,000 Founder Shares remained subject to forfeiture. On December 5, 2020, the remaining unexercised over-allotment expired unused and therefore the remaining 250,000 shares of Class B common stock were forfeited.The Class B Units of RAC OpCo will convert into Class A Units of RAC OpCo in connection with the initial Business Combination on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like and subject to further adjustment as provided herein. The Founder Shares consist of Class B Units of RAC OpCo (and any Class A Units of RAC OpCo into which such Class B Units are converted) and a corresponding number of shares of Class B common stock, which together will be exchangeable for shares of Class A common stock after the time of the initial Business Combination on a one-for-one basis (subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like), and subject to further adjustment as provided herein. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts sold in the Initial Public Offering and related to the closing of the Business Combination (other than the forward purchase securities), the number of Class A Units of RAC OpCo into which the Class B Units of RAC OpCo will convert may be adjusted (unless the holders of a majority of the outstanding Founder Shares agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon exchange of all Founder Shares will equal, in the aggregate, on an as-exchanged basis, 20% of the sum of the total outstanding shares of Rice’s common stock upon completion of the Initial Public Offering, plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the Business Combination (excluding the forward purchase securities and any shares or equity-linked securities issued, or to be issued, to any seller in the Business Combination and excluding the Sponsor Shares). In addition, the number of outstanding shares of Class B common stock will be adjusted through a stock split or stock dividend so that the total number of outstanding shares of Class B common stock corresponds to the total number of Class A Units of RAC OpCo outstanding (other than those held by Rice) plus the total number of Class A Units RAC OpCo into which the Class B Units of RAC OpCo are entitled to convert.The Initial Stockholders agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares held by them (and any shares of Class A common stock acquired upon exchange of Founder Shares) until one year after the date of the consummation of the initial Business Combination or earlier if, subsequent to the initial Business Combination, (i)If the last sale price of the Class A common stockCommon Stock equals or exceeds $12.00$10.00 per share (as adjustedon the last trading day before the notice of redemption is sent to the warrant holders, the Company may redeem the Redeemable Warrants for stock splits, stock dividends, reorganizations, recapitalizations andcash at a price of $0.10 per warrant. During the like)30-day redemption period in this instance, warrant holders can elect to exercise their warrants on a cash or cashless basis.anya 30-trading day period commencing at least 150 days afterending on the initial Business Combination or (ii)third trading day before the notice of redemption is sent to the warrant holders, the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all ofmay redeem the stockholders having the right to exchange their shares of common stockoutstanding Redeemable Warrants for cash securities or other property.Private Placement WarrantsSimultaneously with the closing of the Initial Public Offering, the Company consummated the Private Placement of 6,771,000 Private Placement Warrants to the Sponsor and Atlas Point Fund, at a price of $1.00$0.01 per Private Placement Warrant, generating gross proceedswarrant. If the Company calls the Redeemable Warrants for redemption for cash as described above, the Company will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering Redeemable Warrants for that number of shares of Class A Common Stock equal to the Companyquotient obtained by dividing (x) the product of approximately $6.8 million.the number of shares of Class A Common Stock underlying the Warrants, whole Private Placement Warrant is exercisable for a price of $11.50 to purchase one1 share of Rice’s Class A common stockCommon Stock or, in certain circumstances, one1 Class A Unitunit of RAC OpCo together with aOpco (and corresponding numbershare of shares of Rice’s non-economic Class B common stock. A portion of the proceeds from the sale of the Private Placement Warrants was added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless.Common Stock). The Private Placement Warrants will be non-redeemable and exercisableexpire on a cashless basisSeptember 15, 2026 or earlier upon redemption or liquidation. Private Placement Warrants are nonredeemable so long as they are held by the Sponsor, Atlas Point Fundinitial purchasers of the Private Placement Warrants or their permitted transferees.With certain limited exceptions,The fair value of the Redeemable Warrants is based on observable listed prices on NYSE for such warrants (a Level 1 measurement). The fair value of the Private Placement Warrants andwas estimated using the securities underlying such warrants will not be transferable, assignable or saleable until 30 days afterBlack-Scholes option pricing model (a Level 3 measurement).completionfollowing assumptions to estimate the fair value of the initial Business Combination.September 30,
2021Stock price $18.05 $18.94 Exercise price $11.50 $11.50 Volatility 45.8 % 46.3 % Expected term (years) 5.0 5.0 Risk-free interest rate 0.79 % 0.97 % 14(in thousands) Warrant liabilities as of September 15, 2021 (Closing Date) $ 150,153 Change in fair value - Closing Date through September 30, 2021 10,477 Warrant liabilities as of September 30, 2021 $ 160,630 RICE ACQUISITION CORP. CONSOLIDATED FINANCIAL STATEMENTSRelated Party LoansOn September 1, 2020,Changes in the Sponsor agreed to loan the Company an aggregate of up to $300,000 pursuant to a promissory note (the “Note”). This loan was non-interest bearing and payable upon the completionfair values of the Initial Public Offering. natural gas swap are recognized in gain (loss) on derivative contracts and realized losses are recognized as a component of cost of energy expense in the Consolidated Condensed Statement of Operations. Valuation of the natural gas swap was calculated by discounting future net cash flows that were based on a forward price curve for natural gas over the remaining life of the contract (a Level 2 measurement), with an adjustment for each counterparty's credit rate risk.(in thousands) September 30,
2021December 31,
2020Natural gas swap asset (included in Other long-term assets) $ 391 $ — Warrant liabilities (included in Derivative liabilities) (160,630) — (in thousands) Three Months Ended Nine Months Ended September 30,
2021September 30,
2020September 30,
2021September 30,
2020Cost of energy $ — $ — $ — $ — Gain (loss) on gas swap contracts 64 — 64 — Gain (loss) on warrant liabilities (10,477) — (10,477) — Total $ (10,413) $ — $ (10,413) $ — borrowed an aggregate of approximately $290,000 underhas asset retirement obligations ("ARO") associated with the Note. The outstanding balancefuture environmental remediation responsibility to restore the land and remove biogas plants and related facilities within one year of the expiration of certain operating lease agreements. The fair value of the ARO is measured using expected cash outflows associated with the ARO, adjusted for inflation and discounted at our credit-adjusted risk-free rate when the liability is initially recorded. Accretion expense is recognized over time as the discounted liability is accreted to its expected settlement value.(in thousands) 2021 2020 Balance at beginning of period $ 306 $ — 3,580 — Liabilities incurred — 306 Accretion expense 18 — Balance at end of period $ 3,904 $ 306 was paid in full as of November 10, 2020. Subsequent to the repayment, the facility was no longer available to the Company.4.In addition, in orderfinance transaction costsOpco Class A units, including units issued in connection with athe Business Combination,Combinations and units owned by the Sponsor, Atlas or an affiliateCompany directors. As of September 30, 2021, the Company directly owned approximately 45.9% of the Sponsor, or certaininterest in Opco and the redeemable noncontrolling interest was 54.1%. Owners of the Company’s officers and directors may, but are not obligatedredeemable Opco Class A units own an equal number of shares of Class B Common Stock. Due to loanfunds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company will repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination or, at the lender’s discretion, up to $1.5 million of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants. Excepthas accounted for the foregoing, the termsredeemable noncontrolling interest as temporary equity.such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans.preferred stock, par value $0.0001 per share. As of JuneSeptember 30, 2021 and December 31, 2020, the Company had no borrowings under the Working Capital Loans.The Sponsor, officers and directors, or any of their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on the Company’s behalf such as identifying potential target businesses and performing due diligence on suitable Business Combinations. The Company’s audit committee will review on a quarterly basis all payments that were made to the Sponsor, officers or directors, or their affiliates.Administrative Support