PROSPECTUS SUPPLEMENT NO. 5
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Filed pursuant to Rule 424(b)(3)
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(To prospectus dated October 21, 2021)
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Registration No. 333-260094
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ARCHAEA ENERGY INC.
110,334,394 SHARES OF CLASS A COMMON
STOCK
7,021,000 WARRANTS TO PURCHASE SHARES OF CLASS A
COMMON STOCK
This prospectus supplement is being filed to update
and supplement the information contained in the prospectus dated October 21, 2021 (the “Prospectus”), with the information
contained in our (i) Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on December
28, 2021 (the “Current Report”), (ii) Amendment No. 2 to the Annual Report on Form 10-K/A for the fiscal year ended December
31, 2020 filed with the SEC on December 28, 2021 (the “Amended 10-K”), (iii) Amendment No. 1 to the Quarterly Report on Form
10-Q/A for the quarterly period ended March 31, 2021 filed with the SEC on December 28, 2021 (the “Amended 1Q21 10-Q”), and
(iv) Amendment No. 1 to the Quarterly Report on Form 10-Q/A for the quarterly period ended June 30, 2021 filed with the SEC on December
28, 2021 (the “Amended 2Q21 10-Q” and, together with the Amended 1Q21 10-Q, the “Amended 10-Qs”). Accordingly,
we have attached the Current Report, the Amended 10-K and the Amended 10-Qs to this prospectus supplement.
The Prospectus and this prospectus supplement relate
to the issuance by us of up to 18,883,492 shares of our Class A common stock, par value $0.0001 per share (the “Class A Common Stock”),
which consist of (i) 11,862,492 shares that may be issued upon the exercise of the 11,862,492 warrants (the “Public Warrants”)
originally sold as part of the units issued in the initial public offering (the “IPO”) of Rice Acquisition Corp. (“RAC”),
(ii) 6,771,000 shares of Class A Common Stock that may be issued upon the exercise of the 6,771,000 warrants originally issued to Rice
Acquisition Sponsor LLC (the “Sponsor”) and Atlas Point Energy Infrastructure Fund, LLC (“Atlas”) in a private
placement that closed simultaneously with the consummation of the IPO (the “Private Placement Warrants”) and (iii) 250,000
shares of Class A Common Stock that may be issued upon the exercise of the 250,000 warrants issued to Atlas in a private placement that
closed simultaneously with the consummation of the Business Combinations (as defined in the Prospectus) (the “Forward Purchase Warrants”
and, together with the Public Warrants and the Private Placement Warrants, the “Warrants”). Each Warrant is exercisable to
purchase for $11.50 one share of Class A Common Stock, subject to adjustment.
In addition, the Prospectus and this prospectus supplement
relate to the resale from time to time of 6,771,000 Private Placement Warrants, 250,000 Forward Purchase Warrants and 110,334,394 shares
of Class A Common Stock by the selling security holders named in the Prospectus or their permitted transferees (each a “Selling
Securityholder” and, collectively, the “Selling Securityholders”). The 110,334,394 shares of Class A Common Stock consist
of (i) 29,166,667 shares of Class A Common Stock issued in a private placement that closed concurrently with the consummation of the Business
Combinations, (ii) 2,500 shares of Class A Common Stock issued to the Sponsor in a private placement prior to the consummation of the
IPO, (iii) 18,883,492 shares of Class A Common Stock issuable upon exercise of the Warrants, (iv) 5,931,350 shares of Class A Common Stock
issuable upon redemption of the 5,931,350 Class A units of LFG Acquisition Holdings LLC (f/k/a Rice Acquisition Holdings LLC) (“Opco”)
held by the initial stockholders of RAC, all of which were issued prior to the consummation of the IPO, (v) 23,000,000 shares of Class
A Common Stock issuable upon redemption of the 23,000,000 Opco Class A units issued as partial consideration upon consummation of the
Aria Merger (as defined in the Prospectus) and (vi) 33,350,385 shares of Class A Common Stock issuable upon redemption of the 33,350,385
Opco Class A units issued as consideration upon consummation of the Archaea Merger (as defined in the Prospectus).
This prospectus supplement updates and supplements
the information in the Prospectus and is not complete without, and may not be delivered or utilized except in combination with, the Prospectus,
including any other amendments or supplements thereto. This prospectus supplement should be read in conjunction with the Prospectus and
if there is any inconsistency between the information in the Prospectus and this prospectus supplement, you should rely on the information
in this prospectus supplement.
The Class A Common Stock is listed on the New York
Stock Exchange (“NYSE”) under the symbol “LFG.” On December 27, 2021, the last sale price of the Class A Common
Stock as reported on the NYSE was $17.96 per share.
_______________________
Investing in our securities involves certain risks,
including those that are described in the “Risk Factors” section beginning on page 7 of the Prospectus.
Neither the SEC nor any state securities commission
has approved or disapproved of the securities to be issued under the Prospectus or determined if the Prospectus or this prospectus supplement
is truthful or complete. Any representation to the contrary is a criminal offense.
_______________________
The date of this prospectus supplement is December
28, 2021.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
__________________
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FORM 8-K
___________________
Current
Report
Pursuant to Section 13 or 15(d) of the securities exchange act of 1934
Date of Report (Date of earliest event reported):
December 28, 2021
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ARCHAEA ENERGY INC.
(Exact name of registrant as specified in its charter)
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Delaware
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001-39644
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85-2867266
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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4444 Westheimer Road, Suite G450
Houston, Texas
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77027
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(Address of principal executive offices)
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(Zip Code)
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(346) 708-8272
(Registrant’s telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
__________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Class A common stock, par value $0.0001 per share
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LFG
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The New York Stock Exchange
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities
Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth
company ☒
If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
The information set forth below in Item 4.02
and Item 7.01 is incorporated by reference into this Item 2.02.
Item 4.02 Non-Reliance on Previously Issued Financial Statements
or a Related Audit Report or Completed Interim Review.
In light of recent comment letters issued by
the Securities and Exchange Commission (the “SEC”) to several other special purpose acquisition companies, the management
of Archaea Energy Inc. (the “Company,” “Archaea” or “we”) has re-evaluated the Company’s application
of Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity” to its accounting
classification of the redeemable shares of Class A common stock of the Company (the “Public Shares”) issued as part of the
units sold in the Company’s initial public offering. The Company had previously classified a portion of the Public Shares as permanent
equity because the Company’s amended and restated certificate of incorporation prior to the consummation of its initial business
combination (the “charter”) provided that the Company shall not redeem the Public Shares to the extent that such redemption
would result in the Company’s failure to have net tangible assets in excess of $5 million or any greater net tangible asset or cash
requirement which may be contained in the agreement relating to the Company’s initial business combination. Based on such re-evaluation,
the Company’s management determined that the Public Shares include certain redemption features
not solely within the Company’s control that, under ASC 480-10-S99, require such shares to be classified as temporary
equity in their entirety.
Therefore, on December 28, 2021, the Audit Committee
of the Company’s Board of Directors (the “Audit Committee”), after discussion with the Company’s management, concluded
that the Company’s previously issued (i) audited balance sheet as of October 26, 2020 included in the Company’s Annual Report
on Form 10-K/A filed with the SEC on May 13, 2021, (ii) audited financial statements as of December 31, 2020 and for the period from September
1, 2020 (inception) through December 31, 2020 included in the Company’s Annual Report on Form 10-K/A filed with the SEC on May 13,
2021, (iii) unaudited interim financial statements as of and for the three months ended March 31, 2021 included in the Company’s
Quarterly Report on Form 10-Q filed with the SEC on May 26, 2021 and (iv) unaudited interim financial statements as of and for the three
and six months ended June 30, 2021 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 13, 2021
should be restated to report all of the Public Shares as temporary equity, and as a result, such financial statements, as well as portions
of any communication that describe or are based on such financial statements, should no longer be relied upon.
Additionally, on December 28, 2021, the Audit
Committee, after discussion with the Company’s management, concluded that the Company’s previously issued unaudited interim
financial statements as of and for the three and nine months ended September 30, 2021 (together with the financial statements referred
to in the immediately preceding paragraph, the “Affected Financial Statements”) included in the Company’s Quarterly
Report on Form 10-Q filed with the SEC on November 15, 2021 should no longer be relied upon due to an error related to the transactions
recorded as part of the reverse recapitalization, which understated general and administrative expenses and accounts payable reported
in such financial statements by $2.8 million. The error related to a duplicate entry recorded as part of the reverse recapitalization.
Portions of any communication that describe or are based on such financial statements also should no longer be relied upon.
The Company plans to file an amendment to each
of the reports referred above to restate the Affected Financial Statements.
The Audit Committee has discussed the matters
disclosed in the first, second and fourth paragraphs in this Item 4.02 with WithumSmith+Brown, PC (the Company’s independent registered
public accounting firm from September 1, 2020 (inception) through September 20, 2021) and the matters disclosed in the above four paragraphs
with KPMG LLP (the Company’s current independent registered public accounting firm).
Item 7.01 Regulation FD Disclosure.
Due to the restatements referred in Item 4.02,
portions of any communication that describe or are based on any of the Affected Financial Statements should no longer be relied upon.
In addition to other changes not described herein, the Company’s net income and Adjusted EBITDA, on a combined basis, for the three
and nine months ended September 30, 2021 would differ from the amounts previously reported in the Company’s press release regarding
its third quarter of 2021 results, which was issued on November 15, 2021 (the “Third Quarter 2021 Earnings Release”), as set
forth in the table below. The full year 2021 combined Adjusted EBITDA guidance range of $72.5 - $77.5 million disclosed in the Third Quarter
2021 Earnings Release remains unchanged. As described in the Third Quarter 2021 Earnings Release, financial information presented on a
“combined basis” is the sum of the historical financial results of the Company for the full period shown and Aria Energy LLC
for periods prior to the business combinations closing date, but only includes the impact of purchase accounting as of September 15, 2021.
(in thousands)
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As Previously Reported
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Adjustment
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As Restated
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Three Months Ended September 30, 2021
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Combined basis - Net income (loss)
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$
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(21,875
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)
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$
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(2,836
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)
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$
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(24,711
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)
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Combined basis - Adjusted EBITDA(1)
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$
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22,291
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$
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(2,836
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)
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$
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19,455
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Nine Months Ended September 30, 2021
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Combined basis - Net income (loss)
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$
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52,750
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$
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(2,836
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)
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$
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49,914
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Combined basis - Adjusted EBITDA(1)
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$
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59,804
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$
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(2,836
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)
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$
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56,968
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______
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(1)
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Adjusted EBITDA is commonly used as a supplemental financial measure by our management and external users of our consolidated financial
statements to assess the financial performance of our assets without regard to financing methods, capital structures, or historical cost
basis. Adjusted EBITDA is not intended to represent cash flows from operations or net income (loss) as defined by U.S. GAAP and is not
necessarily comparable to similarly titled measures reported by other companies.
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We believe Adjusted EBITDA provides relevant and useful information
to management, investors, and other users of our financial information in evaluating the effectiveness of our operating performance in
a manner that is consistent with management’s evaluation of financial and operating performance.
Adjusted EBITDA is calculated by taking net income (loss),
before taxes, interest expense, and depreciation, amortization and accretion, and adjusting for the effects of certain non-cash items,
other non-operating income or expense items, and other items not otherwise predictive or indicative of ongoing operating performance,
including gains and losses on disposal of assets, impairment charges, debt forbearance costs, changes in the fair value of derivatives,
non-cash compensation expense, and non-recurring costs related to our business combinations. We believe the exclusion of these items
enables investors and other users of our financial information to assess our sequential and year-over-year performance and operating
trends on a more comparable basis and is consistent with management’s own evaluation of performance.
The table below reconciles Adjusted EBITDA to net income
(loss). A reconciliation of expected full year 2021 combined Adjusted EBITDA to net income (loss) cannot be provided without unreasonable
efforts due to the inherent difficulty in quantifying certain amounts, including changes in fair value of warrant derivatives, due to
a variety of factors including the unpredictability of underlying price movements, which may be significant.
(in thousands)
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Three Months Ended
September 30, 2021
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Nine Months Ended
September 30, 2021
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Net income (loss)
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$
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(24,711)
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$
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49,914
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Adjustments:
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Interest expense
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$
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3,639
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$
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12,335
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Depreciation, amortization and accretion
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$
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7,776
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$
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20,025
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EBITDA
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$
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(13,296
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)
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$
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82,274
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Amortization of intangibles and below-market contracts
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$
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580
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$
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2,488
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Amortization of equity method investments basis difference
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$
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428
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$
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428
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Net (gains) losses from changes in fair value of derivatives
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$
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9,839
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$
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9,284
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Share-based compensation
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$
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2,708
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$
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2,886
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Gain on disposal of assets
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$
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-
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$
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(1,347
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)
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Gain on extinguishment of debt
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$
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-
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$
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(61,411
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)
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Acquisition transaction costs
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$
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19,197
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$
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22,367
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Adjusted EBITDA
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$
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19,455
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$
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56,968
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Note: Totals may not sum due to rounding.
Item 8.01 Other Events.
The Company’s Board of Directors expects
to hold the 2022 Annual Meeting of Stockholders (the “Annual Meeting”) on May 18, 2022. The time and location of the
Annual Meeting will be set forth in the Company’s definitive proxy statement for the Annual Meeting to be filed with the SEC. The
Company has set January 18, 2022 as the deadline for the receipt of proposals to be considered for inclusion in the Company’s proxy
statement for the Annual Meeting pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All
stockholder proposals submitted in accordance with Rule 14a-8 under the Exchange Act must be directed to the attention of the Corporate
Secretary, at 4444 Westheimer Road, Suite G450, Houston, Texas, 77027. Pursuant to the Company’s Bylaws, stockholders seeking to
bring business before the Annual Meeting or nominate candidates for election as directors at the Annual Meeting must deliver such proposals
or nomination in accordance with the notice requirements contained in the Company’s Bylaws to the principal executive offices of
the Company at 4444 Westheimer Road, Suite G450, Houston, Texas, 77027, Attention: Corporate Secretary, no earlier than the close
of business on January 18, 2022 and no later than the close of business on February 17, 2022. Any stockholder proposal or director
nomination must also comply with the requirements of Delaware law, the rules and regulations promulgated by the SEC and the Bylaws, as
applicable.
FORWARD-LOOKING STATEMENTS
This Current Report on Form 8-K contains certain
statements that may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Exchange Act. Statements that do not relate strictly to historical or current facts are forward-looking and usually
identified by the use of words such as “anticipate,” “estimate,” “could,” “would,” “should,”
“will,” “may,” “forecast,” “approximate,” “expect,” “project,”
“intend,” “plan,” “believe” and other similar words. Forward-looking statements may relate to expectations
for future financial performance, business strategies or expectations for Archaea’s business. Specifically, forward-looking statements
may include statements concerning market conditions and trends, earnings, performance, strategies, prospects and other aspects of Archaea’s
business. Forward looking statements are based on current expectations, estimates, projections, targets, opinions and/or beliefs of Archaea,
and such statements involve known and unknown risks, uncertainties and other factors.
The risks and uncertainties that could cause
those actual results to differ materially from those expressed or implied by these forward looking statements include, but are not limited
to: (a) the ability to recognize the anticipated benefits of the business combinations and any transactions contemplated thereby, which
may be affected by, among other things, competition, the ability of Archaea to grow and manage growth profitably and retain its management
and key employees; (b) the possibility that Archaea may be adversely affected by other economic, business and/or competitive factors;
(c) Archaea’s ability to develop and operate new projects; (d) the reduction or elimination of government economic incentives to
the renewable energy market; (e) delays in acquisition, financing, construction and development of new projects; (f) the length of development
cycles for new projects, including the design and construction processes for Archaea’s projects; (g) Archaea’s ability to
identify suitable locations for new projects; (h) Archaea’s dependence on landfill operators; (i) existing regulations and changes
to regulations and policies that affect Archaea’s operations; (j) decline in public acceptance and support of renewable energy development
and projects; (k) demand for renewable energy not being sustained; (l) impacts of climate change, changing weather patterns and conditions,
and natural disasters; (m) the ability to secure necessary governmental and regulatory approvals; (n) the Company’s expansion into
new business lines; and (o) other risks and uncertainties indicated in the Registration Statement on Form S-1 (File No. 333-260094), originally
filed by Archaea with the SEC on October 6, 2021, as subsequently amended on October 18, 2021 and declared effective by the SEC on October
21, 2021, including those under “Risk Factors” therein, and other documents filed or to be filed with the SEC by Archaea.
Accordingly, forward-looking statements should
not be relied upon as representing Archaea’s views as of any subsequent date. Archaea does not undertake any obligation to update
forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information,
future events or otherwise, except as may be required under applicable securities laws.
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: December 28, 2021
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ARCHAEA ENERGY INC.
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By:
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/s/ Chad Bellah
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Name:
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Chad Bellah
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Title:
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Chief Accounting Officer
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UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-K/A
(Amendment No. 2)
(Mark
One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2020
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from to
ARCHAEA
ENERGY INC. (formerly known as Rice Acquisition Corp.)
(Exact name of registrant as specified in its charter)
Delaware
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001-39644
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85-2867266
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(State
or other jurisdiction of
incorporation or organization)
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(Commission
File Number)
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(I.R.S.
Employer
Identification Number)
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4444 Westheimer Road, Suite G450
Houston, Texas
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77027
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (346) 708-8272
Securities
registered pursuant to Section 12(b) of the Act:
Title of Each Class:
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Trading Symbol:
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Name of Each Exchange
on Which Registered:
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Shares of Class A common
stock, par value $0.0001 per share
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LFG
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The New York Stock Exchange
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Securities
registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No
☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes
☐ No ☒
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer, “smaller
reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
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☐
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Accelerated filer
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☐
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Non-accelerated filer
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☒
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Smaller reporting company
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☒
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Emerging growth company
|
☒
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If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on
and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐
As
of June 30, 2020, the last business day of the registrant’s most recently completed second fiscal quarter, the registrant’s
securities were not publicly traded. The registrant’s units began trading on The New York Stock Exchange (“NYSE”)
on October 22, 2020 and the registrant’s shares of Class A common stock, par value $0.0001 (the “Class A common stock”)
and warrants began trading on the NYSE on December 14, 2020. The aggregate market value of the common stock outstanding, other
than shares held by persons who may be deemed affiliates of the registrant, computed by reference to the closing sales price for
the shares of common stock on March 19, 2021, as reported on the NYSE, was $127,909,348 (based on the closing sales price of the
Class A common stock on March 19, 2021 of $10.27).
As
of March 19, 2021, 23,727,500 shares of Class A common stock, par value $0.0001, and 5,931,350 shares of Class B common stock,
par value $0.0001, were issued and outstanding.
Documents
Incorporated by Reference: None.
EXPLANATORY
NOTE
Archaea
Energy Inc., formerly known as Rice Acquisition Corp. (the “Company”), is filing this Amendment No. 2 on Form 10-K/A (this
“Amendment No. 2”) to amend and restate certain items in its Annual Report on Form 10-K as of December 31, 2020 and for the
period from September 1, 2020 (inception) through December 31, 2020, as originally filed with the U.S. Securities and Exchange Commission
(the “SEC”) on March 30, 2021 (the “Original Filing”) and subsequently amended on May 13, 2021 (“Amendment
No. 1”).
On
September 15, 2021, the Company consummated the previously announced business combinations pursuant to (i) the Business Combination Agreement,
dated April 7, 2021 (as amended, the “Aria Merger Agreement”), by and among Rice Acquisition Corp., a Delaware corporation
(“RAC”), Rice Acquisition Holdings LLC, a Delaware limited liability company and direct subsidiary of RAC (“RAC Opco”),
LFG Intermediate Co, LLC, a Delaware limited liability company and direct subsidiary of RAC Opco (“RAC Intermediate”), LFG
Buyer Co, LLC, a Delaware limited liability company and direct subsidiary of RAC Intermediate (“RAC Buyer”), Inigo Merger
Sub, LLC, a Delaware limited liability company and direct subsidiary of RAC Buyer (“Aria Merger Sub”), Aria Energy LLC, a
Delaware limited liability company (“Aria”), and Aria Renewable Energy Systems LLC, a Delaware limited liability company,
pursuant to which, among other things, Aria Merger Sub was merged with and into Aria, with Aria surviving the merger and becoming a direct
subsidiary of RAC Buyer, on the terms and subject to the conditions set forth therein (the transactions contemplated by the Aria Merger
Agreement, the “Aria Merger”), and (ii) the Business Combination Agreement, dated April 7, 2021 (as amended, the “Archaea
Merger Agreement” and, together with the Aria Merger Agreement, the “Business Combination Agreements”), by and among
RAC, RAC Opco, RAC Intermediate, RAC Buyer, Fezzik Merger Sub, LLC, a Delaware limited liability company and direct subsidiary of RAC
Buyer (“Archaea Merger Sub”), Archaea Energy LLC, a Delaware limited liability company, and Archaea Energy II LLC, a Delaware
limited liability company (“Legacy Archaea”), pursuant to which, among other things, Archaea Merger Sub was merged with and
into Legacy Archaea, with Legacy Archaea surviving the merger and becoming a direct subsidiary of RAC Buyer, on the terms and subject
to the conditions set forth therein (the transactions contemplated by the Archaea Merger Agreement, the “Archaea Merger” and,
together with the Aria Merger, the “Business Combinations”). As further discussed in Note 4 - Business Combinations and Reverse
Recapitalization, Legacy Archaea was determined to be the accounting acquirer of the Business Combinations, and Aria was the predecessor
to the Company.
Pursuant
to the terms and subject to the conditions set forth in the Business Combination Agreement, on September 15, 2021 (the “Closing
Date”), the Business Combination was consummated (the “Closing”).
As a result of the Business
Combination, among other things, Nicholas Stork was appointed as Chief Executive Officer of the Company and Eric Javidi was appointed
as Chief Financial Officer of the Company, effective as of the Closing.
Unless
stated otherwise, this report contains information about RAC before the consummation of the Business Combination. References to
the “Company” in this report refer to RAC before the consummation of the Business Combination or Archaea Energy Inc. after
the Business Combination, as the context suggests.
Second Restatement Background
In
the Company’s previously issued financial statements, a portion of the redeemable shares of Class A common stock of the Company
(the “public shares”) issued as part of the units sold in the Company’s initial public offering were classified as
permanent equity to maintain stockholders’ equity greater than $5,000,000 on the basis that the Company will consummate its initial
business combination only if the Company has net tangible assets of at least $5,000,001. Thus, the Company can only complete a merger
and continue to exist as a public company if there are sufficient public shares that do not redeem at the merger and so it is appropriate
to classify the portion of its public shares required to keep its stockholders’ equity above the $5,000,000 threshold as “shares
not subject to redemption.”
Following the preparation
of the Company’s unaudited condensed financial statements as of and for quarterly period ended September 30, 2021, the Company
further evaluated the SEC and its staff’s guidance on redeemable equity instruments in ASC 480-10-S99. Previously, the Company
did not consider redeemable stock classified as temporary equity as part of net tangible assets. Effective with these financial statements,
the Company revised this interpretation to include temporary equity in net tangible assets. As a result, the Company determined that
the public shares include certain redemption provisions not solely within the control of the Company that, under ASC 480-10-S99, require
such shares to be classified outside of permanent equity. In addition, in connection with the change in presentation of Class A common
stock, the Company determined it should restate its earnings per share calculation to allocate income and losses shares pro rata between
the two classes of shares. This presentation contemplates a Business Combination as the most likely outcome, in which case, both classes
of shares share pro rata in the income and losses of the Company.
Therefore, on December 28, 2021, the audit committee of the Company’s board of directors (the “Audit Committee”), after discussion with
the Company’s management, concluded that the Company’s
previously issued (i) audited balance sheet as of October 26, 2020 included in Amendment No. 1, (ii) audited financial statements
as of December 31, 2020 and for the period from September 1, 2020 (inception) through December 31, 2020 included in Amendment No. 1,
(iii) unaudited interim financial statements as of and for the three months ended March 31, 2021 included in the Company’s Quarterly
Report on Form 10-Q filed with the SEC on May 26, 2021 and (iv) unaudited interim financial statements as of and for the three and six
months ended June 30, 2021 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 13, 2021 should
be restated to report all public shares as temporary equity and should no longer be relied upon.
Items Amended in this Amendment No. 2
For the convenience of
the reader, this Amendment No. 2 amends and restates Amendment No. 1 in its entirety (which had amended and restated the Original Filing
in its entirety). As a result, this Amendment No. 2 includes both items that have been changed as a result of the restatement described
above and the restatement described in Amendment No. 1 as well as items that are unchanged from the Original Filing. The following items
have been amended in this Amendment No. 2 to reflect the restatement described above:
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Part
I, Item 1A. Risk Factors
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Part
II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
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Part II, Item 8. Financial Statements and Supplementary Data
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Part
II, Item 9A. Controls and Procedures
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Part IV, Item 15. Exhibits, Financial Statement Schedules
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In addition, in accordance
with applicable SEC rules, this Amendment No. 2 includes new certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act
from our Chief Executive Officer (as principal executive officer) and our Chief Financial Officer (as principal financial officer) dated
as of the filing date of this Amendment No. 2.
Amendment No. 1 had amended
and restated the Original Filing in its entirety, and the only items that were amended in Amendment No. 1 were those listed below. Amendment
No. 1 also included certifications from the Company’s principal executive officer and principal financial officer, which were dated
as of the filing date of Amendment No. 1.
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Part I, Item 1A. Risk Factors
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Part II, Item 7. Management’s Discussion
and Analysis of Financial Condition and Results of Operations
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Part II, Item 8. Consolidated Financial Statements
and Supplementary Data
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Part II, Item 9A. Controls and Procedures
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Part IV, Item 15. Exhibits, Financial Statement
Schedules
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Except as described above,
this Amendment No. 2 does not amend, update or change any other items or disclosures in Amendment No. 1. This Amendment No. 2 does not
purport to reflect any information or events subsequent to the filing date of the Original Filing (except as noted in Amendment No. 1
with respect to the restatement described therein). As such, this Amendment No. 2 speaks only as of the date the Original Filing was
filed, and we have not undertaken herein to amend, supplement or update any information contained in the Original Filing to give effect
to any subsequent events. Accordingly, this Amendment No. 2 should be read in conjunction with our filings made with the SEC subsequent
to the filing of the Original Filing.
TABLE
OF CONTENTS
CERTAIN
TERMS
Unless
otherwise stated in this Annual Report on Form 10-K (this “Report”), or the context otherwise requires, references
to:
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“Affiliated
Joint Acquisition” are to an acquisition opportunity jointly with our sponsor,
or one or more affiliates, including Rice Investment Group and/or one or more of its
portfolio companies;
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“Atlas
Point Fund” are to Atlas Point Energy Infrastructure Fund, LLC, a Delaware limited
liability company;
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“Common
stock” are to our Class A common stock and our Class B common stock, collectively;
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“equity-linked
securities” are to any securities of our company or any of our subsidiaries which
are convertible into, or exchangeable or exercisable for, equity securities of our company
or such subsidiary, including any securities issued by our company or any of our subsidiaries
which are pledged to secure any obligation of any holder to purchase equity securities
of our company or any of our subsidiaries, and including Opco Units;
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“forward
purchase agreement” are to the agreement that provides for the sale of the forward
purchase securities to Atlas Point Fund in a private placement that will close simultaneously
with the closing of our initial business combination;
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“forward
purchase securities” are to either the forward purchase units valued at $10.00
per unit or the forward purchase shares valued at $9.67 per share, which may be issued
at our discretion pursuant to the forward purchase agreement;
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“forward
purchase shares” are to our Class A common stock that may be issued pursuant to
the forward purchase agreement;
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“forward
purchase units” are to the units, consisting of one share of our Class A common
stock and one-third of one warrant that may be issued pursuant to the forward purchase
agreement;
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“forward
purchase warrants” are to the warrants that may be sold as part of the forward
purchase units pursuant to the forward purchase agreement;
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“founder
shares” are to the Class B Units of Opco initially issued in a private placement
to our sponsor prior to our initial public offering (or the Class A Units of Opco into
which such Class B Units will convert) and a corresponding number of shares of our non-economic
Class B common stock;
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“initial
stockholders” are to holders of our founder shares and sponsor shares prior to
our initial public offering, including Atlas Point Energy Infrastructure Fund, LLC;
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“management”
or our “management team” are to our officers and directors;
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“Opco”
is to Rice Acquisition Holdings LLC;
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“Opco
Units” are to the Class A Units and Class B Units of Opco;
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“private
placement warrants” are to the warrants issued to our sponsor and Atlas Point Fund
in private placements simultaneously with the closing of our initial public offering;
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“public
shares” are to shares of our Class A common stock sold as part of the units in
our initial public offering and, unless otherwise stated herein, the 2,500 shares of
our Class A common stock forming part of the sponsor shares, which collectively represent
100% of the economic interests in Rice Acquisition Corp.;
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“public
stockholders” are to the holders of our public shares, including our initial stockholders
and management team to the extent our initial stockholders and/or members of our management
team purchase public shares, provided that each initial stockholder’s and member
of our management team’s status as a “public stockholder” shall only
exist with respect to such public shares;
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“public
warrants” are to the warrants sold as part of the units in our initial public offering;
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“Rice
Investment Group” is a multi-strategy fund controlled by the Rice family and other
members of our management focused on a diverse array of energy related investments, including
energy transition investments;
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“sponsor”
are to Rice Acquisition Sponsor LLC, a Delaware limited liability company. Our sponsor
is controlled by its managing members, Daniel Joseph Rice, IV and J. Kyle Derham, and
owned by members of our management and other individuals, and is an affiliate of Rice
Investment Group;
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“sponsor
shares” are to the 100 Class A Units of Opco and corresponding number of shares
of our non-economic Class B common stock (which together will be exchangeable into shares
of Class A common stock after our initial business combination on a one-for-one basis)
and the 2,500 shares of our Class A common stock purchased by our sponsor in a private
placement prior to our initial public offering; and
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“we,”
“us,” “company” or “our company” are to Rice Acquisition
Corp. and Opco.
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CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
Report, including, without limitation, statements under the heading “Item 7. Management’s Discussion and Analysis
of Financial Condition and Results of Operations,” 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 Securities Exchange Act of
1934, as amended, (the “Exchange Act”). These forward-looking statements can be identified by the use of forward-looking
terminology, including the words “believes,” “estimates,” “anticipates,” “expects,”
“intends,” “plans,” “may,” “will,” “potential,” “projects,”
“predicts,” “continue,” or “should,” or, in each case, their negative or other variations
or comparable terminology. There can be no assurance that actual results will not materially differ from expectations. Such statements
include, but are not limited to, any statements relating to our ability to consummate any acquisition or other business combination
and any other statements that are not statements of current or historical facts. These statements are based on management’s
current expectations, but actual results may differ materially due to various factors, including, but not limited to:
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our
ability to select an appropriate target business or businesses;
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our
ability to complete an initial business combination;
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our
expectations around the performance of the prospective target business or businesses;
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our
success in retaining or recruiting, or changes required in, our officers, key employees
or directors following our initial business combination;
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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;
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our
potential ability to obtain additional financing to complete our initial business combination;
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our
pool of prospective target businesses;
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our
ability to consummate an initial business combination due to the uncertainty resulting
from the recent COVID-19 pandemic and other events (such as terrorist attacks, natural
disasters or other significant outbreaks of infectious diseases);
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the
ability of our officers and directors to generate a number of potential investment opportunities;
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our
public securities’ potential liquidity and trading;
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the
lack of a market for our securities;
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the
use of proceeds not held in the trust account or available to us from interest income
on the trust account balance;
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the
trust account not being subject to claims of third parties; or
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our
financial performance following our initial public offering.
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The
forward-looking statements contained in this Report are based on our current expectations and beliefs concerning future developments
and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking
statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause
actual results or performance to be materially different from those expressed or implied by these forward-looking statements.
These risks and uncertainties include, but are not limited to, 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. These risks and others described under “Risk Factors” may not be exhaustive.
By
their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances
that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance
and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate
may differ materially from those made in or suggested by the forward-looking statements contained in this Report. In addition,
even if our results or operations, financial condition and liquidity, and developments in the industry in which we operate are
consistent with the forward-looking statements contained in this Report, those results or developments may not be indicative of
results or developments in subsequent periods.
SUMMARY
OF RISK FACTORS
The following
is a summary of the principal risks described below in Part I, Item 1A “Risk Factors” in this Annual Report on Form
10-K. We believe that the risks described in the “Risk Factors” section are material to investors, but other factors
not presently known to us or that we currently believe are immaterial may also adversely affect us. The following summary should
not be considered an exhaustive summary of the material risks facing us, and it should be read in conjunction with the “Risk
Factors” section and the other information contained in this Annual Report on Form 10-K.
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We
are a recently formed blank check company with no operating history and no revenues,
and you have no basis on which to evaluate our ability to achieve our business objective.
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Past
performance by the Rice family, Rice Investment Group and its portfolio companies and
our management team may not be indicative of future performance of an investment in the
Company. In addition, none of our officers or directors have served as a sponsor, director
or officer of any blank check companies or special purpose acquisition companies in the
past.
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Our
public stockholders may not be afforded an opportunity to vote on our proposed business
combination, which means we may complete our initial business combination even though
a majority of our public stockholders do not support such a combination.
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In
evaluating a prospective target business for our initial business combination, our management
may consider the availability of funds from the sale of the forward purchase securities,
which may be used as part of the consideration to the sellers in the initial business
combination. If Atlas Point Fund decides not to accept our offer to purchase the forward
purchase securities, we may decide not to consummate our initial business combination,
or if we decide to, we may lack sufficient funds to consummate our initial business combination.
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Your
only opportunity to affect the investment decision regarding a potential business combination
may be limited to the exercise of your right to redeem your shares from us for cash.
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If
we seek stockholder approval of our initial business combination, our initial stockholders
and management team have agreed to vote in favor of such initial business combination,
regardless of how our public stockholders vote.
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The
ability of our public stockholders to redeem their shares for cash may make our financial
condition unattractive to potential business combination targets, which may make it difficult
for us to enter into a business combination with a target.
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The
ability of our public stockholders to exercise redemption rights with respect to a large
number of our shares may not allow us to complete the most desirable business combination
or optimize our capital structure.
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The
ability of our public stockholders to exercise redemption rights with respect to a large
number of our shares could increase the probability that our initial business combination
would be unsuccessful and that you would have to wait for liquidation in order to redeem
your stock.
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Our
search for a business combination, and any target business with which we ultimately consummate
a business combination, may be materially adversely affected by the recent coronavirus
(COVID-19) outbreak and the status of debt and equity markets.
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We
may not be able to complete our initial business combination within the 24 months after
the closing of our initial public offering, in which case we would cease all operations
except for the purpose of winding up and we would redeem our public shares and liquidate,
in which case our public stockholders may receive only their pro rata portion of the
funds in the trust account that are available for distribution to public stockholders,
and our warrants will expire worthless.
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If
we seek stockholder approval of our initial business combination, our sponsor, directors,
officers, advisors and their affiliates may elect to purchase shares or public warrants
from public stockholders or public warrantholders, which may influence a vote on a proposed
business combination and reduce the public “float” of our Class A common
stock.
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If
a stockholder fails to receive notice of our offer to redeem our public shares in connection
with our business combination, or fails to comply with the procedures for tendering its
shares, such shares may not be redeemed.
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You
will not have any rights or interests in funds from the trust account, except under certain
limited circumstances. Therefore, to liquidate your investment, you may be forced to
sell your public shares or warrants, potentially at a loss.
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The
NYSE may delist our securities from trading on its exchange, which could limit investors’
ability to make transactions in our securities and subject us to additional trading restrictions.
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If
we seek stockholder approval of our initial business combination and we do not conduct
redemptions pursuant to the tender offer rules, and if you or a “group” of
stockholders are deemed to hold in excess of 20% of our Class A common stock, you will
lose the ability to redeem all such shares in excess of 20% of our Class A common stock.
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Because
of our limited resources and the significant competition for business combination opportunities,
it may be more difficult for us to complete our initial business combination. If we do
not complete our initial business combination, our public stockholders may receive only
their pro rata portion of the funds in the trust account that are available for distribution
to public stockholders, and our warrants will expire worthless.
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If
the net proceeds of our initial public offering and the sale of the private placement
warrants not being held in the trust account are insufficient to allow us to operate
for at least the next 24 months, we may be unable to complete our initial business combination,
in which case our public stockholders may only receive $10.00 per share, or less than
such amount in certain circumstances, and our warrants will expire worthless.
