References in this quarterly report on Form 10-Q (the "Quarterly Report") to
"we," "our," "us" or the "Company" refer to Athena Technology Acquisition Corp.
References to our "management" or our "management team" refer to our officers
and directors, and references to the "Sponsor" refer to Athena Technology
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 described in our final prospectus relating to the Initial Public
Offering dated March 16, 2021 filed on March 18, 2021 (the "Prospectus") 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 on December 8, 2020, as a Delaware
corporation and formed for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses. We intend to effectuate our initial
business combination using cash from the proceeds of our initial public offering
("Initial Public Offering") and our private placement of private placement
units, any proceeds from the sale of our shares in connection with our initial
business combination (pursuant to forward purchase agreements or backstop
agreements we may enter into following the consummation of this offering or
otherwise), shares issued to the owners of the target, debt issued to bank or
other lenders or the owners of the target, or a combination of the foregoing.
Our sponsor is Athena Technology Sponsor LLC, a Delaware limited liability
company. The registration statement for our Initial Public Offering was declared
effective on March 16, 2021. On March 19, 2021, we consummated our Initial
Public Offering of 25,000,000 units (the "Units"), with each Unit consisting of
one share of Class A common stock of the Company, par value $0.0001 per share
("Class A Common Stock"), and one-third of one redeemable warrant of the Company
("Warrant"), with each whole Warrant entitling the holder thereof to purchase
one share of Class A Common Stock for $11.50 per share. The Units were sold at a
price of $10.00 per Unit, generating gross proceeds to the Company of
$250,000,000.
Simultaneously with the closing of the Initial Public Offering, pursuant to the
Placement Units Purchase Agreement, the Company completed the private sale of an
aggregate of 700,000 units (the "Private Placement Units") to the Sponsor at a
purchase price of $10.00 per Private Placement Unit, generating gross proceeds
to the Company of approximately $7,000,000. The Private Placement Units are
identical to the Units sold in the Initial Public Offering, except as otherwise
disclosed in the Prospectus. No underwriting discounts or commissions were paid
with respect to such sale. The issuance of the Private Placement Units was made
pursuant to the exemption from registration contained in Section 4(a)(2) of the
Securities Act of 1933, as amended.
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A total of $250,000,000, comprised of $245,000,000 of the proceeds from the
Initial Public Offering (which amount includes $8,750,000 of deferred
underwriting commissions) and $5,000,000 of the proceeds of the sale of the
Private Placement Units, was placed in a U.S.-based trust account maintained by
Continental Stock Transfer & Trust Company, acting as trustee. Except with
respect to interest earned on the funds held in the trust account that may be
released to the Company to pay its taxes (less up to $100,000 interest to pay
dissolution expenses, if any), the funds held in the trust account will not be
released from the trust account until the earliest of (i) the completion of the
Company's initial business combination, (ii) the redemption of the Company's
public shares properly submitted in connection with a stockholder vote to amend
the Company's amended and restated certificate of incorporation (a) to modify
the substance or timing of its obligation to redeem 100% of the Company's public
shares if it does not complete its initial business combination within 24 months
from the closing of the Initial Public Offering or (b) with respect to any other
provision relating to stockholders' rights or pre-initial business combination
activity and (iii) the redemption of 100% of the Company's public shares if the
Company has not completed its initial business combination within 24 months from
the closing of the Initial Public Offering, subject to applicable law.
Our management has broad discretion with respect to the specific application of
the net proceeds of the Initial Public Offering and the sale of Private
Placement Units, although substantially all of the net proceeds are intended to
be applied generally toward consummating an initial business combination.
We will have only 24 months from the closing of our Initial Public Offering to
complete an initial business combination (the "Combination Period"). However, if
we are unable to complete 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 (which
interest shall be net of taxes payable and up to $100,000 of interest to pay
dissolution expenses), divided by the number of then outstanding public shares,
which redemption will completely extinguish public stockholders' rights as
stockholders (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 stockholders and our board of
directors, liquidate and dissolve, subject, in each case, to our obligations
under Delaware law to provide for claims of creditors and the requirements of
other applicable law.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to raise capital or to
complete our initial business combination will be successful.
Recent Developments
On July 7, 2021, the Company entered into a definitive agreement for a business
combination with Heliogen, Inc. ("Heliogen") a leading provider of AI-enabled
concentrated solar power. Following the business combination, the Company
expects to be renamed "Heliogen, Inc." and will remain listed on the New York
Stock Exchange under the new ticker symbol "HLGN".
