References to the "Company," "our," "us" or "we" refer to Tech and Energy
Transition Corporation. The following discussion and analysis of the Company's
financial condition and results of operations should be read in conjunction with
the 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. 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 "Cautionary Note
Regarding Forward-Looking Statements and Risk Factor Summary," "Item 1A. Risk
Factors" and elsewhere in this Annual Report on Form 10-K.
Overview
We are a blank check company incorporated in Delaware on December 4, 2017 for
the purpose of effecting a merger, share exchange, asset acquisition, share
purchase, reorganization or similar business combination with one or more
businesses (the "Business Combination"). While we may pursue an initial Business
Combination target in any industry or geographic location, we intend to focus
our search for a target business operating in certain end markets that are
facilitating digital disruptions - such as communications, energy and industrial
software and services -- where technology may be used to unlock a capacity
constrained business problem. Our sponsor is Tech and Energy Transition Sponsor
LLC (the "Sponsor"), a Delaware limited liability company.
Our registration statement for our initial public offering (the "Initial Public
Offering") was declared effective on March 16, 2021. On March 19, 2021, we
consummated our Initial Public Offering of 38,500,000 units (the "Units" and,
with respect to the Class A common stock included in the Units offered, the
"Public Shares") at $10.00 per Unit, generating gross proceeds of $385 million
and incurring offering costs of approximately $22.2 million, consisting of
$7,700,000 of underwriting commission, $13,475,000 of deferred underwriting
commission, and $1,066,089 of other offering costs.
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement (the "Private Placement") of 7,366,667 warrants (each, a
"Private Placement Warrant" and collectively, the "Private Placement Warrants"),
at a price of $1.50 per Private Placement Warrant to our Sponsor, generating
gross proceeds of $11.05 million.
Upon the closing of the Initial Public Offering and the Private Placement, an
aggregate of $385 million ($10.00 per Unit) of the net proceeds of the Initial
Public Offering and certain of the proceeds of the Private Placement was placed
in a trust account ("Trust Account") with Continental Stock Transfer & Trust
Company acting as trustee and invested in United States government treasury
bills with a maturity of 185 days or less or in money market funds investing
solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7 under
the Investment Company Act, as determined by the Company, until the earlier of:
(i) the completion of a Business Combination and (ii) the distribution of the
Trust Account as described below. Except with respect to interest earned on the
funds held in the trust account that may be released to us to pay franchise and
income tax obligations (less up to $100,000 of interest to pay dissolution
expenses), the proceeds from the Initial Public Offering and the sale of the
Private Placement Warrants will not be released from the trust account until the
earlier of (i) the completion of the Company's initial Business Combination or
(ii) the redemption of 100% of the Company's public shares if the Company is
unable to complete the Company's initial Business Combination within 24 months
from the closing of the Initial Public Offering (the "Combination Period"),
without extension. The proceeds deposited in the trust account could become
subject to the claims of our creditors, if any, which could have priority over
the claims of our public stockholders.
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If we are unable to complete a Business Combination within the Combination
Period, as such period may be extended, we will (i) cease all operations except
for the purpose of winding up, (ii) as promptly as reasonably possible but not
more than ten (10) 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 the Company to pay franchise and income
taxes (less 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 liquidating distributions, if any), subject to applicable law,
the Company's remaining stockholders and the Company's board of directors,
dissolve and liquidate, subject in each case to the Company's obligations under
Delaware law to provide for claims of creditors and the requirements of other
applicable law.
Results of Operations
Our entire activity from inception through March 31, 2022 related to our
formation and the preparation for the Initial Public Offering, and, since the
closing of the Initial Public Offering, the search for a prospective initial
Business Combination. We have neither engaged in any operations nor generated
any operating revenues to date. We will not generate any operating revenues
until after completion of our initial Business Combination, at the earliest. We
will generate non-operating income in the form of interest and investment income
on cash and cash equivalents and investments. We expect to incur increased
expenses as a result of being a public company (for legal, financial reporting,
accounting and auditing compliance), as well as for due diligence expenses.