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If
the net proceeds of our initial public offering and the sale of the private placement
warrants not being held in the trust account are insufficient to allow us to operate
for at least the next 24 months, it could limit the amount available to fund our search
for a target business or businesses and complete our initial business combination and
we will depend on loans from our sponsor or management team to fund our search for a
business combination, to pay franchise and income taxes of the Company or Opco and to
complete our initial business combination. If we are unable to obtain these loans, we
may be unable to complete our initial business combination.
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Subsequent
to our completion of our initial business combination, we may be required to take write-downs
or write-offs, restructuring and impairment or other charges that could have a significant
negative effect on our financial condition, results of operations and our stock price,
which could cause you to lose some or all of your investment.
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If
third parties bring claims against us, the proceeds held in the trust account could be
reduced and the per-share redemption amount received by stockholders may be less than
$10.00 per share.
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PART
I
Overview
We
are a blank check company incorporated in Delaware for the purpose of effecting a merger, capital stock exchange, asset acquisition,
stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this
Report as our initial business combination. We are an early stage and emerging growth company and, as such, we are subject to
all of the risks associated with early stage and emerging growth companies.
In
September 2020, our Sponsor paid $25,000 to cover certain of our expenses in exchange for (i) 5,750,100 shares of our Class B
common stock, par value $0.0001 per share, and (ii) 2,500 shares of our Class A common stock, par value $0.0001 per share. Also
in September 2020, the Sponsor received 5,750,000 Class B Units of Opco (which are profits interest units only). In October 2020,
the Sponsor forfeited 90,000 Class B Units of Opco, and 30,000 Class B Units of Opco were issued to each of the independent directors. The Sponsor transferred a corresponding number of shares of Class B common stock to the independent directors.
In October 2020, the Company effected a dividend, resulting in an aggregate of (i) 6,181,350 shares of our Class B common stock,
and (ii) 2,500 shares of our Class A common stock outstanding. All shares and associated amounts have been retroactively restated
to reflect the dividend. Upon a liquidation of Opco, distributions generally will be made to the holders of Opco Units on a pro
rata basis, subject to certain limitations with respect to the Class B Units of Opco, including that, prior to the completion
of the initial business combination, such Class B Units will not be entitled to participate in a liquidating distribution.
On
October 26, 2020, the Company consummated its initial public offering of 23,725,000 units, including 2,225,000 units that were
issued pursuant to the underwriters’ partial exercise of their over-allotment option, at $10.00 per unit, generating gross
proceeds of approximately $237.3 million, and incurring offering costs of approximately $12.5 million, inclusive of $7.6 million
in deferred underwriting commissions. Of the 23,725,000 units sold, affiliates of our Sponsor and Atlas Point Fund had purchased
1,980,000 units (the “Affiliated Units”) and 2,128,500 units (the “Atlas Units”), respectively, at the
initial public offering price. The underwriters did not receive any underwriting discounts or commissions on the 1,980,000 Affiliated
Units. Each unit consists of one share of Class A common stock and one-half of one redeemable warrant (each, a “Public Warrant”).
Each whole Public Warrant entitles the holder to purchase one share of our Class A common stock at a price of $11.50 per share,
subject to adjustment.
Simultaneously
with the closing of our initial public offering, we consummated the private placement (“Private Placement”) of 6,771,000
warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) to the
Sponsor and Atlas Point Fund, at a price of $1.00 per Private Placement Warrant, generating gross proceeds of approximately $6.8
million. Each Private Placement Warrant is exercisable to purchase one share of our Class A common stock or, in certain circumstances,
one Class A Unit of Opco together with a corresponding number of shares of our non-economic Class B common stock, subject to certain
adjustments.
Market
Opportunity
We
intend to focus our search for a target business in the broadly defined energy transition or sustainability arena. Specifically,
we plan to concentrate our search on supply-side solutions and innovations that enable the economy to decarbonize in sectors that
include renewable fuels, sustainable chemical production and feedstocks, carbon capture, utilization and storage technology and
equipment, applications, infrastructure and technology focused on reducing the carbon intensity of fuels, energy production methods,
and industrial processes. We believe the recent capital market and investment activity directed at energy transition has focused
on end-market applications such as vehicle electrification, energy efficiency for consumers and sustainable and eco-conscious
products. These trends are important to the overall success of the energy transition; however, their adoption and commercial development
require more focus on the production and supply of clean fuels, sustainable energy and industrial applications and infrastructure.
We believe traditional renewable electricity generation from wind and solar will continue growing market share. These sources
are ultimately limited by geography and intermittency, and will not solve the renewable energy needs of several sub-sectors of
the economy less likely to electrify. Our focus on renewable fuels and sustainable chemical production will serve to bolster and
complement the rapid development of wind and solar. Our management’s history and track-record of owning and building successful
energy production companies provides us with unique and differentiated insights into how the traditional fossil fuel-based energy
value chain is changing to accommodate for a lower carbon footprint and a more sustainable future.
The
potential growth in the production and consumption of sustainable fuels, including renewable natural gas (“RNG”),
blue and green hydrogen, renewable diesel, renewable jet fuel, low or zero-carbon synthetic fuels and fuels that incorporate carbon
capture, utilization and storage represents a significant market opportunity. We believe the widespread adoption of renewable
fuels by major sectors of the economy such as freight, air and marine transportation, residential and industrial heating and power
generation and energy storage will create a profound disruption resulting in a very large addressable market. The carbon intensity
of energy and industrial production methods is one of the main drivers for the adoption of renewable and low-carbon fuels. For
example, traditional cement and steel production is very energy intensive and pollutant and can be decarbonized using clean fuels
in heat generation and carbon capture, utilization and storage to reduce process-related emissions.
In
addition, the infrastructure, industrial and technological requirements to increase the market penetration of sustainable fuels
also present tremendous opportunity. Equipment, applications and installations such as anaerobic digesters that produce RNG, biodiesel
plants that manufacture renewable diesel and electrolyzers that generate clean hydrogen need to be scaled up to handle increased
demand and compete in markets including and beyond the transportation sector.
Large
publicly traded companies in the energy, utility and waste management sectors have made significant investments in renewable energy
production and infrastructure projects to meet their own emission reduction targets and adapt to changing regulatory frameworks
and customer preferences. The advent of RNG, renewable diesel and blue and green hydrogen and technologies on carbon capture,
utilization and storage will further increase the range of applications and use cases for renewable and zero-emission fuels over
the longer term.
Furthermore,
sustainable chemicals and materials also represent large addressable markets that displace carbon intensive fossil fuel-based
products with lower emission sustainable alternatives. Petrochemicals can be replaced using biomass and recycled waste products
as feedstock. The production of building materials can be decarbonized using recycling technologies and novel circular production
methods that convert traditional waste products into valuable energy and/or feedstock sources.
Business
Strategy
Our
acquisition and value creation strategy is to identify, acquire and, after our initial business combination, build a company whose
principal effort is developing and advancing the objectives of global decarbonization while generating attractive risk adjusted
returns for our shareholders. Our acquisition strategy leverages our management team’s and Rice Investment Group’s
network of potential proprietary and public transaction sources where we believe a combination of our relationships, knowledge
and experience in the renewable and energy industries could effect a positive transformation or augmentation of existing businesses
or properties. Our goal is to build a focused business with multiple competitive advantages that have the potential to improve
the target business’s overall value proposition. We plan to utilize the network and industry experience of our management
team and Rice Investment Group in seeking an initial business combination and employing our acquisition strategy. Over the course
of their careers, the members of our management team and their affiliates, including Rice Investment Group, have developed a broad
network of contacts and corporate relationships that we believe will serve as a useful source of acquisition opportunities. In
addition to industry and lending community relationships, we plan to leverage relationships with management teams of public and
private companies, investment bankers, restructuring advisers, attorneys and accountants, which we believe should provide us with
a number of business combination opportunities.
Our
management team and board of directors have an extensive network of contacts that they will leverage in their efforts in identifying
an attractive target with operations in a Sustainability related sector. We believe this existing network and long history of
working together are advantages in sourcing potential business combination targets. We also believe that our management team’s
reputation, experience and track record will make us a preferred counterparty for public and private companies with operations
in a Sustainability related sector. We also believe many privately held and publicly traded companies consider the Rice Investment
Group to be a trustworthy partner and recognize the firm’s ability to support value and enhance returns.
Acquisition
Criteria
Consistent
with our business strategy, we have identified the following general criteria and guidelines that we believe are important in
evaluating prospective targets for our initial business combination. We use these criteria and guidelines in evaluating acquisition
opportunities, but we may decide to enter into our initial business combination with a target that does not meet these criteria
and guidelines. We intend to acquire target businesses that we believe:
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operate
in high growth, large addressable markets with favorable long-term market dynamics;
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display
differentiated business attributes and/or product offerings that provide us confidence
on the long-term prospects and profitability of the company;
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are
fundamentally sound and can benefit from a partnership with us by leveraging the operational,
transactional, financial, managerial and investment experience of our management team
and Rice Investment Group;
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can
utilize the extensive networks and insights that our management team and Rice Investment
Group have built in the renewable and energy industry;
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are
at an inflection point, such as requiring additional management expertise, are able to
innovate through new operational techniques, or where we believe we can drive improved
financial performance;
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exhibit
unrecognized value or other characteristics, desirable returns on capital, and a need
for capital to achieve the company’s growth strategy, that we believe have been
misevaluated by the marketplace based on our analysis and due diligence review; and
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will
offer an attractive risk-adjusted return for our stockholders.
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Potential
upside from growth in the target business and an improved capital structure will be weighed against any identified downside risks.
These
criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination
may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our
management may deem relevant. In the event that we decide to enter into our initial business combination with a target business
that does not meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria
in our stockholder communications related to our initial business combination, which, as discussed in this Report, would be in
the form of proxy solicitation or tender offer materials that we would file with the U.S. Securities and Exchange Commission (the
“SEC”).
Initial
Business Combination
The
NYSE rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80%
of the net assets held in trust (net of amounts disbursed to management for working capital purposes and excluding the amount
of any deferred underwriting discount held in trust) at the time of the agreement to enter into the initial business combination.
Our board will make the determination as to the fair market value of a target business or businesses. If our board is not able
to independently determine the fair market value of a target business or businesses, we will obtain an opinion from an independent
investment banking firm which is a member of the Financial Industry Regulatory Authority Inc., or FINRA, or an independent accounting
firm with respect to the satisfaction of such criteria. While we consider it unlikely that our board will not be able to make
an independent determination of the fair market value of a target business or businesses, it may be unable to do so if the board
is less familiar or experienced with the target company’s business or there is a significant amount of uncertainty as to
the value of the company’s assets or prospects.
We
may pursue an acquisition opportunity jointly with our sponsor, or one or more affiliates, including Rice Investment Group and/or
one or more of its portfolio companies, which we refer to as an “Affiliated Joint Acquisition.” Any such parties may
co-invest with us in the target business at the time of our initial business combination, or we could raise additional proceeds
to complete the acquisition by issuing to such parties a class of equity or equity-linked securities. Our sponsor and its affiliates
have no obligation to make any such investment, and may compete with us for potential business combinations. Any such issuance
of equity or equity-linked securities would, on a fully diluted basis, reduce the percentage ownership of our then-existing stockholders.
Notwithstanding the foregoing, pursuant to the anti-dilution provisions of our founder shares, issuances or deemed issuances of
our Class A common stock or equity-linked securities would result in an adjustment to the number of Class A Units of Opco into
which the Class B Units of Opco will convert (unless the holders of a majority of the outstanding founder shares agree to waive
such adjustment with respect to any such issuance or deemed issuance) so that, after all founder shares have been exchanged for
shares of our Class A common stock, the aggregate number of shares of our Class A common stock received by holders in exchange
for founder shares would equal 20% of the sum of the total outstanding shares of common stock following the completion of our
initial public offering plus all shares of our Class A common stock and equity-linked securities issued or deemed issued in connection
with the business combination (excluding the forward purchase securities and any shares or equity-linked securities issued, or
to be issued, to any seller in the business combination and excluding the sponsor shares).
We
anticipate structuring our initial business combination either (i) in such a way so that we will control 100% of the equity interests
or assets of the target business or businesses or (ii) in such a way so that we control less than 100% of such interests or assets
of the target business in order to meet certain objectives of the target management team or stockholders or for other reasons,
including an Affiliated Joint Acquisition as described above. However, we will only complete a business combination if we control
50% or more of the outstanding voting securities of the target or otherwise are not required to register as an investment company
under the Investment Company Act of 1940, as amended (the “Investment Company Act”). Even if we control 50% or more
of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest
in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction.
For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding
capital stock, shares or other equity interests of a target. In this case, we would acquire a 100% controlling interest in the
target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our
initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination.
If we control less than 100% of the equity interests or assets of a target business or businesses, the portion of such business
or businesses that is controlled is what will be valued for purposes of the 80% of net assets test. If the business combination
involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the transactions
and we will treat the target businesses together as the initial business combination for seeking stockholder approval or for purposes
of a tender offer, as applicable.
Our
Acquisition Process
In
evaluating a prospective target business, we expect to conduct a thorough due diligence review that will encompass, among other
things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial
and other information that will be made available to us. We will also utilize our transactional, financial, managerial and investment
experience.
We
are not prohibited from pursuing an initial business combination with or from a company that is affiliated with our sponsor, officers
or directors, including a portfolio company of Rice Investment Group, or from entering into an agreement with our sponsor, officers
or directors or their affiliates with respect to the operation of any business we acquire in connection with the initial business
combination. In the event we seek to complete our initial business combination with a business combination target that is affiliated
with our sponsor, officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent
investment banking firm which is a member of FINRA or from an independent accounting firm that such initial business combination
is fair to our company from a financial point of view.
Members
of our management team and our independent directors directly or indirectly own founder shares, sponsor shares and/or private
placement warrants and, accordingly, may have a conflict of interest in determining whether a particular target business is an
appropriate business with which to effectuate our initial business combination. Further, each of our officers and directors may
have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any
such officers and directors was included by a target business as a condition to any agreement with respect to our initial business
combination.
Each
of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations
to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity.
Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an
entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or
contractual obligations to present such opportunity to such other entity. We do not believe, however, that the fiduciary duties
or contractual obligations of our officers or directors will materially affect our ability to complete our business combination.
In addition, we may pursue an Affiliated Joint Acquisition opportunity with an entity to which an officer or director has a fiduciary
or contractual obligation. Any such entity may co-invest with us in the target business at the time of our initial business combination,
or we could raise additional proceeds to complete the acquisition by issuing to such entity a class of equity or equity-linked
securities. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity
offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as
a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would
otherwise be reasonable for us to pursue.
In
addition, members of our sponsor, as well as Rice Investment Group and its portfolio companies may sponsor other blank check companies
similar to ours during the period in which we are seeking an initial business combination, and members of our management team
may participate in such blank check companies. In particular, an affiliate of Rice Investment Group has formed Rice Acquisition
Corp. II (“Rice II”), a blank check company like our company that was formed to consummate an initial business combination.
Like us, Rice II intends to focus its search for a target business in the energy transition or sustainability arena. As of the
date of this filing, Rice II has not completed its initial public offering and does not have a class of securities registered
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any such companies, including Rice II,
may present additional conflicts of interest in pursuing an acquisition target, particularly in the event there is overlap among
the management teams. Mr. Rice also serves as a director and officer of Rice II, and Mr. Derham also serves as an officer and
is a director nominee of Rice II. However, we do not believe that any such potential conflicts would materially affect our ability
to complete our initial business combination. Each of Mr. Rice and Mr. Derham has agreed not to become an officer or director
of any other special purpose acquisition company with a class of securities registered under the Exchange Act, until we have entered
into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination
within 24 months after the closing of our initial public offering. Neither Mr. Rice nor Mr. Derham has been involved with any
blank check companies prior to our company.
We
have filed a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange
Act. As a result, we are subject to the rules and regulations promulgated under the Exchange Act. We have no current intention
of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation
of our initial business combination.
Our
Management Team
Members
of our management team are not obligated to devote any specific number of hours to our matters but they intend to devote as much
of their time as they deem necessary to our affairs until we have completed our initial business combination. The amount of time
that any members of our management team will devote in any time period will vary based on whether a target business has been selected
for our initial business combination and the current stage of the business combination process.
We
believe our management team’s operating and transaction experience and relationships with companies will provide us with
a substantial number of potential business combination targets. Over the course of their careers, the members of our management
team have developed a broad network of contacts and corporate relationships around the world. This network has grown through the
activities of our management team sourcing, acquiring and financing businesses, our management team’s relationships with
sellers, financing sources and target management teams and the experience of our management team in executing transactions under
varying economic and financial market conditions. See the section of this Report entitled “Directors, Executive Officers
and Corporate Governance” for a more complete description of our management team’s experience.
Status
as a Public Company
We
believe our structure will make us an attractive business combination partner to target businesses. As an existing public company,
we offer a target business an alternative to the traditional initial public offering through a merger or other business combination
with us. In a business combination transaction with us, the owners of the target business may, for example, exchange their shares
of stock, shares or other equity interests in the target business for shares of our Class A common stock (or shares of a new holding
company), Opco Units (and corresponding shares of our Class B common stock) or for a combination of shares of our Class A common
stock, Opco Units (and corresponding shares of our Class B common stock) and cash, allowing us to tailor the consideration to
the specific needs of the sellers. Although there are various costs and obligations associated with being a public company, we
believe target businesses will find this method a more certain and cost effective method to becoming a public company than the
typical initial public offering. The typical initial public offering process takes a significantly longer period of time than
the typical business combination transaction process, and there are significant expenses in the initial public offering process,
including underwriting discounts and commissions, that may not be present to the same extent in connection with a business combination
with us.
Furthermore,
once a proposed business combination is completed, the target business will have effectively become public, whereas an initial
public offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions,
which could delay or prevent the offering from occurring or could have negative valuation consequences. Once public, we believe
the target business would then have greater access to capital, an additional means of providing management incentives consistent
with stockholders’ interests and the ability to use its equity as currency for acquisitions. Being a public company can
offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting
talented employees.
While
we believe that our structure and our management team’s backgrounds make us an attractive business partner, some potential
target businesses may view our status as a blank check company, such as our lack of an operating history and our ability to seek
stockholder approval of any proposed initial business combination, negatively.
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As
such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other
public companies that are not “emerging growth companies” including, but not limited to, not being required to comply
with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive
compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory
vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors
find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of
our securities may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.
In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards
would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary
of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion (as
adjusted for inflation pursuant to SEC rules from time to time), or (c) in which we are deemed to be a large accelerated filer,
which means the market value of our Class A common stock that is held by non-affiliates exceeds $700 million as of the prior June
30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year
period.
Additionally,
we are a “smaller reporting company” as defined in Item 10(0(1) of Regulation S-K. Smaller reporting companies may
take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial
statements. We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of
our common stock held by non-affiliates exceeds $250 million as of the end of that year’s second fiscal quarter or (ii)
our annual revenues exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates
exceeds $700 million as of the end of that year’s second fiscal quarter.
Financial
Position
Upon
the closing of our initial public offering, approximately $237.3 million of the net proceeds were placed in a trust account (“Trust
Account”) located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested
only in U.S. “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a
maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment
Company Act which invest only in direct U.S. government treasury obligations, as determined by us, until the earlier of: (i) the
completion of a Business Combination and (ii) the distribution of the Trust Account. Because we are able to complete our business
combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most
efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires.
However, we have not taken any steps to secure third party financing and there can be no assurance it will be available to us.
Effecting
Our Initial Business Combination
We
are not presently engaged in, and we will not engage in, any operations for an indefinite period of time following our initial
public offering. We intend to effectuate our initial business combination using cash from the proceeds of our initial public offering
and the private placement warrants and forward purchase securities, our capital stock, debt or a combination of the foregoing.
We may seek to complete our initial business combination with a company or business that may be financially unstable or in its
early stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses.
Although our management will assess the risks inherent in a particular target business with which we may combine, we cannot assure
you that this assessment will result in our identifying all risks that a target business may encounter. Furthermore, some of those
risks may be outside of our control, meaning that we can do nothing to control or reduce the chances that those risks will adversely
affect a target business.
If
our initial business combination is paid for using equity or debt securities, or not all of the funds released from the trust
account are used for payment of the consideration in connection with our business combination or used for redemptions of purchases
of our Class A common stock, we may apply the balance of the cash released to us from the trust account for general corporate
purposes, including for maintenance or expansion of operations of the post-transaction company, the payment of principal or interest
due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working
capital.
We
may need to obtain additional financing to complete our initial business combination, either because the transaction requires
more cash than is available from the proceeds held in our trust account or because we become obligated to redeem a significant
number of our public shares upon completion of the business combination, or if Atlas Point Fund decides not to exercise its right
to purchase all of the forward purchase securities, in which case we may issue additional securities or incur debt in connection
with such business combination. In the case of an initial business combination funded with assets other than the trust account
assets, our tender offer documents or proxy materials disclosing the business combination would disclose the terms of the financing
and, only if required by applicable law, we would seek stockholder approval of such financing. There are no prohibitions on our
ability to issue securities or incur debt in connection with our initial business combination. We are not currently a party to
any arrangement or understanding with any third party with respect to raising any additional funds through the sale of securities,
the incurrence of debt or otherwise.
Sources
of Target Businesses
Target
businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls or
mailings. These sources may also introduce us to target businesses in which they think we may be interested on an unsolicited
basis, since many of these sources will have read this Report and know what types of businesses we are targeting. Our officers
and directors, as well as their affiliates, may also bring to our attention target business candidates that they become aware
of through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending
trade shows or conventions. In addition, we expect to receive a number of proprietary deal flow opportunities that would not otherwise
necessarily be available to us as a result of the track record and business relationships of our officers and directors. While
we do not presently anticipate engaging the services of professional firms or other individuals that specialize in business acquisitions
on any formal basis, we may engage these firms or other individuals in the future, in which event we may pay a finder’s
fee, consulting fee or other compensation to be determined in an arm’s length negotiation based on the terms of the transaction.
We will engage a finder only to the extent our management determines that the use of a finder may bring opportunities to us that
may not otherwise be available to us or if finders approach us on an unsolicited basis with a potential transaction that our management
determines is in our best interest to pursue. Payment of a finder’s fee is customarily tied to completion of a transaction,
in which case any such fee will be paid out of the funds held in the trust account. We have agreed to pay our sponsor a total
of $10,000 per month for office space, utilities, secretarial support and administrative services and to reimburse our sponsor
for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination. Some of our
officers and directors may enter into employment or consulting agreements with the post-transaction company following our initial
business combination. The presence or absence of any such fees or arrangements will not be used as a criterion in our selection
process of an acquisition candidate.
We
are not prohibited from pursuing an initial business combination with or from a company that is affiliated with our sponsor, officers
or directors, including a portfolio company of Rice Investment Group, or making the acquisition through a joint venture or other
form of shared ownership with our sponsor, officers or directors or their affiliates, including Rice Investment Group and/or one
or more of its portfolio companies. We are also not prohibited from entering into an agreement with our sponsor, officers or directors
or their affiliates with respect to the operation of any business we acquire in connection with the initial business combination.
In the event we seek to complete our initial business combination with a business combination target that is affiliated with our
sponsor, officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment
banking firm which is a member of FINRA or from an independent accounting firm that such initial business combination is fair
to our company from a financial point of view. We are not required to obtain such an opinion in any other context.
As
more fully discussed in the section of this Report entitled “Certain Relationships and Related Transactions, and Director
Independence,” if any of our officers or directors becomes aware of a business combination opportunity that falls within
the line of business of any entity to which he or she has pre-existing fiduciary or contractual obligations, he or she may be
required to present such business combination opportunity to such entity prior to presenting such business combination opportunity
to us. Our officers and directors currently have certain relevant fiduciary duties or contractual obligations that may take priority
over their duties to us. We may pursue an Affiliated Joint Acquisition opportunity with an entity to which an officer or director
has a fiduciary or contractual obligation. Any such entity may co-invest with us in the target business at the time of our initial
business combination, or we could raise additional proceeds to complete the acquisition by issuing to such entity a class of equity
or equity-linked securities.
Selection
of a Target Business and Structuring of our Initial Business Combination
The
NYSE rules require that our initial business combination must occur with one or more target businesses that together have an aggregate
fair market value of at least 80% of the net assets held in trust (net of amounts disbursed to management for working capital
purposes and excluding the amount of any deferred underwriting discount held in trust) at the time of the agreement to enter into
the initial business combination. The fair market value of the target or targets will be determined by our board of directors
based upon one or more standards generally accepted by the financial community, such as discounted cash flow valuation or value
of comparable businesses. If our board is not able to independently determine the fair market value of the target business or
businesses, we will obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent
accounting firm with respect to the satisfaction of such criteria. We do not intend to purchase multiple businesses in unrelated
industries in conjunction with our initial business combination. Subject to this requirement, our management will have virtually
unrestricted flexibility in identifying and selecting one or more prospective target businesses, although we will not be permitted
to effectuate our initial business combination with another blank check company or a similar company with nominal operations.
In
any case, we will only complete an initial business combination in which we control 50% or more of the outstanding voting securities
of the target or otherwise are not required to register as an investment company under the Investment Company Act. If we control
less than 100% of the equity interests or assets of a target business or businesses, the portion of such business or businesses
that are controlled is what will be valued for purposes of the NYSE’s 80% of net assets test. There is no basis for investors
to evaluate the possible merits or risks of any target business with which we may ultimately complete our business combination.
To
the extent we effect our business combination with a company or business that may be financially unstable or in its early stages
of development or growth, we may be affected by numerous risks inherent in such company or business. Although our management will
endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain
or assess all significant risk factors.
In
evaluating a prospective target business, we expect to conduct a thorough due diligence review, which may encompass, among other
things, meetings with incumbent management and employees, document reviews, interviews of customers and suppliers, inspection
of facilities, as applicable, as well as a review of financial, operational, legal and other information which will be made available
to us. If we determine to move forward with a particular target, we will proceed to structure and negotiate the terms of the business
combination transaction.
Any
costs incurred with respect to the identification and evaluation of, and negotiation with, a prospective target business with
which our business combination is not ultimately completed will result in our incurring losses and will reduce the funds we can
use to complete another business combination. The Company will not pay any consulting fees to members of our management team,
or any of their respective affiliates, for services rendered to or in connection with our initial business combination.
Redemption
Rights for Public Stockholders upon Completion of our Initial Business Combination
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of our Class A common stock
upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then
on deposit in the trust account calculated as of two business days prior to the consummation of the initial business combination
including interest earned on the funds held in the trust account and not previously released to pay franchise and income taxes
of the Company or Opco, divided by the number of then outstanding public shares and Class A Units of Opco (other than those held
by Rice Acquisition Corp.), subject to the limitations described herein. The amount in the trust account is initially anticipated
to be approximately $10.00 per public share. The per-share amount we will distribute to investors who properly redeem their shares
will not be reduced by the deferred underwriting discounts and commissions we will pay to the underwriters. Pursuant to the Opco
LLC Agreement and a letter agreement that our sponsor, Atlas Point Fund, officers and directors have entered into with us, they
have agreed that any founder shares and sponsor shares held by them will not be entitled to redemption rights, and they will waive
any such redemption rights for any public shares held by them, in connection with the completion of our business combination.
In connection with the redemption of any public shares, a corresponding number of Class A Units of Opco held by us will also be
redeemed.
Limitations
on Redemptions
Our
amended and restated certificate of incorporation provides that in no event will we redeem our public shares in an amount that
would cause our net tangible assets to be less than $5,000,001 upon consummation of our initial business combination and after
payment of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock” rules).
However, the proposed business combination may require (i) cash consideration to be paid to the target or its owners, (ii) cash
to be transferred to the target for working capital or other general corporate purposes or (iii) the retention of cash to satisfy
other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration
we would be required to pay for all shares of our Class A common stock that are validly submitted for redemption plus any amount
required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of
cash available to us, we will not complete the business combination or redeem any shares, and all shares of our Class A common
stock submitted for redemption will be returned to the holders thereof.
Manner
of Conducting Redemptions
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of our Class A common stock
upon the completion of our initial business combination either (i) in connection with a stockholder meeting called to approve
the business combination or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of a
proposed business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety
of factors such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder
approval under applicable law or stock exchange listing requirement. Asset acquisitions and stock purchases would not typically
require stockholder approval while direct mergers with our company where we do not survive and any transactions where we issue
more than 20% of our outstanding common stock or seek to amend our amended and restated certificate of incorporation would require
stockholder approval. If we structure a business combination transaction with a target business in a manner that requires stockholder
approval, we will not have discretion as to whether to seek a stockholder vote to approve the proposed business combination. We
currently intend to conduct redemptions in connection with a stockholder vote unless stockholder approval is not required by applicable
law or stock exchange listing requirement and we choose to conduct redemptions pursuant to the tender offer rules of the SEC for
business or other legal reasons.
If
we hold a stockholder vote to approve our initial business combination, we will, pursuant to our amended and restated certificate
of incorporation:
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conduct
the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of
the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the
tender offer rules, and
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file
proxy materials with the SEC.
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In
the event that we seek stockholder approval of our initial business combination, we will distribute proxy materials and, in connection
therewith, provide our public stockholders with the redemption rights described above upon completion of the initial business
combination.
If
we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of
common stock voted are voted in favor of the business combination. A quorum for such meeting will consist of the holders present
in person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power of all
outstanding shares of capital stock of the company entitled to vote at such meeting. Our initial stockholders will count toward
this quorum and have agreed to vote their founder shares and any public shares in favor of our initial business combination. For
purposes of seeking approval of the majority of our outstanding shares of common stock voted, non-votes will have no effect on
the approval of our initial business combination once a quorum is obtained. As a result, in addition to our initial stockholders’
founder shares and sponsor shares, we would need 8,896,875, or 37.5%, of the 23,725,000 public shares sold in our initial public
offering to be voted in favor of a transaction (assuming all outstanding shares are voted) in order to have our initial business
combination approved. We intend to give approximately 30 days (but not less than 10 days nor more than 60 days) prior written
notice of any such meeting, if required, at which a vote shall be taken to approve our initial business combination. These quorum
and voting thresholds, and the voting agreements of our initial stockholders, may make it more likely that we will consummate
our initial business combination. Each public stockholder may elect to redeem its public shares irrespective of whether it votes
for or against the proposed transaction. In addition, pursuant to the Opco LLC Agreement and a letter agreement that our sponsor,
Atlas Point Fund, officers and directors have entered into with us, they have agreed that any founder shares and sponsor shares
held by them will not be entitled to redemption rights, and they will waive any such redemption rights for any public shares held
by them, in connection with the completion of a business combination.
If
we conduct redemptions pursuant to the tender offer rules of the SEC, we will, pursuant to our amended and restated certificate
of incorporation:
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conduct
the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which
regulate issuer tender offers, and
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file
tender offer documents with the SEC prior to completing our initial business combination
which contain substantially the same financial and other information about the initial
business combination and the redemption rights as is required under Regulation 14A of
the Exchange Act, which regulates the solicitation of proxies. Although we are not required
to do so, we currently intend to comply with the substantive and procedural requirements
of Regulation 14A in connection with any stockholder vote even if we are not able to
maintain our NYSE listing or Exchange Act registration.
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Upon
the public announcement of our business combination, we or our sponsor will terminate any plan established in accordance with
Rule 10b5-1 to purchase shares of our Class A common stock in the open market if we elect to redeem our public shares through
a tender offer, to comply with Rule 14e-5 under the Exchange Act.
In
the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business
days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination
until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not
tendering more than the number of public shares we are permitted to redeem. If public stockholders tender more shares than we
have offered to purchase, we will withdraw the tender offer and not complete the initial business combination.
Limitation
on Redemption upon Completion of our Initial Business Combination if we Seek Stockholder Approval
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business
combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder,
together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than
an aggregate of 20% of the shares sold in our initial public offering, which we refer to as the “Excess Shares.” We
believe this restriction will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such
holders to use their ability to exercise their redemption rights against a proposed business combination as a means to force us
or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms.
Absent this provision, a public stockholder holding more than an aggregate of 20% of the shares sold in our initial public offering
could threaten to exercise its redemption rights if such holder’s shares are not purchased by us, our sponsor or our management
at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders’ ability to redeem
no more than 20% of the shares sold in our initial public offering without our prior consent, we believe we will limit the ability
of a small group of stockholders to unreasonably attempt to block our ability to complete our business combination, particularly
in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth
or a certain amount of cash. However, we would not be restricting our stockholders’ ability to vote all of their shares
(including Excess Shares) for or against our business combination.
Tendering
Stock Certificates in Connection with a Tender Offer or Redemption Rights
Public
stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street
name,” are required to either tender their certificates to our transfer agent prior to the date set forth in the proxy solicitation
or tender offer materials (as applicable) mailed to such holders, or up to two business days prior to the initially scheduled
vote on the proposal to approve the business combination in the event we distribute proxy materials, or to deliver their shares
to the transfer agent electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System,
at the holder’s option. The proxy solicitation or tender offer materials (as applicable) that we will furnish to holders
of our public shares in connection with our initial business combination will indicate the applicable delivery requirements. Accordingly,
a public stockholder would have from the time we send out our tender offer materials until the close of the tender offer period,
or up to two days prior to the vote on the business combination if we distribute proxy materials, as applicable, to tender its
shares if it wishes to seek to exercise its redemption rights. Given the relatively short period in which to exercise redemption
rights, it is advisable for stockholders to use electronic delivery of their public shares.
There
is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering
them through the DWAC System. The transfer agent will typically charge the tendering broker a fee of approximately $80.00 and
it would be up to the broker whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred
regardless of whether or not we require holders seeking to exercise redemption rights to tender their shares. The need to deliver
shares is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated.
The
foregoing is different from the procedures used by many blank check companies. In order to perfect redemption rights in connection
with their business combinations, many blank check companies would distribute proxy materials for the stockholders’ vote
on an initial business combination, and a holder could simply vote against a proposed business combination and check a box on
the proxy card indicating such holder was seeking to exercise his or her redemption rights. After the business combination was
approved, the company would contact such stockholder to arrange for him or her to deliver his or her certificate to verify ownership.
As a result, the stockholder then had an “option window” after the completion of the business combination during which
he or she could monitor the price of the company’s stock in the market. If the price rose above the redemption price, he
or she could sell his or her shares in the open market before actually delivering his or her shares to the company for cancellation.
As a result, the redemption rights, to which stockholders were aware they needed to commit before the stockholder meeting, would
become “option” rights surviving past the completion of the business combination until the redeeming holder delivered
its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming holder’s
election to redeem is irrevocable once the business combination is approved.
Any
request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials
or the date of the stockholder meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share
delivered its certificate in connection with an election of redemption rights and subsequently decides prior to the applicable
date not to elect to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically
or electronically). It is anticipated that the funds to be distributed to holders of our public shares electing to redeem their
shares will be distributed promptly after the completion of our business combination.
If
our initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise
their redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In
such case, we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If
our initial proposed business combination is not completed, we may continue to try to complete a business combination with a different
target until 24 months from the closing of our initial public offering.
Redemption
of Public Shares and Liquidation if no Initial Business Combination
Our
amended and restated certificate of incorporation provides that we will have only 24 months from the closing of our initial public
offering to complete our initial business combination. If we do not complete our business combination within such 24-month 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
pay franchise and income taxes of the Company or Opco (less up to $100,000 of interest to pay dissolution expenses), divided by
the number of then outstanding public shares and Class A Units of Opco (other than those held by Rice Acquisition Corp.), which
redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further
liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case
to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will
be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete
our business combination within the 24-month time period.
Pursuant
to the Opco LLC Agreement and a letter agreement that our sponsor, Atlas Point Fund, officers and directors have entered into
with us, they have agreed that any founder shares held by them are subject to forfeiture, and thus will not be entitled to liquidating
distributions from the trust account, and they will waive any such rights to liquidating distributions for any founder shares
if we fail to complete our initial business combination within 24 months from the closing of our initial public offering. However,
if our sponsor, officers or directors acquire public shares in or after our initial public offering, they will be entitled to
liquidating distributions from the trust account with respect to such public shares and the sponsor shares, if we fail to complete
our initial business combination within the allotted 24-month time period.
