Attached files
| file | filename |
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| EX-32 - CERTIFICATION - Alussa Energy Acquisition Corp. | f10k2020ex32_alussa.htm |
| EX-31.2 - CERTIFICATION - Alussa Energy Acquisition Corp. | f10k2020ex31-2_alussa.htm |
| EX-31.1 - CERTIFICATION - Alussa Energy Acquisition Corp. | f10k2020ex31-1_alussa.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-39145
Alussa Energy Acquisition Corp.
(Exact name of registrant as specified in its charter)
| Cayman Islands | N/A | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
PO Box 500, 71 Fort Street Grand Cayman KY1-1106 Cayman Islands |
N/A | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: +1345 949 4900
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class: | Trading Symbol(s) | Name of Each Exchange on Which Registered: | ||
Units, each consisting of one Class A ordinary share, $0.0001 par value, and one-half of one redeemable warrant |
ALUS.U | The New York Stock Exchange | ||
| Class A ordinary shares, par value $0.0001 per share | ALUS | The New York Stock Exchange | ||
| Warrants, each whole warrant exercisable for one Class A ordinary share for $11.50 per share | ALUS.WS | The New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
| Emerging growth company | ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐
As of June 30, 2020, the last day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the Class A ordinary shares outstanding, other than shares held by persons who may be deemed affiliates of the registrant, computed by reference to the closing price for the Class A ordinary shares on June 30, 2020, as reported on the New York Stock Exchange was $285,187,500.
As of March 1, 2021, there were 28,750,000 shares of Class A ordinary shares, par value $0.0001 per share (“Class A ordinary shares”) and 7,187,500 shares of Class B ordinary shares, par value $0.0001 per share (“Class B ordinary shares”), of the registrant issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
EXPLANATORY NOTE
Alussa Energy Acquisition Corp. (the “Company”) is filing this Amendment No. 1 on Form 10-K/A (the “Amendment”) to amend and restate certain items in its Annual Report on Form 10-K as of December 31, 2020 and 2019 and for the year ended December 31, 2020 and the period from June 13, 2019 (inception) through December 31, 2019, originally filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 1, 2021 (the “Original Form 10-K”)
Background of Restatement
On May 5, 2021, the Company’s management and the audit committee of the Company’s Board of Directors (the “Audit Committee”) concluded that it is appropriate to restate (i) certain items on the Company’s previously issued audited balance sheet dated as of November 29, 2019, which was related to the Company’s initial public offering (the “IPO”), (ii) the Company’s previously issued unaudited interim financial statements as of and for the periods ended September 30, 2020, June 30, 2020, and March 31, 2020 and (iii) the Company’s previously issued audited financial statements as of December 31, 2020 and 2019, for the year ended December 31, 2020 and for the period from June 13, 2019 (inception) through December 31, 2019 (the “Relevant Periods”). Considering such restatement, the Company concluded that such financial statements for the Relevant Periods should no longer be relied upon. This Amendment includes the restated financial statements for the Relevant Periods.
The restatement primarily related to consideration of the factors in determining whether to classify contracts that may be settled in an entity’s own stock as equity of the entity or as an asset or liability. On April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the SEC together issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”). Specifically, the SEC Statement focused on certain settlement terms and provisions related to certain tender offers following a business combination, which terms are similar to those contained in the warrant agreement governing the Company’s warrants. As a result of the SEC Statement, the Company reevaluated the accounting treatment of (i) the 14,375,000 redeemable warrants (the “Public Warrants”) that were included in the units issued by the Company in its IPO and for the underwriters’ exercise of their over-allotment option and (ii) the 8,750,000 warrants that were issued to the Company’s sponsor in private placements that closed concurrently with the IPO and the underwriters’ exercise of their over-allotment option (the “Private Placement Warrants”, collectively with the Public Warrants, the “Warrants”). The Company previously accounted for the Warrants as components of equity.
In further consideration of the guidance in Accounting Standards Codification (“ASC”) 815-40, “Derivatives and Hedging – Contracts in Entity’s Own Equity”, the Company concluded that a provision in the warrant agreement related to certain tender or exchange offers precludes the Warrants from being accounted for as components of equity. As the Warrants meet the definition of a derivative as contemplated in ASC 815, “Derivatives and Hedging”, the Warrants should be recorded as derivative liabilities on the balance sheets and measured at fair value at issuance and at each reporting date in accordance with ASC 820, “Fair Value Measurement”, with changes in fair value recognized in the statements of operations in the period of change.
Effects of Restatement
As a result of the factors described above, the Company has included in this Amendment: (i) certain restated items on the previously issued balance sheet dated as of November 29, 2019, the date that the IPO closed, that were previously reported on a Current Report on Form 8-K filed with the SEC on December 5, 2019, and (ii) restated financial statements as of December 31, 2020 and 2019 and for the year ended December 31, 2020 and the period from June 13, 2019 (inception) through December 31, 2019. The adjustments that impact the Company’s financial statements for these periods are summarized as follows:
| Balance sheets | December 31, 2020 | December 31, 2019 | November 29, 2019 | |||||||||
| Increase in warrant liabilities | $ | 35,356,250 | $ | 30,962,500 | $ | 26,515,000 | ||||||
| Reduction in Class A ordinary shares subject to possible redemption | (35,356,253 | ) | (30,962,493 | ) | (26,515,000 | ) | ||||||
| Change in shareholders' equity | 3 | (7 | ) | - | ||||||||
i
| Statements of operations | Year
Ended December 31, 2020 | For
the Period from June 13, 2019 (Inception) through December 31, 2019 | ||||||
| Increase in operating costs | $ | - | $ | (1,051,990 | ) | |||
| Increase in fair value of warrant liabilities | (4,393,750 | ) | (3,937,500 | ) | ||||
| Increase in net loss | (4,393,750 | ) | (4,989,490 | ) | ||||
The impact of these amounts is included in the following items on the Company’s balance sheet as of November 29, 2019 and on the Company’s financial statements as of December 31, 2020 and 2019 and for the year ended December 31, 2020 and the period from June 13, 2019 (inception) through December 31, 2019, respectively:
| Balance sheets: | Statements of operations: | |
| Warrant liabilities | Operating costs | |
| Total liabilities | Change in fair value of warrant liabilities | |
Class A ordinary shares subject to possible redemption Class A ordinary shares Additional paid-in capital Accumulated deficit Total shareholders’ equity |
Other income (expense) Net loss Basic and diluted net loss per ordinary share |
A summary of the restatement and its effects to the Company’s balance sheet as of November 29, 2019 and to the Company’s financial statements as of December 31, 2020 and 2019 and for the year ended December 31, 2020 and the period from June 13, 2019 (inception) through December 31, 2019, respectively, included with this Amendment, is presented in Note 1A in the accompanying Notes to the financial statements. The restatement of the financial statements had no impact on the Company’s liquidity or cash position.
Internal Control Considerations
In connection therewith, the Company’s management identified a material weakness in its internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected and corrected on a timely basis. For a discussion of management’s consideration of the material weakness identified, see Item 9A. Controls and Procedures included in this Amendment.
Items Amended by this Filing
The following items included in the Original Form 10-K are amended by this Amendment:
| ● | Part I – Item 1A. Risk Factors |
| ● | Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation |
| ● | Part II – Item 8. Financial Statements and Supplementary Data |
| ● | Part II – Item 9A. Controls and Procedures |
| ● | Part IV – Item 15. Exhibits and Financial Statement Schedules |
As required by applicable rules of the SEC, new certifications by the Company’s principal executive officer and principal financial officer are filed as exhibits 31.1, 31.2, and 32.
Except as described above, this Amendment does not amend, update or change any other disclosures in the Original Form 10-K. In addition, the information contained in this Amendment does not reflect events occurring after the filing of the Original Form 10-K and does not modify or update the disclosures therein, except as specifically identified above. Among other things, forward-looking statements made in the Original Form 10-K have not been revised to reflect events, results or developments that occurred or facts that became known to us after the date of the Original Form 10-K, other than the restatement, and such forward-looking statements should be read in conjunction with our filings with the SEC, including those subsequent to the filing of the Original Form 10-K.
The Company has not amended its previously filed Current Report on Form 8-K or Quarterly Reports on Form 10-Q for the periods affected by the restatement. The financial information that has been previously filed or otherwise reported for these periods is superseded by the information in this Annual Report on Form 10-K, and the financial statements and related financial information contained in such previously filed reports should no longer be relied upon.
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TABLE OF CONTENTS
iii
Unless otherwise stated in this annual report on Form 10-K/A (“Annual Report on Form 10-K/A”), or the context otherwise requires, references to:
| ● | “we,” “us,” “company” or “our company” are to Alussa Energy Acquisition Corp.; |
| ● | “public shares” are to the Class A ordinary shares sold as part of the units in our initial public offering; |
| ● | “public shareholders” are to the holders of our public shares; |
| ● | “management” or our “management team” are to our officers and directors; |
| ● | “sponsor” are to Alussa Energy Sponsor LLC, a Delaware limited liability company; our Chief Executive Officer is to the managing member of our sponsor; |
| ● | “initial shareholders” are to the holders of our founder shares prior to our initial public offering; |
| ● | “founder shares” are to our Class B ordinary shares initially purchased by our sponsor in a private placement prior to our initial public offering and, unless the context otherwise requires, our Class A ordinary shares issued upon the conversion thereof as provided herein; |
| ● | “ordinary shares” are to our Class A ordinary shares and our Class B ordinary shares; |
| ● | “public warrants” are to the redeemable warrants sold as part of the units in our initial public offering (whether they were purchased in our initial public offering or in the open market); |
| ● | “private placement warrants” are to the warrants issued to our sponsor in a private placement simultaneously with the closing of our initial public offering; |
| ● | “warrants” are to our redeemable warrants, which include the public warrants as well as the private placement warrants to the extent they are no longer held by the initial purchasers of the private placement warrants or their permitted transferees; |
| ● | “Companies Law” are to the Companies Law (2020 Revision) of the Cayman Islands as the same may be amended from time to time; |
| ● | “equity-linked securities” are to any securities of our company which are convertible into or exchangeable or exercisable for, ordinary shares of our company; and |
| ● | “specified future issuance” are to an issuance of a class of equity or equity-linked securities to specified purchasers, which may include funds advised by Encompass Capital Advisors LLC that are members of our sponsor, that we may determine to make in connection with financing our initial business combination. |
iv
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this report may constitute “forward-looking statements” for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this report may include, for example, statements about:
| ● | our ability to complete our initial business combination with FREYR AS; |
| ● | our expectations around the performance of the prospective target business or businesses; |
| ● | our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination; |
| ● | our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination, as a result of which they would then receive expense reimbursements; |
| ● | our potential ability to obtain additional financing to complete our initial business combination; |
| ● | our pool of prospective target businesses in the oil and gas E&P industry; |
| ● | risks associated with acquiring an operating company or business in the oil and gas E&P industry; |
| ● | the ability of our officers and directors to generate a number of potential acquisition opportunities; |
| ● | our public securities’ potential liquidity and trading; |
| ● | the lack of a market for our securities; |
| ● | the use of proceeds not held in the trust account or available to us from interest income on the trust account balance; |
| ● | the trust account not being subject to claims of third parties; or |
| ● | our financial performance. |
The forward-looking statements contained in this report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in the section of this report entitled “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws
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General
We are a blank check company incorporated as a Cayman Islands exempted company for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this report as our initial business combination. We have no revenues to date and we will not generate operating revenues until we consummate our initial business combination. While we may pursue an acquisition opportunity in any industry or sector, we have concentrated our efforts on businesses that complement our management team’s expertise in the production, operation and development of crude oil and natural gas wells and related infrastructure, and to capitalize on the ability of our management team to source, screen, evaluate, negotiate, structure, close and manage acquisitions of energy assets or businesses globally. We have concentrated on acquiring one or more businesses with an aggregate enterprise value of approximately $500 million to $1 billion.
Business Combination Agreement
On January 29, 2021, Alussa entered into a Business Combination Agreement (the “Business Combination Agreement”) with FREYR AS, a company organized under the laws of Norway (“FREYR”), Alussa Energy Sponsor LLC, a limited liability company formed under the laws of Delaware, in the capacity as the representative for the Alussa shareholders in accordance with the terms and conditions of the Business Combination Agreement (“Sponsor” or “Purchaser Representative”), FREYR Battery, a corporation in the form of a public limited liability company organized under the laws of Luxembourg (“Pubco”), Norway Sub 1 AS, a private limited liability company under the laws of Norway (“Norway Merger Sub 1”), Norway Sub 2 AS, a private limited liability company under the laws of Norway (“Norway Merger Sub 2” and together with Norway Merger Sub 1, the “Norway Merger Subs”), Adama Charlie Sub, a Cayman Islands exempted company (“Cayman Merger Sub”), certain shareholders of FREYR named in the Business Combination Agreement (the “Major Shareholders”), and ATS NEXT AS, in the capacity as the representative for the Major Shareholders in accordance with the terms and conditions of the Business Combination Agreement (the “Shareholder Representative”). FREYR is a Norway-based developer of clean, next-generation battery cell production capacity. FREYR is targeting development of up to 43 GWh of battery cell production capacity in Norway by 2025 to position the Company as one of Europe’s largest battery cell suppliers. FREYR expects to deliver safer, higher energy density and lower cost clean battery cells made with renewable energy from an ethically and sustainably sourced supply chain. The Company’s ambition is to become the battery cell producer with the lowest lifecycle carbon footprint in the world. FREYR plans to utilize Norway’s inherent advantages, including access to renewable energy, some of Europe’s lowest electricity prices and shorter delivery distances to main markets in Europe and the US as compared to competitors in Asia. Pursuant to the terms of the Business Combination Agreement, (a) Alussa will merge with and into Cayman Merger Sub, with Alussa continuing as the surviving entity (the “Cayman Merger”), (b) Alussa will distribute all of its interests in Norway Merger Sub 1 to Pubco, (c) FREYR will merge with and into Norway Merger Sub 2, with Norway Merger Sub 2 continuing as the surviving entity (the “Norway Merger”), (d) Norway Merger Sub 1 will merge with and into Pubco, with Pubco continuing as the surviving entity (the “Cross-Border Merger”), as a result of which, (i) each issued and outstanding security of Alussa immediately prior to the effective time of the Cayman Merger shall be exchanged for the right of the holder thereof to receive securities of Pubco in accordance with the Business Combination Agreement (or, in the case of Dissenting Purchaser Shareholders, if any, the right to receive the fair value of such holder’s Dissenting Purchaser Ordinary Shares and such other rights as are granted by the Cayman Companies Law), (ii) each issued and outstanding security of FREYR immediately prior to the effective time of the Norway Merger shall be exchanged for the right of the holder thereof to receive securities of Norway Merger Sub 1 in accordance with the Business Combination Agreement and (iii) each issued and outstanding security of Norway Merger Sub 1 immediately prior to the Cross-Border Effective Time shall be exchanged for the right of the holder to receive securities of Pubco, all upon the terms and subject to the conditions set forth in the Business Combination Agreement and in accordance with the provisions of applicable law (the “Business Combination”).
Consummation of the transactions contemplated by the Business Combination Agreement are subject to customary conditions or the respective parties, including the approval of the Business Combination by the Company’s shareholders in accordance with the Company’s amended and restated memorandum and articles of association and the completion of a redemption offer whereby the Company will be providing its public shareholders with the opportunity to redeem their ordinary shares for cash equal to their pro rata share of the aggregate amount on deposit in the Company’s trust account.
The Business Combination Agreement and related agreements are further described in the Form 8-K filed by the Company on January 29, 2021. For additional information regarding FREYR, the Business Combination Agreement and the Business Combination, see the S-4 to be filed.
Other than as specifically discussed, this report does not assume the closing of the Business Combination.
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Business Strategy and Deal Origination
We expect that the experience of the management team will provide us with a robust number of acquisition or investment opportunities. In addition, target business candidates are brought to our attention by various unaffiliated sources, which may include investment market participants, private equity groups, investment banking firms, accounting firms, equity sponsors, lending institutions, family offices, attorneys and brokers energy sector consultants, public and private oil and gas companies, International Oil Companies (IOCs), Governmental Licensing Authorities, and business enterprises who seek to rationalize their existing portfolio. Since the consummation of our initial public offering, members of our management team have communicated with their network of relationships to articulate the parameters for our search for a target company and a potential business combination and began the process of pursuing and reviewing potential leads.
Business Combination Criteria
Consistent with our acquisition strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. We use these criteria and guidelines in evaluating acquisition opportunities. While we intend to acquire companies that we believe exhibit one or more of the following characteristics, we may decide to enter into our initial business combination with a target business that does not meet these criteria and guidelines. We intend to acquire companies that we believe have the following characteristics:
| ● | Management Control: It will be an important factor to have operational control, or alternatively a pathway to such operational control, rather than being a passive equity partner. Existing staff needs to have credentials, expertise and performance that are aligned with future operational activity. Potential should exist for local and expatriate recruitment to compliment the special requirements of future operational activity. Furthermore, the ability to contract specialized consultants and service companies should exist. |
| ● | Ease of Operating: Health, Safety, Security, Environmental and Social (HSSES) standards, procedures and performance will be a critical element of future operational activity; historical records and performance will be an essential element in assessing suitability for future efficient and effective performance. |
| ● | Financial Restructuring: Capital Allocation, Cash Flow Analysis, Authority for Expenditure (AFE), Economic Modeling processes and Corporate Finance integration will be essential processes to ensure effective and efficient future operation. An assessment of existing processes should highlight deficiencies and where essential restructuring modifications should not be too onerous. |
For potential E&P acquisitions, we intend to target opportunities with:
| ● | Subsurface materiality: Existing production is 10,000bopd, where historical production suggests significant increases can be achieved through, but not restricted to a variety of well interventions, infill wells, pressure support, pattern reconfigurations and other operational activity. Independent Reserve Audits demonstrate material Proven Undeveloped Reserves (PUD’s), together with Probable (P2), Possible (P3) and Contingent Resources exist. Realistic Field Development Plans (FDP’s) are in place or can be constructed. Sufficient surveillance data and information is available to envisage significant impact can be achieved with the implementation of various Digital Science and Analysis techniques. |
These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant.
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Our Business Combination Process
In evaluating a prospective target business, we conduct a thorough due diligence review that encompasses, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial and other information. We also utilize our operational and capital allocation experience.
In order to execute our business strategy, we are building a portfolio of prospects to evaluate through a process which includes, but is not limited to, the following dimensions:
| ● | Screening; |
| ● | Reservoir Evaluation; |
| ● | Economic Evaluation; |
| ● | Political Evaluation; |
| ● | Health, Safety & Environmental Evaluation; |
| ● | Due Diligence; |
| ● | Financial Structuring; and |
| ● | Sensitivity Analysis. |
After the initial business combination, our management team intends to apply a rigorous approach to enhancing shareholder value, including evaluating the experience and expertise of incumbent management and making changes where appropriate, examining opportunities for revenue enhancement, cost savings, operating efficiencies and strategic acquisitions and divestitures and developing and implementing corporate strategies and initiatives to improve profitability and long-term value. In doing so, our management team anticipates evaluating corporate governance, opportunistically accessing capital markets and other opportunities to enhance liquidity, identifying acquisition and divestiture opportunities and properly aligning management and board incentives with growing shareholder value. Our management team intends to pursue post-merger initiatives through participation on the Board of Directors, through direct involvement in and operational control of the company and/or calling upon a stable of former managers and advisors when necessary.
Our acquisition criteria, due diligence processes and value creation methods are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant. In the event that we decide to enter into our initial business combination with a target business that does not meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our shareholder communications related to our initial business combination, which, as discussed in this report, would be in the form of tender offer documents or proxy solicitation materials that we would file with the SEC.
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Sourcing of Potential Business Combination Targets
We believe that the operational and transactional experience of our management team and the relationships they have developed as a result of such experience, provides us with a substantial number of potential business combination targets. These individuals and entities have developed a broad network of contacts and corporate relationships around the world. This network has grown through sourcing, acquiring and financing businesses and maintaining relationships with sellers, financing sources and target management teams. Our management team members have significant experience in executing transactions under varying economic and financial market conditions. We believe that these networks of contacts and relationships and this experience provides us with important sources of investment opportunities. In addition, target business candidates may be brought to our attention from various unaffiliated sources, including investment market participants, private equity funds and large business enterprises seeking to divest noncore assets or divisions.
We are not prohibited from pursuing an initial business combination with a business combination target that is affiliated with funds advised by Encompass Capital Advisors LLC (“Encompass,” and together with the pooled investment vehicles for which Encompass serves as the investment advisor and which are members of the sponsor, the “Encompass Funds”), our sponsor, officers or directors or making the acquisition through a joint venture or other form of shared ownership with funds advised by Encompass, our sponsor, officers or directors. In the event we seek to complete our initial business combination with a company that is affiliated with funds advised by Encompass, our sponsor, officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm or another independent firm that commonly renders valuation opinions for the type of company we are seeking to acquire or an independent accounting firm that our initial business combination is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context. If any of our officers or directors becomes aware of a business combination opportunity that falls within the line of business of any entity to which he or she has then-current fiduciary or contractual obligations, he or she may be required to present such business combination opportunity to such entity prior to presenting such business combination opportunity to us, subject to his or her fiduciary duties under Cayman Islands law. Our officers and directors currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us. Any such entity may co-invest with us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the acquisition by making a specified future issuance to any such entity.
Other Acquisition Considerations
Unless we complete our initial business combination with an affiliated entity, or our Board of Directors cannot independently determine the fair market value of the target business or businesses, we are not required to obtain an opinion from an independent investment banking firm, another independent firm that commonly renders valuation opinions for the type of company we are seeking to acquire or from an independent accounting firm that the price we are paying for a target is fair to our company from a financial point of view. If no opinion is obtained, our shareholders will be relying on the business judgment of our Board of Directors, which will have significant discretion in choosing the standard used to establish the fair market value of the target or targets, and different methods of valuation may vary greatly in outcome from one another. Such standards used will be disclosed in our tender offer documents or proxy solicitation materials, as applicable, related to our initial business combination.
Members of our management team directly or indirectly own our ordinary shares and/or private placement warrants, and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination.
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Each of our directors and officers presently has, and in the future any of our directors and our officers may have additional, fiduciary or contractual obligations to other entities pursuant to which such officer or director is or will be required to present acquisition opportunities to such entity. Accordingly, subject to his or her fiduciary duties under Cayman Islands law, if any of our officers or directors becomes aware of an acquisition opportunity which is suitable for an entity to which he or she has then current fiduciary or contractual obligations, he or she will need to honor his or her fiduciary or contractual obligations to present such acquisition opportunity to such entity, and only present it to us if such entity rejects the opportunity. In addition, we may, at our option, pursue an Affiliated Joint Acquisition opportunity with an entity to which Encompass (or funds advised by Encompass), an officer or director has a fiduciary or contractual obligation. Any such entity may co-invest with us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the acquisition by making a specified future issuance to any such entity. Our amended and restated memorandum and articles of association provide that, subject to his or her fiduciary duties under Cayman Islands law, no director or officer shall be disqualified or prevented from contracting with the company nor shall any contract or transaction entered into by or on behalf of the company in which any director shall have an interest be liable to be avoided. A director shall be at liberty to vote in respect of any contract or transaction in which he is interested provided that the nature of such interest shall be disclosed at or prior to its consideration or any vote thereon by the Board of Directors. We do not believe, however, that any fiduciary duties or contractual obligations of our directors or officers would materially undermine our ability to complete our business combination.
Our officers have agreed not to become an officer or director of any other special purpose acquisition company with a class of securities registered under the Exchange Act, until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination by November 29, 2021.
Initial Business Combination
NYSE rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of the value of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable) at the time of our signing a definitive agreement in connection with our initial business combination. If our Board of Directors is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm or another independent firm that commonly renders valuation opinions for the type of company we are seeking to acquire or an independent accounting firm with respect to the satisfaction of such criteria. We do not intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination.
