ESGN ACQU References to the "Company," "our," "us" or "we" refer toESGEN Acquisition Corporation . The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q (this "Quarterly Report"). Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report contains, and our officers and representatives may from
time to time make, "forward-looking statements" within the meaning of the safe
harbor provisions of the
• our ability to select an appropriate target business or businesses;
• our ability to complete our initial business combination;
• our expectations around the performance of a prospective target business or
businesses;
• our success in retaining or recruiting, or changes required in, our officers,
key employees or directors following our initial business combination;
• our officers and directors allocating their time to other businesses and
potentially having conflicts of interest with our business or in approving
our initial business combination;
• our potential ability to obtain additional financing to complete our initial
business combination;
• our pool of prospective target businesses;
• our ability to consummate an initial business combination due to the
uncertainty resulting from the
COVID-19
pandemic, as well as from the emergence of variant strains of
COVID-19,
including the efficacy and adoption of recently developed vaccines with
respect to
COVID-19
and variant strains thereof;
• the ability of our officers and directors to generate a number of potential
business combination opportunities;
• our public securities' potential liquidity and trading;
• the lack of a market for our securities;
• the use of proceeds not held in the trust account or available to us from
interest income on the trust account balance;
• the trust account not being subject to claims of third parties; or
• our financial performance following our initial public offering.
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, those factors described under the heading "Risk Factors." Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. You should not take any statement regarding past trends or activities as representation that the trends or activities will continue in the future. Accordingly, you should not put undue reliance on these statements.
Overview
We were incorporated as a
Our sponsor is
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The registration statement for our initial public offering ("initial public
offering" or "Public Offering") was declared effective on
Transaction costs amounted to
Following the closing of our initial public offering on
We will have 15 months (unless otherwise extended) from the closing of our initial public offering to consummate the initial Business Combination. If we have not consummated the initial Business Combination within the Combination Period, we will: (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay income taxes, if any (less up to$100,000 of interest to pay winding up and dissolution expenses) divided by the number of the then-outstanding public shares, which redemption will completely extinguish public shareholders' rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii), to our obligations underCayman Islands law to provide for claims of creditors and the requirements of other applicable law. 21
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Results of Operations
All of our activity from
For the three months ended
For the six months ended
For the period from
Liquidity and Capital Resources
As of
Prior to the completion of our initial public offering, our liquidity needs had
been satisfied through a capital contribution from the Sponsor of
Based on the foregoing, management believes that we will not have sufficient working capital and borrowing capacity to meet our needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, we will be using these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.
In connection with the Company's assessment of going concern considerations in accordance with ASC Subtopic 205-40, "Presentation of Financial Statements - Going Concern", the Company has untilJanuary 22, 2023 (unless extended) to consummate a Business Combination. If a Business Combination is not consummated by this date and an extension not obtained, there will be a mandatory liquidation and subsequent dissolution of the Company. Although the Company intends to consummate a Business Combination on or beforeJanuary 22, 2023 , it is uncertain whether the Company will be able to consummate a Business Combination by this time. Management has determined that the mandatory liquidation, should a Business Combination not occur and an extension is not obtained, as well as the potential for us to have insufficient funds available to operate our business prior to a Business Combination, and potential subsequent dissolution, raises substantial doubt about the Company's ability to continue as a going concern. It is uncertain whether the Company will be able to consummate a Business Combination or obtain an extension by this time. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate afterJanuary 22, 2023 .
Contractual Obligations
Other than the below, we do not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities.
Underwriting Agreement We granted the underwriters a 45-day option to purchase up to 3,600,000 additional Units to cover over-allotments, if any, at our initial public offering price less the underwriting discounts and commissions. The underwriters exercised the full over-allotment at the consummation of our initial public offering onOctober 22, 2021 .
The underwriters earned an underwriting discount of two percent (2%) of the
gross proceeds of our initial public offering, or
Additionally, the underwriters are entitled to a deferred underwriting discount of 3.5% of the gross proceeds of our initial public offering upon the completion of our initial Business Combination.
Office Space, Secretarial and Administrative Services
Commencing on the date that our securities are first listed on the NASDAQ
through the earlier of consummation of our initial Business Combination and the
liquidation, we are expected to pay our Sponsor a total of
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Registration Rights
The holders of the Founder Shares, Private Placement Warrants and any warrants
that may be issued upon conversion of Working Capital Loans (and any Class A
ordinary shares issuable upon the exercise of the Private Placement Warrants and
warrants that may be issued upon conversion of Working Capital Loans) are
entitled to registration rights pursuant to a registration and shareholder
rights agreement signed at the closing of our initial public offering. The
holders of these securities are entitled to make up to three demands, excluding
short form demands, that we register such securities. In addition, the holders
have certain "piggy-back" registration rights with respect to registration
statements filed subsequent to our completion of the initial Business
Combination. However, the registration and shareholder rights agreement provides
that we will not permit any registration statement filed under the Securities
Act of 1933, as amended (the "Securities Act") to become effective until
termination of the applicable
lock-up
period, which occurs (i) in the case of the Founder Shares, and (ii) in the case
of the Private Placement Warrants and the respective Class A ordinary shares
issuable upon exercise of the Private Placement Warrants, 30 days after the
completion of the initial Business Combination. We will bear the expenses
incurred in connection with the filing of any such registration statements. The
holders of the Founder Shares, Private Placement Warrants and any warrants that
may be issued upon conversion of Working Capital Loans (and any Class A ordinary
shares issuable upon the exercise of the Working Capital Loans and warrants that
may be issued upon conversion of Working Capital Loans) will be entitled to
registration rights pursuant to a registration and expected shareholder rights
agreement signed at the closing of our initial public offering. The holders of
these securities are entitled to make up to three demands, excluding short form
demands, that the Company register such securities.
