| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2023 |
Delaware | 85-2157013 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
Title of each class | Trading 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 redeemable warrant | AEAEU | The Nasdaq Global Market | ||
Class A common stock, par value $0.0001 per share | AEAE | The Nasdaq Global Market | ||
Warrants, each whole warrant exercisable for one share of Class A common stock, each at an exercise price of $11.50 per share | AEAEW | The Nasdaq Global Market |
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
| Emerging growth company | ☒ | |||||
TABLE OF CONTENTS
i
| • | Part I, Item 1-Condensed Financial Statement |
| • | Part I, Item 2-Management’s Discussion and Analysis of Financial Condition and Results of Operations |
| • | Part I, Item 4-Controls and Procedures |
| • | Part II, Item 6-Exhibits and Financial Statement Schedules. The Company’s Chief Executive Officer and Chief Financial Officer provided new certifications dated as of the date of the filing of this Form 10Q/A Amendment No. 1. |
September 30, 2023 (unaudited) | December 31, 2022 (audited) | |||||||
(as restated – see Note 2) | ||||||||
ASSETS | ||||||||
Current Assets: | ||||||||
| Cash | $ | 79,413 | $ | 212,232 | ||||
| Prepaid expenses | 57,853 | 379,264 | ||||||
| Other investments held to maturity | 241,544 | — | ||||||
| Total Current Assets | 378,810 | 591,496 | ||||||
| Investments held in the Trust Account | 17,483,547 | 237,373,538 | ||||||
Total Assets | $ | 17,862,357 | $ | 237,965,034 | ||||
LIABILITIES, COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 90,716 | $ | 101,396 | ||||
| Accrued Tax Payable – Franchise Tax | — | 73,739 | ||||||
| Accrued Tax Payable – Income Tax | 280,343 | 295,065 | ||||||
| Accrued Tax Payable – Excise Tax | 2,224,846 | — | ||||||
| Other accrued expenses – deferred | 137,995 | 12,815 | ||||||
| Due to related party | 333,338 | 15,212 | ||||||
| Loan payable – Sponsor | 710,000 | 175,000 | ||||||
| Total Current Liabilities | 3,777,238 | 673,227 | ||||||
| Derivative warrant liabilities | 1,645,000 | 2,350,000 | ||||||
| Deferred underwriting commission | 8,050,000 | 8,050,000 | ||||||
| Total liabilities | 13,472,238 | 11,073,227 | ||||||
COMMITMENTS AND CONTINGENCIES (Note 7 ) | ||||||||
| Class A common stock subject to possible redemption; 1,577,478 and 23,000,000 shares at September 30, 2023 and December 31, 2022, respectively | 17,444,748 | 236,385,597 | ||||||
Stockholders’ deficit: | ||||||||
| Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding | — | — | ||||||
| Class A common stock, $0.0001 par value, 100,000,000 shares authorized, 5,500,000 and none issued and outstanding (excluding 1,577,478 and 23,000,000 shares subject to possible redemption) at September 30, 2023 and December 31, 2022, respectively | 550 | — | ||||||
Class B common stock, $0.0001 par value, 10,000,000 shares authorized, 250,000 and 5,750,000 shares issued and outstanding at September 30, 2023 and December 3 1, 2022, respectively | 25 | 575 | ||||||
Additional paid-in capital | — | — | ||||||
| Accumulated deficit | (13,055,204 | ) | (9,494,365 | ) | ||||
| Total Stockholders’ Deficit | (13,054,629 | ) | (9,493,790 | ) | ||||
Total Liabilities, Common Stock Subject to Possible Redemption and Stockholders’ Deficit | $ | 17,862,357 | $ | 237,965,034 | ||||
For the Three Months Ended September 30, | For the nine Months Ended September 30, | |||||||||||||||
2023 (as restated – see Note 2) | 2022 | 2023 (as restated – see Note 2) | 2022 | |||||||||||||
EXPENSES | ||||||||||||||||
Administrative fee – related party | $ | 45,000 | $ | 45,000 | $ | 135,000 | $ | 135,000 | ||||||||
Non-redemption agreement expense | — | 180,000 | — | |||||||||||||
| Consulting Fees – CFO | 46,800 | — | 187,200 | — | ||||||||||||
| General and administrative | 267,884 | 278,453 | 1,210,682 | 966,253 | ||||||||||||
TOTAL EXPENSES | $ | 359,684 | $ | 323,453 | $ | 1,712,882 | $ | 1,101,253 | ||||||||
OTHER INCOME (EXPENSE) | ||||||||||||||||
| Income earned on investments held in Trust Account | $ | 227,386 | $ | 1,031,530 | $ | 3,984,184 | $ | 1,436,349 | ||||||||
| Change in fair value of warrant liabilities | (705,000 | ) | 235,000 | 705,000 | 10,230,000 | |||||||||||
Interest earned on operating and investment accounts | 6,832 | 46 | 7,895 | 96 | ||||||||||||
| Interest expense | (6,135 | ) | — | (11,138 | ) | — | ||||||||||
TOTAL OTHER INCOME, NET | $ | (476,917 | ) | $ | 1,266,576 | $ | 4,685,941 | $ | 11,666,445 | |||||||
Net income (loss) before income tax benefit (provision) | (836,601 | ) | 943,123 | 2,973,059 | 10,565,192 | |||||||||||
Income tax benefit (provision) | 86,851 | (22,939 | ) | (945,277 | ) | (475,732 | ) | |||||||||
