The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with our audited financial
statements and the notes related thereto which are included in "Item 8.
Financial Statements and Supplementary Data" of this Annual Report on Form
10-K/A. Certain information contained in the discussion and analysis set forth
below includes forward-looking statements. Our actual results may differ
materially from those anticipated in these forward-looking statements as a
result of many factors, including those set forth under "Special Note Regarding
Forward-Looking Statements," "Item 1A. Risk Factors" and elsewhere in this
Annual Report on Form 10-K/A.
The following information has been adjusted to reflect the restatement of our
financial statements as described in the "Explanatory Note" at the beginning of
this Amendment and in Note 1A, "Restatement of Previously Issued Financial
Statements," in Notes to the Financial Statements of this Amendment.
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.
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.
Recent Developments
On January 29, 2021, we entered into a Business Combination Agreement (the
"Business Combination Agreement") with FREYR A/S, a company organized under the
laws of Norway ("FREYR"), the Sponsor, in the capacity as the representative for
the Alussa shareholders in accordance with the terms and conditions of the
Business Combination Agreement, FREYR Battery, a corporation in the form of a
public limited liability company organized under the laws of Luxembourg
("Pubco"), Norway Sub 1 AS, a private limited liability company under the laws
of Norway ("Norway Merger Sub 1"), Norway Sub 2 AS, a private limited liability
company under the laws of Norway ("Norway Merger Sub 2" and together with Norway
Merger Sub 1, the "Norway Merger Subs"), Adama Charlie Sub, a Cayman Islands
exempted company ("Cayman Merger Sub"), certain shareholders of FREYR named in
the Business Combination Agreement (the "Major Shareholders"), and ATS NEXT AS,
in the capacity as the representative for the Major Shareholders in accordance
with the terms and conditions of the Business Combination Agreement (the
"Shareholder Representative").
Prior to the completion of the transactions contemplated by the Business
Combination Agreement, the Norway Merger Subs shall be wholly-owned subsidiaries
of the Company.
Pursuant to the terms of the Business Combination Agreement, (a) the Company
will merge with and into Cayman Merger Sub, with the Company continuing as the
surviving entity (the "Cayman Merger"), (b) the Company will distribute all of
its interests in Norway Merger Sub 1 to Pubco, (c) FREYR will merge with and
into Norway Merger Sub 2, with Norway Merger Sub 2 continuing as the surviving
entity (the "Norway Merger"), (d) Norway Merger Sub 1 will merge with and into
Pubco, with Pubco continuing as the surviving entity (the "Cross-Border
Merger"), as a result of which, (i) each issued and outstanding security of the
Company immediately prior to the effective time of the Cayman Merger shall be
exchanged for the right of the holder thereof to receive securities of Pubco in
accordance with the Business Combination Agreement (or, in the case of
Dissenting Purchaser Shareholders, if any, the right to receive the fair value
of such holder's Dissenting Purchaser Ordinary Shares and such other rights as
are granted by the Cayman Companies Law), (ii) each issued and outstanding
security of FREYR immediately prior to the effective time of the Norway Merger
shall be exchanged for the right of the holder thereof to receive securities of
Norway Merger Sub 1 in accordance with the Business Combination Agreement and
(iii) each issued and outstanding security of Norway Merger Sub 1 immediately
prior to the Cross-Border Effective Time shall be exchanged for the right of the
holder to receive securities of Pubco, all upon the terms and subject to the
conditions set forth in the Business Combination Agreement and in accordance
with the provisions of applicable law.
The Business Combination will be consummated in accordance with the terms and
subject to the conditions as further described in the Business Combination
Agreement.
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Results of Operations (As Restated)
As discussed in the Explanatory Note to this Amendment and the "Restatement of
Previously Issued Financial Statements" in Note 1A, in the Company's financial
statements included in Item 8 to this Amendment, we are restating the financial
statements of the Company as of December 31, 2020 and 2019,for the year ended
December 31, 2020 and the period from June 13, 2019 (inception) through December
31, 2019, and as of and for the periods ended September 30,2020, June 30, 2020,
and March 31, 2020. The amended discussion and analysis as it pertains to the
restated periods presented below provides information to assist in understanding
our financial condition and results of operations, and should be read in
conjunction with the Company's financial statements included in Item 8.
