UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended
For the transition period from to
Commission
File No.
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices, including zip code)
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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.
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 such files).
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 the definitions 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 | |
| ☒ | ||
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 is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes
As
of August 9, 2023, there were
ATHENA CONSUMER ACQUISITION CORP.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
i
PART I – FINANCIAL INFORMATION
ITEM 1. INTERIM FINANCIAL STATEMENTS (UNAUDITED)
ATHENA CONSUMER ACQUISITION CORP.
CONDENSED BALANCE SHEETS
| June 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses and other assets | ||||||||
| Prepaid income taxes | — | |||||||
| Total current assets | ||||||||
| Cash and Investments held in Trust Account | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES, COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Income tax payable | — | |||||||
| Promissory note - related party, net of discount | ||||||||
| Franchise tax payable | ||||||||
| Total current liabilities | ||||||||
| Derivative liability – Forward Purchase Agreement | ||||||||
| Deferred underwriting fee payable | ||||||||
| TOTAL LIABILITIES | ||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION | ||||||||
| Class A common stock subject to possible redemption, $ | ||||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred stock, $ | ||||||||
| Class A common stock; $ | ||||||||
| Class B common stock; $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS’ DEFICIT | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES, COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
1
ATHENA CONSUMER ACQUISITION CORP.
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
| For the Three Months Ended June 30, | For
the Six Months Ended | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| General and administrative | $ | $ | $ | $ | ||||||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OTHER INCOME (EXPENSES) | ||||||||||||||||
| Income on investments held in Trust Account | ||||||||||||||||
| Other income | ||||||||||||||||
| Finance costs – discount on debt issuance | ( | ) | ( | ) | ||||||||||||
| Gain on termination of Derivative liability – Forward Purchase Agreement | ||||||||||||||||
| Total other income, net | ||||||||||||||||
| (LOSS) INCOME BEFORE PROVISION FOR INCOME TAXES | ( | ) | ( | ) | ( | ) | ||||||||||
| Provision for from income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net (loss) income | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| Weighted average shares outstanding of Class A common stock | ||||||||||||||||
| $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||
| Weighted average shares outstanding of Class B common stock | ||||||||||||||||
| $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
2
ATHENA CONSUMER ACQUISITION CORP.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023
| Common stock | Additional | Total | ||||||||||||||||||||||||||
| Class A | Class B | Paid-in | Accumulated | Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Remeasurement of Class A common stock subject to possible redemption | ( | ) | ( | ) | ||||||||||||||||||||||||
| Class B common stock to be transferred to fund promissory note | ||||||||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||
| Balance, March 31, 2023 (unaudited) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Remeasurement of Class A common stock subject to possible redemption | ( | ) | ( | ) | ||||||||||||||||||||||||
| Class B common stock to be transferred to fund promissory note | ||||||||||||||||||||||||||||
| Class A common stock to be transferred to fund promissory note | ||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, June 30, 2023 (unaudited) | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022
| Common stock | Additional | Total | ||||||||||||||||||||||||||
| Class A | Class B | Paid-in | Accumulated | Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, March 31, 2022 (unaudited) | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, June 30, 2022 (unaudited) | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
ATHENA CONSUMER ACQUISITION CORP.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
| For the Six Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Finance costs – discount on debt issuance | ||||||||
| Income on investments held in Trust Account | ( | ) | ( | ) | ||||
| Gain on termination of Derivative liability – Forward Purchase Agreement | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other assets | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Income tax and Franchise tax payable | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Principal deposited in Trust Account | ( | ) | ||||||
| Withdrawal from Trust Account for payment of income and franchise taxes | ||||||||
| Net cash provided by investing activities | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from Sponsor loans | ||||||||
| Net cash provided by financing activities | ||||||||
| NET CHANGE IN CASH | ( | ) | ( | ) | ||||
| CASH, BEGINNING OF PERIOD | ||||||||
| CASH, END OF PERIOD | $ | $ | ||||||
| Supplemental cash flow information | ||||||||
| Cash paid during the period for: | ||||||||
| Income Taxes | $ | $ | ||||||
| Supplemental disclosure of noncash activities: | ||||||||
| Class B Common Stock to be transferred to fund promissory note | $ | $ | ||||||
| Class A Common Stock to be transferred to fund promissory note | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
4
ATHENA CONSUMER ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2023 (UNAUDITED)
NOTE 1 — DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Athena Consumer Acquisition Corp. (the “Company”) was incorporated in Delaware on June 4, 2021. The Company is a blank check company formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities (a “Business Combination”).
The Company is not limited to a particular industry or geographic region for purposes of consummating 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.
As of June 30, 2023, the Company had not commenced any operations. All activity through June 30, 2023, relates to the Company’s formation and Initial Public Offering (“IPO”), which is described below and, since the offering, the search for a prospective initial Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income earned on investments from the proceeds derived from the IPO.
The
registration statement for the Company’s IPO was declared effective on October 19, 2021. On October 22, 2021, the Company consummated
the IPO and overallotment option of
Simultaneously
with the closing of the IPO, the Company consummated the sale of
Offering
costs for the IPO and the exercise of the underwriters’ over-allotment option amounted to $
Following
the closing of the IPO and exercise of the over-allotment, $
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO and the sale
of the Private Placement Units, 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 complete a Business Combination successfully. The Company
must complete one or more initial Business Combinations having an aggregate fair market value of at least
5
The
Company will provide the holders of the outstanding Public Shares (the “Public Stockholders”) with the opportunity to redeem
all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting
called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder
approval of a Business Combination or conduct a tender offer will be made by the Company. The Public Stockholders will be entitled to
redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $
All
of the Public Shares contain a redemption feature which allows for the redemption of such Public Shares in connection with the Company’s
liquidation, if there is a stockholder vote or tender offer in connection with the Company’s Business Combination and in connection
with the Company’s Amended and Restated Certificate of Incorporation (as amended on December 21, 2022 and July 19, 2023, the “Charter”).