Net (loss) income | $ | (749,750 | ) | $ | 920,184 | $ | 2,027,782 | $ | 10,089,460 | |||||||
Weighted average number of shares of Class A common stock outstanding, basic | 7,077,478 | 23,000,000 | 13,959,740 | 23,000,000 | ||||||||||||
Basic and diluted net (loss) income per share of Class A common stock | $ | (0.10 | ) | $ | 0.03 | $ | 0.12 | $ | 0.35 | |||||||
Weighted average number of shares of Class B common stock outstanding, basic and diluted | 250,000 | 5,750,000 | 2,627,289 | 5,750,000 | ||||||||||||
Basic and diluted net income per share of Class B common stock | $ | (0.10 | ) | $ | 0.03 | $ | 0.12 | $ | 0.35 | |||||||
Class A Common Stock | Class B Common Stock | Additional Paid in Capital | Accumulated Deficit | Stockholders’ Deficit | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance, January 1, 2023 | — | $ | — | 5,750,000 | $ | 575 | $ | — | $ | (9,494,365 | ) | $ | (9,493,790 | ) | ||||||||||||||
Remeasurement of Class A common stock subject to possible redemption to redemption amount | — | — | — | — | — | (2,240,671 | ) | (2,240,671 | ) | |||||||||||||||||||
Net income | — | — | — | — | — | 1,710,547 | 1,710,547 | |||||||||||||||||||||
Balance, March 31, 2023 | — | $ | — | 5,750,000 | $ | 575 | $ | — | $ | (10,024,489 | ) | $ | (10,023,914 | ) | ||||||||||||||
Remeasurement of Class A common stock subject to possible redemption to redemption amount | — | — | — | — | (180,000 | ) | (823,291 | ) | (1,003,291 | ) | ||||||||||||||||||
Excise tax imposed on common stock redemptions | — | — | — | — | — | (2,224,846 | ) | (2,224,846 | ) | |||||||||||||||||||
Contribution – Non-redemption | — | — | — | — | 180,000 | 180,000 | ||||||||||||||||||||||
Class B common stock converted to Class A common stock | 5,500,000 | $ | 550 | (5,500,000 | ) | $ | (550 | ) | — | — | — | |||||||||||||||||
Net income | — | — | — | — | — | 1,066,985 | 1,066,985 | |||||||||||||||||||||
Balance, June 30, 2023 | 5,500,000 | $ | 550 | 250,000 | $ | 25 | $ | — | $ | (12,005,641 | ) | $ | (12,005,066 | ) | ||||||||||||||
Remeasurement of Class A common stock subject to possible redemption to redemption amount | (299,813 | ) | (299,813 | ) | ||||||||||||||||||||||||
Excise tax | ||||||||||||||||||||||||||||
Net loss | (749,750 | ) | (749,750 | ) | ||||||||||||||||||||||||
Balance, September 30, 2023 | 5,500,000 | $ | 550 | 250,000 | $ | 25 | $ | — | $ | (13,055,204 | ) | $ | (13,054,629 | ) | ||||||||||||||
Class B | Class B Common Stock | Additional Paid in Capital | Accumulated Deficit | Stockholders’ Deficit | ||||||||||||||||
Shares | Amount | |||||||||||||||||||
Balance as of January 1, 2022 | 5,750,000 | $ | 575 | $ | — | $ | (20,563,001 | ) | $ | (20,562,426 | ) | |||||||||
| Net income | — | — | — | 8,260,876 | 8,260,876 | |||||||||||||||
Balance as of March 31, 2022 | 5,750,000 | $ | 575 | $ | — | $ | (12,302,125 | ) | $ | (12,301,550 | ) | |||||||||
| Net income | — | — | — | 908,400 | 908,400 | |||||||||||||||
Balance as of June 30, 2022 | 5,750,000 | $ | 575 | $ | — | $ | (11,393,725 | ) | $ | (11,393,150 | ) | |||||||||
| Net income | — | — | — | $ | 920,184 | 920,184 | ||||||||||||||
Balance as of September 30, 2022 | 5,750,000 | $ | 575 | $ | — | $ | (10,473,541 | ) | $ | (10,472,966 | ) | |||||||||
For the Nine Months Ended September 30, 2023 | For the Nine Months Ended September 30, 2022 | |||||||
(As Restated – See Note 2) | ||||||||
Cash Flows From Operating Activities: | ||||||||
| Net income | $ | 2,027,782 | $ | 10,089,460 | ||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Investment income earned on investments held in the Trust Account | (3,984,184 | ) | (1,436,349 | ) | ||||
| Gain on change in fair value of derivative liabilities | (705,000 | ) | (10,230,000 | ) | ||||
| Gain on change in fair value of held to maturity investments | (6,646 | ) | — | |||||
Non-redemption agreement expense | 180,000 | — | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | 321,411 | 7,500 | ||||||
| Other assets | — | 336,426 | ||||||
| Other deferred expenses | 125,180 | — | ||||||
| CFO Compensation Payable | 187,200 | — | ||||||
| Accrued Income Taxes | (14,722 | ) | 262,687 | |||||
| Accounts payable and accrued expenses | (84,419 | ) | (34,097 | ) | ||||
Net Cash Used In Operating Activities | (1,953,398 | ) | (1,004,373 | ) | ||||
Cash Flows From Investing Activities: | ||||||||
| Taxes paid from trust | 533,789 | 252,572 | ||||||
| Cash withdrawn from Trust Account to redeeming stockholders | 222,484,624 | — | ||||||
| Funds withdrawn from Trust Account for Taxes Payable and Dissolution | 855,762 | — | ||||||
| Funds deposited into held to maturity investment account | (775,762 | ) | — | |||||