We may, at our option, pursue an Affiliated Joint Acquisition with an entity affiliated with (or funds advised by) Encompass or with an entity to which an officer or director has a fiduciary or contractual obligation. Any such parties would co-invest only if (i) permitted by applicable regulatory and other legal limitations; (ii) we and Encompass considered a transaction to be mutually beneficial to us as well as the affiliated entity; and (iii) other business reasons exist to do so, such as the strategic merits of including such co-investors, the need for additional capital beyond the amount held in our trust account to fund the initial business combination and/or the desire to obtain committed capital for closing the initial business combination. We refer to this potential future issuance, or a similar issuance to other specified purchasers, as a “specified future issuance” throughout this report. The amount and other terms and conditions of any such specified future issuance would be determined at the time thereof. We are not obligated to make any specified future issuance and may determine not to do so. This is not an offer for any specified future issuance. Pursuant to the anti-dilution provisions of our Class B ordinary shares, any such specified future issuance would result in an adjustment to the conversion ratio such that our initial stockholders and their permitted transferees, if any, would retain their aggregate percentage ownership at 20% of the sum of the total number of all ordinary shares outstanding plus all shares issued in the specified future issuance, unless the holders of a majority of the then-outstanding Class B ordinary shares agreed to waive such adjustment with respect to the specified future issuance at the time thereof. We cannot determine at this time whether a majority of the holders of our Class B ordinary shares at the time of any such specified future issuance would agree to waive such adjustment to the conversion ratio. They may waive such adjustment due to (but not limited to) the following: (i) closing conditions which are part of the agreement for our initial business combination; (ii) negotiation with Class A shareholders on structuring an initial business combination; (iii) negotiation with parties providing financing which would trigger the anti-dilution provisions of the Class B ordinary shares; or (iv) as part of the Affiliated Joint Acquisition. If such adjustment is not waived, the specified future issuance would not reduce the percentage ownership of holders of our Class B ordinary shares, but would reduce the percentage ownership of holders of our Class A ordinary shares. If such adjustment is waived, the specified future issuance would reduce the percentage ownership of holders of both classes of our ordinary shares.
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We anticipate structuring our initial business combination so that the post-transaction company in which our public shareholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or shareholders or for other reasons, including an Affiliated Joint Acquisition as described above. However, we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding 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 of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our shareholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our shareholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test. If our initial business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses. If our securities are not listed on the NYSE, we would not be required to satisfy the 80% requirement. However, we intend to satisfy the 80% requirement even if our securities are not listed on the NYSE at the time of our initial business combination.
Status as a Public Company
We believe our structure makes us an attractive business combination partner to target businesses. As an existing public company, we offer a target business an alternative to the traditional initial public offering through a merger or other business combination. In this situation, the owners of the target business would exchange their shares of stock in the target business for our shares or for a combination of our shares and cash, allowing us to tailor the consideration to the specific needs of the sellers. Although there are various costs and obligations associated with being a public company, we believe target businesses will find this method a more certain and cost effective method to becoming a public company than the typical initial public offering. In a typical initial public offering, there are additional expenses incurred in marketing, road show and public reporting efforts that may not be present to the same extent in connection with a business combination with us.
Furthermore, once a proposed business combination is completed, the target business will have effectively become public, whereas an initial public offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions, which could delay or prevent the offering from occurring. Once public, we believe the target business would then have greater access to capital and an additional means of providing management incentives consistent with shareholders’ interests. It can offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented employees.
While we believe that our structure and our management team’s backgrounds makes us an attractive business partner, some potential target businesses may have a negative view of us since we are a blank check company, without an operating history, and there is uncertainty relating to our ability to obtain shareholder approval of our proposed initial business combination and retain sufficient funds in our trust account in connection therewith.
We are an “emerging growth company,” as defined in the JOBS Act. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
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Financial position
With funds available for a business combination in the amount of $279,771,941, as of December 31, 2020, (assuming no redemptions and after payment of up to $10,062,500 of deferred underwriting fees) before fees and expenses associated with our initial business combination, we offer a target business a variety of options such as creating a liquidity event for its owners, providing capital for the potential growth and expansion of its operations or strengthening its balance sheet by reducing its debt ratio. Because we are able to complete our initial business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However, we have not taken any steps to secure third party financing and there can be no assurance it will be available to us.
Effecting our Initial Business Combination
We are not presently engaged in, and we will not engage in, any operations until we consummate our initial business combination. We intend to effectuate our initial business combination using cash from the proceeds of our initial public offering and the private placement of the private placement warrants, our shares, debt or a combination of these as the consideration to be paid in our initial business combination. We may, although we do not currently intend to, seek to complete our initial business combination with a company or business that may be financially unstable or in its early stages of development or growth, start-up companies or companies with speculative business plans or excess leverage, which would subject us to the numerous risks inherent in such companies and businesses.
If our initial business combination is paid for using equity or debt securities, or not all of the funds released from the trust account are used for payment of the consideration in connection with our initial business combination or used for redemptions of our Class A ordinary shares, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working capital.
We may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of our initial business combination, and we may effectuate our initial business combination using the proceeds of such offering rather than using the amounts held in the trust account.
In the case of an initial business combination funded with assets other than the trust account assets, our tender offer documents or proxy materials disclosing the business combination would disclose the terms of the financing and, only if required by law, we would seek shareholder approval of such financing. There are no prohibitions on our ability to raise funds privately or through loans in connection with our initial business combination, including pursuant to any specified future issuance. At this time, we are not a party to any arrangement or understanding with any third party with respect to raising any additional funds through the sale of securities or otherwise.
Selection of a target business and structuring of our initial business combination
NYSE rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of the value of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable) at the time of our signing a definitive agreement in connection with our initial business combination. The fair market value of the target or targets will be determined by our Board of Directors based upon one or more standards generally accepted by the financial community, such as discounted cash flow valuation or value of comparable businesses. Our shareholders will be relying on the business judgment of our Board of Directors, which will have significant discretion in choosing the standard used to establish the fair market value of the target or targets, and different methods of valuation may vary greatly in outcome from one another. Such standards used will be disclosed in our tender offer documents or proxy solicitation materials, as applicable, related to our initial business combination.
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If our Board of Directors is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm or another independent firm that commonly renders valuation opinions for the type of company we are seeking to acquire or an independent accounting firm, with respect to the satisfaction of such criteria. We do not intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination. Subject to these requirements, our management will have virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses, although we will not be permitted to effectuate our initial business combination with another blank check company or a similar company with nominal operations.
In any case, we will only complete an initial business combination in which we own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquire 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 own or acquire less than 100% of the equity interests or assets of a target business or businesses, the portion of such business or businesses that are owned or acquired by the post-transaction company is what will be valued for purposes of the 80% of net assets test. There is currently no basis for investors to evaluate the possible merits or risks of any target business with which we may ultimately complete our initial business combination.
To the extent we effect our initial business combination with a company or business that may be financially unstable or in its early stages of development or growth we may be affected by numerous risks inherent in such company or business. Although our management will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant risk factors.
In evaluating a prospective target business, we conduct a thorough due diligence review which encompasses, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial, operational, legal and other information which will be made available to us.
The time required to select and evaluate a target business and to structure and complete our initial business combination, and the costs associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target business with which our initial business combination is not ultimately completed will result in our incurring losses and will reduce the funds we can use to complete another business combination.
Lack of business diversification
For an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend entirely on the future performance of a single business. Unlike other entities that have the resources to complete business combinations with multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations and mitigate the risks of being in a single line of business. By completing our initial business combination with only a single entity, our lack of diversification may:
| ● | subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after our initial business combination; and |
| ● | cause us to depend on the marketing and sale of a single product or limited number of products or services. |
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Limited ability to evaluate the target’s management team
Although we intend to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting our initial business combination with that business, our assessment of the target business’s management may not prove to be correct. In addition, the future management may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of members of our management team, if any, in the target business cannot presently be stated with any certainty. While it is possible that one or more of our directors will remain associated in some capacity with us following our initial business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our initial business combination. Moreover, we cannot assure you that members of our management team will have significant experience or knowledge relating to the operations of the particular target business.
We cannot assure you that any of our key personnel will remain in senior management or advisory positions with the combined company. The determination as to whether any of our key personnel will remain with the combined company will be made at the time of our initial business combination.
Following a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we will have the ability to recruit additional managers, or that such additional managers will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Shareholders may not have the ability to approve our initial business combination
We may conduct redemptions without a shareholder vote pursuant to the tender offer rules of the SEC subject to the provisions of our amended and restated memorandum and articles of association. However, we will seek shareholder approval if it is required by law or applicable stock exchange rule, or we may decide to seek shareholder approval for business or other legal reasons.
Under the NYSE’s listing rules, shareholder approval would be required for our initial business combination if, for example:
| ● | we issue Class A ordinary shares that will be equal to or in excess of 20% of the number of Class A ordinary shares then outstanding; |
| ● | any of our directors, officers or substantial security holders (as defined by the NYSE rules) has a 5% or greater interest, directly or indirectly, in the target business or assets to be acquired and if the number of Class A ordinary shares to be issued, or if the number of Class A ordinary shares into which the securities may be convertible or exercisable, exceeds either (a) 1% of the number of Class A ordinary shares or 1% of the voting power outstanding before the issuance in the case of any of our directors and officers or (b) 5% of the number of Class A ordinary shares or 5% of the voting power outstanding before the issuance in the case of any substantial security holders; or |
| ● | the issuance or potential issuance of ordinary shares will result in our undergoing a change of control. |
Permitted purchases of our securities
In the event we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our sponsor, directors, officers or advisors, the Encompass Funds, or their respective affiliates may purchase our Class A ordinary shares in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination. There is no limit on the number of shares such persons may purchase. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. In the event our sponsor, directors, officers or advisors, the Encompass Funds, or their respective affiliates determine to make any such purchases at the time of a shareholder vote relating to our initial business combination, such purchases could have the effect of influencing the vote necessary to approve such transaction. None of the funds in the trust account will be used to purchase shares in such transactions. They will not make any such purchases when they are in possession of any material non-public information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record holder of our Class A ordinary shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. We have adopted an insider trading policy which requires insiders to: (i) refrain from purchasing our shares during certain blackout periods and when they are in possession of any material non-public information and (ii) to clear all trades with our legal counsel prior to execution. We cannot currently determine whether our insiders will make such purchases pursuant to a Rule 10b5-1 plan, as it will be dependent upon several factors, including but not limited to, the timing and size of such purchases. Depending on such circumstances, our insiders may either make such purchases pursuant to a Rule 10b5-1 plan or determine that such a plan is not necessary.
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In the event that our sponsor, directors, officers or advisors, the Encompass Funds, or their respective affiliates purchase our Class A ordinary shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their shares. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules.
The purpose of such purchases would be to (i) vote such Class A ordinary shares in favor of the business combination and thereby increase the likelihood of obtaining shareholder approval of the business combination or (ii) to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be met. This may result in the completion of our initial business combination that may not otherwise have been possible.
In addition, if such purchases are made, the public “float” of our ordinary shares may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
Our sponsor, directors, officers or advisors, Encompass, or their respective affiliates anticipate that they may identify the shareholders with whom our sponsor, directors, officers or advisors, the Encompass Funds, or their respective affiliates may pursue privately negotiated purchases by either the shareholders contacting us directly or by our receipt of redemption requests submitted by shareholders following our mailing of proxy materials in connection with our initial business combination. To the extent that our sponsor, directors, officers or advisors, the Encompass Funds, or their respective affiliates enter into a private purchase, they would identify and contact only potential selling shareholders who have expressed their election to redeem their shares for a pro rata share of the trust account or vote against the business combination. Such persons would select the shareholders from whom to acquire shares based on the number of shares available, the negotiated price per share and such other factors as any such person may deem relevant at the time of purchase. The price per share paid in any such transaction may be different than the amount per share a public shareholder would receive if it elected to redeem its shares in connection with our initial business combination. Our sponsor, directors, officers or advisors, the Encompass Funds, or their respective affiliates will only purchase our shares if such purchases comply with Regulation M under the Exchange Act and the other federal securities laws.
Any purchases by our sponsor, directors, officers or advisors, the Encompass Funds, or their respective affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor, directors, officers or advisors, the Encompass Funds, or their respective affiliates will not make purchases of our ordinary shares if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act.
Redemption rights for public shareholders upon completion of our initial business combination
We will provide our public shareholders with the opportunity to redeem all or a portion of their Class A ordinary shares upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of the initial business combination, including interest (which interest shall be net of taxes payable) divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account, as of December 31, 2020, was $289,834,441. The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. The redemption rights will include the requirement that a beneficial holder must identify itself in order to validly redeem its shares. Our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and any public shares they may hold in connection with the completion of our initial business combination.
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Manner of conducting redemptions
We will provide our public shareholders with the opportunity to redeem all or a portion of their Class A ordinary shares upon the completion of our initial business combination either (i) in connection with a shareholder meeting called to approve the business combination or (ii) by means of a tender offer. The decision as to whether we will seek shareholder approval of a proposed business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require us to seek shareholder approval under the law or stock exchange listing requirement. Under NYSE rules, asset acquisitions and stock purchases would not typically require shareholder approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our outstanding ordinary shares or seek to amend our amended and restated memorandum and articles of association would require shareholder approval. We intend to conduct redemptions without a shareholder vote pursuant to the tender offer rules of the SEC unless shareholder approval is required by law or stock exchange listing requirement or we choose to seek shareholder approval for business or other legal reasons. So long as we obtain and maintain a listing for our securities on the NYSE, we will be required to comply with NYSE rules.
If a shareholder vote is not required and we do not decide to hold a shareholder vote for business or other legal reasons, we will, pursuant to our amended and restated memorandum and articles of association:
| ● | conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers; and |
| ● | file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies. |
Upon the public announcement of our initial business combination, we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase our Class A ordinary shares in the open market if we elect to redeem our public shares through a tender offer, to comply with Rule 14e-5 under the Exchange Act.
In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public shareholders not tendering more than a specified number of public shares which are not purchased by our sponsor, which number will be based on the requirement that we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after payment of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. If public shareholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination.
If, however, shareholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain shareholder approval for business or other legal reasons, we will, pursuant to our amended and restated memorandum and articles of association:
| ● | conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules; and |
| ● | file proxy materials with the SEC. |
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We expect that a final proxy statement would be mailed to public shareholders at least 10 days prior to the shareholder vote. However, we expect that a draft proxy statement would be made available to such shareholders well in advance of such time, providing additional notice of redemption if we conduct redemptions in conjunction with a proxy solicitation. Although we are not required to do so, we currently intend to comply with the substantive and procedural requirements of Regulation 14A in connection with any shareholder vote even if we are not able to maintain our NYSE listing or Exchange Act registration.
In the event that we seek shareholder approval of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our public shareholders with the redemption rights described above upon completion of the initial business combination.
If we seek shareholder approval, we will complete our initial business combination only if a majority of the issued and outstanding ordinary shares voted are voted in favor of the business combination. In such case, pursuant to the terms of a letter agreement entered into with us, our sponsor, officers and directors have agreed (and their permitted transferees will agree) to vote any founder shares and any public shares held by them in favor of our initial business combination. We expect that at the time of any shareholder vote relating to our initial business combination, our sponsor and its permitted transferees will own at least 20% of our issued and outstanding ordinary shares entitled to vote thereon. Each public shareholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction. In addition, our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and public shares in connection with the completion of a business combination.
Our amended and restated memorandum and articles of association provides that we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after payment of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock” rules). Redemptions of our public shares may also be subject to a higher net tangible asset test or cash requirement pursuant to an agreement relating to our initial business combination. For example, the proposed business combination may require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all Class A ordinary shares that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, and all Class A ordinary shares submitted for redemption will be returned to the holders thereof.
Limitation on redemption upon completion of our initial business combination if we seek shareholder approval
Notwithstanding the foregoing, if we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated memorandum and articles of association provide that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than 15% of the shares sold in our initial public offering (the “Excess Shares”). We believe this restriction will discourage shareholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to exercise their redemption rights against a proposed business combination as a means to force us or our sponsor or its affiliates to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public shareholder holding more than an aggregate of 15% of the shares sold in our initial public offering could threaten to exercise its redemption rights if such holder’s shares are not purchased by us or our sponsor or its affiliates at a premium to the then-current market price or on other undesirable terms. By limiting our shareholders’ ability to redeem no more than 15% of the shares sold in our initial public offering our purchased thereafter through open market purchases, we believe we will limit the ability of a small group of shareholders to unreasonably attempt to block our ability to complete our initial business combination, particularly in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our shareholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination. Our sponsor, officers and directors have, pursuant to a letter agreement entered into with us, waived their right to have any founder shares or public shares held by them redeemed in connection with our initial business combination. Unless any of our other affiliates acquires founder shares through a permitted transfer from an initial shareholder, and thereby becomes subject to the letter agreement, no such affiliate is subject to this waiver. However, to the extent any such affiliate acquires public shares, it would be a public shareholder and restricted from seeking redemption rights with respect to any Excess Shares.
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Tendering share certificates in connection with a tender offer or redemption rights
We may require our public shareholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their certificates (if any) to our transfer agent prior to the date set forth in the tender offer documents, or up to two business days prior to the vote on the proposal to approve the business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, rather than simply voting against the initial business combination. The tender offer or proxy materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will indicate whether we are requiring public shareholders to satisfy such delivery requirements. Accordingly, a public shareholder would have from the time we send out our tender offer materials until the close of the tender offer period, or up to two days prior to the vote on the business combination if we distribute proxy materials, as applicable, to tender its shares if it wishes to seek to exercise its redemption rights. Pursuant to the tender offer rules, the tender offer period will be not less than 20 business days and, in the case of a shareholder vote, a final proxy statement would be mailed to public shareholders at least 10 days prior to the shareholder vote. However, we expect that a draft proxy statement would be made available to such shareholders well in advance of such time, providing additional notice of redemption if we conduct redemptions in conjunction with a proxy solicitation. Given the relatively short exercise period, it is advisable for shareholders to use electronic delivery of their public shares.
There is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will typically charge the tendering broker $80.00 and it would be up to the broker whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated.
Any request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials or the date of the shareholder meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share delivered its certificate in connection with an election of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically or electronically). It is anticipated that the funds to be distributed to holders of our public shares electing to redeem their shares will be distributed promptly after the completion of our initial business combination.
If our initial business combination is not approved or completed for any reason, then our public shareholders who elected to exercise their redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If our initial proposed business combination is not completed, we may continue to try to complete a business combination with a different target by November 29, 2021.
Redemption of public shares and liquidation if no initial business combination
Our sponsor, officers and directors have agreed that we will have until November 29, 2021 to complete our initial business combination. If we are unable to complete our initial business combination by November 29, 2021, 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, redeem 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 (less up to $100,000 of interest to pay dissolution expenses (which interest shall be net of taxes payable) divided by the number of then outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our Board of Directors, liquidate and dissolve, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our initial business combination within such time period.
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Our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination by November 29, 2021. However, if our sponsor acquires public shares, it will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within such time period.
Our sponsor, officers and directors have agreed, pursuant to a written letter agreement with us, that they will not propose any amendment to our amended and restated memorandum and articles of association that would (i) modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination by November 29, 2021 or (ii) with respect to the other provisions relating to shareholders’ rights or pre-business combination activity, unless we provide our public shareholders with the opportunity to redeem their Class A ordinary shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable) divided by the number of then outstanding public shares. However, we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after payment of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock” rules). If this optional redemption right is exercised with respect to an excessive number of public shares such that we cannot satisfy the net tangible asset requirement (described above), we would not proceed with the amendment or the related redemption of our public shares.
We expect to use the amounts held outside the trust account ($370,958 as of December 31, 2020) to pay for all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, if we do not complete an initial business combination by November 29, 2021, although we cannot assure you that there will be sufficient funds for such purpose. However, if those funds are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the extent that there is any interest accrued in the trust account not required to pay taxes, we may request the trustee to release to us an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If we were to expend all of the net proceeds of our initial public offering and the sale of the private placement warrants, other than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account, the per-share redemption amount received by shareholders upon our dissolution would be approximately $10.00. The proceeds deposited in the trust account could, however, become subject to the claims of our creditors which would have higher priority than the claims of our public shareholders. We cannot assure you that the actual per-share redemption amount received by shareholders will not be substantially less than $10.00. While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors’ claims.
Although we will seek to have all vendors, service providers (other than our independent auditors), prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public shareholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Upon redemption of our public shares, if we are unable to complete our initial business combination within the prescribed time frame, or upon the exercise of a redemption right in connection with our initial business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption. Our sponsor has agreed that it will be liable to us if and to the extent any claims by a third party (other than our independent auditors) for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes. This liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. Because we are a blank check company, rather than an operating company, and our operations are limited to searching for prospective target businesses to acquire, the only third parties we currently expect to engage would be vendors such as lawyers, investment bankers, computer or information and technical services providers or prospective target businesses. In the event that an executed waiver is deemed to be unenforceable against a third party, then our sponsor will not be responsible to the extent of any liability for such third-party claims. We have not independently verified whether our sponsor has sufficient funds to satisfy their indemnity obligations and believe that our sponsor’s only assets are securities of our company. None of our other officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
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In the event that the proceeds in the trust account are reduced below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so in any particular instance. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption price will not be substantially less than $10.00 per share.
We will seek to reduce the possibility that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service providers (other than our independent auditors), prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsor will also not be liable as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. We may have access to use the amounts held outside the trust account ($370,958 as of December 31, 2020) to pay any such potential claims (including costs and expenses incurred in connection with our liquidation, currently estimated to be no more than approximately $100,000) but these amounts may be spend on expenses incurred as a result of being a public company or due diligence expenses on prospective business combination candidates. In the event that we liquidate and it is subsequently determined that the reserve for claims and liabilities is insufficient, shareholders who received funds from our trust account could be liable for claims made by creditors.
If we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able to return $10.00 per share to our public shareholders. Additionally, if we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our shareholders. Furthermore, our Board of Directors may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive damages, by paying public shareholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.
Our public shareholders will be entitled to receive funds from the trust account only upon the earlier of (i) the completion of our initial business combination, (ii) the redemption of any public shares properly tendered in connection with a shareholder vote to amend our amended and restated memorandum and articles of association to (A) modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination by November 29, 2021 or (B) with respect to any other provision relating to shareholders’ rights or pre-business combination activity and (iii) the redemption of all of our public shares if we are unable to complete our initial business combination by November 29, 2021, subject to applicable law. In no other circumstances will a shareholder have any right or interest of any kind to or in the trust account. In the event we seek shareholder approval in connection with our initial business combination, a shareholder’s voting in connection with the business combination alone will not result in a shareholder’s redeeming its shares to us for an applicable pro rata share of the trust account. Such shareholder must have also exercised its redemption rights described above.
Amended and Restated Memorandum and Articles of Association
Our amended and restated memorandum and articles of association contain certain requirements and restrictions relating to our initial public offering that apply to us until the consummation of our initial business combination. If we seek to amend any provisions of our amended and restated memorandum and articles of association relating to shareholders’ rights or pre-business combination activity, we will provide dissenting public shareholders with the opportunity to redeem their public shares in connection with any such vote. Our sponsor, officers and directors have agreed to waive any redemption rights with respect to their founder shares and public shares in connection with the completion of our initial business combination. Specifically, our amended and restated memorandum and articles of association provide, among other things, that:
| ● | prior to the consummation of our initial business combination, we shall either (1) seek shareholder approval of our initial business combination at a meeting called for such purpose at which shareholders may seek to redeem their shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable) or (2) provide our public shareholders with the opportunity to tender their shares to us by means of a tender offer (and thereby avoid the need for a shareholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable) in each case subject to the limitations described herein; |
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| ● | we will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 either immediately prior to or upon such consummation and, solely if we seek shareholder approval, a majority of the issued and outstanding ordinary shares voted are voted in favor of the business combination; |
| ● | if our initial business combination is not consummated prior to November 29, 2021, then our existence will terminate and we will distribute all amounts in the trust account; and |
| ● | prior to our initial business combination, we may not issue additional ordinary shares that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote on any initial business combination. |
These provisions cannot be amended without the approval of holders of at least two-thirds of our ordinary shares. In the event we seek shareholder approval in connection with our initial business combination, our amended and restated memorandum and articles of association provide that we may consummate our initial business combination only if approved by a majority of the ordinary shares voted by our shareholders at a duly held shareholders meeting.