The business combination is structured as a statutory merger of the Company and
Heliogen, with Heliogen surviving the merger as a wholly owned subsidiary of the
Company. All of Heliogen's stockholders are expected to rollover their equity
into the combined company and to receive shares of the Company's Class A common
stock at closing as consideration.
Completion of the proposed transaction is subject to customary closing
conditions, including the approval of the Company's and Heliogen's respective
stockholders and regulatory approvals, and is expected to occur in the fourth
calendar quarter of 2021.
In connection with the execution of the definitive business combination
agreement with Heliogen, the Company entered into subscription agreements, dated
on or about July 6, 2021 (the "Subscription Agreements"), with certain
investors, pursuant to which such investors have agreed to purchase an aggregate
of 16,500,000 shares of common stock, for a purchase price of $10.00 per share,
for an aggregate purchase price of $165,000,000, to be issued immediately prior
to and conditioned upon the effectiveness of the consummation of the business
combination. The obligations of each party to consummate the transactions
pursuant to the Subscription Agreements are conditioned upon, among other
things, customary closing conditions and the consummation of the business
combination.
On August 30, 2021, the Company received a litigation demand letter (the "Class
Vote Demand") on behalf of Athena stockholder FWD LKNG GDD Irrevocable Trust.
The Demand alleges that the Company violated Section 242(b)(2) of the Delaware
General Corporation Law by not requiring separate class votes for holders of the
Company's Class A and Class B Common Stock in connection with the Company's
proposed transaction with Heliogen, Inc ("Heliogen"). According to the Class
Vote Demand, a class vote is required under Section 242(b)(2) because
consideration to the stockholders of Heliogen will be paid in newly issued
Common Stock, following elimination of the Class B Common Stock. While such
separate class vote is not required pursuant to Section 242(b)(2) of the DGCL,
the Company has concluded that such separate class vote is advisable to prevent
disruption to the proposed transaction with Heliogen, and to avoid the delay and
expense of potential litigation and will amend its Form S-4 Registration
Statement to reflect that change. We believe that the ultimate outcome of the
litigation demand will not have a material effect on our financial statements.
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Results of Operations
For the nine months ended September 30, 2021, we had a net loss of approximately
$5.5 million, which included a loss from operations of approximately $3.6
million, offering cost expense allocated to warrants of approximately $0.6
million, loss from the change in fair value of warrant liabilities of
approximately $1.4 million.
For the three months ended September 30, 2021, we had a net loss of
approximately $5.8 million, which included a loss from operations of
approximately $1.6 million and a loss from the change in fair value of warrant
liabilities of approximately $4.2 million.
Our business activities from inception to September 30, 2021 consisted primarily
of our formation and completing our IPO, and since the offering, our activity
has been limited to identifying and evaluating prospective acquisition targets
for a Business Combination. Our operating costs include approximately $2.6
million of professional fees and regulatory fees relating to the anticipated
merger.
Liquidity and Capital Resources
As of September 30, 2021, we had approximately $177,000 in its operating bank
account, and negative working capital of approximately $2.1 million, which
includes approximately $2.2 million of accrued professional fees not due to be
paid until the consummation of the merger.
Our liquidity needs up to March 19, 2021 had been satisfied through a capital
contribution from the Sponsor of $25,000 for the founder shares and the loan
under an unsecured promissory note from the Sponsor of up to $300,000 and
offering costs and expenses paid for by related parties. Subsequent to the
consummation of the IPO, the Company's liquidity needs have been satisfied
through the net proceeds from the consummation of the Private Placement not held
in the Trust Account. In addition, in order to finance transaction costs in
connection with a Business Combination, the Sponsor or an affiliate of the
Sponsor, or certain of the officers and directors may, but are not obligated to,
provide the Company with working capital loans. As of September 30, 2021, there
were no amounts outstanding under any working capital loan. We have a balance
due to related parties for reimbursement of offering costs and expenses of
approximately $65,000 as of September 30, 2021.
Based on the foregoing, management believes that 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 financial statements. Our 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.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of September 30, 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 an agreement to pay an
affiliate of the Sponsor a monthly fee of $10,000 for office space, utilities,
secretarial and administrative support services. We began incurring these fees
on March 19, 2021 and will continue to incur these fees monthly until the
earlier of the completion of the Business Combination and our liquidation.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or $8,750,000
in the aggregate. The deferred fee will become payable to the underwriters 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.