Our
sponsor, Atlas Point Fund, officers, and directors have agreed, pursuant to a written agreement with us, that
they will not propose any amendment to our amended and restated certificate of incorporation that would affect the substance or
timing of our obligation to redeem 100% of our public shares if we have not consummated an initial business combination within
24 months from the closing of our initial public offering, unless we provide our public stockholders with the opportunity to redeem
their shares of our Class A common stock upon approval of any such amendment 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 pay franchise and income taxes of the Company or Opco, divided by the number of then outstanding public
shares and Class A Units of Opco (other than those held by Rice Acquisition Corp.). However, we may not redeem our public shares
in an amount that would cause our net tangible assets to be less than $5,000,001 upon consummation of our initial business combination
and after payment of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock”
rules). If this optional redemption right is exercised with respect to an excessive number of public shares such that we cannot
satisfy the net tangible asset requirement, we would not proceed with the amendment or the related redemption of our public shares
at such time. Pursuant to our amended and restated certificate of incorporation, such an amendment would need to be approved by
the affirmative vote of the holders of at least 65% of all then outstanding shares of our common stock.
All
costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded
from amounts remaining as part of the estimated $1,000,000 of cash held outside of the trust account, although we cannot assure
you that there will be sufficient funds for such purpose. However, if those funds are not sufficient to cover the costs and expenses
associated with implementing our plan of dissolution, to the extent that there is any interest accrued in the trust account not
required to pay franchise and income taxes on interest income earned on the trust account balance, we may request the trustee
to release to us an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If
we were to expend all of the net proceeds of our initial public offering and the sale of the private placement warrants, other
than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account,
the per-share redemption amount received by stockholders upon our dissolution would be approximately $10.00. The proceeds deposited
in the trust account could, however, become subject to the claims of our creditors which would have higher priority than the claims
of our public stockholders. We cannot assure you that the actual per-share redemption amount received by stockholders will not
be substantially less than $10.00. Under Section 281(b) of the DGCL, our plan of dissolution must provide for all claims against
us to be paid in full or make provision for payments to be made in full, as applicable, if there are sufficient assets. These
claims must be paid or provided for before we make any distribution of our remaining assets to our stockholders. While we intend
to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors’
claims.
Although
we seek to have all vendors (other than our independent registered public accounting firm), service providers, prospective target
businesses and other entities with which we do business execute agreements with us waiving any right, title, interest or claim
of any kind in or to any monies held in the trust account for the benefit of our public stockholders, there is no guarantee that
they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against
the trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims,
as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim
against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving
such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to
it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third
party’s engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where
we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular
expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to
execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there
is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of,
any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Our sponsor
has agreed that it will be liable to us if and to the extent any claims by a third party (other than our independent public accountants)
for services rendered or products sold to us, or a prospective target business with which we have entered into a written letter
of intent, confidentiality or other similar agreement or business combination agreement, reduce the amount of funds in the trust
account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the date
of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount of interest
which may be withdrawn to pay taxes, except as to any claims by a third party or prospective target business who executed a waiver
of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) and except as to any
claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities
under the Securities Act. However, we have not asked our sponsor to reserve for such indemnification obligations, nor have we
independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations, and we believe that our
sponsor’s only assets are securities of our company. Therefore, we cannot assure you that our sponsor would be able to satisfy
those obligations. As a result, if any such claims were successfully made against the trust account, the funds available for our
initial business combination and redemptions could be reduced to less than $10.00 per public share. In such event, we may not
be able to complete our initial business combination, and you would receive such lesser amount per share in connection with any
redemption of your public shares. None of our officers or directors will indemnify us for claims by third parties including, without
limitation, claims by vendors and prospective target businesses.
In
the event that the proceeds in the trust account are reduced below (i) $10.00 per public share or (ii) such lesser amount per
public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the
trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes, and our sponsor asserts that it
is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim,
our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations.
While we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce
its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may
choose not to do so if, for example, the cost of such legal action is deemed by the independent directors to be too high relative
to the amount recoverable or if the independent directors determine that a favorable outcome is not likely. We have not asked
our sponsor to reserve for such indemnification obligations and we cannot assure you that our sponsor would be able to satisfy
those obligations. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption
price will not be less than $10.00 per public share.
We
will seek to reduce the possibility that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring
to have all vendors, service providers (other than our independent registered public accounting firm), prospective target businesses
or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind
in or to monies held in the trust account. Our sponsor will also not be liable as to any claims under our indemnity of the underwriters
of our initial public offering against certain liabilities, including liabilities under the Securities Act. We will have access
to up to approximately $1,000,000 from the proceeds of our initial public offering with which to pay any such potential claims
(including costs and expenses incurred in connection with our liquidation, currently estimated to be no more than approximately
$100,000). In the event that we liquidate and it is subsequently determined that the reserve for claims and liabilities is insufficient,
stockholders who received funds from our trust account could be liable for claims made by creditors. In the event that our offering
expenses exceed our estimate of $1,000,000, we may fund such excess with funds from the funds not to be held in the trust account.
In such case, the amount of funds we intend to be held outside the trust account would decrease by a corresponding amount. Conversely,
in the event that the offering expenses are less than our estimate of $1,000,000, the amount of funds we intend to be held outside
the trust account would increase by a corresponding amount.
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received
by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption
of our public shares in the event we do not complete our business combination within 24 months from the closing of our initial
public offering may be considered a liquidating distribution under Delaware law. If the corporation complies with certain procedures
set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including
a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which
the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are
made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such
stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder
would be barred after the third anniversary of the dissolution.
Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in
the event we do not complete our business combination within 24 months from the closing of our initial public offering is not
considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant
to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption
distribution, instead of three years, as in the case of a liquidating distribution. If we do not complete our business combination
within 24 months from the closing of our initial public offering, 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 pay franchise and income taxes of the Company or Opco (less
up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares and Class A Units
of Opco (other than those held by Rice Acquisition Corp.), which redemption will completely extinguish public stockholders’
rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law,
and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders
and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for
claims of creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem our public shares
as soon as reasonably possible following our 24” month, and, therefore, we do not intend to comply with those procedures.
As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more)
and any liability of our stockholders may extend well beyond the third anniversary of such date.
Because
we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us
at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against
us within the subsequent 10 years. However, because we are a blank check company, rather than an operating company, and our operations
are limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors
(such as lawyers, investment bankers, etc.) or prospective target businesses. As described above, pursuant to the obligation contained
in our underwriting agreement, we will seek to have all vendors, service providers (other than our independent registered public
accounting firm), prospective target businesses or other entities with which we do business execute agreements with us waiving
any right, title, interest or claim of any kind in or to any monies held in the trust account. As a result of this obligation,
the claims that could be made against us are significantly limited and the likelihood that any claim that would result in any
liability extending to the trust account is remote. Further, our sponsor may be liable only to the extent necessary to ensure
that the amounts in the trust account are not reduced below (i) $10.00 per public share or (ii) such lesser amount per public
share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust
assets, in each case net of the amount of interest withdrawn to pay taxes and will not be liable as to any claims under our indemnity
of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act.
In the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible
to the extent of any liability for such third-party claims.
If
we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held
in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to
the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the
trust account, we cannot assure you we will be able to return $10.00 per share to our public stockholders. Additionally, if we
file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions
received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential
transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts
received by our stockholders. Furthermore, our board of directors may be viewed as having breached its fiduciary duty to our creditors
and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive damages, by paying public
stockholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be
brought against us for these reasons.
Our
public stockholders will be entitled to receive funds from the trust account only (i) in the event of the redemption of our public
shares and any Class A Units of Opco (other than those held by Rice Acquisition Corp.) if we do not complete our business combination
within 24 months from the closing of our initial public offering, subject to applicable law, (ii) in connection with a stockholder
vote to approve an amendment to our amended and restated certificate of incorporation that would affect the substance or timing
of our obligation to redeem 100% of our public shares if we have not consummated an initial business combination within 24 months
from the closing of our initial public offering or (iii) if they redeem their respective shares for cash upon the completion of
the initial business combination. In no other circumstances will a stockholder have any right or interest of any kind to or in
the trust account. In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s
voting in connection with the business combination alone will not result in a stockholder’s redeeming its shares to us for
an applicable pro rata share of the trust account. Such stockholder must have also exercised its redemption rights described above.
These provisions of our amended and restated certificate of incorporation, like all provisions of our amended and restated certificate
of incorporation, may be amended with a stockholder vote.
Competition
In
identifying, evaluating and selecting a target business for our business combination, we may encounter intense competition from
other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged
buyout funds, and operating businesses seeking strategic acquisitions. Many of these entities are well established and have extensive
experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors
possess greater financial, technical, human and other resources than we do. Our ability to acquire larger target businesses is
limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the acquisition of
a target business. Furthermore, our obligation to pay cash in connection with our public stockholders who exercise their redemption
rights may reduce the resources available to us for our initial business combination and our outstanding warrants, and the future
dilution they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may place
us at a competitive disadvantage in successfully negotiating an initial business combination.
Facilities
Our
executive offices are located at 102 East Main Street, Second Story, Carnegie, Pennsylvania 15106, and our telephone number is
(713) 446-6259. The cost for our use of this space is included in the $10,000 per month fee we pay to our sponsor for office space,
utilities, secretarial support and administrative services. We consider our current office space adequate for our current operations.
Employees
and Human Capital Resources
We
currently have three officers. These individuals are not obligated to devote any specific number of hours to our matters but they
intend to devote as much of their time as they deem necessary to our affairs until we have completed our initial business combination.
The amount of time that they will devote in any time period will vary based on whether a target business has been selected for
our initial business combination and the stage of the business combination process we are in.
Periodic
Reporting and Financial Information
We
have registered our units, Class A common stock and warrants under the Exchange Act and have reporting obligations, including
the requirement that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange
Act, our annual reports will contain financial statements audited and reported on by our independent registered public accountants.
We
will provide stockholders with audited financial statements of the prospective target business as part of the proxy solicitation
or tender offer materials (as applicable) sent to stockholders. These financial statements may be required to be prepared in accordance
with GAAP, or reconciled to, GAAP, or IFRS, depending on the circumstances, and the historical financial statements may be required
to be audited in accordance with the standards of the PCAOB. These financial statement requirements may limit the pool of potential
target businesses we may acquire because some targets may be unable to provide such statements in time for us to disclose such
statements in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame.
We cannot assure you that any particular target business identified by us as a potential acquisition candidate will have financial
statements prepared in accordance with the requirements outlined above, or that the potential target business will be able to
prepare its financial statements in accordance with the requirements outlined above. To the extent that any applicable requirements
cannot be met, we may not be able to acquire the proposed target business. While this may limit the pool of potential acquisition
candidates, we do not believe that this limitation is material.
We
are required to evaluate our internal control procedures for the fiscal year ending December 31, 2021 as required by the Sarbanes-Oxley
Act. Only in the event we are deemed to be a large accelerated filer or an accelerated filer will we be required to have our internal
control procedures audited. A target business may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding
adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with the
Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.
We
have filed a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange
Act. As a result, we are subject to the rules and regulations promulgated under the Exchange Act. We have no current intention
of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation
of our initial business combination.
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As
such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other
public companies that are not “emerging growth companies” including, but not limited to, not being required to comply
with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive
compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory
vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. If some investors
find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of
our securities may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.
In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards
would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We
will remain an emerging growth company until the earlier of (i) the last day of the fiscal year (a) following the fifth anniversary
of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion (as
adjusted for inflation pursuant to SEC rules from time to time), or (c) in which we are deemed to be a large accelerated filer,
which means the market value of our Class A common stock that is held by non-affiliates exceeds $700 million as of the prior June
30th, and (ii) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
Additionally,
we are a “smaller reporting company” as defined in Item 10(t)(1) of Regulation S-K. Smaller reporting companies may
take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial
statements. We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of
our common stock held by non-affiliates exceeds $250 million as of the end of that year’s second fiscal quarter or (ii)
our annual revenues exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates
exceeds $700 million as of the end of that year’s second fiscal quarter.
An
investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together
with the other information contained in this Report and the final prospectus associated with our initial public offering, before
making a decision to invest in our securities. If any of the following events occur, our business, financial condition and operating
results may be materially adversely affected. In that event, the trading price of our securities could decline, and you could
lose all or part of your investment.
We
are a recently formed blank check company with no operating history and no revenues, and you have no basis on which to evaluate
our ability to achieve our business objective.
We
are a recently formed company with no operating results. Because we lack an operating history, you have no basis upon which to
evaluate our ability to achieve our business objective of completing our initial business combination with one or more target
businesses. We may be unable to complete our business combination. If we fail to complete our business combination, we will never
generate any operating revenues.
Past
performance by the Rice family, Rice Investment Group and its portfolio companies and our management team may not be indicative
of future performance of an investment in the Company. In addition, none of our officers or directors have served as a sponsor,
director or officer of any blank check companies or special purpose acquisition companies in the past.
Information
regarding performance by, or businesses associated with, the Rice family, Rice Investment Group and its portfolio companies and
our management team is presented for informational purposes only. Past performance by the Rice family, Rice Investment Group and
its portfolio companies or our management team is not a guarantee either (i) of success with respect to any business combination
we may consummate or (ii) that we will be able to locate a suitable candidate for our initial business combination. You should
not rely on the historical record of the Rice family, Rice Investment Group and its portfolio companies or our management team
as indicative of our future performance or of an investment in the company or the returns the company will, or is likely to, generate
going forward. In addition, none of our officers or directors have served as a sponsor, director or officer of any blank check
companies or special purpose acquisition companies in the past.
Our
public stockholders may not be afforded an opportunity to vote on our proposed business combination, which means we may complete
our initial business combination even though a majority of our public stockholders do not support such a combination.
We
may choose not to hold a stockholder vote to approve our initial business combination if the business combination would not require
stockholder approval under applicable law or stock exchange listing requirements. Except as required by applicable law or stock
exchange requirement, the decision as to whether we will seek stockholder approval of a proposed business combination or will
allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based
on a variety of factors, such as the timing of the transaction and whether the terms of the transaction would otherwise require
us to seek stockholder approval. Accordingly, we may complete our initial business combination even if holders of a majority of
our public shares do not approve of the business combination we complete.
In
evaluating a prospective target business for our initial business combination, our management may consider the availability of
funds from the sale of the forward purchase securities, which may be used as part of the consideration to the sellers in the initial
business combination. If Atlas Point Fund decides not to accept our offer to purchase the forward purchase securities, we may
decide not to consummate our initial business combination, or if we decide to, we may lack sufficient funds to consummate our
initial business combination.
We
have entered into a forward purchase agreement pursuant to which Atlas Point Fund, which is a fund managed by CIBC National Trust
but is not affiliated with us or our sponsor, agreed to purchase up to $75,000,000 of either (i) a number of forward purchase
units for $10.00 per unit or (ii) a number of forward purchase shares for $9.67 per share, in a private placement that closed
simultaneously with the closing of our initial business combination. Whether we will issue Atlas Point Fund forward purchase units
valued at $10.00 per unit or forward purchase shares valued at $9.67 per share will be determined at our election, and in our
sole discretion, at least 10 business days prior to the closing of our initial business combination. The funds from the sale of
the forward purchase securities are expected to be used as part of the consideration to the sellers in our initial business combination,
and to pay expenses in connection with our initial business combination and may be used for working capital in the post-transaction
company.
The
obligations under the forward purchase agreement will not depend on whether any public stockholders elect to redeem their shares
in connection with our initial business combination. However, if the sale of the forward purchase securities does not close, for
example, by reason of the failure of Atlas Point Fund to fund the purchase price for its forward purchase securities, we may lack
sufficient funds to consummate our initial business combination. Atlas Point Fund’s obligation to purchase the forward purchase
securities will, among other things, be conditioned on Atlas Point Fund giving us its irrevocable written consent to purchase
the forward purchase securities no later than five days after we notify it of our intention to meet to consider entering into
a definitive agreement for a proposed business combination and on a requirement that such initial business combination is approved
by a majority of our board and a majority of the independent directors of our board. Accordingly, if Atlas Point Fund does not
consent to the purchase, or if the initial business combination is not approved by a majority of our board and a majority of the
independent directors of our board, Atlas Point Fund would not be obligated to purchase any forward purchase securities.
Additionally,
Atlas Point Fund’s obligations to purchase the forward purchase securities will be subject to termination prior to the closing
of the sale of such securities by mutual written consent of us and Atlas Point Fund, or automatically: (i) if our initial business
combination is not consummated within 24 months from the closing of our initial public offering or (ii) if we become subject to
any voluntary or involuntary petition under the United States federal bankruptcy laws or any state insolvency law, in each case
which is not withdrawn within 60 days after being filed, or a receiver, fiscal agent or similar officer is appointed by a court
for business or property of us or Atlas Point Fund, in each case which is not removed, withdrawn or terminated within 60 days
after such appointment. In addition, Atlas Point Fund’s obligations to purchase the forward purchase securities will be
subject to fulfillment of customary closing conditions, including that our initial business combination must be consummated substantially
concurrently with the purchase of the forward purchase securities. If Atlas Point Fund decides not to accept our offer to purchase
the forward purchase securities, we may decide not to consummate our initial business combination, or if we decide to, we may
lack sufficient funds to consummate our initial business combination.
Your
only opportunity to affect the investment decision regarding a potential business combination may be limited to the exercise of
your right to redeem your shares from us for cash.
At
the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of our
initial business combination. Since our board of directors may complete a business combination without seeking stockholder approval,
public stockholders may not have the right or opportunity to vote on the business combination, unless we seek such stockholder
vote. Accordingly, if we do not seek stockholder approval, your only opportunity to affect the investment decision regarding a
potential business combination may be limited to exercising your redemption rights within the period of time (which will be at
least 20 business days) set forth in our tender offer documents mailed to our public stockholders in which we describe our initial
business combination.
If
we seek stockholder approval of our initial business combination, our initial stockholders and management team have agreed to
vote in favor of such initial business combination, regardless of how our public stockholders vote.
Our
initial stockholders own 20% of our shares of common stock following the completion of our initial public offering. Our initial
stockholders and management team also may from time to time purchase shares of our Class A common stock prior to our initial business
combination. Our amended and restated certificate of incorporation provide that, if we seek stockholder approval of an initial
business combination, such initial business combination will be approved if we receive the affirmative vote of a majority of the
shares voted at such meeting, including the founder shares and sponsor shares. As a result, in addition to our initial stockholders’
founder shares and sponsor shares, we would need 8,896,875, or 37.5%, of the 23,725,000 public shares sold in our initial public
offering to be voted in favor of an initial business combination in order to have our initial business combination approved. Accordingly,
if we seek stockholder approval of our initial business combination, the agreement by our initial stockholders and management
team to vote in favor of our initial business combination will increase the likelihood that we will receive the requisite stockholder
approval for such initial business combination.
The
ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential
business combination targets, which may make it difficult for us to enter into a business combination with a target.
We
may seek to enter into a business combination transaction agreement with a prospective target that requires as a closing condition
that we have a minimum net worth or a certain amount of cash. If too many public stockholders exercise their redemption rights,
we would not be able to meet such closing condition and, as a result, would not be able to proceed with the business combination.
Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than
$5,000,001. Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less
than $5,000,001 upon consummation of our initial business combination or such greater amount necessary to satisfy a closing condition
as described above, we would not proceed with such redemption and the related business combination and may instead search for
an alternate business combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter into
a business combination transaction with us.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us
to complete the most desirable business combination or optimize our capital structure.
At
the time we enter into an agreement for our initial business combination, we will not know how many stockholders may exercise
their redemption rights, and therefore will need to structure the transaction based on our expectations as to the number of shares
that will be submitted for redemption. If our business combination agreement requires us to use a portion of the cash in the trust
account to pay the purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve a portion
of the cash in the trust account to meet such requirements, or arrange for third party financing. In addition, if a larger number
of shares are submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater
portion of the cash in the trust account or arrange for third party financing. Raising additional third party financing may involve
dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. The above considerations may limit
our ability to complete the most desirable business combination available to us or optimize our capital structure.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the
probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order
to redeem your stock.
If
our business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or
requires us to have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful
is increased. If our initial business combination is unsuccessful, you would not receive your pro rata portion of the trust account
until we liquidate the trust account. If you are in need of immediate liquidity, you could attempt to sell your stock in the open
market; however, at such time our stock may trade at a discount to the pro rata amount per share in the trust account. In either
situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption
until we liquidate or you are able to sell your stock in the open market.
The
requirement that we complete our initial business combination within 24 months after the closing of our initial public offering
may give potential target businesses leverage over us in negotiating a business combination and may limit the time we have to
conduct due diligence on potential business combination targets as we approach our dissolution deadline, which could undermine
our ability to complete our business combination on terms that would produce value for our stockholders.
Any
potential target business with which we enter into negotiations concerning a business combination will be aware that we must complete
our initial business combination within 24 months from the closing of our initial public offering. Consequently, such target business
may obtain leverage over us in negotiating a business combination, knowing that if we do not complete our initial business combination
with that particular target business, we may be unable to complete our initial business combination with any target business.
This risk will increase as we get closer to the timeframe described above. In addition, we may have limited time to conduct due
diligence and may enter into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
Our
search for a business combination, and any target business with which we ultimately consummate a business combination, may be
materially adversely affected by the recent coronavirus (COVID-19) outbreak and the status of debt and equity markets.
In
December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread
throughout China and other parts of the world, including the United States. On January 30, 2020, the World Health Organization
declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.”
On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United
States to aid the U.S. healthcare community in responding to COVID-19, and on March 11, 2020 the World Health Organization characterized
the outbreak as a “pandemic”. The COVID-19 outbreak has resulted, and a significant outbreak of other infectious diseases
could result, in a widespread health crisis that has adversely affected, in the case of COVID-19, and could adversely affect,
in the case of future outbreaks of infectious diseases, the economies and financial markets worldwide, and the business of any
potential target business with which we consummate a business combination could be materially and adversely affected. Furthermore,
we may be unable to complete a business combination if continued concerns relating to COVID-19 continues to restrict travel, limit
the ability to have meetings with potential investors or the target company’s personnel, vendors and services providers
are unavailable to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts our search
for a business combination will depend on future developments, which are highly uncertain and cannot be predicted, including new
information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among
others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extensive period of time, our
ability to consummate a business combination, or the operations of a target business with which we ultimately consummate a business
combination, may be materially adversely affected.
In
addition, our ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may
be impacted by COVID-19 and other events, including as a result of increased market volatility, decreased market liquidity and
third-party financing being unavailable on terms acceptable to us or at all. Furthermore, the impact of COVID-19 may increase
the other risks identified herein.
We
may not be able to complete our initial business combination within the 24 months after the closing of our initial public offering,
in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate,
in which case our public stockholders may receive only their pro rata portion of the funds in the trust account that are available
for distribution to public stockholders, and our warrants will expire worthless.
We
may not be able to find a suitable target business and complete our initial business combination within 24 months after the closing
of our initial public offering. Our ability to complete our initial business combination may be negatively impacted by general
market conditions, volatility in the capital and debt markets and the other risks described herein including the impact of COVID-19.
If we have not completed our initial business combination within such time 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 pay franchise and income taxes of the Company
or Opco (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares
and Class A Units of Opco (other than those held by Rice Acquisition Corp.), which redemption will completely extinguish public
stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject
to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining
stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to
provide for claims of creditors and the requirements of other applicable law. In such case, our public stockholders may only receive
$10.00 per share, and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than
$10.00 per share on the redemption of their shares.
If
we seek stockholder approval of our initial business combination, our sponsor, directors, officers, advisors and their affiliates
may elect to purchase shares or public warrants from public stockholders or public warrantholders, which may influence a vote
on a proposed business combination and reduce the public “float” of our Class A common stock.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business
combination pursuant to the tender offer rules, our sponsor, Atlas Point Fund, directors, officers, advisors or their affiliates
may purchase shares or public warrants or a combination thereof in privately negotiated transactions or in the open market either
prior to or following the completion of our initial business combination, although they are under no obligation to do so. There
is no limit on the number of shares our sponsor, Atlas Point Fund, directors, officers, advisors or their affiliates may purchase
in such transactions, subject to compliance with applicable law and the rules of the NYSE. However, other than as expressly stated
herein, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms
or conditions for any such transactions. None of the funds in the trust account will be used to purchase shares or public warrants
in such transactions.
In
the event that our sponsor, Atlas Point Fund, directors, officers, advisors or their affiliates purchase shares in privately negotiated
transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders
would be required to revoke their prior elections to redeem their shares. The purpose of any such purchases of shares could be
to vote such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval
of the business combination or to satisfy a closing condition in an agreement with a target that requires us to have a minimum
net worth or a certain amount of cash at the closing of our business combination, where it appears that such requirement would
otherwise not be met. The purpose of any such purchases of public warrants could be to reduce the number of public warrants outstanding
or to vote such warrants on any matters submitted to the warrantholders for approval in connection with our initial business combination.
Any such purchases of our securities may result in the completion of our business combination that may not otherwise have been
possible. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent the purchasers
are subject to such reporting requirements.
In
addition, if such purchases are made, the public “float” of our Class A common stock or public warrants and the number
of beneficial holders of our securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing
or trading of our securities on a national securities exchange.
If
a stockholder fails to receive notice of our offer to redeem our public shares in connection with our business combination, or
fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
We
will comply with the proxy rules or tender offer rules, as applicable, when conducting redemptions in connection with our business
combination. Despite our compliance with these rules, if a stockholder fails to receive our proxy solicitation or tender offer
materials, as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, the proxy
solicitation or tender offer materials, as applicable, that we will furnish to holders of our public shares in connection with
our initial business combination will describe the various procedures that must be complied with in order to validly redeem or
tender public shares. For example, we may require our public stockholders seeking to exercise their redemption rights, whether
they are record holders or hold their shares in “street name,” to either tender their certificates to our transfer
agent prior to the date set forth in the proxy solicitation or tender offer materials mailed to such holders, or up to two business
days prior to the vote on the proposal to approve the business combination in the event we distribute proxy materials, or to deliver
their shares to the transfer agent electronically. In the event that a stockholder fails to comply with these or any other procedures,
its shares may not be redeemed.
You
will not have any rights or interests in funds from the trust account, except under certain limited circumstances. Therefore,
to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
Our
public stockholders will be entitled to receive funds from the trust account only upon the earliest to occur of: (i) the redemption
of any public shares properly submitted in connection with our completion of an initial business combination (including the release
of funds to pay any amounts due to any public stockholders who properly exercise their redemption rights in connection therewith),
(ii) the redemption of any public shares properly submitted in connection with a stockholder vote to approve an amendment to our
amended and restated certificate of incorporation that would modify the substance or timing of our obligation to redeem 100% of
our public shares if we have not consummated an initial business combination within 24 months from the closing of our initial
public offering, or (iii) the redemption of our public shares and any Class A Units of Opco (other than those held by Rice Acquisition
Corp.) if we do not complete an initial business combination within 24 months from the closing of our initial public offering,
subject to applicable law and as further described herein. In addition, if we do not complete an initial business combination
within 24 months from the closing of our initial public offering for any reason, compliance with Delaware law may require that
we submit a plan of dissolution to our then-existing stockholders for approval prior to the distribution of the proceeds held
in our trust account. In that case, public stockholders may be forced to wait beyond 24 months from the closing of our initial
public offering before they receive funds from our trust account. In no other circumstances will a public stockholder have any
right or interest of any kind in the trust account. Holders of warrants will not have any right to the proceeds held in the trust
account with respect to the warrants. Accordingly, to liquidate your investment, you may be forced to sell your public shares
or warrants, potentially at a loss.
The
NYSE may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in
our securities and subject us to additional trading restrictions.
Our
securities are currently listed on the NYSE. However, we cannot assure you that our securities will be, or will continue to be,
listed on the NYSE in the future or prior to our initial business combination. In order to continue listing our securities on
the NYSE prior to our initial business combination, we must maintain certain financial, distribution and stock price levels. Generally,
we must maintain a minimum number of holders of our securities (generally 300 round lot holders). Additionally, in connection
with our initial business combination, we will be required to demonstrate compliance with the NYSE’s initial listing requirements,
which are more rigorous than the NYSE’s continued listing requirements, in order to continue to maintain the listing of
our securities on the NYSE. For instance, our stock price would generally be required to be at least $4.00 per share, our aggregate
market value would be required to be at least $100,000,000, and the market value of our publicly-held shares would be required
to be at least $80,000,000. We cannot assure you that we will be able to meet those initial listing requirements at that time.
If
the NYSE delists our securities from trading on its exchange and we are not able to list our securities on another national securities
exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant
material adverse consequences, including:
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a
limited availability of market quotations for our securities;
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reduced
liquidity for our securities;
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a
determination that our Class A common stock is a “penny stock” which will
require brokers trading in our Class A common stock to adhere to more stringent rules
and possibly result in a reduced level of trading activity in the secondary trading market
for our securities;
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a
limited amount of news and analyst coverage; and
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a
decreased ability to issue additional securities or obtain additional financing in the
future.
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The
National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating
the sale of certain securities, which are referred to as “covered securities.” Because our Class A common stock and
warrants are listed on the NYSE, our units, Class A common stock and warrants are covered securities. Although the states are
preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there
is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered
securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of
securities issued by blank check companies, other than the state of Idaho, certain state securities regulators view blank check
companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check
companies in their states. Further, if we were no longer listed on the NYSE, our securities would not be covered securities and
we would be subject to regulation in each state in which we offer our securities.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer
rules, and if you or a “group” of stockholders are deemed to hold in excess of 20% of our Class A common stock, you
will lose the ability to redeem all such shares in excess of 20% of our Class A common stock.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provide that a
public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in
concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption
rights with respect to more than an aggregate of 20% of the shares sold in our initial public offering without our prior consent,
which we refer to as the “Excess Shares.” However, we would not be restricting our stockholders’ ability to
vote all of their shares (including Excess Shares) for or against our business combination. Your inability to redeem the Excess
Shares will reduce your influence over our ability to complete our business combination and you could suffer a material loss on
your investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions
with respect to the Excess Shares if we complete our business combination. And as a result, you will continue to hold that number
of shares exceeding 20% and, in order to dispose of such shares, would be required to sell your stock in open market transactions,
potentially at a loss.
As
the number of special purpose acquisition companies evaluating targets increases, attractive targets may become scarcer and there
may be more competition for attractive targets. This could increase the cost of our initial business combination and could even
result in our inability to find a target or to consummate an initial business combination.
In
recent years, the number of special purpose acquisition companies that have been formed has increased substantially. Many potential
targets for special purpose acquisition companies have already entered into an initial business combination, and there are still
many special purpose acquisition companies seeking targets for their initial business combination, as well as many such companies
currently in registration. As a result, at times, fewer attractive targets may be available, and it may require more time, more
effort and more resources to identify a suitable target and to consummate an initial business combination. In addition, because
there are more special purpose acquisition companies seeking to enter into an initial business combination with available targets,
the competition for available targets with attractive fundamentals or business models may increase, which could cause target companies
to demand improved financial terms. Attractive deals could also become scarcer for other reasons, such as economic or industry
sector downturns, geopolitical tensions or increases in the cost of additional capital needed to close business combinations or
operate targets post-business combination. This could increase the cost of, delay or otherwise complicate or frustrate our ability
to find and consummate an initial business combination, and may result in our inability to consummate an initial business combination
on terms favorable to our investors altogether.
Because
of our limited resources and the significant competition for business combination opportunities, it may be more difficult for
us to complete our initial business combination. If we do not complete our initial business combination, our public stockholders
may receive only their pro rata portion of the funds in the trust account that are available for distribution to public stockholders,
and our warrants will expire worthless.
We
expect to encounter intense competition from other entities having a business objective similar to ours, including private investors
(which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international,
competing for the types of businesses we intend to acquire. Many of these individuals and entities are well-established and have
extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing
services to various industries. Many of these competitors possess greater technical, human and other resources or more local industry
knowledge than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors.
While we believe there are numerous target businesses we could potentially acquire with the net proceeds of our initial public
offering and the sale of the private placement warrants, our ability to compete with respect to the acquisition of certain target
businesses that are sizable will be limited by our available financial resources. This inherent competitive limitation gives others
an advantage in pursuing the acquisition of certain target businesses. Furthermore, we are obligated to offer holders of our public
shares the right to redeem their shares for cash at the time of our initial business combination, in conjunction with a stockholder
vote or via a tender offer. Target businesses will be aware that this may reduce the resources available to us for our initial
business combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a business
combination. If we do not complete our initial business combination, our public stockholders may receive only their pro rata portion
of the funds in the trust account that are available for distribution to public stockholders, and our warrants will expire worthless.
In certain circumstances, our public stockholders may receive less than $10.00 per share upon our liquidation. See “—
If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption
amount received by stockholders may be less than $10.00 per share” and other risk factors below.
If
the net proceeds of our initial public offering and the sale of the private placement warrants not being held in the trust account
are insufficient to allow us to operate for at least the next 24 months, we may be unable to complete our initial business combination,
in which case our public stockholders may only receive $10.00 per share, or less than such amount in certain circumstances, and
our warrants will expire worthless.
The
funds available to us outside of the trust account may not be sufficient to allow us to operate for at least the next 24 months,
assuming that our initial business combination is not completed during that time. We believe that, upon the closing of our initial
public offering, the funds available to us outside of the trust account will be sufficient to allow us to operate for at least
the next 24 months; however, we cannot assure you that our estimate is accurate. Of the funds available to us, we could use a
portion of the funds available to us to pay fees to consultants to assist us with our search for a target business. We could also
use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent or
merger agreements designed to keep target businesses from “shopping” around for transactions with other companies
on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do
not have any current intention to do so. If we entered into a letter of intent or merger agreement where we paid for the right
to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our
breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with respect to,
a target business. If we do not complete our initial business combination, our public stockholders may receive only approximately
$10.00 per share on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances, our
public stockholders may receive less than $10.00 per share upon our liquidation. See “— If third parties bring claims
against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders
may be less than $10.00 per share” and other risk factors below.
If
the net proceeds of our initial public offering and the sale of the private placement warrants not being held in the trust account
are insufficient to allow us to operate for at least the next 24 months, it could limit the amount available to fund our search
for a target business or businesses and complete our initial business combination and we will depend on loans from our sponsor
or management team to fund our search for a business combination, to pay franchise and income taxes of the Company or Opco and
to complete our initial business combination. If we are unable to obtain these loans, we may be unable to complete our initial
business combination.
Of
the net proceeds of our initial public offering and the sale of the private placement warrants, only approximately $1,000,000
is available to us outside the trust account to fund our working capital requirements. If we are required to seek additional capital,
we would need to borrow funds from our sponsor, management team or other third parties to operate or we may be forced to liquidate.
None of our sponsor, members of our management team nor any of their affiliates is under any obligation to advance funds to us
in such circumstances. Any such advances would be repaid only from funds held outside the trust account or from funds released
to us upon completion of our initial business combination. Up to $1,500,000 of such loans may be convertible into warrants of
the post-business combination entity at a price of $1.00 per warrant at the option of the lender. The warrants would be identical
to the private placement warrants. Prior to the completion of our initial business combination, we do not expect to seek loans
from parties other than our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to loan
such funds and provide a waiver against any and all rights to seek access to funds in our trust account. If we do not complete
our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations
and liquidate the trust account. Consequently, our public stockholders may only receive an estimated $10.00 per share, or possibly
less, on our redemption of our public shares, and our warrants will expire worthless. See “— If third parties bring
claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders
may be less than $10.00 per share” and other risk factors below.
Subsequent
to our completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and
impairment or other charges that could have a significant negative effect on our financial condition, results of operations and
our stock price, which could cause you to lose some or all of your investment.
Even
if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will
surface all material issues in relation to a particular target business, that it would be possible to uncover all material issues
through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not
later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations,
or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully identifies
certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary
risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that
we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges
of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing
debt held by a target business or by virtue of our obtaining post-combination debt financing. Accordingly, any stockholders who
choose to remain stockholders following the business combination could suffer a reduction in the value of their securities. Such
stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction
was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able
to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable,
relating to the business combination contained an actionable material misstatement or material omission.
The
securities in which we invest the funds held in the trust account could bear a negative rate of interest, which could reduce the
value of the assets held in trust such that the per-share redemption amount received by public stockholders may be less than $10.00
per share.