| Funds withdrawn from held to maturity investment account | 540,864 | — | ||||||
Net Cash Provided by Investing Activities | 223,639,277 | 252,572 | ||||||
Cash Flows From Financing Activities: | ||||||||
| Redemption of Class A common stock | (222,484,624 | ) | — | |||||
Proceeds from loan payable – Sponsor | 535,000 | — | ||||||
| Proceeds from related party advances | 130,926 | — | ||||||
| Repayment of related party payable | — | (3,873 | ) | |||||
| Payments of offering costs | — | (8,082 | ) | |||||
Net Cash Used In Financing Activities | (221,818,698 | ) | (11,955 | ) | ||||
| Net change in cash | (132,819 | ) | (763,756 | ) | ||||
| Cash at beginning of period | 212,232 | 979,226 | ||||||
Cash at end of period | $ | 79,413 | $ | 215,470 | ||||
Supplemental cash flow information: | ||||||||
| Cash paid for income taxes | $ | 460,000 | $ | — | ||||
Supplemental Schedule of Non-cash Financing Activities: | ||||||||
| Remeasurement of Class A common stock subject to possible redemption to redemption amount | $ | 3,543,775 | $ | — | ||||
| Excise tax liability accrued for common stock redemptions | $ | 2,224,846 | $ | — | ||||
Balance sheet as of September 30, 2023 | ||||||||||||
As previously reported | Adjustments | As revised | ||||||||||
| Due to related party | $ | 146,138 | $ | 187,200 | $ | 333,338 | ||||||
| Accrued tax payable - Income tax | 252,567 | 27,776 | 280,343 | |||||||||
| Total current liabilities | 3,562,264 | 214,974 | 3,777,238 | |||||||||
| Total liabilities | 13,257,264 | 214,974 | 13,472,238 | |||||||||
| Class A common stock subject to redemption | 17,366,793 | 77,955 | 17,444,748 | |||||||||
| Accumulated deficit | (12,762,275 | ) | (292,929 | ) | (13,055,204 | ) | ||||||
| Total stockholders’ deficit | (12,761,700 | ) | (292,929 | ) | (13,054,629 | ) | ||||||
Income statement for the three months ended September 30, 2023 | ||||||||||||
As previously reported | Adjustments | As revised | ||||||||||
| Consulting Fees - CFO | — | $ | 46,800 | $ | 46,800 | |||||||
| Total expenses | $ | 312,884 | 46,800 | 359,684 | ||||||||
| Net loss before income tax provision | (789,801 | ) | (46,800 | ) | (836,601 | ) | ||||||
| Income tax benefit | 62,494 | 24,357 | 86,851 | |||||||||
| Net loss | (727,307 | ) | (22,443 | ) | (749,750 | ) | ||||||
Basic and diluted net loss per share of Class A common stock | (0.10 | ) | 0.00 | (0.10 | ) | |||||||
Basic and diluted net loss per share of Class B common stock | (0.10 | ) | 0.00 | (0.10 | ) | |||||||
Income statement for the nine months ended September 30, 2023 | ||||||||||||
As previously reported | Adjustments | As revised | ||||||||||
| Consulting fees - CFO | — | $ | 187,200 | $ | 187,200 | |||||||
Non-redemption agreement expense | — | 180,000 | 180,000 | |||||||||
Total expenses | $ | 1,345,682 | 367,200 | 1,712,882 | ||||||||
| Net income before income tax provision | 3,340,259 | (367,200 | ) | 2,973,059 | ||||||||
| Income tax provision | (917,501 | ) | (27,776 | ) | (945,277 | ) | ||||||
| Net income | 2,422,758 | (394,976 | ) | 2,027,782 | ||||||||
Basic and diluted net income per share of Class A common | 0.15 | (0.03 | ) | 0.12 | ||||||||
Basic and diluted net income per share of Class B common | 0.15 | (0.03 | ) | 0.12 | ||||||||
Class A common stock subject to possible redemption | ||||
Class A common stock subject to possible redemption at December 31, 2021 | $ | 234,600,000 | ||
| Fair value adjustment of Class A common stock to redemption value | 1,785,597 | |||
Class A common stock subject to possible redemption at December 31, 2022 | $ | 236,385,597 | ||
| Fair value adjustment of Class A common stock to redemption value | 2,240,671 | |||
Class A common stock subject to possible redemption at March 31, 2023 | 238,626,268 | |||
| Fair value adjustment of Class A common stock to redemption value | 1,003,291 | |||
| Fair value of redeemed Class A common stock | (222,484,624 | ) | ||
Class A common stock subject to possible redemption at June 30, 2023 | $ | 17,144,935 | ||
| Fair value adjustment of Class A common stock to redemption value | 299,813 | |||
Class A common stock subject to possible redemption at September 30, 2023 | $ | 17,444,748 | ||
For the Three Months Ended September 30, 2023 | ||||||||
Class A | Class B | |||||||
Basic and diluted net loss per share of common stock | ||||||||
Numerator: | ||||||||
| Allocation of net loss | $ | (724,170 | ) | $ | (25,580 | ) | ||
| Denominator: | ||||||||
| Basic and diluted weighted average shares outstanding | 7,077,478 | 250,000 | ||||||
| Basic and diluted net loss per share of common stock | $ | (0.10 | ) | $ | (0.10 | ) | ||
For the Three Months Ended September 30, 2022 | ||||||||
Class A | Class B | |||||||
Basic and diluted net income per share of common stock | ||||||||
