References to the "Company," "our," "us" or "we" refer to Rice Acquisition Corp.
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 Report. Certain
information contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties.
Overview
We are a blank check company incorporated in Delaware on September 1, 2020 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 "Business Combination"). Our sponsor is Rice Acquisition Sponsor
LLC, a Delaware limited liability company ("Sponsor").
The registration statement for our initial public offering ("Initial Public
Offering") was declared effective on October 21, 2020. On October 26, 2020, we
consummated the Initial Public Offering of 23,725,000 units (each, a "Unit" and
collectively, the "Units"), including 2,225,000 additional Units that were
issued pursuant to the underwriters' partial exercise of their over-allotment
option (the "Over-Allotment Units"), at $10.00 per Unit, generating gross
proceeds of approximately $237.3 million, and incurring offering costs of
approximately $12.5 million, inclusive of $7.6 million in deferred underwriting
commissions.
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement ("Private Placement") of 6,771,000 warrants (each, a
"Private Placement Warrant" and collectively, the "Private Placement Warrants")
to our Sponsor and Atlas Point Energy Infrastructure Fund, LLC ("Atlas Point
Fund"), at a price of $1.00 per Private Placement Warrant, generating gross
proceeds of approximately $6.8 million. Each Private Placement Warrant is
exercisable to purchase one share of Rice's Class A common stock or, in certain
circumstances, one Class A Unit of Opco together with a corresponding number of
shares of Rice's non-economic Class B common stock.
53
Following the Initial Public Offering, our public stockholders hold a direct
economic equity ownership interest in Rice in the form of shares of Class A
common stock, and an indirect ownership interest in Opco through Rice's
ownership of Class A Units of Opco. By contrast, the Initial Stockholders (our
Sponsor, Atlas Point Fund and our officers and directors) hold direct economic
interests in Opco in the form of Class B Units and a corresponding non-economic
voting equity interest in Rice in the form of shares of Class B common stock, as
well as a small direct interest through the Sponsor Shares (as defined below).
Sponsor Shares were purchased for $10.00 each and, in the absence of an initial
Business Combination, will generally participate in liquidation or other
payments on a pari passu basis with the Public Shares (as defined below).
However, given the relatively de minimis number of Sponsor Shares relative to
Public Shares, in many cases the economic, governance or other effects of the
sponsor shares are not material to the holders of Class A common stock or
warrants, and for simplicity, portions of this disclosure may not fully describe
or reflect these immaterial effects.
Upon the closing of the Initial Public Offering and the Private Placement,
approximately $237.3 million of the net proceeds of the sale of the Units in the
Initial Public Offering and the sale of the Private Placement Warrants in 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 invested only in U.S. "government securities" within the meaning of
Section 2(a)(16) of 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, as determined by us, until the earlier of: (i)
the completion of a Business Combination and (ii) the distribution of the Trust
Account.
If we are unable to complete a Business Combination within 24 months from the
closing of the Initial Public Offering, or October 26, 2022, 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 pay our franchise
and income taxes (less up to $100,000 of interest to pay dissolution expenses),
divided by the number of then outstanding Public Shares and Class A Units of
Opco (other than those held by Rice), which redemption will completely
extinguish Public Stockholders' rights as stockholders (including the right to
receive further liquidating distributions, if any), subject to applicable law,
and (iii) as promptly as reasonably possible following such redemption, subject
to the approval of the remaining stockholders and the board of directors,
dissolve and liquidate, subject in each case to our obligations under Delaware
law to provide for claims of creditors and the requirements of other applicable
law.
Liquidity and Capital Resources
As of December 31, 2020, we had approximately $1.3 million in our operating bank
account and working capital of approximately $1.6 million.
Our liquidity needs to date had been satisfied through the payment of $26,000
from our Sponsor to purchase the Founder Shares and Sponsor Shares, a loan under
a note agreement with our Sponsor of approximately $44,000 as of December 31,
2020 (the "Note"), and the net proceeds from the consummation of the Private
Placement not held in the Trust Account. The Note was paid in full as of
November 10, 2020. In addition, in order to finance transaction costs in
connection with a Business Combination, our officers, directors and Sponsor may,
but are not obligated to, provide us working capital loans. As of December 31,
2020, there were no amounts outstanding under any working capital loans.
Based on the foregoing, management believes that we will have sufficient working
capital and borrowing capacity to meet its needs through the earlier of the
consummation of a Business Combination or one year from this filing. Over this
time period, the Company will be using these funds held outside of the Trust
Account for paying existing accounts payable, identifying and evaluating
prospective initial Business Combination candidates, performing due diligence on
prospective target businesses, paying for travel expenditures, selecting the
target business to merge with or acquire, and structuring, negotiating and
consummating the Business Combination.