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The initial stockholders and holders of the Private Placement Units will be
entitled to registration rights pursuant to a registration rights agreement. The
initial stockholders and holders of the Private Placement Units will be entitled
to make up to three demands, excluding short form registration demands, that we
register such securities for sale under the Securities Act. In addition, these
holders will have "piggy-back" registration rights to include their securities
in other registration statements filed by us. We will bear the expenses incurred
in connection with the filing of any such registration statements.
We are party to a definitive business combination agreement with Heliogen, dated
July 6, 2021. Completion of the proposed transaction pursuant to the business
combination agreement is subject to customary closing conditions, including the
approval of the Company's and Heliogen's respective stockholders and regulatory
approvals.
In connection with the execution of the definitive business combination
agreement between us and Heliogen, certain investors have agreed to purchase up
to 16,500,000 shares of our common stock for the purchase price of $10.00 per
share, for an aggregate purchase price of $165,000,000 pursuant to certain
subscription agreements. The obligations of each party under the subscription
agreements are conditioned upon customary closing conditions and the
consummation of the Business Combination.
The Sponsor and its affiliates have agreed to vote their shares in favor of the
Business Combination and the transactions contemplated thereby, pursuant to the
terms of a Sponsor Support Agreement, in consideration for which the Sponsor
will be issued 510,000 shares of our common stock at the closing of the 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.
Warrants Liability
We evaluated the Warrants in accordance with ASC 815-40, "Derivatives and
Hedging - Contracts in Entity's Own Equity", and concluded that a provision in
the Warrant Agreement related to certain tender or exchange offers as well as
provisions that provided for potential changes to the settlement amounts
dependent upon the characteristics of the holder of the warrant, precludes the
Warrants from being accounted for as components of equity. As the Warrants meet
the definition of a derivative as contemplated in ASC 815 and are not eligible
for an exception from derivative accounting, the Warrants are recorded as
derivative liabilities on the Balance Sheet and measured at fair value at
inception (on the date of the IPO) and at each reporting date in accordance with
ASC 820, "Fair Value Measurement", with changes in fair value recognized in the
Statement of Operations in the period of change.
Offering Costs Associated with the Initial Public Offering
The Company complies with the requirements of the ASC 340-10-S99-1. Offering
costs consisted of legal, accounting, underwriting fees and other costs incurred
through the Initial Public Offering that were directly related to the Initial
Public Offering. Offering costs are allocated to the separable financial
instruments issued in the Initial Public Offering based on a relative fair value
basis, compared to total proceeds received. Offering costs associated with
warrant liabilities are expensed as incurred, presented as non-operating
expenses in the statement of operations. Offering costs associated with the
Class A common stock were charged to stockholders' equity upon the completion of
the Initial Public Offering. Transaction costs amounted to $14,203,291, of which
$566,948 were allocated to expense associated with the warrant liability.
Common Stock Subject to Possible Redemption
All of the 25,000,000 Class A Common Stock sold as part of the Units in the
Public Offering 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 Business Combination and
in connection with certain amendments to the Company's second amended and
restated certificate of incorporation. In accordance with SEC and its staff's
guidance on redeemable equity instruments, which has been codified in ASC
480-10-S99, redemption provisions not solely within the control of the Company
require common stock subject to redemption to be classified outside of permanent
equity. Ordinary liquidation events, which involve the redemption and
liquidation of all of the entity's equity instruments, are excluded from the
provisions of ASC 480. Accordingly, at September 30, 2021, since all the shares
of Class A common stock can be redeemed or become redeemable subject to the
occurrence of future events considered outside the Company's control under ASC
480-10-S99, all shares of Class A common stock subject to possible redemption is
presented as temporary equity, outside of the stockholders' equity section of
the Company's condensed balance sheets, respectively.
The Company recognizes 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. 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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Net Loss Per Common Share
Net loss per share is computed by dividing net loss by the weighted average
number of shares of common stock outstanding during the period. The Company has
two classes of shares, Class A Common Stock and Class B Common Stock. Earnings
and losses are shared pro rata between the two classes of shares.
The Company's statement of operations includes a presentation of net loss per
share for Class A and Class B common Stock. Net loss per share for Class A and
Class B common stock, basic and diluted, is calculated by dividing the
proportionate share of net loss by the weighted average number of shares
outstanding for the period.
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