Business Combination - The Company entered into a Business Combination Agreement on April 19, 2023, with a total consideration of $300,000,000 plus net equity investments after the agreement date, divided by $10.00 per share [314][315]. - The Business Combination involves the acquisition of Air Water Ventures Ltd, with each AWV shareholder receiving one Holdings ordinary share for each AWV share held [315]. - The Company extended the SPAC Termination Notice Date multiple times, with the final extension to September 25, 2023, to secure a PIPE investment of at least $30,000,000 [322][323][324]. - A special meeting on June 13, 2023, approved extending the deadline for the initial business combination to March 14, 2024, with 23,176,961 shares of Class A common stock redeemed [328]. - The Sponsor Support Agreement was established to support the Business Combination, including waiving anti-dilution rights and redemption rights [316]. - Lock-Up Agreements were put in place, restricting AWV shareholders from transferring 75% of their shares for six months post-closing [317]. - A New Registration Rights Agreement will be executed at closing, requiring Holdings to file a shelf registration statement within 30 days [319]. - The Business Combination Agreement was terminated on December 13, 2023, with the Company planning to identify another target for a business combination [326]. - The Company intends to complete its initial Business Combination before the mandatory liquidation date of December 14, 2024, but there is no assurance it will succeed [353]. Financial Performance - As of December 31, 2023, the Company had a net income of $1,339,504, consisting of $6,009,585 in interest income, offset by $3,528,434 in operating expenses, $179,819 in finance costs, and $820,571 in income tax expenses [341]. - The Company raised gross proceeds of $250 million from its initial public offering by selling 25 million units at $10.00 per unit, with each unit consisting of one share of Class A common stock and one-half of a redeemable warrant [342]. - As of December 31, 2023, the Trust Account held investments totaling $24,387,525, which the Company intends to use for its business combination [349]. - The Company withdrew $2.4 million from the Trust Account for tax purposes, with an excess of approximately $328,000 returned to the Trust Account [337]. - The Company incurred $896,106 in cash used in operating activities for the year ended December 31, 2023, while net cash provided by investing activities was $241,607,033 [348]. - The Company redeemed 910,258 shares of Class A common stock in connection with the Second Extension Special Meeting, resulting in a withdrawal of $10,179,663 from the Trust Account [346]. - The Company has not obtained commitments for additional funding to cover potential tax liabilities and operational costs prior to closing a business combination [350]. - As of December 31, 2023, the company had a working capital deficit of $5,625,494 and operating cash of $0 [351]. - The company has $360,060 in outstanding Working Capital Loans as of December 31, 2023, compared to $0 in 2022 [352]. - Deferred underwriting commissions of $8,956,250 remain outstanding, contingent upon a successful Business Combination with AWV [356]. Internal Control and Compliance - The company has not maintained effective internal control over financial reporting as of December 31, 2023, due to identified material weaknesses [366]. - The company misallocated $240,528 of Restricted Funds for operating expenses, which was later replenished by an intercompany loan from the Sponsor [373]. - The company will restate its previously issued unaudited condensed financial statements for the three months ended September 30, 2023, due to the incorrect recording of approximately $1.5 million withdrawn from the Trust Account [375]. - The restatement involved reclassifying $1.5 million from Investments held in Trust Account to restricted cash as of September 30, 2023 [375]. - Management is implementing a remediation plan to address identified material weaknesses in internal control over financial reporting, including enhanced controls and improved internal communications [376]. - The remediation plan includes requiring the audit committee's approval for any withdrawals from the Trust Account and ensuring withdrawn funds are placed in a restricted account for tax payments [376]. - As of December 31, 2023, the company continues to implement its remediation plan but cannot assure that these initiatives will have the intended effects [377]. - There were no changes in internal control over financial reporting during the fiscal quarter ended December 31, 2023, that materially affected the company's internal control [378]. - The company is committed to continuous improvement of its internal control over financial reporting and will diligently review these controls [377]. Management and Governance - The Chief Financial Officer, Jennifer Calabrese, has been with the company since July 2024 and previously provided accounting and financial reporting services since September 2022 [386]. - Kirthiga Reddy, the President, has over twenty years of experience in technology-driven transformations and previously held executive roles at Facebook [387]. - Judith Rodin, a director since August 2021, has extensive experience in higher education and philanthropy, having served as President of The Rockefeller Foundation [388]. - The board of directors consists of five members with staggered three-year terms, with Class I expiring in 2026, Class II in 2024, and Class III in 2025 [393]. - The audit committee is composed of independent directors, with Sharon Brown-Hruska as chair and Trier Bryant as a member, ensuring compliance with NYSE standards [396]. - The audit committee's responsibilities include overseeing the integrity of financial statements and compliance with legal requirements, as well as reviewing the performance of the independent registered public accounting firm [397]. - The compensation committee, chaired by Judith Rodin, is responsible for approving the CEO's compensation and reviewing executive compensation policies [400]. - The company has a written Code of Business Conduct and Ethics applicable to all directors, officers, and employees, which is available on its website [409]. - Officers and directors are required to present business opportunities to the corporation if they are within its line of business and financially feasible [410]. - The company has entered into agreements for indemnification of officers and directors, in addition to protections provided by Delaware law [418]. - The company has purchased directors' and officers' liability insurance to cover costs related to defense, settlement, or judgment payments [419]. - The compensation committee may retain independent advisers and is responsible for ensuring their independence [404]. - The nominating and corporate governance committee assists in identifying and recommending candidates for the board of directors [405]. Legal and Risk Factors - Provisions may discourage stockholders from suing directors for breach of fiduciary duty [420]. - These provisions may reduce the likelihood of derivative litigation against officers and directors [420]. - Stockholder investments may be adversely affected by costs of settlement and damage awards paid by the company [420]. - Directors' and officers' liability insurance and indemnity agreements are deemed necessary to attract and retain talent [420].
Athena Technology Acquisition II(ATEK) - 2023 Q4 - Annual Report