54
Results of Operations
Our entire activity since inception through December 31, 2020 related to our
formation, the preparation for the Initial Public Offering, and since the
closing of the Initial Public Offering, the search for a prospective initial
Business Combination. We have neither engaged in any operations nor generated
any revenues to date. We will not generate any operating revenues until after
completion of our initial Business Combination. We will generate non-operating
income in the form of interest income on cash and cash equivalents. We expect to
incur increased 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 September 1, 2020 (inception) through December 31, 2020, we
had net loss of approximately $325,000, which consisted of approximately
$291,000 in general and administrative expenses and approximately $65,000 in
franchise tax expense, which was partially offset by an approximately $32,000 of
net gains on investments held in Trust Account.
Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations,
operating lease obligations, purchase obligations or long-term liabilities.
On October 21, 2020, we entered into an Administrative Services Agreement
pursuant to which we have agreed to cause Opco to pay the Sponsor a total of
$10,000 per month for office space, utilities and administrative support. Upon
completion of the Initial Business Combination or our liquidation, the agreement
will terminate.
The underwriters of the Initial Public Offering were entitled to underwriting
discounts and commissions of 5.5%, of which 2.0% (approximately $4.3 million)
was paid at the closing of the Initial Public Offering and 3.5% (approximately
$7.6 million) was deferred. The deferred underwriting discounts and commissions
will become payable to the underwriters upon the consummation of the Initial
Business Combination and will be paid from the amounts held in the Trust
Account. The underwriters are not entitled to any interest accrued on the
deferred underwriting discounts and commissions.
Critical Accounting Policies
This management's discussion and analysis of our financial condition and results
of operations is based on our financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of our financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses and the disclosure of contingent assets and liabilities in
our financial statements. On an ongoing basis, we evaluate our estimates and
judgments, including those related to fair value of financial instruments and
accrued expenses. We base our estimates on historical experience, known trends
and events and various other factors that we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions. The Company has identified the following as its
critical accounting policies:
Class A Ordinary Shares Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in
accordance with the guidance in FASB ASC Topic 480 "Distinguishing Liabilities
from Equity." Shares of Class A common stock subject to mandatory redemption (if
any) are classified as liability instruments and are measured at fair value.
Shares of conditionally redeemable Class A common stock (including Class A
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 our control) are classified as temporary equity. At all other
times, shares of Class A common stock are classified as stockholders' equity.
Our Class A common stock features certain redemption rights that are considered
to be outside of our control and subject to the occurrence of uncertain future
events. Accordingly, as of December 31, 2020, an aggregate of 21,596,500 shares
of Class A common stock subject to possible redemption are presented as
temporary equity, outside of the stockholders' equity section of our
consolidated balance sheet.
55
Net Income (Loss) Per Common Share
Net loss per share of common stock is computed by dividing net loss applicable
to stockholders by the weighted average number of shares of common stock
outstanding during the period. We have not considered the effect of the warrants
sold in the Initial Public Offering and Private Placement to purchase an
aggregate of 18,633,500 shares of Class A common stock in the calculation of
diluted earnings per share, since their inclusion would be anti-dilutive under
the treasury stock method. As a result, diluted earnings per common share is the
same as basic earnings per common share for the period presented.
Our statement of operations includes a presentation of income per share for
common stock subject to redemption in a manner similar to the two-class method
of income per share. Net income per share, basic and diluted for Class A common
stock is calculated by dividing the net gain from investments held in the Trust
Account of approximately $32,000, net of applicable franchise taxes of
approximately $32,000 for the period from September 1, 2020 (inception) through
December 31, 2020, by the weighted average number of shares of Class A common
stock outstanding for the period. Net loss per share, basic and diluted for
Class B common stock for the period from September 1, 2020 (inception) through
December 31, 2020 is calculated by dividing general and administration expenses
of approximately $291,000 and franchise taxes of approximately $33,000, net of
noncontrolling interest of approximately $12,000, resulting in a net loss of
approximately $312,000, by the weighted average number of Class B common stock
outstanding for the period.
Recent Accounting Pronouncements
Our management does not believe that any recently issued, but not yet effective,
accounting standards if currently adopted would have a material effect on the
accompanying financial statements.
Off-Balance Sheet Arrangements
As of December 31, 2020, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K.
Inflation
We do not believe that inflation had a material impact on our business, revenues
or operating results during the period presented.
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.
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.
56© Edgar Online, source Glimpses
ARCHAEA ENERGY INC. 
