References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Alussa Energy Acquisition Corp. References to our
"management" or our "management team" refer to our officers and directors, and
references to the "Sponsor" refer to Alussa Energy 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 of 1933, as amended (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 Annual Report on Form 10-K 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
We are a blank check company incorporated in the Cayman Islands on June 13, 2019
formed for the purpose of effecting a merger, share exchange, asset acquisition,
stock purchase, reorganization or similar business combination with one or more
businesses (a "Business Combination"). We intend to effectuate our Business
Combination using cash derived from the proceeds of the initial public offering,
our shares, debt or a combination of cash, shares and debt.
The issuance of additional ordinary shares in a Business Combination:
? may significantly dilute the equity interest of investors, which dilution
would increase if the anti-dilution provisions in the Class B ordinary shares
resulted in the issuance of Class A ordinary shares on a greater than
one-to-one basis upon conversion of the Class B ordinary shares;
? may subordinate the rights of holders of ordinary shares if preference shares
are issued with rights senior to those afforded our ordinary shares;
? could cause a change of control if a substantial number of our ordinary shares
are issued, which may affect, among other things, our ability to use our net
operating loss carry forwards, if any, and could result in the resignation or
removal of our present officers and directors;
? may have the effect of delaying or preventing a change of control of us by
diluting the share ownership or voting rights of a person seeking to obtain
control of us; and
? may adversely affect prevailing market prices for our Class A ordinary shares
and/or warrants.
Similarly, if we issue debt securities, it could result in:
? default and foreclosure on our assets if our operating revenues after a
Business Combination are insufficient to repay our debt obligations;
? acceleration of our obligations to repay the indebtedness even if we make all
principal and interest payments when due if we breach certain covenants that
require the maintenance of certain financial ratios or reserves without a
waiver or renegotiation of that covenant;
? our immediate payment of all principal and accrued interest, if any, if the
debt security is payable on demand;
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? our inability to obtain necessary additional financing if the debt security
contains covenants restricting our ability to obtain such financing while the
debt security is outstanding;
? our inability to pay dividends on our ordinary shares;
? using a substantial portion of our cash flow to pay principal and interest on
our debt, which will reduce the funds available for dividends on our ordinary
shares if declared, expenses, capital expenditures, acquisitions and other
general corporate purposes;
? limitations on our flexibility in planning for and reacting to changes in our
business and in the industry in which we operate;
? increased vulnerability to adverse changes in general economic, industry and
competitive conditions and adverse changes in government regulation; and
? limitations on our ability to borrow additional amounts for expenses, capital
expenditures, acquisitions, debt service requirements, execution of our
strategy and other purposes and other disadvantages compared to our
competitors who have less debt.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete a Business
Combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from inception to March 31, 2021 were organizational
activities and those necessary to prepare for our initial public offering (the
"Initial Public Offering"), described below, and, after our Initial Public
Offering, identifying a target company for a Business Combination. We do not
expect to generate any operating revenues until after completion of our Business
Combination. We generate non-operating income in the form of interest income on
marketable securities held in our trust account (the "Trust Account"). We are
incurring expenses as a result of being a public company (for legal, financial
reporting, accounting and auditing compliance), as well as due diligence
expenses.
For the three months ended March 31, 2021, we had a net loss of $30,918,750,
which consisted of operating costs of $5,329,281, offset by interest income on
marketable securities held in the Trust Account of $4,281 and an increase in the
fair value of warrant liabilities of $25,593,750.
For the three months ended March 31, 2020, we had net income of $8,943,386,
which consisted of operating costs of $499,845, offset by interest income on
marketable securities held in the Trust Account of $892,590, an unrealized gain
on marketable securities held in the Trust Account of $881,891 and a decrease in
the fair value of warrant liabilities of $7,668,750.
Liquidity and Capital Resources
On November 29, 2019, we consummated the Initial Public Offering of 25,000,000
Units, at a price of $10.00 per Unit, generating gross proceeds of $250,000,000.
Simultaneously with the closing of the Initial Public Offering, we consummated
the sale of 8,000,000 Private Placement Warrants to the Sponsor at a price of
$1.00 per warrant, generating gross proceeds of $8,000,000.