Additionally, we recognize non-cash gains and losses within other income
(expense) related to changes in recurring fair value measurement of our warrant
liabilities at each reporting period
For the year ended March 31, 2022, we had a net income of $10,607,556 income
comprised of a $12,322,000 income from changes in fair value of warrant
liabilities, $1,097,250 income from gain on expiration of over-allotment option,
and $2,856,281 of general and administrative expenses partially offset by
approximately $44,587 of income on the investments held in the Trust Account.
Liquidity and Capital Resources
As of March 31, 2022, we had approximately $0.24 million in our operating bank
accounts and working capital deficit of approximately $0.73 million.
Our liquidity needs have been satisfied prior to the completion of the Initial
Public Offering through a payment from the Sponsor of $27,467 (see Note 6) for
the Founder Shares, borrowings under the Promissory Note totaled $275,000 (see
Note 5), and the net proceeds from the consummation of the Private Placement not
held in the Trust Account. The Promissory Note was fully repaid upon the
consummation of the initial public offering ("IPO") on March 19, 2021, has
expired and no further borrowing are allowed. Subsequent to the consummation of
the Initial Public Offering and Private Placement, our liquidity needs have been
satisfied from the proceeds from the consummation of the Initial Public Offering
and Private Placement not held in the Trust Account. In addition, in order to
finance transaction costs in connection with a Business Combination, our Sponsor
or an affiliate of our Sponsor, or our officers and directors may, but are not
obligated to, provide us working capital loans ("Working Capital Loans"). As of
March 31, 2022, there were no amounts outstanding under any Working Capital
Loans. However, on January 31, 2022 the Sponsor committed to make available to
the Company, under a promissory note, up to $1,600,000 to finance transaction
costs in connection with a Business Combination (the "Promissory Note"). The
promissory note is non-interest bearing and due on the earlier of (i) the date
of the Business Combination or (ii) the second anniversary of the completion of
the IPO. Up to $1,500,000 of the Promissory Note may be converted into warrants
to purchase shares of Class A common stock at a conversion price of $1.50 per
warrant at the option of Sponsor. If Sponsor elects such conversion, the terms
of the warrants issued in connection with such conversion would be identical to
the Private Placement Warrants. If the Company fails to consummate a business
combination, then the outstanding debt under the Promissory Note will be
forgiven by Sponsor (pursuant to an arrangement to be agreed to by the parties),
except to the extent of any funds held outside of the Company's Trust Account
(as defined below) after paying all other fees and expenses of the Company.
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Based on the foregoing, management believes that we will 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.
Going Concern
As of March 31, 2022, we had $0.24 million in cash and working capital deficit
of approximately $0.73 million. We are also subject to a mandatory liquidation
and subsequent dissolution requirement if we do not complete our initial
business combination by March 19, 2023. Further, we expect to incur significant
costs in pursuit of our acquisition plans. Management's plans to address this
need for capital are discussed in Note 1 to our financial statements included
elsewhere in this Annual Report on Form 10-K. Our plans to raise capital and to
consummate our initial business combination by March 19, 2023 may not be
successful. In addition, management is currently evaluating the continuing
impact of the COVID-19 pandemic on the industry and its effect on our financial
position, results of our operations and/or search for a target company. These
factors, among others, raise substantial doubt about our ability to continue as
a going concern. The financial statements contained elsewhere in this Annual
Report on Form 10-K do not include any adjustments that might result from our
inability to continue as a going concern.
Critical Accounting Policies
This management's discussion and analysis of our financial condition and results
of operations is based on our financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of our financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses and the disclosure of contingent assets and liabilities in
our financial statements. On an ongoing basis, we evaluate our estimates and
judgments, including those related to fair value of financial instruments and
accrued expenses. We base our estimates on historical experience, known trends
and events and various other factors that we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions. The Company has identified the following as its
critical accounting policies:
Derivative Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market or
foreign currency risks. We evaluate all of our financial instruments, including
issued stock purchase warrants, to determine if such instruments are derivatives
or contain features that qualify as embedded derivatives, pursuant to ASC 480
and ASC 815-15. The classification of derivative instruments, including whether
such instruments should be recorded as liabilities or as equity, is re-assessed
at the end of each reporting period.