Numerator: | ||||||||
Allocation of net income | $ | 736,147 | $ | 184,037 | ||||
Denominator: | ||||||||
Basic and diluted weighted average shares outstanding | 23,000,000 | 5,750,000 | ||||||
Basic and diluted net income per share of common stock | $ | 0.03 | $ | 0.03 | ||||
For the Nine Months Ended September 30, 2023 | ||||||||
Class A | Class B | |||||||
Basic and diluted net income per share of common stock | ||||||||
Numerator: | ||||||||
Allocation of net income | $ | 1,706,593 | $ | 321,189 | ||||
Denominator: | ||||||||
Basic and diluted weighted average shares outstanding | 13,959,740 | 2,627,289 | ||||||
Basic and diluted net income per share of common stock | $ | 0.12 | $ | 0.12 | ||||
For the Nine Months Ended September 30, 2022 | ||||||||
Class A | Class B | |||||||
Basic and diluted net income per share of common stock | ||||||||
Numerator: | ||||||||
Allocation of net income | $ | 8,071,568 | $ | 2,017,892 | ||||
Denominator: | ||||||||
Basic and diluted weighted average shares outstanding | 23,000,000 | 5,750,000 | ||||||
Basic and diluted net income per share of common stock | $ | 0.35 | $ | 0.35 | ||||
| • | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
| • | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| • | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
| • | in whole and not in part; |
| • | at a price of $0.01 per Public Warrant; |
| • | upon a minimum of 30 days’ prior written notice of redemption, or the 30-day redemption period to each warrant holder; and |
| • | if, and only if, the last reported sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganization, 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 warrant holders. |
| 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. | |
| 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. | |
| Level 3: | Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. | |
Description: | Level | September 30, 2023 | December 31, 2022 | |||||||||
Assets: | ||||||||||||
| Investments held to Maturity | 1 | $ | 241,544 | — | ||||||||
Investments held in Trust Account | 1 | $ | 17,483,547 | $ | 237,373,538 | |||||||
Liabilities: | ||||||||||||
Warrant liability – Private Placement Warrants | 3 | $ | 840,000 | $ | 1,200,000 | |||||||
Warrant liability – Public Warrants | 1 | $ | 805,000 | $ | 1,150,000 | |||||||
Fair Value Measurement Using Level 3 Inputs Total | ||||
Balance, fair value at June 30, 2023 | $ | 480,000 | ||
Change in fair value of derivative warrant liabilities | 360,000 | |||
Balance, fair value at September 30, 2023 | $ | 840,000 | ||
Fair Value Measurement Using Level 3 Inputs Total | ||||
Balance, fair value at December 31, 2022 | $ | 1,200,000 | ||
Change in fair value of derivative warrant liabilities | (360,000 | ) | ||
Balance, fair value at September 30, 2023 | $ | 840,000 | ||
September 30, 2023 | December 31, 2022 | |||||||
Risk-free interest rate | 4.60 | % | 3.99 | % | ||||
Expected volatility of underlying shares | 2.00 | % | 2.00 | % | ||||
Dividend yield | 0.00 | % | 0.00 | % | ||||
Probability of business combination | 5.00 | % | 12.00 | % | ||||
Private Placement Warrants | Public Warrants | Total | ||||||||||
Fair value at December 31, 2022 | $ | 1,200,000 | $ | 1,150,000 | $ | 2,350,000 | ||||||
Change in fair value | (360,000 | ) | (345,000 | ) | (705,000 | ) | ||||||
Fair value at September 30, 2023 | $ | 840,000 | $ | 805,000 | $ | 1,645,000 | ||||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
In connection with the preparation of the financial statements of the Company as of and for the year ended December 31, 2023, the Company determined that (i) there were errors related to the failure to reflect as an expense the deferred consulting payments due to our chief financial officer if the Company completes its initial business combination, in the previously issued financial statements for the quarters ended March 31, 2023, June 30, 2023, and September 30, 2023; and (ii) there were errors related to the presentation and calculation of the capital contribution and related cost associated with non-redemption agreements entered into with certain stockholders of the Company in connection with the special meeting of stockholders of the Company held on April 28, 2023, in the previously issued financial statements for the three and nine months ended September 30, 2023. In accordance with SEC Staff Accounting Bulletin NO. 99, “Materiality” and SEC Staff Accounting Bulletin NO. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” the Company determined that the errors were material to its previously issued financial statements. Therefore, the Company concluded that the previously issued financial statements should be restated.