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In addition, the holders have certain "piggy-back" registration rights with respect to registration statements filed subsequent to the completion of its initial Business Combination. However, the registration and shareholder rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lockup period, which occurs (i) in the case of the Founder Shares, as described in the following paragraph, and (ii) in the case of the Private Placement Warrants and the respective Class A ordinary shares underlying such warrants, 30 days after the completion of the initial Business Combination. We will bear the expenses incurred in connection with the filing of any such registration statements.
Except as described herein, the Sponsor and its directors and executive officers
have agreed not to transfer, assign or sell any of their Founder Shares until
the earliest of (A) one year after the completion of the initial Business
Combination or (B) subsequent to the initial Business Combination, (x) if the
closing price of the Class A ordinary shares equals or exceeds
In addition, pursuant to the registration and shareholder rights agreement, the Sponsor, upon and following consummation of an initial Business Combination, will be entitled to nominate three individuals for election to the board of directors, as long as the Sponsor holds any securities covered by the registration and shareholder rights agreement.
Going Concern
As of
In connection with the Company's assessment of going concern considerations in accordance with ASC Subtopic 205-40, "Presentation of Financial Statements - Going Concern", the Company has untilJanuary 22, 2023 (unless extended) to consummate a Business Combination. If a Business Combination is not consummated by this date and an extension not obtained, there will be a mandatory liquidation and subsequent dissolution of the Company. Although the Company intends to consummate a Business Combination on or beforeJanuary 22, 2023 , it is uncertain whether the Company will be able to consummate a Business Combination by this time. Management has determined that the mandatory liquidation, should a Business Combination not occur and an extension is not obtained, as well as the potential for us to have insufficient funds available to operate our business prior to a Business Combination, and potential subsequent dissolution, raises substantial doubt about the Company's ability to continue as a going concern. It is uncertain whether the Company will be able to consummate a Business Combination or obtain an extension by this time. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate afterJanuary 22, 2023 . 24
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Critical Accounting Estimates
The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. We have identified the following critical accounting estimates:
Warrant Liability
The Company accounts for the Public and Private Placement warrants issued in connection with the Public Offering in accordance with the guidance contained in ASC 815-40 and ASC 480, Distinguishing Liabilities from Equity. Such guidance provides that because the warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability. Accordingly, the Company classified each warrant as a liability at its fair value. This liability is subject tore-measurement at each balance sheet date. With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in the Company's statement of operations.
Offering Costs Associated with Initial Public Offering
We comply with the requirements of Accounting Standards Codification ("ASC")
340-10-S99-1
and
Class A Ordinary Shares Subject to Possible Redemption
We account for our Class A ordinary shares subject to possible redemption in
accordance with the guidance in ASC Topic 480 "Distinguishing Liabilities from
Equity." Class A ordinary shares subject to mandatory redemption (if any) are
classified as a liability instrument and are measured at fair value.
Conditionally redeemable ordinary shares (including shares that feature
redemption rights that are either within the control of the holder or subject to
redemption upon the occurrence of uncertain events not solely within our
control) are classified as temporary equity. At all other times, ordinary shares
are classified as shareholder's equity. Our Class A ordinary shares sold in our
initial public offering feature certain redemption rights that are considered to
be outside of our control and subject to the occurrence of uncertain future
events. Accordingly, as of
Net Income (Loss) Per Ordinary Share
We apply the two-class method in calculating earnings per share. Ordinary share subject to possible redemption which is not currently redeemable and is not redeemable at fair value, has 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 (loss) is adjusted for the portion of income that is attributable to ordinary share subject to possible redemption, as these shares only participate in the earnings of the Trust Account and not our income or losses.
Recent Accounting Pronouncements
InAugust 2020 , theFinancial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40) ("ASU 2020-06") to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity's own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity's own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effectiveJanuary 1, 2022 and was applied on a full or modified retrospective basis. The Company assessed the impact that ASU 2020-06 would have on its financial position, results of operations or cash flows and noted there was no material effect on the Company's financial statement.
Off-Balance
Sheet Arrangements
As ofJune 30, 2022 , we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations.
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