Competition
In identifying, evaluating and selecting a target business for our initial business combination, we encounter intense competition from other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged buyout funds, and operating businesses seeking strategic acquisitions. Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than us. Our ability to acquire larger target businesses will be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the acquisition of a target business. Furthermore, our obligation to pay cash in connection with our public shareholders who exercise their redemption rights may reduce the resources available to us for our initial business combination and our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully negotiating an initial business combination.
Conflicts of interest
Although we do not believe any conflict currently exists between us and Encompass, funds advised by Encompass, or its affiliates may compete with us for acquisition or investment opportunities. If such entities decide to pursue an opportunity, we may be precluded from procuring such opportunity. In addition, investment ideas generated within Encompass may be suitable for both us, and for funds advised, or separate accounts managed by, Encompass and for an Encompass affiliate and may be directed to such entity rather than to us. Encompass will not have any obligation to present us with any opportunity for a potential business combination of which they become aware. Encompass may be required to present potential business combinations to future Encompass affiliates, or funds advised by, or separate accounts managed by, Encompass, or third parties, before they present such opportunities to us. Encompass and our management team may have similar obligations to future investment vehicles or third parties.
We may, at our option, pursue an Affiliated Joint Acquisition opportunity with (or funds advised by) Encompass or any such fund or other investment vehicle, but such parties would co-invest only if permitted by applicable regulatory and other legal limitations and to the extent considered appropriate. Such entity may co-invest with us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the initial business combination by making a specified future issuance to any such fund or vehicle.
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Each of our directors and officers presently has, and in the future any of our directors and our officers may have additional, fiduciary or contractual obligations to other entities pursuant to which such officer or director is or will be required to present acquisition opportunities to such entity. Accordingly, subject to his or her fiduciary duties under Cayman Islands law, if any of our officers or directors becomes aware of an acquisition opportunity which is suitable for an entity to which he or she has then current fiduciary or contractual obligations, he or she will need to honor his or her fiduciary or contractual obligations to present such acquisition opportunity to such entity, and only present it to us if such entity rejects the opportunity. In addition, we may, at our option, pursue an Affiliated Joint Acquisition opportunity with an entity to which Encompass (or funds advised by Encompass), an officer or director has a fiduciary or contractual obligation. Any such entity may co-invest with us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the acquisition by making a specified future issuance to any such entity. Our amended and restated memorandum and articles of association provide that, subject to his or her fiduciary duties under Cayman Islands law, no director or officer shall be disqualified or prevented from contracting with the company nor shall any contract or transaction entered into by or on behalf of the company in which any director shall have an interest be liable to be avoided. A director shall be at liberty to vote in respect of any contract or transaction in which he is interested provided that the nature of such interest shall be disclosed at or prior to its consideration or any vote thereon by the Board of Directors. We do not believe, however, that any fiduciary duties or contractual obligations of our directors or officers would materially undermine our ability to complete our business combination.
Members of our management team directly or indirectly own our ordinary shares and/or private placement warrants, and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination.
Indemnity
Our sponsor has agreed that it will be liable to us if and to the extent any claims by a third party (other than our independent auditors) for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes. This liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. Because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire, the only third parties we currently expect to engage would be vendors such as lawyers, investment bankers, computer or information and technical services providers or prospective target businesses. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third party claims. We have not independently verified whether our sponsor has sufficient funds to satisfy their indemnity obligations and believe that our sponsor’s only assets are securities of our company. We have not asked our sponsor to reserve for such obligations.
Employees
We have four (4) officers. Aside from Daniel Barcelo, our Chief Executive Officer, who devotes his full time to our affairs, members of our management team are not obligated to devote any specific number of hours to our matters but they devote as much of their time as they deem necessary to our affairs until we have completed our initial business combination. The amount of time that our officers or any other members of our management team aside from Mr. Barcelo devote in any time period will vary based on whether a target business has been selected for our initial business combination and the current stage of the business combination process.
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Periodic reporting and financial information
We have registered our units, Class A ordinary shares and warrants under the Exchange Act and have reporting obligations, including the requirement that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual reports will contain financial statements audited and reported on by our independent registered public auditors.
We will provide shareholders with audited financial statements of the prospective target business as part of the tender offer materials or proxy solicitation materials sent to shareholders to assist them in assessing the target business. These financial statements may be required to be prepared in accordance with, or be reconciled to, U.S. GAAP, or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in accordance with the PCAOB. These financial statement requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such statements in time for us to disclose such statements in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame. While this may limit the pool of potential acquisition candidates, we do not believe that this limitation will be material.
Section 404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with this Annual Report on Form 10-K/A. As long as we maintain our status as an emerging growth company, we will not be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting. The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target company with which we seek to complete our business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” shall have the meaning associated with it in the JOBS Act.
Corporate Information
Our executive offices are located at PO Box 500, 71 Fort Street, Grand Cayman KY1-1106, Cayman Islands and our telephone number at that location is +1345 949 4900.
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Summary Risk Factors
As a smaller reporting company, we are not required to include risk factors in this annual report. However, below please find the following material risks, uncertainties and other factors:
| · | we are an early stage Company with no revenue or basis to evaluate our ability to select a suitable business target; | |
| · | we may not be able to select an appropriate target business or businesses and complete our initial business combination in the prescribed time frame; | |
| · | our expectations around the performance of a prospective target business or businesses may not be realized; | |
| · | we may not be successful in retaining or recruiting required officers, key employees or directors following our initial business combination; | |
| · | our officers and directors may have difficulties allocating their time between the Company and other businesses and may potentially have conflicts of interest with our business or in approving our initial business combination; | |
| · | we may not obtain additional financing to complete our initial business combination or reduce number of shareholders requesting redemption; | |
| · | you may not be given the opportunity to choose the initial business target or to vote on the initial business combination; | |
| · | trust account funds may not be protected against third party claims or bankruptcy; | |
| · | an active market for our public securities' may not develop and you will have limited liquidity and trading; | |
| · | the availability to us of funds from interest income on the trust account balance may be insufficient to operate our business prior to the business combination; | |
| · | our financial performance following a business combination with an entity may be negatively affected by their lack an established record of revenue, cash flows and experienced management; |
| · | changes in personnel and availability of qualified personnel; |
| · | our ability to remediate the material weakness in our internal control over financial reporting; and, |
| · | we may face litigation and other risks as a result of the material weakness in our internal control over financial reporting. |
Risk Factors
For the list of risks relating to our operations, see the section titled “Risk Factors” contained in our prospectus dated November 27, 2019. For risk factors related to the Business Combination with FREYR, see the S-4 to be filed by the Company. In addition to these risk factors, the Company has identified the following additional risk factor in conjunction with the restatement of the Original Form 10-K with this Annual Report on Form 10-K/A.
Our Public Warrants and Private Placement Warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results.
On April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the SEC together issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies”. Specifically, the SEC Statement focused on certain settlement terms and provisions related to certain tender offers following a business combination, which terms are similar to those contained in the warrant agreement governing our Warrants. As a result of the SEC Statement, we reevaluated the accounting treatment of our 14,375,000 Public Warrants and 8,750,000 Private Placement Warrants and restated our previously issued financial statements to classify the Warrants as derivative liabilities measured at fair value, with changes in fair value each period reported in earnings.
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As a result, included on our balance sheet as of December 31, 2020 contained elsewhere in this Annual Report on Form 10-K/A are derivative liabilities related to embedded features contained within our Warrants. ASC 815 provides for the remeasurement of the fair value of such derivatives at each balance sheet date, with a resulting non-cash gain or loss related to the change in the fair value being recognized in earnings in the statements of operations. As a result of the recurring fair value measurement, our financial statements and results of operations may fluctuate quarterly, based on factors, which are outside of our control. Due to the recurring fair value measurement, we expect that we will recognize non-cash gains or losses on our Warrants each reporting period and that the amount of such gains or losses could be material.
We have identified a material weakness in our internal control over financial reporting as of December 31, 2020. If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.
As discussed in the explanatory note to this Annual Report on Form 10-K/A, following the issuance of the SEC Statement, on May 5, 2021, we concluded that our previously issued audited financial statements for the year ended December 31, 2020 and the period from June 13, 2019 (inception) through December 31, 2019, and each of our unaudited condensed financial statements for the quarterly and year-to-date periods during such years, and related disclosures, should be restated (the “Restatement”). As part of such process, we identified a material weakness in our internal controls over financial reporting. For further discussion of the material weakness, please see Item 9A of this report, “Controls and Procedures”. A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements would not be prevented or detected on a timely basis. These deficiencies could result in additional material misstatements to our financial statements that could not be prevented or detected on a timely basis.
Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects.
If we discover additional weaknesses in our internal controls in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our financial statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.
We may face litigation and other risks as a result of the material weakness in our internal control over financial reporting.
Following the issuance of the SEC Statement, our management and our audit committee concluded that it was appropriate to restate our previously issued audited financial statements as of December 31, 2020 and 2019 and for the year ended December 31, 2020 and the period from June 13, 2019 (inception) through December 31, 2019. As part of the restatement, we identified a material weakness in our internal controls over financial reporting.
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As a result of such material weakness, the restatement related to the accounting for the Warrants, and other matters raised or that may in the future be raised by the SEC, we face potential litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the restatement and material weakness in our internal control over financial reporting. As of the date of this Annual Report on Form 10-K/A, we have no knowledge of any such litigation or dispute. However, we can provide no assurance that such litigation or dispute will not arise in the future. Any such litigation or dispute, whether successful or not, could have a material adverse effect on our business, results of operations and financial condition or our ability to complete a Business Combination.
Item 1B. Unresolved Staff Comments
None.
We do not own any real estate or other physical properties materially important to our operation. Our registered office is located at PO Box 500, 71 Fort Street, Grand Cayman KY1-1106, Cayman Islands. We consider our current office space, combined with the other office space otherwise available to our executive officers adequate for our current operations.
To the knowledge of our management, there is not litigation currently pending or contemplated against us, any of our officers or directors in their capacity as such or against any of our property.
Item 4. Mine Safety Disclosures
Not Applicable
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Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters, and Issuer Purchases of Equity Securities
(a) Market Information
Our units, Class A ordinary shares and warrants are each traded on the New York Stock Exchange under the symbols “ALUS.U,” “ALUS” and “ALUS.WS,” respectively. Our units commenced public trading on November 26, 2019 and our Class A ordinary shares and warrants commenced public trading on January 10, 2020.
(b) Holders
On March 1, 2021, there was two holders of record of our units, two holders of record of our Class A Ordinary Shares and two holders of record of our warrants.
(c) Dividends
We have not paid any cash dividends on our ordinary shares to date and do not intend to pay cash dividends prior to completion of our initial business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of our initial combination. The payment of any cash dividends subsequent to our initial business combination will be at the discretion of our Board of Directors and subject to the company having funds lawfully available for distribution at such time. In addition, our Board of Directors is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future. Further, if we incur any indebtedness in connection with our initial business combination, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.
(d) Securities Authorized for Issuance Under Equity Compensation Plans
None.
(e) Recent Sales of Unregistered Securities
None.
(f) Purchase of Equity Securities by Issuer and Affiliated Purchasers
None.
Item 6. Selected Financial Data
Not applicable.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with our audited financial statements and the notes related thereto which are included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K/A. Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Special Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors” and elsewhere in this Annual Report on Form 10-K/A.
The following information has been adjusted to reflect the restatement of our financial statements as described in the “Explanatory Note” at the beginning of this Amendment and in Note 1A, “Restatement of Previously Issued Financial Statements,” in Notes to the Financial Statements of this Amendment.
Overview
We are a blank check company incorporated in the Cayman Islands on June 13, 2019 formed for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”). We intend to effectuate our Business Combination using cash derived from the proceeds of the initial public offering, our shares, debt or a combination of cash, shares and debt.
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.
Recent Developments
On January 29, 2021, we entered into a Business Combination Agreement (the “Business Combination Agreement”) with FREYR A/S, a company organized under the laws of Norway (“FREYR”), the Sponsor, in the capacity as the representative for the Alussa shareholders in accordance with the terms and conditions of the Business Combination Agreement, FREYR Battery, a corporation in the form of a public limited liability company organized under the laws of Luxembourg (“Pubco”), Norway Sub 1 AS, a private limited liability company under the laws of Norway (“Norway Merger Sub 1”), Norway Sub 2 AS, a private limited liability company under the laws of Norway (“Norway Merger Sub 2” and together with Norway Merger Sub 1, the “Norway Merger Subs”), Adama Charlie Sub, a Cayman Islands exempted company (“Cayman Merger Sub”), certain shareholders of FREYR named in the Business Combination Agreement (the “Major Shareholders”), and ATS NEXT AS, in the capacity as the representative for the Major Shareholders in accordance with the terms and conditions of the Business Combination Agreement (the “Shareholder Representative”).
Prior to the completion of the transactions contemplated by the Business Combination Agreement, the Norway Merger Subs shall be wholly-owned subsidiaries of the Company.
Pursuant to the terms of the Business Combination Agreement, (a) the Company will merge with and into Cayman Merger Sub, with the Company continuing as the surviving entity (the “Cayman Merger”), (b) the Company will distribute all of its interests in Norway Merger Sub 1 to Pubco, (c) FREYR will merge with and into Norway Merger Sub 2, with Norway Merger Sub 2 continuing as the surviving entity (the “Norway Merger”), (d) Norway Merger Sub 1 will merge with and into Pubco, with Pubco continuing as the surviving entity (the “Cross-Border Merger”), as a result of which, (i) each issued and outstanding security of the Company immediately prior to the effective time of the Cayman Merger shall be exchanged for the right of the holder thereof to receive securities of Pubco in accordance with the Business Combination Agreement (or, in the case of Dissenting Purchaser Shareholders, if any, the right to receive the fair value of such holder’s Dissenting Purchaser Ordinary Shares and such other rights as are granted by the Cayman Companies Law), (ii) each issued and outstanding security of FREYR immediately prior to the effective time of the Norway Merger shall be exchanged for the right of the holder thereof to receive securities of Norway Merger Sub 1 in accordance with the Business Combination Agreement and (iii) each issued and outstanding security of Norway Merger Sub 1 immediately prior to the Cross-Border Effective Time shall be exchanged for the right of the holder to receive securities of Pubco, all upon the terms and subject to the conditions set forth in the Business Combination Agreement and in accordance with the provisions of applicable law.
The Business Combination will be consummated in accordance with the terms and subject to the conditions as further described in the Business Combination Agreement.
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Results of Operations (As Restated)
As discussed in the Explanatory Note to this Amendment and the “Restatement of Previously Issued Financial Statements” in Note 1A, in the Company’s financial statements included in Item 8 to this Amendment, we are restating the financial statements of the Company as of December 31, 2020 and 2019,for the year ended December 31, 2020 and the period from June 13, 2019 (inception) through December 31, 2019, and as of and for the periods ended September 30,2020, June 30, 2020, and March 31, 2020. The amended discussion and analysis as it pertains to the restated periods presented below provides information to assist in understanding our financial condition and results of operations, and should be read in conjunction with the Company’s financial statements included in Item 8.
We have neither engaged in any operations nor generated any revenues to date. Our only activities from inception to December 31, 2020 were organizational activities and those necessary to prepare for our initial public offering (the “Initial Public Offering”), described below, and, after our Initial Public Offering, identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after completion of our Business Combination. We generate non-operating income in the form of interest income on marketable securities held in our trust account (the “Trust Account”). We are incurring expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as due diligence expenses.
For the Year Ended December 31, 2020 and the Period from June 13, 2019 (Inception) through December 31, 2019
For the year ended December 31, 2020, we had net loss of $7,580,615, which consists of changes in fair value of warrant liabilities of $4,393,750 and operating costs of $5,190,525, offset by interest income on marketable securities held in the Trust Account of $2,003,660.
For the period from June 13, 2019 (inception) through December 31, 2019, we had net loss of $4,779,782, which consists of changes in fair value of warrant liabilities of $3,937,500 and operating costs of $1,173,063, offset by interest income on marketable securities held in the Trust Account of $290,672 and an unrealized gain on marketable securities held in the Trust Account of $40,109.
For the Three and Nine Months Ended September 30, 2020
For the three months ended September 30, 2020, we had a net loss of $2,487,788, which consists of changes in fair value of warrant liabilities of $2,312,500 and operating costs of $324,347, offset by interest income on marketable securities held in the Trust Account of $93,440 and an unrealized gain on marketable securities held in Trust Account of $55,619.
For the nine months ended September 30, 2020, we had net income of $8,039,334, which consists of changes in fair value of warrant liabilities of $7,356,250, interest income on marketable securities held in the Trust account of $1,944,601 and an unrealized gain on securities held in the Trust Account of $16,548, offset by operating costs of $1,278,065.
For the Three and Six Months Ended June 30, 2020
For the three months ended June 30, 2020, we had net income of $1,583,736, which consists of changes in fair value of warrant liabilities of $2,000,000 and interest income on marketable securities held in the Trust Account of $958,571, offset by operating costs of $453,873 and an unrealized loss on marketable securities held in Trust Account of $920,962.
For the six months ended June 30, 2020, we had net income of $10,527,122, which consists of changes in fair value warrant liabilities of $9,668,750 and interest income on marketable securities held in the Trust Account of $1,851,161, offset by operating costs of $953,718 and an unrealized loss on marketable securities held in Trust Account of $39,071.
For the Three Months Ended March 31, 2020
For the three months ended March 31, 2020, we had net income of $8,943,386, which consists of changes in fair value of warrant liabilities of $7,668,750, interest income on marketable securities held in the Trust Account of $892,590 and an unrealized gain on marketable securities held in the Trust Account of $881,891, offset by operating costs of $499,845.
Liquidity and Capital Resources (As Restated)
On November 29, 2019, we consummated the Initial Public Offering of 25,000,000 Units, at a price of $10.00 per Unit, generating gross proceeds of $250,000,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 8,000,000 Private Placement Warrants to the Sponsor at a price of $1.00 per warrant, generating gross proceeds of $8,000,000.
On December 5, 2019, as a result of the underwriters’ election to fully exercise their over-allotment option, the Company consummated the sale of an additional 3,750,000 Units, at a price of $10.00 per Unit, and the sale of an additional 750,000 Private Placement Warrants, at a price of $1.00 per Private Placement Warrant, generating total gross proceeds of $38,250,000.
Following the Initial Public Offering, the exercise of the over-allotment option and the sale of the Private Placement Warrants, a total of $287,500,000 was placed in the Trust Account. We incurred $16,326,240 in transaction costs, including $5,750,000 of underwriting fees, $10,062,500 of deferred underwriting fees and $513,740 of other costs.
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For the year ended December 31, 2020, net cash used in operating activities was $1,911,404. Net loss of $7,580,615 was impacted by the change in fair value of warrant liabilities of $4,393,750 and interest earned on marketable securities held in the Trust Account of $2,003,660. Changes in operating assets and liabilities provided $3,279,121 of cash from operating activities.
For the period from June 13, 2019 (inception) through December 31, 2019, net cash used in operating activities was $228,898. Net loss of $4,779,782 was impacted by the change in fair value of warrant liabilities of $3,937,500, interest earned on marketable securities held in the Trust Account of $290,672 an unrealized gain on marketable securities of $40,109, and underwriting fees and offering costs allocated to warrant liabilities. Changes in operating assets and liabilities used $107,825 of cash from operating activities.
As of December 31, 2020, we had marketable securities held in the Trust Account of $289,834,441. We may withdraw interest to pay our income taxes, if any. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (which interest shall be net of taxes payable and excluding deferred underwriting commissions) to complete our Business Combination. To the extent that our share capital is used, in whole or in part, as consideration to complete a Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
As of December 31, 2020, we had cash of $370,958. We intend to use the funds held outside the Trust Account primarily to identify and evaluate, target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required (“Working Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. If we complete a Business Combination, we would repay such loaned amounts without interest. In the event that a Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.00 per warrant unit at the option of the lender. The warrants would be identical to the Private Placement Warrants.
On February 9, 2021, the Company issued an unsecured promissory note to the Sponsor pursuant to the Working Capital Loans agreement by which the Company may borrow up to $1,500,000 in the aggregate. The note is non-interest bearing and payable on the earlier to occur of (i) the completion of a initial Business Combination or (ii) liquidation.
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We will need to raise additional capital through loans or additional investments from its Sponsor, shareholders, officers, directors, or third parties. Our officers, directors and Sponsor may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet our working capital needs. Accordingly, we may not be able to obtain additional financing. If we are unable to raise additional capital, we may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. We cannot provide any assurance that new financing will be available on commercially acceptable terms, if at all. These conditions raise substantial doubt about our ability to continue as a going concern through November 29, 2021, the date that we will be required to cease all operations, except for the purpose of winding up, if a Business Combination is not consummated. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should we be unable to continue as a going concern.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of December 31, 2020. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than as described below.
We entered into an agreement to pay our Sponsor a monthly fee of $35,000 for office space, and administrative and support services, which Mr. Daniel Barcelo, our Executive Officer and President, will be paid $20,000 per month and Mr. Nick De’Ath, our Chief Technology Officer, will be paid $5,000 per month. The Sponsor, officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on their behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf. We began incurring these fees on November 25, 2019 and will continue to incur these fees monthly until the earlier of the completion of a Business Combination and our liquidation.
The underwriters are entitled to a deferred fee of $10,062,500. The deferred fee will be forfeited by the underwriters solely in the event that we fail to complete a Business Combination, subject to the terms of the underwriting agreement.
On February 10, 2020, we entered into a transactional support agreement with a service provider, pursuant to which the service provider agreed to assist us in evaluating acquisition opportunities in the energy industry, including valuation and qualitative assessments, as well as investor presentations. We paid the service provider a fee of $100,000 and will pay the service provider an additional fee upon the closing of a Business Combination. The fee payable at the closing of the Business Combination is dependent upon the timing of the closing and ranges between $975,000 and $1,950,000. The additional fee will not be payable in the event we do not consummate a Business Combination.
On February 28, 2020, we entered into a consulting agreement with a service provider, pursuant to which the service provider provided us with advisory or transaction support for a potential Business Combination. We paid the service provider a fee of $75,000 per month for three months, for total fees of $225,000. In addition, on February 28, 2020, we entered into a transactional support agreement with the same service provider, pursuant to which we agreed to pay the service provider a fee equal to 1% of the consideration paid by us for the equity of a target company, up to a maximum fee of $5,000,000, if we consummate a Business Combination with a target company located in certain countries, as listed in the agreement. The fee will not be payable in the event we do not consummate a Business Combination.
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Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:
Class A Ordinary Shares Subject to Redemption
We account for our Class A ordinary shares subject to possible conversion in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature 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, ordinary shares are classified as shareholders’ equity. Our Class A ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, Class A ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ equity section of our balance sheets.
Net Income (Loss) Per Ordinary Share
We apply the two-class method in calculating earnings per share. Ordinary shares subject to possible redemption, which are not currently redeemable and are not redeemable at fair value, have been excluded from the calculation of basic net loss per ordinary share since such shares, if redeemed, only participate in their pro rata share of the Trust Account earnings. Our net income is adjusted for the portion of income that is attributable to ordinary shares subject to redemption, as these shares only participate in the earnings of the Trust Account and not our income or losses.
Public Warrants and Private Placement Warrants
We account for the Public Warrants and Private Placement Warrants issued in connection with our initial public offering in accordance with ASC 815-40, under which the Warrants do not meet the criteria for equity classification and must be recorded as liabilities. As the warrants meet the definition of a derivative as contemplated in ASC 815, the Warrants are measured at fair value at inception and at each reporting date in accordance with ASC 820, “Fair Value Measurement”, with changes in fair value recognized in the statements of operations in the period of change.
Recent accounting pronouncements
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Following the consummation of our initial public offering, the net proceeds of our initial public offering, including amounts in the trust account, have been invested in U.S. government treasury bills, notes or bonds with a maturity of 180 days or less or in certain money market funds that invest solely in US treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.