The
proceeds held in the trust account will be invested only in U.S. government treasury obligations with a maturity of 185 days or
less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in
direct U.S. government treasury obligations. While short-term U.S. government treasury obligations currently yield a positive
rate of interest, they have briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued
interest rates below zero in recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility
that it may in the future adopt similar policies in the United States. In the event that we do not complete our initial business
combination or make certain amendments to our amended and restated certificate of incorporation, our public stockholders are entitled
to receive their pro rata share of the proceeds held in the trust account, plus any interest income, net of taxes paid or payable
(less, in the case we do not complete our initial business combination, $100,000 of interest). Negative interest rates could reduce
the value of the assets held in trust such that the per-share redemption amount received by public stockholders may be less than
$10.00 per share.
If
third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount
received by stockholders may be less than $10.00 per share.
Our
placing of funds in the trust account may not protect those funds from third-party claims against us. Although we will seek to
have all vendors, service providers (other than our independent registered public accounting firm), prospective target businesses
and other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind
in or to any monies held in the trust account for the benefit of our public stockholders, such parties may not execute such agreements,
or even if they execute such agreements, they may not be prevented from bringing claims against the trust account, including,
but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging
the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including
the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held
in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an
agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would
be significantly more beneficial to us than any alternative. Making such a request of potential target businesses may make our
acquisition proposal less attractive to them and, to the extent prospective target businesses refuse to execute such a waiver,
it may limit the field of potential target businesses that we might pursue.
Examples
of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party
consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants
that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver.
In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of,
or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for
any reason. Upon redemption of our public shares, if we do not complete our business combination within the prescribed timeframe,
or upon the exercise of a redemption right in connection with our business combination, we will be required to provide for payment
of claims of creditors that were not waived that may be brought against us within the 10 years following redemption. Accordingly,
the per-share redemption amount received by public stockholders could be less than the $10.00 per public share initially held
in the trust account, due to claims of such creditors. Pursuant to the letter agreement the form of which is filed as an exhibit
to the registration statement on Form S-1 that was filed in connection with our initial public offering, our sponsor has agreed
that it will be liable to us if and to the extent any claims by a third party (other than our independent public accountants)
for services rendered or products sold to us, or a prospective target business with which we have entered into a written letter
of intent, confidentiality or other similar agreement or business combination agreement, reduce the amount of funds in the trust
account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account
as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of the trust
assets, in each case net of the interest which may be withdrawn to pay taxes, provided that such liability will not apply to any
claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the trust
account (whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters of
our initial public offering against certain liabilities, including liabilities under the Securities Act. However, we have not
asked our sponsor to reserve for such indemnification obligations, nor have we independently verified whether our sponsor has
sufficient funds to satisfy its indemnity obligations and we believe that our sponsor’s only assets are securities of our
company. Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations. As a result, if any such
claims were successfully made against the trust account, the funds available for our initial business combination and redemptions
could be reduced to less than $10.00 per public share. In such event, we may not be able to complete our initial business combination,
and you would receive such lesser amount per share in connection with any redemption of your public shares. None of our officers
or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target
businesses.
Our
directors may decide not to enforce the indemnification obligations of our sponsor, resulting in a reduction in the amount of
funds in the trust account available for distribution to our public stockholders.
In
the event that the proceeds in the trust account are reduced below the lesser of (i) $10.00 per public share and (ii) the actual
amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00
per share due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes,
and our sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to
a particular claim, our independent directors would determine whether to take legal action against our sponsor to enforce its
indemnification obligations.
While
we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification
obligations to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary
duties may choose not to do so in any particular instance. If our independent directors choose not to enforce these indemnification
obligations, the amount of funds in the trust account available for distribution to our public stockholders may be reduced below
$10.00 per share.
If
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members
of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members
of our board of directors and us to claims of punitive damages.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under
applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. In addition, our board
of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing
itself and us to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims
of creditors.
If
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over
the claims of our stockholders and the per-share amount that would otherwise be received by our stockholders in connection with
our liquidation may be reduced.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable
bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the
claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise
be received by our stockholders in connection with our liquidation may be reduced.
If
we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance
requirements and our activities may be restricted, which may make it difficult for us to complete our business combination.
If
we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions
on the nature of our investments; and
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restrictions
on the issuance of securities, each of which may make it difficult for us to complete
our business combination.
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In
addition, we may have imposed upon us burdensome requirements, including:
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registration
as an investment company;
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adoption
of a specific form of corporate structure; and
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reporting,
record keeping, voting, proxy and disclosure requirements and other rules and regulations.
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In
order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we
must ensure that we are engaged primarily in a business other than investing, reinvesting or trading of securities and that our
activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting
more than 40% of our assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business
is to identify and complete a business combination and thereafter to operate the post-transaction business or assets for the long
term. We do not plan to buy businesses or assets with a view to resale or profit from their resale. We do not plan to buy unrelated
businesses or assets or to be a passive investor.
We
do not believe that our anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds
held in the trust account may only be invested in United States “government securities” within the meaning of Section
2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions
under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations.
Pursuant to the trust agreement, the trustee is not permitted to invest in other securities or assets. By restricting the investment
of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long
term (rather than on buying and selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid
being deemed an “investment company” within the meaning of the Investment Company Act. Our initial public offering
is not intended for persons who are seeking a return on investments in government securities or investment securities. The trust
account is intended as a holding place for funds pending the earliest to occur of: (i) the completion of our initial business
combination; (ii) the redemption of any public shares properly submitted in connection with a stockholder vote to approve an amendment
to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem
100% of our public shares if we have not consummated an initial business combination within 24 months from the closing of our
initial public offering; or (iii) the redemption of our public shares and any Class A Units of Opco (other than those held by
Rice Acquisition Corp.) if we do not complete our business combination within 24 months from the closing of our initial public
offering, subject to applicable law. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the
Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory
burdens would require additional expenses for which we have not allotted funds and may hinder our ability to complete a business
combination, or may result in our liquidation. If we do not complete our initial business combination, our public stockholders
may only receive their pro rata portion of the funds in the trust account that are available for distribution to public stockholders,
and our warrants will expire worthless.
Changes
in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our
ability to negotiate and complete our initial business combination, and results of operations.
We
are subject to laws and regulations enacted by national, regional and local governments. In particular, we are required to comply
with certain SEC and other legal requirements and numerous complex tax laws. Compliance with, and monitoring of, applicable laws
and regulations may be difficult, time consuming and costly.
Those
laws and regulations and their interpretation and application may also change from time to time and those changes could have a
material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable
laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to
negotiate and complete our initial business combination, and results of operations.
Our
stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption
of their shares.
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received
by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption
of our public shares in the event we do not complete our initial business combination within 24 months from the closing of our
initial public offering may be considered a liquidating distribution under Delaware law. If a corporation complies with certain
procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it,
including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during
which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions
are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of
such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder
would be barred after the third anniversary of the dissolution. However, it is our intention to redeem our public shares as soon
as reasonably possible following the 24th month from the closing of our initial public offering in the event we do
not complete our business combination and, therefore, we do not intend to comply with the foregoing procedures.
Because
we will not comply with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such
time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us
within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company,
and our operations will are limited to searching for prospective target businesses to acquire, the only likely claims to arise
would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. If our plan of distribution
complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited
to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability
of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly
assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims
to the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third
anniversary of such date. Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon
the redemption of our public shares in the event we do not complete our initial business combination within 24 months from the
closing of our initial public offering is not considered a liquidating distribution under Delaware law and such redemption distribution
is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then
be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.
We
may not hold an annual meeting of stockholders until after the consummation of our initial business combination, which could delay
the opportunity for our stockholders to elect directors.
In
accordance with the NYSE corporate governance requirements, we are not required to hold an annual meeting until no later than
one year after our first fiscal year end following our listing on the NYSE. Under Section 211(b) of the DGCL, we are, however,
required to hold an annual meeting of stockholders for the purposes of electing directors in accordance with our bylaws unless
such election is made by written consent in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect
new directors prior to the consummation of our initial business combination, and thus, we may not be in compliance with Section
211(b) of the DGCL, which requires an annual meeting. Therefore, if our stockholders want us to hold an annual meeting prior to
the consummation of our initial business combination, they may attempt to force us to hold one by submitting an application to
the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL.
We
have not registered the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any
state securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus
precluding such investor from being able to exercise its warrants except on a cashless basis and potentially causing such warrants
to expire worthless.
We
have not registered the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any
state securities laws at this time. However, under the terms of the warrant agreement, we have agreed that as soon as practicable,
but in no event later than 15 business days, after the closing of our initial business combination, we will use our best efforts
to file a registration statement under the Securities Act covering such shares and maintain a current prospectus relating to the
Class A common stock issuable upon exercise of the warrants, until the expiration of the warrants in accordance with the provisions
of the warrant agreement. We cannot assure you that we will be able to do so if, for example, any facts or events arise which
represent a fundamental change in the information set forth in the registration statement or prospectus, the financial statements
contained or incorporated by reference therein are not current or correct or the SEC issues a stop order. If the shares issuable
upon exercise of the warrants are not registered under the Securities Act, we will be required to permit holders to exercise their
warrants on a cashless basis, in which case, the number of shares of Class A common stock that you will receive upon cashless
exercise will be based on a formula subject to a maximum amount of shares equal to 0.361 shares of Class A common stock per warrant
(subject to adjustment). However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated
to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered
or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available.
Notwithstanding the above, if our Class A common stock is at the time of any exercise of a warrant not listed on a national securities
exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act,
we may, at our option, require holders of public warrants who exercise their warrants to do so on a “cashless basis”
in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain
in effect a registration statement, but we will be required to use our best efforts to register or qualify the shares under applicable
blue sky laws to the extent an exemption is not available. In no event will we be required to net cash settle any warrant, or
issue securities or other compensation in exchange for the warrants in the event that we are unable to register or qualify the
shares underlying the warrants under the Securities Act or applicable state securities laws, and there is no exemption available.
If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification,
the holder of such warrant shall not be entitled to exercise such warrant and such warrant may have no value and expire worthless.
In such event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price
solely for the shares of our Class A common stock included in the units. If and when the warrants become redeemable by us, we
may exercise our redemption right even if we are unable to register or qualify the underlying shares of our Class A common stock
for sale under all applicable state securities laws.
The
grant of registration rights to our initial stockholders may make it more difficult to complete our initial business combination,
and the future exercise of such rights may adversely affect the market price of our Class A common stock.
Pursuant
to the agreement entered into concurrently with the issuance and sale of the securities in our initial public offering, our initial
stockholders and their permitted transferees can demand that we register the shares of our Class A common stock into which founder
shares and sponsor shares are exchangeable, holders of our private placement warrants and their permitted transferees can demand
that we register the private placement warrants and the shares of our Class A common stock issuable upon exercise of the private
placement warrants or upon exchange of any Class A Units of Opco issued upon exercise of the private placement warrants and holders
of warrants that may be issued upon conversion of working capital loans may demand that we register such warrants or the Class
A common stock issuable upon exercise of such warrants or upon exchange of any Class A Units of Opco issued upon exercise of such
warrants. Assuming the founder shares and sponsor shares are exchanged on a one for one basis and no warrants are issued upon
conversion of working capital loans, an aggregate of up to 5,940,096 shares of our Class A common stock and up to 6,771,000 warrants
are subject to registration under these agreements. We will bear the cost of registering these securities. The registration and
availability of such a significant number of securities for trading in the public market may have an adverse effect on the market
price of our Class A common stock. In addition, the existence of the registration rights may make our initial business combination
more costly or difficult to conclude. This is because the stockholders of the target business may increase the equity stake they
seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our Class
A common stock that is expected when the securities owned by our initial stockholders, holders of our private placement warrants,
holders of working capital loans or their respective permitted transferees are registered.
Because
we are not limited to a particular industry, sector or any specific target businesses with which to pursue our initial business
combination, you will be unable to ascertain the merits or risks of any particular target business’s operations.
Although
we expect to focus our search for a target business in the broadly defined energy transition or sustainability arena, we may complete
a business combination with an operating company in any industry or sector. However, we are not, under our amended and restated
certificate of incorporation, be permitted to effectuate our business combination solely with another blank check company or similar
company with nominal operations. Because we have not yet selected or approached any specific target business with respect to a
business combination, there is no basis to evaluate the possible merits or risks of any particular target business’s operations,
results of operations, cash flows, liquidity, financial condition or prospects. To the extent we complete our business combination,
we may be affected by numerous risks inherent in the business operations with which we combine. For example, if we combine with
a financially unstable business or an entity lacking an established record of revenues or earnings, we may be affected by the
risks inherent in the business and operations of a financially unstable or a development stage entity. Although our officers and
directors will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly
ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore,
some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks
will adversely impact a target business. We also cannot assure you that an investment in our units will ultimately prove to be
more favorable to investors than a direct investment, if such opportunity were available, in a business combination target. Accordingly,
any stockholders who choose to remain stockholders following the business combination could suffer a reduction in the value of
their securities. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully
claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to
them, or if they are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer
materials (as applicable) relating to the business combination contained an actionable material misstatement or material omission.
We
may seek acquisition opportunities outside of our target industries or sectors (which industries or sectors may or may not be
outside of our management’s areas of expertise).
Although
we intend to focus on identifying business combination candidates in the broad energy transition or sustainability arena that
may advance the objectives of global decarbonization, we will consider a business combination outside of our target industries
or sectors if a business combination candidate is presented to us and we determine that such candidate offers an attractive acquisition
opportunity for our company or we are unable to identify a suitable candidate in our target industries or sectors after having
expended a reasonable amount of time and effort in an attempt to do so. Although our management will endeavor to evaluate the
risks inherent in any particular business combination candidate, we cannot assure you that we will adequately ascertain or assess
all of the significant risk factors. We also cannot assure you that an investment in our units will not ultimately prove to be
less favorable to investors in our initial public offering than a direct investment, if an opportunity were available, in a business
combination candidate. In the event we elect to pursue an acquisition outside of our target industries or sectors, our management’s
expertise may not be directly applicable to its evaluation or operation, and the information contained in this Report regarding
our target industries or sectors would not be relevant to an understanding of the business that we elect to acquire. As a result,
our management may not be able to adequately ascertain or assess all of the significant risk factors. Accordingly, any stockholders
who choose to remain stockholders following our business combination could suffer a reduction in the value of their shares. Such
stockholders are unlikely to have a remedy for such reduction in value.
Although
we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses,
we may enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result,
the target business with which we enter into our initial business combination may not have attributes entirely consistent with
our general criteria and guidelines.
Although
we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target
business with which we enter into our initial business combination will not have all of these positive attributes. If we complete
our initial business combination with a target that does not meet some or all of these guidelines, such combination may not be
as successful as a combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce
a prospective business combination with a target that does not meet our general criteria and guidelines, a greater number of stockholders
may exercise their redemption rights, which may make it difficult for us to meet any closing condition with a target business
that requires us to have a minimum net worth or a certain amount of cash. In addition, if stockholder approval of the transaction
is required by law, or we decide to obtain stockholder approval for business or other legal reasons, it may be more difficult
for us to attain stockholder approval of our initial business combination if the target business does not meet our general criteria
and guidelines. If we do not complete our initial business combination, our public stockholders may only receive their pro rata
portion of the funds in the trust account that are available for distribution to public stockholders, and our warrants will expire
worthless.
We
may seek business combination opportunities with a financially unstable business or an entity lacking an established record of
revenue or earnings, which could subject us to volatile revenues, cash flows or earnings or difficulty in retaining key personnel.
To
the extent we complete our initial business combination with a financially unstable business or an entity lacking an established
record of revenues, cash flows or earnings, we may be affected by numerous risks inherent in the operations of the business with
which we combine. These risks include volatile revenues, cash flows or earnings and difficulties in obtaining and retaining key
personnel. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we
may not be able to properly ascertain or assess all of the significant risk factors and we may not have adequate time to complete
due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce
the chances that those risks will adversely impact a target business.
We
are not required to obtain an opinion from an independent investment banking firm or from an independent accounting firm, and
consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our
company from a financial point of view.
Unless
we complete our business combination with an affiliated entity, we are not required to obtain an opinion from an independent investment
banking firm that is a member of FINRA or from an independent accounting firm that the price we are paying is fair to our company
from a financial point of view. If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors,
who will determine fair market value based on standards generally accepted by the financial community. Such standards used will
be disclosed in our proxy solicitation or tender offer materials, as applicable, related to our initial business combination.
If our board of directors is not able to independently determine the fair market value of our initial business combination, we
will obtain an opinion from an independent investment banking firm. However, our stockholders may not be provided with a copy
of such opinion, nor will they be able to rely on such opinion.
We
may issue additional shares of our Class A common stock, preferred stock or Opco Units (and a corresponding number of shares of
our Class B common stock) to complete our initial business combination or under an employee incentive plan after completion of
our initial business combination. The number of Class A Units of Opco into which the Class B Units of Opco will convert may be
adjusted after the time of our initial business combination as a result of the anti-dilution provisions contained in our amended
and restated certificate of incorporation. Any such issuances would dilute the interest of our stockholders and likely present
other risks.
Our
amended and restated certificate of incorporation authorizes the issuance of up to 250,000,000 shares of our Class A common stock,
par value $0.0001 per share, 20,000,000 shares of our Class B common stock, par value $0.0001 per share, and 1,000,000 undesignated
shares of preferred stock, par value $0.0001 per share. There are 226,272,500 and 14,068,650 authorized but unissued shares of
our Class A common stock and Class B common stock, respectively, available for issuance, which amount does not take into account
shares of our Class A common stock reserved for issuance upon exercise of outstanding warrants, or shares issuable upon exchange
of founder shares or other Class A Units of Opco (and corresponding shares of our Class B common stock). There are no shares of
preferred stock issued and outstanding. The Class A Units of Opco (and corresponding shares of our Class B common stock) are exchangeable
for shares of our Class A common stock at a one-for-one ratio but subject to adjustment as set forth herein.
We
may issue a substantial number of additional Opco Units (and corresponding shares of our Class B common stock), shares of our
Class A common stock or preferred stock to complete our initial business combination or under an employee incentive plan after
completion of our initial business combination. We may also issue additional shares of our Class A common stock upon exchange
of the founder shares, as a result of adjustments to the number of Class A Units of Opco into which the Class B Units of Opco
will convert after the time of our initial business combination as a result of the anti-dilution provisions contained in our amended
and restated certificate of incorporation. However, our amended and restated certificate of incorporation provide, among other
things, that prior to our initial business combination, we may not issue additional shares of capital stock that would entitle
the holders thereof to (i) receive funds from the trust account or (ii) vote on any initial business combination. These provisions
of our amended and restated certificate of incorporation, like all provisions of our amended and restated certificate of incorporation,
may be amended with a stockholder vote.
The
issuance of additional Opco Units (and corresponding shares of our Class B common stock), shares of Class A common stock or preferred
stock:
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may
significantly dilute the equity interest of investors in our initial public offering;
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may
subordinate the rights of holders of common stock if preferred stock is issued with rights
senior to those afforded our common stock;
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could
cause a change in control if a substantial number of shares of our common stock are issued,
which may affect, among other things, our ability to use our net operating loss carry
forwards, if any, and could result in the resignation or removal of our present officers
and directors; and
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may
adversely affect prevailing market prices for our units, Class A common stock and/or
warrants.
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Unlike
some other similarly structured blank check companies, our initial stockholders will receive additional Class A Units of Opco
if we issue shares to consummate an initial business combination.
The
founder shares consist of Class B Units of Opco (and any Class A Units of Opco into which such Class B Units are converted) and
a corresponding number of shares of our Class B common stock, which together will be exchangeable for shares of our Class A common
stock after the time of our initial business combination on a one-for-one basis, subject to adjustment for stock splits, stock
dividends, reorganizations, recapitalizations and the like and subject to further adjustment as provided herein. In the case that
additional shares of our Class A common stock or equity-linked securities convertible or exercisable for shares of our Class A
common stock are issued or deemed issued in excess of the amounts sold in our initial public offering and related to the closing
of our initial business combination (other than the forward purchase securities), the number of Class A Units of Opco into which
the Class B Units of Opco will convert may be adjusted so that, after all founder shares have been exchanged for shares of our
Class A common stock, the aggregate number of shares of our Class A common stock received by holders in exchange for founder shares
would equal 20% of our total outstanding common stock upon completion of our initial public offering plus the number of shares
of our Class A common stock and equity-linked securities issued or deemed issued in connection with our initial business combination,
excluding any shares of our Class A common stock or equity-linked securities issued, or to be issued, to any seller in our initial
business combination, and excluding the sponsor shares. In addition, the number of outstanding shares of our Class B common stock
will be adjusted through a stock split or stock dividend so that the total number of outstanding shares of our Class B common
stock corresponds to the total number of Class A Units of Opco outstanding (other than those held by Rice Acquisition Corp.) plus
the total number of Class A Units of Opco into which the Class B Units of Opco are entitled to convert.
Resources
could be wasted in researching business combinations that are not completed, which could materially adversely affect subsequent
attempts to locate and acquire or merge with another business. If we do not complete our initial business combination, our public
stockholders may only receive their pro rata portion of the funds in the trust account that are available for distribution to
public stockholders, and our warrants will expire worthless.
We
anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements,
disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants,
attorneys, consultants and others. If we decide not to complete a specific initial business combination, the costs incurred up
to that point for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to
a specific target business, we may fail to complete our initial business combination for any number of reasons including those
beyond our control. Any such event will result in a loss to us of the related costs incurred which could materially adversely
affect subsequent attempts to locate and acquire or merge with another business. If we do not complete our initial business combination,
our public stockholders may only receive their pro rata portion of the funds in the trust account that are available for distribution
to public stockholders, and our warrants will expire worthless.
We
are dependent upon our officers and directors, and their loss could adversely affect our ability to operate.
Our
operations are dependent upon a relatively small group of individuals and, in particular, our officers and directors. We believe
that our success depends on the continued service of our officers and directors, at least until we have completed our initial
business combination. In addition, our officers and directors are not required to commit any specified amount of time to our affairs
and, accordingly, will have conflicts of interest in allocating their time among various business activities, including identifying
potential business combinations and monitoring the related due diligence. We do not have an employment agreement with, or key-man
insurance on the life of, any of our directors or officers. The unexpected loss of the services of one or more of our directors
or officers could have a detrimental effect on us.
Our
ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent upon
the efforts of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel
could negatively impact the operations and profitability of our post-combination business.
Our
ability to successfully effect our business combination is dependent upon the efforts of our key personnel. The role of our key
personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with
the target business in senior management or advisory positions following our business combination, it is likely that some or all
of the management of the target business will remain in place. While we intend to closely scrutinize any individuals we engage
after our initial business combination, we cannot assure you that our assessment of these individuals will prove to be correct.
These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to
have to expend time and resources helping them become familiar with such requirements.
In
addition, the officers and directors of an acquisition candidate may resign upon completion of our initial business combination.
The departure of a business combination target’s key personnel could negatively impact the operations and profitability
of our post-combination business. The role of an acquisition candidate’s key personnel upon the completion of our initial
business combination cannot be ascertained at this time. Although we contemplate that certain members of an acquisition candidate’s
management team will remain associated with the acquisition candidate following our initial business combination, it is possible
that members of the management of an acquisition candidate will not wish to remain in place. The loss of key personnel could negatively
impact the operations and profitability of our post-combination business.
Our
key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business
combination, and a particular business combination may be conditioned on the retention or resignation of such key personnel. These
agreements may provide for them to receive compensation following our business combination and as a result, may cause them to
have conflicts of interest in determining whether a particular business combination is the most advantageous.
Our
key personnel may be able to remain with our company after the completion of our business combination only if they are able to
negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take place
simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation
in the form of cash payments and/or our securities for services they would render to us after the completion of the business combination.
Such negotiations also could make such key personnel’s retention or resignation a condition to any such agreement. The personal
and financial interests of such individuals may influence their motivation in identifying and selecting a target business.
Our
current officers may not remain in their positions following our business combination. We may have a limited ability to assess
the management of a prospective target business and, as a result, may effect our initial business combination with a target business
whose management may not have the skills, qualifications or abilities to manage a public company, which could, in turn, negatively
impact the value of our stockholders’ investment in us.
When
evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess
the target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities
of the target business’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications
or abilities we suspected. Should the target business’s management not possess the skills, qualifications or abilities necessary
to manage a public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly,
any stockholders who choose to remain stockholders following the business combination could suffer a reduction in the value of
their securities. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully
claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to
them, or if they are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer
materials (as applicable) relating to the business combination contained an actionable material misstatement or material omission.
The
officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The loss of
a business combination target’s key personnel could negatively impact the operations and profitability of our post-combination
business.
The
role of an acquisition candidate’s key personnel upon the completion of our initial business combination cannot be ascertained
at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated
with the acquisition candidate following our initial business combination, it is possible that members of the management of an
acquisition candidate will not wish to remain in place.
Our
officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination
as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete
our initial business combination.
Our
officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict
of interest in allocating their time between our operations and our search for a business combination and their other businesses.
We do not intend to have any full-time employees prior to the completion of our initial business combination. Each of our officers
is engaged in several other business endeavors for which he may be entitled to substantial compensation, and our officers are
not obligated to contribute any specific number of hours per week to our affairs. Our independent directors may also serve as
officers or board members for other entities. If our officers’ and directors’ other business affairs require them
to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability
to devote time to our affairs which may have a negative impact on our ability to complete our initial business combination.
Certain
of our officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business
activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in allocating their
time and determining to which entity a particular business opportunity should be presented.
Until
we consummate our initial business combination, we are in the process of identifying and combining with one or more businesses.
Our sponsor and officers and directors are, and may in the future become, affiliated with entities that are engaged in a similar
business, including Rice Investment Group and its portfolio companies and Rice II. Our officers and directors also may become
aware of business opportunities which may be appropriate for presentation to us and the other entities to which they owe certain
fiduciary or contractual duties.
Accordingly,
they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These
conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation
to us. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity
offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as
a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would
otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to
us without violating another legal obligation.
Our
officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with
our interests.
We
have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct
or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which
we are a party or have an interest. In fact, we may enter into a business combination with a target business that is affiliated
with our sponsor, our directors or officers, although we do not intend to do so, or we may acquire a target business through an
Affiliated Joint Acquisition with one or more affiliates of our sponsor, including Rice Investment Group and/or one or more of
its portfolio companies. We do not have a policy that expressly prohibits any such persons from engaging for their own account
in business activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between their interests
and ours.
In
particular, members of our sponsor and its affiliates, including Rice Investment Group and its portfolio companies and Rice II,
are focused on investments in the energy industry. As a result, there may be substantial overlap between companies that would
be a suitable business combination for us and companies that would make an attractive target for such affiliates.
We
may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated
with our sponsor, officers, directors or existing holders which may raise potential conflicts of interest.
In
light of the involvement of our sponsor, officers and directors with other entities, we may decide to acquire one or more businesses
affiliated with our sponsor, officers, directors or existing holders, including one or more portfolio companies of Rice Investment
Group. Our officers and directors also serve as officers and board members for other entities. They may also have investments
in target businesses. Such entities may compete with us for business combination opportunities. Although we will not be specifically
focusing on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined that
such affiliated entity met our criteria for a business combination and such transaction was approved by a majority of our independent
and disinterested directors. Despite our obligation to obtain an opinion from an independent investment banking firm that is a
member of FINRA or from an independent accounting firm regarding the fairness to our company from a financial point of view of
a business combination with one or more domestic or international businesses affiliated with our sponsor, officers or directors,
potential conflicts of interest still may exist and, as a result, the terms of the business combination may not be as advantageous
to our public stockholders as they would be absent any conflicts of interest.
Moreover,
we may pursue an Affiliated Joint Acquisition opportunity with one or more affiliates of our sponsor, including Rice Investment
Group and/or one or more of its portfolio companies. Any such parties may co-invest with us in the target business at the time
of our initial business combination, or we could raise additional proceeds to complete the business combination by issuing to
such parties a class of equity or equity-linked securities. Accordingly, such persons or entities may have a conflict between
their interests and ours.
Since
our sponsor, officers and directors will lose their entire investment in us if our business combination is not completed (other
than with respect to sponsor shares and public shares they have acquired during or may acquire after our initial public offering),
a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial
business combination.
In
September 2020, our Sponsor paid $25,000 to cover certain of our expenses in exchange for (i) 5,750,100 shares of our Class B
common stock, par value $0.0001 per share, and (ii) 2,500 shares of our Class A common stock, par value $0.0001 per share. Also
in September 2020, the Sponsor received 5,750,000 Class B Units of Opco (which are profits interest units only). In October 2020,
the Sponsor forfeited 90,000 Class B Units of Opco, and 30,000 Class B Units of Opco were issued to each of the independent directors. The Sponsor transferred a corresponding number of shares of Class B common stock to the independent directors.
In October 2020, the Company effected a dividend, resulting in an aggregate of (i) 6,181,350 shares of our Class B common stock,
and (ii) 2,500 shares of our Class A common stock outstanding. All shares and associated amounts have been retroactively restated
to reflect the dividend. Upon a liquidation of Opco, distributions generally will be made to the holders of Opco Units on a pro
rata basis, subject to certain limitations with respect to the Class B Units of Opco, including that, prior to the completion
of the initial business combination, such Class B Units will not be entitled to participate in a liquidating distribution. On
October 26, 2020, the Company consummated its initial public offering of 23,725,000 units, including 2,225,000 units that were
issued pursuant to the underwriters’ partial exercise of their over-allotment option, at $10.00 per unit, generating gross
proceeds of approximately $237.3 million, and incurring offering costs of approximately $12.5 million, inclusive of $7.6 million
in deferred underwriting commissions. Of the 23,725,000 units sold, affiliates of our Sponsor and Atlas Point Fund had purchased
1,980,000 units and 2,128,500 units at the initial public offering price. The founder shares will be worthless if we do not complete
an initial business combination. The underwriters did not receive any underwriting discounts or commissions on the 1,980,000 Affiliated
Units. Each unit consists of one share of Class A common stock and one-half of one redeemable warrant. Each whole Public Warrant
entitles the holder to purchase one share of our Class A common stock at a price of $11.50 per share, subject to adjustment. The
personal and financial interests of our officers and directors may influence their motivation in identifying and selecting a target
business combination, completing an initial business combination and influencing the operation of the business following our initial
business combination. This risk may become more acute as the 24-month anniversary of the closing of our initial public offering
nears, which is the deadline for our completion of an initial business combination.
We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely
affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.
We
may choose to incur substantial debt to complete our business combination. We and our officers have agreed that we will not incur
any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to
the monies held in the trust account. As such, no issuance of debt will affect the per share amount available for redemption from
the trust account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:
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default
and foreclosure on our assets if our operating revenues after an initial business combination
are insufficient to repay our debt obligations;
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acceleration
of our obligations to repay the indebtedness even if we make all principal and interest
payments when due if we breach certain covenants that require the maintenance of certain
financial ratios or reserves without a waiver or renegotiation of that covenant;
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our
immediate payment of all principal and accrued interest, if any, if the debt security
is payable on demand;
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our
inability to obtain necessary additional financing if the debt security contains covenants
restricting our ability to obtain such financing while the debt security is outstanding;
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our
inability to pay dividends on our common stock;
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using
a substantial portion of our cash flow to pay principal and interest on our debt, which
will reduce the funds available for dividends on our common stock if declared, to pay
expenses, make capital expenditures and acquisitions and fund other general corporate
purposes;
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limitations
on our flexibility in planning for and reacting to changes in our business and in the
industry in which we operate;
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increased
vulnerability to adverse changes in general economic, industry and competitive conditions
and adverse changes in government regulation;
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limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions,
debt service requirements, and execution of our strategy; and
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other
disadvantages compared to our competitors who have less debt.
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We
may only be able to complete one business combination with the proceeds of our initial public offering and the sale of the private
placement warrants, which will cause us to be solely dependent on a single business which may have a limited number of products
or services. This lack of diversification may negatively impact our operations and profitability.
Of
the net proceeds from our initial public offering and the sale of the private placement warrants, up to approximately $237.3 million
is available to complete our business combination and pay related fees and expenses. Of the up to approximately $237.3 million,
approximately $1.0 million will be held outside the trust account for business, legal and accounting due diligence on prospective
acquisitions and continuing general and administrative expenses.
We
may effectuate our business combination with a single target business or multiple target businesses simultaneously or within a
short period of time. However, we may not be able to effectuate our business combination with more than one target business because
of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma
financial statements with the SEC that present operating results and the financial condition of several target businesses as if
they had been operated on a combined basis.
By
completing our initial business combination with only a single entity, our lack of diversification may subject us to numerous
economic, competitive and regulatory developments. Further, we would not be able to diversify our operations or benefit from the
possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several business
combinations in different industries or different areas of a single industry. In addition, we are focusing our search for an initial
business combination in a single industry. Accordingly, the prospects for our success may be:
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solely
dependent upon the performance of a single business, property or asset, or
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dependent
upon the development or market acceptance of a single or limited number of products,
processes or services.
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This
lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a
substantial adverse impact upon the particular industry in which we may operate subsequent to our business combination.
We
may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to
complete our business combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
If
we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers
to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which
may make it more difficult for us, and delay our ability, to complete our initial business combination. With multiple business
combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations
and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation
of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately
address these risks, it could negatively impact our profitability and results of operations.
We
may attempt to complete our initial business combination with a private company about which little information is available, which
may result in a business combination with a company that is not as profitable as we suspected, if at all.
In
pursuing our business combination strategy, we may seek to effectuate our initial business combination with a privately held company.
Very little public information generally exists about private companies, and we could be required to make our decision on whether
to pursue a potential initial business combination on the basis of limited information, which may result in a business combination
with a company that is not as profitable as we suspected, if at all.
Our
management may not be able to maintain control of a target business after our initial business combination. We cannot provide
assurance that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities
necessary to profitably operate such business.
We
may structure a business combination so that we will control less than 100% of the equity interests or assets of a target business,
but we will only complete such business combination if we control 50% or more of the outstanding voting securities of the target
or otherwise are not required to register as an investment company under the Investment Company Act. We will not consider any
transaction that does not meet such criteria. Even if we control 50% or more of the voting securities of the target, our stockholders
prior to the business combination may collectively own a minority interest in the post business combination company, depending
on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction
in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock, shares or other equity
interests of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a
substantial number of new shares, our stockholders immediately prior to such transaction could own less than a majority of our
outstanding shares of common stock subsequent to such transaction. In addition, other minority stockholders may subsequently combine
their holdings resulting in a single person or group obtaining a larger share of the company’s stock than we initially acquired.
Accordingly, this may make it more likely that our management will not be able to maintain control of the target business.
We
do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to
complete a business combination with which a substantial majority of our stockholders do not agree.
Our
amended and restated certificate of incorporation will not provide a specified maximum redemption threshold, except that in no
event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon consummation
of our initial business combination and after payment of underwriters’ fees and commissions (such that we are not subject
to the SEC’s “penny stock” rules). As a result, we may be able to complete our business combination even though
a substantial majority of our public stockholders do not agree with the transaction and have redeemed their shares or, if we seek
stockholder approval of our initial business combination and do not conduct redemptions in connection with our business combination
pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares to our sponsor, Atlas
Point Fund, officers, directors, advisors or any of their affiliates. In the event the aggregate cash consideration we would be
required to pay for all shares of our Class A common stock that are validly submitted for redemption plus any amount required
to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available
to us, we will not complete the business combination or redeem any shares, all shares of our Class A common stock submitted for
redemption will be returned to the holders thereof, and we instead may search for an alternate business combination.
The
exercise price for the public warrants is higher than in some other blank check company offerings, and accordingly, the warrants
are more likely to expire worthless.
The
exercise price of the public warrants is higher than in some other blank check companies. For example, historically, the exercise
price of a warrant was often a fraction of the purchase price of the units in the initial public offering. The exercise price
for our public warrants is $11.50 per share, subject to adjustments as provided herein. As a result, the warrants are less likely
to ever be in the money and more likely to expire worthless.
In
order to effectuate our initial business combination, we may seek to amend our amended and restated certificate of incorporation
or other governing instruments in a manner that will make it easier for us to complete our initial business combination but that
our stockholders or warrantholders may not support.
In
order to effectuate a business combination, we may amend various provisions of our charter and governing instruments, including
the warrant agreement, the underwriting agreement relating to our initial public offering, the letter agreement among us and our
sponsor, Atlas Point Fund, officers and directors, and the registration rights agreement among us and our initial stockholders.