In accordance with Accounting Standards Codification (“ASC”) 480-10-S99, redemption provisions not solely within the control
of a company require Class A common stock subject to redemption to be classified outside of permanent equity. Given that the Public Shares
will be issued with other freestanding instruments (i.e., public warrants), the initial carrying value of Class A common stock classified
as temporary equity will be the allocated proceeds determined in accordance with ASC 470-20. The Class A common stock are subject to
ASC 480-10-S99. If it is probable that the equity instrument will become redeemable, the Company has the option to either (i) accrete
changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument
will become redeemable, if later) to the earliest redemption date of the instrument or (ii) recognize changes in the redemption value
immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting
period. The Company has elected to recognize the changes immediately. While redemptions cannot cause the Company’s net tangible
assets to fall below $
Redemptions of the Company’s Public Shares may be subject to the satisfaction of conditions, including minimum cash conditions, pursuant to an agreement relating to the Company’s Business Combination. If the Company seeks stockholder approval of the Business Combination, the Company will proceed with a Business Combination if a majority of the shares voted are voted in favor of the Business Combination, or such other vote as required by law or stock exchange rule. If a stockholder vote is not required by applicable law or stock exchange listing requirements and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its Charter, conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (the “SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by applicable law or stock exchange listing requirements, or the Company decides to obtain stockholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the IPO in favor of approving a Business Combination. Additionally, each Public Stockholder may elect to redeem their Public Shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction.
Notwithstanding
the foregoing, the Charter provides that a Public Stockholder, together with any affiliate of such stockholder or any other person with
whom such stockholder is acting in concert or as a “group” (as defined under Section 13 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
The
Company’s Sponsor, officers and directors (the “Initial Stockholders”) have agreed not to propose an amendment to the
Charter that would affect the substance or timing of the Company’s obligation to redeem
6
If
the Company is unable to complete a Business Combination by August 22, 2023, as extended on July 20, 2023 (see Note 9), 22 months from
the closing of the IPO, as may be further extended pursuant to the Company’s Charter (“Combination Period”), 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 earned on the funds held in the Trust Account and not previously released to us to pay the Company’s
franchise and income taxes (less up to $
On
December 16, 2022,
On December 21, 2022, the Company held the Extension Meeting. At the Extension Meeting, the Company’s stockholders approved the Extension Amendment, providing the Company with the right to extend the Deadline Date up to six times for an additional one month each time, from January 22, 2023 (the date which is 15 months from the closing date of the Company’s IPO) to up to July 22, 2023 (the date which is 21 months from the closing date of the IPO).
On
January 17, 2023, the Board determined to implement a first Extension and to extend the Deadline Date for an additional month to February
22, 2023. On the same date, in connection with the Extension and pursuant to an unsecured promissory note the Company and the Sponsor
entered into on January 17, 2023 (the “Extension Note”), the Board delivered to the Sponsor a written request to draw down
$
On
January 30, 2023, the Company received notifications via phone calls from the staff of the New York Stock Exchange (the “NYSE”)
that it had determined that the Company was not in compliance with the requirements of Section
On February 9, 2023, the Company issued a press release announcing that it would transfer its listing to the NYSE American LLC (the “NYSE American”). The Company received written confirmation that it had been cleared to file an initial listing application with the NYSE American on February 6, 2023, and received the final approval for listing from the staff of the NYSE American on February 9, 2023. In connection with listing on the NYSE American, the Company would voluntarily delist from the New York Stock Exchange. Following the transfer of its listing, the Company intends to continue to file the same periodic reports and other information it currently files with the Securities and Exchange Commission. On February 14, 2023, the Company voluntarily delisted its securities from the NYSE and the Company’s securities commenced trading on the NYSE American under the same symbols.
7
On
February 17, 2023, the Board determined to implement a second Extension to allow additional time for the Company to complete its initial
business combination. In connection with the second Extension and pursuant to the Extension Note, the Board delivered to the Sponsor
a written request to draw down $
On
March 20, 2023, the Board determined to implement a third Extension to allow additional time for the Company to complete its initial
business combination. In connection with the third Extension and pursuant to the Extension Note, the Board delivered to the Sponsor a
written request to draw down $
On
April 18, 2023, the Board determined to implement a fourth Extension to allow additional time for the Company to complete its initial
business combination. In connection with the fourth Extension and pursuant to the Extension Note, the Board delivered to the Sponsor
a written request to draw down $
On April 20, 2023, the Company issued a press release announcing that its Board has elected to extend the Deadline Date from April 22, 2023 for an additional month to May 22, 2023, the fourth of six potential one-month extensions of the Deadline Date available to the Company.
On
May 19, 2023, the Board determined to implement a fifth Extension to allow additional time for the Company to complete its initial business
combination. In connection with the fifth Extension and pursuant to the Extension Note, the Board delivered to the Sponsor a written
request to draw down $
On May 22, 2023, the Company issued a press release announcing that its Board has elected to extend the Deadline Date from May 22, 2023 for an additional month to June 22, 2023, the fifth of six potential one-month extensions of the Deadline Date available to the Company.
On
June 20, 2023, the Board determined to implement a sixth Extension to allow additional time for the Company to complete its initial business
combination. In connection with the sixth Extension and pursuant to the Extension Note, the Board delivered to the Sponsor a written
request to draw down $
On June 21, 2023, the Company issued a press release announcing that its Board has elected to extend the Deadline Date from June 22, 2023 for an additional month to July 22, 2023, the last of six potential one-month extensions of the Deadline Date available to the Company.
8
On
July 19, 2023, the Company held a special meeting of its stockholders (the “Second Extension Meeting”). At the Second Extension
Meeting, the Company’s stockholders approved (1) a proposal to amend the Company’s amended and restated certificate of incorporation,
as amended on December 21, 2022 (the proposed amendment, the “Second Extension Amendment”) to provide the Company with the
right to extend the Deadline Date up to three times for an additional one month each time (the “Second Extension”), from
July 22, 2023 (the date which is 21 months from the closing date of the IPO) to up to October 22, 2023 (the date which is 24 months from
the closing date of the IPO) (the “Second Extension Amendment Proposal”) and (2) a proposal to amend the Company’s
amended and restated certificate of incorporation, as amended on December 21, 2022 (the “Redemption Limitation Amendment”,
together with the Second Extension Amendment, the “Charter Amendment”) to eliminate
A
total of
In addition, on July 19, 2023, the Company filed the Charter Amendment with the Secretary of State of the State of Delaware (Note 9).