Item 8. Financial Statements and Supplementary Data
This information appears following Item 15 of this Report and is included herein by reference.
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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures (As Restated)
Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Report, is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our current chief executive officer and chief financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of December 31, 2020, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, at the time our Annual Report on Form 10-K for the year ended December 31, 2020 was filed on March 1, 2021, our Certifying Officers concluded that, as of December 31, 2020, our disclosure controls and procedures were effective.
Subsequent to that evaluation, as a result of the material weakness described below, our Certifying Officers concluded that, as of December 31, 2020, our disclosure controls and procedures were not effective.
The Certifying Officers of the Company previously concluded that the Company’s disclosure controls and procedures were effective for the interim periods ended March 31, 2020, June 30, 2020 and September 30, 2020. However, the Certifying Officers have subsequently concluded that the Company’s disclosure controls and procedures were not effective for the interim periods ended March 31, 2020, June 30, 2020 and September 30, 2020, due solely to the material weakness in the Company’s internal controls over financial reporting as described in “Management’s Report on Internal Controls over Financial Reporting (As Restated)” below. In light of this material weakness, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. GAAP. Accordingly, management believes that the financial statements included in this Annual Report on Form 10-K/A present fairly in all material respects our financial position, results of operations and cash flows for the period presented.
Management’s Report on Internal Controls Over Financial Reporting (As Restated)
This Annual Report on Form 10-K/A does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.
During the year ended December 31, 2020, there had been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, as the circumstances that led to the restatement of our financial statements described in this Annual Report on Form 10-K/A had not yet been identified. Due solely to the events that led to our restatement of our financial statements, management has identified a material weakness in internal controls related to the accounting for warrants issued in connection with our initial public offering, as described in Note 1A to the Notes to Financial Statements entitled “Restatement of Previously Issued Financial Statements.”
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the year ended December 31, 2020, covered by this Annual Report on Form 10-K/A that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, as the circumstances that led to the restatement of our financial statements described in this Annual Report on Form 10-K/A had not yet been identified. Due solely to the events that led to our restatement of our financial statements, management has identified a material weakness in internal controls related to the accounting for warrants issued in connection with our initial public offering, as described in Note 1A to the Notes to Financial Statements entitled “Restatement of Previously Issued Financial Statements.” In light of the restatement of our financial statements included in this Annual Report on Form 10-K/A, we plan to enhance our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements. Our plans at this time include providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding the application of complex accounting standards. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
None.
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Item 10. Directors, Executive Officers and Corporate Governance
Directors and Executive Officers
Our officers and directors are as follows:
| Name | Age | Position | ||
| James Musselman | 73 | Chairman of the Board and Director | ||
| Daniel Barcelo | 50 | Chief Executive Officer, President, Secretary and Director | ||
| Sarah James | 38 | Chief Financial Officer | ||
| Nick De’Ath | 72 | Chief Technology Officer | ||
| Mavriky Kalugin | 47 | Chief Operating Officer | ||
| W. Richard Anderson | 67 | Director | ||
| Germán Curá | 58 | Director | ||
| Maurice Dijols | 69 | Director | ||
| John Wu | 50 | Director | ||
| Abdel Badwi | 73 | Director |
James Musselman, a Director and our Chairman since inception, founded Dallas-based Caelus Energy, LLC in 2011 and brings a track record of leading successful oil and gas ventures to the company. In 2014, Caelus Energy and its subsidiaries acquired the Oooguruk development located on Alaska’s North Slope. Oooguruk has produced over 27 MMBO since it began production in 2008. Prior to establishing Caelus Energy, in 2003, Mr. Musselman was one of five founding partners of Kosmos Energy Ltd (NYSE:KOS), and he was Chairman and Chief Executive Officer of the Kosmos until 2010. Under Mr. Musselman’s leadership, Kosmos’ Mahogany-1 exploration well discovered the Jubilee Field offshore the Republic of Ghana in 2007. The Jubilee Field was regarded as an important oil discovery offshore of West Africa and was one of the largest finds in the world in 2007. Kosmos and its company partners developed the Jubilee Field and delivered first oil in late 2010. Before leading Kosmos Energy, Mr. Musselman was President and Chief Executive Officer of Triton Energy Limited (NYSE:OIL), an independent international oil and gas exploration and production company. Mr. Musselman secured a $350 million private equity infusion for Triton that enabled the company to pursue oil and gas ventures offshore West Africa. The company made several significant oil discoveries offshore Equatorial Guinea, including the Ceiba oil field, which was quickly developed. The company also discovered and developed several major natural gas fields in the Malaysia/Thailand Joint Development Area in the Gulf of Thailand. Triton was sold to Hess Corporation (NYSE:HES) in 2001 for $3.2 billion. After the sale, Mr. Musselman served as a Senior Advisor to Hess Chairman and Chief Executive Officer, John Hess. Previously, Mr. Musselman was Founder and Operator of JM Petroleum Corp., a crude oil gathering and purchasing company with more than $1 billion in annual sales. He later sold the company to Wesray Capital Corporation. Following the sale of JM Petroleum Corporation, Mr. Musselman assembled an influential investor coalition that secured the first Class 1 horserace license in the Dallas/Fort Worth area. After the license award, he led the design, construction and initial operation of the Lone Star Park racetrack facility in Grand Prairie, Texas. Mr. Musselman began his career practicing law at Strother, Davis, Musselman and Hill, with responsibility for oil and gas financing. He is a graduate of Duke University and the University of Texas School of Law. Mr. Musselman is well qualified to serve as a Director due to his extensive operational and investing experience in international energy markets.
Daniel Barcelo, our Chief Executive Officer, President, Secretary and a Director since inception, has over 25 years in international energy finance and emerging markets. Mr. Barcelo brings experience encompassing executive management, portfolio management, capital markets, corporate restructuring, valuation, deal origination and structuring. Prior to founding Alussa Energy in 2019, he was a Director of Research and Portfolio Manager at Moore Capital Management from 2008 to 2011 and an equity research analyst with Lehman Brothers from 1998 to 2004, Bank of America from 2004 to 2008, and Managing Director and Head of Oil & Gas at Renaissance Capital in Moscow, Russia from 2011 to 2012. His corporate experience includes small cap E&P start-up and restructuring in complicated geo-markets including executive roles as Chief Financial Officer of Ruspetro plc in Russia from 2012 to 2014, Head Corporate Finance of Lekoil Limited in Nigeria from 2015 to 2016 and co-founder, Director and Chief Financial Officer of Invicti Terra Argentina Limited in Argentina from 2017 to 2019. He is a graduate of Syracuse University with a Bachelor of Science in Finance and is also a CFA charterholder. Mr. Barcelo is well-qualified to serve as a Director due to his extensive experience in international energy finance and emerging markets.
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Sarah James, our Chief Financial Officer since July 2020, served as a vice president of finance and business development at Caelus Energy Alaska, LLC, a private company specializing in oil and gas exploration and production, from February 2013 to April 2020. Ms. James oversaw the company’s business development strategy, debt and equity fundraising and ongoing financial reporting functions. From January 2008 to August 2010, she served as a private equity associate at Riverstone Holdings, LLC, a private equity firm that specializes in the energy industry and electrical power industry sectors. Prior to that, Ms. James served as an analyst at JPMorgan Securities, Inc., in the diversified industrials and natural resources group. Ms. James holds a Bachelor of Arts degree in Economics and English from Duke University and a Master of Business Administration and Master of Science: School of Earth Sciences from Stanford University.
Nicholas ‘Nick’ De’Ath MBE, our Chief Technology Officer since July 2019, has over 45 years management experience in the Upstream Oil and Gas Industry. This has included 21 years at BP Exploration, a subsidiary of BP (NYSE:BP) as Chief Geologist in the North Sea from 1983 to 1986, General Manager of Colombia (where he was instrumental in the Cusiana discovery; the largest discovery in the 80 year history of the Colombian oil industry and the largest in the Western Hemisphere in 25 years) from 1986 to 1991, and President for Exploration in Mexico from 1991 to 1992. His leadership achieved an Advanced 3* ISRS (Intl. Safety Rating System) within two years, in the manner in which the BP Colombia operation was conducted. From 1993 to 1998 Mr. De’Ath also helped build a global Exploration and Production portfolio at Triton Energy Limited (NYSE:OIL) which subsequently resulted in major oil discoveries offshore Equatorial Guinea. He was instrumental in forming the Carigali-Triton Op. Co (CTOC) in the Gulf of Thailand (the Malaysia-Thailand Joint Development Area-MTJDA), which included the initial appraisal of the Cakerawala Gas complex. In 1999, he was also a member of the Strategic Risk Group at PwC, the global assurance, tax and consulting services provider. He also focused on reservoir management in developing and production oil and gas fields in the Former Soviet Union, serving as chief reservoir geologist for Yukos Oil Company in Moscow from 2003 to 2004 and various positions for TNK-BP, a major vertically integrated Russian oil company, in Moscow, latterly as Director Subsurface Assurance from 2006 to 2011. Mr. De’Ath graduated from University College, London University with a B.Sc. (Hons) Geology. He was awarded the MBE (Member of the British Empire) in 1990 by Queen Elizabeth II for Commercial Services to Colombia.
Mavriky Kalugin, our Chief Operating Officer since July 2019, currently serves as Executive Vice President of Upstream and Deputy Board Chairman of Ukrnafta, a Ukrainian oil and gas company based in Kiev, a position he has held since January 2016. He is an international operations executive delivering results in difficult exploration and production environments to solve tough oil field challenges. He has developed a reputation for reservoir and production engineering and a deep commitment to Health, Safety and Environment management. His multidisciplinary team leadership, business planning, strategic organizational capability planning/resourcing, greenfield development and brownfield redevelopment has been gained through personnel development in multi-language, multi-cultural, and multi-discipline organizations in major international and independent E&P companies. Over the past 22 years his progressively more senior roles have evolved through ARCO and ConocoPhillips (NYSE:COP) as reservoir/production/development engineer on Alaska’s North Slope from 1997 to 2003; as senior production/reservoir engineer with Occidental (NYSE:OXY) Elk Hills in California’s San Joaquin Valley from 2003 to 2004; with TNK-BP, via secondment from BP (LSE:BP), in Volga-Urals and West Siberia as Gas Enhanced Oil Recovery technology manager and deputy director, Brownfields Production Technology from 2004 to 2008; Cairn India as general manager, Reservoir Management & Development/Production Optimization from 2008 to 2013; country manager for Petrofac Integrated Energy Services Russia from 2013 to 2014 and country manager/Chief Operating Officer in Romania from 2014 to 2015.
W. Richard Anderson, a Director since November 2019, has been Chief Executive Officer of SOMA Oil and Gas, with exploration license interests in deep water, offshore Somalia. Mr. Anderson has over 40 years experience in the financial aspects of energy related companies, and started his career in audit with Pricewaterhouse Coopers, followed by 16 years as a managing and tax partner of Hein & Associates LLP focused on mergers and acquisitions, cross-border transactions and numerous initial and secondary public offerings. From December 1998 to August 2007, he was President and Chief Executive Officer of Prime Natural Resources, Inc. an independent oil and gas exploration and production company, active in the U.S., South America and Kurdistan. From 2008 to 2015 he was Chief Financial Officer of Eurasia Drilling Company Ltd (LSE:EDCL), a large oil and gas drilling company in Russia. Mr. Anderson led the company in various executive and director capacities from its initial public offering in 2007 to a privatization in 2015. For the past 25 years, Mr. Anderson has also been a Director of various public companies in the energy, exploration and resource extraction industries, assisting companies with initial public offerings and debt issuances, sourcing of other third party financing, reorganizations, trade sales, pay outs of special dividends, issuing special awards to management teams and conducting internal investigations with the assistance of outside counsel and forensic accountants. His involvement has frequently been on Audit Committees and as Chairman of the Audit Committee. From April 2014 to April 2019 he has served as a Director and Chairman of the Compensation Committee of Gulf Marine Services (LON: GMS); from August 2008 to the present as a Director of Eurasia Drilling Company Limited and member of the Audit Committee (LON: EDCL) and from December 2013 to the present as a Director of SOMA Oil and Gas. Mr. Anderson’s professional qualifications include membership in the AICPA, Texas Society of Certified Public Accountants, Houston Chapter of Texas Society of CPAs and the Society of Exploration Geophysicists. Mr. Anderson graduated from the University of Colorado, magna cum laude, in 1978 and then obtained a masters in taxation from the University of Denver in 1985. Mr. Anderson is well qualified to serve as a Director due to his extensive operational, public company director and finance experience in the energy, exploration and resource extraction industries.
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Germán Curá, a Director since November 2019, is a member of the Board of Directors of Tenaris (NYSE:TS), a global manufacturer of steel pipes, mainly to the energy industry and also holds the position of Vice Chairman of the Board of Tenaris, since 2018. He served as president of Tenaris’ operations in North America from 2006 to 2018. He was first employed by Siderca, an Argentine subsidiary of Tenaris, in 1988. Previously, he served as Siderca’s exports director, Tenaris’ Mexican subsidiary Tamsa’s exports director and commercial director , sales and marketing manager of Tenaris’s Middle East subsidiary, president of Algoma Tubes, president and Chief Executive Officer of Maverick Tubulars and president and Chief Executive Officer of Hydril, director of the Oilfield Services global business unit and Tenaris commercial director. He was also a member of the Board of Directors of American Petroleum Institute (API) from 2008 to 2009 and currently serves as a member of the Board of Directors of the American Iron and Steel Institute (AISI) since 2018 and of Deep Ocean AS, a Norway based subsea construction company since 2018. He holds a degree in Marine Engineering from the Instituto Tecnológico de Buenos Aires and an M.B.A. from the Massachusetts Institute of Technology. Mr. Curá is well qualified to serve as a Director due to his extensive operational and executive experience in the steel and energy industries.
Maurice Dijols, a Director since November 2019, has been with Schlumberger (NYSE:SLB) for 34 years, most recently serving as the President of Russia Operations from 2003 to 2011. As President of North Central Europe & the Commonwealth of Independent States (“CIS”) of Schlumberger Sema from 2001 to 2003, he provided strategic direction for Schlumberger’s business operations in France, Switzerland, Belgium, UK, Ireland, Germany, Netherlands, Scandinavia, Eastern Europe and the CIS. Previously Mr. Dijols held a variety of executive positions, including Chief Information Officer of Schlumberger Limited; as the President of Schlumberger Oilfield Services North and South America. Prior to this, he held senior executive positions with Schlumberger Oilfield Services, including President of Wireline & Testing, Personnel Director for Oilfield Services and President of Wireline & Testing Operations in North America. From June 2015, he has been the Chairman of The Supervisory Board at Petro Welt Technologies AG (C.A.T. Oil AG) . Previous non-executive Director positions include: Eurasia Drilling Company from 2011 to 2015, Ruspetro PLC from 2013 to 2016, Bashneft from 2015 to 2016 and IG Seismic Services Limited from 2012 to 2016. He is a graduate of the Ecole d’Ingenieurs de Marseille and the Ecole Superieure d’Electricite de Paris. Mr. Dijols is well qualified to serve as a Director due to his extensive operational and executive experience in the energy and resource extraction industries.
John Wu, a Director since November 2019, is a seasoned entrepreneur and alternative investment executive with over twenty years of experience investing in technology, media, telecom, and FinTech companies. He has a track record in long/short equity investing in developed and emerging markets. In addition, he has experience investing in macro assets as well as structuring derivative products and developing risk management tools. From 2018 to 2019 he was an officer of Thunder Bridge Acquisition, Ltd. (NASDAQ: TBRG), a blank check company which in July 2019 consummated its initial business combination with Hawk Parent Holdings, LLC, or Repay, an omnichannel payments technology provider for approximately $580.7 million in total consideration, following which Thunder Bridge changed its name to Repay Holdings Corporation, and its common stock and warrants began trading on the Nasdaq Stock Market, and current Chief Investment Officer of Thunder Bridge Acquisition II, Ltd. (NASDAQ:THBR), a blank check company which in August 2019 completed its initial public offering for $345 million in aggregate proceeds deposited into its trust account, and is in the process of searching for an initial business combination. Currently, Mr. Wu is president of Ava Labs, a FinTech/block chain softward company in the alternatives space, as well as an officer of Thunder Bridge Acquisition II, Ltd, a blank check company currently in registration which will seek an initial business combination in the financial services industry. From 2018 to 2019, Mr. Wu served as the Chief Executive Officer of the Digital Assets Group of SharesPost, overseeing its expansion into digital securities and building an ecosystem around its technology and compliance platform. SharesPost provides global liquidity for private growth company securities, allowing issuers and investors to use its existing Alternative Trading System to invest and trade in aftermarket digital securities in compliance with U.S. laws and regulations. Mr. Wu also serves as the Chief Executive Officer and Portfolio Manager of SEGO, LLC, a family office investment firm, since 2014. Previously, Mr. Wu was Managing Partner and Founder of Sureview Capital, a global multisector long-short equity hedge fund, from 2010 to 2014. While at Sureview Capital, he secured a strategic investment from The Blackstone Group and raised approximately $400 million in AUM from global institutions. Immediately prior to forming Sureview, Mr. Wu was at Kingdon Capital, a long-short hedge fund, from 2004 to 2010. At Kingdon, he was a Portfolio Manager, responsible for investing in a cross-section of industries within technology, media, telecom, consumer discretionary, business services, and FinTech. Mr. Wu was a Portfolio Manager of Weiss Multi-Strategy Advisers LLC, an asset management firm, from 2015 to 2017. Mr. Wu started his hedge fund career in 1992 at Tiger Management where he spent four years as a macro analyst and trader. He received an M.B.A. from Harvard Business School and a B.S. in Economics from Cornell University. Mr. Wu is well qualified to serve as a Director due to his extensive operational, investment and blank-check company experience.
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Abdel Badwi, a Director since July 2020, served a non-executive director, from September 2014 to December 2017, and president, chief executive officer and director, from December 2017 to March 2019, of Kuwait Energy Plc, a private oil and gas company with operations in Egypt, Iraq and Yemen, where he lead the re-organization the company and selling it. From November 2015 to October 2017, Mr. Badwi served as executive chairman of the board of directors of GrowMax Resources Corp. (TSX-V), an exploration and production company with assets in Argentina and mining and fertilizer operations in Peru, where he lead the re-structuring of the company, sold their assets in Argentina to fund its mining activities in Peru. From November 2007 to March 2013, Mr. Badwi served as president and chief executive officer, from March 2013 to September 2016 as vice chairman of the board of directors of Bankers Petroleum Ltd. (TSX) with operations in Albania and selling it. From January 2011 to May 2014, he served as chairman of the board of directors of Verano P1 Energy, a private oil and gas company in Colombia, where he assisted in the acquisition of exploration acreage and selling the company. Mr. Badwi holds a B.Sc. in Geology & Chemistry from the University of Alexandria, Egypt. We believe Mr. Badwi is well qualified to serve as a director due to his extensive merger and acquisition experience in the oil and gas industry.
Number, terms of office and appointment of officers and directors
Our Board of Directors consists of seven members. Holders of our founder shares have the right to appoint all of our directors prior to consummation of our initial business combination and holders of our public shares do not have the right to vote on the appointment of directors during such time. These provisions of our amended and restated memorandum and articles of association may only be amended by a special resolution passed by at least 90% of our ordinary shares voting in a general meeting. Each of our directors holds office for a two-year term. Subject to any other special rights applicable to the shareholders, any vacancies on our Board of Directors may be filled by the affirmative vote of a majority of the directors present and voting at the meeting of our board or by a majority of the holders of our founder shares.
Our officers are elected by the Board of Directors and serve at the discretion of the Board of Directors, rather than for specific terms of office. Our Board of Directors is authorized to appoint persons to the offices set forth in our amended and restated memorandum and articles of association as it deems appropriate. Our amended and restated memorandum and articles of association provide that our officers may consist of a Chairman, Chief Executive Officer, President, Chief Financial Officer, Vice Presidents, Secretary, Assistant Secretaries, Treasurer and such other offices as may be determined by the Board of Directors.
Collectively, through their positions described above, our officers and directors have extensive experience in public companies and in the energy industry. These individuals play a key role in identifying and evaluating prospective acquisition candidates, selecting the target businesses, and structuring, negotiating and consummating the acquisition.
Director independence
NYSE listing standards require that a majority of our Board of Directors be independent. An “independent director” is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which in the opinion of the company’s Board of Directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. Our board has determined that each of Messrs. Musselman, Anderson, Curá, Dijols, Wu and Badwi are independent directors under applicable SEC and NYSE rules. Our independent directors will have regularly scheduled meetings at which only independent directors are present.
Committees of the Board of Directors
Our Board of Directors has three standing committees: an audit committee, a compensation committee and a nominating and corporate governance committee. Subject to phase-in rules and a limited exception, NYSE rules and Rule 10A-3 of the Exchange Act require that the audit committee of a listed company be comprised solely of independent directors, and NYSE rules require that the compensation committee and nominating and corporate governance committee of a listed company each be comprised solely of independent directors.
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Audit Committee
We have established an audit committee of the Board of Directors. Messrs. Anderson, Dijols and Wu serve as members of our audit committee, and Mr. Anderson chairs the audit committee. Under the NYSE listing standards and applicable SEC rules, we are required to have at least three members of the audit committee, all of whom must be independent. Each of Messrs. Anderson, Dijols and Wu meet the independent director standard under NYSE listing standards and under Rule 10-A-3(b)(1) of the Exchange Act.
Each member of the audit committee is financially literate and our Board of Directors has determined that Mr. Anderson qualifies as an “audit committee financial expert” as defined in applicable SEC rules.
We have adopted an audit committee charter, which details the principal functions of the audit committee, including:
| ● | the appointment, compensation, retention, replacement, and oversight of the work of the independent registered public accounting firm engaged by us; |
| ● | pre-approving all audit and permitted non-audit services to be provided by the independent registered public accounting firm engaged by us, and establishing pre-approval policies and procedures; |
| ● | setting clear hiring policies for employees or former employees of the independent registered public accounting firm, including but not limited to, as required by applicable laws and regulations; |
| ● | setting clear policies for audit partner rotation in compliance with applicable laws and regulations; |
| ● | obtaining and reviewing a report, at least annually, from the independent registered public accounting firm describing (i) the independent registered public accounting firm’s internal quality-control procedures, (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues and (iii) all relationships between the independent registered public accounting firm and us to assess the independent registered public accounting firm’s independence; |
| ● | reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction; and |
| ● | reviewing with management, the independent registered public accounting firm, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities. |
Compensation Committee
We have established a compensation committee of the Board of Directors. Messrs. Anderson and Wu serve as members of our compensation committee. Under the NYSE listing standards and applicable SEC rules, we are required to have at least two members of the compensation committee, all of whom must be independent. Messrs. Anderson and Wu are independent and Mr. Wu chairs the compensation committee.
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We have adopted a compensation committee charter, which details the principal functions of the compensation committee, including:
| ● | reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, if any is paid by us, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation; |
| ● | reviewing and approving on an annual basis the compensation, if any is paid by us, of all of our other officers; |
| ● | reviewing on an annual basis our executive compensation policies and plans; |
| ● | implementing and administering our incentive compensation equity-based remuneration plans; |
| ● | assisting management in complying with our proxy statement and annual report disclosure requirements; |
| ● | approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees; |
| ● | if required, producing a report on executive compensation to be included in our annual proxy statement; and |
| ● | reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors. |
The charter also provides that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required by the NYSE and the SEC.
Nominating and Corporate Governance Committee
We have established a nominating and corporate governance committee. The members of our nominating and corporate governance are Messrs. Anderson and Musselman and Mr. Musselman serves as chair of the nominating and corporate governance committee.