These agreements contain various provisions that our public stockholders might deem to be material. While we do not expect our
board to approve any amendment to any of these agreements prior to our initial business combination, it may be possible that our
board, in exercising its business judgment and subject to its fiduciary duties, chooses to approve one or more amendments to any
such agreement in connection with the consummation of our initial business combination. Except in relation to the charter, any
such amendments would not require approval from our stockholders and may have an adverse effect on the value of an investment
in our securities. We cannot assure you that we will not seek to amend our charter or other governing instruments or change our
industry focus in order to effectuate our initial business combination.
The
provisions of our amended and restated certificate of incorporation that relate to our pre-business combination activity (and
corresponding provisions of the agreement governing the release of funds from our trust account) may be amended with the approval
of holders of 65% of our common stock, which is a lower amendment threshold than that of some other blank check companies. It
may be easier for us, therefore, to amend our amended and restated certificate of incorporation and the trust agreement to facilitate
the completion of an initial business combination that some of our stockholders may not support.
Some
other blank check companies have a provision in their charter which prohibits the amendment of certain of its provisions, including
those which relate to a company’s pre-business combination activity, without approval by a certain percentage of the company’s
stockholders. In those companies, amendment of these provisions requires approval by between 90% and 100% of the company’s
public stockholders. Our amended and restated certificate of incorporation provides that any of its provisions (other than amendments
relating to the election of directors, which require the approval of a majority of at least 90% of our common stock voting at
a stockholder meeting) related to pre-business combination activity (including the requirement to deposit proceeds of our initial
public offering and the private placement warrants into the trust account and not release such amounts except in specified circumstances,
and to provide redemption rights to public stockholders as described herein) may be amended if approved by holders of 65% of our
common stock entitled to vote thereon, and corresponding provisions of the trust agreement governing the release of funds from
our trust account may be amended if approved by holders of 65% of our common stock entitled to vote thereon. In all other instances,
our amended and restated certificate of incorporation may be amended by holders of a majority of our outstanding common stock
entitled to vote thereon, subject to applicable provisions of the DGCL or applicable stock exchange rules. Our initial stockholders,
who will collectively beneficially own 20% of the total outstanding common stock, will participate in any vote to amend our amended
and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose.
As a result, we may be able to amend the provisions of our amended and restated certificate of incorporation which govern our
pre-business combination behavior more easily than some other blank check companies, and this may increase our ability to complete
a business combination with which you do not agree. Our stockholders may pursue remedies against us for any breach of our amended
and restated certificate of incorporation.
Our
sponsor, Atlas Point Fund, officers, and directors have agreed, pursuant to a written agreement with us, that
they will not propose any amendment to our amended and restated certificate of incorporation that would affect the substance or
timing of our obligation to redeem 100% of our public shares if we have not consummated an initial business combination within
24 months from the closing of our initial public offering, unless we provide our public stockholders with the opportunity to redeem
their shares of our Class A common stock upon approval of any such amendment 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 pay franchise and income taxes of the Company or Opco, divided by the number of then outstanding public
shares and Class A Units of Opco (other than those held by Rice Acquisition Corp.). These agreements are contained in a letter
agreement that we have entered into with our sponsor, Atlas Point Fund, officers, and directors. Our stockholders
are not parties to, or third-party beneficiaries of, these agreements and, as a result, will not have the ability to pursue remedies
against our sponsor, Atlas Point Fund, officers, and directors for any breach of these agreements. As a result,
in the event of a breach, our stockholders would need to pursue a stockholder derivative action, subject to applicable law.
We
may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth
of a target business, which could compel us to restructure or abandon a particular business combination. If we do not complete
our initial business combination, our public stockholders may only receive their pro rata portion of the funds in the trust account
that are available for distribution to public stockholders, and our warrants will expire worthless.
Although
we believe that the net proceeds of our initial public offering and the sale of the private placement warrants and the forward
purchase securities are sufficient to allow us to complete our initial business combination, we cannot ascertain the capital requirements
for any particular transaction. If the net proceeds of our initial public offering and the sale of the private placement warrants
and the forward purchase securities prove to be insufficient, either because of the size of our initial business combination,
the depletion of the available net proceeds in search of a target business, the obligation to redeem for cash a significant number
of shares from stockholders who elect redemption in connection with our initial business combination or the terms of negotiated
transactions to purchase shares in connection with our initial business combination, or if Atlas Point Fund decides not to exercise
its right to purchase all of the forward purchase securities, we may be required to seek additional financing or to abandon the
proposed business combination. We cannot assure you that such financing will be available on acceptable terms, if at all. To the
extent that additional financing proves to be unavailable when needed to complete our initial business combination, we would be
compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target
business candidate. If we do not complete our initial business combination, our public stockholders may only receive their pro
rata portion of the funds in the trust account that are available for distribution to public stockholders, and our warrants will
expire worthless. In addition, even if we do not need additional financing to complete our business combination, we may require
such financing to fund the operations or growth of the target business. The failure to secure additional financing could have
a material adverse effect on the continued development or growth of the target business. None of our officers, directors or stockholders
is required to provide any financing to us in connection with or after our business combination.
Our
initial stockholders control the election of our board of directors until consummation of our initial business combination and
hold a substantial interest in us. As a result, they elect all of our directors prior to our initial business combination and
may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support.
After
the closing of our initial public offering, our initial stockholders own shares representing 20% of our shares of common stock.
In addition, the founder shares, all of which are held by our initial stockholders, will entitle the holders to elect all of our
directors prior to our initial business combination. Holders of our public shares will have no right to vote on the election of
directors during such time. These provisions of our amended and restated certificate of incorporation may only be amended by a
special resolution passed by a majority of at least 90% of our common stock voting at a stockholder meeting. As a result, you
will not have any influence over the election of directors prior to our initial business combination. Accordingly, our initial
stockholders may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not
support, including amendments to our amended and restated certificate of incorporation and approval of major corporate transactions.
If our initial stockholders purchase any units in our initial public offering or if our initial stockholders purchase any additional
shares of common stock in the aftermarket or in privately negotiated transactions, this would increase their control. Neither
our initial stockholders nor, to our knowledge, any of our officers or directors have any current intention to purchase additional
securities, other than as disclosed in our initial public offering. Factors that would be considered in making such additional
purchases would include consideration of the current trading price of our Class A common stock. In addition, our board of directors,
whose members were elected by our initial stockholders, is divided into three classes, each of which will generally serve for
a term of three years with only one class of directors being elected in each year. We may not hold an annual meeting to elect
new directors prior to the completion of our business combination, in which case all of the current directors will continue in
office until at least the completion of the business combination. If there is an annual meeting, as a consequence of our “staggered”
board of directors, only a minority of the board of directors will be considered for election and our initial stockholders, because
of their ownership position, will have considerable influence regarding the outcome. Accordingly, our initial stockholders will
continue to exert control at least until the completion of our business combination. The forward purchase securities will not
be issued until completion of our initial business combination, and, accordingly, will not be included in any stockholder vote
until such time.
We
may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders
of at least 50% of the then outstanding public warrants. As a result, the exercise price of your warrants could be increased,
the warrant could be converted into cash or stock (at a ratio different than initially provided), the exercise period could be
shortened and the number of shares of our Class A common stock purchasable upon exercise of a warrant could be decreased, all
without your approval.
Our
warrants were issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant
agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder
to cure any ambiguity or correct any defective provision or mistake (including to conform the terms of the warrants to those described
herein), but requires the approval by the holders of at least 50% of the then outstanding public warrants to make any change that
adversely affects the interests of the registered holders of public warrants and 50% of the registered holders of the private
warrants to make any change to the terms of the private warrants. Accordingly, we may amend the terms of the public warrants in
a manner adverse to a holder if holders of at least 50% of the then outstanding public warrants approve of such amendment. Although
our ability to amend the terms of the public warrants with the consent of at least 50% of the then outstanding public warrants
is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants,
convert the warrants into cash or stock (at a ratio different than initially provided), shorten the exercise period or decrease
the number of shares of our Class A common stock purchasable upon exercise of a warrant.
We
may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants
worthless.
We
have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a
price of $0.01 per warrant, provided that the last reported sales price of our Class A common stock equals or exceeds $18.00 per
share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days
within a 30 trading-day period ending on the third trading day prior to the date on which we give proper notice of such redemption
and provided certain other conditions are met. If and when the warrants become redeemable by us, we may exercise our redemption
right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws.
Redemption of the outstanding warrants could force you (i) to exercise your warrants and pay the exercise price therefor at a
time when it may be disadvantageous for you to do so, (ii) to sell your warrants at the then-current market price when you might
otherwise wish to hold your warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants
are called for redemption, is likely to be substantially less than the market value of your warrants. None of the private placement
warrants will be redeemable by us so long as they are held by the sponsor, Atlas Point Fund or their permitted transferees.
In
addition, we may redeem your warrants at any time after they become exercisable and prior to their expiration at a price of $0.10
per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise
their warrants prior to redemption for a number of shares of our Class A common stock determined based on the redemption date
and the fair market value of our Class A common stock. Any such redemption may have similar consequences to a cash redemption
described above. The value received upon exercise of the warrants (1) may be less than the value the holders would have received
if they had exercised their warrants at a later time where the underlying stock price is higher and (2) may not compensate the
holders for the value of the warrants because the number of shares of Class A common stock received is capped at 0.361 shares
of Class A common stock per warrant (subject to adjustment) irrespective of the remaining life of the warrants.
Our
ability to require holders of our warrants to exercise such warrants on a cashless basis after we call the warrants for redemption
or if there is no effective registration statement covering the Class A common stock issuable upon exercise of these warrants
will cause holders to receive fewer shares of our Class A common stock upon their exercise of the warrants than they would have
received had they been able to pay the exercise price of their warrants in cash.
If
the shares of our Class A common stock are at the time of any exercise of a warrant not listed on a national securities exchange
such that the shares of our Class A common stock satisfy the definition of a “covered security” under Section 18(b)(I)
of the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so on a “cashless
basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to
file or maintain in effect a registration statement, but we will be required to use our best efforts to register or qualify the
shares under applicable blue sky laws to the extent an exemption is not available. “Cashless exercise” means the warrant
holder pays the exercise price by giving up some of the shares for which the warrant is being exercised, with those shares valued
at the then current market price. Accordingly, each holder would pay the exercise price by surrendering the warrants for that
number of shares of our Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares
of our Class A common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and
the “fair market value” by (y) the fair market value. The “fair market value” shall mean volume weighted
average price of our Class A common stock as reported during 10 trading days ending on the third trading day prior to the date
on which the notice of redemption is sent to the holders of warrants.
In
addition, if a registration statement covering the shares of our Class A common stock issuable upon exercise of the warrants is
not effective within a specified period following the consummation of our initial business combination, warrantholders may, until
such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective
registration statement, exercise warrants on a cashless basis, For purposes of calculating the number of shares issuable upon
such cashless exercise, the “fair market value” of warrants shall be calculated using the volume weighted average
sale price of the Class A common stock for the 10 trading days ending on the trading day prior to the date on which notice of
exercise is received by the warrant agent.
If
we choose to require holders to exercise their warrants on a cashless basis, which we may do at our sole discretion, or if holders
elect to do so when there is no effective registration statement, the number of shares of our Class A common stock received by
a holder upon exercise will be fewer than it would have been had such holder exercised his or her warrant for cash. For example,
if the holder is exercising 875 public warrants at $11.50 per share through a cashless exercise when the shares of our Class A
common stock have a fair market value per share of $17.50 per share, then upon the cashless exercise, the holder will receive
300 shares of our Class A common stock. The holder would have received 875 shares of our Class A common stock if the exercise
price was paid in cash. This will have the effect of reducing the potential “upside” of the holder’s investment
in our company because the warrant holder will hold a smaller number of shares of our Class A common stock upon a cashless exercise
of the warrants they hold.
Our
warrants and founder shares may have an adverse effect on the market price of our Class A common stock and make it more difficult
to effectuate our business combination.
We
issued warrants to purchase 11,862,500 shares of our Class A common stock as part of the units offered by our initial public offering
and, simultaneously with the closing of our initial public offering, we issued in private placements an aggregate of 6,771,000
private placement warrants, each exercisable to purchase for $11.50 either one share of our Class A common stock or, in certain
circumstances, one Class A Unit of Opco (and corresponding share of our Class B common stock). In addition, we may issue up to
approximately 7.8 million shares of Class A common stock to Atlas Point Fund in connection with our initial business combination
pursuant to the forward purchase agreement. The founder shares are exchangeable for shares of our Class A common stock on a one-for-one
basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like and subject to
further adjustment as set forth herein. In addition, if our sponsor makes any working capital loans, it may convert those loans
into up to an additional 1,000,000 private placement warrants, at the price of $1.00 per warrant. To the extent we issue shares
of our Class A common stock to effectuate a business combination, the potential for the issuance of a substantial number of additional
shares of our Class A common stock upon exercise of these warrants and exchange rights could make us a less attractive acquisition
vehicle to a target business. Any such issuance will increase the number of issued and outstanding shares of our Class A common
stock and reduce the value of the shares of our Class A common stock issued to complete the business combination. Therefore, our
warrants and founder shares may make it more difficult to effectuate a business combination or increase the cost of acquiring
the target business.
A
provision of our warrant agreement may make it more difficult for us to consummate an initial business combination.
If
we issue additional shares of common stock or equity-linked securities or capital raising purposes in connection with the closing
of our initial business combination at a newly issued price of less than $9.20 per share of common stock, then the exercise price
of the warrants will be adjusted to equal 115% of the newly issued price. This may make it more difficult for us to consummate
an initial business combination with a target business.
The
market for our securities may not develop, which would adversely affect the liquidity and price of our securities.
The
price of our securities may vary significantly due to one or more potential business combinations and general market or economic
conditions. Furthermore, an active trading market for our securities may never develop or, if developed, it may not be sustained.
You may be unable to sell your securities unless a market can be established and sustained.
Because
we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous
initial business combination with some prospective target businesses.
The
federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial
significance tests include target historical and/or pro forma financial statement disclosure. We will include the same financial
statement disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules.
These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting principles generally
accepted in the United States of America, or GAAP, or international financial reporting standards as issued by the International
Accounting Standards Board, or IFRS, depending on the circumstances and the historical financial statements may be required to
be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. These
financial statement requirements may limit the pool of potential target businesses we may acquire because some targets may be
unable to provide such financial statements in time for us to disclose such financial statements in accordance with federal proxy
rules and complete our initial business combination within the prescribed time frame.
We
are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage
of certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting companies, this
could make our securities less attractive to investors and may make it more difficult to compare our performance with other public
companies.
We
are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may
take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are
not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports
and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and
stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access
to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances
could cause us to lose that status earlier, including if the market value of our Class A common stock held by non-affiliates exceeds
$700 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following
December 31. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions.
If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our
securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading
prices of our securities may be more volatile.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared
effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and
comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We
have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has
different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard
at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another
public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended
transition period difficult or impossible because of the potential differences in accounting standards used.
Additionally,
we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may
take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial
statements. We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of
our common stock held by non-affiliates exceeds $250 million as of the end of that year’s second fiscal quarter or (ii)
our annual revenues exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates
exceeds $700 million as of the end of that year’s second fiscal quarter. To the extent we take advantage of such reduced
disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.
We have identified material weaknesses
in our internal control over financial reporting. We may identify additional material weaknesses in the future or otherwise fail to maintain
an effective system of internal controls, which may result in material misstatements of our financial statements or cause us to fail
to meet our reporting obligations.
Following the issuance of
the SEC Staff Statement on April 12, 2021, after consultation with our management, our audit committee concluded that, in light of the
SEC Statement, it was appropriate to restate our previously issued (i) audited balance sheet dated as of October 26, 2020 which was related
to its initial public offering and (ii) audited financial statements as of December 31, 2020 and for the period from September 1, 2020
(inception) through December 31, 2020 as reported in the Company’s Annual Report on Form 10-K filed with the SEC on May 13, 2021
(collectively, the “Affected Periods Amendment No. 1”).
Our management is responsible
for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our
management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any changes
and material weaknesses identified through such evaluation of those internal controls. A material weakness is a deficiency, or a
combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material
misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
As described in Amendment
No. 1, we identified a material weakness in our internal control over financial reporting related to the accounting for a significant
and unusual transaction related to the warrants we issued in connection with our initial public offering in October 2020. As a result
of this material weakness, our management concluded that our internal control over financial reporting was not effective as of December 31,
2020. This material weakness resulted in a material misstatement of our derivative warrant liabilities, change in fair value of derivative
warrant liabilities, Class A common stock subject to possible redemption, accumulated deficit and related financial disclosures for the
Affected Periods Amendment No. 1. For a discussion of management’s consideration of the material weakness identified related to
our accounting for a significant and unusual transaction related to the warrants we issued in connection with our initial public offering,
see “Note 2—Restatement of Previously Issued Financial Statements” to the financial statements in Amendment No.
1, as well as Part II, Item 9A. “Controls and Procedures” included in this Annual Report.
As described elsewhere in
this Amendment No. 2, we have identified a material weakness in our internal control over financial reporting related to the Company’s
application of ASC 480-10-S99-3A to its accounting classification of the public shares. As a result of this material weakness, our management
has concluded that our internal control over financial reporting was not effective as of December 31, 2020. Historically, a portion of
the public shares was classified as permanent equity to maintain stockholders’ equity greater than $5 million on the basis that
the Company will not redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001, as described
in the Charter. Previously, the Company did not consider redeemable stock classified as temporary equity as part of net tangible assets.
Effective with these financial statements, the Company revised this interpretation to include temporary equity in net tangible assets.
For a discussion of management’s consideration of the material weakness identified related to the Company’s application of
ASC 480-10-S99-3A to its accounting classification of the Public Share, see Note 2 to the accompanying financial statements, as well as
Part II, Item 9A. “Controls and Procedures” included in this Amendment No. 2.
As described in Part II, Item
9A. “Controls and Procedures,” we have concluded that our internal control over financial reporting was ineffective as of
December 31, 2020 because material weaknesses existed in our internal control over financial reporting. We have taken a number of measures
to remediate the material weaknesses described therein; however, if we are unable to remediate our material weaknesses in a timely manner
or we identify additional material weaknesses, we may be unable to provide required financial information in a timely and reliable manner
and we may incorrectly report financial information. Likewise, if our financial statements are not filed on a timely basis, we could be
subject to sanctions or investigations by the stock exchange on which our Class A common stock are listed, the SEC or other regulatory
authorities. Failure to timely file will cause us to be ineligible to utilize short form registration statements on Form S-3 or Form S-4,
which may impair our ability to obtain capital in a timely fashion to execute our business strategies or issue shares to effect an acquisition.
In either case, there could result a material adverse effect on our business. The existence of material weaknesses or significant deficiencies
in internal control over financial reporting could adversely affect our reputation or investor perceptions of us, which could have a negative
effect on the trading price of our stock. In addition, we will incur additional costs to remediate material weaknesses in our internal
control over financial reporting, as described in Part II, Item 9A. “Controls and Procedures.”
We can give no assurance that
the measures we have taken and plan to take in the future will remediate the material weaknesses identified or that any additional material
weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal
control over financial reporting or circumvention of these controls. In addition, even if we are successful in strengthening our controls
and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to
facilitate the fair presentation of our financial statements.
The warrants are accounted for as a liability
and the changes in fair value of the warrants may have an adverse effect on our financial results and the market price of our common stock.
On April 12, 2021, the Staff
of the SEC released a statement informing market participants that warrants issued by special purpose acquisition companies may require
classification as a liability of the entity measured at fair value, with changes in fair value each period reported in earnings. As a
result such statement, we reevaluated the accounting treatment of our warrants, which were classified as equity, and determined to classify
the warrants as a liability measured at fair value, with changes in fair value each period reported in earnings. Due to the recurring
fair value measurement, we expect to recognize non-cash gains or losses on the warrants each reporting period, and the amount of such
gains or losses could be material, which may cause our consolidated financial statements and results of operations to fluctuate quarterly
and may have an adverse impact on the market price of our common stock.
Compliance
obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our business combination, require substantial
financial and management resources, and increase the time and costs of completing our initial business combination.
Section
404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual
Report on Form 10-K for the year ending December 31, 2021. Only in the event we are deemed to be a large accelerated filer or
an accelerated filer will we be required to comply with the independent registered public accounting firm attestation requirement
on our internal control over financial reporting. Further, for as long as we remain an emerging growth company, we will not be
required to comply with the independent registered public accounting firm attestation requirement on our internal control over
financial reporting. The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act
particularly burdensome for us as compared to other public companies because a target business with which we seek to complete
our business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal
controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase
the time and costs necessary to complete any such acquisition.
Provisions
in our amended and restated certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the
price investors might be willing to pay in the future for our Class A common stock and could entrench management.
Our
amended and restated certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that
stockholders may consider to be in their best interests. These provisions include a staggered board of directors and the ability
of the board of directors to designate the terms of and issue new series of preferred stock, which may make the removal of management
more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices
for our securities.
We
are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these
provisions may make the removal of management more difficult and may discourage transactions that otherwise could involve payment
of a premium over prevailing market prices for our securities.
Provisions
in our amended and restated certificate of incorporation and Delaware law may have the effect of discouraging lawsuits against
our directors and officers.
Our
amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought
in our name, actions against directors, officers and employees for breach of fiduciary duty and other similar actions (other than
actions arising under the Securities Act or the Exchange Act) may be brought only in the Court of Chancery in the State of Delaware
(or, if such court does not have subject matter jurisdiction thereof, any other court located in the State of Delaware with subject
matter jurisdiction) and, if brought outside of Delaware, the stockholder bringing such suit will be deemed to have consented
to service of process on such stockholder’s counsel. This provision may limit a stockholder’s ability to bring a claim
in a judicial forum that it finds favorable for disputes with us and our directors, officers or other employees and may have the
effect of discouraging lawsuits against our directors and officers.
Cyber
incidents or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial
loss.
We
depend on digital technologies, including information systems, infrastructure and cloud applications and services, including those
of third parties with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure,
or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary
information and sensitive or confidential data. As an early stage company without significant investments in data security protection,
we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against,
or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination
of them, could have adverse consequences on our business and lead to financial loss.
If
we pursue a target business with operations or opportunities outside of the United States for our initial business combination,
we may face additional burdens in connection with investigating, agreeing to and completing such initial business combination,
and if we effect such initial business combination, we would be subject to a variety of additional risks that may negatively impact
our operations.
If
we pursue a target a company with operations or opportunities outside of the United States for our initial business combination,
we would be subject to risks associated with cross-border business combinations, including in connection with investigating, agreeing
to and completing our initial business combination, conducting due diligence in a foreign jurisdiction, having such transaction
approved by any local governments, regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange
rates.
If
we effect our initial business combination with such a company, we would be subject to any special considerations or risks associated
with companies operating in an international setting, including any of the following:
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higher
costs, complexity and difficulties inherent in executing cross-border transactions, managing
cross-border business operations, and complying with different commercial and legal requirements
of overseas markets;
|
|
●
|
rules
and regulations regarding currency redemption;
|
|
●
|
laws
governing the manner in which future business combinations may be effected;
|
|
●
|
exchange
listing and/or delisting requirements;
|
|
●
|
tariffs
and trade barriers;
|
|
●
|
regulations
related to customs and import/export matters;
|
|
●
|
local
or regional economic policies and market conditions;
|
|
●
|
unexpected
changes in regulatory requirements;
|
|
●
|
tax
issues, including limits on our ability to change our tax residence from the United States,
complex withholding or other tax regimes which may apply in connection with our business
combination or to our structure following our business combination, variations in tax
laws as compared to the United States, and potential changes in the applicable tax laws
in the United States and/or relevant non-U.S. jurisdictions;
|
|
●
|
currency
fluctuations and exchange controls;
|
|
●
|
challenges
in collecting accounts receivable;
|
|
●
|
cultural
and language differences;
|
|
●
|
employment
regulations;
|
|
●
|
underdeveloped
or unpredictable legal or regulatory systems;
|
|
●
|
protection
of intellectual property;
|
|
●
|
social
unrest, crime, strikes, riots and civil disturbances;
|
|
●
|
regime
changes and political upheaval;
|
|
●
|
terrorist
attacks and wars; and
|
|
●
|
deterioration
of political relations with the United States.
|
We
may not be able to adequately address these additional risks. If we were unable to do so, we may be unable to complete such initial
business combination, or, if we complete such combination, our operations might suffer, either of which may adversely impact our
business, financial condition and results of operations.
Our
initial business combination and our structure thereafter may not be tax-efficient to our stockholders and warrantholders. As
a result of our business combination, our tax obligations may be more complex, burdensome and uncertain.
Although
we will attempt to structure our initial business combination in a tax-efficient manner, tax structuring considerations are complex,
the relevant facts and law are uncertain and may change, and we may prioritize commercial and other considerations over tax considerations.
For example, in connection with our initial business combination and subject to requisite stockholder approval, we may structure
our business combination in a manner that requires stockholders and/or warrantholders to recognize gain or income for tax purposes.
We do not intend to make any cash distributions to stockholders or warrantholders to pay taxes in connection with our business
combination or thereafter. Accordingly, a stockholder or a warrant holder may need to satisfy any liability resulting from our
initial business combination with cash from its own funds or by selling all or a portion of such holder’s shares or warrants.
In addition, we may effect a business combination with a target company in another jurisdiction or reincorporate in a different
jurisdiction (including, but not limited to, the jurisdiction in which the target company or business is located). As a result,
stockholders and warrantholders may be subject to additional income, withholding or other taxes with respect to their ownership
of us after our initial business combination.
In
addition, we may effect a business combination with a target company that has business operations outside of the United States,
and possibly, business operations in multiple jurisdictions. If we effect such a business combination, we could be subject to
significant income, withholding and other tax obligations in a number of jurisdictions with respect to income, operations and
subsidiaries related to those jurisdictions. Due to the complexity of tax obligations and filings in other jurisdictions, we may
have a heightened risk related to audits or examinations by taxing authorities. This additional complexity and risk could have
an adverse effect on our after-tax profitability and financial condition.
Our
organizational structure confers certain benefits upon our initial stockholders that will not benefit the holders of our Class
A common stock to the same extent as it will benefit our initial stockholders.
We
are a holding company and will not have material assets other than our ownership of Opco Units. Subject to the obligation of Opco
to make tax distributions and to reimburse us for our corporate and other overhead expenses, we will have the right to determine
whether to cause Opco to make non-liquidating distributions, and the amount of any such distributions. We do not anticipate causing
Opco to make any such distributions (other than tax distributions) to holders of Opco Units (including Rice Acquisition Corp.)
prior to our initial business combination, other than required redemptions of Class A Units of Opco held by us in connection with
a redemption of public shares. If Opco makes distributions after our initial business combination, the initial stockholders will
be entitled to receive equivalent distributions from Opco on a pro rata basis. However, because we must pay taxes, amounts we
may distribute as dividends to holders of our Class A common stock are expected to be less on a per share basis than the amounts
distributed by Opco to the initial stockholders on a per unit basis.
If
our management following our initial business combination is unfamiliar with United States securities laws, they may have to expend
time and resources becoming familiar with such laws, which could lead to various regulatory issues.
Following
our initial business combination, our management may resign from their positions as officers or directors of the company and the
management of the target business at the time of the business combination will remain in place. Management of the target business
may not be familiar with United States securities laws. If new management is unfamiliar with United States securities laws, they
may have to expend time and resources becoming familiar with such laws. This could be expensive and time-consuming and could lead
to various regulatory issues which may adversely affect our operations.
After
our initial business combination, substantially all of our assets may be located in a foreign country and substantially all of
our revenue will be derived from our operations in such country. Accordingly, our results of operations and prospects will be
subject, to a significant extent, to the economic, political and legal policies, developments and conditions in the country in
which we operate.
The
economic, political and social conditions, as well as government policies, of the country in which our operations are located
could affect our business. Economic growth could be uneven, both geographically and among various sectors of the economy and such
growth may not be sustained in the future. If in the future such country’s economy experiences a downturn or grows at a
slower rate than expected, there may be less demand for spending in certain industries. A decrease in demand for spending in certain
industries could materially and adversely affect our ability to find an attractive target business with which to consummate our
initial business combination and if we effect our initial business combination, the ability of that target business to become
profitable.
Exchange
rate fluctuations and currency policies may cause a target business’ ability to succeed in the international markets to
be diminished
In
the event we acquire a non-U.S. target, all revenues and income would likely be received in a foreign currency, and the dollar
equivalent of our net assets and distributions, if any, could be adversely affected by reductions in the value of the local currency.
The value of the currencies in non-U.S. regions fluctuates and is affected by, among other things, changes in political and economic
conditions. Any change in the relative value of such currency against our reporting currency may affect the attractiveness of
any target business or, following consummation of our initial business combination, our financial condition and results of operations.
Additionally, if a currency appreciates in value against the dollar prior to the consummation of our initial business combination,
the cost of a target business as measured in dollars will increase, which may make it less likely that we are able to consummate
such transaction.
Item
1B.
|
Unresolved
Staff Comments
|
None.
Our
executive offices are located at 102 East Main Street, Second Story, Carnegie, Pennsylvania 15106, and our telephone number is
(713) 446-6259. The cost for our use of this space is included in the $10,000 per month fee we will pay to our sponsor for office
space, utilities, secretarial support and administrative services. We consider our current office space adequate for our current
operations.
Item
3.
|
Legal
Proceedings
|
To
the knowledge of our management, there is no material litigation currently pending or contemplated against us, any of our officers
or directors in their capacity as such or against any of our property.
Item
4.
|
Mine
Safety Disclosures
|
Not
applicable.
PART
II
Item
5.
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities
|
Our
units, shares of Class A common stock and warrants are each traded on the NYSE under the symbol “RICE.U”, “RICE”
and “RICE WS” respectively. Our units commenced public trading on October 22, 2020. Our shares of Class A common stock
and warrants began separate trading on December 14, 2020.
On
March 19, 2021, there was 1 holder of record of our units, 2 holders of record of our shares of Class A common stock, 5 holders
of record of our shares of Class B common stock and 3 holders of record of our warrants.
We
have not paid any cash dividends on our common stock to date and do not intend to pay cash dividends prior to the completion of
an initial business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings,
if any, capital requirements and general financial conditions subsequent to completion of an initial business combination. The
payment of any cash dividends subsequent to an initial business combination will be within the discretion of our board of directors
at such time. In addition, our board of directors is not currently contemplating and does not anticipate declaring any stock dividends
in the foreseeable future. Further, if we incur any indebtedness, our ability to declare dividends may be limited by restrictive
covenants we may agree to in connection therewith.
|
(d)
|
Securities
Authorized for Issuance Under Equity Compensation Plans
|
None.
Not
applicable.
|
(f)
|
Recent
Sales of Unregistered Securities; Use of Proceeds from Registered Offerings
|
On
September 2, 2020, Rice Acquisition Sponsor LLC, our sponsor, received 5,750,000 Class B Units of Opco for no consideration and
purchased 5,750,000 corresponding shares of our Class B common stock, 2,500 shares of our Class A common stock and 100 Class A
Units of Opco and 100 corresponding shares of our Class B common stock for an aggregate of $26,000. The number of founder shares
was determined based on the expectation that the founder shares would represent 20% of the total outstanding equity after our
initial public offering (excluding the sponsor shares). Such securities were issued in connection with our organization pursuant
to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
Our
sponsor is an accredited investor for purposes of Rule 501 of Regulation D under the Securities Act. The sole business of our
sponsor was to act as our sponsor in connection with our initial public offering.
In
addition, our sponsor purchased from us an aggregate of 6,093,900 private placement warrants at a purchase price of $1.00 per
warrant (for an aggregate purchase price of $6,093,900). Atlas Point Fund also purchased 677,100 private placement warrants at
a purchase price of $1.00 per warrant (for an aggregate purchase price of $677,100). These purchases took place on a private placement
basis simultaneously with the completion of our initial public offering. These issuances were made pursuant to the exemption from
registration contained in Section 4(a)(2) of the Securities Act. No underwriting discounts or commissions were paid with respect
to such sales. Each private placement warrant entitles the holder to purchase for $11.50 either one share of our Class A common
stock or, so long as they are held by our initial stockholders or their permitted transferees, one Class A Unit of Opco (and corresponding
share of our Class B common stock). The private placement warrants (including the Class A common stock or Class A Units of Opco
(and corresponding shares of our Class B common stock) issuable upon exercise thereof) may not, subject to certain limited exceptions,
be transferred, assigned or sold by the holder until 30 days after the completion of our initial business combination.
On
October 26, 2020, the Company consummated its initial public offering of 23,725,000 units, including 2,225,000 units that were
issued pursuant to the underwriters’ partial exercise of their over-allotment option, at $10.00 per unit, generating gross
proceeds of approximately $237.3 million, and incurring offering costs of approximately $12.5 million, inclusive of $7.6 million
in deferred underwriting commissions. Of the 23,725,000 units sold, affiliates of our Sponsor and Atlas Point Energy Infrastructure
Fund, LLC (“Atlas Point Fund”) had purchased 1,980,000 units (the “Affiliated Units”) and 2,128,500 units
(the “Atlas Units”), respectively, at the initial public offering price. The underwriters did not receive any underwriting
discounts or commissions on the 1,980,000 Affiliated Units. Each unit consists of one share of Class A common stock and one-half
of one redeemable warrant (each, a “Public Warrant”). Each whole Public Warrant entitles the holder to purchase one
share of our Class A common stock at a price of $11.50 per share, subject to adjustment.
Simultaneously
with the closing of our initial public offering, we consummated the private placement (“Private Placement”) of 6,771,000
warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) to the
Sponsor and Atlas Point Fund, at a price of $1.00 per Private Placement Warrant, generating gross proceeds of approximately $6.8
million. Each Private Placement Warrant is exercisable to purchase one share of our Class A common stock or, in certain circumstances,
one Class A Unit of Opco together with a corresponding number of shares of our non-economic Class B common stock, subject to certain
adjustments.
|
(g)
|
Purchases
of Equity Securities by the Issuer and Affiliated Purchasers
|
None.
Item
6.
|
Selected
Financial Data
|
Not
applicable.
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of Operations
|
References
to the “Company,” “our,” “us” or “we” refer to Rice Acquisition Corp. 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 Report. Certain information contained in the discussion
and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
We have re-evaluated our application
of ASC 480-10-S99-3A to our accounting and classification of the public shares issued as part of the units sold in the Initial Public
Offering on October 26, 2020. Historically, a portion of the public shares was classified as permanent equity to maintain stockholders’
equity greater than $5 million on the basis that we will not redeem our public shares in an amount that would cause our net tangible assets
to be less than $5,000,001, as described in our charter. Previously, the Company did not consider redeemable stock classified as temporary
equity as part of net tangible assets. Effective with these financial statements, the Company revised this interpretation to include temporary
equity in net tangible assets. Pursuant to such re-evaluation, our management has determined that the public shares include certain provisions
that require classification of all of the public shares as temporary equity. In addition, in connection with the change in presentation
for the public shares, management determined it should restate earnings per share calculation to allocate income and losses shared pro
rata between the two classes of shares. This presentation contemplates a Business Combination as the most likely outcome, in which case,
both classes of shares share pro rata in our income and losses.
Therefore, on December 28,
2021, our management and the Audit Committee concluded that our previously issued (i) audited balance sheet as of October 26, 2020, as
previously restated in Amendment No. 1, (ii) audited financial statements as previously restated in Amendment No. 1, (iii) unaudited interim
financial statements included in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021, filed with the SEC on
May 26, 2021 and (iv) unaudited interim financial statements included in our Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 2021, filed with the SEC on August 13, 2021, should be restated to report all public shares as temporary equity and should no
longer be relied upon. As such, the Company is restating the 2020 periods herein and intends to restate its 2021 interim financial statements
for the Affected Periods in its quarterly reports on Form 10-Qs for the periods ended March 31, 2021 and June 30, 2021.
The restatement does not
have an impact on our cash position or the cash held in the Trust Account.
Our management has concluded
that a material weakness remains in our internal control over financial reporting and that our disclosure controls and procedures were
not effective. As a result of that reassessment, we determined that our disclosure controls and procedures for such periods were not effective
with respect to the proper accounting and classification of complex financial instruments. For more information, see Part II, Item 9A.