AgreementCommencing on the date the Company’s securities are first listed on NYSE, the Company agreed to pay the Sponsor a total of $10,000 per month for office space, utilities, secretarial support and administrative services provided to members of the management team. Upon completion of the initial Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees. For the three and six months ended June 30, 2021, the Company incurred expenses of $30,000 and $60,000 under this agreement, respectively. As of June 30, 2021 and December 31, 2020, the Company had $20,000 and $30,000 outstanding for services in connection with such agreement on the accompanying condensed consolidated balance sheets, respectively.Note 5—Commitments and ContingenciesForward Purchase AgreementThe Company entered into an amended and restated forward purchase agreement (the “Forward Purchase Agreement”) with Atlas Point Fund, pursuant to which Atlas Point Fund, which is a fund managed by CIBC National Trust but is not affiliated with the Company or sponsor, agreed to purchase up to $75,000,000 of either (i) a number of units (the “forward purchase units”), consisting of one share of Class A common stock (the “forward purchase shares”) and one-third of one warrant (the “forward purchase warrants”), for $10.00 per unit or (ii) a number of forward purchase shares for $9.67 per share (such forward purchase shares valued at $9.67 per share or the forward purchase units, as the case may be, the “forward purchase securities”), in a private placement that will close simultaneously with the closing of the Initial Business Combination. The forward purchase warrants will have the same terms as the public warrants and the forward purchase shares will be identical to the shares of Class A commonpreferred stock included in the units being sold in this offering, except the forward purchase shares and the forward purchase warrants will be subject to transfer restrictions and certain registration rights and the forward purchase units will consist of only one-third of one forward purchase warrant. The funds from the sale of the forward purchase securities may be used as part of the consideration to the sellers in the Initial Business Combination, and any excess funds may be used for the working capital needs of the post-transaction company. This agreement is independent of the percentage of stockholders electing to redeem their public shares and may provide the Company with an increased minimum funding level for the Initial Business Combination. The forward purchase agreement is subject to conditions, including Atlas Point Fund giving the Company its irrevocable written consent to purchase the forward purchase securities no later than five days after the Company notifies it of the Company’s intention to meet to consider entering into a definitive agreement for a proposed Business Combination. Atlas Point Fund may grantwere issued or withhold its consent to the purchase entirely within its sole discretion. Accordingly, if Atlas Point Fund does not consent to the purchase, it will not be obligated to purchase the forward purchase securities.15RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSRegistration RightsThe holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any, (and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares) are entitled to registration rights pursuant to a registration rights agreement. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of the initial Business Combination. Additionally, pursuant to the Forward Purchase Agreement, the Company agreed to grant certain registration rights to Atlas Point Fund in connection with the issuance of any forward purchase units upon the completion of the Company’s Business Combination. The Company will bear the expenses incurred in connection with the registration of such securities.Underwriting AgreementThe Company granted the underwriters a 45-day option from the date of Initial Public Offering to purchase up to 3,225,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions. On October 26, 2020, the underwriters partially exercised the over-allotment option to purchase an additional 2,225,000 Units.The underwriters were entitled to an underwriting discount of $0.20 per Unit (excluding the Affiliated Units purchased). As a result of affiliates of the Sponsor purchasing 1,980,000 Units, the Company paid an underwriting discount of approximately $4.3 million in the aggregate upon the closing of the Initial Public Offering. In addition, the underwriters will be entitled to a deferred fee of $0.35 per Unit (excluding the Affiliated Units), or approximately $7.6 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 the Company completes a Business Combination, subject to the terms of the underwriting agreement.Risks and UncertaintiesManagement continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these condensed consolidated financial statements. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.Note 6—Stockholders’ Equity— 250,000,000900.0 million shares of Class A common stockCommon Stock with a par value of $0.0001 per share. As of JuneSeptember 30, 2021, and December 31, 2020, there were 23,727,50052,847,195 shares of Class A common stockCommon Stock issued and outstanding, of which 18,351,762 shares of Class A common stock are subject to possible redemption and therefore classified outside of permanent equity in the accompanying condensed consolidated balance sheets.— 20,000,000190.0 million shares of Class B common stockCommon Stock with a par value of $0.0001 per share. As of JuneSeptember 30, 2021, and December 31, 2020, there were 5,931,35062,281,735 shares of Class B common stockCommon Stock issued and outstanding.common stockCommon Stock and holders of the Class B common stockCommon Stock will vote together as a single class on all matters submitted to a vote of the stockholders, except as required by law. Each share of common stock will have one1 vote on all such matters. Priorinitialunitholders of Opco.Combination, onlyCombinations, the Company adopted the 2021 Omnibus Incentive Plan (the "Plan"). The Company may grant restricted stock, restricted stock units, incentive and non-qualified stock options, stock appreciation rights, performance awards, stock awards and other stock-based awards to officers, directors, employees and consultants under the terms of the Plan. There are 11.3 million shares authorized under the plan as of September 30, 2021, and all authorized shares remain available for future issuance as of September 30, 2021.Nonvested at December 31, 2020 4,500 $ — Granted 1,500 $ 1,566 Forfeited (250) $ — Vested (5,750) $ 409 Nonvested at September 30, 2021 — $ — Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2021 2020 2021 2020 Service cost $ 2 $ — $ 2 $ — Interest cost 4 — 4 — Net periodic benefit cost $ 6 $ — $ 6 $ — Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2021 2020 2021 2020 Income tax provision $ — $ — $ — $ — commonshares, as well as the warrants, of Rice Acquisition Corp. accompanied by a recapitalization. Therefore, Class A Common Stock is outstanding beginning at the Merger date due to the reverse recapitalization.Three Months Ended Nine Months Ended (in thousands, except per share amounts) September 30,
2021September 30,
2020September 30,
2021September 30,
2020Net income (loss) attributable to Class A Common Stock $ (7,011) $ — $ (7,011) $ — Class A Common Stock Average number of shares outstanding - basic 52,847,195 — 52,847,195 — Average number of shares outstanding - diluted 52,847,195 — 52,847,195 — Excluded due to anti-dilutive effect 7,804,055 — 7,804,055 — Net income (loss) per share of Class A Common Stock Basic and diluted $ (0.13) $ — $ (0.13) $ — Three Months Ended Nine Months Ended (in thousands) September 30,
2021September 30,
2020September 30,
2021September 30,
2020Income (loss) before income taxes $ (21,341) $ (602) $ (31,770) $ (1,819) Interest expense 1,586 — 1,606 — Depreciation, amortization and accretion 3,142 34 4,077 101 EBITDA $ (16,613) $ (568) $ (26,087) $ (1,718) (in thousands) RNG Power Corporate and Other Total Three months ended September 30, 2021 Revenue $ 5,963 $ 5,158 $ 865 $ 11,986 Intersegment revenue — 12 (12) — Total revenue $ 5,963 $ 5,170 $ 853 $ 11,986 Net income (loss) $ 28 $ (320) $ (21,049) $ (21,341) EBITDA $ 1,916 $ 884 $ (19,413) $ (16,613) Nine months ended September 30, 2021 Revenue $ 6,785 $ 7,395 $ 4,588 $ 18,768 Intersegment revenue — 12 (12) — Total revenue $ 6,785 $ 7,407 $ 4,576 $ 18,768 Net income (loss) $ (1,538) $ (2,150) $ (28,082) $ (31,770) EBITDA $ 585 $ (316) $ (26,356) $ (26,087) September 30, 2021 Goodwill $ 27,011 $ — $ — $ 27,011 Three months ended September 30, 2020 Revenue $ — $ — $ 1,904 $ 1,904 Intersegment revenue — — — — Total revenue $ — $ — $ 1,904 $ 1,904 Net income (loss) $ (19) $ (5) $ (578) $ (602) EBITDA $ (19) $ (5) $ (544) $ (568) Nine months ended September 30, 2020 Revenue $ 34 $ — $ 4,462 $ 4,496 Intersegment revenue — — — — Total revenue $ 34 $ — $ 4,462 $ 4,496 Net income (loss) $ (102) $ (5) $ (1,712) $ (1,819) EBITDA $ (102) $ (5) $ (1,611) $ (1,718) December 31, 2020 Goodwill $ 2,754 $ — $ — $ 2,754 (in thousands) December 31, 2020 ASSETS Current Assets Cash and cash equivalents $ 14,257 Accounts receivable 20,727 Inventory 7,770 Prepaid expenses and other current assets 3,768 Assets held for sale 70,034 Total Current Assets 116,556 Property and equipment, net 70,759 Intangible assets, net 126,922 Equity method investments 77,993 Other noncurrent assets 689 Total Assets $ 392,919 LIABILITIES