The following discussion and analysis of the financial condition and results of operations of AltEnergy Acquisition Corp. (the “Company”) should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q/A (the “Quarterly Report”). Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report includes forward-looking statements. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. We have based these forward-looking statements on our current expectations and projections about future events. Forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in the Risk Factors section of our Annual Report on Form 10-K/A (Amendment No. 1) for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on May 23, 2023, and in our other SEC filings. Except as expressly required by applicable securities law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Restatement
In connection with the preparation of het financial statements of the Company as of and for the year ended December 31, 2023, the Company determined that there were errors relating to the presentation and calculation of the expense related to certain non-redemption agreements entered into with certain stockholders of the Company in connection with the special meeting of stockholders of the Company held on April 28, 2023, in previously issued financial statements as of and for the quarterly periods ending on June 30, 2023 and September 30, 2023.
In accordance with SEC Staff Accounting Bulletin No. 99, “Materiality” and SEC Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,”. the Company determined that the errors were material to its previously issued financial statements. Therefore, the Company concluded that the previously issued financial statements should be restated.
Overview
We are a blank check company incorporated as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “initial business combination”). We intend to effectuate an initial business combination using cash from the proceeds of our initial public offering (the “Public Offering”) that closed on November 2, 2021 (the “Closing Date”) and the private placement warrants sold in a private placement (the “Private Placement Warrants”) that closed simultaneously with the completion of the Public Offering, our capital stock, debt or a combination of cash, stock and debt.
23
The issuance of additional shares in connection with an initial business combination to the owners of the target or other investors:
| • | may significantly dilute the equity interest of investors in the initial public offering, which dilution would increase if the anti-dilution provisions in the Class B common stock resulted in the issuance of shares of Class A common stock on a greater than one-to-one basis upon conversion of the Class B common stock; |
| • | may subordinate the rights of holders of our common stock if preferred stock is issued with rights senior to those afforded our common stock; |
| • | could cause a change in control if a substantial number of shares of our common stock is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; |
| • | may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us; and |
| • | may adversely affect prevailing market prices for our Class A common stock and/or warrants. |
Similarly, if we issue debt securities or otherwise incur significant debt to bank or other lenders or the owners of a target, it could result in:
| • | default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations; |
| • | acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
| • | our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand; |
| • | our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding; |
| • | our inability to pay dividends on our common stock; |
| • | using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes; |
| • | limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; |
| • | increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; |
| • | limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and |
| • | other purposes and other disadvantages compared to our competitors who have less debt. |
In the short term, we expect to continue to incur significant costs in the pursuit of our initial business combination. There can be no assurance that our plans to raise capital or to complete our initial business combination will be successful.
Extension of Combination Period
On April 28, 2023, the Company held a special meeting of stockholders (the “Special Meeting”). As of April 10, 2023, the record date of the Special Meeting, there were 28,750,000 issued and outstanding shares of common stock of the Company, par value $0.0001 per share (the “Common Stock”) comprised of 23,000,000 shares of the Company’s Class A common stock, par value $0.0001 per share (“Class A Shares”), and 5,750,000 shares of the Company’s Class B common stock, par value $0.0001 per share. At the Special Meeting, the Company’s stockholders approved the proposal to file an amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware (the “Amendment”) to extend the date from May 2, 2023, to May 2, 2024 (the “Extension,” and such proposal, the “Extension Proposal”) by which the Company must (1) consummate a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (an “initial business combination”) or (2) cease its operations except for the purpose of winding up if it fails to complete such initial business combination, and redeem all of the Class A Shares included as part of the units sold in the Company’s initial public offering that was consummated on November 2, 2021. On April 28, 2023, to effectuate the Extension, the Company filed the Amendment with the Secretary of State of the State of Delaware. Stockholders holding 21,422,522 Class A Shares exercised their right to redeem such shares for a pro rata portion of the funds in the Company’s trust account (“Trust Account”) in connection with the Extension. As a result, $222,484,624 (approximately $10.38 per share) was removed from the Trust Account on or about May 15, 2023 to pay such holders, and an additional $855,761 was removed from the Trust Account on or about May 9, 2023. As of September 30, 2023 there was $17,483,547 (or approximately $11.08 per share of Class A common stock that is subject to redemption) held in the Trust Account.