“Controls and Procedures” included in this Annual Report on Form 10-K.
The financial information
that has been previously filed or otherwise reported for these periods is superseded by the information in this Amendment No. 2, and
the financial statements and related financial information contained in such previously filed reports should no longer be relied upon.
The
restatement is more fully described in Note 2 of the notes to the financial statements included herein.
Overview
We
are a blank check company incorporated in Delaware on September 1, 2020 for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business
Combination”). Our sponsor is Rice Acquisition Sponsor LLC, a Delaware limited liability company (“Sponsor”).
The
registration statement for our initial public offering (“Initial Public Offering”) was declared effective on October
21, 2020. On October 26, 2020, we consummated the Initial Public Offering of 23,725,000 units (each, a “Unit” and
collectively, the “Units”), including 2,225,000 additional Units that were issued pursuant to the underwriters’
partial exercise of their over-allotment option (the “Over-Allotment Units”), at $10.00 per Unit, generating gross
proceeds of approximately $237.3 million, and incurring offering costs of approximately $12.5 million, inclusive of $7.6 million
in deferred underwriting commissions.
Simultaneously
with the closing of the Initial Public Offering, we consummated the private placement (“Private Placement”) of 6,771,000
warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) to our
Sponsor and Atlas Point Energy Infrastructure Fund, LLC (“Atlas Point Fund”), at a price of $1.00 per Private Placement
Warrant, generating gross proceeds of approximately $6.8 million. Each Private Placement Warrant is exercisable to purchase one
share of Rice’s Class A common stock or, in certain circumstances, one Class A Unit of Opco together with a corresponding
number of shares of Rice’s non-economic Class B common stock.
Following the Initial Public
Offering, our public stockholders hold a direct economic equity ownership interest in Rice in the form of shares of Class A common stock,
and an indirect ownership interest in Opco through Rice’s ownership of Class A Units of Opco. By contrast, the Initial Stockholders
(our Sponsor, Atlas Point Fund and our officers and directors) hold direct economic interests in Opco in the form of Class B Units and
a corresponding non-economic voting equity interest in Rice in the form of shares of Class B common stock, as well as a small direct interest
through the Sponsor Shares (as defined below). Sponsor Shares were purchased for $10.00 each and, in the absence of an initial Business
Combination, will generally participate in liquidation or other payments on a pari passu basis with the public shares. However, given
the relatively de minimis number of Sponsor Shares relative to public shares, in many cases the economic, governance or other effects
of the sponsor shares are not material to the holders of Class A common stock or warrants, and for simplicity, portions of this disclosure
may not fully describe or reflect these immaterial effects.
Upon
the closing of the Initial Public Offering and the Private Placement, approximately $237.3 million of the net proceeds of the
sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants in the Private Placement were
placed in a trust account (“Trust Account”) located in the United States with Continental Stock Transfer & Trust
Company acting as trustee, and invested only in U.S. “government securities” within the meaning of Section 2(a)(16)
of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under
Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations, as determined
by us, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account.
If we are unable to complete
a Business Combination within 24 months from the closing of the Initial Public Offering, or October 26, 2022, 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 pay our franchise and income taxes (less up to $100,000 of
interest to pay dissolution expenses), divided by the number of then outstanding public shares and Class A Units of Opco (other than those
held by Rice), which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive
further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of the remaining stockholders and the board of directors, dissolve and liquidate, subject in each case to our
obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
Liquidity
and Capital Resources
As
of December 31, 2020, we had approximately $1.3 million in our operating bank account and working capital of approximately
$1.6 million.
Our liquidity needs to date had
been satisfied through the payment of $26,000 from our Sponsor to purchase the Founder Shares and Sponsor Shares, a loan under a note
agreement with our Sponsor of approximately $44,000 as of December 31, 2020 (the “Note”), and the net proceeds from the consummation
of the Private Placement not held in the Trust Account. The Note was paid in full as of November 10, 2020. In addition, in order to finance
transaction costs in connection with a Business Combination, our officers, directors and Sponsor may, but are not obligated to, provide
us working capital loans. As of December 31, 2020, there were no amounts outstanding under any working capital loans.
Based
on the foregoing, management believes that we 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, the Company 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.
Results
of Operations
Our
entire activity since inception through December 31, 2020 related to our formation, 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 revenues to date. We will not generate any operating revenues until after completion
of our initial Business Combination. We will generate non-operating income in the form of interest income on cash and cash equivalents.
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.
The Company’s statement of operations includes a presentation of income per share for common stock subject to redemption in a manner similar
to the two-class method of income per share. Net income per share, basic and diluted for Class A common stock is calculated by dividing
the net gain from investments held in the Trust Account of approximately $32,000, net of applicable franchise taxes of approximately $32,000
for the period from September 1, 2020 (inception) through December 31, 2020, by the weighted average number of shares of Class A common
stock outstanding for the period. Net loss per share, basic and diluted for Class B common stock for the period from September 1, 2020
(inception) through December 31, 2020 is calculated by dividing the change in fair value of warrant liability of approximately $19.7 million,
compensation expense of approximately $1.7 million, approximately $787,000 related to warrant financing costs, general and administration
expenses of approximately $291,000 and franchise taxes of approximately $33,000, net of noncontrolling interest of approximately $865,000,
resulting in a net loss of approximately $21.6 million, by the weighted average number of Class B common stock outstanding for the period.
Contractual
Obligations
We
do not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term
liabilities.
On
October 21, 2020, we entered into an Administrative Services Agreement pursuant to which we have agreed to cause Opco to pay the
Sponsor a total of $10,000 per month for office space, utilities and administrative support. Upon completion of the Initial Business
Combination or our liquidation, the agreement will terminate.
The
underwriters of the Initial Public Offering were entitled to underwriting discounts and commissions of 5.5%, of which 2.0% (approximately
$4.3 million) was paid at the closing of the Initial Public Offering and 3.5% (approximately $7.6 million) was deferred. The deferred
underwriting discounts and commissions will become payable to the underwriters upon the consummation of the Initial Business Combination
and will be paid from the amounts held in the Trust Account. The underwriters are not entitled to any interest accrued on the
deferred underwriting discounts and commissions.
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:
Class A Common Stock Subject to Possible
Redemption
We account for our Class A
common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.”
Class A common stock subject to mandatory redemption (if any) is classified as liability instruments and are measured at fair value. Conditionally
redeemable Class A common stock (including Class A common stock that features 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) is classified as temporary
equity. At all other times, Class A common stock is classified as stockholders’ equity. We issued 2,500 shares of Class
A common stock to the Sponsor. These Sponsor Shares will not be transferable and will only be exchangeable into Class A common stock
after the initial business combination, and as such are considered non-redeemable and presented as permanent equity in our balance sheet.
Excluding the Sponsor Shares, 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, as of the Initial Public Offering, 23,725,000 shares
of Class A common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’
equity section of our balance sheets.
We recognize changes in
redemption value immediately as they occur and adjust the carrying value of the Class A common stock subject to possible redemption to
equal the redemption value at the end of each reporting period. Effective with the closing of the Initial Public Offering, we recognized
the accretion from initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent
available) and accumulated deficit.
Net
Income (Loss) Per Common Share
We comply with accounting
and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” We have two classes of shares, which are referred
to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes of shares. Net income
(loss) per common share is calculated by dividing the net income (loss) by the weighted average shares of common stock outstanding for
the respective period.
The calculation of diluted
net income (loss) per share does not consider the effect of the warrants underlying the Units sold in the Initial Public Offering (including
the consummation of the over-allotment) and the private placement warrants to purchase an aggregate of 18,633,500 shares of
Class A common stock, because their exercise is contingent upon future events and their inclusion would be anti-dilutive under the treasury
stock method. As a result, diluted net income (loss) per share is the same as basic net income (loss) per share for the period from September
1, 2020 (inception) through December 31, 2020. Accretion associated with the redeemable Class A common stock is excluded from earnings
per share as the redemption value approximates fair value.
Recent
Accounting Pronouncements
Our
management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have
a material effect on the accompanying financial statements.
Off-Balance
Sheet Arrangements
As
of December 31, 2020, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
Inflation
We
do not believe that inflation had a material impact on our business, revenues or operating results during the period presented.
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.
Item
7A.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
We
are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise
required under this item.
Item
8.
|
Consolidated
Financial Statements And Supplementary Data
|
This
information appears following Item 15 of this Annual Report on Form 10-K and is incorporated herein by reference.
Item
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial Disclosure
|
None.
Item
9A.
|
Controls
and Procedures
|
Evaluation
of Disclosure Controls and Procedures
Disclosure
controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed
under the Exchange Act, such as this Report, is recorded, processed, summarized, and reported within the time period specified in the
SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated
and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely
decisions regarding required disclosure.
On March 30, 2021, we filed
our original Annual Report on Form 10-K for the period ended December 31, 2020 (the “Original Filing”). Our management evaluated,
with the participation of our principal executive officer and principal financial officer (our “Certifying Officers”), the
effectiveness of our disclosure controls and procedures as of December 31, 2020, pursuant to Rule 13a-15(b) under the Exchange Act. Based
upon that evaluation at that earlier time, our Certifying Officers had concluded that our disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective as of December 31, 2020. Subsequently, and solely due to the restatement
of our financial statements to reclassify our warrants as described Amendment No. 1 and the restatement of our financial statements to
reclassify the public shares as described herein in Amendment No. 2 and the restatement of our financial statements to reclassify the
public shares as described herein, our Certifying Officers have concluded that our disclosure controls and procedures were not effective
as of December 31, 2020.
Management’s
Report on Internal Controls Over Financial Reporting
This
Report does not include a report of management’s assessment regarding internal control over financial reporting
or an attestation report of our independent registered public accounting firm due to a transition period established by rules of the
SEC for newly public companies.
Changes
in Internal Control over Financial Reporting
There
were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of
the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting, as the circumstances that led to the restatement of our financial statements described in this Report had not
yet been identified.
PART
III
Item
10.
|
Directors,
Executive Officers and Corporate Governance
|
Our
officers and directors are as follows:
Name
|
|
Age
|
|
Position
|
Daniel Joseph Rice, IV*
|
|
40
|
|
Chief Executive Officer and Director
|
J.
Kyle Derham*
|
|
33
|
|
Chief
Financial Officer and Director
|
James
Wilmot Rogers*
|
|
40
|
|
Chief Accounting Officer
|
Kathryn
Jackson
|
|
63
|
|
Independent Director
|
Joseph
Malchow
|
|
35
|
|
Independent Director
|
James
Torgerson
|
|
68
|
|
Independent Director
|
*
|
Denotes
an executive officer.
|
Daniel
Joseph Rice, IV — Chief Executive Officer and director. Mr. Rice has over 15 years of experience in the energy industry.
Mr. Rice is also the Chief Executive Officer and a director of Rice II. Mr. Rice is a Partner of Rice Investment Group
and served as Chief Executive Officer of Rice Energy Inc. (“Rice Energy”) from October 2013 through the completion
of its acquisition by EQT Corporation (“EQT”) in November 2017. Prior to his role as Chief Executive Officer, Mr.
Rice served as Chief Operating Officer of Rice Energy from October 2012 through September 2013 and as Vice President and Chief
Financial Officer of Rice Energy from October 2008 through September 2012. Mr. Rice oversaw Rice Energy’s growth from start-up
through its $1 billion initial public offering in 2014 and eventual $8.2 billion sale to EQT in 2017. Mr. Rice also oversaw the
creation and growth of Rice Midstream Partners LP (“Rice Midstream”), which was acquired by EQT Midstream Partners,
LP for $2.4 billion in 2018. Mr. Rice established Rice Energy’s strategic framework for value creation, which yielded success
for its shareholders and employees. He has utilized his operating and growth strategy formulation experience as the founder of
Rice Energy to help portfolio companies of Rice Investment Group to refine and optimize their business strategies in order to
profitably grow. Mr. Rice currently serves on the board of directors of EQT, and he recently joined the board of Whiting Petroleum
in August 2020. Prior to joining Rice Energy, he was an investment banker for Tudor Pickering Holt & Co. in Houston and held
finance and strategic roles with Transocean Ltd. and Tyco International plc.
J.
Kyle Derham — Chief Financial Officer and director. Mr. Derham is a Partner of Rice Investment Group. Mr. Derham
is also the President, Chief Financial Officer and a director nominee of Rice II. Mr. Derham, as part of the Rice Team, led the
shareholder campaign in 2019 to revamp the strategic direction of EQT and elect a majority slate of director candidates to the
board of EQT, the largest operator of natural gas production in the United States. Following the campaign, Mr. Derham served as
interim Chief Financial Officer of EQT and currently serves as a strategic advisor to the company. Mr. Derham previously served
as Vice President, Corporate Development and Finance of Rice Energy and Rice Midstream from January 2014 through November 2017.
Through his various roles working alongside the Rice family, Mr. Derham has focused on evaluating, structuring and negotiating
key acquisitions and execution of critical strategic initiatives to generate attractive risk adjusted returns for investors. Mr.
Derham also has experience as a private equity investor, working as an associate at First Reserve and as an investment banker
at Barclays Investment Bank.
James
Wilmot Rogers — Chief Accounting Officer. Mr. Rogers is also the Chief Accounting Officer of Rice II.
Mr. Rogers served as Senior Vice President and Chief Accounting Officer & Administrative Officer, Treasurer of Rice Energy
from April 2011 through November 2017. Mr. Rogers led accounting, tax and human resources functions for Rice Energy, Rice
Midstream and its numerous joint ventures and joint venture companies. Mr. Rogers oversaw such functions through two initial public
offerings in a single calendar year (Rice Energy in January 2014 and Rice Midstream in December 2014) and through numerous asset
and corporate level acquisitions totaling more than $10 billion in asset value. He also has numerous years in public accounting
experience, having worked at both Ernst & Young and PricewaterhouseCoopers.
Dr.
Kathryn Jackson — Independent director. Dr. Kathryn Jackson, one of our independent directors, is an accomplished
executive leader with a highly successful career in electricity generation, energy system operations and technology management.
Dr. Jackson serves as Director of Energy and Technology Consulting for KeySource, Inc. Prior to this role, Dr. Jackson has served
as President and Chief Technology Officer for RTI International Metals, Chief Technology Officer and Senior Vice President for
Research and Technology for Westinghouse Electric Company, LLC, and Executive Vice President of River System Operations and Environment
for the Tennessee Valley Authority. Dr. Jackson serves on the board of directors of Portland General Electric, Cameco Corporation,
Duquesne Light Holdings and EQT. Dr. Jackson previously served on the board of directors of Rice Energy from April 2017 until
its acquisition by EQT. Dr. Jackson holds advanced degrees in engineering, industrial engineering, and public policy from Carnegie
Mellon University and the University of Pittsburgh.
Joseph
Malchow — Independent director. Mr. Malchow, one of our independent directors, is the Founding General Partner at
HNVR Technology Investment Management in Menlo Park, California, a Seed and Series A venture capital firm. The firm supports software
entrepreneurs in fields including artificial intelligence, developer tooling, low code business logic, data and computing infrastructure,
cybersecurity for enterprise, government, and people, and SaaS in a number of specific verticals including finance and credit,
freight and logistics, national security and defense technology, and construction. Mr. Malchow also sits on the Board of Enphase
Energy, Inc. (Nasdaq: ENPH), a global energy technology company. Mr. Malchow earned an A.B. from Dartmouth College in 2008. He
later studied at the law and business schools of Stanford University, receiving a J.D. in 2013.
James
Torgerson — Independent director Mr. Torgerson, one of our independent directors, was the Chief Executive Officer
of Avangrid, Inc., a public utility company with $35 billion of assets, from December 2015 until June 2020. Prior to that role,
Mr. Torgerson served as President and Chief Executive Officer of UIL Holdings Corporation beginning in 2006. Prior to 2006, Mr.
Torgerson was President and Chief Executive Officer of Midcontinent Independent System Operator, Inc. Mr. Torgerson served as
the chair of the board of directors of the American Gas Association and serves as a trustee of the Yale-New Haven Hospital and
as a trustee of Yale New Haven Health System. Until his retirement in June 2020, he served on the board and as an executive committee
member of the Edison Electric Institute (“EEI”). Mr. Torgerson also co-chaired EEI’s Board Committee for Reliability,
Security and Business Continuity, which included responsibility related to cyber security for the EEI member utilities. Mr. Torgerson,
prior to his retirement, was also a member of the Electricity Sub-sector Coordinating Council (“ESCC”), that coordinates
with the federal government on physical and cyber security and natural disasters impacting the electric grid.
Our
board of directors is divided into three classes with only one class of directors being elected in each year and each class (except
for those directors elected prior to our first annual meeting of stockholders) serving a three-year term. The term of office of
the first class of directors, consisting of Kathryn Jackson and J. Kyle Derham, will expire at our first annual meeting of stockholders.
The term of office of the second class of directors, consisting of Joseph Malchow and Daniel Joseph Rice, IV, will expire at the
second annual meeting of stockholders. The term of office of the third class of directors, consisting of James Torgerson, will
expire at the third annual meeting of stockholders. We may not hold an annual meeting of stockholders until after we consummate
our initial business combination.
Holders
of our founder shares have the right to elect all of our directors prior to consummation of our initial business combination and
holders of our public shares do not have the right to vote on the election of directors during such time. These provisions of
our amended and restated certificate of incorporation may only be amended if approved by a majority of at least 90% of our common
stock voting at a stockholder meeting.
Our
officers are appointed by the board of directors and serve at the discretion of the board of directors, rather than for specific
terms of office. Our board of directors is authorized to appoint persons to the offices set forth in our bylaws as it deems appropriate.
Our bylaws provide that our officers may consist of a Chairman of the Board, Chief Executive Officer, President, Chief Financial
Officer, Vice Presidents, Secretary, Treasurer and such other offices as may be determined by the board of directors.
Director
Independence
The
NYSE listing standards require that a majority of our board of directors be independent. An “independent director”
is defined generally as a person who has no material relationship with the listed company (either directly or as a partner, stockholder
or officer of an organization that has a relationship with the company). Our board of directors has determined that Kathryn Jackson,
Joseph Malchow, and James Torgerson are “independent directors” as defined in the NYSE listing standards and applicable
SEC rules. Our independent directors will have regularly scheduled meetings at which only independent directors are present.
Officer
and Director Compensation
None
of our officers or directors have received any cash compensation for services rendered to us. Commencing on the date that of our
initial public offering through the earlier of consummation of our initial business combination and our liquidation, we have pay
our sponsor a total of $10,000 per month for office space, utilities, secretarial support and administrative services. In addition,
our sponsor, executive officers and directors, or any of their respective affiliates, are reimbursed for any out-of-pocket expenses
incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence
on suitable business combinations. Our audit committee reviews on a quarterly basis all payments that were made to our sponsor,
officers or directors, or our or their affiliates. Any such payments prior to an initial business combination will be made using
funds held outside the trust account. Other than quarterly audit committee review of such reimbursements, we do not expect to
have any additional controls in place governing our reimbursement payments to our directors and officers for their out-of-pocket
expenses incurred in connection with our activities on our behalf in connection with identifying and consummating an initial business
combination. Other than these payments and reimbursements, no compensation of any kind, including finder’s and consulting
fees, will be paid by the company to our sponsor, officers and directors, or any of their respective affiliates, prior to completion
of our initial business combination.
After
the completion of our initial business combination, directors or members of our management team who remain with us may be paid
consulting or management fees from the combined company. All of these fees will be fully disclosed to stockholders, to the extent
then known, in the proxy solicitation or tender offer materials (as applicable) furnished to our stockholders in connection with
a proposed business combination. We have not established any limit on the amount of such fees that may be paid by the combined
company to our directors or members of our management. It is unlikely the amount of such compensation will be known at the time
of the proposed business combination, because the directors of the post-combination business will be responsible for determining
officer and director compensation. Any compensation to be paid to our officers will be determined, or recommended to the board
of directors for determination, either by a compensation committee constituted solely by independent directors or by a majority
of the independent directors on our board of directors.
We
do not intend to take any action to ensure that members of our management team maintain their positions with us after the consummation
of our initial business combination, although it is possible that some or all of our officers and directors may negotiate employment
or consulting arrangements to remain with us after our initial business combination. The existence or terms of any such employment
or consulting arrangements to retain their positions with us may influence our management’s motivation in identifying or
selecting a target business but we do not believe that the ability of our management to remain with us after the consummation
of our initial business combination will be a determining factor in our decision to proceed with any potential business combination.
We are not party to any agreements with our officers and directors that provide for benefits upon termination of employment.
Committees
of the Board of Directors
Our
board of directors has three standing committees: an audit committee, a compensation committee and a nominating and corporate
governance committee. Subject to phase-in rules and a limited exception, the rules of the NYSE and Rule 10A of the Exchange Act
require that the audit committee of a listed company be comprised solely of independent directors. Subject to phase-in rules and
a limited exception, the rules of the NYSE require that the compensation and nominating and corporate governance committees of
a listed company be comprised solely of independent directors. The charter of each committee is available on our website.
Audit
Committee
We
have established an audit committee of the board of directors. Kathryn Jackson, Joseph Malchow and James Torgerson serve as members
of our audit committee. Under the NYSE listing standards and applicable SEC rules, we are required to have at least three members
of the audit committee, all of whom must be independent, subject to the exception described below. Kathryn Jackson, Joseph Malchow,
and James Torgerson are independent.
James
Torgerson serves as chair of the audit committee. Each member of the audit committee is financially literate and our board of
directors has determined that James Torgerson qualifies as an “audit committee financial expert” as defined in applicable
SEC rules.
We
have adopted an audit committee charter, which details the principal functions of the audit committee, including:
|
●
|
the
appointment, compensation, retention, replacement, and oversight of the work of the independent
registered public accounting firm and any other independent registered public accounting
firm engaged by us;
|
|
●
|
pre-approving
all audit and permitted non-audit services to be provided by the independent registered
public accounting firm or any other registered public accounting firm engaged by us,
and establishing pre-approval policies and procedures;
|
|
●
|
reviewing
and discussing with the independent registered public accounting firm all relationships
the auditors have with us in order to evaluate their continued independence;
|
|
●
|
setting
clear hiring policies for employees or former employees of the independent registered
public accounting firm;
|
|
●
|
setting
clear policies for audit partner rotation in compliance with applicable laws and regulations;
|
|
●
|
obtaining
and reviewing a report, at least annually, from the independent registered public accounting
firm describing (i) the independent registered public accounting firm’s internal
quality-control procedures and (ii) any material issues raised by the most recent internal
quality-control review, or peer review, of the audit firm, or by any inquiry or investigation
by governmental or professional authorities within the preceding five years respecting
one or more independent audits carried out by the firm and any steps taken to deal with
such issues;
|
|
●
|
reviewing
and approving any related party transaction required to be disclosed pursuant to Item
404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction;
and
|
|
●
|
reviewing
with management, the independent registered public accounting firm, and our legal advisors,
as appropriate, any legal, regulatory or compliance matters, including any correspondence
with regulators or government agencies and any employee complaints or published reports
that raise material issues regarding our financial statements or accounting policies
and any significant changes in accounting standards or rules promulgated by the Financial
Accounting Standards Board, the SEC or other regulatory authorities.
|
Compensation
Committee
Kathryn
Jackson, Joseph Malchow, and James Torgerson serve as members of our compensation committee. Under the NYSE listing standards
and applicable SEC rules, we are required to have at least two members of the compensation committee, all of whom must be independent.
Kathryn Jackson, Joseph Malchow, and James Torgerson are independent. Joseph Malchow serves as chair of the compensation committee.
We
have adopted a compensation committee charter, which details the principal functions of the compensation committee, including:
|
●
|
reviewing
and approving on an annual basis the corporate goals and objectives relevant to our chief
executive officer’s compensation, evaluating our chief executive officer’s
performance in light of such goals and objectives and determining and approving the remuneration
(if any) of our chief executive officer based on such evaluation;
|
|
●
|
reviewing
and approving on an annual basis the compensation of all of our other officers;
|
|
●
|
reviewing
on an annual basis our executive compensation policies and plans;
|
|
●
|
implementing
and administering our incentive compensation equity-based remuneration plans;
|
|
●
|
assisting
management in complying with our proxy statement and annual report disclosure requirements;
|
|
●
|
approving
all special perquisites, special cash payments and other special compensation and benefit
arrangements for our officers and employees;
|
|
●
|
if
required, producing a report on executive compensation to be included in our annual proxy
statement; and
|
|
●
|
reviewing,
evaluating and recommending changes, if appropriate, to the remuneration for directors.
|
The
charter also provides that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation
consultant, legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of
the work of any such adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel
or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required
by the NYSE and the SEC.
Nominating
and Corporate Governance Committee
The
members of our nominating and corporate governance are Kathryn Jackson, Joseph Malchow, and James Torgerson. Kathryn Jackson serves
as chair of the nominating and corporate governance committee.
The
primary purposes of our nominating and corporate governance committee is to assist the board in:
|
●
|
identifying,
screening and reviewing individuals qualified to serve as directors and recommending
to the board of directors candidates for nomination for election at the annual meeting
of stockholders or to fill vacancies on the board of directors;
|
|
●
|
developing,
recommending to the board of directors and overseeing implementation of our corporate
governance guidelines;
|
|
●
|
coordinating
and overseeing the annual self-evaluation of the board of directors, its committees,
individual directors and management in the governance of the company; and
|
|
●
|
reviewing
on a regular basis our overall corporate governance and recommending improvements as
and when necessary.
|
The
nominating and corporate governance committee is governed by a charter that complies with the rules of the NYSE.
Director
Nominations
Our
nominating and corporate governance committee recommend to the board of directors candidates for nomination for election at the
annual meeting of the stockholders. The board of directors also consider director candidates recommended for nomination by our
stockholders during such times as they are seeking proposed nominees to stand for election at the next annual meeting of stockholders
(or, if applicable, a special meeting of stockholders). Our stockholders that wish to nominate a director for election to our
board of directors should follow the procedures set forth in our bylaws.
We
have not formally established any specific, minimum qualifications that must be met or skills that are necessary for directors
to possess. In general, in identifying and evaluating nominees for director, our board of directors considers educational background,
diversity of professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and
the ability to represent the best interests of our stockholders. Prior to our initial business combination, holders of our public
shares do not have the right to recommend director candidates for nomination to our board of directors.
Compensation
Committee Interlocks and Insider Participation
None
of our officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee
of any entity that has one or more officers serving on our board of directors.
Code
of Ethics
We
have adopted a Code of Ethics applicable to our directors, officers and employees. A copy of the Code of Ethics will be provided
without charge upon written request to our principal executive offices. We intend to disclose any amendments to or waivers of
certain provisions of our Code of Ethics in a Current Report on Form 8-K.
Corporate
Governance Guidelines
Our
board of directors has adopted corporate governance guidelines in accordance with the corporate governance rules of the NYSE that
serve as a flexible framework within which our board of directors and its committees operate. These guidelines cover a number
of areas including board membership criteria and director qualifications, director responsibilities, board agenda, roles of the
chairman of the board, chief executive officer and presiding director, meetings of independent directors, committee responsibilities
and assignments, board member access to management and independent advisors, director communications with third parties, director
compensation, director orientation and continuing education, evaluation of senior management and management succession planning.
A copy of our corporate governance guidelines is posted on our website.
Conflicts
of Interest
Members
of our sponsor, as well as Rice Investment Group and its portfolio companies may compete with us for acquisition opportunities.
If they decide to pursue any such opportunity, we may be precluded from procuring such opportunities. Neither members of our sponsor
nor members of our management team who are members of our sponsor have any obligation to present us with any opportunity for a
potential business combination of which they become aware, unless presented to such member solely in his or her capacity as an
officer of the company. Members of our sponsor and our management, in their other endeavors, may be required to present potential
business combinations to other entities, before they present such opportunities to us.
In
addition, members of our sponsor, as well as Rice Investment Group and its portfolio companies, may sponsor other blank check
companies similar to ours during the period in which we are seeking an initial business combination, and members of our management
team may participate in such blank check companies. In particular, an affiliate of Rice Investment Group has formed Rice II, a
blank check company like our company that was formed to consummate an initial business combination. Like us, Rice II intends to
focus its search for a target business in the energy transition or sustainability arena. As of the date of this filing, Rice II
has not completed its initial public offering and does not have a class of securities registered under the Exchange Act. Any such
companies, including Rice II, may present additional conflicts of interest in pursuing an acquisition target, particularly in
the event there is overlap among the management teams. Mr. Rice also serves as a director and officer of Rice II, and Mr. Derham
also serves as an officer and is a director nominee of Rice II. However, we do not believe that any such potential conflicts would
materially affect our ability to complete our initial business combination. Each of Mr. Rice and Mr. Derham has agreed not to
become an officer or director of any other special purpose acquisition company with a class of securities registered under the
Exchange Act, until we have entered into a definitive agreement regarding our initial business combination or we have failed to
complete our initial business combination within 24 months after the closing of our initial public offering. Neither Mr. Rice
nor Mr. Derham has been involved with any blank check companies prior to our company.
Each
of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations
to other entities, including Rice II, pursuant to which such officer or director is or will be required to present a business
combination opportunity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity
which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor
his or her fiduciary or contractual obligations to present such opportunity to such other entity. We do not believe, however,
that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability to complete
our business combination. In addition, we may pursue an Affiliated Joint Acquisition opportunity with an entity to which an officer
or director has a fiduciary or contractual obligation. Any such entity may co-invest with us in the target business at the time
of our initial business combination, or we could raise additional proceeds to complete the acquisition by issuing to such entity
a class of equity or equity-linked securities. Our amended and restated certificate of incorporation provides that we renounce
our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such
person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually
permitted to undertake and would otherwise be reasonable for us to pursue.
Potential
investors should also be aware of the following other potential conflicts of interest:
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●
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None
of our officers or directors is required to commit his or her full time to our affairs
and, accordingly, may have conflicts of interest in allocating his or her time among
various business activities.
|
|
●
|
In
the course of their other business activities, our officers and directors may become
aware of investment and business opportunities which may be appropriate for presentation
to us as well as the other entities with which they are affiliated. Our management may
have conflicts of interest in determining to which entity a particular business opportunity
should be presented.
|
|
●
|
Our
initial stockholders have agreed that any founder shares and sponsor shares will not
be entitled to redemption rights, and they will waive any such redemption rights for
any public shares held by them, in connection with the consummation of our initial business
combination. Additionally, our initial stockholders have agreed that any founder shares
held by them will not be entitled to redemption rights, and they will waive any such
redemption rights for any public shares held by them, if we fail to consummate our initial
business combination within 24 months after the closing of our initial public offering.
If we do not complete our initial business combination within such applicable time period,
the portion of the proceeds of the sale of the private placement warrants held in the
trust account will be used to fund the redemption of our public shares and any Class
A Units of Opco (other than those held by Rice Acquisition Corp.), and the private placement
warrants will expire worthless. Furthermore, our initial stockholders have agreed not
to transfer, assign or sell any founder shares held by them, and any shares of our Class
A common stock acquired upon exchange of founder shares, until one year after the date
of the consummation of our initial business combination or earlier if, subsequent to
our initial business combination, (i) the last sale price of our Class A common stock
equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like) for any 20 trading days within any 30-trading day period
commencing at least 150 days after our initial business combination or (ii) we consummate
a subsequent liquidation, merger, stock exchange or other similar transaction which results
in all of our stockholders having the right to exchange their shares of common stock
for cash, securities or other property. With certain limited exceptions, the private
placement warrants and the Class A common stock underlying such warrants will not be
transferable, assignable or saleable until 30 days after the completion of our initial
business combination. Since our sponsor and officers and directors may directly or indirectly
own common stock and warrants following our initial public offering, our officers and
directors may have a conflict of interest in determining whether a particular target
business is an appropriate business with which to effectuate our initial business combination.
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●
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Our
officers and directors may have a conflict of interest with respect to evaluating a particular
business combination if the retention or resignation of any such officers and directors
was included by a target business as a condition to any agreement with respect to our
initial business combination.
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●
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Our
sponsor, officers or directors may have a conflict of interest with respect to evaluating
a business combination and financing arrangements as we may obtain loans from our sponsor
or an affiliate of our sponsor or any of our officers or directors to finance transaction
costs in connection with an intended initial business combination. Up to $1,500,000 of
such loans may be convertible into warrants at a price of $1.00 per warrant at the option
of the lender. Such warrants would be identical to the private placement warrants, including
as to exercise price, exercisability and exercise period.
|
The
conflicts described above may not be resolved in our favor.
In
general, officers and directors of a corporation incorporated under the laws of the State of Delaware are required to present
business opportunities to a corporation if:
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the
corporation could financially undertake the opportunity;
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●
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the
opportunity is within the corporation’s line of business; and
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●
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it
would not be fair to our company and its stockholders for the opportunity not to be brought
to the attention of the corporation.
|
Accordingly,
as a result of multiple business affiliations, our officers and directors may have similar legal obligations relating to presenting
business opportunities meeting the above-listed criteria to multiple entities. Furthermore, our amended and restated certificate
of incorporation provide that the doctrine of corporate opportunity will not apply with respect to any of our officers or directors
in circumstances where the application of the doctrine would conflict with any fiduciary duties or contractual obligations they
may have.
We
are not prohibited from pursuing an initial business combination with or from a company that is affiliated with our sponsor, officers
or directors, including a portfolio company of Rice Investment Group, or making the acquisition through a joint venture or other
form of shared ownership with our sponsor, officers or directors or their affiliates, including Rice Investment Group and/or one
or more of its portfolio companies and Rice II. We are also not prohibited from entering into an agreement with our sponsor, officers
or directors or their affiliates with respect to the operation of any business we acquire in connection with the initial business
combination. In the event we seek to complete our initial business combination with a business combination target that is affiliated
with our sponsor, officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent
investment banking firm which is a member of FINRA or from an independent accounting firm that such initial business combination
is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context. Further,
commencing on the date our securities are first listed on the NYSE, we began paying an amount equal to $10,000 per month to our
sponsor for office space, utilities, secretarial support and administrative services provided to us.
We
cannot assure you that any of the above mentioned conflicts will be resolved in our favor.
In
the event that we submit our initial business combination to our public stockholders for a vote, we will complete our initial
business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the initial business
combination. Our initial stockholders have agreed to vote any founder shares held by them and any public shares purchased during
or after the offering in favor of our initial business combination and our officers and directors have also agreed to vote any
public shares purchased during or after the offering in favor of our initial business combination.
Limitation
on Liability and Indemnification of Officers and Directors
Our
amended and restated certificate of incorporation provides that our officers and directors will be indemnified by us to the fullest
extent authorized by Delaware law, as it now exists or may in the future be amended. In addition, our amended and restated certificate
of incorporation provide that our directors will not be personally liable for monetary damages to us or our stockholders for breaches
of their fiduciary duty as directors, unless they violated their duty of loyalty to us or our stockholders, acted in bad faith,
knowingly or intentionally violated the law, authorized unlawful payments of dividends, unlawful stock purchases or unlawful redemptions,
or derived an improper personal benefit from their actions as directors.
We
have entered into agreements with our officers and directors to provide contractual indemnification in addition to the indemnification
provided for in our amended and restated certificate of incorporation. Our bylaws also permit us to secure insurance on behalf
of any officer, director or employee for any liability arising out of his or her actions, regardless of whether Delaware law would
permit such indemnification. We have purchased a policy of directors’ and officers’ liability insurance that insures
our officers and directors against the cost of defense, settlement or payment of a judgment in some circumstances and insures
us against our obligations to indemnify our officers and directors.
Our
officers and directors have agreed, and any persons who may become officers or directors prior to the initial business combination
will agree, to waive any right, title, interest or claim of any kind in or to any monies in the trust account, and to waive any
right, title, interest or claim of any kind they may have in the future as a result of, or arising out of, any services provided
to us and will not seek recourse against the trust account for any reason whatsoever. Accordingly, any indemnification provided
will only be able to be satisfied by us if (i) we have sufficient funds outside of the trust account or (ii) we consummate an
initial business combination.
Our
indemnification obligations may discourage stockholders from bringing a lawsuit against our officers or directors for breach of
their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against our
officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders. Furthermore,
a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against
our officers and directors pursuant to these indemnification provisions.
