AltC Acquisition (ALCC) - 2022 Q4 - Annual Report

Part I Item 1. Business AltC Acquisition Corp. is a Delaware-incorporated SPAC aiming to complete a business combination by July 2023, otherwise facing liquidation - The company is a blank check company formed to effect a business combination, operating as a shell company with no current operations or revenue[15] - The leadership team includes co-founders Sam Altman, CEO of OpenAI, and Michael Klein, founder of M. Klein and Company[15][17] Initial Public Offering and Private Placement Details | Event | Details | Gross Proceeds ($) | Date | | :--- | :--- | :--- | :--- | | Initial Public Offering (IPO) | 50 million Class A common shares at $10.00 per share | $500 million | July 12, 2021 | | Private Placement | 1.45 million shares purchased by the Sponsor at $10.00 per share | $14.5 million | July 12, 2021 | - The initial business combination target must have a fair market value of at least 80% of the net assets in the trust account[23] - The deadline for completing an initial business combination is 24 months from IPO (July 12, 2023), extendable to 27 months with a signed agreement, with failure resulting in liquidation[58][59] Item 1A. Risk Factors The company faces significant risks including failure to complete a business combination, new excise taxes, potential delisting, and conflicts of interest - The primary risk is failure to complete an initial business combination within 24-27 months, leading to cessation of operations, redemption of public shares, and mandatory liquidation[118][119] - A new 1% U.S. federal excise tax on stock repurchases, effective after December 31, 2022, may reduce cash available for redemptions[142][146] - The company risks being deemed an investment company under the Investment Company Act if a business combination is not completed within 24 months, potentially requiring liquidation of trust assets into cash and reducing interest income[153][154][155] - The Sponsor and its affiliates have significant conflicts of interest, as their entire investment will be lost if a business combination is not completed, potentially incentivizing deals not in public shareholders' best interest[254][256][258] - Officers and directors have fiduciary duties to other entities, potentially presenting business opportunities to them before the company[246][247] - The NYSE may delist the company's securities for failing to meet listing requirements, reducing liquidity and potentially classifying the stock as a penny stock[198][200] Item 1B. Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - There are no unresolved staff comments[275] Item 2. Properties The company's executive offices are in New York, with a $30,000 monthly fee paid to a Sponsor affiliate for administrative services - The company's executive offices are located at 640 Fifth Avenue, 12th Floor, New York, NY 10019. An affiliate of the Sponsor is paid $30,000 per month for this space and other administrative and support services[276] Item 3. Legal Proceedings The company is not currently subject to any material legal proceedings or aware of any threatened proceedings - The company is not a party to any material legal proceedings[277] Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine safety disclosures are not applicable[278] Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's Class A common stock trades on the NYSE, with $500 million from IPO proceeds in the Trust Account and no dividends paid pre-combination - The company's Class A common stock is traded on the New York Stock Exchange (NYSE) under the symbol "ALCC"[281] - The company has not paid any cash dividends and does not plan to do so prior to completing its initial business combination[283] - Of the gross proceeds from the IPO and private placement, $500 million was placed in the Trust Account, with total transaction costs of $26.7 million, including $17.5 million in deferred underwriting fees[287][288] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The company, a non-operating SPAC, reported $3.9 million net income in 2022, primarily from Trust Account interest, but faces going concern uncertainty due to its business combination deadline Results of Operations Summary | Metric | Year Ended Dec 31, 2022 ($) | Period Feb 1, 2021 - Dec 31, 2021 ($) | | :--- | :--- | :--- | | Net Income (Loss) | $3.9 million | ($1.1 million) | | Interest Earned on Trust Account | $7.3 million | $117,677 | | Formation and Operational Costs | ($1.8 million) | ($1.2 million) | - As of December 31, 2022, the company held $506.1 million in marketable securities in the Trust Account and $3.6 million in cash for working capital[299][302] - Management determined that potential for mandatory liquidation if a business combination is not completed by the July/October 2023 deadline raises substantial doubt about the Company's ability to continue as a going concern[305][479] - The company has a contractual obligation to pay a Sponsor affiliate $30,000 per month for services and a $17.5 million deferred underwriting fee payable upon business combination completion[307][308] Item 9A. Controls and Procedures As of December 31, 2022, management concluded that the company's disclosure controls and internal control over financial reporting were effective with no material changes - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[317] - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2022, based on the COSO framework (2013)[318] Part III Item 10. Directors, Executive Officers and Corporate Governance This section details the company's directors and executive officers, board structure, and significant conflicts of interest from management's outside affiliations Key Directors and Executive Officers | Name | Age | Title | Key Affiliations | | :--- | :--- | :--- | :--- | | Sam Altman | 37 | Chief Executive Officer and Director | OpenAI, Y Combinator | | Michael Klein | 59 | Chairman of the Board of Directors | M. Klein and Company, CS First Boston, Churchill Capital SPACs | | Jay Taragin | 57 | Chief Financial Officer | M. Klein and Company, Churchill Capital SPACs | | Frances Frei | 59 | Director | Harvard Business School, Robinhood | | Allison Green | 37 | Director | SuRo Capital Corp. | | Peter Lattman | 52 | Director | Emerson Collective, The Atlantic | | John L. Thornton | 69 | Director | Barrick Gold, Ford Motor Company | - The board determined that Frances Frei, Allison Green, Peter Lattman, and John L. Thornton are independent directors under NYSE and SEC rules[337] - Significant conflicts of interest exist as officers