Common Stock

3 Months Ended

Mar. 31, 2022

Stockholders' Equity Note [Abstract]

Common Stock

(10) Common Stock

Shares Authorized and Outstanding

As of March 31, 2022, the Company had authorized a total of 310,000,000 shares for issuance, with 300,000,000 shares designated as common stock and 10,000,000 shares designated as preferred stock.

On Closing Date, all outstanding shares of Legacy Quanergy common stock and convertible preferred stock (except Series B and Series C convertible preferred stock) were cancelled and converted into shares of Quanergy using a conversion ratio of 3.8799 in accordance with the terms of the Merger Agreement. Series B and Series C were cancelled and converted using a ratio of 11.5423 and 14.3118, respectively, in accordance with the terms of the Merger Agreement. There were 83,412,347 shares of common stock outstanding immediately after the consummation of the Business Combination, excluding contingent shares.

	February 8, 2022
	(Closing Date)
	Preferred Stock Shares		Exchange Ratio		Common Stock Shares
Series Seed Convertible Preferred Stock (Legacy Quanergy)		2,231,248		3.8799		8,657,100
Series Seed-2 Convertible Preferred Stock (Legacy Quanergy)		495,417		3.8799		1,922,184
Series A Convertible Preferred Stock (Legacy Quanergy)		3,233,871		3.8799		12,547,237
Series A Plus Convertible Preferred Stock (Legacy Quanergy)		790,500		3.8799		3,067,096
Series B Convertible Preferred Stock (Legacy Quanergy)		778,839		11.5423		8,989,588
Series C Convertible Preferred Stock (Legacy Quanergy)		165,237		14.3118		2,364,817
Total		7,695,112				37,548,022

GEM Agreement

In December 2021, CCAC and GEM entered into the GEM Agreement for the Company’s liquidity needs post Business Combination. Under the GEM Agreement, the Company is entitled to draw down up to $125 million of gross proceeds, over a three year period in exchange for shares of the Company’s common stock. The shares of common stock issued in exchange for funding will be determined at a price equal to 90% of the average closing price of the Company’s common stock over a 30-day period.

In exchange for GEM’s commitment to fund, the Company issued to GEM warrants to purchase common stock, which warrants were fair valued at $4.0 million at issuance, and agreed to pay $2.5 million in cash or in shares for the GEMS commitment fee by the first anniversary of the Closing Date. The Company has recorded $2.5 million as deferred offering costs for the commitment fee, recorded in other long-term assets on the condensed consolidated balance sheet at March 31, 2022, and the $2.5 million commitment fee payable within one year is recorded in other current liabilities on the condensed consolidated balance sheet at March 31, 2022.

The Company accounts for the GEM Agreement as an equity-classified purchase put option. The Company determined that the fair value of the purchase put option approximates the fair value of the GEM warrant issued of approximately $4.0 million. Accordingly, the purchase put option and the common stock warrants are each reflected within equity in connection with the retrospective recapitalization as of December 31, 2021.

Common Stock Warrants

As of March 31, 2022, the Company had the following common stock warrants outstanding to purchase shares of the Company’s common stock:

			Exercise
	Shares		Price		Expiration
Public Warrants		13,799,988	$	11.50	February 2027
Private Placement Warrants		7,520,000		11.50	February 2027
GEM Warrants		3,397,923		10.00	February 2025
2023 Notes Warrants		6,917,883		0.01	March 2025
Sensata Warrants		2,500,000		0.01	June 2026
Total		34,135,794

Public and Private Placement Warrants

On February 13, 2021, CCAC consummated the initial public offering (“IPO”) of 27,600,000 units (the “Units”), including the full exercise by the underwriters of their over-allotment option. Each Unit included one share of Class A Common Stock and one half of one warrant (the “Public Warrants”). Simultaneously with the closing of the IPO, CCAC consummated the sale of 7,520,000 warrants (the “Private Placement Warrants”) in a private placement to CITIC Capital Acquisition LLC (the “Sponsor”). As of March 31, 2022, the Company had 13,799,988 Public Warrants and 7,520,000 Private Placement Warrants outstanding. Each warrant entitles the registered holder to purchase one share of common stock at a price of $11.50 per share. The Private Placement Warrants, which the Company assumed as part of the Business Combination, are recorded as warrant liabilities.

The Company estimated the fair value of Private Placement Warrants exercisable for common stock measured at fair value on a recurring basis at the respective dates using the Black-Scholes option valuation model. The inputs are based on the estimated fair value of the underlying Common Stock at the valuation measurement date, the remaining contractual term of the warrant, the risk-free interest rates, the expected dividends, and the expected volatility of the price of the Company’s underlying stock. These estimates, especially the expected volatility, are highly judgmental and could differ materially in the future.

