References to the "Company," "TLG Acquisition One Corp.," "TLG Acquisition,"
"our," "us" or "we" refer to TLG Acquisition One Corp. The following discussion
and analysis of the Company's financial condition and results of operations
should be read in conjunction with the unaudited interim 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 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. Factors that could cause or contribute to such a discrepancy
include the risk factors described in our final prospectus for our Initial
Public Offering filed with the SEC, in Part II, Item 1A herein, and our other
filings with the SEC. Any of those factors could result in a significant or
material adverse effect on our results of operations or financial condition.
Additional risk factors not presently known to us or that we currently deem
immaterial may also impair our business or results of operations.
Overview
We are a blank check company incorporated in Delaware on October 2, 2020. We
were formed for the purpose of effecting a merger, share exchange, asset
acquisition, share purchase, reorganization or similar business combination with
one or more businesses (the "Business Combination"). We are an emerging growth
company and, as such, we are subject to all of the risks associated with
emerging growth companies.
Our sponsor is TLG Acquisition Founder LLC, a Delaware limited liability company
(the "Sponsor"). The registration statement for our Initial Public Offering was
declared effective on January 27, 2021. On February 1, 2021, we consummated our
Initial Public Offering of 40,000,000 units (the "Units" and, with respect to
the Class A common stock included in the Units being offered, the "Public
Shares"), including 5,000,000 additional Units to cover over-allotments (the
"Over-Allotment Units"), at $10.00 per Unit, generating gross proceeds of
$400.0 million, and incurring offering costs of approximately $22.7 million, of
which $14.0 million was for deferred underwriting commissions.
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement ("Private Placement") of 4,666,667 and 2,000,000 warrants
(each, a "Private Placement Warrant" and collectively, the "Private Placement
Warrants") to the Sponsor and RBC Capital Markets, LLC, in its capacity as a
purchaser of Private Placement Warrants ("RBC"), respectively, at a price of
$1.50 per Private Placement Warrant, generating total proceeds of $10.0 million.
Upon the closing of the Initial Public Offering and the Private Placement,
$400.0 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, and will be invested only 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 185 days or less
or in money market funds investing solely in U.S. Treasuries and meeting certain
conditions under Rule
2a-7
under the Investment Company Act, as determined by us, until the earlier of:
(i) the completion of a Business Combination and (ii) the distribution of the
Trust Account as described below.
Our management has broad discretion with respect to the specific application of
the net proceeds of the Initial Public Offering and the sale of the Private
Placement Warrants, 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.
We must complete one or more initial Business Combinations having an aggregate
fair market value of at least 80% of the net assets held in the Trust Account
(net of amounts disbursed to

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management for working capital purposes, if any, and excluding the amount of any
deferred underwriting discount held in trust) at the time of the agreement to
enter into the initial Business Combination. However, we will only complete a
Business Combination if the post-business combination company owns or acquires
50% or more of the 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 24 months from the
closing of the Initial Public Offering, or February 1, 2023, (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, subject to lawfully available funds therefor, redeem 100% of 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 taxes (less up to $100,000 of
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); 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 September 30, 2021, we had approximately $38,000 in our operating bank
account and a working capital deficit of approximately $2.3 million. Our
liquidity needs prior to the consummation of the Initial Public Offering were
satisfied through the payment of $25,000 from our Sponsor to cover certain of
our offering costs in exchange for issuance of Class F common stock, and a loan
from our Sponsor of approximately $192,000 under a promissory note. We repaid
the promissory note in full upon consummation of the Private Placement.
Subsequent to the consummation of the Initial Public Offering, our liquidity has
been satisfied through the net proceeds from the consummation of the Initial
Public Offering and the Private Placement held outside of the Trust Account. 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, loan us working capital
loans as may be required.
Based on the foregoing, management believes that we will have sufficient working
capital and borrowing capacity from our Sponsor or an affiliate of our Sponsor,
or certain of our officers and directors to meet our needs through the earlier
of the consummation of a Business Combination or one year from this filing. Over
this time period, we will be using these funds 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.
Management continues to evaluate the impact of the
COVID-19
pandemic on the industry and has concluded that while it is reasonably possible
that the virus could have a negative effect on our financial position, results
of our operations and/or search for a target company, the specific impact is not
readily determinable as of the date of the condensed financial statements. The
condensed financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Results of Operations
Our entire activity since inception up to September 30, 2021 was in preparation
for our formation and the Initial Public Offering and, after the Initial Public
Offering, identifying a target company for a Business Combination. We do not
expect to be generating any operating revenues until the closing and completion
of our initial Business Combination.
For the three months ended September 30, 2021, we had net income of
approximately $4.7 million, due largely to a noncash gain resulting from changes
in fair value of derivative warrant liabilities of approximately $4.9 million,
partially offset by operating expenses of approximately $236,000. Operating
expenses consisted of approximately $161,000 in general and administrative
expenses, $22,000 in general and administrative expenses with related parties
and approximately $60,000 in franchise tax expenses.