We
believe that these provisions, the insurance and the indemnity agreements are necessary to attract and retain talented and experienced
officers and directors.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling
us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
Item
11.
|
Executive
Compensation
|
Officer
and Director Compensation
None
of our officers or directors have received any cash compensation for services rendered to us. Commencing on the date that our
securities were first listed on the NYSE through the earlier of consummation of our initial business combination and our liquidation,
we have agreed to pay our sponsor a total of $10,000 per month for office space, utilities, secretarial support and administrative
services. In addition, our sponsor, executive officers and directors, or any of their respective affiliates, will be reimbursed
for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses
and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments
that were made to our sponsor, officers or directors, or our or their affiliates. Any such payments prior to an initial business
combination will be made using funds held outside the trust account. Other than quarterly audit committee review of such reimbursements,
we do not expect to have any additional controls in place governing our reimbursement payments to our directors and officers for
their out-of-pocket expenses incurred in connection with our activities on our behalf in connection with identifying and consummating
an initial business combination. Other than these payments and reimbursements, no compensation of any kind, including finder’s
and consulting fees, will be paid by the company to our sponsor, officers and directors, or any of their respective affiliates,
prior to completion of our initial business combination.
After
the completion of our initial business combination, directors or members of our management team who remain with us may be paid
consulting or management fees from the combined company. All of these fees will be fully disclosed to stockholders, to the extent
then known, in the proxy solicitation or tender offer materials (as applicable) furnished to our stockholders in connection with
a proposed business combination. We have not established any limit on the amount of such fees that may be paid by the combined
company to our directors or members of our management. It is unlikely the amount of such compensation will be known at the time
of the proposed business combination, because the directors of the post-combination business will be responsible for determining
officer and director compensation. Any compensation to be paid to our officers will be determined, or recommended to the board
of directors for determination, either by a compensation committee constituted solely by independent directors or by a majority
of the independent directors on our board of directors.
We
do not intend to take any action to ensure that members of our management team maintain their positions with us after the consummation
of our initial business combination, although it is possible that some or all of our officers and directors may negotiate employment
or consulting arrangements to remain with us after our initial business combination. The existence or terms of any such employment
or consulting arrangements to retain their positions with us may influence our management’s motivation in identifying or
selecting a target business but we do not believe that the ability of our management to remain with us after the consummation
of our initial business combination will be a determining factor in our decision to proceed with any potential business combination.
We are not party to any agreements with our officers and directors that provide for benefits upon termination of employment.
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
The
following table sets forth information regarding the beneficial ownership of our shares of common stock as of March 19, 2021 based
on information obtained from the persons named below, with respect to the beneficial ownership of our shares of common stock,
by:
|
●
|
each
person known by us to be the beneficial owner of more than 5% of our outstanding shares
of common stock;
|
|
●
|
each
of our executive officers and directors that beneficially owns our shares of common stock;
and
|
|
●
|
all
our executive officers and directors as a group.
|
In
the table below, percentage ownership is based on 23,727,500 shares of Class A common stock (which includes shares of Class A
common stock that are underlying the units) and 5,931,350 shares of Class B common stock outstanding as of March 19, 2021. The
table below does not include the shares of Class A common stock underlying the private placement warrants held by our sponsor
because these securities are not exercisable within 60 days of this Report.
Name of Beneficial
Owners(1)
|
|
Class B
common stock
|
|
|
Class A
common stock
|
|
|
Number of Shares Beneficially Owned(2)
|
|
|
Approximate
Percentage of Class
|
|
|
Number of Shares Beneficially Owned
|
|
|
Approximate
Percentage of Class
|
|
Rice Acquisition Sponsor LLC (our sponsor)(3)
|
|
|
5,532,287
|
|
|
|
93.3
|
%
|
|
|
2,500
|
|
|
|
*
|
|
Atlas Point Energy Infrastructure, LLC(4)
|
|
|
309,063
|
|
|
|
5.2
|
%
|
|
|
—
|
|
|
|
—
|
|
Daniel Joseph Rice, IV(3)
|
|
|
5,532,287
|
|
|
|
93.3
|
%
|
|
|
—
|
|
|
|
—
|
|
J. Kyle Derham(3)
|
|
|
5,532,287
|
|
|
|
93.3
|
%
|
|
|
—
|
|
|
|
—
|
|
James Wilmot Rogers
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Kathryn Jackson
|
|
|
30,000
|
|
|
|
*
|
|
|
|
—
|
|
|
|
—
|
|
Joseph Malchow
|
|
|
30,000
|
|
|
|
*
|
|
|
|
—
|
|
|
|
—
|
|
James Torgerson
|
|
|
30,000
|
|
|
|
*
|
|
|
|
—
|
|
|
|
—
|
|
All officers and directors as a group (six individuals)
|
|
|
5,622,287
|
|
|
|
94.8
|
%
|
|
|
—
|
|
|
|
—
|
|
Adage Capital Partners, LP(5)
|
|
|
—
|
|
|
|
—
|
|
|
|
1,935,000
|
|
|
|
8.16
|
%
|
CIBC Private Wealth Group, LLC(6)
|
|
|
—
|
|
|
|
—
|
|
|
|
2,128,500
|
|
|
|
8.97
|
%
|
Goldman Sachs Asset Management(7)
|
|
|
—
|
|
|
|
—
|
|
|
|
2,550,000
|
|
|
|
10.4
|
%
|
Hartree Partners, LP(8)
|
|
|
|
|
|
|
|
|
|
|
1,359,341
|
|
|
|
5.7
|
%
|
HITE Hedge Asset Management LLC(9)
|
|
|
—
|
|
|
|
—
|
|
|
|
1,300,000
|
|
|
|
5.5
|
%
|
Kensico Capital Management Corp(10)
|
|
|
—
|
|
|
|
—
|
|
|
|
2,000,000
|
|
|
|
8.4
|
%
|
|
(1)
|
Unless
otherwise noted, the business address of each of the following entities or individuals is 102 East Main Street, Second Story,
Carnegie, Pennsylvania 15106.
|
|
(2)
|
The
interests shown consist of founder shares and sponsor shares. The Class A Units of Opco (and corresponding shares of our Class
B common stock) comprising such shares will be exchangeable for shares of our Class A common stock after the time of our initial
business combination on a one-for-one basis, subject to adjustment, as described in the section entitled “Description of
Securities.” Excludes forward purchase securities that will only be issued, if at all, at the time of our initial business
combination.
|
|
(3)
|
Rice
Acquisition Sponsor LLC is the record holder of the shares reported herein. Daniel Joseph Rice, IV and J. Kyle Derham are the
managing members of Rice Acquisition Sponsor LLC.
|
|
(4)
|
Upon
the closing of our initial public offering, our sponsor transferred 309,063 founder shares to Atlas Point Fund pursuant to the
forward purchase agreement. Atlas Point Fund is the record holder of the shares reported herein. CIBC National Trust Company,
a limited-purpose national trust bank, is the manager of Atlas Point Fund. The parent company of CIBC National Trust is CIBC Private
Wealth Group, LLC, which in turn is an indirect, wholly owned subsidiary of Canadian Imperial Bank of Commerce (“CIBC”).
Accordingly, CIBC may be deemed to have or share beneficial ownership of the common stock held directly by Atlas Point Fund. The
business address for Atlas Point Energy Infrastructure Fund, LLC is: 3920 Northside Parkway, 7th Floor, Atlanta, Georgia 30327.
|
|
(5)
|
The
address of Adage Capital Partners, L.P. is 200 Clarendon Street, 52nd Floor, Boston, Massachusetts 02116. Based on a Schedule
13G/A filed on November 5, 2020 (the “Adage 13G”). According to the Adage 13G, Adage Capital Partners, L.P., a Delaware
limited partnership (“ACP” is the direct owner of such Class A Common Stock. Adage Capital Partners GP, L.L.C., a
limited liability company organized under the laws of the State of Delaware (“ACPGP”), is the general partner of ACP
and therefore has beneficial ownership of the shares of Class A Common Stock directly owned by ACP. Adage Capital Advisors, L.L.C.,
a limited liability company organized under the laws of the State of Delaware (“ACA”), is the managing member of ACPGP,
the general partner of ACP, and therefore has beneficial ownership of the shares of Class A Common Stock directly owned by ACP.
Robert Atchinson (“Mr. Atchinson”) is the managing member of ACA, which is the managing member of ACPGP, which is
the general partner of ACP and therefore Mr. Atchinson has beneficial ownership of the shares of Class A Common Stock directly
owned by ACP. Phillip Gross (“Mr. Gross”) is the managing member of ACA, which is the managing member of ACPGP, which
is the general partner of ACP and therefore Mr. Gross has beneficial ownership of the shares of Class A Common Stock directly
owned by ACP.
|
|
(6)
|
The
address of CIBC Private Wealth Group, LLC is 3290 Northside Parkway NW, 7th Flr, Atlanta, GA 30327. Based on a Schedule 13G/A
filed on February 14, 2021.
|
|
(7)
|
The
address of Goldman Sachs Asset Management is 200 West Street New York, NY 10282. Based on a Schedule 13G/A filed on December 16,
2020.
|
|
(8)
|
The
address of Hartree Partners, LP is 1185 Avenue of the Americas New York, NY 10036. Based on a Schedule 13G/A filed on February
8, 2021.
|
|
(9)
|
The
address of HITE Hedge Asset Management LLC is 300 Crown Colony Drive Suite 108 Quincy, MA 02169. Based on a Schedule 13G/A filed
on February 17, 2021.
|
|
(10)
|
The
address of Kensico Capital Management Corp. is 55 Railroad Avenue, 2nd Floor Greenwich, CT 06830. Based on a Schedule 13G/A filed
on February 12, 2021.
|
Our
sponsor, officers and directors are deemed to be our “promoter” as such term is defined under the federal securities
laws.
Changes
in Control
None.
Item
13.
|
Certain
Relationships and Related Transactions, and Director Independence
|
Founder
Shares
In September 2020, our sponsor
received 5,750,000 Class B Units of Opco for no consideration and purchased 5,750,000 corresponding shares of our Class B common stock,
2,500 shares of our Class A common stock and 100 Class A Units of Opco and 100 corresponding shares of our Class B common stock for an
aggregate of $26,000. The number of founder shares issued was determined based on the expectation that such founder shares would represent
20% of the total outstanding equity upon completion of our initial public offering (excluding the sponsor shares). In October, 2020 our
sponsor forfeited 90,000 Class B Units of Opco, and 30,000 Class Units of Opco were issued to each of our independent directors. In October
2020, we effected a dividend, and Opco effected a distribution, resulting in our Sponsor owning 6,091,250 Class B Units and 6,091,250
shares of our Class B common stock that comprise the founder shares. Our sponsor transferred a corresponding number of shares of our Class
B common stock to our independent directors. Following the closing of our initial public offering, our sponsor forfeited 309,063 Class
B Units of Opco, and 309,063 Class B Units of Opco was issued to Atlas Point Fund. Our sponsor transferred a corresponding number of shares
of our Class B common stock to Atlas Point Fund. Up to 806,250 founder shares were subject to forfeiture by our sponsor depending on the
extent to which the underwriters’ over-allotment option was exercised. The founder shares (including the Class A common stock issuable
upon exchange thereof) may not, subject to certain limited exceptions, be transferred, assigned or sold by the holder. On October 26,
2020, the underwriters partially exercised the over-allotment option to purchase an additional 2,225,000 Units; thus, only 250,000 founder
shares remained subject to forfeiture to the extent the over-allotment option was exercised. On December 5, 2020, the remaining underwriters’
over-allotment option expired unexercised; thus, 250,000 founder shares held by our sponsor were forfeited for no consideration. As of
December 31, 2020, there were 5,931,350 shares of Class B common stock issued and outstanding.
Private
Placement Warrants
Our
sponsor purchased from us an aggregate of 6,093,900 private placement warrants at a purchase price of $1.00 per warrant ($6,093,900
in the aggregate) in a private placement that occurred simultaneously with the closing of our initial public offering. Atlas Point
Fund also purchased 677,100 private placement warrants at a purchase price of $1.00 per warrant ($677,100 in the aggregate). Each
private placement warrant entitles the holder to purchase for $11.50 either one share of our Class A common stock or, so long
as they are held by our initial stockholders or their permitted transferees, one Class A Unit of Opco (and corresponding share
of our Class B common stock). The private placement warrants (including the Class A common stock or Class A Units of Opco (and
corresponding shares of our Class B common stock) issuable upon exercise thereof) may not, subject to certain limited exceptions,
be transferred, assigned or sold by the holder until 30 days after the completion of our initial business combination.
We
have entered into a forward purchase agreement pursuant to which we may elect, in our sole and absolute discretion, to offer Atlas
Point Fund, which is a fund managed by CIBC National Trust Company the opportunity to purchase up to $75,000,000 of either (i)
a number of forward purchase units for $10.00 per unit or (ii) a number of forward purchase shares for $9.67 per share in a private
placement that will close simultaneously with the closing of our initial business combination. Whether we will issue Atlas Point
Fund forward purchase units valued at $10.00 per unit or forward purchase shares valued at $9.67 per share will be determined
at our election, and in our sole discretion, at least 10 business days prior to the closing of our initial business combination.
Each whole forward purchase warrant is exercisable to purchase one share of our Class A common stock at $11.50 per share. The
forward purchase warrants will have the same terms as the public warrants and the forward purchase shares will be identical to
the shares of Class A common stock included in the units being sold in our initial public offering, except the forward purchase
shares and the forward purchase warrants will be subject to transfer restrictions and certain registration rights and the forward
purchase units will consist of only one-third of one forward purchase warrant. The funds from the sale of the forward purchase
securities may be used as part of the consideration to the sellers in the initial business combination, and any excess funds may
be used for the working capital needs of the post-transaction company. This agreement is independent of the percentage of stockholders
electing to redeem their public shares and may provide us with an increased minimum funding level for the initial business combination.
The forward purchase agreement is subject to conditions, including Atlas Point Fund giving us its written consent to purchase
the forward purchase securities no later than five days after we notify it of our intention to meet to consider entering into
a definitive agreement for a proposed business combination. Atlas Point Fund may grant or withhold its consent to the purchase
entirely within its sole discretion. Accordingly, if Atlas Point Fund does not consent to the purchase, it will not be obligated
to purchase the forward purchase securities. Additionally, pursuant to the terms of the forward purchase agreement, we have granted
Atlas Point Fund the right to appoint a single observer to our board of directors until the consummation of our initial business
combination. Such observer will not have voting rights or otherwise have any of the powers of a member of our board of directors
and Atlas Point Fund will not have the right to appoint such observer at any time that Atlas Point Fund or any of Atlas Point
Fund’s affiliates has the right to designate a director or observer to the board of directors of a special purchase acquisition
company that is focused on an industry similar to that which we are focused.
Opco
LLC Agreement
In
connection with our initial public offering, we entered into the Amended and Restated Limited Liability Company Agreement of Opco
(the “Opco LLC Agreement”). A form of the Opco LLC Agreement was filed as an exhibit to our Registration Statement
on Form S-1 filed in connection with our initial public offering, and the following description of the Opco LLC Agreement is qualified
in its entirety by reference thereto.
Conversion
of Class B Units of Opco and Exchange Right
Our
initial stockholders own all of the outstanding Class B Units of Opco. The Class B Units of Opco will convert into Class A Units
of Opco in connection with the initial business combination on a one-for-one basis, subject to adjustment for stock splits, stock
dividends, reorganizations, recapitalizations and the like and subject to further adjustment as described below under “—
Founder Shares Anti-Dilution.”
In
addition, following our initial business combination, holders of Class A Units of Opco (other than Rice Acquisition Corp.) will
have the right (an “exchange right”), subject to certain limitations, to exchange Class A Units of Opco (and a corresponding
number of shares of our Class B common stock) for, at our option, (i) shares of our Class A common stock on a one-for-one basis,
subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, or (ii) a corresponding
amount of cash. Our decision to make a cash payment upon an exercise of an exchange right will be made by our independent directors.
We will determine whether to issue shares of our Class A common stock or pay cash based on facts in existence at the time of the
decision, which we expect would include the relative value of the Class A common stock (including trading prices for the Class
A common stock at the time), the cash purchase price, the availability of other sources of liquidity (such as an issuance of preferred
stock) to acquire the Class A Units of Opco and alternative uses for such cash.
Holders
of Class A Units of Opco (other than Rice Acquisition Corp.) will generally be permitted to exercise the exchange right on a quarterly
basis, subject to certain de minimis allowances. In addition, additional exchanges may occur in connection with certain specified
events, and any exchanges involving 500,000 or more Class A Units of Opco (subject to our discretion to permit exchanges of a
lower number of units) may occur at any time upon ten business days’ advanced notice. The exchange rights will be subject
to certain limitations and restrictions intended to reduce the administrative burden of exchanges upon us and ensure that Opco
will continue to be treated as a partnership for U.S. federal income tax purposes.
Following
any exchange of Class A Units of Opco (and a corresponding number of shares of our Class B common stock), Rice Acquisition Corp.
will retain the Class A Units of Opco and cancel the shares of our Class B common stock. As the holders of Class A Units of Opco
(other than Rice Acquisition Corp.) exchange their Class A Units of Opco, our membership interest in Opco will be correspondingly
increased, the number of shares of our Class A common stock outstanding will be increased, and the number of shares of our Class
B common stock outstanding will be reduced.
In
connection with our initial business combination, we might choose to issue additional Class A Units of Opco (and corresponding
shares of our Class B common stock) to participants in the business combination, such as sellers of assets or entities or financing
sources. We expect that any participants receiving Class A Units of Opco in the business combination will have an exchange right
on substantially the same terms as described above.
Founder
Shares Anti-Dilution
In
the case that additional shares of our Class A common stock, or equity-linked securities, are issued or deemed issued in excess
of the amounts sold in the offering in connection with the initial business combination (other than the forward purchase securities),
the number of Class A Units of Opco into which the Class B Units of Opco will convert may be adjusted (unless the holders of a
majority of the outstanding founder shares agree to waive such adjustment with respect to any such issuance or deemed issuance)
so that, after all founders shares have been exchanged for shares of our Class A common stock, the aggregate number of shares
of our Class A common stock received by holders in exchange for founders shares would equal 20% of the sum of the total outstanding
shares of common stock upon the completion of our initial public offering plus all shares of our Class A common stock and equity-linked
securities issued or deemed issued in connection with the business combination (excluding the forward purchase securities and
any shares or equity-linked securities issued, or to be issued, to any seller in the business combination and excluding the sponsor
shares). In addition, the number of outstanding shares of our Class B common stock will be adjusted through a stock split or stock
dividend so that the total number of outstanding shares of our Class B common stock corresponds to the total number of Class A
Units of Opco outstanding (other than those held by Rice Acquisition Corp.) plus the total number of Class A Units of Opco into
which the Class B Units of Opco are entitled to convert.
Non-Liquidating
Distributions and Allocations of Income and Loss
Subject
to the obligation of Opco to make tax distributions and to reimburse Rice Acquisition Corp. for its corporate and other overhead
expenses, Rice Acquisition Corp. will have the right to determine when non-liquidating distributions will be made to the holders
of Opco Units and the amount of any such distributions. We do not anticipate making any such distributions (other than tax distributions
and reimbursements of expenses) to holders of Opco Units (including Rice Acquisition Corp.) prior to our initial business combination,
other than redemptions of Class A Units of Opco held by Rice Acquisition Corp. in connection with a redemption of public shares.
If we authorize a non-liquidating distribution, whether before or following our initial business combination, the distribution
will be made to holders of Opco Units on a pro rata basis in accordance with their respective percentage ownership of Opco Units.
Opco
will allocate its net income or net loss for each year to the holders of its Class A and Class B Units pursuant to the terms of
the Opco LLC Agreement, and holders of its Class A and Class B Units, including Rice Acquisition Corp., will generally incur U.S.
federal, state and local income taxes on their share of any taxable income of Opco. Prior to the initial business combination,
net profits and net losses of Opco generally will be allocated to holders of Class A Units of Opco on a pro rata basis in accordance
with their respective percentage ownership of Class A Units (except for certain allocations of items of book income and loss and
book-tax differences that may be specially allocated). Prior to our initial business combination, to the extent cash is available,
pro rata tax distributions will be made to the holders of Class A Units of Opco in an amount sufficient to allow Rice Acquisition
Corp. to satisfy its actual income tax liabilities. We will own substantially all of the Class A Units of Opco prior to our initial
business combination, and accordingly, we will be allocated substantially all of the taxable income of Opco and will receive substantially
all of the tax distributions made by Opco.
After
our initial business combination, net profits and net losses of Opco generally will be allocated to holders of Opco Units on a
pro rata basis in accordance with their respective percentage ownership of Opco Units (except for certain allocations of book
income and loss items and book-tax differences that may be specially allocated). After our initial business combination, to the
extent cash is available, tax distributions will be made to the holders of Opco Units, on a pro rata basis in accordance with
their respective percentage ownership of Opco Units, in an amount sufficient to allow Rice Acquisition Corp. to satisfy its actual
tax liabilities.
Issuance
of Equity
Except
as otherwise determined by us, at any time Rice Acquisition Corp. issues a share of its Class A common stock or any other equity
security, the net proceeds received by Rice Acquisition Corp. with respect to such issuance, if any, shall be concurrently invested
in Opco, and Opco shall issue to Rice Acquisition Corp. one Class A Unit or other economically equivalent equity interest. Conversely,
if at any time any shares of Rice Acquisition Corp.’s Class A common stock are redeemed, repurchased, or otherwise acquired
by Rice Acquisition Corp., including in connection with the exercise of redemption rights by holders of our public shares, Opco
shall redeem, repurchase or otherwise acquire an equal number of Opco Units held by Rice Acquisition Corp., upon the same terms
and for the same price, as the shares of our Class A common stock are redeemed, repurchased or otherwise acquired.
Other
Transactions With Our Sponsor and Atlas Point Fund
As
more fully discussed in the section of this Report titled “Certain Relationships and Related Transactions, and Director
Independence” if any of our officers or directors becomes aware of a business combination opportunity that falls within
the line of business of any entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor
his or her fiduciary or contractual obligations to present such business combination opportunity to such entity. Our officers
and directors currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties
to us. We may pursue an Affiliated Joint Acquisition opportunity with an entity to which an officer or director has a fiduciary
or contractual obligation. Any such entity may co-invest with us in the target business at the time of our initial business combination,
or we could raise additional proceeds to complete the acquisition by issuing to such entity a class of equity or equity-linked
securities.
Commencing
on the date that our securities were first listed on the NYSE, we began to pay our sponsor a total of $10,000 per month for office
space, utilities, secretarial support and administrative services. Upon completion of our initial business combination or our
liquidation, we will cease paying these monthly fees.
Other
than these monthly fees, no compensation of any kind, including finder’s and consulting fees, will be paid by the company
to our sponsor, officers and directors, or any of their respective affiliates, for services rendered prior to or in connection
with the completion of an initial business combination. However, these individuals will be reimbursed for any out-of-pocket expenses
incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence
on suitable business combinations. Our audit committee will review on a quarterly basis all payments that were made to our sponsor,
officers, directors or our or their affiliates and will determine which expenses and the amount of expenses that will be reimbursed.
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.
In
addition, in order to finance transaction costs in connection with an intended initial 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.
If we complete an initial business combination, we would repay such loaned amounts. In the event that our initial 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 at the option of the lender. The warrants would be identical to the private placement warrants,
including as to exercise price, exercisability and exercise period. Except as set forth above, the terms of such loans by our
officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. Prior to
the completion of our initial business combination, we do not expect to seek loans from parties other than our sponsor or an affiliate
of our sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all
rights to seek access to funds in our trust account.
After
our initial business combination, members of our management team who remain with us may be paid consulting, management or other
fees from the combined company with any and all amounts being fully disclosed to our stockholders, to the extent then known, in
the tender offer or proxy solicitation materials (as applicable) furnished to our stockholders. It is unlikely the amount of such
compensation will be known at the time of distribution of such tender offer materials or at the time of a stockholder meeting
held to consider our initial business combination, as applicable, as it will be up to the directors of the post-combination business
to determine executive and director compensation.
We
will enter into a registration rights agreement with respect to the private placement warrants, the warrants issuable upon conversion
of working capital loans (if any) and the shares of our Class A common stock issuable upon exercise of the foregoing and upon
exchange of the founder shares, which is described under the heading “Description of Securities — Registration Rights.”
Related
Party Policy
Following
the consummation of our initial public offering, we adopted a code of ethics requiring us to avoid, wherever possible, all conflicts
of interests, except under guidelines or resolutions approved by our board of directors (or the appropriate committee of our board)
or as disclosed in our public filings with the SEC. Under our code of ethics, conflict of interest situations will include any
financial transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) involving the company.
In
addition, our audit committee, pursuant to a written charter that was adopted prior to the consummation of our initial public
offering, is responsible for reviewing and approving related party transactions to the extent that we enter into such transactions.
An affirmative vote of a majority of the members of the audit committee present at a meeting at which a quorum is present is required
in order to approve a related party transaction. A majority of the members of the entire audit committee will constitute a quorum.
Without a meeting, the unanimous written consent of all of the members of the audit committee is required to approve a related
party transaction. We also require each of our directors and executive officers to complete a directors’ and officers’
questionnaire that elicits information about related party transactions.
These
procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents
a conflict of interest on the part of a director, employee or officer.
To
further minimize conflicts of interest, we will not consummate an initial business combination with an entity that is affiliated
with any of our sponsor, officers or directors unless we, or a committee of independent directors, have obtained an opinion from
an independent investment banking firm which is a member of FINRA or an independent accounting firm that our initial business
combination is fair to our company from a financial point of view. Our audit committee will review on a quarterly basis all payments
that were made to our sponsor, officers or directors, or our or their affiliates.
Item
14.
|
Principal
Accountant Fees and Services
|
The
following is a summary of fees paid to WithumSmith+Brown, PC (“Withum”) for services rendered.
Audit
Fees. Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements,
reviews of our quarterly financial statements and services that are normally provided by our independent registered public accounting
firm in connection with statutory and regulatory filings. The aggregate fees billed by Withum for audit fees, inclusive of required
filings with the SEC for the period from September 1, 2020 (inception) through December 31, 2020, and of services rendered in
connection with our initial public offering, totaled $66,435.
Audit-Related
Fees. Audit-related fees consist of fees billed for assurance and related services that are reasonably related to performance
of the audit or review of our year-end financial statements and are not reported under “Audit Fees.” These services
include attest services that are not required by statute or regulation and consultation concerning financial accounting and reporting
standards. We did not pay Withum any audit-related fees during the period from September 1, 2020 (inception) through December
31, 2020.
Tax
Fees. Tax fees consist of fees billed for professional services relating to tax compliance, tax planning and tax advice. We did
not pay Withum any tax fees during the period from September 1, 2020 (inception) through December 31, 2020.
All
Other Fees. All other fees consist of fees billed for all other services. We did not pay Withum any other fees during the period
from September 1, 2020 (inception) through December 31, 2020.
Pre-Approval
Policy
Our
audit committee was formed upon the consummation of our initial public offering. As a result, the audit committee did not pre-approve
all of the foregoing services, although any services rendered prior to the formation of our audit committee were approved by our
board of directors. Since the formation of our audit committee, and on a going-forward basis, the audit committee has and will
pre-approve all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees
and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange Act which are approved
by the audit committee prior to the completion of the audit).
PART
IV
|
Item
15.
|
Exhibits,
Financial Statements Schedules
|
|
(a)
|
The
following documents are filed as part of this Form 10-K:
|
|
(1)
|
Financial
Statements: Our consolidated financial statements are listed in the “Index to Consolidated
Financial Statements” on page F-1.
|
|
(2)
|
Financial
Statement Schedules: None.
|
We
hereby file as part of this Report the exhibits listed in the attached Exhibit Index. Copies of such material can also be obtained
on the SEC website at www.sec.gov.
Exhibit
No.
|
|
Description
|
3.1
|
|
Amended
and Restated Certificate of Incorporation. (1)
|
|
|
|
3.2
|
|
Bylaws.
(2)
|
|
|
|
4.1
|
|
Warrant
Agreement, dated October 21, 2020, between the Company, Opco and Continental Stock Transfer & Trust Company, as warrant
agent. (1)
|
|
|
|
4.2
|
|
Specimen
Unit Certificate. (2)
|
|
|
|
4.3
|
|
Specimen
Class A Common Stock Certificate. (2)
|
|
|
|
4.4
|
|
Specimen
Warrant Certificate. (2)
|
|
|
|
4.5
|
|
Description of Registrant’s Securities. (3)
|
|
|
|
10.1
|
|
Investment
Management Trust Agreement, dated October 21, 2020, between the Company, Opco and Continental Stock Transfer & Trust
Company, as trustee. (1)
|
|
|
|
10.2
|
|
Registration
Rights Agreement, dated October 21, 2020, among the Company, the Sponsor, Atlas Point and certain other security holders named
therein. (1)
|
|
|
|
10.3
|
|
Private
Placement Warrants and Warrants Rights Purchase Agreement, dated October 21, 2020, between the Company, Opco and the Sponsor.
(1)
|
|
|
|
10.4
|
|
Private
Placement Warrants and Warrants Rights Purchase Agreement, dated October 21, 2020, between the Company, Opco and Atlas Point.
(1)
|
|
|
|
10.5
|
|
Letter
Agreement, dated October 21, 2020, among the Company, its officers and directors, Atlas Point and the Sponsor. (1)
|
|
|
|
10.6
|
|
Administrative
Services Agreement, dated October 21, 2020, between the Company, Opco and the Sponsor. (1)
|
|
|
|
10.7
|
|
Promissory
Note, dated September 1, 2020, issued to sponsor by Opco. (2)
|
|
|
|
10.8
|
|
Forward
Purchase Agreement, dated September 30, 2020, between the Registrant and Atlas Point Energy Infrastructure Fund, LLC.
(2)
|
|
(1)
|
Incorporated
by reference to the registrant’s Current Report on Form 8-K, filed with the SEC on October 21, 2020.
|
|
(2)
|
Incorporated
by reference to the registrant’s Registration Statement on Form S-1, filed with the SEC on October 15, 2020.
|
(3)
|
Incorporated
by reference to the Original Filing (the registrant’s Annual Report on Form 10-K, filed with the SEC on March 30, 2021).
|
(4)
|
Incorporated by reference to Amendment No.
1 (the registrant’s Annual Report on Form 10-K/A, filed with the SEC on May 13, 2021).
|
|
Item
16.
|
Form
10-K Summary
|
Not
applicable.
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the registrant has duly caused this Annual Report on
Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
December 28, 2021
|
Archaea Energy Inc.
|
|
|
|
|
/s/ Nicholas Stork
|
|
Name:
|
Nicholas Stork
|
|
Title:
|
Chief Executive Officer and Director
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Name
|
|
Position
|
|
Date
|
|
|
|
|
|
/s/
Nicholas Stork
|
|
Chief Executive Officer
and Director
|
|
December
28, 2021
|
Nicholas
Stork
|
|
(Principal Executive
Officer)
|
|
|
|
|
|
|
|
/s/
Eric Javidi
|
|
Chief Financial Officer
|
|
December
28, 2021
|
Eric
Javidi
|
|
(Principal Financial
Officer)
|
|
|
|
|
|
|
|
/s/
Chad Bellah
|
|
Chief Accounting
Officer
|
|
December
28, 2021
|
Chad
Bellah
|
|
(Principal Accounting
Officer)
|
|
|
|
|
|
|
|
/s/
Daniel J. Rice, IV
|
|
Chairman of the Board
of Directors
|
|
December
28, 2021
|
Daniel
J. Rice, IV
|
|
|
|
|
|
|
|
|
|
/s/
J. Kyle Derham
|
|
Director
|
|
December
28, 2021
|
J. Kyle Derham
|
|
|
|
|
|
|
|
|
|
/s/
Kathryn Jackson
|
|
Director
|
|
December
28, 2021
|
Kathryn Jackson
|
|
|
|
|
|
|
|
|
|
/s/
Joseph Malchow
|
|
Director
|
|
December
28, 2021
|
Joseph Malchow
|
|
|
|
|
|
|
|
|
|
/s/
Scott Parkes
|
|
Director
|
|
December
28, 2021
|
Scott Parkes
|
|
|
|
|
|
|
|
|
|
/s/
James Torgerson
|
|
Director
|
|
December
28, 2021
|
James Torgerson
|
|
|
|
|
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors
of
Rice Acquisition Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated
balance sheet of Rice Acquisition Corp. (the “Company”), as of December 31, 2020, the related consolidated statements of operations,
changes in stockholders’ equity and cash flows for the period from September 1, 2020 (inception) through December 31, 2020, and
the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the
results of its operations and its cash flows for the period from September 1, 2020 (inception) through December 31, 2020, in conformity
with accounting principles generally accepted in the United States of America.
Restatement of Financial Statements
As discussed in Note 2 to the financial statements,
the 2020 financial statements have been restated to correct certain misstatements.
Basis for Opinion
These consolidated financial statements are the
responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial
statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal
control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess
the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable
basis for our opinion.
/s/ WithumSmith+Brown, PC
We have served as the Company’s auditor since
2020.
New York, New York
May 13, 2021, except for the effects of the
restatement disclosed in Note 2, as to which the date is December 28, 2021
RICE
ACQUISITION CORP.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2020
(as restated)
Assets:
|
|
|
|
Current assets:
|
|
|
|
Cash
|
|
$
|
1,335,167
|
|
Prepaid expenses
|
|
|
662,865
|
|
Total current assets
|
|
|
1,998,032
|
|
Investments held in Trust Account
|
|
|
237,308,171
|
|
Total Assets
|
|
$
|
239,306,203
|
|
|
|
|
|
|
Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’
Deficit:
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accrued expenses
|
|
$
|
118,446
|
|
Accounts payable
|
|
|
217,918
|
|
Franchise tax payable
|
|
|
65,481
|
|
Total current liabilities
|
|
|
401,845
|
|
Warrant Liabilities
|
|
|
42,588,487
|
|
Deferred legal fees
|
|
|
187,500
|
|
Deferred underwriting commissions in connection with the initial public offering
|
|
|
7,610,750
|
|
Total liabilities
|
|
|
50,788,582
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
Class A common stock; 23,725,000 shares subject to possible redemption at $10.00 per share
|
|
|
237,250,000
|
|
|
|
|
|
|
Stockholders’ Deficit:
|
|
|
|
|
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
|
|
|
-
|
|
Class A common stock, $0.0001 par value; 250,000,000 shares
authorized; 2,500 shares issued (all shares subject to possible redemption)
|
|
|
-
|
|
Class B common stock, $0.0001 par value; 20,000,000 shares
authorized; 5,931,350 shares issued and outstanding
|
|
|
593
|
|
Additional paid-in capital
|
|
|
-
|
|
Accumulated deficit
|
|
|
(47,868,812
|
)
|
Total Rice Acquisition Corp deficit
|
|
|
(47,868,219
|
)
|
|
|
|
|
|
Non-controlling interest in subsidiary
|
|
|
(864,160
|
)
|
|
|
|
|
|
Total stockholders’ deficit
|
|
|
(48,732,379
|
)
|
Total Liabilities, Class A Common Stock Subject to Possible
Redemption and Stockholders’ Deficit
|
|
$
|
239,306,203
|
|
The
accompanying notes are an integral part of these Consolidated Financial Statements.
RICE ACQUISITION CORP.
CONSOLIDATED
STATEMENT OF OPERATIONS
FOR
THE PERIOD FROM SEPTEMBER 1, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020
(as restated)
General and administrative expenses
|
|
$
|
291,301
|
|
Franchise tax expense
|
|
|
65,481
|
|
Total operating expenses
|
|
|
(356,782
|
)
|
Loss on initial issuance of warrants
|
|
|
(1,654,000
|
)
|
Transaction costs allocated to warrant liabilities
|
|
|
(787,138
|
)
|
Interest Income
|
|
|
32,171
|
|
Change in fair value of warrant liabilities
|
|
|
(19,728,480
|
)
|
Net loss
|
|
|
(22,494,229
|
)
|
Net loss attributable to non-controlling interest in subsidiary
|
|
|
(865,160
|
)
|
Net loss attributable to Rice Acquisition Corp.
|
|
$
|
(21,629,069
|
)
|
|
|
|
|
|
Weighted average shares outstanding of redeemable Class A
common stock
|
|
|
13,139,483
|
|
Basic and diluted net income per share, redeemable Class
A
|
|
$
|
(1.20
|
)
|
Weighted average shares outstanding of nonredeemable Class
A and Class B common stock (1)
|
|
|
5,683,106
|
|
Basic and diluted net loss per share, nonredeemable Class
A and Class B
|
|
$
|
(1.20
|
)
|
|
(1)
|
This
number excludes an aggregate of up to 250,000 shares of Class B common stock subject to forfeiture if the over-allotment option
is not exercised in full or in part by the underwriters. On December 5, 2020, the remaining unexercised over-allotment expired
unused and therefore the remaining 250,000 shares of Class B common stock were forfeited (see Note 5).
|
The
accompanying notes are an integral part of these Consolidated Financial Statements.