On
July 20, 2023, the Sponsor initiated the wire of the $
The
Initial Stockholders have agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete
a Business Combination within the Combination Period. However, if the Initial Stockholders should acquire Public Shares in or after the
IPO, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails
to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to its deferred
underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within
the Combination Period, and, in such event, such amounts will be included with the other funds held in the Trust Account that will be
available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of
the residual assets remaining available for distribution (including Trust Account assets) will be only $
9
Risks and Uncertainties
In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) as a pandemic which continues to spread throughout the United States and the world. As of the date the unaudited condensed financial statements were issued, there was considerable uncertainty around the expected duration of this pandemic. Management continues to evaluate the impact of the COVID-19 pandemic, and the Company has concluded that while it is reasonably possible that COVID-19 could have a negative effect on identifying a target company for a Business Combination, the specific impact is not readily determinable as of the date of the unaudited condensed financial statements. The unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy is not determinable as of the date of these unaudited condensed financial statements. The specific impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these unaudited condensed financial statements.
On
August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (the “IR Act”), which, among other things,
generally imposes a
Whether and to what extent the Company would be subject to the Excise Tax on a redemption of shares of Class A common stock or other stock issued by the Company would depend on a number of factors, including (i) whether the redemption is treated as a repurchase of stock for purposes of the Excise Tax, (ii) the fair market value of the redemption treated as a repurchase of stock in connection with the initial Business Combination, an extension or otherwise, (iii) the structure of the initial Business Combination, (iv) the nature and amount of any “PIPE” or other equity issuances (whether in connection with the initial Business Combination or otherwise) issued within the same taxable year of a redemption treated as a repurchase of stock and (v) the content of forthcoming regulations and other guidance from the Treasury. As noted above, the Excise Tax would be payable by the Company and not by the redeeming holder, and only limited guidance on the mechanics of any required reporting and payment of the Excise Tax on which taxpayers may rely have been issued to date. The imposition of the Excise Tax could cause a reduction in the cash available on hand to complete the initial Business Combination or for effecting redemptions and may affect the Company’s ability to complete the initial Business Combination, fund future operations or make distributions to stockholders. In addition, the Excise Tax could cause a reduction in the per share amount payable to the public stockholders in the event the Company liquidates the Trust Account due to a failure to complete the initial Business Combination within the requisite time frame.
Going Concern and Capital Resources
As of June 30, 2023, the Company had $
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, stockholders, 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.
10
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 to it on commercially acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time, which is considered to be one year from the issuance date of the unaudited condensed financial statements. These unaudited condensed 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.
In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the Company has until August 22, 2023, as may be further extended pursuant to the Company’s Charter, to consummate the proposed Business Combination. It is uncertain that the Company will be able to consummate the proposed Business Combination by this time. If a Business Combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of the Company. Management has determined that the mandatory liquidation, should a Business Combination not occur, and potential subsequent dissolution and liquidity condition, raises substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after the Deadline Date. The Company intends to complete the proposed Business Combination before the mandatory liquidation date. However, there can be no assurance that the Company will be able to consummate any Business Combination by the Deadline Date.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial statements of the Company are presented in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, as filed with the SEC on March 30, 2023. The interim results for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any future interim periods.
Emerging Growth Company
The Company is an emerging growth company as defined in Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), which 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 an emerging growth 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 an 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 unaudited condensed financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
11
Use of Estimates
The preparation of unaudited condensed financial statements in conformity with U.S. GAAP requires the Company’s 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 unaudited condensed financial statements and the reported amounts of expenses during the reporting periods. Actual results could differ from those estimates. Making estimates requires management to exercise significant judgment. Such estimates may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates. 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 unaudited condensed financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Actual results could differ from those estimates.
Cash and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company had $
Investments Held in Trust Account
The Company’s portfolio of investments held in the Trust Account is comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities are included in income on investments held in Trust Account in the accompanying unaudited condensed statements of operations. The estimated fair values of investments held in the Trust Account are determined using available market information.
As
of June 30, 2023 and December 31, 2022, the Company had $
Offering Costs associated with the Initial Public Offering
Offering
costs consist principally of legal, accounting, underwriting fees and other costs directly related to the IPO. Offering costs are allocated
to the separable financial instruments issued in the IPO based on a relative fair value basis, compared to total proceeds received. Total
offering costs amounted to $
Concentration of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution,
which, at times, may exceed the Federal Deposit Insurance Corporation coverage limit of $
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheets, primarily due to their short-term nature.
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Income Taxes
The Company accounts for income taxes under ASC 740, “Income Taxes.” ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the unaudited condensed financial statements 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. As of June 30, 2023 and December 31, 2022, the Company’s deferred tax asset had a full valuation allowance recorded against it.
ASC
740-270-25-2 requires that an annual effective tax rate be determined and such annual effective rate applied to year to date income in
interim periods under ASC 740-270-30-5. The Company’s effective tax rate was
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 statements 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. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
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 June 30, 2023 and December 31, 2022. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
Derivative Liabilities
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. The Company has determined forward purchase agreements are derivative instruments.
Class A Common Stock Subject to Possible Redemption
The
Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480, “Distinguishing
Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption (if any) are classified as a liability
instrument and are measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that features
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) is classified as temporary equity. At all other times, Class A common stock is classified
as stockholders’ equity. The Company’s Class A common stock sold in the IPO and over-allotment features certain redemption
rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly,
as of June 30, 2023 and December 31, 2022,
Under ASC 480-10-S99, the Company has elected to recognize changes in redemption value immediately as they occur and adjust the carrying value of the Class A common stock subject to possible redemption to equal the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security. Immediately upon the closing of the IPO, the Company recognized the accretion from initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit.
Immediately upon the closing of the IPO and over-allotment, the Company recognized the accretion from the initial book value to redemption amount value. This method would view the end of the reporting period as if it were also the redemption date of the security. Immediately upon the closing of the IPO, the Company recognized the accretion from initial book value to redemption amount value. The change in the carrying value of redeemable shares of Class A common stock resulted in charges against additional paid-in capital and accumulated deficit.
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As of June 30, 2023 and December 31, 2022, the shares of Class A common stock subject to possible redemption reflected on the balance sheets are reconciled on the following table:
| Gross proceeds | $ | |||
| Less: | ||||
| Fair value of Public Warrants at issuance | ( | ) | ||
| Class A shares issuance costs | ( | ) | ||
| Add: | ||||
| Accretion of carrying value to redemption value | ||||
| Class A common stock subject to possible redemption at December 31, 2021 | ||||
| Less: Redemption of common stock subject to possible redemption | ( | ) | ||
| Plus: Accretion of carrying value to redemption value | ||||
| Class A common stock subject to possible redemption, December 31, 2022 | ||||
| Add: Accretion of carrying value to redemption value | ||||
| Class A common stock subject to possible redemption, June 30, 2023 | $ |
Net (Loss) Income per Common Share
The Company has two classes of shares, which are referred to as Class A common stock and Class B common stock (the “Founder Shares”). Earnings and losses are shared pro rata between the two classes of shares. On June 30, 2023 and 2022, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into shares of common stock and then share in the earnings of the Company. As a result, diluted (loss) income per common share is the same as basic (loss) income per common share for the period presented. The table below presents a reconciliation of the numerator and denominator used to compute basic and diluted net (loss) income per share for each class of stock.