AND EQUITY Current Liabilities Accounts payable - trade $ 1,570 Current portion of long-term debt, net 102,831 Accrued and other current liabilities 25,736 Liabilities held for sale 12,534 Total Current Liabilities 142,671 Long-term debt, net 136,593 Derivative liabilities 1,268 Below-market contracts 5,769 Asset retirement obligations 3,408 Other long-term liabilities 5,150 Total Liabilities 294,859 Commitments and contingencies 0 Equity Controlling interest Class A units 299,327 Class B units 19,327 Class C units 1 Retained loss (218,957) Accumulated other comprehensive loss (1,349) Total Controlling Interest 98,349 Noncontrolling interest (289) Total Equity 98,060 Total Liabilities and Equity $ 392,919 (in thousands) July 1 to September 14, 2021 July 1 to September 30, 2020 January 1 to September 14, 2021 January 1 to September 30, 2020 Revenue and Other Income Energy revenue $ 35,765 $ 33,376 $ 120,250 $ 96,025 Construction revenue 8 2,705 32 9,950 Amortization of intangibles and below-market contracts (785) (917) (2,693) (2,752) Total Revenue and Other Income 34,988 35,164 117,589 103,223 Equity Investment Income, net 6,451 2,558 19,777 6,005 Cost of Operations Cost of energy 15,175 17,006 56,291 53,020 Cost of other revenues 8 2,576 30 9,476 Depreciation, amortization and accretion 4,634 7,801 15,948 23,381 Total Cost of Operations 19,817 27,383 72,269 85,877 Gain on disposal of assets — — (1,347) — General and administrative expenses 20,678 5,303 33,737 14,934 Operating Income (Loss) 944 5,036 32,707 8,417 Other Income (Expense) Interest expense, net (2,053) (4,765) (10,729) (14,429) Gain (loss) on derivative contracts 574 261 1,129 (61) Gain on extinguishment of debt — — 61,411 — Other income 1 — 2 2 Total Other Income (Expense) (1,478) (4,504) 51,813 (14,488) Net Income (Loss) (534) 532 84,520 (6,071) Net income attributable to noncontrolling interest — 22 289 61 Net Income (Loss) Attributable to Controlling Interest $ (534) $ 510 $ 84,231 $ (6,132) (in thousands) July 1 to September 14, 2021 July 1 to September 30, 2020 January 1 to September 14, 2021 January 1 to September 30, 2020 Net Income (Loss) $ (534) $ 532 $ 84,520 $ (6,071) Other Comprehensive Income (Loss) Net actuarial income 19 25 213 75 Other Comprehensive Income (Loss) (515) 557 84,733 (5,996) Comprehensive income attributable to noncontrolling interest — 22 289 61 Comprehensive Income (Loss) Attributable to Controlling Interest $ (515) $ 535 $ 84,444 $ (6,057) Controlling Interest (in thousands) Class A
UnitsClass B
UnitsClass C
UnitsRetained
Earnings (Loss)Accumulated
Other
Comprehensive
(Loss) IncomeTotal
Controlling
InterestNoncontrolling
InterestTotal
EquityBalance – January 1, 2021 $ 299,327 $ 19,327 $ 1 $ (218,957) $ (1,349) $ 98,349 $ (289) $ 98,060 Net income (loss) — — — 84,231 — 84,231 289 84,520 Adjustments for postretirement plan — — — — 213 213 — 213 Balance – September 14, 2021 $ 299,327 $ 19,327 $ 1 $ (134,726) $ (1,136) $ 182,793 $ — $ 182,793 Controlling Interest (in thousands) Class A
UnitsClass B
UnitsClass C
UnitsRetained
Earnings (Loss)Accumulated
Other
Comprehensive
(Loss) IncomeTotal
Controlling
InterestNoncontrolling
InterestTotal
EquityBalance – January 1, 2020 $ 299,327 $ 19,327 $ 1 $ (188,956) $ (1,304) $ 128,395 $ (266) $ 128,129 Net income (loss) — — — (6,132) — (6,132) 61 (6,071) Adjustments for postretirement plan — — — — 75 75 — 75 Distributions to noncontrolling interest — — — — — — (76) (76) Balance – September 30, 2020 $ 299,327 $ 19,327 $ 1 $ (195,088) $ (1,229) $ 122,338 $ (281) $ 122,057 (in thousands) January 1 to September 14, 2021 January 1 to September 30, 2020 Cash flows from operating activities: Net income (loss) $ 84,520 $ (6,071) Adjustments to reconcile consolidated net income (loss) to net cash provided by operating activities: Depreciation, amortization and accretion 15,948 23,381 Gain on disposal of assets (1,573) — Amortization of debt origination costs 699 1,181 Amortization of intangibles and below-market contracts 859 918 Return on investment in equity method investments 19,518 9,295 Equity in earnings of equity method investments (19,777) (6,005) Change in fair value of derivatives (1,268) (1,113) Gain on extinguishment of debt (61,411) — Net periodic postretirement benefit cost 106 79 Changes in operating assets and liabilities: Accounts receivable (4,728) (6,338) Inventory (1,318) (656) Prepaid expenses and other assets (143) (625) Other non-current assets (196) 295 Trade accounts payable 478 882 Accrued and other current liabilities 19,231 4,475 Net cash provided by operating activities 50,945 19,698 Cash flows from investing activities: Purchase of property and equipment (2,318) (1,558) Contributions to equity method investments (8,430) (9,900) Net cash used in investing activities (10,748) (11,458) Cash flows from financing activities: Payments on note payable and revolving credit agreement — (10,408) Proceeds from revolving credit agreement — 4,000 Payments on long-term debt (49,551) — Distributions to noncontrolling interest — (76) Net cash used in financing activities (49,551) (6,484) Net increase (decrease) in cash and cash equivalents (9,354) 1,756 Cash and cash equivalents – beginning of period 14,257 7,081 Cash and cash equivalents – end of period $ 4,903 $ 8,837 Supplemental cash flow information: Cash paid for interest $ 5,940 $ 9,339 Noncash investing activities: Accruals of property and equipment incurred but not yet paid $ 25 $ 50 (in thousands) July 1 to September 14, 2021 July 1 to September 30, 2020 January 1 to September 14, 2021 January 1 to September 30, 2020 RNG, including RINs and LCFSs $ 28,125 $ 18,925 $ 83,848 $ 51,818 Gas O&M service 268 309 974 791 Power, including RECs 6,591 11,323 31,217 36,280 Electric O&M service 781 2,819 4,211 7,136 Other 8 2,705 32 9,950 Total $ 35,773 $ 36,081 $ 120,282 $ 105,975 Operating segments RNG $ 28,402 $ 21,939 $ 84,853 $ 62,559 Power 7,371 14,142 35,429 43,416 Total $ 35,773 $ 36,081 $ 120,282 $ 105,975 vote oninvoice practical expedient and determined that the amounts invoiced to customers correspond directly with the value to customers and Aria’s satisfaction of the performance obligations to date. Furthermore, with the election of directors.Preferred Stock — The Companyauthorized to issue 1,000,000 sharesestablished based on a specific assessment of preferred stock, par value $0.0001 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of June 30,all invoices that remain unpaid following normal customer payment periods. There was no allowance for doubtful accounts at September 14, 2021 and December 31, 2020 therebased on Aria’s history with its existing customers. Payments on accounts receivable balances are typically due and paid within 30 days of invoice.no shares$58.5 million, which were sent to the lenders of preferred stock issuedthe LESPH debt discussed in Note 6. As discussed further in Note 6, in connection with the sale, Aria was released from its obligations under the LESPH debt and a gain on the extinguishment of debt in the amount of $61.4 million was recorded in conjunction with the sale, which accounts for the proceeds received, the debt and interest payable relieved and settlement of LESPH intercompany balances. Aria recorded an ordinary gain on sale of assets in the amount of $1.3 million.outstanding.changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset or asset group to future undiscounted cash flows expected to be generated by the asset or asset group. Such estimates are based on certain assumptions, which are subject to uncertainty and may materially differ from actual results. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.16RICE ACQUISITION CORP.NOTES TO UNAUDITED CONSOLIDATED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS7—WarrantsAsJune 30,Aria that are due more than one year in the future. Based on a contractual obligation under its Mavrix LLC (Mavrix) operating agreement (as discussed in Note 5), as of September 14, 2021 and December 31, 2020, the Company had 11,862,500 Public Warrants and 6,771,000 Private Placement Warrants outstanding, respectively.Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering; provided in each case that the Company hasAria estimates an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities Act). The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of the initial Business Combination, it will use its best efforts to file with the SEC and have an effective registration statement covering the shares of the Class A common stock issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares of the Class A common stock until the warrants expire or are redeemed. If a registration statement covering the shares of the Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day after the closing of the initial Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption.The warrants have an exercise price of $11.50 per share, subject to adjustments, and will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation. In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the board and, in the case of any such issuanceearn-out related to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), the exercise pricethe warrants will be adjusted (to the nearest cent) to be equal to 115% of the Newly Issued Price.ContentsRedemption of warrants when our Class A common stock equals or exceeds $18.00 per share:Once the warrants become exercisable, the Company may redeem the outstanding warrants for cash (except as described herein with respect to the Private Placement Warrants):●in whole and not