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For the nine months ended September 30, 2021, we had net income of approximately
$15.8 million, due largely to a noncash gain resulting from changes in fair
value of derivative warrant liabilities of approximately $20.8 million,
partially offset by a
non-operating
expense of approximately $1.4 million related to offering costs for derivative
warrant liabilities and operating expenses of approximately $3.6 million.
Operating expenses consisted of approximately $3.3 million in general and
administrative expenses, $57,000 in general and administrative expenses with
related parties and approximately $207,000 in franchise tax expenses.
Contractual Obligations
Administrative Support Agreement
We entered into an agreement with an affiliate of the Sponsor, pursuant to which
we agreed to pay a total of $7,000 per month for office space, administrative
and support services to such affiliate. Upon completion of the initial Business
Combination or the liquidation, we will cease paying these monthly fees. We
incurred approximately $22,000 and $57,000 in general and administrative
expenses in the accompanying unaudited condensed statements of operations in the
three and nine months ended September 30, 2021, respectively, related to the
administrative support agreement.
The Sponsor, officers and directors, or any of their respective affiliates, will
be reimbursed for any reasonable
out-of-pocket
expenses incurred in connection with activities on our behalf such as
identifying potential target businesses and performing due diligence on suitable
Business Combinations. Our audit committee will review on a quarterly basis all
payments that were made by us to the Sponsor, officers, directors or any of
their affiliates and will determine which expenses and the amount of expenses
that will be reimbursed. There is no cap or ceiling on the reimbursement of
reasonable
out-of-pocket
expenses incurred by such persons in connection with activities on our behalf.
Underwriting Agreement
We granted the underwriters a
45-day
option from the date of Initial Public Offering to purchase up to 5,000,000
additional Units to cover over-allotments, if any, at the Initial Public
Offering price less the underwriting discounts and commissions. The underwriter
exercised its over-allotment option in full on February 1, 2021.
The underwriters were entitled to an underwriting discount of $0.20 per Unit, or
$8.0 million in the aggregate, paid upon the closing of the Initial Public
Offering. In addition, the underwriters were entitled to a deferred fee of $0.35
per Unit, or $14.0 million in the aggregate. The deferred fee 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
Derivative Warrant Liabilities
The Company does not use derivative instruments to hedge exposures to cash flow,
market, or foreign currency risks. The Company evaluates all of its 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 Financial Accounting Standards Board's ("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.
The warrants issued in connection with the Initial Public Offering (the "Public
Warrants") and the Private Placement Warrants are recognized as derivative
liabilities in accordance with ASC 815. Accordingly, the Company recognizes 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, and any change in fair value is
recognized in the Company's statement of operations. The fair value of the
Public Warrants and Private Placement Warrants have each been measured at fair
value using a modified Black-Scholes option pricing model. The fair value of the
Public Warrants has subsequently been determined using listed prices in an
active market for such warrants. 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.

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Class A common shares 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) is classified as liability instruments and are
measured at fair value. Conditionally redeemable Class A common stock (including
Class A 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) are classified as temporary equity. At all
other times, 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 September 30, 2021, 40,000,000 shares of Class A common stock
subject to possible redemption is presented at redemption value as temporary
equity, outside of the stockholders' equity section of our balance sheet. There
were no shares of Class A common stock issued or outstanding as of December 31,
2020.
Immediately upon the closing of the Initial Public Offering, we recognized the
accretion from initial book value to redemption amount. The change in the
carrying value of redeemable shares of Class A common stock resulted in charges
against additional
paid-in
capital and accumulated deficit.
Net income per common share
We have two classes of shares, which are referred to as Class A common stock and
Class F common stock. Income and losses are shared pro rata between the two
classes of shares. Net income (loss) per common share is calculated by dividing
the net income (loss) by the weighted average shares of common stock outstanding
for the respective period.
The calculation of diluted net income (loss) does not consider the effect of the
warrants underlying the Units sold in the Initial Public Offering (including the
consummation of the Over-allotment) and the private placement warrants to
purchase an aggregate of 20,000,000 shares of Class A common stock in the
calculation of diluted income (loss) per share, because their inclusion would be
anti-dilutive under the treasury stock method. As a result, diluted net income
(loss) per share is the same as basic net income (loss) per share for the three
and nine months ended September 30, 2021. Accretion associated with the
redeemable Class A common stock is excluded from earnings per share as the
redemption value approximates fair value.
Recent Accounting Pronouncements
In August 2020, the FASB issued Accounting Standards Update ("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. The Company adopted
ASU 2020-06 on
January 1, 2021. Adoption of the ASU did not impact the Company's financial
position, results of operations or cash flows.
The Company's management does not believe that any other recently issued, but
not yet effective, accounting standards updates, if currently adopted, would
have a material effect on the Company's unaudited condensed financial
statements.
Off-Balance
Sheet Arrangements
As of September 30, 2021, we did not have any
off-balance
sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation
S-K.

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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.

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