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On April 28, 2023, following the Special Meeting, 5,500,000 shares of Class B Common Stock were converted into Class A Shares, which Class A Shares are not subject to redemption.
Results of Operations (restated)
We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception were organizational activities, those necessary to prepare for the initial public offering, and identifying a target company for a business combination. We do not expect to generate any operating revenues until after the completion of our initial business combination. We generate non-operating income in the form of interest income on marketable securities. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with completing a business combination.
For the three months ended September 30, 2023 and 2022, we had a net loss of $749,750 and net income of $920,184, respectively. Our net loss for the three months ended September 30, 2023 consisted of interest income earned on the funds held in Trust in the amount of $227,386, interest income earned on operating and investment accounts of $6,832 and income tax benefit of $86,851 offset by a loss of $705,000 on the change in fair value of the derivative warrant liabilities associated with the warrants issued as part of the Units sold in the Public Offering and the Private Placement Warrants, operating expenses that total $359,684 and interest expense of $6,135. Our net income for the three months ended September 30, 2022 consisted of interest income earned on the funds held in Trust in the amount of $1,031,530, interest income earned on operating and investment accounts of $46, gain of $235,000 on the change in fair value of the derivative warrant liabilities associated with the warrants issued as part of the Units sold in the Public Offering and the Private Placement Warrants offset by operating expenses that total $323,453 and income tax expense of $22,939.
For the nine months ended September 30, 2023 and 2022, we had net income of $2,027,782 and $10,089,460, respectively. Our net income for the nine months ended September 30, 2023 consisted of interest income earned on the funds held in Trust in the amount of $3,984,184, interest income earned on operating and investment accounts of $7,895, a gain of $705,000 on the change in fair value of the derivative warrant liabilities associated with the warrants issued as part of the Units sold in the Public Offering and the Private Placement Warrants offset by operating expenses that total $1,712,882, interest expense of $11,138 and income tax expense of $945,277. Our net income for the nine months ended September 30, 2022 consisted of interest income earned on the funds held in Trust in the amount of $1,436,349, interest income earned on operating and investment accounts of $96, a gain of $10,230,000 on the change in fair value of the derivative warrant liabilities associated with the warrants issued as part of the Units sold in the Public Offering and the Private Placement Warrants offset by operating expenses that total $1,101,253 and income tax expense of $475,732.
Going Concern Considerations, Liquidity and Capital Resources (restated)
As of September 30, 2023 there was $17,483,547 (or approximately $11.08 per share) held in the Trust Account. Cash of $79,413 was held outside of the Trust Account on September 30, 2023 and was available for working capital purposes. As of September 30, 2023, there was $241,544 held in the investment account of which is $235,762 is reserved to pay taxes and dissolution costs and expenses in the event the Company fails to complete in initial business combination and is dissolved.
In connection with the Company’s assessment of going concern considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that the Company may lack the financial resources it needs to sustain operations for a reasonable period of time, which is considered to be one year from the issuance date of the financial statements. Management has also determined that, in accordance with the Company’s amended and restated articles of incorporation, if the Company is unsuccessful in consummating an initial business combination by May 2, 2024 (after giving effect to the Extension of the Combination Period discussed above) as discussed above, the Company will cease all operations, redeem the public shares and thereafter liquidate and dissolve. These conditions raise substantial doubt about the ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The accompanying financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern.
The Company intends to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account, excluding the deferred underwriting commissions, and amounts paid to redeem public shares, to complete an initial business combination. To the extent that capital stock or debt is used, in whole or in part, as consideration to complete an initial business combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue growth strategies. If an initial business combination agreement requires the Company to use a portion of the cash in the Trust Account to pay the purchase price or requires the Company to have a minimum amount of cash at closing (including any cash available from the Trust Account), the Company will need to arrange for third-party financing.
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We may have insufficient funds available to operate our business prior to completing our initial business combination. Moreover, we may need to obtain additional financing either to complete our initial business combination or because we become obligated to redeem a significant number of the remaining public shares upon completion of our initial business combination, in which case we may issue additional securities or incur debt in connection with such initial business combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our initial business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
As of September 30, 2023, we had cash of $320,957 held outside the Trust Account, of which $235,762 is reserved to pay taxes and dissolution costs and expenses in the event the Company fails to complete in initial business combination and is dissolved. We intend to use all of such funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a business combination. The balance will be used to pay accrued taxes.