in part;●at a price of $0.01 per warrant;●upon a minimum of 30 days’ prior written notice of redemption; and●if, and only if, the last sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.The Company will not redeem the warrants for cash unless a registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of Class A common stock is available throughout the 30-day redemption period, except if the warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If the Company calls the warrants for redemption for cash as described above, the management will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.”Redemption of warrants when our Class A common stock equals or exceeds $10.00 per share:Once the warrants become exercisable, the Company may redeem the outstanding warrants (except as described herein with respect to the Private Placement Warrants):●in whole and not in part;●at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares of Class A common stock determined by reference to an agreed table based on the redemption date and the “fair market value” of Class A common stock;●if and only if, the last sale price of Class A common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which the Company sends the notice of redemption to the warrant holders; and●if, and only if, there is an effective registration statement covering the issuance of shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating thereto available throughout the 30- day period after written notice of redemption is given.17RICE ACQUISITION CORP.NOTES TO UNAUDITED CONSOLIDATED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSThe “fair market value”performance of the Class A common stock shall mean the volume weighted average price of the Class A common stock as reported during the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants.None of the Private Placement Warrants will be redeemable by the Company so long as they are held by the initial purchasers of the Private Placement Warrants or their permitted transferees.In no event will the Company be required to net cash settle any warrant. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds heldMavrix joint ventures payable in 2022 in the Trust Account, holdersamount of warrants will not receive any$1.7 million and $1.4 million, respectively. The maximum earn-out under the operating agreement is $9.55 million.such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.Note 8—Fair Value MeasurementsThe fair value of the Company’s financialnet (loss) income and other comprehensive (loss) income. Other comprehensive (loss) income includes certain changes in assets and liabilities reflects management’s estimaterecognized directly to equity, such as actuarial gains/losses on Aria’s postretirement plan.amountsAria Energy LLC is required to be reported by the respective members on their individual income tax returns.Company would have receivedcustomers may be similarly affected by changes in connection witheconomic, industry or other conditions. Receivables and other contractual arrangements are subject to collateral requirements under the saleterms of enabling agreements. However, Aria believes that the assetscredit risk posed by industry concentration is offset by the creditworthiness of its customer base.paidtransmission of electricity to the delivery point, and royalty payments to landfill owners as stipulated in connection with the transfer ofgas rights agreements.liabilitiesprice at which an asset could be exchanged or a liability transferred in an orderly transaction between knowledgeable, willing parties in the principal or most advantageous market participants atfor the measurement date. In connection with measuringasset or liability. Where available, fair value is based on observable market prices or derived from such prices. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity. The framework for establishing fair value is based on a hierarchy that prioritizes the inputs and valuation techniques used to measure fair value.its assetseach class of financial instruments for which it is practicable to estimate fair value. For cash and liabilities,cash equivalents, accounts receivable and trade accounts payables, the Company seekscarrying amounts approximate fair value due to the short maturity of these instruments. For long-term debt, the carrying amounts approximate fair value as the interest rates obtained by Aria approximate the prevailing interest rates available to Aria for similar instruments.(market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would pricewhen measuring fair value. The hierarchy defines three levels of inputs that may be used to measure fair value:liabilities). The followingliabilities in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.is used to classify assets and liabilitiesfair value measurements in their entirety are categorized based on the observablelowest level input that is significant to the valuation. Aria’s assessment of the significance of particular inputs to these fair value measurements requires judgment and unobservable inputs used in orderconsiders factors specific to value the assets and liabilities:(in thousands) Level 1:Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.December 31, 2020Buildings $ 25,186 Machinery and equipment 166,191 Furniture and fixtures Level 2:Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.1,154Construction in progress 1,366 Total cost Level 3:$Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.193,897 Accumulated depreciation (123,138) Net property, plant and equipment $ 70,759 following table presents information about the Company’s assets and liabilitiesgas rights agreements have various renewal terms in their underlying contracts that are measuredfactored into the useful lives when amortizing the intangible asset.December 31, 2020 (in thousands) Gross Carrying Amount Accumulated Amortization Net Gas rights agreements $ 217,285 $ 102,944 $ 114,341 Operations and maintenance contracts 3,500 2,475 1,025 Gas sales agreements 32,059 20,503 11,556 Total $ 252,844 $ 125,922 $ 126,922 Expense Type of Contract Amortization Line Item Remaining Lives July 1 to September 14, 2021 July 1 to September 30, 2020 January 1 to September 14, 2021 January 1 to September 30, 2020 Gas rights Depreciation, amortization and accretion 4 to 16 years $ 1,892 $ 3,777 $ 6,494 $ 11,331 Operation and maintenance Amortization of intangibles and below-market contracts 5 years $ 52 $ 145 $ 178 $ 434 Gas sales Amortization of intangibles and below-market contracts 1 to 8 years $ 733 $ 891 $ 2,515 $ 2,674 December 31, 2020 Gross Accumulated (in thousands) Liability Amortization Net Gas purchase agreements $ 19,828 $ 14,059 $ 5,769 (in thousands) December 31, 2020 Assets $ 171,288 Liabilities 13,570 Net assets $ 157,718 Company's share of equity in net assets 77,993 (in thousands) July 1 to September 14, 2021 July 1 to September 30, 2020 January 1 to September 14, 2021 January 1 to September 30, 2020 Revenue $ 25,223 $ 16,307 $ 78,125 $ 41,199 Net income $ 13,237 $ 5,226 $ 38,512 $ 12,338 Aria's share of net income $ 6,451 $ 2,558 $ 19,777 $ 6,005 (in thousands) December 31, 2020 Notes payable - due October 7, 2020 $ 102,831 Term Loan B - due May 2022 137,978 Debt origination costs (1,385) Total 239,424 Less: Current portion of debt 102,831 Long-term portion $ 136,593 recurring basis asforward price curve for natural gas over the life of Junethe contract (a Level 2 measurement), with an adjustment for each counterparty's credit rate risk.indicatesall associated fees with this transaction were recorded. Aria made cash payments for the fair value hierarchynatural gas swap of $0.5 million and $1.1 million for the period January 1 to September 14, 2021 and for the nine months ended September 30, 2020 respectively.(in thousands) December 31, 2020 Natural gas swap liability $ 1,268 (in thousands) July 1 to September 14, 2021 July 1 to September 30, 2020 January 1 to September 14, 2021 January 1 to September 30, 2020 Natural gas swap - unrealized gain (loss) $ 574 $ 261 $ 1,129 $ (61) valuation techniques that the Company utilizedPlan, substantially all employees meeting minimum age and service requirements are entitled to determine such fair value:June 30, 2021Description 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 - U.S. Treasury securities $ 237,351,433 $ - $ - Liabilities: Derivative warrant liabilities - Public warrants $ 67,616,251 $ - $ - Derivative warrant liabilities - Private placement warrants $ - $ - $ 71,349,396 December 31, 2020Description 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 - U.S. Treasury securities $ 237,308,171 $ - $ - Liabilities: Derivative warrant liabilities - Public warrants $ 27,046,500 $ - $ - Derivative warrant liabilities - Private placement warrants $ - $ - $ 15,541,987 Transfers to/from Levels 1, 2,contribute on a before and 3 are recognized at the beginningafter-tax basis a certain percentage of their compensation. Aria matches up to 100% of employees’ first 3% contribution and 50% of the reporting period. There were no transfers to/from Levels 1, 2,employees’ next 2% contribution. Employees vest immediately in their contributions and 3 during the threeAria’s contribution.six months ended June 30, 2021.Level 1 assets include investments in U.S. treasury securities. The Company uses inputs such as actual trade data, quoted market prices from dealers or brokers, and other similar sources to determine the fair valueits investments.Contents18RICE ACQUISITION CORP.NOTES TO UNAUDITED