and directors have fiduciary duties to other entities, requiring them to present business opportunities elsewhere first, with the company renouncing interest unless specifically offered[357][363][377] - The company adopted a Code of Ethics and Corporate Governance Guidelines, available on its website[355][356] Item 11. Executive Compensation No executive officers or directors receive cash compensation, but a Sponsor affiliate receives $30,000 monthly for administrative services, with expenses reimbursed - No executive officers or directors have received any cash compensation for services rendered to the company[389] - An affiliate of the Sponsor is paid $30,000 per month for office space and administrative services, ceasing upon a business combination or liquidation[389] - The Sponsor, executive officers, and directors are reimbursed for out-of-pocket expenses incurred in connection with company activities[390] Item 12. Security Ownership of Certain Beneficial Owners and Management AltC Sponsor LLC beneficially owned 21.8% of the company's common stock as of March 31, 2023, including all Class B founder shares, granting them effective control over director elections - AltC Sponsor LLC, controlled by Michael Klein, is the beneficial owner of 13.95 million shares, representing 21.8% of outstanding common stock, including 12.5 million Class B founder shares and 1.45 million Class A private placement shares[395][398] - As the holder of all founder shares, the Sponsor has the right to elect all directors prior to the initial business combination[398] Beneficial Owners of More Than 5% | Owner | Shares of Class A | Percentage | | :--- | :--- | :--- | | AltC Sponsor LLC | 13.95 million | 21.8% | | Empyrean Capital Overseas Master Fund, Ltd. | 4.8 million | 9.4% | | Tiger Global Investments, L.P. | 4 million | 8.0% | | Magnetar Financial LLC | 3.4 million | 6.7% | | PEAK6 Capital Management LLC | 3.3 million | 6.4% | Item 13. Certain Relationships and Related Transactions, and Director Independence This section details related party transactions, including the Sponsor's purchase of founder shares and private placement shares, monthly administrative fees, and potential working capital loans - The Sponsor purchased 12.5 million founder shares for an aggregate price of $25,000[401] - The Sponsor purchased 1.45 million private placement shares at $10.00 per share for a total of $14.5 million[403] - The company pays an affiliate of the Sponsor $30,000 per month for office space and administrative services[408] - The Sponsor or its affiliates may loan the company up to $1.5 million for transaction costs, convertible into shares at $10.00 per share upon a business combination[411] - The company's audit committee is responsible for reviewing and approving all related party transactions[418] Item 14. Principal Accountant Fees and Services Marcum LLP is the principal accountant, with audit fees totaling $86,005 in FY2022 and $135,445 in FY2021, and all services are pre-approved by the audit committee Accountant Fees Paid to Marcum LLP | Fee Type | FY 2022 ($) | Period from Inception to FYE 2021 ($) | | :--- | :--- | :--- | | Audit Fees | $86,005 | $135,445 | | Audit-Related Fees | $0 | $0 | | Tax Fees | $0 | $0 | | All Other Fees | $0 | $0 | - The audit committee pre-approves all auditing and permitted non-audit services performed by the auditors[429] Part IV Item 15. Exhibits, Financial Statement Schedules This section lists the financial statements and exhibits filed as part of the Form 10-K, including the Report of the Independent Registered Public Accounting Firm, Balance Sheets, and key corporate documents - This section contains the company's financial statements for the periods ended December 31, 2022 and 2021[430] - Filed exhibits include the Amended and Restated Certificate of Incorporation, bylaws, Investment Management Trust Agreement, Registration Rights Agreement, and various certifications[433] Financial Statements Report of Independent Registered Public Accounting Firm Marcum LLP issued an opinion that the financial statements are fairly presented in accordance with U.S. GAAP, with an explanatory paragraph on substantial doubt about the company's going concern ability due to liquidation risk - The auditor, Marcum LLP, expressed the opinion that the financial statements are fairly presented in conformity with U.S. GAAP[446] - The audit report contains a "Going Concern" paragraph, noting that mandatory liquidation if a business combination is not completed by July 12, 2023, raises substantial doubt about the company's ability to continue operating[447] Financial Statements Data The financial statements reflect the company as a non-operating SPAC, with $510.1 million in total assets, $504.5 million in redeemable Class A common stock, and $3.9 million in net income for 2022 Balance Sheet Summary (As of December 31, 2022) | Category | Amount ($) | | :--- | :--- | | Total Assets | $510.1 million | | Marketable securities held in Trust Account | $506.1 million | | Total Liabilities | $19.4 million | | Deferred underwriting fee payable | $17.5 million | | Class A common stock subject to possible redemption | $504.5 million | | Total stockholders' deficit | ($13.8 million) | Statement of Operations Summary (Year Ended December 31, 2022) | Category | Amount ($) | | :--- | :--- | | Loss from operations | ($1.8 million) | | Interest earned on marketable securities | $7.3 million | | Provision for income taxes | ($1.5 million) | | Net income | $3.9 million | Notes to Financial Statements The notes detail accounting policies, related party transactions with the Sponsor, deferred underwriting fees, classification of redeemable Class A common stock as temporary equity, and reiterate going concern uncertainty due to the business combination deadline and 1% excise tax impact - The company must complete a Business Combination by July 12, 2023 (or October 12, 2023, with a signed agreement), or face liquidation, raising substantial doubt about its going concern ability[472][479] - Class A common stock subject to possible redemption is classified as temporary equity and measured at its redemption value, totaling $504.5 million as of December 31, 2022[499][501] - Related party transactions include the Sponsor's purchase of 12.5 million Founder Shares for $25,000 and a $30,000 monthly administrative services fee paid to a Sponsor affiliate[514][516] - The company has a commitment to pay a deferred underwriting fee of $17.5 million from the Trust Account, contingent upon the completion of a Business Combination[523]