References to the "Company," "our," "us" or "we" refer to Spartan Acquisition
Corp. III. 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 Quarterly Report on Form 10-Q. 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 (the
"Securities Act"), 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 Quarterly Report on Form 10-Q. Factors that might cause or
contribute to such a discrepancy include, but are not limited to, those
described in our other U.S. Securities and Exchange Commission ("SEC") filings.
Overview
We are a blank check company incorporated in Delaware on December 23, 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 "Initial Business Combination"). Our sponsor is Spartan
Acquisition Sponsor III LLC ("Sponsor").
The registration statement for our initial public offering (the "Initial Public
Offering") was declared effective on February 8, 2021. On February 11, 2021, we
consummated the Initial Public Offering of 55,200,000 units (the "Units" and,
with respect to the Class A common stock included in the Units being offered,
the "Public Shares"), including 7,200,000 additional Units to cover
over-allotments (the "Over-Allotment Units"), at $10.00 per Unit, generating
gross proceeds of $552.0 million, and incurring offering costs of approximately
$31.1 million, of which approximately $19.3 million was for deferred
underwriting commissions.
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement ("Private Placement") of 9,360,000 warrants (each, a
"Private Placement Warrant" and collectively, the "Private Placement Warrants")
at a price of $1.50 per Private Placement Warrant to our Sponsor, generating
proceeds of approximately $14.0 million.
Upon the closing of the Initial Public Offering and the Private Placement,
$552.0 million ($10.00 per Unit) of the net proceeds of the Initial Public
Offering and certain of the proceeds of the Private Placement was placed in a
trust account (the "Trust Account"). The proceeds held in the Trust Account were
invested only in U.S. government securities with a maturity of 185 days or less
or in money market funds that meet certain conditions under Rule 2a-7 under the
Investment Company Act of 1940, as amended (the "Investment Company Act"), and
that invest only in direct U.S. government treasury obligations, as determined
by us. Funds will remain in the Trust Account until the earlier of (i) the
consummation of the Initial Business Combination or (ii) the distribution of the
Trust Account proceeds as described below. The remaining proceeds outside the
Trust Account may be used to pay for business, legal and accounting due
diligence on prospective acquisitions and continuing general and administrative
expenses.
If we are unable to complete an Initial Business Combination within 24 months
from the closing of the Initial Public Offering, or February 11, 2023 (the
"Combination Period"), we will (i) cease all operations except for the purpose
of winding up, (ii) as promptly as reasonably possible but no more than ten
business days thereafter subject to lawfully
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available funds therefor, 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 our franchise and income taxes (less up to
$100,000 of such net interest to pay dissolution expenses), divided by the
number of then outstanding Public Shares, 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 our remaining stockholders and our 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. Our Sponsor and our officers and directors will enter into a letter
agreement, signed upon the effective date of the Initial Public Offering, with
us, pursuant to which they agreed to waive their rights to liquidating
distributions from the Trust Account with respect to any Founder Shares (as
defined below) held by them if we fail to complete the Initial Business
Combination within the Combination Period. However, if our Sponsor or any of our
directors, officers or affiliates acquires shares of Class A common stock in or
after the Initial Public Offering, they will be entitled to liquidating
distributions from the Trust Account with respect to such shares if we fail to
complete the Initial Business Combination within the prescribed time period.
Recent Developments
Proposed Business Combination
On July 28, 2021, the Company entered into a Business Combination Agreement and
Plan of Reorganization (the "Business Combination Agreement"), by and among the
Company, Athena Pubco B.V., a Dutch private limited liability company (besloten
vennootschap met beperkte aansprakelijkheid), Athena Merger Sub, Inc., a
Delaware corporation, Madeleine Charging B.V., a Dutch private limited liability
company (besloten vennootschap met beperkte aansprakelijkheid), Allego Holding
B.V., a Dutch private limited liability company (besloten vennootschap met
beperkte aansprakelijkheid) ("Allego"), and, solely with respect to the sections
specified therein, E8 Partenaires, a French societe par actions simplifee.