CONSOLIDATED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSThe Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within derivative warrant liabilities on the Company’s condensed consolidated balance sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilitiesNet periodic benefit cost recognized in the statementconsolidated statements of operations.comprehensive income was as follows:(in thousands) July 1 to September 14, 2021 July 1 to September 30, 2020 January 1 to September 14, 2021 January 1 to September 30, 2020 Service cost $ 8 $ 12 $ 27 $ 36 Interest cost 19 26 64 77 Amortization of prior service cost 2 3 8 9 Recognition of net actuarial loss 17 22 57 66 Net periodic benefit cost $ 46 $ 63 $ 156 $ 188 For periods where no observable traded price is available, the fair valuethe Public Warrants was estimated using a Monte Carlo simulation model. For periods subsequent to the detachmentmembership units, consisting of the Public Warrants from the Units, the fair value of the Public Warrants is based on the observable listed price for such warrants.Class A units, Class B units and Class C units. The estimated fair value of the Private Placement Warrants,Class A units and the Public Warrants priorClass B units have the voting interests - voting together as a single class. The Class C units have a nonvoting interest. The Class A units and the Class B units receive all distributions until set Internal Rate of Returns are reached. Aria had been authorized to being separately listedissue an unlimited number of Class A units and traded, is determined using Level 3 inputs. Inherent in a Monte Carlo simulation are assumptions related to expected stock-price volatility, expected life, risk-free interest rateClass B units and dividend yield. The Company estimateshad the volatility of its common stock based on historical volatility of select peer companies that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.The Warrants are measured at fair value on a recurring basis. The measurement of the Public Warrantsfollowing units outstanding as of June 30,December 31, 2020:(in thousands, except price per share) December 31, 2020 Price per share Class A Class B Class C $1.00 441,482 27,120 — $0.10 — — 9 $0.88 11,364 — — Total shares outstanding 452,846 27,120 9 20202020:(in thousands) January 1 to September 14, 2021 January 1 to December 31, 2020 Balance at beginning of period $ 3,408 $ 6,536 Accretion expense 172 456 Revision to estimated cash flows — — Transfer to liabilities classified as held for sale — (3,584) Settlement of asset retirement obligation — — Balance at end of period $ 3,580 $ 3,408 classified as Level 1 duerecognized in depreciation, amortization and accretion.the useand services are purchased from entities and individuals affiliated through common ownership. Aria provides operations and maintenance services, and administration and accounting services to their 50% owned jointan observable market quote in an active market.ContentsThe key Level 3 fair value measurement inputs into the Black-Scholes model for the Private Placement Warrants as June 30, 2021 and December 31, 2020, are as follows: June 30,
2021 Exercise price $ 11.50 $ 11.50 Stock price $ 18.05 $ 10.83 Volatility 52.0 % 22.7 % Term (in years) 5.25 5.82 Risk-free rate 0.91 % 0.48 % The change in the fair value of the derivative warrant liabilities, measured using Level 3 inputs, for the three and six months ended June 30, 2021 is summarized as follows:Derivative warrant liabilities at January 1, 2021 $ 15,541,987 Change in fair value of derivative warrant liabilities (2,284,001 ) Derivative warrant liabilities at March 31, 2021 13,257,986 Change in fair value of derivative warrant liabilities 58,091,410 Derivative warrant liabilities at June 30, 2021 $ 71,349,396 Level 3 financial liabilities consist of the Private Placement Warrant liability for which there is no current market such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate.Note 9—Subsequent EventsManagement has evaluated subsequent events to determine if events or transactions occurring through the date the condensed consolidated financial statements were issued, require potential adjustment to or disclosure in the condensed consolidated financial statements and has concluded that all such events, except as noted above, that would require recognition or disclosure have been recognized or disclosed.(in thousands) July 1 to September 14, 2021 July 1 to September 30, 2020 January 1 to September 14, 2021 January 1 to September 30, 2020 Sales of construction services $ 8 $ 2,705 $ 32 $ 9,950 Sales of operations and maintenance services $ 214 $ 482 $ 1,215 $ 1,332 Sales of administrative and other services $ 25 $ 105 $ 221 $ 305
NOTE 12 - Segment Reporting - Predecessor19For the year-to-date period ended September 14, 2021 (in thousands) RNG Power Corporate and Other Total Net income (loss) $ 59,066 $ 66,431 $ (40,977) $ 84,520 Depreciation, amortization and accretion 6,447 9,467 34 15,948 Interest expense — — 10,729 10,729 EBITDA $ 65,513 $ 75,898 $ (30,214) $ 111,197 Amortization of intangibles and below-market contracts 2,516 177 — 2,693 Gain on disposal of assets — (1,347) — (1,347) Net derivative activity (1,129) — — (1,129) Debt forbearance costs — — 990 990 Gain on extinguishment of debt — (61,411) — (61,411) Costs related to sale of equity — — 18,629 18,629 Adjusted EBITDA $ 66,900 $ 13,317 $ (10,595) $ 69,622 For the nine months ended September 30, 2020 (in thousands) RNG Power Corporate and Other Total Net income (loss) $ 19,308 $ (161) $ (25,218) $ (6,071) Depreciation, amortization and accretion 6,729 16,592 60 23,381 Interest expense — — 14,429 14,429 EBITDA $ 26,037 $ 16,431 $ (10,729) $ 31,739 Amortization of intangibles and below-market contracts 2,674 78 — $ 2,752 Net derivative activity 61 — — 61 Debt forbearance costs — — 907 907 Costs related to sale of equity — — 196 196 Adjusted EBITDA $ 28,772 $ 16,509 $ (9,626) $ 35,655 ItemManagement’s Discussion and Analysis of Financial Condition and Results of Operations.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSReferences to the “Company,” “our,” “us” or “we” refer to Rice Acquisition Corp. and its majority-owned and controlled operating subsidiary, Rice Acquisition Holdings LLC (“RAC OpCo”), unless the context indicates otherwise. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unauditedfinancial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements reflecting our current expectations, estimates, and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the sections entitled "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" appearing elsewhere in this Quarterly Report.Site Location Butler David City, NE Boyd County Landfill Ashland, KY Canton (JV) Canton, MI KC LFG Johnson County, KS North Shelby (JV) Millington, TN Oklahoma City Oklahoma City, OK SE Oklahoma City (JV) Oklahoma City, OK Seneca Gas Waterloo, NY South Shelby (JV) Memphis, TN SWACO Grove City, OH Site Location Colonie Cohoes, NY County Line Argos, IN DANC Rodman, NY Erie Erie, CO Fulton Johnstown, NY Hernando County Brooksville, FL Model City Youngstown, NY Modern Youngstown, NY Ontario Stanley, NY PEI Power Archbald, PA Sarasota Nokomis, FL Seneca Power Waterloo, NY Sunshine Canyon (JV) Sylmar, CA Three Months Ended
September 30,Nine Months Ended
September 30,2021 2020 2021 2020 RNG sold (MMBtu) 320,265 — 378,730 — Electricity sold (MWh) 77,228 — 164,307 — Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2021 2020 $ Change 2021 2020 $ Change Revenues $ 11,986 $ 1,904 $ 10,082 $ 18,768 $ 4,496 $ 14,272 Costs of operations 13,235 1,288 11,947 19,678 2,678 17,000 Equity investment income (loss) 879 — 879 879 — 879 General and administrative expenses 9,053 1,205 7,848 20,097 3,652 16,445 Operating income (loss) $ (9,423) $ (589) $ (8,834) $ (20,128) $ (1,834) $ (18,294) Other income (expense), net (11,918) (13) (11,905) (11,642) 15 (11,656) Net income (loss) $ (21,341) $ (602) $ (20,739) $ (31,770) $ (1,819) $ (29,951) Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2021 2020 2021 2020 Net income (loss) $ (21,341) $ (602) $ (31,770) $ (1,819) Adjustments: Interest expense 1,586 — 1,606 — Depreciation, amortization and accretion 3,142 34 4,077 101 EBITDA $ (16,613) $ (568) $ (26,088) $ (1,718) Net derivative activity 10,413 — 10,413 — Amortization of intangibles and below-market contracts (205) — (205) — Amortization of equity method investments basis difference 428 — 428 — Share-based compensation 2,708 — 2,886 — Acquisition transaction costs 2,748 — 2,748 — Adjusted EBITDA $ (521) $ (568) $ (9,818) $ (1,718) July 1 to September 14, 2021 July 1 to September 30, 2020 January 1 to September 14, 2021 January 1 to September 30, 2020 RNG sold (MMBtu) 1,713,637 1,547,966 5,020,959 4,407,358 Electricity sold (MWh) 144,361 285,164 650,286 881,383 (in thousands) July 1 to September 14, 2021 July 1 to September 30, 2020 $ Change January 1 to September 14, 2021 January 1 to September 30, 2020 $ Change Revenues $ 34,988 $ 35,164 $ (176) $ 117,589 $ 103,223 $ 14,366 Costs of operations 19,817 27,383 (7,566) 72,269 85,877 (13,608) Equity investment income (loss) 6,451 2,558 3,893 19,777 6,005 13,772 General and administrative expenses 20,678 5,303 15,375 33,737 14,934 18,803 Operating income (loss) $ 944 $ 5,036 $ (4,092) $ 32,707 $ 8,417 $ 24,290 Other income (expense), net (1,478) (4,504) 3,026 51,813 (14,488) 66,301 Net income (loss) $ (534) $ 532 $ (1,066) $ 84,520 $ (6,071) $ 90,591 notes thereto contained elsewhereaddition of the South Shelby RNG facility.this report. Certain information