On December 5, 2019, as a result of the underwriters' election to fully exercise
their over-allotment option, the Company consummated the sale of an additional
3,750,000 Units, at a price of $10.00 per Unit, and the sale of an additional
750,000 Private Placement Warrants, at a price of $1.00 per Private Placement
Warrant, generating total gross proceeds of $38,250,000.
Following the Initial Public Offering, the exercise of the over-allotment option
and the sale of the Private Placement Warrants, a total of $287,500,000 was
placed in the Trust Account. We incurred $16,326,240 in transaction costs,
including $5,750,000 of underwriting fees, $10,062,500 of deferred underwriting
fees and $513,740 of other costs.
For the three months ended March 31, 2021, cash used in operating activities was
$586,958. Net loss of $30,918,750 and interest earned on marketable securities
held in the Trust Account of $4,281 were offset by an increase in fair value of
the warrant liabilities of $25,593,750. Changes in operating assets and
liabilities provided $4,742,323 of cash from operating activities.
For the three months ended March 31, 2020, cash used in operating activities was
$402,163. Net income of $8,943,386 was offset by interest earned on marketable
securities held in the Trust Account of $892,590, an unrealized gain on
marketable securities held in the Trust Account of $881,891 and a decrease in
fair value of the warrant liabilities of $7,668,750. Changes in operating assets
and liabilities provided $97,682 of cash from operating activities.
As of March 31, 2021, we had marketable securities held in the Trust Account of
$289,838,722. We may withdraw interest to pay our income taxes, if any. We
intend to use substantially all of the funds held in the Trust Account,
including any amounts representing interest earned on the Trust Account (which
interest shall be net of taxes payable and excluding deferred underwriting
commissions) to complete our Business Combination. To the extent that our share
capital is used, in whole or in part, as consideration to complete a Business
Combination, the remaining proceeds held in the Trust Account will be used as
working capital to finance the operations of the target business or businesses,
make other acquisitions and pursue our growth strategies.
As of March 31, 2021, we had cash of $334,000. We intend to use the funds held
outside the Trust Account primarily to identify and evaluate, target businesses,
perform business due diligence on prospective target businesses, travel to and
from the offices, plants or similar locations of prospective target businesses
or their representatives or owners, review corporate documents and material
agreements of prospective target businesses, structure, negotiate and complete a
Business Combination.
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In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, our Sponsor or an affiliate of our
Sponsor or certain of our officers and directors may, but are not obligated to,
loan us funds as may be required. If we complete a Business Combination, we
would repay such loaned amounts. In the event that a Business Combination does
not close, we may use a portion of the working capital held outside the Trust
Account to repay such loaned amounts, but no proceeds from our Trust Account
would be used for such repayment. Up to $1,500,000 of such loans may be
convertible into warrants, at a price of $1.00 per warrant unit at the option of
the lender. The warrants would be identical to the Private Placement Warrants.
On February 9, 2021, we issued an unsecured promissory note to our Sponsor
pursuant to the working capital loans agreement by which we may borrow up to
$1,500,000 in the aggregate. The note is non-interest bearing and payable on the
earlier to occur of (i) the completion of an initial Business Combination or
(ii) liquidation. During the three months ended March 31, 2021, the Sponsor made
a $550,000 advance to the Company to assist with operation expenses. On April 6,
2021, we borrowed $1,500,000 under the loan note, net of the $550,000 advance.
On April 30, 2021, the Sponsor elected to convert the loan note into 1,500,000
warrants that are identical to the Private Placement Warrants.
We will need to raise additional capital through loans or additional investments
from its Sponsor, shareholders, officers, directors, or third parties. Our
officers, directors and Sponsor may, but are not obligated to, loan us funds,
from time to time or at any time, in whatever amount they deem reasonable in
their sole discretion, to meet our working capital needs. Accordingly, we may
not be able to obtain additional financing. If we are unable to raise additional
capital, we may be required to take additional measures to conserve liquidity,
which could include, but not necessarily be limited to, curtailing operations,
suspending the pursuit of a potential transaction, and reducing overhead
expenses. We cannot provide any assurance that new financing will be available
on commercially acceptable terms, if at all. These conditions raise substantial
doubt about our ability to continue as a going concern through November 29,
2021, the date that we will be required to cease all operations, except for the
purpose of winding up, if a Business Combination is not consummated. These
financial statements do not include any adjustments relating to the recovery of
the recorded assets or the classification of the liabilities that might be
necessary should we be unable to continue as a going concern.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of March 31, 2021. We do not participate in
transactions that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than as described below.