Subject to the satisfaction or waiver of the conditions to closing of the
transactions contemplated by the Business Combination Agreement (the
"Transactions"), as described in the Current Report on Form 8-K , filed with
the SEC on July 28, 2021, the Transactions will effect an Initial Business
Combination between the Company and Allego. The Agreement and the Transactions
contemplated thereby were unanimously approved by the boards of directors of
each of the Company and Allego.
Results of Operations
Our entire activity from inception through June 30, 2021, was in preparation for
our formation and the Initial Public Offering, and since our Initial Public
Offering, our activity has been limited to the search for a prospective Initial
Business Combination. We will not generate any operating revenues until the
closing and completion of our Initial Business Combination. We generate
non-operating income primarily in the form of investment income from our
investments held in the Trust Account. 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 three months ended June 30, 2021, we had an income of approximately $0.3
million, which consisted of approximately $4.6 million of non-operating gain
resulting from the change in fair value of derivative warrant liabilities and
approximately $20,000 of income from investments held in Trust Account, offset
by approximately $4.3 million of general and administrative expenses and
approximately $49,000 of franchise tax expense.
For the six months ended June 30, 2021, we had a loss of approximately $4.1
million, which consisted of approximately $1.1 million of offering costs -
derivative warrant liabilities, approximately $5.1 million of general and
administrative expenses, approximately $0.1 million of franchise tax expense
offset by, approximately $2.1 million of non-operating gain resulting from the
change in fair value of derivative warrant liabilities and approximately $36,000
of income from investments held in Trust Account.
Liquidity and Going Concern
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As of June 30, 2021, we had approximately $0.7 million in cash and working
capital deficit of approximately $2.8 million.
Our liquidity needs prior to the Initial Public Offering were satisfied through
the payment of $25,000 from our Sponsor to cover for certain offering costs on
our behalf in exchange for issuance of our shares of Class B common stock (the
"Founder Shares"), and loan proceeds from our Sponsor of approximately $182,000
under an unsecured promissory note (the "Note"). We repaid the Note in full on
February 17, 2021. Subsequent from the consummation of the Initial Public
Offering, our liquidity needs will be satisfied with the proceeds from the
consummation of the Private Placement not held in the Trust Account. In
addition, in order to finance transaction costs in connection with an Initial
Business Combination, our Sponsor may, but is not obligated to, provide us
Working Capital Loans (see Note 4 to the accompanying financial statements). To
date, there were no amounts outstanding under any Working Capital Loans.
We will need to raise additional capital through loans or additional investments
from our Sponsor, an affiliate of our Sponsor, or our 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 our 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, and
reducing overhead expenses. 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,"
management has determined these conditions raise substantial doubt about our
ability to continue as a going concern through the Combination Period, which is
the date we are required to cease all operations except for the purpose of
winding up if we have not completed a business combination. These financial
statements do not include any adjustments relating to the recovery of the
recorded assets or the classification of the liabilities that might be necessary
should we be unable to continue as a going concern.
Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations,
operating lease obligations, purchase obligations or long-term liabilities.
Critical Accounting Policies
This management's discussion and analysis of our financial condition and results
of operations is based on our unaudited condensed financial statements, which
have been prepared in accordance with United States generally accepted
accounting principles. The preparation of these unaudited condensed 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 unaudited condensed 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.
Investments Held in the Trust Account
Our portfolio of investments is comprised of U.S. government securities, within
the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a
maturity of 185 days or less, or investments in money market funds that invest
in U.S. government securities and generally have a readily determinable fair
value, or a combination thereof. When our investments held in the Trust Account
are comprised of U.S. government securities, the investments are classified as
trading securities. When our investments held in the Trust Account are comprised
of money market funds, the investments are recognized at fair value. Trading
securities and investments in money market funds are presented on the condensed
balance sheets at fair value at the end of each reporting period. Gains and
losses resulting from the change in fair value of these securities is included
in income from investments held in Trust Account in the
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accompanying unaudited condensed statements of operations. The estimated fair
values of investments held in the Trust Account are determined using available
market information.