Convertible Working Capital Loan
In order to fund working capital deficiencies or finance transaction costs in connection with a business combination, the Sponsor or an affiliate of the Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a business combination, we would repay such loaned amounts. In the event that a business combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such working capital loans may be convertible into private placement units at a price of $1.00 per warrant at the option of the lender.
Loan Payable — Sponsor
Per a Commitment Letter, dated July 19, 2022, the Sponsor undertook upon the Company’s written request to make available an aggregate amount of up to $250,000 to provide the Company funds for working capital purposes to ensure that the Company would continue as a going concern for at least 12 months A second Commitment Letter was dated May 4, 2023 for up to an additional $750,000. The Sponsor is charging interest at the mid-term applicable federal rate at the time of funding. During During the nine months ended September 30, 2023, the Sponsor loaned an aggregate of $535,000 to the Company for working capital purposes. As of September 30, 2023 and December 31, 2022, $710,000 and $175,000 remained outstanding, respectively. As of September 30, 2023 and December 31, 2022, there was accrued interest of $11,138 and $184, respectively.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of September 30, 2023. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities, other than an agreement to pay an affiliate of the Sponsor a monthly fee of $15,000 for office space, utilities and administrative support to the Company. We began incurring these fees on October 28, 2021. On January 28, 2023 this agreement was amended to provide that, rather than be payable on a monthly basis, the payments due thereunder commencing with the monthly payment payable on or about February 28, 2023 shall accrue and be payable on the completion of a business combination or the Company’s liquidation.
Pursuant to the Underwriting Agreement with B. Riley securities, Inc., upon the consummation of our initial business combination, we will pay B. Riley Securities, Inc. a cash fee in an amount equal to 3.5% of the gross proceeds of the Public Offering (exclusive of any applicable finders’ fees which might become payable). No fee will be due if we do not complete an initial business combination.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:
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Common stock subject to possible redemption
The Company accounts for its shares of Class A common stock subject to possible redemption in accordance with the guidance enumerated in ASC 480 “Distinguishing Liabilities from Equity”. Common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The shares of the Company’s Class A common stock feature certain redemption rights that are considered by the Company to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, at September 30, 2023 and December 31, 2022, the shares of Class A common stock subject to possible redemption in the amount of $17,444,748 and $236,385,597 are presented as temporary equity, outside of the stockholders’ deficit section of the Company’s balance sheets, respectively. The shares of Class A common stock that were issued upon conversion of shares of Class B common stock are not subject to redemption and accordingly are presented in the stockholders’ deficit section of the Company’s balance sheets.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging.” The Company’s derivative instruments are recorded at fair value as of the closing date of the Initial Public Offering (November 2, 2021) and re-valued at each reporting date, with changes in the fair value reported in the statements of operations. Derivative assets and liabilities are classified on the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. The Company has determined the Public Warrants and the Private Placement Warrants are derivative instruments. As the Public Warrants and the Private Placement Warrants meet the definition of a derivative, the Public Warrants and the Private Placement Warrants are measured at fair value at issuance and at each reporting date in accordance with ASC 820, Fair Value Measurement, with changes in fair value recognized in the statement of operations in the period of change.
Warrants Instruments
We evaluated the Warrants in accordance with ASC 815-40, “Derivatives and Hedging-Contracts in Entity’s Own Equity”, and concluded that a provision in the Warrant Agreement related to certain tender or exchange offers as well as provisions that provided for potential changes to the settlement amounts dependent upon the characteristics of the holder of the warrant, precludes the Warrants from being accounted for as components of equity. As the Warrants meet the definition of a derivative as contemplated in ASC 815 and are not eligible for an exception from derivative accounting, the Warrants are recorded as derivative liabilities on the Balance Sheet. Upon consummation of the Initial Public Offering, the Company used a Monte Carlo simulation model to value the Public Warrants and a modified Black-Scholes model to value the Private Placement Warrants. The Company allocated the proceeds received from (i) the sale of Units (which is inclusive of one share of Class A common stock and one-half of one Public Warrant), (ii) the sale of Private Placement Warrants, and (iii) the issuance of shares of Class B common stock, first to the warrants based on their fair values as determined at initial measurement, with the remaining proceeds allocated to shares of Class A common stock subject to possible redemption (temporary equity) and Class B common stock (permanent equity) based on their relative fair values at the initial measurement date. The Public Warrants and the Private Placement Warrants were classified within Level 3 of the fair value hierarchy at the measurement dates due to the use of unobservable inputs.