For the Three Months Ended June 30, | ||||||||||||||||
| 2023 | 2022 | |||||||||||||||
Class A common stock | Class B common stock | Class A common stock | Class B common stock | |||||||||||||
| Basic and diluted net loss per share: | ||||||||||||||||
| Numerator: | ||||||||||||||||
| Allocation of net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Denominator: | ||||||||||||||||
| Weighted average shares outstanding | ||||||||||||||||
| $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
For the Six Months Ended June 30, | ||||||||||||||||
| 2023 | 2022 | |||||||||||||||
Class A common stock | Class B common stock | Class A common stock | Class B common stock | |||||||||||||
| Basic and diluted net income (loss) per share: | ||||||||||||||||
| Numerator: | ||||||||||||||||
| Allocation of net income (loss) | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
| Denominator: | ||||||||||||||||
| Weighted average shares outstanding | ||||||||||||||||
| $ | $ | $ | ( | ) | $ | ( | ) | |||||||||
Accounting for Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the instruments’ specific terms and applicable authoritative guidance in ASC 480 and ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the instruments are free standing financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the instruments meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to the Company’s own common shares and whether the instrument holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, was conducted at the time of warrant issuance and as of each subsequent period end date while the instruments are outstanding. Management has concluded that the Public Warrants and Private Placement Warrants (defined below) issued pursuant to the warrant agreements qualify for equity accounting treatment.
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Recent Accounting Pronouncements
The Company’s management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s unaudited condensed financial statements.
NOTE 3. INITIAL PUBLIC OFFERING AND OVER-ALLOTMENT
Pursuant
to the IPO, and including the underwriters’ exercise of their over-allotment option, the Company sold
NOTE 4. PRIVATE PLACEMENT
On
October 22, 2021, simultaneously with the consummation of the IPO and the underwriters’ exercise of their over-allotment option,
the Company consummated the issuance and sale (“Private Placement”) of
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On
June 4, 2021, the Sponsor was issued
Subject to limited exceptions, each holder of Founder Shares has agreed that, during the period from July 28, 2022 through the earlier to occur of (the “Termination Date”) (a) the closing of the e.GO Transaction (as such term is defined in Note 6) (the “Closing”), (b) such date and time as the Business Combination Agreement (as such term is defined in Note 6) is validly terminated in accordance with its terms and (c) the mutual written agreement of the parties to that certain Sponsor Letter Agreement (as such term is defined in Note 6), except as contemplated by such Sponsor Letter Agreement and the Business Combination Agreement, it shall not, and shall cause its affiliates not to, without the prior written consent of e.GO and the Company (which consent may be given or withheld by e.GO and the Company in their sole discretion), (i) offer for sale, sell (including short sales), transfer, tender, pledge, convert, encumber, assign or otherwise dispose of, directly or indirectly (including by gift, merger, tendering into any tender offer or exchange offer or otherwise) (collectively, a “Transfer”), or enter into any contract, option, derivative, hedging or other agreement or arrangement or understanding (including any profit-sharing arrangement) with respect to, or consent to, a Transfer of, any or all of its Founder Shares; (ii) grant any proxies or powers of attorney with respect to any or all of its Founder Shares held by it (except in connection with voting by proxy at a meeting of shareholders of the Company); or (iii) permit to exist any mortgage, pledge, security interest, encumbrance, lien, license or sub-license, charge or other similar encumbrance or interest (including, in the case of any equity securities, any voting, transfer or similar restrictions) (a “Lien”) with respect to any or all of its Founder Shares, other than those created by the Sponsor Letter Agreement; provided that any Lien with respect to the Founder Shares that would not prevent, impair or delay its ability to comply with the terms and conditions of the Sponsor Letter Agreement shall be permitted and will not be deemed to violate the restrictions contained above.
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Additionally,
subject to limited exceptions, each holder of Founder Shares has agreed that for a period from the Closing through the date that is 180
days thereafter, it shall not, and shall cause its affiliates not to, Transfer, or enter into any contract, option, derivative, hedging
or other agreement or arrangement or understanding (including any profit-sharing arrangement) with respect to, or consent to, a Transfer
of, any or all of its TopCo Covered Shares. “TopCo Covered Shares” means (i) with respect to the Sponsor,
Related Party Loans
On
June 4, 2021, the Sponsor agreed to loan the Company an aggregate of up to $
In
order to finance transaction costs in connection with a 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”). If the Company completes a Business Combination, the Company will repay the Working Capital Loans out of the proceeds
of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the
Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust
Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.