Derivative Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or
foreign currency risks. We evaluate all of our financial instruments, including
issued stock purchase warrants, to determine if such instruments are derivatives
or contain features that qualify as embedded derivatives, pursuant to the FASB
Accounting Standards Codification ("ASC") Topic 480 "Distinguishing Liabilities
from Equity" ("ASC 480") and FASB ASC Topic 815, "Derivatives and Hedging" ("ASC
815"). The classification of derivative instruments, including whether such
instruments should be recorded as liabilities or as equity, is re-assessed at
the end of each reporting period. Derivative warrant liabilities are classified
as non-current liabilities as their liquidation is not reasonably expected to
require the use of current assets or require the creation of current
liabilities.
The Public Warrants and the Private Placement Warrants are recognized as
derivative liabilities in accordance with ASC 815. Accordingly, we recognize the
warrant instruments as liabilities at fair value and adjust the instruments to
fair value at each reporting period. The liabilities are subject to
re-measurement at each balance sheet date until exercised. The initial fair
value of the Public Warrants was estimated using a Black-Scholes option pricing
model. The fair value of the Public Warrants as of June 30, 2021 is based on
observable listed prices for such warrants. The fair value of the Private
Placement Warrants as of June 30, 2021 is determined using Black-Scholes option
pricing model. The determination of the fair value of the warrant liability may
be subject to change as more current information becomes available and
accordingly the actual results could differ significantly. Derivative warrant
liabilities are classified as non-current liabilities as their liquidation is
not reasonably expected to require the use of current assets or require the
creation of current liabilities.
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in
accordance with the guidance in ASC 480. Class A common stock subject to
mandatory redemption (if any) are classified as liability instruments and are
measured at fair value. 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) is classified as temporary equity. At all
other times, shares of Class A common stock are classified as stockholders'
equity. Our Class A common stock feature certain redemption rights that are
considered to be outside of our control and subject to the occurrence of
uncertain future events. Accordingly, as of June 30, 2021, 49,423,215 shares of
Class A common stock subject to possible redemption are presented at redemption
value as temporary equity, outside of the stockholders' equity section of our
unaudited condensed balance sheet. There were no shares of Class A common stock
issued and outstanding at December 31, 2020.
Net Income (Loss) Per Share of Common Stock
Our condensed statements of operations include a presentation of net income
(loss) per share for common stock subject to possible redemption in a manner
similar to the two-class method of net income (loss) per common stock. Net
income (loss) per common stock, basic and diluted, for Class A common stock is
calculated by dividing the interest income earned on the Trust Account, less
interest available to be withdrawn for the payment of taxes, by the weighted
average number of Class A common stock outstanding for the periods. Net income
(loss) per common stock, basic and diluted, for Class B common stock is
calculated by dividing the net income (loss), adjusted for income attributable
to Class A common stock, by the weighted average number of Class B Common Stock
outstanding for the periods. Class B common stock include the Founder Shares as
these common stocks do not have any redemption features and do not participate
in the income earned on the Trust Account.
The calculation of diluted net income (loss) per common stock does not consider
the effect of the warrants issued in connection with the (i) Initial Public
Offering, (ii) exercise of the over-allotment option and (iii) Private Placement
since the exercise price of the warrants is in excess of the average common
stock price for the periods and therefore the inclusion of such warrants would
be anti-dilutive.
Recent Accounting Pronouncements
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In August 2020, the FASB issued ASU No. 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): Accounting for Convertible Instruments
and Contracts in an Entity's Own Equity" ("ASU 2020-06"), which simplifies
accounting for convertible instruments by removing major separation models
required under current GAAP. The ASU also removes certain settlement conditions
that are required for equity-linked contracts to qualify for the derivative
scope exception, and it simplifies the diluted earnings per share calculation in
certain areas. We adopted ASU 2020-06 on January 1, 2021. Adoption of the ASU
did not impact our financial position, results of operations or cash flows.
Management does not believe that any other 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 June 30, 2021, we
did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii)
of Regulation S-K.
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 unaudited condensed
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 Public Company
Accounting Oversight Board (United States) 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 Chief Executive Officer'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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