As of September 30, 2023 and December 31, 2022, the Public Warrants were valued using the publicly available price for the Warrant and are classified as Level 1 on the Fair Value Hierarchy. As of September 30, 2023 and December 31, 2022, the Company used a modified Black-Scholes model to value the Private Placement Warrants. The Company relied upon the implied volatility of the Public Warrants and the implied volatilities of comparable companies and the closing price as of September 30, 2023 and December 31, 2022, per Public Warrant, respectively, to estimate the volatility for the Private Placement Warrants. As of September 30, 2023 and December 31, 2022, the Private Placement Warrants were classified within Level 3 of the Fair Value Hierarchy at the measurement dates due to the use of unobservable inputs.
Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid to transfer of a liability, in an orderly transaction between market participants at the measurement date. US GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
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| • | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
| • | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| • | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
Net income per share
Net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. The Company applies the two-class method in calculating earnings per share. Earnings and losses are shared pro rata between the two classes of shares. Net income per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. The calculation of diluted income per share of common stock does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering, and (ii) the private placement since the exercise of the warrants is contingent upon the occurrence of future events. As of September 30, 2023, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company. As a result, diluted net income per common share is the same as basic net income per common share for the periods presented. The warrants are exercisable to purchase 23,500,000 shares of Class A common stock in the aggregate.
Recent accounting pronouncements
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As of September 30, 2023, we were not subject to any market or interest rate risk.
We have not engaged in any hedging activities since our inception. We do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.
Item 4. Controls and Procedures.
Disclosure controls and procedures are controls and other procedures designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 (the “Exchange Act”), such as this quarterly report, is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls and procedures are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our principal executive officer and principal financial and accounting officer (our “Certifying Officers”) evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2023, pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, the Company’s principal executive officer and principal financial officer have concluded that material weaknesses exist related our accounting for complex financial instruments and our accounting and reporting for the completeness and accuracy of warrant liabilities and the corresponding change in the fair value of the warrant liability, that led to the restatement of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Management additionally identified, as it relates to the material weakness discussed above relating to the accounting for complex financial instruments, a failure to properly record the capital contributions and related costs associated with non-redemption agreements entered into with certain stockholders of the Company in connection with the special meeting of stockholders of the Company held on April 28, 2023 that led to the restatement of the Company’s Quarterly Report on Form 10-Q for the quarterly periods ending June 30, 2023 and September 30, 2023. In addition, management identified a material weakness in relation to the accounting of contractual liabilities which led to errors in our financial statements (i) in the accounting of consulting fees pursuant to a consulting agreement with our chief financial officer that led to the restatement of the Company’s Quarterly Report on Form 10-Q for the quarterly periods ended March 31, 2023, June 30, 2023, and September 30, 2023. In addition to the remediation steps discussed below, the Company has added additional steps to its internal financial review process in order to provide reasonable assurance that a reoccurrence of a material misstatement of any item in our financial statements will not occur.
A material weakness is a deficiency, or a combination of deficiencies, in disclosure controls and procedures or 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 and corrected on a timely basis.
Effective disclosure controls and internal controls are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects.
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Management has implemented remediation steps to improve our disclosure controls and procedures and our internal control over financial reporting. Specifically, we expanded and improved our review process for complex securities and related accounting standards. We plan to further improve this process by enhancing access to accounting literature, identification of third-party professionals with whom to consult regarding complex accounting applications and consideration of additional staff with the requisite experience and training to supplement existing accounting professionals.
If we identify any new material weakness in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in Internal Control Over Financial Reporting
During the three months ended September 30, 2023, there was no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in the Risk Factors section of our Annual Report on Form 10-K/A (Amendment No. 1) for the year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on May 23, 2023 (“10-K”). Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our 10-K other than the addition of the risk factor set forth below.
Risks Related to Taxes
New legislation that would change U.S. or foreign taxation of business activities could seriously harm our business, or the financial markets and the market price of our Class A common stock.
On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases (including redemptions) of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax. Any redemption or other repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax. Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote or otherwise would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business
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Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury. As such, the Company has recorded a 1% excise tax liability in the amount of $2,224,846 on the condensed balance sheets as of September 30, 2023. The liability does not impact the condensed statements of operations and is offset against additional paid-in capital or accumulated deficit if additional paid-in capital is not available.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
None.
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Item 6. Exhibits.
Exhibit No. | Description | |
| 31.1* | Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a). | |
| 31.2* | Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a). | |
| 32.1* | Certification of the Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350. | |
| 32.2* | Certification of the Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350. | |
| 101.INS* | Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
| 101.CAL* | Inline XBRL Taxonomy Extension Schema Document | |
| 101.SCH* | 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* | The cover page for the Company’s Quarterly Report on Form 10-Q has been formatted in Inline XBRL and contained in Exhibit 101 | |
| * | Furnished. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
April 16, 2024
| ALTENERGY ACQUISITION CORP. | ||
| By: | /s/ Russell Stidolph | |
| Name: | Russell Stidolph | |
| Title: | Chief Executive Officer (principal executive officer) | |
| By: | /s/ Jonathan Darnell | |
| Name: | Jonathan Darnell | |
| Title: | Chief Financial Officer (principal financial officer) | |
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