References in this report (this "Quarterly Report") to "we," "us" or the
"Company" refer to Athena Consumer Acquisition Corp. References to our
"management" or our "management team" refer to our officers and directors, and
references to the "Sponsor" refer to Athena Consumer Acquisition 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 Quarterly Report.
Certain information contained in the discussion and analysis set forth below
includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act that
are not historical facts and involve risks and uncertainties that could cause
actual results to differ materially from those expected and projected. All
statements, other than statements of historical fact included in this Form 10-Q
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. Words such as
"expect," "believe," "anticipate," "intend," "estimate," "seek" and variations
and similar words and expressions are intended to identify such forward-looking
statements. Such forward-looking statements relate to future events or future
performance, but reflect management's current beliefs, based on information
currently available. A number of factors could cause actual events, performance
or results to differ materially from the events, performance and results
discussed in the forward-looking statements. For information identifying
important factors that could cause actual results to differ materially from
those anticipated in the forward-looking statements, please refer to the Risk
Factors section of the Company's final prospectus filed with the U.S. Securities
and Exchange Commission (the "SEC"). The Company's securities filings can be
accessed on the EDGAR section of the SEC's website at www.sec.gov. Except as
expressly required by applicable securities law, the Company disclaims any
intention or obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise.
Overview
Athena Consumer Acquisition Corp. was incorporated in Delaware on June 4, 2021.
The Company was formed for the purpose of entering into a merger, share
exchange, asset acquisition, stock purchase, reorganization or other similar
business transaction with one or more businesses (a "Business Combination").
On July 28, 2022, the Company entered into a Business Combination Agreement (as
amended by that certain first amendment to the Business Combination Agreement on
September 29, 2022, and as it may be further amended, supplemented or otherwise
modified from time to time, the "Business Combination Agreement"), by and among
the Company, Next.e.GO Mobile SE, a German company ("e.GO"), Next.e.GO B.V., a
Dutch private limited liability company and a wholly-owned subsidiary of e.GO
("TopCo"), and Time is Now Merger Sub, Inc., a Delaware corporation and
wholly-owned subsidiary of TopCo ("Merger Sub"), for the Company's initial
Business Combination (the "e.GO Transaction"). Pursuant to the Business
Combination Agreement, among other things, (i) TopCo will issue to the e.GO
Shareholders and convertible loan lenders of e.GO (the "Lenders") an aggregate
of up to 79,019,608 TopCo Ordinary Shares, representing aggregate consideration
to the e.GO Shareholders of $800,000,000, 30,000,000 of such shares will be
unvested and subject to an earn-out (the "Earn-Out Shares"), in exchange for the
contribution by the e.GO Shareholders of all of the paid up no-par value shares
of e.GO to TopCo and the convertible loans held by the Lenders, assuming that
all e.GO Shareholders and Lender participate in the exchange; (ii) each issued
and outstanding share of the Company's Class A common stock will be
automatically cancelled and extinguished and converted into one share of common
stock, par value $0.0001 per share, of the Surviving Company (the "Surviving
Company Common Stock"), (iii) each issued and outstanding share of the Company's
Class B common stock will be automatically cancelled and extinguished and
converted into a number of shares of Surviving Company Common Stock calculated
as the sum of (x) one plus (y) the lower of (a) the total amount funded under
the credit agreement, dated September 29, 2022, between e.GO, Brucke Funding
LLC, Brucke Agent LLC and certain lenders party thereto (the "Bridge
Financing"), divided by $15,000,000 and multiplied with one-fifth and (b)
one-fifth; (iv) TopCo will change its legal form from a Dutch private limited
liability company (besloten vennootschap met beperkte aansprakelijkheid) to a
Dutch public limited liability company (naamloze vennootschap); (v) Merger Sub
will merge with and into the Company, with the Company being the Surviving
Company and, after giving effect to the merger, becoming a direct, wholly-owned
subsidiary of TopCo; (vi) each share of the Company's common stock will be
converted into one share of the Surviving Company Common Stock; (vii)
immediately thereafter, each of the resulting shares of Surviving Company Common
Stock will be automatically exchanged for one TopCo Ordinary Share; and (viii)
each outstanding warrant to purchase a share of the Company's Class A common
stock will be converted into a warrant to purchase a TopCo Ordinary Share on the
same contractual terms and conditions as were in effect with respect to each
warrant prior to the e.GO Transaction.
We expect to continue to incur significant costs in the pursuit of our Business
Combination plans. We cannot assure you that our plans to complete the e.GO
Transaction or any Business Combination will be successful.
Results of Operations
As of September 30, 2022, the Company had not commenced any operations. All
activity through September 30, 2022 relates to the Company's formation and the
initial public offering (the "IPO"). The Company will not generate any operating
revenues until after the completion of a Business Combination, at the earliest.
The Company will generate non-operating income in the form of interest income
from the proceeds derived from the IPO placed in the Trust Account (defined
below). Most of the Company's expenses for the three months ended September 30,
2022 are related to the transaction described in Note 6 of the financial
statements.
For the three months ended September 30, 2022, we had a net loss of $539,199,
which consists of operating expenses of $1,271,266, change in fair value of
derivative forward purchase agreement of $130,000 and income tax expense of
$196,768, offset by income on investments held in Trust account of $1,058,835.
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For the nine months ended September 30, 2022, we had a net loss of $1,612,841,
which consists of operating expenses of $2,626,069, change in fair value of
derivative forward purchase agreement of $130,000 and income tax expense of
$256,026, offset by income on investments held in Trust account of $1,399,254.
For the three months ended September 30, 2021, we had a net loss of $2,416 which
consists of operating expenses.
For the period from June 4, 2021 (inception) through September 30, 2021, we had
a net loss of $3,416 which consists of operating expenses.
