References to the "Company," "our," "us" or "we" refer to Authentic Equity Acquisition Corp. The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the unaudited condensed 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.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We have based these forward-looking statements on our current expectations and projections about future events. These 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. 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. Such statements include, but are not limited to, possible business combinations and the financing thereof, and related matters, as well as all other statements other than statements of historical fact included in this Form 10-Q. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission ("SEC") filings.





Overview

We are a blank check company incorporated as a Cayman Islands company on September 29, 2020. We were formed for the purpose entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or other similar business combination with one or more target businesses (the "Business Combination").





Sponsor and Financing

Our Sponsor is Authentic Equity Sponsor LLC, a Delaware limited liability company (the "Sponsor"). The registration statement for our initial public offering (the "Initial Public Offering") was declared effective on January 14, 2021. On January 20, 2021, we consummated its Initial Public Offering of 23,000,000 units (the "Units" and, with respect to the Class A ordinary shares included in the Units being offered, the "Public Shares"), including 3,000,000 additional Units to cover over-allotments (the "Over-Allotment Units"), at $10.00 per Unit, generating gross proceeds of $230.0 million, and incurring offering costs of approximately $13.3 million, of which approximately $8.1 million was for deferred underwriting commissions.

Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 6,600,000 warrants (each, a "Private Placement Warrant" and collectively, the "Private Placement Warrants") to the Sponsor for an aggregate purchase price of approximately $5.8 million, and incurred offering costs of approximately $18,000, in a private placement (the "Private Placement"). In addition, the Company consummated the sale of certain rights to General Electric Pension Trust ("GEPT" and such rights, the "GEPT Rights") for gross proceeds of $824,500, which will allow GEPT to purchase up to $50.0 million of Forward Purchase Units (as defined below) immediately prior to an initial Business Combination.





Trust Account

Upon the closing of the Initial Public Offering and the Private Placement, $230.0 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement were placed in a trust account ("Trust Account") located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and are invested only in United States "government securities" within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended (the "Investment Company Act"), having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act, which invest only in direct U.S. government treasury obligations, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.





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Initial Business Combination

Our management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering, the sale of Private Placement Warrants and the sale of the GEPT Rights, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that we will be able to complete a Business Combination successfully. Our initial Business Combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the trust account) at the time of the signing of the agreement to enter into the initial Business Combination. However, we will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act.

If we are unable to complete a Business Combination within the Combination Period, we will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay its tax obligations, if any (less up to $100,000 of interest to pay dissolution expenses) divided by the number of the then-outstanding Public Shares, which redemption will completely extinguish Public Shareholders' rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii), to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.





Liquidity and Going Concern

As of September 30, 2022, we had approximately $8,000 in our operating bank account and a working capital deficit of approximately $854,000 including $25,000 in working capital loans- related party.

Our liquidity needs to date have been satisfied through a contribution of $25,000 from Sponsor to cover for certain expenses in exchange for the issuance of the Founder Shares, a loan of approximately $97,000 from the Sponsor pursuant to a promissory note originally issued on September 30, 2020 (the "Note"), and certain portion of the proceeds from the Private Placement and sale of the GEPT Right held outside of the Trust Account. We repaid the Note in full on January 20, 2021. In addition, in order to 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, provide us Working Capital Loans.

On September 8, 2022, we issued an unsecured promissory note (the "Working capital loan-related party") in the principal amount of up to $250,000 to the Sponsor, which may be drawn down by us from time to time to the consummation of the initial business combination upon our written notice to the Sponsor and subject to the sole discretion of the Sponsor. Interest will accrue on the unpaid and outstanding principal balance of the Working capital loan-related party at the lowest short-term Applicable Federal Rate beginning on the date of issuance. The Working capital loan-related party is repayable in full upon the date of the Business Combination. At the Sponsor's option, at any time prior to the Business Combination, any amounts outstanding under the Working capital loan-related party may be converted into warrants at a price of $1.00 per warrant to purchase one Class A ordinary share. The warrants will have the same terms as the existing private placement warrants, except that these warrants will not be subject to forfeiture in connection with the Business Combination. If we do not complete a business combination, the Working capital loan-related party will not be repaid, and all amounts owed under it will be forgiven except to the extent that we have funds available to it outside of our trust account established in connection with its initial public offering. During the three and nine months ended September 30, 2022, we withdrew $25,000 and accrued $35 interest pursuant to the Working capital loan-related party. As of September 30, 2022 and December 31, 2021, there were approximately $25,000 and $0 outstanding Working Capital Loans, respectively.





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We may need to raise additional capital through loans or additional investments from its Sponsor, an affiliate of the Sponsor, or its officers or directors. Our officers, directors and Sponsor, or their affiliates, may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company's working capital needs. Accordingly, we may not be able to obtain additional financing. If we are unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, reducing overhead expenses, and extending the terms and due dates of certain accrued expenses and other liabilities. We cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all.