The primary purposes of our nominating and corporate governance committee are to assist the board in:
| ● | identifying, screening and reviewing individuals qualified to serve as directors and recommending to the Board of Directors candidates for nomination for election at the annual meeting of shareholders or to fill vacancies on the Board of Directors; |
| ● | developing and recommending to the Board of Directors and overseeing implementation of our corporate governance guidelines; |
| ● | coordinating and overseeing the annual self-evaluation of the Board of Directors, its committees, individual directors and management in the governance of the company; and |
| ● | reviewing on a regular basis our overall corporate governance and recommending improvements as and when necessary. |
The nominating and corporate governance committee is governed by a charter that complies with the rules of the NYSE.
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Director nominations
Our nominating and corporate governance committee will recommend to the Board of Directors candidates for nomination for election at the annual meeting of the shareholders. We have not formally established any specific, minimum qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying and evaluating nominees for director, the Board of Directors considers educational background, diversity of professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our shareholders.
Compensation committee interlocks and insider participation
None of our officers currently serves, and in the past year has not served, (i) as a member of the compensation committee or Board of Directors of another entity, one of whose executive officers served on our compensation committee, or (ii) as a member of the compensation committee of another entity, one of whose executive officers served on our Board of Directors.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, requires our executive officers, directors and persons who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of our ordinary shares and other equity securities. These executive officers, directors, and greater than 10% beneficial owners are required by SEC regulation to furnish us with copies of all Section 16(a) forms filed by such reporting persons. Based solely on our review of such forms furnished to us and written representations from certain reporting persons, we believe that all filing requirements applicable to our executive officers, directors and greater than 10% beneficial owners were filed in a timely manner.
Code of Ethics
We have adopted a Code of Ethics applicable to our directors, officers and employees. We have filed a copy of our Code of Ethics and our audit committee charter as exhibits to the registration statement filed in connection with our initial public offering. You can review these documents by accessing our public filings at the SEC’s web site at www.sec.gov. In addition, a copy of the Code of Ethics will be provided without charge upon request from us. We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K.
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Item 11. Executive Compensation
Officer and director compensation
Except as set forth herein, none of our officers or directors have received any cash compensation for services rendered to us. Commencing on the date that our securities were first listed on the NYSE and continuing through the earlier of consummation of our initial business combination and our liquidation, we pay our sponsor a total of $35,000 per month for office space, administrative and support services, of which Mr. Barcelo, our Chief Executive Officer and President, is paid $20,000 per month and Mr. De’Ath, our Chief Technology Officer, is paid $5,000 per month. Our sponsor, officers and directors, and Encompass or any of their respective affiliates, are reimbursed for any bona-fide, documented 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 reviews, on a quarterly basis, all payments that were made to our sponsor, officers, directors or our or their affiliates.
After the completion of our initial business combination, directors or members of our management team who remain with us may be paid consulting, management or other fees from the combined company. All of these fees will be fully disclosed to shareholders, to the extent then known, in the tender offer materials or proxy solicitation materials furnished to our shareholders in connection with a proposed business combination. It is unlikely the amount of such compensation will be known at the time such materials are distributed, because the directors of the post-combination business will be responsible for determining officer and director compensation. Any compensation to be paid to our officers will be determined by a compensation committee constituted solely by independent directors.
Following a business combination to the extent we deem necessary, we may seek to recruit additional managers to supplement the incumbent management team of the target business. We cannot assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
The following table sets forth information regarding the beneficial ownership of our ordinary shares as of March 1, 2021, based on information obtained from the persons named below, with respect to the beneficial ownership of shares of our ordinary shares, by:
| ● | Each person believed by us to be beneficial owners of more than 5% of our outstanding stock of ordinary shares; |
| ● | Each of our executive officers and directors that beneficially owns shares our of ordinary shares and; |
| ● | All our executive officers and directors as a group. |
In the table below, percentage ownership is based on 35,937,500 ordinary shares, which includes 28,750,000 shares of Class A ordinary shares underlying the units sold in our initial public offering, and 7,187,500 shares of Class B ordinary shares outstanding as of March 1, 2021. Class A ordinary shareholders and Class B ordinary shareholders of record are entitled to one vote for each share held on all matters to be voted on by shareholders and vote together as a single class, except as required by law; provided, that holders of our Class B ordinary shares have the right to appoint all of our directors prior to our initial business combination and holders of our Class A ordinary shares are not entitled to vote on the appointment of directors during such time.
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Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of ordinary shares beneficially owned by them.
| Class A Ordinary Shares | Class B Ordinary Shares(2) | Approximate | ||||||||||||||||||
| Name and Address of Beneficial Owner(1) | Number
of Shares Beneficially Owned |
Approximate Percentage of Class |
Number
of Shares Beneficially Owned |
Approximate Percentage of Class |
Percentage of Outstanding Ordinary Shares |
|||||||||||||||
| Alussa Energy Sponsor LLC (3)(4) | — | — | 7,187,500 | 100.0 | % | 20.0 | % | |||||||||||||
| Daniel Barcelo (3) | — | — | 7,187,500 | 100.0 | % | 20.0 | % | |||||||||||||
| James Musselman (3) | — | — | — | — | — | |||||||||||||||
| Nick De’Ath (3) | — | — | — | — | — | |||||||||||||||
| Mavriky Kalugin (3) | — | — | — | — | — | |||||||||||||||
| W. Richard Anderson (3) | — | — | — | — | — | |||||||||||||||
| Germán Curá (3) | — | — | — | — | — | |||||||||||||||
| Maurice Dijols (3) | — | — | — | — | — | |||||||||||||||
| John Wu (3) | — | — | — | — | — | |||||||||||||||
| Sarah James (3) | — | — | — | — | — | |||||||||||||||
| Abdel Badwi (3) | — | — | — | — | — | |||||||||||||||
| Glazer Capital, LLC (5) | 1,951,426 | 6.8% | — | — | 6.8% | |||||||||||||||
| Paul J. Glazer (5) | 1,951,426 | 6.8% | — | — | 6.8% | |||||||||||||||
| Encompass Capital Advisors LLC (6) | 1,437,500 | 5.00 | % | — | — | 5.00 | % | |||||||||||||
| Periscope Capital Inc. (7) | 1,919,500 | 6.7% | — | — | 6.7% | |||||||||||||||
| Adage Capital Partners LP (8) | 1,800,000 | 6.26 | % | — | — | 6.26% | ||||||||||||||
| All directors and executive officers as a group (10 individuals) | — | — | 7,187,500 | 100.0 | % | 20.0 | % | |||||||||||||
| * | Less than one percent |
| (1) | Unless otherwise noted, the business address of each of the following entities or individuals is PO Box 500, 71 Fort Street, Grand Cayman KY1-1106, Cayman Islands |
| (2) | Interests shown consist solely of founder shares, classified as Class B ordinary shares. Such ordinary shares will convert into Class A ordinary shares on a one-for-one basis, subject to adjustment, as described in the section entitled “Description of Securities.” |
| (3) | Daniel Barcelo, our Chief Executive Officer, may be deemed to beneficially own shares held by our sponsor by virtue of his control over our sponsor, as its managing member. Mr. Barcelo disclaims beneficial ownership of our ordinary shares held by our sponsor other than to the extent of his pecuniary interest in such shares. All of our officers and directors are members of our sponsor. |
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| (4) | Certain funds and separate accounts managed by or affiliated with Alussa are investors in our sponsor. | |
| (5) | According to a Schedule 13G filed with the SEC on February 16, 2021, jointly by Glazer Capital, LLC (“Glazer Capital”) and Paul J. Glazer (“Mr. Glazer”). Glazer Capital and Mr. Glazer have shared power to vote and dispose of 1,951,426 Class A ordinary shares. The address of the principal business office of Glazer Capital and Mr. Glazer is 250 West 55th Street, Suite 30A, New York, New York 10019. | |
| (6) | According to a Schedule 13G/A filed with the SEC on February 14, 2020, jointly by Encompass Capital Advisors LLC (“Encompass Advisors”), Encompass Capital Partners LLC (“Encompass Partners”), and Todd J. Kantor (“Mr. Kantor”). Encompass Advisors, Encompass Partners and Mr. Kantor have shared power to vote and dispose of 1,437,500 Class A ordinary shares. The address of the principal business office of Encompass Advisors and Encompass Partners is 200 Park Avenue, 11th Floor, New York, NY 10166. The address of the principal business office of Mr. Kantor is c/o Encompass Capital Advisors LLC, 200 Park Avenue, 11th Floor, New York, NY 10166. | |
| (7) | According to a Schedule 13G filed with the SEC on February 16, 2021, by Periscope Capital Inc. (“Periscope”). Periscope was the beneficial owner of 1,919,500 Class A ordinary shares and may be deemed to have shared voting control and investment discretion over the securities. The address of the principal business office of Periscope is 333 Bay Street, Suite 1240, Toronto, Ontario, Canada M5H 2R2. | |
| (8) | According to a Schedule 13G filed with the SEC on December 6, 2019, jointly by Adage Capital Partners, L.P (“ACP”), Adage Capital Partners GP, LLC (“ACPGP”), Adage Capital Advisors, LLC (“ACA”), Robert Atchinson (“Mr. Atchinson”), and Phillip Gross (“Mr. Gross”), the parties reported that ACP was the beneficial owner of 1,800,000 Class A ordinary shares. ACPGP is the general partner of ACP and may be deemed to have shared voting control and investment discretion over securities owned by ACP. ACA is the managing member of ACPGP and may be deemed to have shared voting control and investment discretion over securities owned by ACP. Messrs. Atchinson and Gross are the managing members of ACA and may be deemed to have shared voting control and investment discretion over securities owned by ACP. However, the reporting persons state that the foregoing should not be construed in and of itself as an admission by ACPGP, ACA, Mr. Atchinson or Mr. Gross as to beneficial ownership of the securities owned by ACP. The business address for each reporting persons is 200 Clarendon Street, 52nd floor, Boston, Massachusetts 02116. |
Securities Authorized for Issuance under Equity Compensation Table
None.
Changes in Control
None.
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Item 13. Certain Relationships and Related Transactions, Director Independence
Certain Relationships and Related Transactions
In June 2019, our sponsor purchased 5,750,000 founder shares for an aggregate price of $25,000. In October 2019, we declared a share dividend satisfied by way of issuance of 0.125 of a share for each ordinary share in issue, and in November 2019, we declared a share dividend satisfied by way of issuance of 0.111111 of a share for each ordinary share in issue, resulting in our sponsor holding an aggregate of 7,187,500 founder shares. Our sponsor currently owns 20% of our issued and outstanding shares and has the right to elect all of our directors prior to our initial business combination.
In addition, simultaneously with the closing of the IPO on November 29, 2019, our sponsor purchased an aggregate of 8,000,000 warrants at a price of $1.00 per warrant for an aggregate price of $8,000,000 in a private placement closed simultaneously with the closing of our initial public offering. On December 5, 2019, our sponsor purchased an aggregate of 750,000 warrants at a price of $1.00 per warrant for an aggregate price of $750,000, simultaneously with the exercise in full of the underwriters’ over-allotment option. Each private placement warrant is exercisable to the purchase of one whole Class A ordinary share at $11.50 per share, subject to adjustment. The private placement warrants (including the Class A ordinary share issuable upon exercise of the private placement warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by it until 30 days after the completion of our initial business combination.
If any of our officers or directors becomes aware of a business combination opportunity that falls within the line of business of any entity to which he or she has then-current fiduciary or contractual obligations, he or she may be required to present such business combination opportunity to such entity prior to presenting such business opportunity to us, subject to his or her fiduciary duties under Cayman Islands law. Our officers and directors have and will in the future have certain relevant fiduciary duties or contractual obligations that my take priority over their duties to us. Additionally, we may, at our option, pursue an Affiliated Joint Acquisition opportunity with an entity to which Encompass (or funds advised by Encompass), an officer or director has a fiduciary or contractual obligation. Any such entity may co-invest with us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the acquisition by making a specified future issuance to any such entity.
We have entered into an Administrative Services Agreement with our sponsor, pursuant to which we pay a total of $35,000 per month for office space, administrative and support services to such affiliate, of which Mr. Barcelo, our Chief Executive Officer, is paid $20,000 per month and Mr. De’Ath, our Chief Technology Officer, is paid $5,000 per month. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees. Accordingly, in the event the consummation of our initial business combination takes the maximum 24 months, our sponsor will be paid a total of $840,000 ($35,000 per month) for office space, administrative and support services and will be entitled to be reimbursed for any out-of-pocket expenses.
Our sponsor, officers and directors, and Encompass or any of their affiliates, are reimbursed for any bona-fide, documented 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 reviews on a quarterly basis all payments that were made to our sponsor, officers and directors, and Encompass of any of their affiliates and determines which expenses and the amount of expenses that will be reimbursed. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf.
39
Prior to the consummation of our initial public offering, our sponsor loaned an aggregate of $198,959 to us under an unsecured promissory note, which we used for a portion of the expenses of our initial public offering. The loans were fully repaid upon the closing of our initial public offering.
In addition, in order to finance transaction costs in connection with an intended initial business combination, our sponsor or an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete an initial business combination, we would repay such loaned amounts. In the event that the initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the placement warrants issued to the initial holder. The terms of such loans by our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.
After our initial business combination, members of our management team who remain with us may be paid consulting, management or other fees from the combined company with any and all amounts being fully disclosed to our shareholders, to the extent then known, in the tender offer or proxy solicitation materials, as applicable, furnished to our shareholders. It is unlikely the amount of such compensation will be known at the time of distribution of such tender offer materials or at the time of a shareholder meeting held to consider our initial business combination, as applicable, as it will be up to the directors of the post-combination business to determine executive and director compensation.
We have entered into a registration rights agreement with respect to the founder shares, private placement warrants and warrants issued upon conversion of working capital loans (if any) and the shares of Class A ordinary shares issuable upon exercise of the foregoing and upon conversion of the founder shares.
Related Party Policy
Our audit committee must review and approve any related person transaction we propose to enter into. Our audit committee charter details the policies and procedures relating to transactions that may present actual, potential or perceived conflicts of interest and may raise questions as to whether such transactions are consistent with the best interest of our company and our stockholders. A summary of such policies and procedures is set forth below.
Any potential related party transaction that is brought to the audit committee’s attention will be analyzed by the audit committee, in consultation with outside counsel or members of management, as appropriate, to determine whether the transaction or relationship does, in fact, constitute a related party transaction. At its meetings, the audit committee will be provided with the details of each new, existing or proposed related party transaction, including the terms of the transaction, the business purpose of the transaction and the benefits to us and to the relevant related party.
40
In determining whether to approve a related party transaction, the audit committee must consider, among other factors, the following factors to the extent relevant:
| ● | whether the terms of the transaction are fair to us and on the same basis as would apply if the transaction did not involve a related party; |
| ● | whether there are business reasons for us to enter into the transaction; |
| ● | whether the transaction would impair the independence of an outside director; and |
| ● | whether the transaction would present an improper conflict of interest for any director or executive officer. |
Any member of the audit committee who has an interest in the transaction under discussion must abstain from any voting regarding the transaction, but may, if so requested by the chairman of the audit committee, participate in some or all of the audit committee’s discussions of the transaction. Upon completion of its review of the transaction, the audit committee may determine to permit or to prohibit the transaction.
Item 14. Principal Accountant Fees and Services.
The following is a summary of fees paid or to be paid to Marcum LLP, or Marcum, for services rendered.
Audit Fees. Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements and services that are normally provided by Marcum in connection with regulatory filings. The aggregate fees billed by Marcum for professional services rendered for the audit of our annual financial statements, review of the financial information included in our Forms 10-Q for the respective periods and other required filings with the SEC for the year ended December 31, 2020 and for the period from June 13, 2019 (inception) through December 31, 2019 totaled $50,985 and $44,805, respectively. The above amounts include interim procedures and audit fees, as well as attendance at audit committee meetings.
Audit-Related Fees. Audit-related services consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our financial statements and are not reported under “Audit Fees.” These services include attest services that are not required by statute or regulation and consultations concerning financial accounting and reporting standards. We paid Marcum $3,506 for consultations concerning financial accounting and reporting standards for the year ended December 31, 2020 and $0 for the period from June 13, 2019 (inception) through December 31, 2019.
Tax Fees. We paid Marcum $12,463 for tax planning and tax advice for the year ended December 31, 2020 and $0 for the period from June 13, 2019 (inception) through December 31, 2019.
All Other Fees. We did not pay Marcum for other services for the year ended December 31, 2020 and for the period from June 13, 2019 (inception) through December 31, 2019.
Pre-Approval Policy
Our audit committee was formed upon the consummation of our Initial Public Offering. As a result, the audit committee did not pre-approve all of the foregoing services, although any services rendered prior to the formation of our audit committee were approved by our board of directors. Since the formation of our audit committee, and on a going-forward basis, the audit committee has and will pre-approve all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the audit).
41
Item 15. Exhibits, Financial Statement Schedules
(a) The following documents are filed as part of this Form 10-K/A:
(1) Financial Statements:
(2) Financial Statement Schedules:
None.
(3) Exhibits
We hereby file as part of this Report the exhibits listed in the attached Exhibit Index. Exhibits which are incorporated herein by reference can be inspected and copied at the public reference facilities maintained by the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Copies of such material can also be obtained from the Public Reference Section of the SEC, 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates or on the SEC website at www.sec.gov.
42
ALUSSA ENERGY ACQUISITION CORP.
INDEX TO FINANCIAL STATEMENTS
| Report of Independent Registered Public Accounting Firm | F-2 |
| Financial Statements: | |
| Balance Sheets | F-3 |
| Statements of Operations | F-4 |
| Statements of Changes in Shareholders’ Equity | F-5 |
| Statements of Cash Flows | F-6 |
| Notes to Financial Statements | F-7 |
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
Alussa Energy Acquisition Corp.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Alussa Energy Acquisition Corp. (the “Company”) as of December 31, 2020 and 2019, the related statements of operations, changes in shareholders’ equity and cash flows for the year ended December 31, 2020 and for the period from June 13, 2019 (inception) through December 31, 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the year ended December 31, 2020 and for the period from June 13, 2019 (inception) through December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company’s business plan is dependent on the completion of a business combination and the Company’s cash and working capital as of December 31, 2020 are not sufficient to complete its planned activities. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Restatement of the 2020 and 2019 Financial Statements
As discussed in Note 1A to the financial statements, the accompanying financial statements as of December 31, 2020 and 2019, for the year ended December 31, 2020 and for the period from June 13, 2019 (inception) through December 31, 2019, have been restated.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Marcum llp
Marcum llp
We have served as the Company’s auditor since 2019.
Houston, Texas
March 1, 2021, except for the effects of the restatement discussed in Note 1A as to which the date is May 5, 2021.
F-2
ALUSSA ENERGY ACQUISITION CORP.
BALANCE SHEETS
| December 31, | ||||||||
| 2020
(As Restated) | 2019 (As Restated) | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | 370,958 | $ | 2,282,362 | ||||
| Prepaid expenses and other current assets | 234,167 | 113,049 | ||||||
| Total Current Assets | 605,125 | 2,395,411 | ||||||
| Marketable securities held in Trust Account | 289,834,441 | 287,830,781 | ||||||
| Total Assets | $ | 290,439,566 | $ | 290,226,192 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities - Accounts payable and accrued expenses | $ | 3,405,463 | $ | 5,224 | ||||
| Deferred underwriting fee payable | 10,062,500 | 10,062,500 | ||||||
| Warrant liabilities | 35,356,250 | 30,962,500 | ||||||
| Total Liabilities | 48,824,213 | 41,030,224 | ||||||
| Commitments | ||||||||
| Class A ordinary shares subject to possible redemption, 23,470,955 and 24,391,533 shares at redemption value at December 31, 2020 and 2019, respectively | 236,615,344 | 244,195,965 | ||||||
| Shareholders' Equity | ||||||||
| Preference shares, $0.0001 par value; 2,000,000 shares authorized; none issued and outstanding | - | - | ||||||
| Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 5,279,045 and 4,358,467 shares issued and outstanding (excluding 23,470,955 and 24,391,533 shares subject to possible redemption) at December 31, 2020 and 2019, respectively | 528 | 436 | ||||||
| Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized; 7,187,500 shares issued and outstanding at December 31, 2020 and 2019 | 719 | 719 | ||||||
| Additional paid-in capital | 18,107,557 | 9,778,630 | ||||||
| Accumulated deficit | (13,108,795 | ) | (4,779,782 | ) | ||||
| Total Shareholders' Equity | 5,000,009 | 5,000,003 | ||||||
| Total Liabilities and Shareholders' Equity | $ | 290,439,566 | $ | 290,226,192 | ||||
The accompanying notes are an integral part of the financial statements.
F-3
ALUSSA ENERGY ACQUISITION CORP.
STATEMENTS OF OPERATIONS
| Year Ended December 31, 2020 (As Restated) | For the Period from June 13,
2019 (Inception) through December 31, 2019 (As Restated) | |||||||
| Operating costs | $ | 5,190,525 | $ | 1,173,063 | ||||
| Loss from operations | (5,190,525 | ) | (1,173,063 | ) | ||||
| Other income (expense): | ||||||||
| Interest income | 2,003,660 | 290,672 | ||||||
| Unrealized gain on marketable securities held in Trust Account | - | 40,109 | ||||||
| Change in fair value of warrant liabilities | (4,393,750 | ) | (3,937,500 | ) | ||||
| Other income (expense) | (2,390,090 | ) | (3,606,719 | ) | ||||
| Net loss | $ | (7,580,615 | ) | $ | (4,779,782 | ) | ||
| Weighted average redeemable ordinary shares outstanding, basic and diluted | 24,958,411 | 3,820,067 | ||||||
| Basic and diluted net income per redeemable ordinary share (Note 3) | $ | 0.07 | $ | 0.06 | ||||
| Weighted average non-redeemable ordinary shares outstanding, basic and diluted | 10,979,089 | 7,016,376 | ||||||
| Basic and diluted net loss per non-redeemable ordinary share (Note 3) | $ | (0.84 | ) | $ | (0.72 | ) | ||
The accompanying notes are an integral part of the financial statements.
F-4
ALUSSA ENERGY ACQUISITION CORP.
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
YEAR ENDED DECEMBER 31, 2020 (AS RESTATED)
| Class A Ordinary Shares | Class B Ordinary Shares | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Additional Paid-In Capital | Accumulated Deficit | Total Shareholders' Equity | ||||||||||||||||||||||
| Balance - January 1, 2020 | 4,358,467 | $ | 436 | 7,187,500 | $ | 719 | $ | 9,778,630 | $ | (4,779,782 | ) | $ | 5,000,003 | |||||||||||||||
| Class A ordinary shares subject to possible redemption | 920,578 | 92 | - | - | 8,328,927 | (748,398 | ) | 7,580,621 | ||||||||||||||||||||
| Net loss | - | - | - | - | - | (7,580,615 | ) | (7,580,615 | ) | |||||||||||||||||||
| Balance - December 31, 2020 | 5,279,045 | $ | 528 | 7,187,500 | $ | 719 | $ | 18,107,557 | $ | (13,108,795 | ) | $ | 5,000,009 | |||||||||||||||
FOR THE PERIOD FROM JUNE 13, 2019 (INCEPTION) THROUGH DECEMBER 31, 2019 (AS RESTATED)
| Class A Ordinary Shares | Class B Ordinary Shares | Additional Paid-In | Accumulated | Total Shareholders' | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance - June 13, 2019 (inception) | - | $ | - | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||
| Issuance of Class B ordinary shares to Sponsor | - | - | 7,187,500 | 719 | 24,281 | - | 25,000 | |||||||||||||||||||||
| Sale of 28,750,000 Units, net of underwriting discounts and offering expenses | 28,750,000 | 2,875 | - | - | 253,947,875 | - | 253,950,750 | |||||||||||||||||||||
| Class A ordinary shares subject to possible redemption | (24,391,533 | ) | (2,439 | ) | - | - | (244,193,526 | ) | - | (244,195,965 | ) | |||||||||||||||||
| Net loss | - | - | - | - | - | (4,779,782 | ) | (4,779,782 | ) | |||||||||||||||||||
| Balance - December 31, 2019 | 4,358,467 | $ | 436 | 7,187,500 | $ | 719 | $ | 9,778,630 | $ | (4,779,782 | ) | $ | 5,000,003 | |||||||||||||||
The accompanying notes are an integral part of the financial statements.