The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s
discretion, up to $
On
January 17, 2023, the Company issued an unsecured promissory note to the Sponsor with a principal amount equal to $
In
connection with funding the Extension Note, the Sponsor entered into an agreement with a member of the Sponsor. Pursuant to such agreement,
the Sponsor agreed to assign and transfer to such member a ratio of
On
May 19, 2023, the Sponsor entered into an agreement with a third party investor. Pursuant to such agreement, the Sponsor will transfer
one share of Class A common stock of the Company for each dollar funded upon the closing of a Business Combination. As of June 30, 2023,
such third party investor loaned $
Support Services
The
Company intends to pay an entity affiliated with the Sponsor a fee of approximately $
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NOTE 6. COMMITMENTS AND CONTINGENCIES
Registration Rights
The holders of Founder Shares, Private Placement Units and warrants that may be issued upon conversion of Working Capital Loans, if any, will be entitled to registration rights (in the case of the Founder Shares, only after conversion of such shares to shares of Class A common stock) pursuant to a registration rights agreement to be signed on or before the date of the prospectus for the IPO. These holders will be entitled to certain demand and “piggyback” registration rights. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until the termination of the applicable lock-up period for the securities to be registered. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The
Company granted the underwriters a 45-day option from the final prospectus relating to the IPO to purchase up to
The
underwriters were paid a cash underwriting discount of $
On
December 8, 2022, Citi, as representative of the underwriters, agreed to formally waive the deferred underwriting commissions of $
Business Combination Agreement
On
July 28, 2022, the Company entered into a Business Combination Agreement (as amended by that certain first amendment to the Business
Combination Agreement on September 29, 2022, and as it may be further amended, supplemented or otherwise modified from time to time,
the “Business Combination Agreement”), by and among the Company, Next.e.GO Mobile SE, a German company (“e.GO”),
Next.e.GO B.V., a Dutch private limited liability company and a wholly owned subsidiary of e.GO (“TopCo”), and Time is Now
Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of TopCo (“Merger Sub”), for the Company’s initial
Business Combination (the “e.GO Transaction”). Pursuant to the Business Combination Agreement, among other things, (i) TopCo
will issue to the e.GO’s equity securities (the “e.GO Shareholders”) and convertible loan lenders of e.GO (the “Lenders”)
an aggregate of up to
17
On
June 29, 2023, the Company entered into a second amendment to the Business Combination Agreement (the “Second Amendment to the
Business Combination Agreement”), by and between the Company and e.GO, pursuant to which, among other things, the following terms
of the Business Combination Agreement were amended:
On July 18, 2023, the Company entered into a third amendment to the Business Combination Agreement (the “Third Amendment to the Business Combination Agreement”), by and between the Company and e.GO, pursuant to which the treatment of the Company’s Class B common stock was amended that, in connection with the closing of the Business Combination, each issued and outstanding share of the Company’s Class B common stock will be converted into TopCo ordinary shares on a one-for-one basis, instead of 1:1.05, as had been the case under the Second Amendment to the Business Combination Agreement. The one-for-one conversion ratio aligns with what is currently in the Company’s Charter (Note 9).
Sponsor Letter Agreement
On
July 28, 2022, the Company, the Sponsor, e.GO, TopCo and certain of the Company’s officers and directors (the “Athena Insiders”)
entered into a Sponsor Letter Agreement, which was amended on September 29, 2022 (as it may be further amended, supplemented or otherwise
modified from time to time, the “Sponsor Letter Agreement”), pursuant to which, among other things, the Sponsor and the Athena
Insiders have agreed to (i) vote all of its, his or her shares of the Company’s Class A common stock to approve and adopt the Business
Combination Agreement and the e.GO Transaction, (ii) waive its, his or her redemption rights with respect to its, his or her shares of
the Company’s Class A common stock in connection with the e.GO Transaction, (iii) not transfer any of its, his or her shares of
the Company’s Class A common stock until the Closing or termination of the Business Combination Agreement (except in limited circumstances),
(iv) not transfer (a) with respect to the Sponsor,
Pursuant
to the Sponsor Letter Agreement, TopCo will indemnify the Sponsor from and against certain liabilities relating to the e.GO Transaction
for a period of six years after the Closing and subject to an aggregate maximum indemnity of $
Forward Purchase Agreement
On September 29, 2022, the Company, TopCo, e.GO and Vellar Opportunity Fund SPV LLC – Series 3 (“Vellar”) entered into a Forward Purchase Agreement (the “Forward Purchase Agreement”) for an OTC equity prepaid share forward transaction (the “Forward Purchase Transaction”). Vellar agreed to waive any redemption rights with respect to any shares of the Company and shares of TopCo following the Closing of the e.GO Transaction (collectively, the “Shares”) in connection with the e.GO Transaction.
Pursuant
to the terms of the Forward Purchase Agreement, Vellar intended, but was not obligated, to purchase through a broker in the open market
from Public Stockholders who redeemed or indicated an intention to redeem, or from the Company, up to an aggregate amount of
On March 3, 2023, the Forward Purchase Agreement was terminated.
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Subscription Agreement
In
connection with funding the Extension Note, the Sponsor entered into an agreement with a member of the Sponsor. Pursuant to such agreement,
the Sponsor agreed to assign and transfer to such member a ratio of
On May 19, 2023, the Sponsor entered into an agreement with a third-party
investor. Pursuant to such agreement, the Sponsor will transfer
NOTE 7. STOCKHOLDERS’ DEFICIT
Class
A Common Stock — The Company is authorized to issue
Pursuant to the e.GO Transaction, if approved by the Company’s stockholders, at Closing, each issued and outstanding share of the Company’s Class A common stock will be automatically cancelled and extinguished and converted into one share the Surviving Company Common Stock.
Class
B Common Stock — The Company is authorized to issue
Holders of Class A common stock and Class B common stock will vote together as a single class on all other matters submitted to a vote of stockholders except as required by law.
The
Company’s Charter provides that the shares of Class B common stock will automatically convert into shares of Class A common stock
at the time of the initial Business Combination on a one-for-one basis, subject to adjustment. In the case that additional shares of
Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts offered in the IPO and related
to the closing of the initial Business Combination, the ratio at which shares of Class B common stock shall convert into shares of Class
A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such
adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion
of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, approximately
Pursuant
to the e.GO Transaction, if approved by the Company’s stockholders, at Closing, each issued and outstanding shares of Class B common
stock will be automatically cancelled and extinguished and converted into a number of shares of Surviving Company Common Stock calculated
as the sum of (x) one plus (y) the lower of (a) the total amount funded under the Bridge Financing divided by $
Preferred
Stock — The Company is authorized to issue
Warrants
— As of June 30, 2023 and December 31, 2022, the Company has
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The Company will not be obligated to deliver any shares of common stock pursuant to the exercise of a Warrant and will have no obligation to settle such Warrant exercise unless a registration statement under the Securities Act with respect to the shares of common stock underlying the Warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No Warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their Warrants, unless the issuance of the 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 agreed that as soon as practicable, but in no event later than 15 business days, after the closing of a Business Combination, it will use its best efforts to file, and within 60 business days following a Business Combination to have declared effective, a registration statement covering the offer and sale of the shares of common stock issuable upon exercise of the Warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the Warrants in accordance with the provisions of the warrant agreements. No Warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the offer and sale of the shares of common stock issuable upon exercise of the Warrants and a current prospectus relating to such shares of common stock. Notwithstanding the foregoing, if a registration statement covering the offer and sale of the shares of common stock issuable upon exercise of the Warrants is not effective within a specified period following the consummation of a Business Combination, Warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise Warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their Warrants on a cashless basis.
