References in this Annual Report to "we," "us" or the "Company" refer to AltC
Acquisition Corp. References to our "management" or our "management team" refer
to our officers and directors, and references to the Sponsor refer to AltC
Sponsor LLC. The following discussion and analysis of the Company's financial
condition and results of operations should be read in conjunction with the
financial statements and the notes thereto contained elsewhere in this Annual
Report. Certain information contained in the discussion and analysis set forth
below includes forward-looking statements that involve risks and uncertainties.
Our actual results may differ materially from those anticipated in these
forward-looking statements as a result of many factors, including those set
forth under "Special Note Regarding Forward-Looking Statements," "Item 1A. Risk
Factors" and elsewhere in this Annual Report.
Overview
We are a blank check company incorporated in Delaware on February 1, 2021 formed
for the purpose of effecting a merger, stock exchange, asset acquisition, stock
purchase, reorganization or similar business combination with one or more
businesses. We intend to effectuate our Business Combination using cash derived
from the proceeds of the Initial Public Offering and the sale of the private
placement shares, our shares, debt or a combination of cash, shares and debt.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete a business
combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from February 1, 2021 (inception) through December 31, 2021
were organizational activities, those necessary to prepare for the Initial
Public Offering, described below, and subsequent to the Initial Public Offering,
identifying a target company for a business combination. We do not expect to
generate any operating revenues until after the completion of our business
combination. We generate non-operating income in the form of interest income on
marketable securities held in the Trust Account. 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.
For the period from February 1, 2021 (inception) through December 31, 2021, we
had net loss of $1,056,706, which consists of formation and operating costs of
$1,179,760 and a provision for income taxes of $2,416, offset by interest earned
on marketable securities held in Trust Account of $117,677 and an unrealized
gain on marketable securities held in the Trust Account of $7,793.
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Liquidity and Capital Resources
On July 12, 2021, we completed the Initial Public Offering of 50,000,000 public
shares, which includes the full exercise by the underwriters of their
over-allotment option in the amount of 5,000,000 Public Shares, at $10.00 per
public share, generating gross proceeds of $500,000,000. Simultaneously with the
closing of the Initial Public Offering, we completed the sale of 1,450,000
private placement shares at a price of $10.00 per private placement share in a
private placement to the Sponsor, generating gross proceeds of $14,500,000.
Following the Initial Public Offering and the sale of the private placement
shares, a total of $500,000,000 was placed in the Trust Account. We incurred
$26,652,125 of transaction costs, consisting of $8,580,000 of underwriting fees,
which is net of $1,420,000 reimbursed fees from the underwriters, $17,500,000 of
deferred underwriting fees and $572,125 of other offering costs.
For the period from February 1, 2021 (inception) through December 31, 2021, cash
used in operating activities was $1,880,180. Net loss of $1,056,706 was affected
by interest earned on marketable securities held in Trust Account of $117,677,
offering costs of $168,415 and an unrealized gain on marketable securities held
in Trust Account of $7,793. Changes in operating assets and liabilities used
$866,419 of cash for operating activities.
As of December 31, 2021, we had marketable securities held in the Trust Account
of $500,125,470 (including approximately $125,470 of interest income) consisting
of U.S. Treasury Bills with a maturity of 185 days or less. Interest income on
the balance in the Trust Account may be used by us to pay taxes. Through
December 31, 2021, we have not withdrawn any interest earned from the Trust
Account.
We intend to use substantially all of the funds held in the Trust Account,
including any amounts representing interest earned on the Trust Account (less
income taxes payable), to complete our Business Combination. To the extent that
our capital stock or debt is used, in whole or in part, as consideration to
complete our 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 our growth
strategies.
As of December 31, 2021, we had cash of $3,337,050. We intend to use the 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.
In order to finance transaction costs in connection with a Business Combination,
the Sponsor, an affiliate of the Sponsor, or the Company's officers and
directors may, but are not obligated to, loan the Company funds as may be
required ("Working Capital Loans"). If the Company completes a Business
Combination, the Company would repay the Working Capital Loans out of the
proceeds of the Trust Account released to the Company. 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. Except for the foregoing, the terms of such Working Capital Loans, if
any, have not been determined and no written agreements exist with respect to
such loans. The Working Capital Loans would either be repaid upon consummation
of a Business Combination, without interest, or, at the lender's discretion, up
to $1,500,000 of such Working Capital Loans may be convertible into shares of
the post-business combination entity at a price of $10.00 per share. These
shares would be identical to the private placement shares.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of identifying a target business, undertaking in-depth due diligence
and negotiating a Business Combination are less than the actual amount necessary
to do so, we may have insufficient funds available to operate our business prior
to our Business Combination. Moreover, we may need to obtain additional
financing either to complete our Business Combination or because we become
obligated to redeem a significant number of our public shares upon consummation
of our Business Combination, in which case we may issue additional securities or
incur debt in connection with such Business Combination. Subject to compliance
with applicable securities laws, we would only complete such financing
simultaneously with the completion of our 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 upon expiration of the completion window. 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.
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Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 2021. 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 or long-term liabilities, other than an agreement to pay an
affiliate of the Sponsor a monthly fee of $30,000 for office space,
administrative and support services. We began incurring these fees on July 8,
2021 and will continue to incur these fees monthly until the earlier of the
completion of the business combination and our liquidation.
The underwriters are entitled to a deferred fee of $0.35 per public share, or
$17,500,000 in the aggregate. The deferred fee will become payable to the
underwriter 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.
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 as of
December 31, 2021:
Common Stock Subject to Possible Redemption
We account for our common stock subject to possible conversion in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480
"Distinguishing Liabilities from Equity." Common stock subject to mandatory
redemption is classified as a liability instrument and 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 our
control) is classified as temporary equity. At all other times, common stock is
classified as stockholders' equity. Our common stock features certain redemption
rights that are considered to be outside of our control and subject to
occurrence of uncertain future events. Accordingly, common stock subject to
possible redemption is presented at redemption value as temporary equity,
outside of the stockholders' equity section of our balance sheet.
Net Loss Per Common Share
Net loss per common share is computed by dividing net loss by the weighted
average number of common shares outstanding during the period. Accretion
associated with the redeemable shares of Class A common stock is excluded from
earnings per share as the redemption value approximates fair value.
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") 2020-06, Debt - Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in
Entity's Own Equity (Subtopic 815-40) ("ASU 2020-06") to simplify accounting for
certain financial instruments. ASU 2020-06 eliminates the current models that
require separation of beneficial conversion and cash conversion features from
convertible instruments and simplifies the derivative scope exception guidance
pertaining to equity classification of contracts in an entity's own equity. The
new standard also introduces additional disclosures for convertible debt and
freestanding instruments that are indexed to and settled in an entity's own
equity. ASU 2020-06 amends the diluted earnings per share guidance, including
the requirement to use the if-converted method for all convertible instruments.
ASU 2020-06 is effective January 1, 2024 and should be applied on a full or
modified retrospective basis, with early adoption permitted beginning on
January 1, 2021. We adopted ASU 2020-06 effective February 1, 2021. The adoption
of ASU 2020-06 did not have an impact on our financial statements.
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Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our financial statements.
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