F-5
ALUSSA ENERGY ACQUISITION CORP.
STATEMENTS OF CASH FLOWS
| Year
Ended December 31, 2020 (As Restated) | For
the Period from June 13, 2019 (Inception) Through December 31, 2019 (As Restated) | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | (7,580,615 | ) | $ | (4,779,782 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Interest earned on marketable securities held in Trust Account | (2,003,660 | ) | (290,672 | ) | ||||
| Unrealized gain on marketable securities held in Trust Account | - | (40,109 | ) | |||||
| Underwriting fees and offering costs allocated to warrant liabilities | - | 1,051,990 | ||||||
| Change in fair value of warrant liabilities | 4,393,750 | 3,937,500 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other current assets | (121,118 | ) | (113,049 | ) | ||||
| Accounts payable and accrued expenses | 3,400,239 | 5,224 | ||||||
| Net cash used in operating activities | (1,911,404 | ) | (228,898 | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Investment of cash in Trust Account | - | (287,500,000 | ) | |||||
| Net cash used in investing activities | - | (287,500,000 | ) | |||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from sale of Units, net of underwriting discounts paid | - | 281,750,000 | ||||||
| Proceeds from sale of Private Placement Warrants | - | 8,750,000 | ||||||
| Proceeds from promissory note - related party | - | 198,959 | ||||||
| Repayment of promissory note – related party | - | (198,959 | ) | |||||
| Payment of offering costs | - | (488,740 | ) | |||||
| Net cash provided by financing activities | - | 290,011,260 | ||||||
| Net Change in Cash | (1,911,404 | ) | 2,282,362 | |||||
| Cash – Beginning | 2,282,362 | - | ||||||
| Cash – Ending | $ | 370,958 | $ | 2,282,362 | ||||
| Non-Cash Investing and Financing Activities: | ||||||||
| Initial classification of Class A ordinary shares subject to possible redemption | $ | - | $ | 247,917,190 | ||||
| Change in fair value of Class A ordinary shares subject to possible redemption | $ | (7,580,621 | ) | $ | (3,721,225 | ) | ||
| Deferred underwriting fee | $ | - | $ | 10,062,500 | ||||
| Offering costs paid directly by Sponsor from proceeds from issuance of Class B ordinary shares | $ | - | $ | 25,000 | ||||
The accompanying notes are an integral part of the financial statements.
F-6
NOTE 1A. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
On April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the Securities and Exchange Commission (“SEC”) together issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (the “SEC Statement”). Specifically, the SEC Statement focused on certain settlement terms and provisions related to certain tender offers following a business combination, which terms are similar to those contained in the warrant agreements, dated as of November 25, 2019, between the Company and Continental Stock Transfer & Trust Company, a New York corporation, as warrant agent (the “Warrant Agreement”). As a result of the SEC Statement, the Company reevaluated the accounting treatment of (i) the 14,375,000 redeemable warrants (the “Public Warrants”) that were included in the units issued by the Company in its initial public offering (the “IPO”) and for the underwriters’ exercise of their over-allotment option and (ii) the 8,750,000 warrants that were issued to the Company’s sponsor in private placements that closed concurrently with the IPO and the underwriters’ exercise of their over-allotment option (the “Private Placement Warrants”, collectively with the Public Warrants, the “Warrants”, which are discussed in Note 1B, Note 3, Note 4, Note 8 and Note 10). The Company previously accounted for the Warrants as components of equity.
In further consideration of the guidance in Accounting Standards Codification (“ASC”) 815-40, “Derivatives and Hedging – Contracts in Entity’s Own Equity”, the Company concluded that a provision in the Warrant Agreement related to certain tender or exchange offers precludes the Warrants from being accounted for as components of equity. As the Warrants meet the definition of a derivative as contemplated in ASC 815, “Derivatives and Hedging”, the Warrants should be recorded as derivative liabilities on the balance sheets and measured at fair value at issuance and at each reporting date in accordance with ASC 820, “Fair Value Measurement”, with changes in fair value recognized in the statements of operations in the period of change.
The Company’s management and the audit committee of the Company’s Board of Directors concluded that it is appropriate to restate the Company’s previously issued audited financial statements as of December 31, 2020 and 2019 and for the year ended December 31, 2020 and the period from June 13, 2019 (inception) through December 31, 2019, as previously reported in its Form 10-K (the “Original Form 10-K”), filed with the SEC on March 1, 2021.
A summary of the accounting impact of these adjustments to the Company’s condensed financial statements as of and for the related interim periods is provided in Note 10, “Restatement of Quarterly Condensed Financial Statements”.
The following tables reflect the impact of the adjustments to the specific line items presented in the Company’s previously reported financial statements. The amounts originally reported were derived from the Company’s Original Form 10-K and its Form 8-K filed on December 5, 2019:
| December 31, 2020 | ||||||||||||
| As Originally Reported | Adjustments | As Restated | ||||||||||
| Balance Sheet | ||||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||
| Warrant liabilities | $ | - | $ | 35,356,250 | $ | 35,356,250 | ||||||
| Total Liabilities | 13,467,963 | 35,356,250 | 48,824,213 | |||||||||
| Class A ordinary shares subject to possible redemption, 23,470,955 shares at redemption value at December 31, 2020 | 271,971,597 | (35,356,253 | ) | 236,615,344 | ||||||||
| Shareholders' Equity | ||||||||||||
| Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 5,279,045 shares issued and outstanding (excluding 23,470,955 shares subject to possible redemption) at December 31, 2020 | 177 | 351 | 528 | |||||||||
| Additional paid-in capital | 7,976,267 | 10,131,290 | 18,107,557 | |||||||||
| Accumulated Deficit | (2,977,157 | ) | (10,131,638 | ) | (13,108,795 | ) | ||||||
| Total Shareholders' Equity | 5,000,006 | 3 | 5,000,009 | |||||||||
| Total Liabilities and Shareholders' Equity | $ | 290,439,566 | $ | - | $ | 290,439,566 | ||||||
F-7
| December 31, 2019 | ||||||||||||
| As Originally Reported | Adjustments | As Restated | ||||||||||
| Balance Sheet | ||||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||
| Warrant liabilities | $ | - | $ | 30,962,500 | $ | 30,962,500 | ||||||
| Total Liabilities | 10,067,724 | 30,962,500 | 41,030,224 | |||||||||
| Class A ordinary shares subject to possible redemption, 24,391,533 shares at redemption value at December 31, 2019 | 275,158,458 | (30,962,493 | ) | 244,195,965 | ||||||||
| Shareholders' Equity | ||||||||||||
| Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 4,358,467 shares issued and outstanding (excluding 24,391,533 shares subject to possible redemption) at December 31, 2019 | 127 | 309 | 436 | |||||||||
| Additional paid-in capital | 4,789,456 | 4,989,174 | 9,778,630 | |||||||||
| (Accumulated deficit) Retained earnings | 209,708 | (4,989,490 | ) | (4,779,782 | ) | |||||||
| Total Shareholders' Equity | 5,000,010 | (7 | ) | 5,000,003 | ||||||||
| Total Liabilities and Shareholders' Equity | $ | 290,226,192 | $ | - | $ | 290,226,192 | ||||||
| November 29, 2019 | ||||||||||||
| As Originally Reported | Adjustments | As Revised | ||||||||||
| Balance Sheet | ||||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||
| Warrant liabilities | $ | - | $ | 26,515,000 | $ | 26,515,000 | ||||||
| Total Liabilities | 9,236,505 | 26,515,000 | 35,751,505 | |||||||||
| Class A ordinary shares subject to possible redemption, 21,223,969 shares at redemption value at November 29, 2019 | 238,754,690 | (26,515,000 | ) | 212,239,690 | ||||||||
| Shareholders' Equity | ||||||||||||
| Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 3,776,031 shares issued and outstanding (excluding 21,223,969 shares subject to possible redemption) at December 31, 2019 | 112 | 265 | 377 | |||||||||
| Additional paid-in capital | 5,005,739 | 3,600,876 | 8,606,615 | |||||||||
| Accumulated deficit | (6,565 | ) | (3,601,141 | ) | (3,607,706 | ) | ||||||
| Total Shareholders' Equity | 5,000,005 | - | 5,000,005 | |||||||||
| Total Liabilities and Shareholders' Equity | $ | 252,991,200 | $ | - | $ | 252,991,200 | ||||||
F-8
| Year Ended December 31, 2020 | ||||||||||||
| As Originally Reported | Adjustments | As Restated | ||||||||||
| Statement of Operations | ||||||||||||
| Other income (expense): | ||||||||||||
| Change in fair value of warrant liabilities | $ | - | $ | (4,393,750 | ) | $ | (4,393,750 | ) | ||||
| Other income (expense) | 2,003,660 | (4,393,750 | ) | (2,390,090 | ) | |||||||
| Net loss | $ | (3,186,865 | ) | $ | (4,393,750 | ) | $ | (7,580,615 | ) | |||
| Weighted average redeemable ordinary shares outstanding, basic and diluted | - | 24,958,411 | 24,958,411 | |||||||||
| Basic and diluted net income per redeemable ordinary share | $ | - | $ | 0.07 | $ | 0.07 | ||||||
| Weighted average non-redeemable ordinary shares outstanding, basic and diluted | 8,515,209 | 2,463,880 | 10,979,089 | |||||||||
| Basic and diluted net loss per non-redeemable ordinary share | $ | (0.60 | ) | $ | (0.24 | ) | $ | (0.84 | ) | |||
| For the Period from June 13, 2019 (Inception) through December 31, 2019 | ||||||||||||
| As Originally Reported | Adjustments | As Restated | ||||||||||
| Statement of Operations | ||||||||||||
| Operating costs | $ | 121,073 | $ | 1,051,990 | $ | 1,173,063 | ||||||
| Loss from operations | (121,073 | ) | (1,051,990 | ) | (1,173,063 | ) | ||||||
| Other income (expense): | ||||||||||||
| Change in fair value of warrant liabilities | $ | - | $ | (3,937,500 | ) | $ | (3,937,500 | ) | ||||
| Other income (expense) | 330,781 | (3,937,500 | ) | (3,606,719 | ) | |||||||
| Net (loss) income | $ | 209,708 | $ | (4,989,490 | ) | $ | (4,779,782 | ) | ||||
| Weighted average redeemable ordinary shares outstanding, basic and diluted | - | 3,820,067 | 3,820,067 | |||||||||
| Basic and diluted net income per redeemable ordinary share | $ | - | $ | 0.06 | $ | 0.06 | ||||||
| Weighted average non-redeemable ordinary shares outstanding, basic and diluted | 6,567,276 | 449,100 | 7,016,376 | |||||||||
| Basic and diluted net loss per non-redeemable ordinary share | $ | (0.02 | ) | $ | (0.70 | ) | $ | (0.72 | ) | |||
| December 31, 2020 | ||||||||||||
| As Originally Reported | Adjustments | As Restated | ||||||||||
| Statement of Changes in Shareholders' Equity | ||||||||||||
| Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 5,279,045 shares issued and outstanding (excluding 23,470,955 shares subject to possible redemption) at December 31, 2020 | $ | 177 | $ | 351 | $ | 528 | ||||||
| Additional paid-in capital | 7,976,267 | 10,131,290 | 18,107,557 | |||||||||
| Accumulated deficit | (2,977,157 | ) | (10,131,638 | ) | (13,108,795 | ) | ||||||
| Total Shareholders' Equity | $ | 5,000,006 | $ | 3 | $ | 5,000,009 | ||||||
F-9
| December 31, 2019 | ||||||||||||
| As Originally Reported | Adjustments | As Restated | ||||||||||
| Statement of Changes in Shareholders' Equity | ||||||||||||
| Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 4,358,467 shares issued and outstanding (excluding 24,391,533 shares subject to possible redemption) at December 31, 2019 | $ | 127 | $ | 309 | $ | 436 | ||||||
| Additional paid-in capital | 4,789,456 | 4,989,174 | 9,778,630 | |||||||||
| (Accumulated deficit) Retained earnings | 209,708 | (4,989,490 | ) | (4,779,782 | ) | |||||||
| Total Shareholders' Equity | $ | 5,000,010 | $ | (7 | ) | $ | 5,000,003 | |||||
| Year Ended December 31, 2020 | ||||||||||||
| As Originally Reported | Adjustments | As Restated | ||||||||||
| Statement of Cash Flows | ||||||||||||
| Cash Flows from Operating Activities: | ||||||||||||
| Net loss | $ | (3,186,865 | ) | $ | (4,393,750 | ) | $ | (7,580,615 | ) | |||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
| Change in fair value of warrant liabilities | - | 4,393,750 | 4,393,750 | |||||||||
| Net cash used in operating activities | (1,911,404 | ) | - | (1,911,404 | ) | |||||||
| Non-Cash Investing and Financing Activities: | ||||||||||||
| Change in fair value of Class A ordinary shares subject to possible redemption | $ | (3,186,861 | ) | $ | (4,393,760 | ) | $ | (7,580,621 | ) | |||
| For the Period from June 13, 2019 (Inception) through December 31, 2019 | ||||||||||||
| As Originally Reported | Adjustments | As Restated | ||||||||||
| Statement of Cash Flows | ||||||||||||
| Cash Flows from Operating Activities: | ||||||||||||
| Net (loss) income | $ | 209,708 | $ | (4,989,490 | ) | $ | (4,779,782 | ) | ||||
| Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||||||
| Underwriting fees and offering costs allocated to warrant liabilities | - | 1,051,990 | 1,051,990 | |||||||||
| Change in fair value of warrant liabilities | - | 3,937,500 | 3,937,500 | |||||||||
| Net cash used in operating activities | (228,898 | ) | - | (228,898 | ) | |||||||
| Non-Cash Investing and Financing Activities: | ||||||||||||
| Initial classification of Class A ordinary shares subject to possible redemption | $ | 274,942,190 | $ | (27,025,000 | ) | $ | 247,917,190 | |||||
| Change in fair value of Class A ordinary shares subject to possible redemption | $ | 216,268 | $ | (3,937,493 | ) | $ | (3,721,225 | ) | ||||
F-10
NOTE 1B. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Alussa Energy Acquisition Corp. is a newly organized blank check company incorporated as a Cayman Islands exempted company on June 13, 2019. The Company was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”). The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
Although the Company is not limited to a particular industry or sector for purposes of consummating a Business Combination, the Company intends to focus on businesses that complement its management team’s expertise in the production, operation and development of crude oil and natural gas wells and related infrastructure.
All activity for the period from June 13, 2019 (inception) through November 29, 2019 was related to the Company’s formation and the initial public offering (the “Initial Public Offering”), which is described below. Since the consummation of the Initial Public Offering through December 31, 2020, all activity has related to identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.
The registration statements for the Company’s Initial Public Offering were declared effective on November 27, 2019. On November 29, 2019, the Company consummated the Initial Public Offering of 25,000,000 units (the “Units”), generating gross proceeds of $250,000,000, which is described in Note 3. Each Unit consists of one of the Company’s Class A ordinary shares, par value $0.0001 per share (the “Class A Shares”) and one-half of one warrant (the “Warrants”). Each whole Warrant entitles the holder to purchase one Class A Share. The Class A Shares sold as part of the Units in the Initial Public Offering are referred to herein as the “public shares.”
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 8,000,000 warrants (the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to the Company’s sponsor, Alussa Energy Sponsor LLC (the “Sponsor”), generating gross proceeds of $8,000,000, which is described in Note 5.
Following the closing of the Initial Public Offering on November 29, 2019, an amount of $250,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering, and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”) and invested only in specified U.S. government treasury bills with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended, which invest only in direct U.S. government treasury obligations, until the earlier of (i) the consummation of the Business Combination and (ii) the Company’s failure to consummate a Business Combination within the prescribed time.
On December 4, 2019, the underwriters notified the Company of their intention to fully exercise their over-allotment option on December 5, 2019. As such, on December 5, 2019 the Company consummated the sale of an additional 3,750,000 Units, at $10.00 per Unit, and the sale of an additional 750,000 Private Placement Warrants, at $1.00 per Private Placement Warrant, generating total gross proceeds of $38,250,000. A total of $37,500,000 of the net proceeds was deposited into the Trust Account, bringing the aggregate proceeds held in the Trust Account to $287,500,000.
Transaction costs amounted to $16,326,240, consisting of $5,750,000 of underwriting fees, $10,062,500 of deferred underwriting fees and $513,740 of other costs. In addition, at December 31, 2020, cash of $370,958 was held outside of the Trust Account and is available for working capital purposes.
The Company’s 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 the Company will be able to successfully effect a Business Combination. Placing funds in the Trust Account may not protect those funds from third party claims against the Company. Although the Company will seek to have all vendors, service providers, prospective target businesses or other entities it engages execute agreements with the Company waiving any claim of any kind in or to any monies held in the Trust Account, there is no guarantee that such persons will execute such agreements. The Sponsor has agreed that it will be liable to the Company under certain circumstances if and to the extent any claims by such persons reduce the amount of funds in the Trust Account below a specified threshold. The Company has not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believes that the Sponsor’s only assets are securities of the Company. Therefore, the Sponsor may not be able to satisfy those obligations should they arise. The remaining net proceeds (not held in the Trust Account) may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses as well as any taxes.
F-11
The Company will provide the holders of the public shares (the “Public Shareholders”) with the opportunity to redeem all or a portion of their public shares upon the completion of the Business Combination, either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer, in either case at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest (which interest shall be net of taxes payable) divided by the number of then outstanding public shares. Notwithstanding the foregoing, if the Company seeks shareholder approval of the Business Combination and the Company does not conduct redemptions pursuant to the tender offer rules, a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the public shares. In connection with any shareholder vote required to approve any Business Combination, the Sponsor and any other shareholder of the Company prior to the consummation of the Initial Public Offering (collectively with the Sponsor, the “Initial Shareholders”) and the Company’s directors and officers will agree (i) to vote any of their respective Ordinary Shares (as defined below) in favor of the initial Business Combination and (ii) not to redeem any of their Ordinary Shares in connection therewith.
The Company will proceed with a Business Combination only if it has net tangible assets of at least $5,000,001 upon consummation of the Business Combination and, in the case of a shareholder vote, a majority of the outstanding Ordinary Shares voted are voted in favor of the Business Combination. The amount in the Trust Account is initially anticipated to be $10.00 per public share. The per-share amount to be distributed to shareholders who properly redeem their shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters. There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.
The New York Stock Exchange (the “NYSE”) rules require that the Business Combination must be with one or more target businesses that together have an aggregate fair market value equal to at least 80% of the balance in the Trust Account (less any Deferred Commissions (as defined below) and taxes payable on interest earned) at the time of the Company signing a definitive agreement in connection with the Business Combination.
If the Company has not completed a Business Combination by November 29, 2021, the Company 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, redeem 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 (which interest shall be net of taxes payable, and 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 the rights of the Public Shareholders as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining shareholders and its Board of Directors, dissolve and liquidate, subject in each case to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In the event of a liquidation, the Public Shareholders will be entitled to receive a full pro rata interest in the Trust Account ($10.00 per share, plus any pro rata interest earned on the Trust Account not previously released to the Company and less up to $100,000 of interest to pay dissolution expenses). There will be no redemption rights or liquidating distributions with respect to the Founder Shares (as defined in Note 6) or the Private Placement Warrants, which will expire worthless if the Company fails to complete a Business Combination by November 29, 2021.
Risks and Uncertainties
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 the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
F-12
NOTE 2. LIQUIDITY AND GOING CONCERN
As of December 31, 2020, the Company had $370,958 in its operating bank accounts, $289,834,441 in securities held in the Trust Account to be used for a Business Combination or to repurchase or redeem its ordinary shares in connection therewith and working capital deficit of $(2,800,338). As of December 31, 2020, approximately $2,334,000 of the amount on deposit in the Trust Account represented interest income and unrealized gain, which is available to pay the Company’s tax obligations.
Until the consummation of a Business Combination, the Company will be using the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring, negotiating and consummating the Business Combination.
The Company will need to raise additional capital through loans or additional investments from its Sponsor, shareholders, officers, directors, or third parties. The Company’s officers, directors and Sponsor may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs. Accordingly, the Company may not be able to obtain additional financing. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available on commercially acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern through November 29, 2021, the date that the Company will be required to cease all operations, except for the purpose of winding up, if a Business Combination is not consummated. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statement with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
F-13
Use of Estimates
The preparation of the financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company did not have any cash equivalents as of December 31, 2020 and 2019.
Marketable Securities Held in Trust Account
At December 31, 2020, the assets held in the Trust Account were substantially held in U.S. Treasury Securities Money Market Fund. At December 31, 2019, the assets held in the Trust Account were substantially held in U.S. Treasury Bills.
Class A Ordinary Shares Subject to Possible Redemption
The Company accounts for its Class A ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s Class A ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, Class A ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheets.
Income Taxes
The Company accounts for income taxes under ASC 740, “Income Taxes” (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2020 and 2019. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
The Company is considered an exempted Cayman Islands Company and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was zero for the period presented.
F-14
Net Income (Loss) Per Ordinary Share
Net loss per ordinary share is computed by dividing net income (loss) by the weighted average number of ordinary shares outstanding for the period. The Company applies the two-class method in calculating earnings per share. Class A ordinary shares subject to possible redemption at December 31, 2020 and 2019, which are not currently redeemable and are not redeemable at fair value, have been excluded from the calculation of basic net loss per ordinary share since such shares, if redeemed, only participate in their pro rata share of the Trust Account earnings. The Company has not considered the effect of warrants sold in the Initial Public Offering and the private placement to purchase 23,125,000 ordinary shares in the calculation of diluted loss per share, since the exercise of the warrants into ordinary shares is contingent upon the occurrence of future events. As a result, diluted net loss per ordinary share is the same as basic net loss per ordinary share for the period presented.
Reconciliation of Net Income (Loss) Per Ordinary Share
The Company’s net income (loss) is adjusted for the portion of income that is attributable to ordinary shares subject to possible redemption, as these shares only participate in the earnings of the Trust Account and not the income or losses of the Company. Accordingly, basic and diluted loss per ordinary share is calculated as follows:
| Year
Ended December 31, 2020 (As Restated) |
For
the Period from June 13, 2019 (Inception) through December 31, 2019 (As Restated) |
|||||||
| Redeemable ordinary shares | ||||||||
| Numerator: | ||||||||
| Interest income attributable to redeemable ordinary shares | $ | 1,635,750 | $ | 246,606 | ||||
| Net income attributable to redeemable ordinary shares | $ | 1,635,750 | $ | 246,606 | ||||
| Denominator: | ||||||||
| Weighted average redeemable ordinary shares outstanding, basic and diluted | 24,958,411 | 3,820,067 | ||||||
| Basic and diluted net income per redeemable ordinary share | $ | 0.07 | $ | 0.06 | ||||
| Non-redeemable ordinary shares | ||||||||
| Numerator: | ||||||||
| Net loss | $ | (7,580,615 | ) | $ | (4,779,782 | ) | ||
| Less: Net income attributable to redeemable ordinary shares | (1,635,750 | ) | (246,606 | ) | ||||
| Net loss attributable to non-redeemable ordinary shares | $ | (9,216,365 | ) | $ | (5,026,389 | ) | ||
| Denominator: | ||||||||
| Weighted average non-redeemable ordinary shares outstanding, basic and diluted | 10,979,089 | 7,016,376 | ||||||
| Basic and diluted net loss per non-redeemable ordinary share | $ | (0.84 | ) | $ | (0.72 | ) | ||
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution which, at times may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
Fair Value of Financial Instruments
The Company follows the guidance in ASC Topic 820, “Fair Value Measurement”, for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
See Note 8 for additional information on assets and liabilities measured at fair value.
F-15
Public Warrants and Private Placement Warrants
The Company evaluated the Public Warrants and Private Placement Warrants (collectively, “Warrants”, which are discussed in Note 1A, Note 1B, Note 3, Note 4, Note 8 and Note 10) in accordance with ASC 815-40, “Derivatives and Hedging — Contracts in Entity’s Own Equity”, and concluded that a provision in the Warrant Agreement related to certain tender or exchange offers precludes the Warrants from being accounted for as components of equity. As the Warrants meet the definition of a derivative as contemplated in ASC 815, the Warrants are recorded as derivative liabilities on the balance sheets and measured at fair value at inception (concurrent with or shortly after the date of the IPO) and at each reporting date in accordance with ASC 820, “Fair Value Measurement”, with changes in fair value recognized in the statements of operations in the period of change.