containedJune 2021. Other income (expense), net increased by $66.3 million for the nine month period ended September 14, 2021 as result of the gain on extinguishment of debt associated with the LESPH sale.discussionIPO. To minimize dilution to its existing stockholders as a result of warrant exercises, the Company intends to use any cash proceeds received from exercises of its warrants to repurchase shares of Class A Common Stock from Aria Renewable Energy Systems LLC at a price of $17.65 per share. For more information regarding our warrants and analysis set forth below includes forward-looking statements that involve risksthe redemption notice, see Note 11—Derivative Instruments to our Consolidated Condensed Financial Statements included herein.uncertainties.OverviewWe are a blank check company incorporated in Delaware on September 1, 2020 forupon consummation of the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). Our sponsor is Rice Acquisition SponsorBusiness Combinations, Archaea Energy Operating LLC, a Delaware limited liability company (“Sponsor”).The registration statement for our initial public offering (“Initial Public Offering”) was declared effective on October 21, 2020. On October 26, 2020, we consummated the Initial Public Offering of 23,725,000 units (each, (f/k/a “Unit” and collectively, the “Units”LFG Buyer Co, LLC) (“Archaea Borrower”), including 2,225,000 additional Units that were issued pursuantentered into a $470 million Revolving Credit and Term Loan Agreement (the “New Credit Agreement”) with a syndicate of lenders co-arranged by Comerica Bank. The New Credit Agreement provides for a senior secured revolving credit facility (the “Revolver”) with an initial commitment of $250 million and a senior secured term loan credit facility (the “Term Loan” and, together with the Revolver, the “Facilities”) with an initial commitment of $220 million. Pursuant to the underwriters’ partial exerciseNew Credit Agreement, Archaea Borrower has the ability, subject to certain conditions, to draw upon the Revolver on a revolving basis up to the amount of their over-allotment option (the “Over-Allotment Units”), at $10.00 per Unit, generating grossthe Revolver then in effect. On the Closing Date, the Company received total proceeds of approximately $237.3$220 million and incurring offering costs of approximately $12.5 million, inclusive of $7.6 million in deferred underwriting commissions.Simultaneously with the closing of the Initial Public Offering, we consummated the private placement (“Private Placement”) of 6,771,000 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) to our Sponsor and Atlas Point Energy Infrastructure Fund, LLC (“Atlas Point Fund”), at a price of $1.00 per Private Placement Warrant, generating gross proceeds of approximately $6.8 million. Each Private Placement Warrant is exercisable to purchase one share of Rice’s Class A common stock or, in certain circumstances, one Class A Unit of RAC OpCo together with a corresponding number of shares of Rice’s non-economic Class B common stock.Following the Initial Public Offering, our public stockholders hold a direct economic equity ownership interest in Rice in the form of shares of Class A common stock, and an indirect ownership interest in RAC OpCo through Rice’s ownership of Class A Units of RAC OpCo. By contrast, the Initial Stockholders (our Sponsor, Atlas Point Fund and our officers and directors) own direct economic interests in RAC OpCo in the form of Class B Units and a corresponding non-economic voting equity interest in Rice in the form of shares of Class B common stock, as well as a small direct interest through the Sponsor Shares (as defined below). Sponsor Shares were purchased for $10.00 each and, in the absence of an initial Business Combination, will generally participate in liquidation or other payments on a pari passu basis with the Public Shares (as defined below). However, given the relatively de minimis number of Sponsor Shares relative to Public Shares, in many cases the economic, governance or other effects of the sponsor shares are not material to the holders of Class A common stock or warrants, and for simplicity, portions of this disclosure may not fully describe or reflect these immaterial effects.Upon the closing of the Initial Public Offering and the Private Placement, approximately $237.3 million of the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants in the Private Placement were placed in a trust account (“Trust Account”) located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only in U.S. “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations, as determined by us, until the earlier of: (i) the completionTerm Loan. As of a Business Combination and (ii) the distribution of the Trust Account.If we are unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or October 26, 2022, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to pay our franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares and Class A Units of RAC OpCo (other than those held by Rice), which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.20Proposed Business CombinationOn April 7,September 30, 2021, the Company has outstanding borrowings under the Term Loan of $220 million at an effective interest rate of 3.34% and has not drawn on the Revolver. As of September 30, 2021, the Company had issued letters of creditNine months Ended September 30, (in thousands) 2021 2020 Cash used in operating activities $ (54,710) $ (2,820) Cash used in investing activities $ (587,372) $ (18,707) Cash provided by financing activities $ 811,386 $ 21,841 Net increase in cash, cash equivalents and restricted cash $ 169,304 $ 314 (i)warehouse and office leases with third parties for periods ranging from one to three years. The Company also entered into a related-party office lease as a result of its acquisition of interest GCES in 2020. During the nine months ended September 30, 2021, the Company paid $0.2 million under this related-party lease which expires in May 2022.Combination Agreement (as amended, supplemented or otherwise modified from time to time, the “Aria Merger Agreement”), by and among the Company, RAC OpCo, LFG Intermediate Co,Combinations, Archaea Energy Operating LLC, a Delaware limited liability company and direct subsidiary of RAC OpCo (“RAC Intermediate”),(f/k/a LFG Buyer Co, LLC,LLC) (“Archaea Borrower”), entered into a Delaware limited liability company$470 million Revolving Credit and Term Loan Agreement (the “New Credit Agreement”) with a syndicate of lenders co-arranged by Comerica Bank. The New Credit Agreement provides for a senior secured revolving credit facility (the “Revolver”) with an initial commitment of $250 million and a direct subsidiary of RAC Intermediate (“RAC Buyer”), Inigo Merger Sub, LLC, a Delaware limited liability company and a direct subsidiary of RAC Buyer (“Aria Merger Sub”), Aria Energy LLC, a Delaware limited liability company (“Aria”), and the Equityholder Representative (as defined therein), pursuant to which, among other things, Aria Merger Sub will merge with and into Aria, with Aria surviving the merger and becoming a direct subsidiary of RAC Buyer, and (ii) the Business Combination Agreement, dated as of April 7, 2021 (as amended, supplemented or otherwise modified from time to time, the “Archaea Merger Agreement”senior secured term loan credit facility (the “Term Loan” and, together with the Aria MergerRevolver, the “Facilities”) with an initial commitment of $220 million. Pursuant to the New Credit Agreement, Archaea Borrower has the “Business Combination Agreements”), by and amongability, subject to certain conditions, to draw upon the Revolver on a revolving basis up to the amount of the Revolver then in effect. On the Closing Date, the Company RAC OpCo, RAC Intermediate, RAC Buyer, Fezzik Merger Sub, LLC, a Delaware limited liability companyreceived total proceeds of $220 million under the Term Loan. As of September 30, 2021, the Company has outstanding borrowings under the Term Loan of $220 million at an effective interest rate of 3.34% and direct subsidiary of RAC Buyer (“Archaea Merger Sub”), Archaea Energy, LLC (“Archaea Seller”), a Delaware limited liability company, and Archaea Energy II, LLC, a Delaware limited liability company (“Archaea” and, together with Archaea Seller and Aria, the “Companies”), pursuant to which, among other things, Archaea Merger Sub will merge with and into Archaea, with Archaea surviving the merger and becoming a direct subsidiary of RAC Buyer, in each case,has not drawn on the termsRevolver. As of September 30, 2021, the Company had issued letters of credit under the New Credit Agreement of $14.7 million, and subjectthus reducing the borrowing capacity of the Revolver to $235.3 million.(in thousands) December 31, 2020 Borrowings Repayments September 30, 2021 Comerica Bank - Specific Advance Facility Note $ 4,319 $ 675 $ (4,994) $ — Comerica Bank - Previous Revolver — 12,478 (12,478) — Comerica Term Loan 12,000 — (12,000) — New Credit Agreement - Term Loan — 220,000 — 220,000 New Credit Agreement - Revolver — — — — — 60,828 — 60,828 — 66,558 — 66,558 Promissory Notes — 30,000 (30,000) — Kubota Corporation - Term Notes 46 — (46) — Total $ 16,365 $ 390,539 $ (59,518) $ 347,386 conditions therein, and certain related agreements, as further describedAssai facility.Note 1the Notes to the condensed consolidated financial statements included inConsolidated Financial Statements under Part I, Item 1 of this Quarterly Report on Form 10-Q.Results of OperationsOur entire activity10-Q for the three and six months ended June 30, 2021, has been related to identifying a target company for our initial Business Combination. We have neither engaged in any operations nor generated any revenues to date. We will not generate any operating revenues until after completion of our initial Business Combination. We will generate non-operating income in the form of interest income from the proceeds from the IPO. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.For the three months ended June 30, 2021, we had a loss of approximately $131.8 million, which consisted of approximately $125.6 million of change in fair value of warrant liabilities, approximately $6.2 million of general and administrative expenses, approximately $34,000 of franchise tax expense, partially offset by approximately $6,000 in interest earned on investments held in Trust Account.For the six months ended June 30, 2021, we had a loss of approximately $123.0 million, which consisted of approximately $113.8 million of change in fair value of warrant liabilities, approximately $9.2 million of general and administrative expenses, approximately $74,000 of franchise tax expense, partially offset by approximately $43,000 in interest earned on investments held in Trust Account.Liquidity and Capital ResourcesAs of June 30, 2021, we had approximately $5,000 in our operating bank account and a working capital deficiency of approximately $7.6 million.Our liquidity needs to date had been satisfied through the payment of $26,000 from our Sponsor to purchase the Founder Shares and Sponsor Shares, a loan under a note agreement with our Sponsor of approximately $290,000 (the “Note”), and the net proceeds from the consummation of the Private Placement not held in the Trust Account. The Note was paid in full as of November 10, 2020. In addition, in order to finance transaction costs in connection with a Business Combination, our officers, directors and Sponsor may, but are not obligated to, provide us working capital loans. As of June 30, 2021, there were no amounts outstanding under any working capital loans.Basedadditional information on the foregoing, management believes that we will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, the Company will be using these funds held outside of the Trust Account for paying existing accounts payable, and structuring, negotiating and consummating the Business Combination.We do not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities.On October 21, 2020, we entered into an Administrative Services Agreement pursuant to which we have agreed to cause RAC OpCo to pay the Sponsor a total of $10,000 per month for office space, utilities and administrative support. Upon completion of the Initial Business Combination or our liquidation, the agreement will terminate.The underwriters of the Initial Public Offering were entitled to underwriting discounts and commissions of 5.5%, of which 2.0% (approximately $4.3 million) was paid at the closing of the Initial Public Offering and 3.5% (approximately $7.6 million) was deferred. The deferred underwriting discounts and commissions will become payable to the underwriters upon the consummation of the Initial Business Combination and will be paid from the amounts held in the Trust Account. The underwriters are not entitled to any interest accrued on the deferred underwriting discounts and commissions.Payments Due by Periods (in thousands) Total Remainder 2021 2022 - 2023 2024 - 2025 Thereafter Operating leases $ 975 $ 207 $ 747 $ 21 $ — Biogas rights and contracts commitments 40,192 794 10,060 5,950 23,388 Long-term debt 347,386 1,375 29,860 34,969 281,182 Total contractual obligations $ 388,553 $ 2,376 $ 40,667 $ 40,940 $ 304,570 21CriticalSignificant Accounting Policiesmanagement’smanagement's discussion and analysis of our financial condition and results of operations isare based on our unaudited condensed consolidated financial statements. Our financial statements which have been prepared in accordanceconformity with United States generally acceptedGAAP. For a discussion of our significant accounting principles. policies, see Note 2 - Basis of Presentation and Summary of Significant Accounting Policies. condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amountsamount of assets, liabilities, revenues and expenses and therelated disclosure of contingent assets and liabilitiesliabilities. The estimates and assumptions used in our condensed consolidatedfinancial statements are based upon management's evaluation of the relevant facts and circumstances as of the date of the financial statements. On an ongoing basis, weWe evaluate our estimates and judgments, including those related to fair value of financial instruments and accrued expenses.on an ongoing basis. We base our estimates on historical experience known trends and events andon various other factorsassumptions that we believe to be reasonable under the circumstances, thecircumstances. The results of which form the basis for making judgments we make about the carrying values of assets and liabilities that are not readily apparent from other sources. ActualBecause these estimates can vary depending on the situation, actual results may differ from thesethe estimates under differentand assumptions or conditions. There have been no significant changesused in ourpreparing the financial statements.discussed in the Company’s Amendment No. 1 to Annual Report on Form 10-K/A for the year ended December 31, 2020 as filed with the SEC on May 13, 2021.Recent Accounting PronouncementsIn August 2020, the FASB issued Accounting Standard Update (the “ASU”) No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditionsthose that are required for equity-linked contractsthe most pervasive and important to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. The Company early adopted the ASU on January 1, 2021. Adoptionportrayal of the ASU did not impact the Company’sour financial position and results of operations and that require the most difficult, subjective and/or complex judgments by management regarding estimates about matters that are inherently uncertain. Our critical accounting policies are associated with revenue recognition, acquisition accounting, and the judgment used in determining the fair value of identified assets acquired and liabilities assumed.flows.flows that incorporate the specific attributes of each asset including age, useful life, equipment condition and technology, and current replacement costs for similar assets. Other key inputs that require judgment include discount rates, comparable market transactions, estimated useful lives and probability of future transactions. The Company evaluates all available information, as well as all appropriate methodologies, when determining the fair value of assets acquired, liabilities assumed, and noncontrolling interest, if applicable, in a business combination. In addition, once the appropriate fair values are determined, the Company must determine the remaining useful life for property, plant and equipment and the amortization period and method of amortization for each finite-lived intangible asset.JuneSeptember 30, 2021, wethe Company did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.JOBS ActJumpstart Our Business Startups Act of 2012 (the “JOBS Act”) contains provisionsCompany does not believe 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 asinflation had 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 non-emerging growth companies. As a result, the condensed consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.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 reportmaterial impact on our systembusiness, revenues or operating results during the periods presented.this item.long-term fixed price off-take agreements. We believe these fixed-price arrangements will reduce our exposure to fluctuating energy and commodity prices, as well as the fluctuating prices of Environmental Attributes. However, if our costs were to rise unexpectedly, the revenue under our fixed-price contracts would remain constant, which may result in operating losses.ItemControls and ProceduresCONTROLS AND PROCEDURESDisclosure 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. Under the supervision and with the participation of our management, including our chief executive officerChief Executive Officer and chief financial officer,Chief Financial Officer, we conducted an evaluation ofevaluated the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended June 30, 2021, as such term is(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act.Act of 1934, as amended (the “Exchange Act”)) as of September 30, 2021. Based on thisupon that evaluation, our chief executive officerChief Executive Officer and chief financial officer haveChief Financial Officer concluded that our disclosure controls and procedures were not effective as of June 30, 2021, solely due to the material weakness in internal control over financial reporting described below and the resulting restatementend of our financial statements for the Affected Period (as defined below) to reflect the warrants we issued in connection with our initial public offering in October 2020 (the “warrants”) as a liability.22Material Weakness in Internal Control over Financial ReportingA material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. As previously reported in Amendment No. 1 to our Annual Report on Form 10-K/A for the year ended December 31, 2020, we have identified a material weakness in our internal control over financial reporting