Once the Warrants become exercisable, the Company may redeem the Warrants:
| ● | in whole and not in part; | |
| ● | at a price of $0.01 per Warrant; | |
| ● | upon not less than 30 days’ prior written notice of redemption, to each Warrant holder; and | |
| ● | if, and only if, the reported last sale price of the shares of common stock equals or exceeds $18.00 per share (as adjusted for share subdivisions, share consolidations, share capitalizations, rights issuances, 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 the Company sends the notice of redemption to the Warrant holders. |
If and when the Warrants become redeemable by the Company, the Company may not exercise its redemption right if the issuance of shares upon exercise of the Warrants is not exempt from registration or qualification under applicable state blue sky laws or the Company is unable to effect such registration or qualification.
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If the Company calls the Warrants for redemption, management will have the option to require all holders that wish to exercise the Warrants to do so on a “cashless basis,” as described in the Public Warrant agreement and Private Warrant agreement. The exercise price and number of shares of common stock issuable upon exercise of the Warrants may be adjusted in certain circumstances including in the event of a share dividend, or recapitalization, reorganization, merger or consolidation. However, except as described below, the Warrants will not be adjusted for issuances of shares of common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the 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 Warrants will not receive any of such funds with respect to their Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such Warrants. Accordingly, the Warrants may expire worthless.
The Private Placement Warrants are Identical to the Public Warrants underlying the Units being sold in the IPO, except that the Private Placement Warrants and the shares of common stock issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or saleable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be exercisable at the election of the holder on a “cashless basis”.
Neither the Placement Warrants nor the Public Warrants contain any provision that change dependent upon the characteristics of the holder of the Warrant.
NOTE 8. FAIR VALUE MEASUREMENTS
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 assessment of the assumptions that market participants would use in pricing the asset or liability. |
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At June 30, 2023 and December 31, 2022, the assets held in the Trust Account were held in treasury funds. All of the Company’s investments held in the Trust Account are classified as trading securities.
The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at June 30, 2023 and December 31, 2022 and indicate the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
| Quoted Prices in | Significant Other | Significant Other | ||||||||||||
| Active Markets | Observable Inputs | Unobservable Inputs | ||||||||||||
| June 30, 2023 | Level | (Level 1) | (Level 2) | (Level 3) | ||||||||||
| Assets: | ||||||||||||||
| Cash and investments held in Trust Account | 1 | $ | $ | $ | ||||||||||
| Quoted Prices in | Significant Other | Significant Other | ||||||||||||
| Active Markets | Observable Inputs | Unobservable Inputs | ||||||||||||
| December 31, 2022 | Level | (Level 1) | (Level 2) | (Level 3) | ||||||||||
| Assets: | ||||||||||||||
| Cash and investments held in Trust Account | 1 | $ | $ | $ | ||||||||||
| Liabilities: | ||||||||||||||
| Derivative liability – Forward Purchase Agreement | 3 | $ | $ | $ | ||||||||||
The Company utilizes a Put Model Option to value its forward purchase agreement at each reporting period, with changes in fair value recognized in the statements of operations. The estimated fair value of the forward purchase agreement liabilities is determined using Level 3 inputs. Inherent in put options pricing model are assumptions related to expected share-price volatility, expected life and risk-free interest rate. The Company estimates the volatility of its ordinary shares based on historical volatility that matches the expected remaining life of the forward purchase agreement. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the forward purchase agreement. The expected life of the forward purchase agreement is assumed to be equivalent to their remaining contractual term. The forward purchase agreement was terminated on March 9, 2023.
For the three and six months ended June 30, 2023 and for the year ended December 31, 2022, there were no transfers between Levels 1, 2 or 3.
The following table provides quantitative information regarding Level 3 fair value measurements:
| December 31, 2022 | ||||
| Risk-free interest rate | % | |||
| Term | ||||
| Expected volatility | % | |||
| Exercise price | $ | |||
| Stock Price | $ | |||
| Probability of transaction | % | |||
The following table presents the changes in the fair value of Forward Purchase Agreement:
| Forward | ||||
| Purchase | ||||
| Agreement | ||||
| Fair value as of September 29, 2022 | $ | |||
| Change in valuation inputs or other assumptions | ||||
| Fair value as of December 31, 2022 | ||||
| Gain on termination of Derivative liability – Forward Purchase Agreement | ( | ) | ||
| Fair value as of June 30, 2023 | $ | |||
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NOTE 9. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheets date up to the date that the unaudited condensed financial statements were issued. Based upon this review, other than stated below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed financial statements.
Amendment to Working Capital Note
On
July 7, 2023, the Company and Sponsor entered into an amendment and restatement to the Working Capital Note in order to increase the
aggregate principal amount of borrowings to an aggregate principal amount of up to $
Third Amendment to the Business Combination Agreement
On July 18, 2023, the Company entered into the Third Amendment to the Business Combination Agreement, pursuant to which the treatment of the Company’s Class B common stock was amended that, in connection with the closing of the Business Combination, each issued and outstanding share of the Company’s Class B common stock will be converted into TopCo ordinary shares on a one-for-one basis, instead of 1:1.05, as had been the case under the Second Amendment to the Business Combination Agreement. The one-for-one conversion ratio aligns with what is currently in the Company’s Charter.
Special Meeting of Stockholders; Amendments of Articles of Incorporation; Redemptions
On July 19, 2023, the Company held the Second Extension Meeting. At the Second Extension Meeting, the Company’s stockholders approved (1) the Second Extension Amendment Proposal and (2) the Redemption Limitation Amendment Proposal.
In
connection with the Second Extension Meeting, a total of
In addition, on July 19, 2023, the Company filed the Charter Amendment with the Secretary of State of the State of Delaware.
Second Extension Note
In
connection with the Sponsor’s Contribution for the Second Extension, on July 20, 2023, the Company issued an unsecured promissory
note to the Sponsor with a principal amount equal to $
On
July 20, 2023, the Sponsor initiated the wire of the $
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References in this report (this “Quarterly Report”) to “we,” “us” or the “Company” refer to Athena Consumer Acquisition Corp. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Athena Consumer Acquisition Sponsor LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s final prospectus filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
Athena Consumer Acquisition Corp. was incorporated in Delaware on June 4, 2021. The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, reorganization or other similar business transaction with one or more businesses (a “Business Combination”).