Going Concern and Capital Resources
The Registration Statement on Form S-1, as amended (the "Registration
Statement"), for the Company's IPO was declared effective on October 19, 2021.
On October 22, 2021, the Company consummated the IPO of 20,000,000 units
("Units"). Each Unit consists of one share of Class A common stock (the "Public
Shares") and one-half of a redeemable warrant (each, a "Public Warrant"). The
Units were sold at a price of $10.00 per Unit, generating gross proceeds of
$200,000,000, which is discussed in Note 3.
Simultaneously with the closing of the IPO, the Company consummated the sale of
1,000,000 units ("Private Placement Units") at a price of $10.00 per Private
Placement Unit in a private placement to the Company's sponsor, Athena Consumer
Acquisition Sponsor LLC (the "Sponsor") generating gross proceeds of
$10,000,000, which is described in Note 4.
Simultaneously with the closing of the IPO, the Company consummated the closing
of the sale of 3,000,000 additional Units upon receiving notice of the
underwriter's election to fully exercise its over-allotment option
("Overallotment Units"), generating additional gross proceeds of $30,000,000.
Simultaneously with the exercise of the over-allotment, the Company consummated
the Private Placement of an additional 60,000 Private Placement Units to the
Sponsor, generating gross proceeds of $600,000.
Following the closing of the IPO and exercise of the over-allotment,
$234,600,000 ($10.20 per Unit) from the net proceeds of the sale of the Units in
the IPO and the Private Placement Units was placed in a trust account ("Trust
Account") and invested in U.S. government securities, within the meaning set
forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), with a maturity of 180 days or less or in any
open-ended investment company that holds itself out as a money market fund
selected by the Company meeting the conditions of paragraphs (d)(2), (d)(3) and
(d)(4) of Rule 2a-7 of the Investment Company Act, as determined by the Company,
until the earlier of: (i) the completion of a Business Combination and (ii) the
distribution of the Trust Account.
For the nine months ended September 30, 2022, $689,968 of cash was used in
operating activities.
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
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.
In order to finance transaction costs in connection with a Business Combination,
the Sponsor or an affiliate of the Sponsor, or certain of 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 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. 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 $1.5 million of such Working Capital Loans may be
convertible into units of the post Business Combination entity at a price of
$10.00 per unit. The units would be identical to the Private Placement Units. As
of September 30, 2022, there were no Working Capital Loans outstanding.
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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.
In connection with the Company's assessment of going concern considerations in
accordance with Financial Accounting Standards Board ("FASB") Accounting
Standards Update ("ASU") 2014-15, "Disclosure of Uncertainties about an Entity's
Ability to Continue as a Going Concern," the Company has until January 22, 2023
to consummate the proposed Business Combination. It is uncertain that the
Company will be able to consummate the proposed Business Combination by this
time. If a Business Combination is not consummated by this date, there will be a
mandatory liquidation and subsequent dissolution of the Company. Management has
determined that the mandatory liquidation, should a Business Combination not
occur, and potential subsequent dissolution and liquidity condition, raises
substantial doubt about the Company's ability to continue as a going concern. No
adjustments have been made to the carrying amounts of assets or liabilities
should the Company be required to liquidate after January 22, 2023. The Company
intends to complete the proposed Business Combination before the mandatory
liquidation date. However, there can be no assurance that the Company will be
able to consummate any Business Combination by January 22, 2023.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of September 30, 2022. We do not participate
in transactions that create relationships with 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. The underwriter is entitled to deferred
underwriting commissions of $8,650,000 consisting of the $8,050,000 deferred
portion and the $600,000 cash discount agreed to be deferred until Business
Combination. 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.
The Company also agreed, commencing on October 19, 2021 through the earlier of
the Company's consummation of a Business Combination and its liquidation, to pay
an affiliate of the Sponsor a total of $10,000 per month for office space and
administrative support services.
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We will qualify as an "emerging growth company" and
under the JOBS Act will be allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded)
companies. We are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting
standards on the relevant dates on which adoption of such standards is required
for non-emerging growth companies. As such, our financial statements may not be
comparable to companies that comply with public company effective dates.
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Additionally, we are in the process of evaluating the benefits of relying on the
other reduced reporting requirements provided by the JOBS Act. Subject to
certain conditions set forth in the JOBS Act, if, as an "emerging growth
company," we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an auditor's attestation report on our system of
internal control over financial reporting pursuant to Section 404 of the
Sarbanes-Oxley Act, (ii) provide all of the compensation disclosure that may be
required of non-emerging growth public companies under the Dodd-Frank Wall
Street Reform and Consumer Protection Act, (iii) comply with any requirement
that may be adopted by the PCAOB regarding mandatory audit firm rotation or a
supplement to the auditor's report providing additional information about the
audit and the financial statements (auditor discussion and analysis) and (iv)
disclose certain executive compensation related items such as the correlation
between executive compensation and performance and comparisons of executive
compensation to median employee compensation. These exemptions will apply for a
period of five years following the completion of our IPO or until we are no
longer an "emerging growth company," whichever is earlier.
Critical Accounting Policies
The preparation of unaudited condensed 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:
Common Stock Subject to Possible Redemption
We account for our common stock subject to possible redemption 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 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
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 as temporary equity, outside of the
stockholders' equity section of our condensed balance sheets. The Company
recognizes changes in redemption value immediately as they occur and adjusts the
carrying value of redeemable common stock to equal the redemption value at the
end of each reporting period. This method would view the end of the reporting
period as if it were also the redemption date of the security. Immediately upon
the closing of the IPO, we recognized the accretion from initial book value to
redemption amount value. Increases or decreases in the carrying amount of
redeemable common stock are affected by charges against additional paid in
capital and accumulated deficit.
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 condensed financial statements.
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