AltC Acquisition (ALCC) - 2022 Q3 - Quarterly Report

Part I. Financial Information Financial Statements The SPAC reported $506.5 million in total assets, primarily from Trust Account securities, with $1.14 million net income for nine months, and faces going concern uncertainty due to its business combination deadline Condensed Balance Sheets As of September 30, 2022, the company held $503.3 million in Trust Account securities, with total assets of $506.5 million, liabilities of $18.5 million, and a stockholders' deficit of $13.4 million Condensed Balance Sheet Data (Unaudited) | Account | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash | $2,589,181 | $3,337,050 | | Marketable securities held in Trust Account | $503,254,886 | $500,125,470 | | Total Assets | $506,496,560 | $504,719,054 | | Liabilities & Stockholders' Deficit | | | | Total liabilities | $18,540,136 | $17,902,885 | | Class A common stock subject to possible redemption | $501,366,624 | $500,000,000 | | Total Stockholders' Deficit | $(13,410,200) | $(13,183,831) | Condensed Statements of Operations Net income for the three months ended September 30, 2022, was $1.47 million, driven by $2.35 million in Trust Account interest, contrasting with a $0.54 million net loss in the prior year period Statement of Operations Highlights (Unaudited) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Period from Feb 1, 2021 to Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Interest earned on Trust Account | $2,354,571 | $40,895 | $3,184,242 | $40,895 | | Loss from operations | $(402,616) | $(569,025) | $(1,362,475) | $(570,025) | | Net Income (Loss) | $1,474,130 | $(535,181) | $1,140,255 | $(536,181) | | Basic and diluted net income (loss) per share | $0.02 | $(0.01) | $0.02 | $(0.02) | Condensed Statements of Changes in Stockholders' Deficit The stockholders' deficit increased from $13.18 million to $13.41 million as of September 30, 2022, due to a $1.37 million re-measurement adjustment offsetting $1.14 million in net income - The accumulated deficit was $(13,411,595) as of September 30, 2022, compared to $(13,185,226) at the start of the year[13] - A re-measurement of Class A common stock to its redemption value resulted in a charge of $1,366,624 against the accumulated deficit during the third quarter of 2022[13] Condensed Statements of Cash Flows Net cash used in operating activities was $747,869 for the nine months ended September 30, 2022, with no investing or financing cash flows, leading to a cash balance decrease to $2.59 million Cash Flow Summary (Unaudited) | Cash Flow Activity | Nine Months Ended Sep 30, 2022 | Period from Feb 1, 2021 to Sep 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(747,869) | $(1,775,680) | | Net cash used in investing activities | $— | $(500,000,000) | | Net cash provided by financing activities | $— | $505,217,230 | | Net Change in Cash | $(747,869) | $3,441,550 | | Cash – End of period | $2,589,181 | $3,441,550 | Notes to Condensed Financial Statements Notes detail the company's SPAC formation, IPO, and Trust Account balance of $503.3 million, highlighting a going concern due to the July 12, 2023 business combination deadline and potential impact of the Inflation Reduction Act - The company was formed to effect a business combination and has not commenced any operations, with all activity relating to its formation, IPO, and search for a target[19][20] - The company consummated its IPO of 50,000,000 Public Shares at $10.00 per share on July 12, 2021, generating gross proceeds of $500 million, which were placed in a Trust Account[21][23] - Management has determined that the potential mandatory liquidation if a business combination is not consummated by July 12, 2023 (or October 12, 2023 with an LOI) raises substantial doubt about the company's ability to continue as a going concern[35][36] - The Inflation Reduction Act of 2022 imposes a 1% excise tax on stock repurchases after December 31, 2022, which may apply to redemptions in connection with a business combination or liquidation, potentially reducing cash available to stockholders[39][40] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's blank-check status, with net income from Trust Account interest, highlighting liquidity and going concern uncertainty due to the business combination deadline - The company is a blank check company with its activities limited to organizational tasks, preparing for the IPO, and searching for a business combination target[93][94] - As of September 30, 2022, the company had $2,589,181 in cash outside the Trust Account for working capital purposes[102] - The company has until July 12, 2023 (or October 12, 2023, with a definitive agreement) to consummate a Business Combination, otherwise it will face