related to the accounting for the warrants. This material weakness resulted in a material misstatement of our warrant liabilities, change in fair value of warrant liabilities, additional paid-in capital, accumulated deficit and related financial disclosures as of December 31, 2020 and for the period from September 1, 2020covered by this report.December 31, 2020 (such period, the “Affected Period”).Internal ControlsRemediation Efforts to Address the Material WeaknessIn response to the material weakness described above, our management has expended a substantial amount of effort and resources for the remediation and improvement of our internal control over financial reporting. While we already had processes to properly identify and evaluate the appropriate accounting technical pronouncements and other literature for all significant or unusual transactions, in the quarter ended June 30, 2021, we improved these processes to ensure that the nuances of such transactions are effectively evaluated in the context of the increasingly complex accounting standards. Specifically, we expanded and improved our review process for complex securities and related accounting standards, and we have increased communication among our personnel and third-party professionals with whom we consult regarding the application of complex accounting transactions. We have also retained the services of a valuation expert to assist in valuation analysis of the warrants on a quarterly basis. Our remediation plan can only be accomplished over time and will be continually reviewed to determine that it is achieving its objectives. As such, our material weakness had not been fully remediated as of June 30, 2021.In light of the material weakness that we identified, we performed additional analysis as deemed necessary to ensure that our financial statements for the three and six months ended June 30, 2021, were prepared in accordance with U.S. generally accepted accounting principles. Management believes that the financial statements includeddiscussed elsewhere in this Quarterly Report on Form 10-Q, present fairly in all material respects our financial position, results of operationsthe Company completed the Business Combinations on September 15, 2021 pursuant to which the Company completed a reverse recapitalization with RAC and cash flowsacquired Aria. Prior to the Business Combinations, RAC was a special purpose acquisition company formed for the period presented.Changespurpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or other similar Business Combination with one or more target businesses. As a result, previously existing internal controls are no longer applicable or comprehensive enough as of the assessment date as the Company’s operations prior to the Business Combinations were insignificant compared to those of the consolidated entity post-Business Combinations. We are in Internal Controlthe process of reviewing, re-designing, and in some cases designing our internal controls over Financial ReportingOther than as described above in “Remediation Effortsfinancial reporting for the post-Business Combinations. The design and implementation of internal controls over financial reporting for the Company's post-Business Combinations has required and will continue to Address the Material Weakness,” there was no change inrequire significant time and resources from management and other personnel. The changes to our internal control over financial reporting that occurredcommenced during the fiscal quarter ended June 30, 2021 that hasperiod covered by this report and after will materially affected,affect, or isare reasonably likely to materially affect, our internal control over financial reporting.PART II – OTHER INFORMATIONItemLegal ProceedingsLEGAL PROCEEDINGSNone.ItemRisk Factors.RISK FACTORSour Annual Report on Form 10-K/A. However, below is a partial list of material risks, uncertainties and other factors that could have a material effect on the Company and its operations:●we may not be able to complete our initial business combination in the prescribed time frame;●our expectations around the performance of a prospective target business or businesses may not be realized;●we may not be successful in retaining or recruiting required officers, key employees or directors following our initial business combination;●our officers and directors may have difficulties allocating their time between the Company and other businesses and may potentially have conflicts of interest with our business or in approving our initial business combination;●we may not be able to obtain additional financing to complete our initial business combination or reduce the number of shareholders requesting redemption;●trust account funds may not be protected against third party claims or bankruptcy;●an active market for our public securities may not develop and you will have limited liquidity and trading; and●the availability to us of funds from interest income on the trust account balance may be insufficient to operate our business prior to the business combination.For more information about our risk factors, see Item 1A of Part I in Amendment No. 1 to ourRAC’s Annual Report on Form 10-K/A for the period ended December 31, 2020 and the section titled “Risk Factors” contained in our definitive proxy statement filed with the SEC on August 12, 2021, as the same may be amended or supplemented, with respect2020. However, for a discussion of risk factors applicable to our initial business combination.Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered SecuritiesOn October 26, 2020, we consummated the Initial Public Offering of 23,725,000 Units, including the Over-Allotment Units. The Units were sold at a price of $10.00 per Unit, generating gross proceeds of $237,250,000. The underwriters were granted a 45-day option from the date of the final prospectus relatingus, please refer to the Initial Public Offering to purchase up to 3,225,000 additional Units to cover over-allotments, if any, at $10.00 per Unit, less underwriting discounts and commissions. On October 23, 2020, the underwriters partially exercised the over-allotment option and, on October 26, 2020, the underwriters purchased the Over-Allotment Units.Barclays Capital Inc., AmeriVet Securities Inc. and Academy Securities 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 statementRegistration Statement on Form S-1 (File No. 333-249340). The333-260094), originally filed by the Company with the SEC on October 6, 2021, as subsequently amended on October 18, 2021 and declared effective by the registration statement effectiveSEC on October 21, 2020.In connection with2021. As a result of the closing of the Initial Public Offering, we paid a totalBusiness Combinations on September 15, 2021, the risk factors previously discussed in Part I, Item 1A. “Risk Factors” of approximately $4.3 million in underwriting discounts and commissions. In addition,RAC’s Annual Report Form 10-K/A for the underwriters agreed to defer approximately $7.6 million in underwriting discounts and commissions, which amount will be payable upon consummation of the Initial Business Combination. Prior to the closing of the Initial Public Offering, the Sponsor loaned RAC OpCo approximately $300,000 under the Note.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS24In connection withWe had no sales of unregistered equity securities during the Initial Public Offering, we incurred offering costs of approximately $12.5 million, inclusive of approximately $7.6 million in deferred underwriting commissions. Other incurred offering costs consisted principally of preparation fees related to the Initial Public Offering. After deducting the underwriting discounts and commissions (excluding the deferred portion, which amount will be payable upon consummation of the Initial Business Combination, if consummated) and the Initial Public Offering expenses, $237.3 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 inperiod covered by this Quarterly Report on Form 10-Q.On October 26, 2020, simultaneously with the closing of the Initial Public Offering and pursuant to separate Private Placement Warrants and Warrant Rights Agreements, dated September 21, 2020, by and among the Company and RAC OpCo, and each of the Sponsor and Atlas Point Fund, the Company completed the private sale of an aggregate of 6,771,000 Private Placement Warrants at a purchase price of $1.00 per Private Placement Warrant to the Sponsor and Atlas Point Fund, generating gross proceeds of $6,771,000.There has been no material change in the planned use of the proceeds from the Initial Public Offering and Private Placement as is described in the Company’s final prospectus related to the Initial Public Offering.ItemDefaults Upon Senior SecuritiesDEFAULTS UPON SENIOR SECURITIESNone.ItemMine Safety DisclosuresMINE SAFETY DISCLOSURESItemOther InformationOTHER INFORMATIONNone.ItemExhibits.EXHIBITSExhibit Number Description 2.1†2.1+2.2†2.2+Exhibit Number Description 31.2* 32.1** 32.2** 101.INS Inline XBRL Instance Document. 101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). †Certain schedules and similar attachments have been omitted. The Company agrees to furnish supplementally a copy of any omitted schedule or attachment to the SEC upon its request.*Filed herewith.**Furnished herewith.SIGNATURESduly authorized.RICE ACQUISITION CORP.ARCHAEA ENERGY INC. Date: August 13,November 15, 2021By: /s/ Daniel Joseph Rice, IVChad BellahName: Daniel Joseph Rice, IVChad BellahTitle:Chief ExecutiveAccounting Officer26iso4217:USD xbrli:shares