On July 28, 2022, the Company entered into a Business Combination Agreement (as amended by that certain first amendment to the Business Combination Agreement on September 29, 2022, and as it may be further amended, supplemented or otherwise modified from time to time, the “Business Combination Agreement”), by and among the Company, Next.e.GO Mobile SE, a German company (“e.GO”), Next.e.GO B.V., a Dutch private limited liability company and a wholly-owned subsidiary of e.GO (“TopCo”), and Time is Now Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of TopCo (“Merger Sub”), for the Company’s initial Business Combination (the “e.GO Transaction”). Pursuant to the Business Combination Agreement, among other things, (i) TopCo will issue to the e.GO Shareholders and convertible loan lenders of e.GO (the “Lenders”) an aggregate of up to 79,019,608 TopCo Ordinary Shares, representing aggregate consideration to the e.GO Shareholders of $800,000,000, 30,000,000 of such shares will be unvested and subject to an earn-out (the “Earn-Out Shares”), in exchange for the contribution by the e.GO Shareholders of all of the paid up no-par value shares of e.GO to TopCo and the convertible loans held by the Lenders, assuming that all e.GO Shareholders and Lender participate in the exchange; (ii) each issued and outstanding share of the Company’s Class A common stock will be automatically cancelled and extinguished and converted into one share of common stock, par value $0.0001 per share, of the Surviving Company (the “Surviving Company Common Stock”), (iii) each issued and outstanding share of the Company’s Class B common stock will be automatically cancelled and extinguished and converted into a number of shares of Surviving Company Common Stock calculated as the sum of (x) one plus (y) the lower of (a) the total amount funded under the credit agreement, dated September 29, 2022, between e.GO, Brucke Funding LLC, Brucke Agent LLC and certain lenders party thereto (the “Bridge Financing”), divided by $15,000,000 and multiplied with one-fifth and (b) one-fifth; (iv) TopCo will change its legal form from a Dutch private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) to a Dutch public limited liability company (naamloze vennootschap); (v) Merger Sub will merge with and into the Company, with the Company being the Surviving Company and, after giving effect to the merger, becoming a direct, wholly-owned subsidiary of TopCo; (vi) each share of the Company’s common stock will be converted into one share of the Surviving Company Common Stock; (vii) immediately thereafter, each of the resulting shares of Surviving Company Common Stock will be automatically exchanged for one TopCo Ordinary Share; and (viii) each outstanding warrant to purchase a share of the Company’s Class A common stock will be converted into a warrant to purchase a TopCo Ordinary Share on the same contractual terms and conditions as were in effect with respect to each warrant prior to the e.GO Transaction.
We expect to continue to incur significant costs in the pursuit of our Business Combination plans. We cannot assure you that our plans to complete the e.GO Transaction or any Business Combination will be successful.
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Results of Operations
As of June 30, 2023, the Company had not commenced any operations. All activity through June 30, 2023 relates to the Company’s formation and the initial public offering (the “IPO”). The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the IPO placed in the Trust Account (defined below). Most of the Company’s expenses for the three and six months ended June 30, 2023 are related to the transaction described in Note 6 of the financial statements.
For the three months ended June 30, 2023, we had a net loss of $696,030, which consists of operating expenses of $722,338, finance costs – discount on debt issuance of $182,708 and provision for income taxes of $49,740, offset by income on investments held in Trust Account of $258,756.
For the three months ended June 30, 2022, we had a net loss of $851,328, which consisted of operating expenses of $1,100,134 driven by general and administrative expenses of $1,092,849 and franchise tax of $7,285 along with dividend income on investments held in Trust Account of $316,795 and interest income of $14.
For the six months ended June 30, 2023, we had a net income of $142,057, which consists of income on investments held in Trust Account of $502,125 and gain on termination of derivative liability forward purchase agreement of $1,730,000, offset by operating expenses of $1,811,236, finance costs – discount on debt issuance of $182,708 and provision for income taxes of $96,124.
For the six months ended June 30, 2022, we had a net loss of $1,073,642, which consisted of operating expenses of $1,354,849 driven by general and administrative expenses of $1,297,564 and franchise tax of $57,285 along with dividend income on investments held in Trust Account of $340,419 and interest income of $46.
Going Concern and Capital Resources
The Registration Statement on Form S-1, as amended (the “Registration Statement”), for the Company’s IPO was declared effective on October 19, 2021. On October 22, 2021, the Company consummated the IPO of 20,000,000 units (“Units”). Each Unit consists of one share of Class A common stock (the “Public Shares”) and one-half of a redeemable warrant (each, a “Public Warrant”). The Units were sold at a price of $10.00 per Unit, generating gross proceeds of $200,000,000, which is discussed in Note 3.
Simultaneously with the closing of the IPO, the Company consummated the sale of 1,000,000 units (“Private Placement Units”) at a price of $10.00 per Private Placement Unit in a private placement to the Company’s sponsor, Athena Consumer Acquisition Sponsor LLC (the “Sponsor”) generating gross proceeds of $10,000,000, which is described in Note 4.
Simultaneously with the closing of the IPO, the Company consummated the closing of the sale of 3,000,000 additional Units upon receiving notice of the underwriter’s election to fully exercise its over-allotment option (“Overallotment Units”), generating additional gross proceeds of $30,000,000. Simultaneously with the exercise of the over-allotment, the Company consummated the Private Placement of an additional 60,000 Private Placement Units to the Sponsor, generating gross proceeds of $600,000.
Following the closing of the IPO and exercise of the over-allotment, $234,600,000 ($10.20 per Unit) from the net proceeds of the sale of the Units in the IPO and the Private Placement Units was placed in a trust account (“Trust Account”) and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account.
For the six months ended June 30, 2023, $1,472,362 of cash was used in operating activities. Net income of $142,057 was offset by a non-cash charge for the gain on termination of derivative liability forward purchase agreement of $1,730,000, interest earned on investments held in Trust Account of $502,125 and finance costs – discount on debt issuance of $182,708. Changes in operating assets and liabilities provided $434,998 of cash from operating activities.
For the six months ended June 30, 2022, $443,253 of cash was used in operating activities. Net loss of $1,073,642 was offset by interest earned on investments held in Trust Account of $340,419. Changes in operating assets and liabilities provided $970,808 of cash from operating activities.
We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less taxes payable), to complete our Business Combination. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our 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.
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In order to finance transaction costs in connection with a 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”). If the Company completes a Business Combination, the Company will repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1.5 million of such Working Capital Loans may be convertible into units of the post Business Combination entity at a price of $10.00 per unit. The units would be identical to the Private Placement Units. As of June 30, 2023, there was approximately $995,362, net of $224,738 discount outstanding under the Working Capital Loans.
