AltEnergy Acquisition p(AEAE) - 2021 Q4 - Annual Report

PART I Business AltEnergy Acquisition Corp. is a SPAC focused on acquiring businesses in the renewable energy sector, having raised $230 million in its IPO with proceeds held in trust - The company is a blank check company targeting a business combination in the renewable energy or related clean technology sector, referred to as the alternative energy sector[9] Initial Public Offering and Private Placement Details | Item | Details | | :--- | :--- | | IPO Date | November 2, 2021 | | Units Sold | 23,000,000 (including over-allotment) | | Price per Unit | $10.00 | | Gross Proceeds (IPO) | $230,000,000 | | Private Placement Warrants | 12,000,000 | | Price per Warrant | $1.00 | | Gross Proceeds (Private Placement) | $12,000,000 | | Funds Placed in Trust Account | $234,600,000 (or $10.20 per unit) | - The company's business strategy is to identify and acquire a company in the alternative energy sector, leveraging its management team's experience and network. Key target subsectors include renewable technology, grid optimization, distributed energy resources, alternative fuels, and decarbonization[18][24][25] - Key acquisition criteria include a large addressable market (SAM over $1 billion), proven technology or business model, a clear path to profitability, and a defensible market position[28] - The company has 18 months from the closing of its IPO to complete an initial business combination. If it fails to do so, it will cease operations and redeem public shares[48] Risk Factors The company faces significant risks as a SPAC, including failure to complete a business combination, intense competition, conflicts of interest, and industry-specific regulatory changes - There is a significant risk that the company may not complete an initial business combination within the required 18-month timeframe, which would force liquidation and render the warrants worthless[65][144] - The company faces intense competition from other SPACs, private equity funds, and operating businesses in sourcing acquisition targets, which may limit its ability to find a suitable business combination[71][72] - Potential conflicts of interest exist as officers and directors are not required to commit their full time to the company's affairs and may have fiduciary duties to other entities, potentially diverting business opportunities[133][134][135] - The sponsor, officers, and directors will lose their entire investment in founder shares and private placement warrants if a business combination is not completed, creating a conflict of interest that may influence their decision to pursue a potentially suboptimal target[140][142] - The company's warrants are accounted for as a liability and are remeasured at fair value each reporting period, which could cause earnings volatility and may make the company a less attractive merger partner[117] - If the company combines with a business in the alternative energy sector, it will be subject to industry-specific risks, including changes in government regulations, reduction of incentives, and the need for substantial infrastructure investment[123] Unresolved Staff Comments The company has no unresolved comments from the Securities and Exchange Commission staff - There are no unresolved staff comments[207] Properties The company's executive offices are in New York, provided by a sponsor affiliate for a monthly fee of $15,000 covering administrative support - The company pays an affiliate of the Sponsor $15,000 per month for office space and administrative support at its New York executive offices[207] Legal Proceedings AltEnergy Acquisition Corp. is not currently a party to any material legal proceedings, nor is management aware of any threatened ones - The company is not currently subject to any material legal proceedings[208] Mine Safety Disclosures This section is not applicable to the company's operations - Not applicable[208] PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's securities trade on Nasdaq, no dividends have been paid or are planned before a business combination, and $234.6 million from offerings was placed in a trust account - The company's securities trade on The Nasdaq Global Market with the following ticker symbols: Units (AEAEU), Class A common stock (AEAE), and Warrants (AEAEW)[210] - No cash dividends have been paid to date, and none are intended to be paid prior to the completion of an initial business combination[211] Use of Proceeds from Offerings | Item | Amount (USD) | | :--- | :--- | | Gross Proceeds from IPO & Private Placement | $242,000,000 | | Amount Placed in Trust Account | $234,600,000 | | Underwriting Fees Paid | $4,600,000 | | Deferred Underwriting Fees | $8,050,000 | | Other Offering Costs | $635,000 | Selected Financial Data This section is not required as the company qualifies as a smaller reporting company - Not required[218] Management's Discussion and Analysis of Financial Condition and Results of Operations The company, a blank check entity with no revenue, reported $11.6 million net income for 2021, primarily from a non-cash gain on warrant liabilities, and maintains sufficient liquidity - The company has not engaged in any operations or generated any revenue since inception. Its activities have been limited to organizational matters and preparing for its IPO and business combination search[223] Results of Operations (Inception to Dec 31, 2021) | Metric | Amount (USD) | | :--- | :--- | | Net Income | $11,639,507 | | Formation & Administrative Costs | ($640,595) | | Change in Fair Value of Warrant Liabilities | $17,270,000 | | Warrant Related Costs | ($926,044) | | Interest Income on Trust | $16,146 | - As of December 31, 2021, the company had $979,226 in cash outside the trust account available for working capital. Management believes these funds, along with potential sponsor loans, are sufficient to sustain operations for at least one year[225][230] - The company accounts for its public and private warrants as derivative liabilities, which are re-measured at fair value at each reporting date, with changes in fair value recognized in the statement of operations[239][240] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, AltEnergy Acquisition