The key inputs into the Black Scholes Option Pricing Model for the Private Placement Warrants were as follows:

Input	March 31, 2022			February 8, 2022
Risk-free interest rate		2.42	%		1.81	%
Expected term (years)		4.86			5
Expected volatility		61	%		20.9	%
Dividend yield		0	%		0	%
Exercise price	$	11.50		$	11.50
Price of underlying common stock	$	1.84		$	7.05

The following table provides a reconciliation of changes in fair value of the beginning and ending balances for the liabilities classified as Level 3:

	Warrant
Fair value at February 8, 2022	$	3,248
Change in fair value of Private Placement Warrants		(1,439	)
Fair value at March 31, 2022	$	1,808

Each whole Warrant entitles the registered holder to purchase one share of common stock at a price of $11.50 per share, at any time commencing on March 10, 2022, provided that the Company has an effective registration statement under the Securities Act covering the shares of the common stock issuable upon exercise of the Warrants and a current prospectus relating to them is available. The Warrants expire on February 8, 2027, or earlier upon redemption or liquidation. The Company may redeem the Public Warrants when the last reported sales price of the Company’s common stock 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 warrant holders (the “Reference Value”) exceeds $18.00.

If the Reference Value exceeds $18.00, Public Warrants are redeemable at $0.01 per warrant, in whole and upon a minimum of 30 days prior written notice. The Company’s Board of Directors could also elect to require all warrant holders to exercise the Public Warrants on a cashless basis. The number of shares to be issued for the cashless exercise would be equal to the quotient obtained by dividing (x) the product of the number of shares underlying the warrants, multiplied by the excess of the fair market value over the warrant price by (y) the fair market value. The fair market value is the average reporting closing price of the shares for the ten trading days ending on the third day prior to the date on which the notice of redemption was send to warrant holders.

The Private Placement Warrants have terms and provisions that are identical to those of the Public Warrants. However, the Private Placement Warrants are not redeemable by the Company as long as they are held by a Sponsor or its permitted transferees. If the Private Placement Warrants are held by holders other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by us in all redemption scenarios and exercisable by the holders on the same basis as the Public Warrants.

GEM Warrants

In December 2021, the Company issued the GEM Warrant, pursuant to the GEM Agreement, with a 36-month term to purchase 3,397,923 shares of Common Stock at a strike price per share equal to $10.00, to GEM Yield Bahamas Limited.

2023 Notes Warrants

During fiscal year 2020, the Company issued warrants to purchase 3,527,241 shares of the Company’s common stock with an exercise price of $0.01 per share in conjunction with the issuance of $16.1 million convertible promissory notes (the “2023 Initial Notes”). These warrants expire in March 2025.

The Company allocated the proceeds from the issuance of the 2023 Initial Notes between the convertible notes and the common stock warrants on a relative fair value basis, with approximately $7.2 million allocated to the common stock warrants, included within additional paid-in capital on the consolidated balance sheets. The warrants are not remeasured in future periods as they meet the conditions for equity classification. See “Note 12 – Borrowing Arrangements” for additional details on the 2023 Initial Notes.

In February 2021, the Company issued warrants to purchase 6,298,306 shares of common stock in conjunction with the issuance of $48.7 million in convertible promissory notes (the “Extension Notes”). These Extension Notes have similar terms to the 2023 Initial Notes (the “2023 Initial Notes”, together with the “Extension Notes”, referred to as the “2023 Notes”).

These warrants are exercisable for shares of common stock at $0.01 per share and expire in March 2025. The Company allocated the proceeds from the issuance of the Extension Notes between the convertible notes and the common stock warrants on a relative fair value basis, with approximately $22.0 million allocated to the common stock warrants, included within additional paid-in capital on the consolidated balance sheets. The warrants are not remeasured in future periods as they meet the conditions for equity classification. See “Note 12 – Borrowing Arrangements” for additional details on the Extension Notes.

Sensata Warrants

In June 2021, the Company issued warrants to purchase shares of common stock of the Company in exchange for services to be provided under the Sensata Collaboration Agreement. These warrants are exercisable for shares of common stock at $0.01 per share and expire in June 2026. Upon the close of the Business Combination, the Sensata Warrants are exercisable for an aggregate of 2,500,000 shares of common stock. The Company recorded $17.6 million within additional paid-in capital for issuance of the warrants, with $8.8 million recorded in prepaid expenses and other current assets, and $8.8 million in other long-term assets. The Company will recognize expense on the Sensata Warrants as services are provided. Refer to “Note 18 – Related Party Transactions” for additional details.