We entered into an agreement to pay our Sponsor a monthly fee of $35,000 for
office space, and administrative and support services, which Mr. Daniel Barcelo,
our Executive Officer and President, will be paid $20,000 per month and Mr. Nick
De'Ath, our Chief Technology Officer, will be paid $5,000 per month. The
Sponsor, officers and directors, or any of their respective affiliates, will be
reimbursed for any out-of-pocket expenses incurred in connection with activities
on their behalf such as identifying potential target businesses and performing
due diligence on suitable business combinations. There is no cap or ceiling on
the reimbursement of out-of-pocket expenses incurred by such persons in
connection with activities on our behalf. We began incurring these fees on
November 25, 2019 and will continue to incur these fees monthly until the
earlier of the completion of a Business Combination and our liquidation.
The underwriters are entitled to a deferred fee of $10,062,500. The deferred fee
will be forfeited by the underwriters solely in the event that we fail to
complete a Business Combination, subject to the terms of the underwriting
agreement.
On February 10, 2020, we entered into a transactional support agreement with a
service provider, pursuant to which the service provider agreed to assist us in
evaluating acquisition opportunities in the energy industry, including valuation
and qualitative assessments, as well as investor presentations. In 2020, we paid
the service provider a fee of $100,000 and will pay the service provider an
additional fee upon the closing of a Business Combination. The fee payable at
the closing of the Business Combination is dependent upon the timing of the
closing and ranges between $975,000 and $1,950,000. The additional fee will not
be payable in the event we do not consummate a Business Combination.
On February 28, 2020, we entered into a consulting agreement with a service
provider, pursuant to which the service provider will provide us with advisory
or transaction support for a potential Business Combination. We will pay the
service provider a fee of $75,000 per month, for total fees of $225,000. In
addition, on March 1, 2020 we entered into a transactional support agreement
with the same service provider, pursuant to which we agreed to pay the service
provider a fee equal to 1% of the consideration paid by us for the equity of a
target company, up to a maximum fee of $5,000,000, if we consummate a Business
Combination with a target company located in certain countries, as listed in the
agreement. The fee will not be payable in the event we do not consummate a
Business Combination.
Critical Accounting Policies
The preparation of 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:
Class A Ordinary Shares Subject to Redemption
We account for our Class A ordinary shares subject to possible conversion in
accordance with the guidance in Accounting Standards Codification ("ASC") Topic
480 "Distinguishing Liabilities from Equity." Class A ordinary shares subject to
mandatory redemption are classified as a liability instrument and are measured
at fair value. Conditionally redeemable Class A ordinary shares (including
ordinary shares that feature redemption rights that are either within the
control of the holder or subject to redemption upon the occurrence of uncertain
events not solely within our control) are classified as temporary equity. At all
other times, Class A ordinary shares are classified as shareholders' equity. Our
ordinary shares feature certain redemption rights that are considered to be
outside of our control and subject to occurrence of uncertain future events.
Accordingly, Class A ordinary shares subject to possible redemption are
presented at redemption value as temporary equity, outside of the shareholders'
equity section of our condensed balance sheets.
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Net Income (Loss) Per Ordinary Share
We apply the two-class method in calculating earnings per share. Ordinary shares
subject to possible redemption, which are not currently redeemable and are not
redeemable at fair value, have been excluded from the calculation of basic net
income (loss) per ordinary share since such shares, if redeemed, only
participate in their pro rata share of the Trust Account earnings. Our net
income is adjusted for the portion of income that is attributable to ordinary
shares subject to redemption, as these shares only participate in the earnings
of the Trust Account and not our income or losses.
Public Warrants and Private Placement Warrants
We account for the Public Warrants and Private Placement Warrants issued in
connection with our initial public offering in accordance with ASC 815-40, under
which the Warrants do not meet the criteria for equity classification and must
be recorded as liabilities. As the warrants meet the definition of a derivative
as contemplated in ASC 815, the Warrants are measured at fair value at inception
and at each reporting date in accordance with ASC 820, "Fair Value Measurement",
with changes in fair value recognized in the statements of operations in the
period of change.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on our
condensed financial statements.
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