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
(the "Quarterly Report"). Certain information contained in the discussion and
analysis set forth below includes forward-looking statements that involve risks
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
for the fiscal year ended December 31. 2021, filed with the Securities and
Exchange Commission ("SEC") on March 15, 2022, 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.
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 on the
Closing Date and from additional issuances, if any, of, our capital stock and
our debt, or a combination of cash, stock and debt.
Our business activities from inception to June 30, 2022 consisted primarily of
our preparation for our Public Offering that was completed on November 2, 2021
and, since the Closing Date, identification and evaluation of prospective
acquisition targets for an Initial Business Combination.
At June 30, 2022, we had cash of approximately $349,000 and working capital of
approximately $629,000. Further, we expect to continue to incur significant
costs in the pursuit of our acquisition plans. We cannot assure you that our
plans to complete an Initial Business Combination will be successful.
Results of Operations
For the three months ended June 30, 2022 and 2021, we had net income of $908,400
and a net loss of $50,653, respectively. Our net income for the three months
ended June 30, 2022 consisted of interest income earned in the amount of
$338,218 on funds held in the Trust Account, operating expenses that total
$387,025 and a gain of $1,410,000 reflecting the change in fair value of
derivative warrant liability associated with the warrants issued as part of the
Units sold in the Public Offering and the Private Placement Warrants. In
addition, the Company record an income tax provision of $452,793. Our net loss
for the three months ended June 30, 2021 was $50,653 and consisted solely of
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For the six months ended June 30, 2022, we had net income of $9,169,276. Our net
income for the six months ended June 30, 2022 consisted of interest income
earned in the amount of $404,819 on funds held in the Trust Account and
operating expenses that total $777,750 and a gain of $9,995,000 reflecting the
change in fair value of derivative warrant liability associated with the
warrants issued as part of the Units sold in the Public Offering and the Private
Placement Warrants. In addition, the Company record an income tax provision of
$452,793. Our net loss for the period February 9, 2021 (inception) through
June 30, 2021 was $85,201 and consisted solely of formation costs.
Going Concern Considerations, Liquidity and Capital Resources
As of June 30, 2022, we had investments held in the Trust Account of
approximately $235.0 million principally invested in U.S. government securities.
Interest income on the balance in the Trust Account may be used by us to pay
taxes, and to pay up to $100,000 of any dissolution expenses. As of June 30,
2022, we had working capital of approximately $629,000, current liabilities of
approximately $399,800 and cash of approximately $349,000.
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
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, 2023, 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.
We intend 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, 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 us to use a portion of the cash in the Trust Account to pay
the purchase price or requires us to have a minimum amount of cash at closing,
we will need to reserve a portion of the cash in the Trust Account to meet such
requirements or arrange for third-party financing.
We are required to complete an initial business combination within 18 months
from the closing of the IPO. If we are unable to complete an initial business
combination within 18 months from the closing of the IPO, 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, and subject to having
lawfully available funds therefore, redeem the public shares, at a
price, payable in cash, equal to the aggregate amount then on deposit in the
trust account, including interest earned on the trust account deposits (which
interest shall be net of taxes payable and less up to $100,000 to pay
dissolution expenses), divided by the number of then-outstanding public shares,
which redemption will completely extinguish the public stockholders' rights as
stockholders (including the right to receive further liquidation distributions,
if any), subject to applicable law; and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of our remaining shareholders
and our board of directors, dissolve and liquidate, subject in each case to the
our obligations under Delaware law to provide for claims of creditors and the
requirements of other applicable law.
We completed the sale of 23,000,000 units (the "Public Units") at an offering
price of $10.00 per unit in the Public Offering including 3,000,000 units at the
initial public offering price less the underwriting discounts and commissions
pursuant to the full exercise of the underwriters' over-allotment option. On the
Closing Date, simultaneously with the consummation of the Public Offering, we
consummated the private placement (the "Private Placement") of an aggregate of
12,000,000 Private Placement at a price of $1.00 per Private Placement Warrant,
to the Sponsor and B. Riley Principal Investments, LLC ("BRPI"). The Sponsor
subscribed to purchase an aggregate of 11,600,000 Private Placement Warrants and
BRPI subscribed to purchase an aggregate of 400,000 Private Placement Warrants.
The sale of the Public Units generated gross proceeds of $230,000,000, less
underwriting commissions of $4,600,000 and other offering costs of $530,022. The
Private Placement Warrants generated $12,000,000 of proceeds.
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Each Public Unit consists of one share of our Class A common stock, $0.0001 par
value (each a "Public Share"), and
of one redeemable warrant, with each whole warrant exercisable for one share of
Class A common stock (each, a "Warrant" and, collectively, the "Warrants"). One
Warrant entitles the holder thereof to purchase one whole share of Class A
common stock at a price of $11.50 per share.
Of the proceeds of the Public Offering and the Private Placement aggregating
$242,000,000, $234,600,000 were deposited in a trust account (the "Trust
Account"). Income on the funds held in the Trust Account may be released to us
to pay our franchise and income taxes.
We have no obligations, assets or liabilities which would be considered
sheet arrangements. 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
We have not entered into any
sheet financing arrangements, established any special purpose entities,
guaranteed any debt or commitments of other entities, or entered into any
agreements involving assets.
At June 30, 2022, we did not have any long-term debt, capital lease obligations,
operating lease obligations or long-term liabilities. On October 28, 2021, we
entered into an administrative services agreement pursuant to which we have
agreed to pay an affiliate of the Sponsor a total of $15,000 per month for
office space, utilities and secretarial, and administrative support services.
Upon the earlier of the completion of the Initial Business Combination and the
Company's liquidation, we will cease paying these monthly fees.
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
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States 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 condensed financial statements, and income and expenses during the
periods reported. Actual results could materially differ from those estimates.
We have identified the following as our critical accounting policies:
Net Income (Loss) per Common Share
Net income (loss) per share is computed by dividing net income (loss) by the
weighted average number of shares of common stock outstanding during the period.
Weighted average shares for the period February 9, 2021 (inception) through
March 31, 2021 were reduced for the effect of an aggregate of 750,000 shares of
Class B common stock that were subject to forfeiture if the over-allotment
option was not exercised by the underwriters. At June 30, 2022 and 2021, the
Company did not have any dilutive securities and/or other contracts that could,
potentially, be exercised or converted into shares of common stock and then
share in the earnings (losses) of the Company. As a result, diluted income
(loss) per share is the same as basic income (loss) per share for the three
months ended June 30, 2022 and 2021, the six months ended June 30, 2022 and the
period from February 9, 2021 (inception) through June 30, 2021.
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Class A 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 feature
redemption rights that are either within the control of the holder or subject to
redemption upon the occurrence of uncertain events not solely within 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.
The Company accounts for the Public Warrants and the Private Placement Warrants
issued in connection with the Initial Public Offering and the Private Placement
in accordance with the guidance contained in FASB ASC 815, "Derivatives and
Hedging" whereby under that provision the Public Warrants and the Private
Placement Warrants do not meet the criteria for equity treatment and must be
recorded as a liability. Accordingly, the Company classifies the warrant
instrument as a liability at fair value and adjusts the instrument to fair value
at each reporting period. This liability will be
at each balance sheet date until the Public Warrants and the Private Placement
Warrants are exercised or expire, and any change in fair value will be
recognized in the Company's statement of operations. The fair value of the
Public Warrants and the Private Placement Warrants will be estimated using an
internal valuation model. The Company's valuation model utilizes inputs and
other assumptions and may not be reflective of the price at which they can be
settled. Such warrant classification is also subject to
at each reporting period.
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 the
Company's balance sheet.
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