In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the Company has until August 22, 2023, as may be further extended pursuant to the Company’s Charter. to consummate the proposed Business Combination. It is uncertain that the Company will be able to consummate the proposed Business Combination by this time. If a Business Combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of the Company. Management has determined that the mandatory liquidation, should a Business Combination not occur, and potential subsequent dissolution and liquidity condition, raises substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after the Deadline Date. The Company intends to complete the proposed Business Combination before the mandatory liquidation date. However, there can be no assurance that the Company will be able to consummate any Business Combination by the Deadline Date.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of June 30, 2023. We do not participate in transactions that create relationships with 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. The underwriter was entitled to deferred underwriting commissions of $8,650,000 consisting of the $8,050,000 deferred portion and the $600,000 cash discount agreed to be deferred until Business Combination. The deferred fee would become payable to the underwriter from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement. On December 8, 2022, Citigroup Global Markets Inc. (“Citi"), as representative of the underwriters, agreed to formally waive the deferred underwriting commissions of $8,650,000 in full, pursuant to a deferred fee waiver letter agreement between Citi and the Company only upon the successful Business Combination under the e.GO Transaction.
The Company also agreed, commencing on October 19, 2021 through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay an affiliate of the Sponsor a total of $10,000 per month for office space and administrative support services.
Critical Accounting Policies and Estimates
The preparation of unaudited condensed 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:
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Use of Estimates
The preparation of unaudited condensed financial statements in conformity with U.S. GAAP requires the Company’s 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 unaudited condensed financial statements and the reported amounts of expenses during the reporting periods. Actual results could differ from those estimates. Making estimates requires management to exercise significant judgment. Such estimates may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates. 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 unaudited condensed financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Actual results could differ from those estimates.
Derivative Liabilities
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. The Company has determined forward purchase agreements are derivative instruments.
Income Taxes
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 statements 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. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
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 June 30, 2023 and December 31, 2022. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
Common Stock Subject to Possible Redemption
We account for our common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”). Common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features 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) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. Our common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ equity section of our balance sheets. We recognize changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date of the security. Immediately upon the closing of the IPO, we recognized the accretion from initial book value to redemption amount value. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid in capital and accumulated deficit.
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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 unaudited condensed financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a “smaller reporting company,” we are not required to provide the information called for by this Item.
Item 4. Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2023. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were effective.
Changes in Internal Control Over Financial Reporting
During the most recently completed fiscal quarter, there has 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.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in our annual report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 30, 2023. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our annual report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 30, 2023, except as listed below.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The securities sold in the IPO were registered under the Securities Act on a registration statement on Form S-1 (Registration No. 333-258050). The Registration Statement for the Company’s IPO was declared effective on October 19, 2021. On October 22, 2021, the Company consummated the IPO of 20,000,000 Units. Each Unit consists of one Public Shares and one-half of a Public Warrant. The Units were sold at a price of $10.00 per Unit, generating gross proceeds of $200,000,000, which is discussed in Note 3.
Simultaneously with the closing of the IPO, the Company consummated the sale of 1,000,000 Private Placement Units at a price of $10.00 per Private Placement Unit in a private placement to the Company’s Sponsor, generating gross proceeds of $10,000,000. Offering costs for the IPO and the exercise of the underwriters’ over-allotment option amounted to $13,116,818, consisting of $4,000,000 of underwriting fees, $8,650,000 of deferred underwriting fees payable (which are held in the Trust Account) and $466,818 of other costs. As described in Note 6, the $8,650,000 of deferred underwriting fee payable is contingent upon the consummation of a Business Combination, subject to the terms of the underwriting agreement.
Simultaneously with the closing of the IPO, the Company consummated the closing of the sale of 3,000,000 Overallotment Units upon receiving notice of the underwriter’s election to fully exercise its over-allotment option, generating additional gross proceeds of $30,000,000. Simultaneously with the exercise of the over-allotment, the Company consummated the Private Placement of an additional 60,000 Private Placement Units to the Sponsor, generating gross proceeds of $600,000.
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Following the closing of the IPO and exercise of the over-allotment, $234,600,000 from the net proceeds of the sale of the Units in the IPO and the Private Placement Units, including the amounts generated from the exercise of the underwriters’ over-allotment option, was placed in the Trust Account and was invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account.
We paid a total of $4,000,000 underwriting discounts and commissions and $466,818 for other offering costs and expenses related to the IPO. In addition, the underwriters agreed to defer $8,650,000 in underwriting discounts and commissions. On December 8, 2002, Citi, as representative of the underwriters, agreed to formally waive the deferred underwriting commissions of $8,650,000 in full, pursuant to a deferred fee waiver letter agreement between Citi and the Company.
For a description of the use of the proceeds generated in our IPO, see Part I, Item 2 of this Quarterly Report.
The Company’s Charter provided the Company the right to extend the Deadline Date six times for an additional one month each time, from January 22, 2023, the initial Deadline Date, to up to July 22, 2023. The Company’s Board had implemented the six Extensions and extended the Deadline Date to July 22, 2023. On July 19, 2023, the Company held the Second Extension Meeting. At the Second Extension Meeting, the Company’s stockholders approved (1) the Second Extension Amendment Proposal to provide the Company with the right to extend the Deadline Date up to three times for an additional one month each time, from July 22, 2023 to up to October 22, 2023 and (2) the Redemption Limitation Amendment Proposal. In connection with the Second Extension Meeting, a total of 1,082,596 shares of the Company’s Class A common stock were presented for redemption. As a result, there is approximately $10.48 million remaining in the Trust Account as of July 28, 2023 following redemptions. On July 20, 2023, the Sponsor initiated the wire of the $60,000 to the Company’s Trust Account in connection with the extension of the Deadline Date to August 22, 2023 following the Second Extension Meeting. On July 21, 2023, Continental Stock Transfer & Trust Company, the Company’s trustee, confirmed the receipt of the $60,000 Second Contribution. The Deadline Date has been amended to August 22, 2023.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
| * | Filed herewith. |
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ATHENA CONSUMER ACQUISITION CORP. | ||
| Date: August 9, 2023 | By: | /s/ Angelina Smith |
| Name: | Angelina Smith | |
| Title: | Chief Financial Officer (Principal Financial and Accounting Officer) | |
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