In connection with our assessment of going concern considerations in accordance with FASB Accounting Standards Update ("ASU") 2014-15, "Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern," we have determined that the working capital deficit and mandatory liquidation and subsequent dissolution raises substantial doubt about our ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should we be required to liquidate after January 20, 2023. The financial statements do not include any adjustment that might be necessary if we are unable to continue as a going concern.

We continue to evaluate the impact of the COVID-19 pandemic and has concluded that the specific impact is not readily determinable as of the date of the balance sheet. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.





Results of Operations

Our entire activity from inception to September 30, 2022 was for our formation, preparation for our Initial Public Offering, and, since the closing of our Initial Public Offering, a search for business combination candidates. We will not be generating any operating revenues until the closing and completion of our initial Business Combination, at the earliest.

For the three months ended September 30, 2022, we had net income of approximately $2.0 million, which consisted of approximately $1.1 million of incomefrom change in fair value of derivative instruments and approximately $1.0 million of net gain from investments held in Trust Account, partially offset by approximately $157,000 of general and administrative expenses and $30,000 of related party administrative fees.

For the three months ended September 30, 2021, we had net income of approximately $2.9 million, which consisted of approximately $3.3 million of a gain from change in fair value of derivative instruments and approximately $6,000 of net gain from investments held in Trust Account, partially offset by approximately $326,000 of general and administrative expenses and $30,000 of related party administrative fees.

For the nine months ended September 30, 2022, we had net income of approximately $9.7 million, which consisted of approximately $9.1 million of income from change in fair value of derivative instruments and approximately $1.3 million of net gain from investments held in Trust Account, partially offset by approximately $563,000 of general and administrative expenses and $90,000 of related party administrative fees.

For the nine months ended September 30, 2021, we had net income of approximately $4.8 million, which consisted of approximately $8.1 million of a gain from change in fair value of derivative instruments and approximately $16,000 of net gain from investments held in Trust Account, partially offset by approximately $1.1 million of general and administrative expenses, approximately $702,000 offering costs associated with issuance of public and private placement warrants, approximately $1.4 million loss on excess of fair value over cash received for private placement warrants and approximately $84,000 of related party administrative fees.





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Contractual Obligations



Forward Purchase Agreement

In connection with the consummation of the Initial Public Offering, we entered into a forward purchase agreement (the "Forward Purchase Agreement") with GEPT, pursuant to which, in exchange for $824,500 of proceeds paid to the Company simultaneously with the closing of the Initial public Offering, GEPT has the right, in its discretion, to purchase up to the lesser of (i) $50.0 million of units and (ii) a number of units equal to 19.99% of the pro forma equity outstanding at the time of the closing of our initial Business Combination, including but not limited to, any ordinary shares issued in connection with the Initial Public Offering, the Forward Purchase Agreement or any private placement or other offering or to any seller in the initial Business Combination (the "Forward Purchase Units"), with each unit consisting of one Class A ordinary share (the "Forward Purchase Shares") and 0.425 of one warrant to purchase one Class A ordinary share at $11.50 per share, subject to adjustment (the "Forward Purchase Warrants"), for a purchase price of $10.00 per unit, in a private placement to occur immediately prior to the closing of the initial Business Combination.

In consideration for the purchase for the Forward Purchase Units, if GEPT purchases the maximum number of Forward Purchase Units available to it under the Forward Purchase Agreement, we will issue to GEPT, at the closing of the Company's initial Business Combination and prior to the conversion of the Class B ordinary shares into Class A ordinary shares in accordance with the terms thereof (the "GEPT Issuance"):





  ? a number of Class B ordinary shares (the "GEPT Class B ordinary shares") that
    is equal to 12.5% of the aggregate number of Class B ordinary shares
    outstanding at the time of the initial Business Combination prior to the
    conversion of such Class B ordinary shares into Class A ordinary shares
    pursuant to the terms thereof and after giving effect to the issuance of the
    GEPT Class B ordinary shares and any other Class B ordinary shares as a result
    of anti-dilution rights or other adjustments and the number of Class B
    ordinary shares transferred, assigned, sold or forfeited in connection with
    the initial Business Combination but excluding 115,000 Class B ordinary shares
    from such calculation (the "Post-Business Combination Class B ordinary
    shares") (provided, however, that if the Founder Shares are converted into
    Class A ordinary shares prior to the date of the Company's initial Business
    Combination, GEPT will receive a number of Class A ordinary shares equal to
    the number of Class A ordinary shares that it would have been entitled to
    pursuant to the GEPT Issuance); and




  ? a number of Private Placement Warrants equal to 12.5% of the aggregate number
    of Private Placement Warrants outstanding at the time of the Company's initial
    business combination prior to the conversion of such Class B ordinary shares
    into Class A ordinary shares pursuant to the terms thereof and after giving
    effect to any Private Placement Warrants transferred, assigned, sold or
    forfeited in connection with the initial Business Combination (the
    "Post-Business Combination Private Placement Warrants").