Recently Issued Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying financial statements.
NOTE 4. INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company sold 28,750,000 Units, which includes the exercise by the underwriters of their over-allotment option in full of 3,750,000 Units, at a price of $10.00 per Unit. Each Unit consists of one Class A Share and one-half of one Warrant. Each whole Warrant entitles the holder to purchase one Class A Share at a price of $11.50 per share. The Warrants will become exercisable on the later of 30 days after completion of the Business Combination or November 29, 2020 and will expire five years from the completion of the Business Combination or earlier upon redemption or liquidation. The Company may redeem the Warrants at a price of $0.01 per Warrant upon 30 days’ notice, only in the event that the last sale price of the Class A Shares is at least $18.00 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which notice of redemption is given. The Company will not redeem the Warrants unless a registration statement under the Securities Act covering the Class A Shares issuable upon exercise of the Warrants is effective and a current prospectus relating to those shares is available throughout the 30 day redemption period, unless the Warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If the Company redeems the Warrants as described above, management will have the option to require all holders that wish to exercise their Warrants to do so on a cashless basis; provided that an exemption from registration is available. No Warrants will be exercisable for cash unless the Company has an effective registration statement covering the Class A Shares issuable upon exercise of the Warrants and a current prospectus relating to such shares. If the shares issuable upon exercise of the Warrants are not registered under the Securities Act, holders will be permitted to exercise their Warrants on a cashless basis. However, no Warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any Class A Shares to holders seeking to exercise their Warrants, unless the issuance of the Class A Shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption is available.
In addition, if (x) the Company issues additional ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at an issue price or effective issue price of less than $9.20 per Class A Share (with such issue price or effective issue price to be determined in good faith by the Company’s Board of Directors, and in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the sponsor or such affiliates prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the consummation of a Business Combination, and (z) the volume weighted average trading price of the Company’s Class A Shares during the 20 trading day period starting on the trading day prior to the day on which the Company consummates a Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
NOTE 5. PROMISSORY NOTE — RELATED PARTY
On June 14, 2019, the Company issued an unsecured promissory note to the Sponsor pursuant to which the Company may borrow up to $300,000 in the aggregate. During 2019, the Company borrowed $198,959 under the promissory note. The note was non-interest bearing and payable on the earlier to occur of (i) December 31, 2019 or (ii) the consummation of the Initial Public Offering. The borrowings outstanding under the Promissory Note of $198,959 were repaid on December 2, 2019.
F-16
NOTE 6. COMMITMENTS
On February 10, 2020, the Company entered into a transactional support agreement with a service provider, pursuant to which the service provider agreed to assist the Company in evaluating acquisition opportunities in the energy industry, including valuation and qualitative assessments, as well as investor presentations. The Company paid the service provider a fee of $100,000 and will pay the service provider an additional fee upon the closing of a Business Combination. The fee payable at the closing of the Business Combination is dependent upon the timing of the closing and ranges between $975,000 and $1,950,000. The additional fee will not be payable in the event the Company does not consummate a Business Combination.
February 28, 2020, the Company entered into a consulting agreement with a service provider, pursuant to which the service provider provided the Company with advisory or transaction support for a potential Business Combination. The Company paid the service provider a fee of $75,000 per month for three months, for total fees of $225,000. In addition, on February 28, 2020, the Company entered into a transactional support agreement with the same service provider, pursuant to which the Company agreed to pay the service provider a fee equal to 1% of the consideration paid by the Company for the equity of a target company, up to a maximum fee of $5,000,000, if the Company consummates a Business Combination with a target company located in certain countries, as listed in the agreement. The fee will not be payable in the event the Company does not consummate a Business Combination.
On April 27, 2020, the Company entered into a consulting agreement, pursuant to which the consultant will provide the Company with advisory services for a potential Business Combination with a specific counter-party. In the event the Company consummates the Business Combination, the Company will pay the consultant 250,000 Euros.
The Company granted the underwriters (the “Underwriters”) a 45-day option from the date of the Initial Public Offering to purchase up to 3,750,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions. On December 5, 2019, the underwriters fully exercised their over-allotment option to purchase an additional 3,750,000 Units at $10.00 per Unit.
The underwriters were paid a cash fee of 2.0% per Unit, or $5,750,000 in the aggregate at the closing of the Initial Public Offering. Upon completion of the initial Business Combination, the Underwriters will be entitled to $10,062,500, which constitutes the Underwriters’ deferred fee of 3.5%. The deferred fee will be forfeited by the Underwriters solely in the event that the Company fails to complete a Business Combination, subject to the terms of the underwriting agreement.
The Company entered into an agreement, commencing on November 25, 2019 through the earlier of the consummation of a Business Combination or the Company’s liquidation, to pay an aggregate of $35,000 per month to the Sponsor for office space, administrative and support services, of which Mr. Daniel Barcelo, the Company’s Chief Executive Officer and President, will be paid $20,000 per month and Mr. Nick De’Ath, the Company’s Chief Technology Officer, will be paid $5,000 per month. The Company’s Sponsor, officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on their behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on behalf of the Company. During the year ended December 31, 2020 and for the period from June 13, 2019 (inception) through December 3, 2019, the Company incurred and paid $420,000 and $35,000 in fees for these services, respectively.
In addition, in order to finance transaction costs in connection with an intended initial Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. If the Company completes its initial Business Combination, it would repay such loaned amounts without interest. In the event that the initial Business Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from the Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the Private Placement Warrants issued to the Sponsor.
Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 8,750,000 Private Placement Warrants at $1.00 per warrant, for an aggregate purchase price of $8,750,000 from the Company. A portion of the proceeds from the sale of the Private Placement Warrants were placed into the Trust Account. Each Private Placement Warrant is exercisable for one Class A Share at a price of $11.50 per share. The Private Placement Warrants are identical to the Warrants included in the Units sold in the Initial Public Offering except that the Private Placement Warrants: (i) will not be redeemable by the Company; (ii) may be exercised for cash or on a cashless basis, as described in the registration statement relating to the Initial Public Offering, so long as they are held by the Sponsor or any of its permitted transferees and (iii) are (including the ordinary shares issuable upon exercise of the Private Placement Warrants) entitled to registration rights. Additionally, the Sponsor has agreed not to transfer, assign or sell any of the Private Placement Warrants, including the Class A Shares issuable upon exercise of the Private Placement Warrants (except to certain permitted transferees), until 30 days after the completion of the Business Combination.
F-17
NOTE 7. SHAREHOLDERS’ EQUITY AND WARRANTS
Preference Shares
The Company is authorized to issue 2,000,000 preference shares with a par value of $0.0001. The Company’s Board of Directors will be authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. The Board of Directors will be able to, without shareholder approval, issue preferred shares with voting and other rights that could adversely affect the voting power and other rights of the holders of the Ordinary Shares and could have anti-takeover effects.
At December 31, 2020 and 2019, there were no preference shares issued or outstanding.
Ordinary Shares
The Company is authorized to issue 200,000,000 Class A Shares, with a par value of $0.0001 each, and 20,000,000 Class B ordinary shares, with a par value of $0.0001 each (the “Class B Shares” and, together with the Class A Shares, the “Ordinary Shares”). Holders of the Ordinary Shares are entitled to one vote for each Ordinary Share; provided that only holders of the Class B Shares have the right to vote on the election of directors prior to the Business Combination. The Class B Shares will automatically convert into Class A Shares at the time of the Business Combination, on a one-for-one basis, subject to adjustment for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional Class A Shares, or equity-linked securities, are issued or deemed issued in excess of the amounts sold in the Initial Public Offering and related to the closing of the Business Combination, the ratio at which the Class B Shares shall convert into Class A Shares will be adjusted (unless the holders of a majority of the outstanding Class B ordinary shares agree to waive such anti-dilution adjustment with respect to any such issuance or deemed issuance) so that the number of Class A Shares issuable upon conversion of all Class B Shares will equal, in the aggregate, 20% of the sum of all Ordinary Shares outstanding upon completion of the Initial Public Offering plus all Class A Shares and equity-linked securities issued or deemed issued in connection with the Business Combination, excluding any Ordinary Shares or equity-linked securities issued, or to be issued, to any seller in the Business Combination, any Private Placement-equivalent Warrants issued to the Sponsor or its affiliates upon conversion of loans made to the Company. Holders of Founder Shares may also elect to convert their Class B Shares into an equal number of Class A Shares, subject to adjustment as provided above, at any time.
At December 31, 2020 and 2019, there were 5,279,045 and 4,358,467 Class A Shares issued and outstanding, excluding 23,470,955 and 24,391,533 Class A Shares subject to possible redemption, respectively. At December 31, 2020 and 2019, there were 7,187,500 Class B Shares issued and outstanding.
Founder Shares
On June 14, 2019, an aggregate of 5,750,000 Class B Shares (the “Founder Shares”) were issued to the Sponsor for an aggregate purchase price of $25,000. In October 2019, the Company declared a share dividend satisfied by way of issuance of 0.125 of a share for each ordinary share in issue and on November 25, 2019, the Company declared a share dividend satisfied by way of issuance of 0.111111 of a share for each ordinary share in issue, resulting in an aggregate of 7,187,500 Founder Shares being held by the Sponsor. The 7,187,500 Founder Shares included an aggregate of up to 937,500 Founder Shares that were subject to forfeiture if the over-allotment option was not exercised in full by the Underwriters in order to maintain the Initial Shareholder’s ownership at 20% of the issued and outstanding Ordinary Shares upon completion of the Initial Public Offering. As a result of the underwriters’ election to fully exercise their over-allotment option on December 5, 2019, a total of 937,500 Founder Shares are no longer subject to forfeiture.
The Founder Shares are identical to the Class A Shares included in the Units being sold in the Initial Public Offering, except that the Founder Shares (i) have the voting rights described above, (ii) are subject to certain transfer restrictions described below and (iii) are convertible into Class A Shares on a one-for-one basis, subject to adjustment pursuant to the anti-dilution provisions contained therein. The Founder Shares may not be transferred, assigned or sold until the earlier of (i) one year after the completion of the Business Combination and (ii) the date on which the Company completes a liquidation, merger, share exchange, reorganization or other similar transaction after the Business Combination that results in all of the Public Shareholders having the right to exchange their Class A Shares for cash, securities or other property. Notwithstanding the foregoing, if the last sale price of the Class A Shares equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Business Combination, the Founder Shares will be released from the lock-up.
F-18
Warrants
Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination and (b) 12 months from the closing of the Initial Public Offering or November 29, 2020. The Public Warrants will expire five years from the completion of a Business Combination or earlier upon redemption or liquidation.
The Company will not be obligated to deliver any Class A ordinary shares pursuant to the exercise of a Public Warrant and will have no obligation to settle such Public Warrant exercise unless a registration statement under the Securities Act covering the Class A ordinary shares issuable upon exercise of the Public Warrants is effective and a current prospectus relating to those shares is available throughout the 30 day redemption period, unless the Public Warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. No Public Warrants will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any Class A ordinary shares to holders seeking to exercise their Public Warrants, unless the issuance of the Class A ordinary shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption is available.
The Company has determined that after the closing of a Business Combination, it will use its commercially reasonable efforts to file with the SEC a registration statement registering the issuance, under the Securities Act, of the Class A ordinary shares issuable upon exercise of the Public Warrants. The Company will use its commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of the Business Combination and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the Public Warrants in accordance with the provisions of the Warrant Agreement. Notwithstanding the above, if the Class A ordinary shares are, at the time of any exercise of a Public Warrant, not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act with 60 business days after the closing of the Business Combination, the holders of the Public Warrants shall have the right to exercise their Public Warrants on a “cashless basis” in accordance with the Section 3(a)(9) of the Securities Act and, by exchanging the Public Warrants for the number of Class A ordinary share per Public Warrant equal to the quotient obtained by dividing (x) the product of the number of Class A ordinary shares underlying such Public Warrant, multiplied by the excess of the fair market value over the exercise price by (y) the fair market value.
Redemption of warrants when the price per Class A ordinary share equals or exceeds $18.00. Once the Public Warrants become exercisable, the Company may redeem the Public Warrants:
| ● | In whole and not in part; |
| ● | At a price of $0.01 per Public Warrant |
| ● | Upon not less than 30 days’ prior written notice of redemption to each Public Warrant holder |
| ● | If, and only if, the reported last sale price of the Class A ordinary shares for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the Public Warrant holders equals or exceeds $18.00 per share (as adjusted). |
If and when the Public Warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
The exercise price and number of ordinary shares issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share split, share dividend, rights issuance, subdivision, reorganization, recapitalization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Public Warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.
In addition, if (x) the Company issues additional ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at an issue price or effective issue price of less than $9.20 per Class A ordinary share (with such issue price or effective issue price to be determined in good faith by the Company’s Board of Directors, and in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the sponsor or such affiliates prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the consummation of a Business Combination, and (z) the volume weighted average trading price of the Company’s Class A ordinary shares during the 20 trading day period starting on the trading day prior to the day on which the Company consummates a Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the Public Warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
The Private Placement Warrants are identical to the Warrants included in the Units sold in the Initial Public Offering except that the Private Placement Warrants: (i) will not be redeemable by the Company; (ii) may be exercised for cash or on a cashless basis, as described in the registration statement relating to the Initial Public Offering, so long as they are held by the Sponsor or any of its permitted transferees and (iii) are (including the ordinary shares issuable upon exercise of the Private Placement Warrants) entitled to registration rights. Additionally, the Sponsor has agreed not to transfer, assign or sell any of the Private Placement Warrants, including the Class A Shares issuable upon exercise of the Private Placement Warrants (except to certain permitted transferees), until 30 days after the completion of the Business Combination.
F-19
NOTE 8. FAIR VALUE MEASUREMENTS
The Company follows the guidance in ASC Topic 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. The Company also follows the guidance in ASC Topic 815 for its Public Warrants and Private Placement Warrants that are re-measured and reported at fair value each reporting period.
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
| Level 1: | Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. |
| Level 2: | Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. |
| Level 3: | Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. |
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2020 and 2019, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
| December 31, 2020 (As Restated) | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Marketable securities held in Trust Account | $ | 289,834,441 | $ | - | $ | - | $ | 289,834,441 | ||||||||
| Total fair value | $ | 289,834,441 | $ | - | $ | - | $ | 289,834,441 | ||||||||
| Liabilities: | ||||||||||||||||
| Public Warrants | $ | 17,681,250 | $ | - | $ | - | $ | 17,681,250 | ||||||||
| Private Placement Warrants | - | - | 17,675,000 | 17,675,000 | ||||||||||||
| Total fair value | $ | 17,681,250 | $ | - | $ | 17,675,000 | $ | 35,356,250 | ||||||||
| December 31, 2019 (As Restated) | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Marketable securities held in Trust Account | $ | 287,830,781 | $ | - | $ | - | $ | 287,830,781 | ||||||||
| Total fair value | $ | 287,830,781 | $ | - | $ | - | $ | 287,830,781 | ||||||||
| Liabilities: | ||||||||||||||||
| Public Warrants | $ | - | $ | - | $ | 18,975,000 | $ | 18,975,000 | ||||||||
| Private Placement Warrants | - | - | 11,987,500 | 11,987,500 | ||||||||||||
| Total fair value | $ | - | $ | - | $ | 30,962,500 | $ | 30,962,500 | ||||||||
Public Warrants and Private Placement Warrants
The Public Warrants and Private Placement Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the balance sheets. The warrant liabilities are measured at fair value at issuance and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the statements of operations.
F-20
Initial Measurement
The Company measured the fair value for the Warrants at issuance using a Monte Carlo simulation model for the Public Warrants and a Black-Scholes option pricing model for the Private Placement Warrants. The Company allocated the proceeds received from the sale of Units (which include one Class A ordinary share and one-half of one Public Warrant), to the Public Warrants based on their fair value at issuance, with the remaining proceeds allocated to Class A ordinary shares . The Warrants were classified at Level 3 at the initial measurement date due to the use of unobservable inputs.
The Company’s use of a Black-Scholes option pricing model and Monte Carlo simulation model required the use of subjective assumptions:
| ● | The risk-free interest rate assumption was based on the U.S. Constant Maturity Treasury yield, which was commensurate with the contractual terms of the Warrants, which expire on the earlier of (i) five years after the completion of the initial Business Combination and (ii) redemption or liquidation. An increase in the risk-free interest rate in isolation, would result in an increase in the fair value measurement of the warrant liabilities and vice versa. |
| ● | The expected term was determined to be 5.5 years, as the Warrants become exercisable on the later of (i) 30 days after the completion of the Business Combination and (ii) 12 months from the IPO date or November 29, 2020. An increase in the expected term, in isolation, would result in an increase in the fair value measurement of the warrant liabilities and vice versa. |
| ● | The expected volatility assumption was based on the implied volatility from a set of comparable publicly-traded warrants as determined based on the size and proximity of other similar business combinations. An increase in expected volatility, in isolation, would result in an increase in the fair value measurement of the warrant liabilities and vice versa. |
| ● | The fair value of the Units, which each consist of one Class A ordinary share and one-half of one Public Warrant, represents the closing price on the measurement date as observed from the ticker ALUS.U. |
Subsequent Measurement
The Warrants are measured at fair value on a recurring basis. As of December 31, 2019, the Public and Private Placement Warrants were classified as Level 3 fair value measurements based on the use of unobservable inputs. However, the subsequent measurement of the Public Warrants as of December 31, 2020 is classified as a Level 1 fair value measurement due to the use of an observable market quote in an active market under the ticker ALUS.WS. As of December 31, 2020, the fair value of the Public Warrants was $17,681,250 based on the closing price of ALUS.WS on that date of $1.23 per Public Warrant. As of December 31, 2020, the Private Placement Warrants remained a Level 3 measurement.
The key inputs into the Black-Scholes option model and Monte Carlo simulation model for the Public Warrants and Private Placement Warrants were as follows on each respective date:
| November 29,
2019 (Initial Measurement) | December 5,
2019 (Initial Measurement) | December 31, 2019 | December 31, 2020 | |||||||||||||
| Risk-free interest rate | 1.64 | % | 1.64 | % | 1.72 | % | 0.43 | % | ||||||||
| Term (years) | 5.5 | 5.5 | 5.5 | 5.5 | ||||||||||||
| Volatility | 20.0 | % | 20.0 | % | 20.0 | % | 26.17 | % | ||||||||
| Dividend yield | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||
| Exercise price | $ | 11.50 | $ | 11.50 | $ | 11.50 | $ | 11.50 | ||||||||
| Share price | $ | 9.37 | (1) | $ | 9.38 | (1) | $ | 9.42 | (1) | $ | 10.06 | |||||
| (1) | As of the respective dates, the Units had not been separated into Class A ordinary shares and Public Warrants. As such, an implied share price was determined using the observed Unit price. |
F-21
The following table presents the changes in the fair value of warrant liabilities through December 31, 2020:
| Public Warrants | Private Placement Warrants | Warrant Liabilities | ||||||||||
| Fair value as of June 13, 2019 | $ | - | $ | - | $ | - | ||||||
| Fair value for warrants issued on November 29, 2019 | 15,875,000 | 10,640,000 | 26,515,000 | |||||||||
| Fair value for warrants issued on December 5, 2019 | 2,400,000 | 997,500 | 3,397,500 | |||||||||
| Change in fair value of warrant liabilities | 700,000 | 350,000 | 1,050,000 | |||||||||
| Fair value as of December 31, 2019 | 18,975,000 | 11,987,500 | 30,962,500 | |||||||||
| Change in fair value of warrant liabilities(1) | (1,293,750 | ) | 5,687,500 | 4,393,750 | ||||||||
| Fair value as of December 31, 2020 | $ | 17,681,250 | $ | 17,675,000 | $ | 35,356,250 | ||||||
| (1) | Due to the use of quoted prices in an active market (Level 1) to measure the fair values of the Public Warrants subsequent to December 31, 2019, Public Warrants with a fair value of $10,781,250 were transferred out of Level 3 for the year ended December 31, 2020. |
NOTE 9. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this review, other than disclosed below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.
On January 29, 2021, the Company entered into a Business Combination Agreement (the “Business Combination Agreement”) with FREYR A/S, a company organized under the laws of Norway (“FREYR”), the Sponsor, in the capacity as the representative for the Alussa shareholders in accordance with the terms and conditions of the Business Combination Agreement, FREYR Battery, a corporation in the form of a public limited liability company organized under the laws of Luxembourg (“Pubco”), Norway Sub 1 AS, a private limited liability company under the laws of Norway (“Norway Merger Sub 1”), Norway Sub 2 AS, a private limited liability company under the laws of Norway (“Norway Merger Sub 2” and together with Norway Merger Sub 1, the “Norway Merger Subs”), Adama Charlie Sub, a Cayman Islands exempted company (“Cayman Merger Sub”), certain shareholders of FREYR named in the Business Combination Agreement (the “Major Shareholders”), and ATS NEXT AS, in the capacity as the representative for the Major Shareholders in accordance with the terms and conditions of the Business Combination Agreement (the “Shareholder Representative”).
Prior to the completion of the transactions contemplated by the Business Combination Agreement, the Norway Merger Subs shall be wholly-owned subsidiaries of the Company.
Pursuant to the terms of the Business Combination Agreement, (a) the Company will merge with and into Cayman Merger Sub, with the Company continuing as the surviving entity (the “Cayman Merger”), (b) the Company will distribute all of its interests in Norway Merger Sub 1 to Pubco, (c) FREYR will merge with and into Norway Merger Sub 2, with Norway Merger Sub 2 continuing as the surviving entity (the “Norway Merger”), (d) Norway Merger Sub 1 will merge with and into Pubco, with Pubco continuing as the surviving entity (the “Cross-Border Merger”), as a result of which, (i) each issued and outstanding security of the Company immediately prior to the effective time of the Cayman Merger shall be exchanged for the right of the holder thereof to receive securities of Pubco in accordance with the Business Combination Agreement (or, in the case of Dissenting Purchaser Shareholders, if any, the right to receive the fair value of such holder’s Dissenting Purchaser Ordinary Shares and such other rights as are granted by the Cayman Companies Law), (ii) each issued and outstanding security of FREYR immediately prior to the effective time of the Norway Merger shall be exchanged for the right of the holder thereof to receive securities of Norway Merger Sub 1 in accordance with the Business Combination Agreement and (iii) each issued and outstanding security of Norway Merger Sub 1 immediately prior to the Cross-Border Effective Time shall be exchanged for the right of the holder to receive securities of Pubco, all upon the terms and subject to the conditions set forth in the Business Combination Agreement and in accordance with the provisions of applicable law.
The Business Combination will be consummated in accordance with the terms and subject to the conditions as further described in the Business Combination Agreement.
On February 9, 2021, the Company issued an unsecured promissory note to the Sponsor pursuant to the Working Capital Loans agreement as described in Note 6, by which the Company may borrow up to $1,500,000 in the aggregate. The note is non-interest bearing and payable on the earlier to occur of (i) the completion of an initial Business Combination or (ii) liquidation. On April 6, 2021, the Company borrowed $1,500,000 under the loan note. On April 30, 2021, the Sponsor elected to convert the loan note into 1,500,000 warrants that are identical to the Private Placement Warrants.