mandatory liquidation, raising substantial doubt about its ability to continue as a going concern[106] Results of Operations Net income for Q3 2022 was $1.47 million, a turnaround from a $535,181 net loss in Q3 2021, primarily due to $2.41 million in Trust Account interest offsetting operating costs Results of Operations Comparison | Period | Net Income / (Loss) | Key Drivers | | :--- | :--- | :--- | | Q3 2022 | $1,474,130 | Interest income of $2.35M, offset by operating costs of $403k and taxes of $535k | | Q3 2021 | $(535,181) | Operating costs of $569k, with minimal interest income | | Nine Months 2022 | $1,140,255 | Interest income of $3.18M, offset by operating costs of $1.36M and taxes of $627k | | Inception to Sep 30, 2021 | $(536,181) | Operating costs of $570k, with minimal interest income | Liquidity, Capital Resources and Going Concern Liquidity is primarily from IPO proceeds, with $503.3 million in the Trust Account and $2.6 million cash for working capital, but the July 12, 2023 business combination deadline poses a significant going concern risk - Following the IPO, $500 million was placed in the Trust Account, with the balance growing to $503,254,886 as of September 30, 2022, due to interest income[99][100] - The Sponsor or affiliates may provide Working Capital Loans up to $1.5 million, which can be converted into shares at $10.00 per share upon a business combination[103] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is not required to provide disclosures on quantitative and qualitative market risk - The company is a smaller reporting company and is not required to provide this disclosure[112] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2022, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of September 30, 2022, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[114] - No changes in internal control over financial reporting occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls[115] Part II. Other Information Legal Proceedings The company reports no legal proceedings - None[117] Risk Factors Key risks include the Inflation Reduction Act's 1% excise tax on stock redemptions and the potential of being deemed an investment company if a business combination is not completed within the proposed 24-month safe harbor - The Inflation Reduction Act of 2022 imposes a 1% excise tax on stock repurchases by publicly traded U.S. corporations starting in 2023, which could apply to redemptions in connection with a business combination or liquidation, potentially reducing stockholder returns[118][119] - Proposed SEC rules (the "2022 Proposed Rules") could materially adversely affect the company's ability to complete a business combination and may increase costs and time[121] - There is a risk the company could be deemed an investment company under the Investment Company Act if it does not complete its business combination within the proposed 24-month safe harbor timeline, which could restrict activities and force liquidation[123][126][127] - To mitigate the investment company risk, the company may liquidate the U.S. government securities in the Trust Account and hold cash, which would result in minimal interest income and reduce the amount available for redemption[132] Unregistered Sales of Equity Securities and Use of Proceeds The company details the use of $500 million gross IPO proceeds and $14.5 million from private placement shares, with $500 million placed in the Trust Account - Simultaneously with the IPO, the Sponsor purchased 1,450,000 Private Placement Shares at $10.00 per share for a total of $14,500,000 in a private placement exempt from registration under Section 4(a)(2) of the Securities Act[134] - Gross proceeds of $500 million from the IPO and private placement were placed in the Trust Account, with transaction costs totaling $26,652,125 and $5,285,860 held outside the trust for working capital[134][135] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[135] Mine Safety Disclosures The company reports no mine safety disclosures - None[135] Other Information The company disclosed that Michael Klein, Chairman of the Board, is anticipated to be appointed CEO designate of CS First Boston in 2023 following Credit Suisse's restructuring - It is anticipated that Michael Klein, Chairman of the Board, will be appointed CEO designate of CS First Boston in 2023, following a restructuring announcement by Credit Suisse Group AG[135] Exhibits This section lists exhibits filed with the quarterly report, including CEO and CFO certifications and XBRL data files Signatures Signatures The report was signed and authorized on November 10, 2022, by Sam Altman, CEO, and Jay Taragin, CFO - The Form 10-Q was signed on November 10, 2022, by Sam Altman (CEO) and Jay Taragin (CFO)[140]