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.
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.
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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.
The transaction is anticipated to generate gross proceeds of up to approximately
$415 million of cash, assuming no redemptions by the Company's public
stockholders. The proceeds are expected to be used to scale heliostat
manufacturing, to support research and development efforts on next generation
heliostat technology, to support global project development, and to fund the
balance sheet. These gross proceeds include investor commitments to purchase up
to $165 million in shares of stock in the Company at $10.00 per share through a
private investment in public equity (a "PIPE"), subject to satisfaction of
customary closing conditions. Assuming no redemptions by Company's public
stockholders and including anticipated proceeds from the PIPE, the Company
estimates an initial pro forma implied enterprise value of the combined company
immediately after closing of the business combination of approximately $2.0
billion.
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.
Results of Operations
For the six months ended June 30, 2021, we had a net income of $251,888, which
included a loss from operations of $2.0 million, offering cost expense allocated
to warrants of $566,948, fully offset by a gain from the change in fair value of
warrant liabilities of $2.8 million, and $10,656 of interest earned on the trust
account. Our business activities from inception to June 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
$1.6 million of professional fees relating to the anticipated merger.
Liquidity and Capital Resources
As of June 30, 2021, we had approximately $1.7 million in its operating bank
account, and negative working capital of approximately $0.6 million, which
includes approximately $1.6 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 June 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 $639,000 as of June 30, 2021.
Based on the foregoing, management believes that the Company will have
sufficient working capital and borrowing capacity to meet its 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 held outside of the
Trust Account 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.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of June 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.
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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.
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.
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
The Company accounts for its common stock subject to possible redemption in
accordance with the guidance in Accounting Standards Codification ("ASC") Topic
480 "Distinguishing Liabilities from Equity." 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 is 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,
common stock is classified as stockholders' equity. The Company's common stock
features certain redemption rights that are considered to be outside of the
Company's control and subject to occurrence of uncertain future events.
Accordingly, common stock subject to possible redemption is presented at
redemption value as temporary equity, outside of the stockholders' equity
section of the Company's condensed balance sheets.
Net income Per Common Share
Net income per share is computed by dividing net income by the weighted average
number of shares of common stock outstanding during the period. The Company
applies the two-class method in calculating earnings per share. Shares of common
stock subject to possible redemption at June 30, 2021, which are not currently
redeemable and are not redeemable at fair value, have been excluded from the
calculation of basic net loss per common share since such shares, if redeemed,
only participate in their pro rata share of the Trust Account earnings.
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