In connection with such issuance, our Sponsor agreed to forfeit to us for no consideration a number of Class B ordinary shares and Private Placement Warrants (the "Sponsor Forfeiture") such that after the Sponsor Forfeiture and the GEPT Issuance, the Sponsor will own (i) a number of Class B ordinary shares equal to 87.5% of the number of Post-Business Combination Class B ordinary shares plus 15,000 Class B ordinary shares, and (ii) a number of Private Placement Warrants equal to 87.5% of the number of Post-Business Combination Private Placement Warrants.

We will determine the number of Forward Purchase Units to be sold under the Forward Purchase Agreement and GEPT's obligation to purchase such units will be subject to the satisfaction of certain conditions, including, among others, the delivery by GEPT of a notice to us that it will purchase the Forward Purchase Units in whole or in part. The rights of GEPT under the Forward Purchase Agreement do not depend on whether any Class A ordinary shares are redeemed by our public shareholders. If GEPT does not purchase the maximum number of forward purchase units available to it under the Forward Purchase Agreement, GEPT will not be entitled to receive any of the Founder Shares or Private Placement Warrants described above, and we will be entitled to retain the $824,500 paid to us by GEPT.

The Forward Purchase Warrants purchased by GEPT under the Forward Purchase Agreement will have the same terms as the Public Warrants. The Private Placement Warrants to be issued to GEPT as described above will have the same terms and be subject to the same transfer restrictions as the Private Placement Warrants held by our Sponsor.

Registration and Shareholder Rights

The holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans) are entitled to registration rights pursuant to a registration and shareholder rights agreement signed upon consummation of the Initial Public Offering. These holders are entitled to certain demand and "piggyback" registration rights. However, the registration and shareholder rights agreement provide that the Company will not permit any registration statement filed under the Securities Act to become effective until the termination of the applicable lock-up period for the securities to be registered We will bear the expenses incurred in connection with the filing of any such registration statements.





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Pursuant to the Forward Purchase Agreement, we agreed to use reasonable best efforts to: (i) file within 30 days after the closing of the initial Business Combination a registration statement with the SEC for a secondary offering of the Forward Purchase Shares and the Forward Purchase Warrants (and underlying Class A ordinary shares); (ii) cause such registration statement to be declared effective promptly thereafter but in no event later than sixty (60) days after the initial filing; (iii) maintain the effectiveness of such registration statement until the earliest of (A) the date on which GEPT or its assignees cease to hold the securities covered thereby, and (B) the date all of the securities covered thereby can be sold publicly without restriction or limitation under Rule 144 of the Securities Act; and (iv), after such registration statement is declared effective, cause us to conduct firm commitment underwritten offerings, subject to certain limitations. In addition, the Forward Purchase Agreement provides for certain "piggy-back" registration rights to the holders of forward purchase securities to include their securities in other registration statements filed by us. We will bear the cost of registering these securities.





Underwriting Agreement

We granted the underwriters a 45-day option from the final prospectus relating to the Initial Public Offering to purchase up to 3,000,000 additional Units to cover over-allotments, if any, at $10.00 per Unit, less the underwriting discounts and commissions. On January 20, 2021, the underwriter fully exercised its over-allotment option.

The underwriters were entitled to an underwriting discount of $0.20 per unit, or $4.6 million in the aggregate, paid upon the closing of the Initial Public Offering. In addition, $0.35 per unit, or approximately $8.1 million in the aggregate will be payable to the underwriters for deferred underwriting commissions. The deferred underwriting commissions will become payable to the underwriters from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. A summary of our significant accounting policies is included in Note 2 to our condensed financial statements in Part I, Item 1 of this Quarterly Report. Certain of our accounting policies are considered critical, as these policies are the most important to the depiction of our financial statements and require significant, difficult or complex judgments, often employing the use of estimates about the effects of matters that are inherently uncertain. Such policies are summarized in the Management's Discussion and Analysis of Financial Condition and Results of Operations section in our 2021 Annual Report on Form 10-K filed with the SEC on March 25, 2022. There have been no significant changes in the application of our critical accounting policies during the nine months ended September 30, 2022.

Recent Accounting Pronouncements

See Note 2 to the unaudited condensed financial statements included in Part I, Item 1 of this Quarterly Report for a discussion of recent accounting pronouncements.

Off-Balance Sheet Arrangements

As of September 30, 2022, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations.





JOBS Act

The Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an "emerging growth company" and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and 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 a result, the financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of 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 controls over financial reporting pursuant to Section 404, (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 the CEO's compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering or until we are no longer an "emerging growth company," whichever is earlier.

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