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from inception to December 31, 2020 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 Year Ended December 31, 2020 and the Period from June 13, 2019
(Inception) through December 31, 2019
For the year ended December 31, 2020, we had net loss of $7,580,615, which
consists of changes in fair value of warrant liabilities of $4,393,750 and
operating costs of $5,190,525, offset by interest income on marketable
securities held in the Trust Account of $2,003,660.
For the period from June 13, 2019 (inception) through December 31, 2019, we had
net loss of $4,779,782, which consists of changes in fair value of warrant
liabilities of $3,937,500 and operating costs of $1,173,063, offset by interest
income on marketable securities held in the Trust Account of $290,672 and an
unrealized gain on marketable securities held in the Trust Account of $40,109.
For the Three and Nine Months Ended September 30, 2020
For the three months ended September 30, 2020, we had a net loss of $2,487,788,
which consists of changes in fair value of warrant liabilities of $2,312,500 and
operating costs of $324,347, offset by interest income on marketable securities
held in the Trust Account of $93,440 and an unrealized gain on marketable
securities held in Trust Account of $55,619.
For the nine months ended September 30, 2020, we had net income of $8,039,334,
which consists of changes in fair value of warrant liabilities of $7,356,250,
interest income on marketable securities held in the Trust account of $1,944,601
and an unrealized gain on securities held in the Trust Account of $16,548,
offset by operating costs of $1,278,065.
For the Three and Six Months Ended June 30, 2020
For the three months ended June 30, 2020, we had net income of $1,583,736, which
consists of changes in fair value of warrant liabilities of $2,000,000 and
interest income on marketable securities held in the Trust Account of $958,571,
offset by operating costs of $453,873 and an unrealized loss on marketable
securities held in Trust Account of $920,962.
For the six months ended June 30, 2020, we had net income of $10,527,122, which
consists of changes in fair value warrant liabilities of $9,668,750 and interest
income on marketable securities held in the Trust Account of $1,851,161, offset
by operating costs of $953,718 and an unrealized loss on marketable securities
held in Trust Account of $39,071.
For the Three Months Ended March 31, 2020
For the three months ended March 31, 2020, we had net income of $8,943,386,
which consists of changes in fair value of warrant liabilities of $7,668,750,
interest income on marketable securities held in the Trust Account of $892,590
and an unrealized gain on marketable securities held in the Trust Account of
$881,891, offset by operating costs of $499,845.
Liquidity and Capital Resources (As Restated)
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.
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For the year ended December 31, 2020, net cash used in operating activities was
$1,911,404. Net loss of $7,580,615 was impacted by the change in fair value of
warrant liabilities of $4,393,750 and interest earned on marketable securities
held in the Trust Account of $2,003,660. Changes in operating assets and
liabilities provided $3,279,121 of cash from operating activities.
For the period from June 13, 2019 (inception) through December 31, 2019, net
cash used in operating activities was $228,898. Net loss of $4,779,782 was
impacted by the change in fair value of warrant liabilities of $3,937,500,
interest earned on marketable securities held in the Trust Account of $290,672
an unrealized gain on marketable securities of $40,109, and underwriting fees
and offering costs allocated to warrant liabilities. Changes in operating assets
and liabilities used $107,825 of cash from operating activities.
As of December 31, 2020, we had marketable securities held in the Trust Account
of $289,834,441. 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 December 31, 2020, we had cash of $370,958. 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.
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 ("Working Capital Loans"). Such Working Capital
Loans would be evidenced by promissory notes. If we complete a Business
Combination, we would repay such loaned amounts without interest. 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, the Company issued an unsecured promissory note to the
Sponsor pursuant to the Working Capital Loans agreement by which the Company 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 a initial Business
Combination or (ii) liquidation.
25
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 December 31, 2020. 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. 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 provided us with advisory or
transaction support for a potential Business Combination. We paid the service
provider a fee of $75,000 per month for three months, for total fees of
$225,000. In addition, on February 28, 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.
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Critical Accounting Policies
The preparation of 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 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, ordinary shares are classified as shareholders' equity. Our Class A
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 balance sheets.
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
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 pronouncements
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 financial statements.
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