We issued an aggregate of 12,833,333 warrants as part of the Units offered in
the Initial Public Offering and an aggregate of 7,366,667 Private Placement
Warrants concurrently with the closing of the Initial Public Offering. All
20,200,000 outstanding warrants are recognized as derivative liabilities in
accordance with ASC 815-40. Accordingly, we recognize the warrant instruments as
liabilities at fair value and adjust the instruments to fair value at each
reporting period. The liabilities are subject to remeasurement at each balance
sheet date until exercised, and any change in fair value is recognized in our
statement of operations. The fair value of warrants issued in connection with
the Initial Public Offering and Private Placement were measured at fair value
using a binomial lattice model.
Class A Common Stock Subject to Possible Redemption
Class A common stock subject to mandatory redemption (if any) are classified as
liability instruments and are measured at fair value. Conditionally redeemable
Class A common stock (including Class A common stock 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 common stock are
classified as stockholders' equity. Our Class A common stock feature certain
redemption rights that are considered to be outside of our control and subject
to the occurrence of uncertain future events. Accordingly, at March 31, 2021,
38,500,000 shares of Class A common stock subject to possible redemption are
presented as temporary equity, outside of the stockholders' equity section of
our balance sheet.
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Net Income (Loss) Per Common Stock
Net income (loss) per common stock is computed by dividing net income (loss) by
the weighted-average number of ordinary shares outstanding during the period. We
have not considered the effect of the warrants sold in the Initial Public
Offering and the Private Placement to purchase an aggregate of 20,200,000 shares
of the Company's Class A common stock in the calculation of diluted income
(loss) per share, since their inclusion would be anti-dilutive under the
treasury stock method.
Our statement of operations includes a presentation of income (loss) per share
for common stock subject to redemption in a manner similar to the two-class
method of income (loss) per share. Net income (loss) per common stock, basic and
diluted for common stock subject to possible redemption is calculated by
dividing the interest income (loss) earned on investments held in the Trust
Account, by the weighted average number of common stock subject to possible
redemption outstanding for the period.
Net income (loss) per share, basic and diluted, for non-redeemable common stock
is calculated by dividing the net income (loss), adjusted for income or loss on
marketable securities attributable to Common stock subject to possible
redemption, by the weighted average number of non-redeemable common stock
outstanding for the period.
Recent Accounting Pronouncements
Our management does not believe that any other recently issued, but not yet
effective, accounting standards if currently adopted would have a material
effect on the accompanying financial statements.
JOBS Act
The Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We qualify as an "emerging growth company" and
under the JOBS Act are allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded)
companies. We are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting
standards on the relevant dates on which adoption of such standards is required
for non-emerging growth companies. As a result, the financial statements may not
be comparable to companies that comply with new or revised accounting
pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the
other reduced reporting requirements provided by the JOBS Act. Subject to
certain conditions set forth in the JOBS Act, if, as an "emerging growth
company," we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an auditor's attestation report on our system of
internal controls over financial reporting pursuant to Section 404, (ii) provide
all of the compensation disclosure that may be required of non-emerging growth
public companies under the Dodd-Frank Wall Street Reform and Consumer Protection
Act, (iii) comply with any requirement that may be adopted by the PCAOB
regarding mandatory audit firm rotation or a supplement to the auditor's report
providing additional information about the audit and the financial statements
(auditor discussion and analysis) and (iv) disclose certain executive
compensation related items such as the correlation between executive
compensation and performance and comparisons of the CEO's compensation to median
employee compensation. These exemptions will apply for a period of five years
following the completion of our Initial Public Offering or until we are no
longer an "emerging growth company," whichever is earlier.
This may make comparison of the Company's financial statements with another
public company that is neither an emerging growth company nor an emerging growth
company that has opted out of using the extended transition period difficult or
impossible because of the potential differences in accounting standards used.
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