Corp. is not required to provide quantitative and qualitative disclosures about market risk - The company is not required to provide this information as it is a "smaller reporting company"[245] Financial Statements and Supplementary Data This section presents the audited financial statements for 2021, showing total assets of $236.4 million, liabilities of $22.4 million, and net income of $11.6 million Balance Sheet Summary (as of Dec 31, 2021) | Category | Amount (USD) | | :--- | :--- | | Assets | | | Cash | $979,226 | | Investments held in Trust Account | $234,616,116 | | Total Assets | $236,424,406 | | Liabilities & Equity | | | Derivative warrant liabilities | $13,990,000 | | Deferred underwriting commission | $8,050,000 | | Total Liabilities | $22,386,832 | | Class A common stock subject to redemption | $234,600,000 | | Total Stockholders' deficit | ($20,562,426) | Statement of Operations Summary (Inception to Dec 31, 2021) | Category | Amount (USD) | | :--- | :--- | | Operating Loss | ($640,595) | | Change in fair value of derivative warrants | $13,190,000 | | Total Other Income (Net) | $12,280,102 | | Net Income | $11,639,507 | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants regarding accounting principles, financial disclosure, or auditing scope - None[351] Controls and Procedures Management concluded that disclosure controls were ineffective as of December 31, 2021, due to a material weakness in accounting for complex financial instruments, with remediation efforts underway - A material weakness was identified related to the company's accounting for complex financial instruments[352][353] - As a result of the material weakness, management concluded that the company's disclosure controls and procedures were not effective as of December 31, 2021[352] - Remediation measures have been implemented, including an expanded review process for complex securities, and the company is considering hiring additional staff with relevant experience[354] Other Information There is no other information to report in this section - None[358] PART III Directors, Executive Officers and Corporate Governance This section details the experienced executive team and staggered board, outlines independent committees, and discloses potential conflicts of interest from officers' and directors' external affiliations - The executive team includes Russell Stidolph (CEO), Jonathan Darnell (CFO), and Arul Gupta (COO), all of whom have significant experience in alternative energy investing through their roles at AltEnergy, LLC[360][361][362] - The board of directors is divided into three classes, serving staggered three-year terms[370] - The company has established fully independent Audit, Compensation, and Nominating and Corporate Governance committees in compliance with Nasdaq and SEC rules[372][375][379] - Significant potential conflicts of interest are noted, as officers and directors have fiduciary duties to other entities and are not required to commit their full time to the company's affairs[387][388][393] Executive Compensation Officers receive no cash compensation, but a sponsor affiliate receives $15,000 monthly for support, and the CFO and COO are eligible for one-time payments upon business combination completion - No officers have received cash compensation for services rendered to the company[400] Compensation and Fee Arrangements | Recipient | Type | Amount (USD) | Condition | | :--- | :--- | :--- | :--- | | Sponsor Affiliate | Monthly Fee | $15,000 | For office space and admin support | | Chief Financial Officer | Monthly Fee | $15,600 | For services prior to business combination | | Chief Financial Officer | One-Time Payment | $150,000 | Upon consummation of business combination | | Chief Operating Officer | One-Time Payment | $300,000 | Upon consummation of business combination | - Officers and directors will be reimbursed for out-of-pocket expenses incurred in connection with company activities, such as identifying potential target businesses[401] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters As of March 14, 2022, the sponsor and all officers and directors beneficially owned 5,750,000 shares of Class B common stock, representing 20% of total outstanding common stock Beneficial Ownership | Beneficial Owner | Number of Shares | Percentage of Outstanding Common Stock | | :--- | :--- | :--- | | AltEnergy Acquisition Sponsor, LLC | 5,750,000 | 20% | | Russell Stidolph (CEO) | 5,750,000 | 20% | | All officers and directors as a group | 5,750,000 | 20% | Certain Relationships and Related Transactions, and Director Independence Key related party transactions include the sponsor's purchase of founder shares, potential working capital loans convertible to warrants, and monthly administrative service fees - On March 25, 2021, the sponsor purchased 5,750,000 founder shares for an aggregate price of $25,000[411] - The sponsor or its affiliates may provide the company with Working Capital Loans, of which up to $1,500,000 can be converted into warrants at $1.00 per warrant at the lender's discretion[415] - The company pays an affiliate of the Sponsor $15,000 per month for office space, utilities, and administrative support services[416] Principal Accountant Fees and Services For the period from inception to December 31, 2021, the company incurred $20,600 in audit fees from Marcum LLP, with no other fees for audit-related, tax, or other services Accountant Fees (Inception to Dec 31, 2021) | Fee Category | Amount (USD) | | :--- | :--- | | Audit Fees | $20,600 | | Audit-Related Fees | $0 | | Tax Fees | $0 | | All Other Fees | $0 | - The audit committee has pre-approved and will continue to pre-approve all auditing and permitted non-audit services performed by the auditors[419] PART IV Exhibits, Financial Statement Schedules This section lists documents filed with the Form 10-K, including financial statements and an index of exhibits containing key corporate and offering-related agreements - This section provides an index of all financial statements, schedules, and exhibits filed with the Form 10-K[421] - Key exhibits filed include the company's charter documents, warrant agreement, registration rights agreement, and administrative services agreement[422]