F-22
NOTE 10: RESTATEMENT OF QUARTERLY CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
| As Restated | ||||||||||||
| September 30, 2020 | June 30, 2020 | March 31, 2020 | ||||||||||
| BALANCE SHEETS | ||||||||||||
| ASSETS | ||||||||||||
| Current Assets | ||||||||||||
| Cash | $ | 1,109,632 | $ | 1,399,600 | $ | 1,880,199 | ||||||
| Prepaid expenses and other current assets | 41,817 | 84,716 | 81,894 | |||||||||
| Total Current Assets | 1,151,449 | 1,484,316 | 1,962,093 | |||||||||
| Marketable securities held in Trust Account | 289,791,930 | 289,642,871 | 289,605,262 | |||||||||
| Total Assets | $ | 290,943,379 | $ | 291,127,187 | $ | 291,567,355 | ||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||
| Current liabilities - Accounts payable and accrued expenses | $ | 39,327 | $ | 47,847 | $ | 71,751 | ||||||
| Deferred underwriting fee payable | 10,062,500 | 10,062,500 | 10,062,500 | |||||||||
| Warrant liabilities | 23,606,250 | 21,293,750 | 23,293,749 | |||||||||
| Total Liabilities | 33,708,077 | 31,404,097 | 33,428,000 | |||||||||
| Commitments | ||||||||||||
| Class A ordinary shares subject to possible redemption, 25,024,040, 25,283,856 and 25,129,917 shares at redemption value at September 30, 2020, June 30, 2020 and March 31, 2020, respectively | 252,235,299 | 254,723,083 | 253,139,346 | |||||||||
| Shareholders' Equity | ||||||||||||
| Preference shares, $0.0001 par value; 2,000,000 shares authorized; none issued and outstanding | - | - | - | |||||||||
| Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 3,725,960, 3,466,144, and 3,620,083 shares issued and outstanding (excluding 25,024,040, 25,283,856 and 25,129,917 shares subject to possible redemption) at September 30, 2020, June 30, 2020 and March 31, 2020, respectively | 372 | 346 | 363 | |||||||||
| Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized; 7,187,500 shares issued and outstanding at September 30, 2020, June 30, 2020, and March 31, 2020 | 719 | 719 | 719 | |||||||||
| Additional paid-in capital | 2,487,758 | - | 835,323 | |||||||||
| Retained earnings | 2,511,154 | 4,998,942 | 4,163,604 | |||||||||
| Total Shareholders' Equity | 5,000,003 | 5,000,007 | 5,000,009 | |||||||||
| Total Liabilities and Shareholders' Equity | $ | 290,943,379 | $ | 291,127,187 | $ | 291,567,355 | ||||||
F-23
| As Restated | ||||||||||||||||||||
| September 30, 2020 | June 30, 2020 | March 31, 2020 | ||||||||||||||||||
| Three Months Ended | Nine Months Ended | Three Months Ended | Six Months Ended | Three Months Ended | ||||||||||||||||
| STATEMENTS OF OPERATIONS | ||||||||||||||||||||
| Operating costs | $ | 324,347 | $ | 1,278,065 | $ | 453,873 | $ | 953,718 | $ | 499,845 | ||||||||||
| Loss from operations | (324,347 | ) | (1,278,065 | ) | (453,873 | ) | (953,718 | ) | (499,845 | ) | ||||||||||
| Other income (expense): | ||||||||||||||||||||
| Interest income | 93,440 | 1,944,601 | 958,571 | 1,851,161 | 892,590 | |||||||||||||||
| Unrealized gain on marketable securities held in Trust Account | 55,619 | 16,548 | (920,962 | ) | (39,071 | ) | 881,891 | |||||||||||||
| Change in fair value of warrant liabilities | (2,312,500 | ) | 7,356,250 | 2,000,000 | 9,668,750 | 7,668,750 | ||||||||||||||
| Other income (expense) | (2,163,441 | ) | 9,317,399 | 2,037,609 | 11,480,840 | 9,443,231 | ||||||||||||||
| Net income (loss) | $ | (2,487,788 | ) | $ | 8,039,334 | $ | 1,583,736 | $ | 10,527,122 | $ | 8,943,386 | |||||||||
| Weighted average redeemable ordinary shares outstanding, basic and diluted | 25,283,856 | 24,936,375 | 25,129,917 | 24,760,725 | 24,391,533 | |||||||||||||||
| Basic and diluted net income per redeemable ordinary share | $ | 0.00 | $ | 0.07 | $ | 0.03 | $ | 0.07 | $ | 0.03 | ||||||||||
| Weighted average non-redeemable ordinary shares outstanding, basic and diluted | 10,653,644 | 11,001,125 | 10,807,583 | 11,176,775 | 11,545,967 | |||||||||||||||
| Basic and diluted net income (loss) per non-redeemable ordinary share | $ | (0.24 | ) | $ | 0.58 | $ | 0.07 | $ | 0.80 | $ | 0.71 | |||||||||
| For the Three Months Ended March 31, 2020 (As Restated) | ||||||||||||||||||||||||||||
| Class A Ordinary Shares | Class B Ordinary Shares | Additional Paid-In | (Accumulated Deficit) Retained | Total Shareholders' | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Earnings | Equity | ||||||||||||||||||||||
| STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY | ||||||||||||||||||||||||||||
| Balance - January 1, 2020 | 4,358,467 | $ | 436 | 7,187,500 | $ | 719 | $ | 9,778,630 | $ | (4,779,782 | ) | $ | 5,000,003 | |||||||||||||||
| Class A ordinary shares subject to possible redemption | (738,384 | ) | (73 | ) | - | - | (8,943,307 | ) | - | (8,943,380 | ) | |||||||||||||||||
| Net income | - | - | - | - | - | 8,943,386 | 8,943,386 | |||||||||||||||||||||
| Balance - March 31, 2020 | 3,620,083 | $ | 363 | 7,187,500 | $ | 719 | $ | 835,323 | $ | 4,163,604 | $ | 5,000,009 | ||||||||||||||||
| For the Three Months Ended June 30, 2020 (As Restated) | ||||||||||||||||||||||||||||
| Class A Ordinary Shares | Class B Ordinary Shares | Additional Paid-In | Retained | Total Shareholders' | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Earnings | Equity | ||||||||||||||||||||||
| STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY | ||||||||||||||||||||||||||||
| Balance - March 31, 2020 | 3,620,083 | $ | 363 | 7,187,500 | $ | 719 | $ | 835,323 | $ | 4,163,604 | $ | 5,000,009 | ||||||||||||||||
| Class A ordinary shares subject to possible redemption | (153,939 | ) | (17 | ) | - | - | (835,323 | ) | (748,398 | ) | (1,583,738 | ) | ||||||||||||||||
| Net income | - | - | - | - | - | 1,583,736 | 1,583,736 | |||||||||||||||||||||
| Balance - June 30, 2020 | 3,466,144 | $ | 346 | 7,187,500 | $ | 719 | $ | - | $ | 4,998,942 | $ | 5,000,007 | ||||||||||||||||
F-24
| For the Six Months Ended June 30, 2020 (As Restated) | ||||||||||||||||||||||||||||
| Class A Ordinary Shares | Class B Ordinary Shares | Additional Paid-In | (Accumulated Deficit) Retained | Total Shareholders' | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Earnings | Equity | ||||||||||||||||||||||
| STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY | ||||||||||||||||||||||||||||
| Balance - January 1, 2020 | 4,358,467 | $ | 436 | 7,187,500 | $ | 719 | $ | 9,778,630 | $ | (4,779,782 | ) | $ | 5,000,003 | |||||||||||||||
| Class A ordinary shares subject to possible redemption | (892,323 | ) | (90 | ) | - | - | (9,778,630 | ) | (748,398 | ) | (10,527,118 | ) | ||||||||||||||||
| Net income | - | - | - | - | - | 10,527,122 | 10,527,122 | |||||||||||||||||||||
| Balance - June 30, 2020 | 3,466,144 | $ | 346 | 7,187,500 | $ | 719 | $ | - | $ | 4,998,942 | $ | 5,000,007 | ||||||||||||||||
| For the Three Months Ended September 30, 2020 (As Restated) | ||||||||||||||||||||||||||||
| Class A Ordinary Shares | Class B Ordinary Shares | Additional Paid-In | Retained | Total Shareholders' | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Earnings | Equity | ||||||||||||||||||||||
| STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY | ||||||||||||||||||||||||||||
| Balance - June 30, 2020 | 3,466,144 | $ | 346 | 7,187,500 | $ | 719 | $ | - | $ | 4,998,942 | $ | 5,000,007 | ||||||||||||||||
| Class A ordinary shares subject to possible redemption | 259,816 | 26 | - | - | 2,487,758 | - | 2,487,784 | |||||||||||||||||||||
| Net loss | - | - | - | - | - | (2,487,788 | ) | (2,487,788 | ) | |||||||||||||||||||
| Balance - September 30, 2020 | 3,725,960 | $ | 372 | 7,187,500 | $ | 719 | $ | 2,487,758 | $ | 2,511,154 | $ | 5,000,003 | ||||||||||||||||
| For the Nine Months Ended September 30, 2020 (As Restated) | ||||||||||||||||||||||||||||
| Class A Ordinary Shares | Class B Ordinary Shares | Additional Paid-In | (Accumulated Deficit) Retained | Total Shareholders' | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Earnings | Equity | ||||||||||||||||||||||
| STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY | ||||||||||||||||||||||||||||
| Balance - January 1, 2020 | 4,358,467 | $ | 436 | 7,187,500 | $ | 719 | $ | 9,778,630 | $ | (4,779,782 | ) | $ | 5,000,003 | |||||||||||||||
| Class A ordinary shares subject to possible redemption | (632,507 | ) | (64 | ) | - | - | (7,290,872 | ) | (748,398 | ) | (8,039,334 | ) | ||||||||||||||||
| Net income | - | - | - | - | - | 8,039,334 | 8,039,334 | |||||||||||||||||||||
| Balance - September 30, 2020 | 3,725,960 | $ | 372 | 7,187,500 | $ | 719 | $ | 2,487,758 | $ | 2,511,154 | $ | 5,000,003 | ||||||||||||||||
F-25
| As Restated | ||||||||||||
| Nine
Months Ended September 30, 2020 | Six
Months Ended June 30, 2020 | Three
Months Ended March 31, 2020 | ||||||||||
| STATEMENTS OF CASH FLOWS | ||||||||||||
| Cash Flows from Operating Activities | ||||||||||||
| Net income | $ | 8,039,334 | $ | 10,527,122 | $ | 8,943,386 | ||||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||||||
| Interest earned on marketable securities held in Trust Account | (1,944,601 | ) | (1,851,161 | ) | (892,590 | ) | ||||||
| Unrealized gain on marketable securities held in Trust Account | (16,548 | ) | 39,071 | (881,891 | ) | |||||||
| Change in fair value of warrant liabilities | (7,356,250 | ) | (9,668,750 | ) | (7,668,750 | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Prepaid expenses and other current assets | 71,232 | 28,333 | 31,155 | |||||||||
| Accrued expenses | 34,103 | 42,623 | 66,527 | |||||||||
| Net cash used in operating activities | (1,172,730 | ) | (882,762 | ) | (402,163 | ) | ||||||
| Net Change in Cash | (1,172,730 | ) | (882,762 | ) | (402,163 | ) | ||||||
| Cash - Beginning | 2,282,362 | 2,282,362 | 2,282,362 | |||||||||
| Cash - Ending | $ | 1,109,632 | $ | 1,399,600 | $ | 1,880,199 | ||||||
| Non-Cash Investing and Financing Activities: | ||||||||||||
| Change in fair value of Class A ordinary shares subject to possible redemption | $ | 8,039,334 | $ | 10,527,118 | $ | 8,943,381 | ||||||
| September 30, 2020 | ||||||||||||
| As Originally Reported | Adjustments | As Restated | ||||||||||
| Balance Sheet | ||||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||
| Warrant liabilities | $ | - | $ | 23,606,250 | $ | 23,606,250 | ||||||
| Total Liabilities | 10,101,827 | 23,606,250 | 33,708,077 | |||||||||
| Class A ordinary shares subject to possible redemption, 25,024,040 shares at redemption value at September 30, 2020 | 275,841,548 | (23,606,249 | ) | 252,235,299 | ||||||||
| Shareholders' Equity | ||||||||||||
| Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 3,725,960 shares issued and outstanding (excluding 25,024,040 shares subject to possible redemption) at September 30, 2020 | 138 | 234 | 372 | |||||||||
| Additional paid-in capital | 4,106,355 | (1,618,597 | ) | 2,487,758 | ||||||||
| Retained earnings | 892,792 | 1,618,362 | 2,511,154 | |||||||||
| Total Shareholders' Equity | 5,000,004 | (1 | ) | 5,000,003 | ||||||||
| Total Liabilities and Shareholders' Equity | $ | 290,943,379 | $ | - | $ | 290,943,379 | ||||||
F-26
| June 30, 2020 | ||||||||||||
| As Originally Reported | Adjustments | As Restated | ||||||||||
| Balance Sheet | ||||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||
| Warrant liabilities | $ | - | $ | 21,293,750 | $ | 21,293,750 | ||||||
| Total Liabilities | 10,110,347 | 21,293,750 | 31,404,097 | |||||||||
| Class A ordinary shares subject to possible redemption, 25,283,856 shares at redemption value at June 30, 2020 | 276,016,831 | (21,293,748 | ) | 254,723,083 | ||||||||
| Shareholders' Equity | ||||||||||||
| Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 3,466,144 shares issued and outstanding (excluding 25,283,856 shares subject to possible redemption) at June 30, 2020 | 135 | 211 | 346 | |||||||||
| Additional paid-in capital | 3,931,075 | (3,931,075 | ) | - | ||||||||
| Retained earnings | 1,068,080 | 3,930,862 | 4,998,942 | |||||||||
| Total Shareholders' Equity | 5,000,009 | (2 | ) | 5,000,007 | ||||||||
| Total Liabilities and Shareholders' Equity | $ | 291,127,187 | $ | - | $ | 291,127,187 | ||||||
| March 31, 2020 | ||||||||||||
| As Originally Reported | Adjustments | As Restated | ||||||||||
| Balance Sheet | ||||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||
| Warrant liabilities | $ | - | $ | 23,293,749 | $ | 23,293,749 | ||||||
| Total Liabilities | 10,134,251 | 23,293,749 | 33,428,000 | |||||||||
| Class A ordinary shares subject to possible redemption 25,129,917 shares at redemption value at March 31, 2020 | 276,433,098 | (23,293,752 | ) | 253,139,346 | ||||||||
| Shareholders' Equity | ||||||||||||
| Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 3,620,083 shares issued and outstanding (excluding 25,129,917 shares subject to possible redemption) at March 31, 2020 | 131 | 232 | 363 | |||||||||
| Additional paid-in capital | 3,514,812 | (2,679,489 | ) | 835,323 | ||||||||
| Retained earnings | 1,484,344 | 2,679,260 | 4,163,604 | |||||||||
| Total Shareholders' Equity | 5,000,006 | 3 | 5,000,009 | |||||||||
| Total Liabilities and Shareholders' Equity | $ | 291,567,355 | $ | - | $ | 291,567,355 | ||||||
F-27
| For the Three Months Ended September 30, 2020 | ||||||||||||
| As Originally Reported | Adjustments | As Restated | ||||||||||
| Statement of Operations | ||||||||||||
| Other income (expense): | ||||||||||||
| Change in fair value of warrant liabilities | $ | - | $ | (2,312,500 | ) | $ | (2,312,500 | ) | ||||
| Other income (expense) | 149,059 | (2,312,500 | ) | (2,163,441 | ) | |||||||
| Net loss | $ | (175,288 | ) | $ | (2,312,500 | ) | $ | (2,487,788 | ) | |||
| Weighted average redeemable ordinary shares outstanding, basic and diluted | - | 25,283,856 | 25,283,856 | |||||||||
| Basic and diluted net income per redeemable ordinary share | $ | - | $ | 0.00 | $ | 0.00 | ||||||
| Weighted average non-redeemable ordinary shares outstanding, basic and diluted | 8,540,023 | 2,113,621 | 10,653,644 | |||||||||
| Basic and diluted net loss per non-redeemable ordinary share | $ | (0.04 | ) | $ | (0.20 | ) | $ | (0.24 | ) | |||
| For the Nine Months Ended September 30, 2020 | ||||||||||||
| As Originally Reported | Adjustments | As Restated | ||||||||||
| Statement of Operations | ||||||||||||
| Other income (expense): | ||||||||||||
| Change in fair value of warrant liabilities | $ | - | $ | 7,356,250 | $ | 7,356,250 | ||||||
| Other income (expense) | 1,961,149 | 7,356,250 | 9,317,399 | |||||||||
| Net income | $ | 683,084 | $ | 7,356,250 | $ | 8,039,334 | ||||||
| Weighted average redeemable ordinary shares outstanding, basic and diluted | - | 24,936,375 | 24,936,375 | |||||||||
| Basic and diluted net income per redeemable ordinary share | $ | - | $ | 0.07 | $ | 0.07 | ||||||
| Weighted average non-redeemable ordinary shares outstanding, basic and diluted | 8,496,307 | 2,504,818 | 11,001,125 | |||||||||
| Basic and diluted net income (loss) per non-redeemable ordinary share | $ | (0.14 | ) | $ | 0.72 | $ | 0.58 | |||||
F-28
| For the Three Months Ended June 30, 2020 | ||||||||||||
| As Originally Reported | Adjustments | As Restated | ||||||||||
| Statement of Operations | ||||||||||||
| Other income (expense): | ||||||||||||
| Change in fair value of warrant liabilities | $ | - | $ | 2,000,000 | $ | 2,000,000 | ||||||
| Other income (expense) | 37,609 | 2,000,000 | 2,037,609 | |||||||||
| Net (loss) income | $ | (416,264 | ) | $ | 2,000,000 | $ | 1,583,736 | |||||
| Weighted average redeemable ordinary shares outstanding, basic and diluted | - | 25,129,917 | 25,129,917 | |||||||||
| Basic and diluted net income per redeemable ordinary share | $ | - | $ | 0.03 | $ | 0.03 | ||||||
| Weighted average non-redeemable ordinary shares outstanding, basic and diluted | 8,495,141 | 2,312,442 | 10,807,583 | |||||||||
| Basic and diluted net income (loss) per non-redeemable ordinary share | $ | (0.05 | ) | $ | 0.12 | $ | 0.07 | |||||
| For the Six Months Ended June 30, 2020 | ||||||||||||
| As Originally Reported | Adjustments | As Restated | ||||||||||
| Statement of Operations | ||||||||||||
| Other income (expense): | ||||||||||||
| Change in fair value of warrant liabilities | $ | - | $ | 9,668,750 | $ | 9,668,750 | ||||||
| Other income (expense) | 1,812,090 | 9,668,750 | 11,480,840 | |||||||||
| Net income | $ | 858,372 | $ | 9,668,750 | $ | 10,527,122 | ||||||
| Weighted average redeemable ordinary shares outstanding, basic and diluted | - | 24,760,725 | 24,760,725 | |||||||||
| Basic and diluted net income per redeemable ordinary share | $ | - | $ | 0.07 | $ | 0.07 | ||||||
| Weighted average non-redeemable ordinary shares outstanding, basic and diluted | 8,474,209 | 2,702,566 | 11,176,775 | |||||||||
| Basic and diluted net income (loss) per non-redeemable ordinary share | $ | (0.10 | ) | $ | 0.90 | $ | 0.80 | |||||
F-29
| For the Three Months Ended March 31, 2020 | ||||||||||||
| As Originally Reported | Adjustments | As Restated | ||||||||||
| Statement of Operations | ||||||||||||
| Other income (expense): | ||||||||||||
| Change in fair value of warrant liabilities | $ | - | $ | 7,668,750 | $ | 7,668,750 | ||||||
| Other income (expense) | 1,774,481 | 7,668,750 | 9,443,231 | |||||||||
| Net income | $ | 1,274,636 | $ | 7,668,750 | $ | 8,943,386 | ||||||
| Weighted average redeemable ordinary shares outstanding, basic and diluted | - | 24,391,533 | 24,391,533 | |||||||||
| Basic and diluted net income per redeemable ordinary share | $ | - | $ | 0.03 | $ | 0.03 | ||||||
| Weighted average non-redeemable ordinary shares outstanding, basic and diluted | 8,453,276 | 3,092,691 | 11,545,967 | |||||||||
| Basic and diluted net income (loss) per non-redeemable ordinary share | $ | (0.05 | ) | $ | 0.76 | $ | 0.71 | |||||
| For
the Nine Months Ended September 30, 2020 | ||||||||||||
| As Originally Reported | Adjustments | As Restated | ||||||||||
| Statement of Cash Flows | ||||||||||||
| Cash Flows from Operating Activities: | ||||||||||||
| Net income | $ | 683,084 | $ | 7,356,250 | $ | 8,039,334 | ||||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||||||
| Change in fair value of warrant liabilities | - | (7,356,250 | ) | (7,356,250 | ) | |||||||
| Net cash used in operating activities | (1,172,730 | ) | - | (1,172,730 | ) | |||||||
| Non-Cash Investing and Financing Activities: | ||||||||||||
| Change in fair value of Class A ordinary shares subject to possible redemption | $ | 683,090 | $ | 7,356,244 | $ | 8,039,334 | ||||||
F-30
| For
the Six Months Ended June 30, 2020 | ||||||||||||
| As Originally Reported | Adjustments | As Restated | ||||||||||
| Statement of Cash Flows | ||||||||||||
| Cash Flows from Operating Activities: | ||||||||||||
| Net income | $ | 858,372 | $ | 9,668,750 | $ | 10,527,122 | ||||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||||||
| Change in fair value of warrant liabilities | - | (9,668,750 | ) | (9,668,750 | ) | |||||||
| Net cash used in operating activities | (882,762 | ) | - | (882,762 | ) | |||||||
| Non-Cash Investing and Financing Activities: | ||||||||||||
| Change in fair value of Class A ordinary shares subject to possible redemption | $ | 858,373 | $ | 9,668,745 | $ | 10,527,118 | ||||||
| For
the Three Months Ended March 31, 2020 | ||||||||||||
| As Originally Reported | Adjustments | As Restated | ||||||||||
| Statement of Cash Flows | ||||||||||||
| Cash Flows from Operating Activities: | ||||||||||||
| Net income | $ | 1,274,636 | $ | 7,668,750 | $ | 8,943,386 | ||||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||||||
| Change in fair value of warrant liabilities | - | (7,668,750 | ) | (7,668,750 | ) | |||||||
| Net cash used in operating activities | (402,163 | ) | - | (402,163 | ) | |||||||
| Non-Cash Investing and Financing Activities: | ||||||||||||
| Change in fair value of Class A ordinary shares subject to possible redemption | $ | 1,274,640 | $ | 7,668,741 | $ | 8,943,381 | ||||||
F-31
| * | Filed herewith |
| ** | Furnished herewith |
| (1) | Incorporated by reference to the Company’s Form 8-K, filed with the SEC on November 29, 2019. |
| (2) | Incorporated by reference to the Company’s Form S-1, filed with the SEC on December 18, 2017. |
| (3) | Incorporated by reference to the Company’s Form S-1/A, filed with the SEC on November 19, 2019. |
| (4) | Incorporated by reference to the Company’s Form 8-K/A, filed with the SEC on January 29, 2021. |
| (5) | Incorporated by reference to the Company’s Original Form 10-K, filed with the SEC on March 1, 2021. |
Not applicable.
43
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| May 5, 2021 | Alussa Energy Acquisition Corp. | |
| By: | /s/ Daniel Barcelo | |
| Name: | Daniel Barcelo | |
| Title: | Chief Executive Officer, President and Director | |
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Name | Position | Date | ||
/s/ Daniel Barcelo |
Chief Executive Officer, President and Director | May 5, 2021 | ||
| Daniel Barcelo | (Principal Executive Officer) | |||
| /s/ Sarah James | Chief Financial Officer | May 5, 2021 | ||
| Sarah James | (Principal Financial & Accounting Officer) | |||
/s/ James Musselman |
Chairman of the Board and Director | May 5, 2021 | ||
| James Musselman | ||||
/s/ W. Richard Anderson |
Director | May 5, 2021 | ||
| W. Richard Anderson | ||||
/s/ Germán Curá |
Director | May 5, 2021 | ||
| Germán Curá | ||||
/s/ Maurice Dijols |
Director | May 5, 2021 | ||
| Maurice Dijols | ||||
| /s/ John Wu | Director | May 5, 2021 | ||
| John Wu | ||||
| /s/ Abdel Badwi | Director | May 5, 2021 | ||
| Abdel Badwi |
44