RICE
ACQUISITION CORP.
CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR
THE PERIOD FROM SEPTEMBER 1, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020
(as restated)
|
|
Common Stock
|
|
|
Additional
|
|
|
|
|
|
Non-controlling
|
|
|
Total
|
|
|
|
Class A
|
|
|
Class B
|
|
|
Paid-In
|
|
|
Accumulated
|
|
|
Interest in
|
|
|
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares (1)
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
subsidiary
|
|
|
(Deficit)
|
|
Balance - September 1, 2020 (inception)
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Issuance of Class A and Class B common stock to Sponsor
|
|
|
2,500
|
|
|
|
-
|
|
|
|
6,181,350
|
|
|
|
618
|
|
|
|
24,382
|
|
|
|
-
|
|
|
|
-
|
|
|
|
25,000
|
|
Issuance of Units in subsidiary to Sponsor
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,000
|
|
|
|
1,000
|
|
Forfeited Shares
|
|
|
-
|
|
|
|
-
|
|
|
|
(250,000
|
)
|
|
|
(25
|
)
|
|
|
25
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Accretion of Class A common stock subject to redemption
amount
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(24,407
|
)
|
|
|
(26,239,743
|
)
|
|
|
-
|
|
|
|
(26,264,150
|
)
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(21,629,069
|
)
|
|
|
(865,160
|
)
|
|
|
(22,494,229
|
)
|
Balance - December 31, 2020
|
|
|
2,500
|
|
|
$
|
-
|
|
|
|
5,931,350
|
|
|
$
|
593
|
|
|
$
|
-
|
|
|
$
|
(47,868,812
|
)
|
|
$
|
(864,160
|
)
|
|
$
|
(48,732,379
|
)
|
|
(1)
|
In
October 2020, the Company effected a dividend of Class B common stock, resulting in an aggregate of 6,181,350 shares of Class
B common stock outstanding. All shares and associated amounts have been retroactively restated to reflect the dividend (see Note
5).
|
The
accompanying notes are an integral part of these Consolidated Financial Statements.
RICE
ACQUISITION CORP.
CONSOLIDATED STATEMENT
OF CASH FLOWS
FOR
THE PERIOD FROM SEPTEMBER 1, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020
(as
restated)
Cash
Flows from Operating Activities:
|
|
|
|
Net
loss
|
|
$
|
(22,494,229
|
)
|
Adjustments
to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
Change
in fair value of warrant liabilities
|
|
|
19,728,480
|
|
General
and administrative expenses paid through Note from Sponsor
|
|
|
130,377
|
|
Loss on initial issuance of warrants
|
|
|
1,654,000
|
|
Transaction costs allocated to warrant liability
|
|
|
787,138
|
|
Interest
earned on securities held in Trust Account
|
|
|
(32,171
|
)
|
Changes
in operating assets and liabilities:
|
|
|
|
|
Prepaid
expenses
|
|
|
(662,865
|
)
|
Accounts
payable
|
|
|
44,898
|
|
Accrued
expenses
|
|
|
33,446
|
|
Franchise
tax payable
|
|
|
65,481
|
|
Net
cash used in operating activities
|
|
|
(745,445
|
)
|
|
|
|
|
|
Cash
Flows from Investing Activities
|
|
|
|
|
Cash
deposited in Trust Account
|
|
|
(237,276,000
|
)
|
Net
cash used in investing activities
|
|
|
(237,276,000
|
)
|
|
|
|
|
|
Cash
Flows from Financing Activities:
|
|
|
|
|
Proceeds
from note payable to related party
|
|
|
44,500
|
|
Repayment
of note payable to related party
|
|
|
(289,713
|
)
|
Proceeds
received from initial public offering, gross
|
|
|
237,250,000
|
|
Proceeds
received from private placement
|
|
|
6,771,000
|
|
Offering
costs paid
|
|
|
(4,419,175
|
)
|
Net
cash provided by financing activities
|
|
|
239,356,612
|
|
|
|
|
|
|
Net
change in cash
|
|
|
1,335,167
|
|
Cash
- beginning of the period
|
|
|
-
|
|
Cash
- end of the period
|
|
$
|
1,335,167
|
|
|
|
|
|
|
Supplemental
disclosure of noncash financing activities:
|
|
|
|
|
Offering
costs paid by Sponsor in exchange for issuance of Class A and Class B common stock
|
|
$
|
25,000
|
|
Non-controlling
interest in subsidiary
|
|
$
|
1,000
|
|
Offering
costs included in accounts payable
|
|
$
|
173,020
|
|
Offering
costs included in accrued expenses
|
|
$
|
85,000
|
|
Offering
costs funded with note payable - related party
|
|
$
|
114,836
|
|
Deferred
legal fees
|
|
$
|
187,500
|
|
Deferred
underwriting commissions
|
|
$
|
7,610,750
|
|
Initial classification of warrant liability
|
|
$
|
21,206,020
|
|
The
accompanying notes are an integral part of these Consolidated Financial Statements.
RICE
ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note
1 — Description of Organization and Business Operations
Rice Acquisition Corp. (the “Company”)
was incorporated in Delaware on September 1, 2020. As used herein, “the Company” or “Rice” refer to Rice Acquisition
Corp. and its majority-owned and controlled operating subsidiary, Rice Acquisition Holdings LLC (the “Opco”), unless the
context indicates otherwise. The Company was formed 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”). The Company is an
emerging growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies.
As
of December 31, 2020, the Company had not commenced any operations. All activity for the period from September 1, 2020 (inception)
through December 31, 2020 relates to the Company’s formation and the preparation of its initial public offering (the “Initial
Public Offering”) and since the closing of the Initial Public Offering, the search for a prospective initial Business Combination.
The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest.
The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived
from the Initial Public Offering (as defined below). The Company has selected December 31 as its fiscal year end.
The
Company’s sponsor is Rice Acquisition Sponsor LLC, a Delaware limited liability company (the “Sponsor”). The
registration statement for the Company’s Initial Public Offering was declared effective on October 21, 2020. On October
26, 2020, the Company consummated its Initial Public Offering of 23,725,000 units (each, a “Unit” and collectively,
the “Units”), including 2,225,000 additional Units that were issued pursuant to the underwriters’ partial exercise
of their over-allotment option (the “Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds of approximately
$237.3 million, and incurring offering costs of approximately $12.5 million, inclusive of $7.6 million in deferred underwriting
commissions (Note 6).
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”)
of 6,771,000 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”)
to the Sponsor and Atlas Point Energy Infrastructure Fund, LLC (“Atlas Point Fund”), at a price of $1.00 per Private
Placement Warrant, generating gross proceeds to the Company of approximately $6.8 million (Note 5). Each Private Placement Warrant
is exercisable to purchase one share of Rice’s Class A common stock or, in certain circumstances, one Class A Unit of Opco
together with a corresponding number of shares of Rice’s non-economic Class B common stock.
Following
the Initial Public Offering, the Public Stockholders (as defined below) will hold a direct economic equity ownership interest
in Rice in the form of shares of Class A common stock, and an indirect ownership interest in Opco through Rice’s ownership
of Class A Units of Opco. By contrast, the Initial Stockholders (as defined below) will own direct economic interests in Opco
in the form of Class B Units and a corresponding non-economic voting equity interest in Rice in the form of shares of Class B
common stock, as well as a small direct interest through the Sponsor Shares (as defined in Note 5). Sponsor Shares were purchased
for $10.00 each and, in the absence of an initial Business Combination, will generally participate in liquidation or other payments
on a pari passu basis with the Public Shares (as defined below). However, given the relatively de minimis number of Sponsor Shares
relative to Public Shares, in many cases the economic, governance or other effects of the Sponsor Shares are not material to the
holders of Class A common stock or warrants, and for simplicity, portions of this disclosure may not fully describe or reflect
these immaterial effects.
Upon
the closing of the Initial Public Offering and the Private Placement, approximately $237.3 million of the net proceeds of the
sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants in the Private Placement were
placed in a trust account (“Trust Account”) located in the United States with Continental Stock Transfer & Trust
Company acting as trustee, and invested only in U.S. “government securities” within the meaning of Section 2(a)(16)
of the Investment Company Act (as defined below) having a maturity of 185 days or less or in money market funds meeting certain
conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations,
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.
RICE
ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public
Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied
generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business
Combination successfully. The Company must complete one or more initial Business Combinations having an aggregate fair market
value of at least 80% of the net assets held in the Trust Account (excluding the amount of any deferred underwriting discount
held in Trust) at the time of the agreement to enter into the initial Business Combination. However, the Company will only complete
a Business Combination if the post-business combination company controls 50% or more of the voting securities of the target or
is otherwise not required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment
Company Act”).
The
Company will provide the holders (the “Public Stockholders”) of the Company’s Public Shares with the opportunity
to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with
a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. Unless otherwise stated herein,
the term “Public Shares” includes the 2,500 shares of Class A common stock, par value $0.0001 per share, of the Company
held by the Sponsor and forming part of the Sponsor Shares. The decision as to whether the Company will seek stockholder approval
of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Stockholders
will be entitled to redeem their Public Shares for a pro rata portion of the amount then held in the Trust Account (initially
anticipated to be $10.00 per Public Share). The per-share amount to be distributed to Public Stockholders who redeem their Public
Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in
Note 6). These Public Shares will be recorded at a redemption value and classified as temporary equity upon the completion of
the Initial Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting
Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” The Company will proceed
with a Business Combination if a majority of the shares voted are voted in favor of the Business Combination. The Company will
not redeem the Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. If a stockholder
vote is not required by law and the Company does not decide to hold a stockholder vote for business or other reasons, the Company
will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”),
conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”)
and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of
the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company
will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender
offer rules. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for
or against the proposed transaction. If the Company seeks stockholder approval in connection with a Business Combination, the
Initial Stockholders (as defined below) have agreed to vote their Founder Shares (as defined below in Note 5), Sponsor Shares
and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination. In addition, the
Initial Stockholders have agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection
with the completion of a Business Combination.
The
Amended and Restated Certificate of Incorporation provides that a Public Stockholder, together with any affiliate of such stockholder
or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares
with respect to more than an aggregate of 20% or more of the Public Shares, without the prior consent of the Company.
If
the Company is unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or
October 26, 2022 (the “Combination Period”), the Company 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 pay franchise and income taxes of the Company or Opco (less up to $100,000
of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares and Class A Units of Opco (other
than those held by Rice), which redemption will completely extinguish Public Stockholders’ rights as stockholders (including
the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of the remaining stockholders and the 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.
RICE
ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The
Sponsor, Atlas Point Fund and the Company’s officers and directors (the “Initial Stockholders”) have agreed
(i) that any Founder Shares and Sponsor Shares held by them will not be entitled to redemption rights, and they will waive any
such redemption rights for any Public Shares held by them, in connection with the completion of the initial Business Combination,
(ii) that any Founder Shares and Sponsor Shares held by them will not be entitled to redemption rights, and they will waive any
such redemption rights for any Public Shares held by them, in connection with a stockholder vote to amend our amended and restated
certificate of incorporation in a manner that would affect the substance or timing of the Company’s obligation to redeem
100% of the Public Shares if the Company have not consummated the initial Business Combination within the Combination Period,
(iii) that any Founder Shares held by them are subject to forfeiture, and thus will not be entitled to liquidating distributions
from the Trust Account, and they will waive any such rights to liquidating distributions for any Founder Shares, if the Company
fails to complete the initial Business Combination within the Combination Period (although they will be entitled to liquidating
distributions from the Trust Account with respect to any Public Shares and Sponsor Shares they hold if the Company fails to complete
the initial Business Combination within the Combination Period), and (iv) in certain limited circumstances the Class B Units of
Opco will have more limited rights to current or liquidating distributions from the Company.
The
underwriters agreed to waive their rights to the deferred underwriting commission (see Note 6) held in the Trust Account in the
event the Company does not complete a Business Combination within the Combination Period and subsequently liquidates and, in such
event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption
of the Public Shares and Sponsor Shares. In the event of such distribution, it is possible that the per share value of the residual
assets remaining available for distribution (including Trust Account assets) will be only $10.00. In order to protect the amounts
held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party
(except for the Company’s independent registered public accounting firm) for services rendered or products sold to the Company,
or a prospective target business with which the Company has entered into a letter of intent, confidentiality or other similar
agreement or business combination agreement (a “Target”), reduce the amount of funds in the Trust Account to below
the lesser of (i) $10.00 per Public Share or Class A Unit of Opco not held by Rice and (ii) the actual amount per Public Share
or Class A Unit of Opco not held by Rice held in the Trust Account as of the date of the liquidation of the Trust Account, if
less than $10.00 per Public Share or Class A Unit of Opco not held by Rice due to reductions in the value of the trust assets,
less taxes payable, provided that such liability will not apply to any claims by a third party or Target that executed a waiver
of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable), nor will it apply to
any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities,
including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). The Company will seek to
reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to
have all vendors, service providers (except for the Company’s independent registered public accounting firm), prospective
target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right,
title, interest or claim of any kind in or to monies held in the Trust Account.
Basis
of Presentation and Principles of Consolidation
The Company’s consolidated financial statements
have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”)
and include all adjustments necessary for the fair presentation of the Company’s financial position for the periods presented.
The
consolidated financial statements include the accounts of the Company and its majority-owned and controlled operating subsidiary after
elimination of all intercompany transactions and balances as of December 31, 2020. The ownership interest of noncontrolling participants
in the operating subsidiary is included as a separate component of stockholders’ equity. The noncontrolling participants’
share of the net loss is included as “Net loss attributable to noncontrolling interest in Opco” on the accompanying consolidated
statement of operations.
RICE
ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Emerging
Growth Company
The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart
Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting
requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to,
not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced
disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the
requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute
payments not previously approved.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared
effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition
period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable.
The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised
and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt
the new or revised standard at the time private companies adopt the new or revised standard.
This
may make comparison of the Company’s consolidated 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.
Liquidity
and Capital Resources
As
of December 31, 2020, the Company had approximately $1.3 million in its operating bank account and working capital of approximately
$1.6 million (including tax obligations of approximately $32,000 that may be paid using the withdrawal of interest earned
from Trust Account).
The
Company’s liquidity needs to date had been satisfied through the payment of $26,000 from the Sponsor to purchase the Founder
Shares and Sponsor Shares (see Note 5), the loan under the Note of approximately $290,000 (see Note 5), and the net proceeds from
the consummation of the Private Placement not held in the Trust Account. The Company repaid the Note in full on November 10, 2020.
In addition, in order to finance transaction costs in connection with a Business Combination, the Company’s officers, directors
and initial stockholders may, but are not obligated to, provide the Company Working Capital Loans (see Note 5). As of December
31, 2020, there were no amounts outstanding under any Working Capital Loans.
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, the
Company 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.
RICE
ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Risk
and Uncertainties
On
January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus
(the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase
in exposure globally. The full impact of the COVID-19 outbreak continues to evolve. The impact of the COVID-19 outbreak on the Company’s
results of operations, financial position and cash flows will depend on future developments, including the duration and spread of the
outbreak and related advisories and restrictions. These developments and the impact of the COVID-19 outbreak on the financial markets
and the overall economy are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted
for an extended period, the Company’s results of operations, financial position and cash flows may be materially adversely affected.
Additionally, the Company’s ability to complete an Initial Business Combination may be materially adversely affected due to significant
governmental measures being implemented to contain the COVID-19 outbreak or treat its impact, including travel restrictions, the shutdown
of businesses and quarantines, among others, which may limit the Company’s ability to have meetings with potential investors or
affect the ability of a potential target company’s personnel, vendors and service providers to negotiate and consummate an Initial
Business Combination in a timely manner. The Company’s ability to consummate an Initial Business Combination may also be dependent
on the ability to raise additional equity and debt financing, which may be impacted by the COVID-19 outbreak and the resulting market
downturn. The consolidated financial statements does not include any adjustments that might result from the outcome of this uncertainty.
Note 2 —
Restatement of Previously Issued Financial Statements
The Company concluded it should restate its
previously issued financial statements by amending Amendment No. 1 to its Annual Report on Form 10-K/A, filed with the SEC on May 13,
2021, to classify all Class A common stock subject to possible redemption in temporary equity. In accordance with accounting guidance
on redeemable equity instruments, ASC 480, paragraph 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. The Company had previously classified a portion of its
Class A common stock in permanent equity, or total stockholders’ equity. Although the Company did not specify a maximum redemption
threshold, its charter currently provides that, the Company will not redeem its public shares in an amount that would cause its net tangible
assets to be less than $5,000,001. Previously, the Company did not consider redeemable stock classified as temporary equity as part of
net tangible assets. Effective with these financial statements, the Company revised this interpretation to include temporary equity in
net tangible assets. Also, in connection with the change in presentation for the Class A common stock subject to possible redemption,
the Company also restated its earnings per share calculation to allocate income and losses shared pro rata between the two classes of
shares. This presentation contemplates a Business Combination as the most likely outcome, in which case, both classes of shares share
pro rata in the income and losses of the Company. As a result, the Company restated its previously filed financial statements to present
all redeemable Class A common stock as temporary equity and to recognize accretion from the initial book value to redemption value at
the time of its Initial Public Offering and in accordance with ASC 480. The Company’s previously filed financial statements that
contained the error were initially reported in the Company’s Form 8-K filed with the SEC on October 30, 2020 (the “Post-IPO
Balance Sheet”), and the Company's Annual Report on 10-K for the annual period ended December 31, 2020, which were all previously
restated in the Company's Amendment No. 1 to its Form 10-K as filed with the SEC on May 13, 2021 (“the 2020 Affected Periods”),
as well as the Company’s Form 10-Qs for the quarterly periods ended March 31, 2021, and June 30, 2021 (collectively, the “Affected
Periods”). These financial statements restate the Company’s previously issued audited financial statements
covering the periods through December 31, 2020. The quarterly periods ended March 31, 2021, and June 30, 2021, will be restated with
amendments to the Company’s Form 10-Qs for the quarterly periods ended March 31, 2021 and June 30, 2021.
RICE
ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Impact of the Restatements
The impact of the restatement on the balance
sheet, statement of operations and statement of cash flows for the 2020 Affected Periods is presented below.
The impact on the Post-IPO Balance Sheet is presented below:
IPO Balance Sheet - As Restated
As of October 26, 2020
|
|
As Previously
Reported in
Amendment No. 1
to Form 10-K
|
|
|
Adjustment
|
|
|
As Restated
|
|
Total assets
|
|
$
|
240,445,800
|
|
|
|
|
|
|
$
|
240,445,800
|
|
Total liabilities
|
|
$
|
31,915,097
|
|
|
|
|
|
|
$
|
31,915,097
|
|
Class A common stock subject to possible redemption
|
|
|
203,530,696
|
|
|
|
33,719,304
|
|
|
|
237,250,000
|
|
Preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Class A common stock
|
|
|
337
|
|
|
|
(337
|
)
|
|
|
-
|
|
Class B common stock
|
|
|
618
|
|
|
|
-
|
|
|
|
618
|
|
Additional paid-in capital
|
|
|
7,669,592
|
|
|
|
(7,669,592
|
)
|
|
|
-
|
|
Accumulated deficit
|
|
|
(2,572,403
|
)
|
|
|
(26,049,375
|
)
|
|
|
(28,621,778
|
)
|
Total Rice Acquisition Corp equity (deficit)
|
|
|
5,098,144
|
|
|
|
(33,719,304
|
)
|
|
|
(28,621,160
|
)
|
Non-controlling interest in subsidiary
|
|
|
(98,137
|
)
|
|
|
|
|
|
|
(98,137
|
)
|
Total stockholders’ equity (deficit)
|
|
$
|
5,000,007
|
|
|
$
|
(33,719,304
|
)
|
|
$
|
(28,719,297
|
)
|
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Equity (Deficit)
|
|
$
|
240,445,800
|
|
|
$
|
-
|
|
|
$
|
240,445,800
|
|
The change in the carrying value of the redeemable shares of Class
A common stock in the consolidated financial statements for the period ended December 31, 2020 resulted in a decrease of approximately
$27.5 million in additional paid-in capital and an increase of approximately $26.2 million to accumulated deficit, as well as a reclassification
of 5,373,238 shares of Class A common stock from permanent equity to temporary equity as presented below:
December 31, 2020
As of December 31, 2020
|
|
As Previously
Reported in
Amendment No. 1
to Form 10-K
|
|
|
Adjustment
|
|
|
As Restated
|
|
Total assets
|
|
$
|
239,306,203
|
|
|
|
|
|
|
$
|
239,306,203
|
|
Total liabilities
|
|
$
|
50,788,582
|
|
|
|
|
|
|
$
|
50,788,582
|
|
Class A common stock subject to possible redemption
|
|
|
183,517,620
|
|
|
|
53,732,380
|
|
|
|
237,250,000
|
|
Preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Class A common stock
|
|
|
538
|
|
|
|
(538
|
)
|
|
|
-
|
|
Class B common stock
|
|
|
593
|
|
|
|
-
|
|
|
|
593
|
|
Additional paid-in capital
|
|
|
27,492,099
|
|
|
|
(27,492,099
|
)
|
|
|
-
|
|
Accumulated deficit
|
|
|
(21,629,069
|
)
|
|
|
(26,239,743
|
)
|
|
|
(47,868,812
|
)
|
Total Rice Acquisition Corp equity (deficit)
|
|
|
5,864,161
|
|
|
|
(53,732,380
|
)
|
|
|
(47,868,219
|
)
|
Non-controlling interest in subsidiary
|
|
|
(864,160
|
)
|
|
|
|
|
|
|
(864,160
|
)
|
Total stockholders’ equity (deficit)
|
|
$
|
5,000,001
|
|
|
$
|
(53,732,380
|
)
|
|
$
|
(48,732,379
|
)
|
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Equity (Deficit)
|
|
$
|
239,306,203
|
|
|
$
|
-
|
|
|
$
|
239,306,203
|
|
RICE
ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The impact of the restatement to the previously reported as restated
statement of cash flows for the period ended December 31, 2020 is presented below:
|
For the period from September 1, 2020 (inception) through December 31,
2020
|
|
As Previously Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Supplemental Disclosure of Noncash Financing Activities:
|
|
|
|
|
|
|
|
|
|
Initial value of Class A common stock subject to possible redemption
|
|
$
|
193,104,980
|
|
|
$
|
(193,104,980
|
)
|
|
$
|
-
|
|
Change in value of Class A common stock subject to possible redemption
|
|
$
|
(9,587,360
|
)
|
|
$
|
9,587,360
|
|
|
$
|
-
|
|
The impact to the reported amounts of weighted average shares outstanding
and basic and diluted earnings per common share for the period ended December 31, 2020 is presented below:
|
|
Earnings Per Share for Class A common stock
|
|
|
|
As Previously Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
For the period from September 1, 2020 (inception) through December 31, 2020
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(22,494,229
|
)
|
|
$
|
-
|
|
|
$
|
(22,494,229
|
)
|
Weighted average shares outstanding
|
|
|
23,725,000
|
|
|
|
(10,585,517
|
)
|
|
|
13,139,483
|
|
Basic and diluted earnings per share
|
|
$
|
-
|
|
|
$
|
(1.20
|
)
|
|
$
|
(1.20
|
)
|
|
|
Earnings Per Share for Class B common stock
|
|
|
|
As Previously Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
For the period from September 1, 2020 (inception) through December 31, 2020
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(22,494,229
|
)
|
|
$
|
-
|
|
|
$
|
(22,494,229
|
)
|
Weighted average shares outstanding
|
|
|
5,685,606
|
|
|
|
(2,500
|
)
|
|
|
5,683,106
|
|
Basic and diluted earnings per share
|
|
$
|
(3.80
|
)
|
|
$
|
2.60
|
|
|
$
|
(1.20
|
)
|
RICE
ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note
3 — Summary of Significant Accounting Policies
Use
of Estimates
The
preparation of consolidated financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date
of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Making estimates
requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition,
situation or set of circumstances that existed at the date of the consolidated financial statements, which management considered in formulating
its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ
significantly from those estimates.
Cash
and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
There are no cash equivalents as of December 31, 2020.
Investments
Held in Trust Account
Upon
the closing of the Initial Public Offering and the Private Placement, the Company was required to place net proceeds of the Initial
Public Offering and certain of the proceeds of the Private Placement in a Trust Account, which may be invested in U.S. government
securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less,
or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest
only in direct U.S. government treasury obligations, as determined by management of the Company, until the earlier of: (i) the
completion of a Business Combination and (ii) the distribution of the Trust Account. Investments held in Trust Account are classified
as trading securities, which are presented on the balance sheet at fair value at the end of each reporting period. Gains and losses
resulting from the change in fair value of investments held in Trust Account are included in gain on marketable securities, dividends
and interest held in Trust Account in the accompanying statement of operations. The estimated fair values of investments held
in Trust Account are determined using available market information, other than for investments in open-ended money market funds
with published daily net asset values (“NAV”), in which case the Company uses NAV as a practical expedient to fair
value. The NAV on these investments is typically held constant at $1.00 per unit.
RICE
ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution,
which, at times, may exceed the Federal Depository Insurance Coverage of $250,000, and investments held in Trust Account. As of December
31, 2020, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant
risks on such accounts.
Fair
Value Measurement
Fair
value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction
between market participants at the measurement date. U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes
the inputs used in measuring fair value.
The
hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level
1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
|
●
|
Level
1, defined as observable inputs such as quoted prices for identical instruments in active markets;
|
|
●
|
Level
2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted
prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not
active; and
|
|
●
|
Level
3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are
unobservable.
|
In
some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy.
In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest
level input that is significant to the fair value measurement.
Fair
Value of Financial Instruments
As
of December 31, 2020, the carrying values of cash, accounts payable, accrued expenses, and franchise tax payable approximate their
fair values due to the short-term nature of the instruments. As of December 31, 2020, the Company’s portfolio of investments
held in the Trust Account is comprised of investments in U.S. Treasury securities with an original maturity of 185 days or less,
which are recognized at fair value. The fair value of investments held in Trust Account is determined using quoted prices in active
markets.
Offering
Costs Associated with the Initial Public Offering
Offering
costs consist of underwriting, legal, accounting, underwriting commissions and other costs incurred that were directly related to the
Initial Public Offering. Offering costs were 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 derivative warrant liabilities
were expensed as incurred and presented as non-operating expenses in the statements of operations. Offering costs associated with the
Class A common stock issued were charged against the carrying value of the Class A common stock subject to possible redemption upon the
completion of the Initial Public Offering. The Company classifies deferred underwriting commissions as non-current liabilities as their
liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.
RICE
ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Class
A Common Stock Subject to Possible Redemption
The Company accounts for its Class A common
stock subject to possible redemption in accordance with the guidance in FASB ASC Topic 480 “Distinguishing Liabilities from Equity.”
Shares of Class A common stock subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair
value. Shares of 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 the Company’s
control) are classified as temporary equity. The Company’s Class A common stock features certain redemption rights that are considered
to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, as of December 31,
2020, 23,725,000 shares of Class A common stock subject to possible redemption are presented as temporary equity, outside of the
stockholders’ equity section of the Company’s consolidated balance sheet.
Under ASC 480-10-S99,
the Company has elected to recognize changes in the redemption value immediately as they occur and adjust the carrying value of the security
to equal the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were
also the redemption date for the security. Accordingly, effective with the closing of the Initial Public Offering, the Company recognized
the accretion from the initial book value to redemption amount, which resulted in charges against paid-in capital (to the extent available)
and accumulated deficit.
Net Income (Loss) Per Share of Common
Stock
The Company complies
with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares,
which are referred to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes
of shares. Net income (loss) per common share is calculated by dividing the net income (loss) by the weighted average shares of common
stock outstanding for the respective period.
The calculation of diluted net income (loss)
per share does not consider the effect of the warrants underlying the Units sold in the Initial Public Offering (including the consummation
of the over-allotment) and the private placement warrants to purchase an aggregate of 18,633,500 shares of Class A common stock,
because their exercise is contingent upon future events and their inclusion would be anti-dilutive under the treasury stock method. As
a result, diluted net income (loss) per share is the same as basic net income (loss) per share for the year ended December 31, 2020.
Accretion associated with the redeemable Class A common stock is excluded from earnings per share as the redemption value approximates
fair value.
The table below presents a reconciliation
of the numerator and denominator used to compute basic and diluted net loss per share for each class of common stock:
|
|
For the Year Ended December 31, 2020
|
|
|
|
Class A
|
|
|
Class B
|
|
Basic and diluted net loss per common share:
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
Allocation of net loss
|
|
$
|
(15,702,544
|
)
|
|
$
|
(6,791,685
|
)
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average common shares outstanding
|
|
|
13,139,483
|
|
|
|
5,683,106
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share
|
|
$
|
(1.20
|
)
|
|
$
|
(1.20
|
)
|
Income
Taxes
The
Company complies with the accounting and reporting requirements of Financial Accounting Standards Board (“FASB”) Accounting
Standard Codification, or FASB ASC, 740, “Income Taxes,” which requires an asset and liability approach to financial
accounting and reporting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established,
when necessary, to reduce deferred tax assets to the amount expected to be realized.
FASB
ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement
of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not
to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized
tax benefits as income tax expense.
RICE
ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Derivative warrant liabilities
The Company does not
use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its 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.
The Company accounts
for its 18,633,500 common stock warrants issued in connection with its Initial Public Offering (11,862,500) and Private Placement (6,771,000)
as derivative warrant liabilities in accordance with ASC 815-40. Accordingly, the Company recognizes the warrant instruments as liabilities
at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each
balance sheet date until exercised, and any change in fair value is recognized in the Company’s statement of operations. The fair
value of warrants issued by the Company in connection with the Public Offering and Private Placement has been estimated using Monte-Carlo
simulations at each measurement date.
Recent
Accounting Pronouncements
Management
does not believe that any recently issued, but not yet effective, accounting pronouncement if currently adopted would have a material
effect on the Company’s consolidated financial statements.
Note
4 — Initial Public Offering
On
October 26, 2020, the Company consummated its Initial Public Offering of 23,725,000 Units, including 2,225,000 Over-Allotment
Units that were issued pursuant to the underwriters’ partial exercise of their over-allotment option, at $10.00 per Unit,
generating gross proceeds of approximately $237.3 million, and incurring offering costs of approximately $12.5 million, inclusive
of $7.6 million in deferred underwriting commissions. Of the 23,725,000 Units sold, affiliates of the Sponsor and Atlas Point
Fund had purchased 1,980,000 Units (the “Affiliated Units”) and 2,128,500 Units (the “Atlas Units”), respectively,
at the Initial Public Offering price. The underwriters did not receive any underwriting discounts or commissions on the 1,980,000
Affiliated Units.
Each
Unit consists of one share of Class A common stock and one-half of one redeemable warrant (each, a “Public Warrant”).
Each whole Public Warrant entitles the holder to purchase one share of Rice’s Class A common stock at a price of $11.50
per share, subject to adjustment (see Note 7).
Note
5 — Related Party Transactions
Founder
Shares and Sponsor Shares
In
September 2020, the Sponsor paid $25,000 to cover for certain of expenses of the Company in exchange for issuance of (i) 5,750,100
shares of Rice’s Class B common stock, par value $0.0001 per share, and (ii) 2,500 shares of Rice’s Class A common
stock, par value $0.0001 per share. In September 2020, the Sponsor received 5,750,000 Class B Units of Opco (which are profits
interest units only). In October 2020, the Sponsor forfeited 90,000 Class B Units of Opco, and 30,000 Class B Units of Opco were
issued to each of the independent directors. The Sponsor transferred a corresponding number of shares of Class B common
stock to the independent directors. In October 2020, the Company effected a dividend, resulting in an aggregate of (i)
6,181,350 shares of Rice’s Class B common stock, and (ii) 2,500 shares of Rice’s Class A common stock outstanding.
All shares and associated amounts have been retroactively restated to reflect the dividend. Upon a liquidation of Opco, distributions
generally will be made to the holders of Opco Units on a pro rata basis, subject to certain limitations with respect to the Class
B Units of Opco, including that, prior to the completion of the initial Business Combination, such Class B Units will not be entitled
to participate in a liquidating distribution.
Also,
in September 2020, Rice paid $25,000 to Opco in exchange for issuance of 2,500 Class A Units of Opco. In September 2020, the Sponsor
received 100 Class A Units of Opco in exchange for $1,000.
The
Company refers to the 6,181,250 shares of Class B common stock and corresponding number of Class B Units of Opco (or the Class
A Units of Opco into which such Class B Units will convert) collectively as the “Founder Shares”. The Founder Shares
consist of Class B Units of Opco (and any Class A Units of Opco into which such Class B Units are converted) and a corresponding
number of shares of Class B common stock, which together will be exchangeable for shares of Rice’s Class A common stock
after the time of the initial Business Combination on a one-for-one basis, subject to adjustment as provided herein. The Company
refers to the 2,500 shares of Rice’s Class A common stock and the 100 Class A Units of Opco and a corresponding number of
shares of Rice’s non-economic Class B common stock (which together will be exchangeable into shares of Class A common stock
after the initial Business Combination on a one-for-one basis) collectively as the “Sponsor Shares”.
Upon
the closing of the Initial Public Offering, the Sponsor forfeited 309,063 Class B Units of Opco, and 309,063 Class B Units of
Opco were issued to Atlas Point Fund. The Sponsor transferred a corresponding number of shares of Class B common stock to Atlas
Point Fund.
RICE
ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The
Initial Stockholders agreed to forfeit up to 806,250 Founder Shares to the extent that the over-allotment option is not exercised
in full by the underwriters, so that the Founder Shares will represent 20.0% of the Company’s issued and outstanding shares
after the Initial Public Offering (excluding the Sponsor Shares). On October 26, 2020, the underwriters partially exercised the
over-allotment option to purchase as additional 2,225,000 Units; thus, only 250,000 Founder Shares remain subject to forfeiture
to the extent the over-allotment option is fully exercised. On December 5, 2020, the remaining unexercised over-allotment expired
unused and therefore the remaining 250,000 shares of Class B common stock were forfeited.
The
Class B Units of Opco will convert into Class A Units of Opco in connection with the initial Business Combination on a one-for-one
basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like and subject to
further adjustment as provided herein. The Founder Shares consist of Class B Units of Opco (and any Class A Units of Opco into
which such Class B Units are converted) and a corresponding number of shares of Class B common stock, which together will be exchangeable
for shares of Class A common stock after the time of the initial Business Combination on a one-for-one basis (subject to adjustment
for stock splits, stock dividends, reorganizations, recapitalizations and the like), and subject to further adjustment as provided
herein. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in
excess of the amounts sold in the Initial Public Offering and related to the closing of the Business Combination (other than the
forward purchase securities), the number of Class A Units of Opco into which the Class B Units of Opco will convert may be adjusted
(unless the holders of a majority of the outstanding Founder Shares agree to waive such adjustment with respect to any such issuance
or deemed issuance) so that the number of shares of Class A common stock issuable upon exchange of all Founder Shares will equal,
in the aggregate, on an as-exchanged basis, 20% of the sum of the total outstanding shares of Rice’s common stock upon completion
of the Initial Public Offering, plus all shares of Class A common stock and equity-linked securities issued or deemed issued in
connection with the Business Combination (excluding the forward purchase securities and any shares or equity-linked securities
issued, or to be issued, to any seller in the Business Combination and excluding the Sponsor Shares). In addition, the number
of outstanding shares of Class B common stock will be adjusted through a stock split or stock dividend so that the total number
of outstanding shares of Class B common stock corresponds to the total number of Class A Units of Opco outstanding (other than
those held by Rice) plus the total number of Class A Units Opco into which the Class B Units of Opco are entitled to convert.
The
Initial Stockholders agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares held by
them (and any shares of Class A common stock acquired upon exchange of Founder Shares) until one year after the date of the consummation
of the initial Business Combination or earlier if, subsequent to the initial Business Combination, (i) the last sale price of
the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations
and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business
Combination or (ii) the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which
results in all of the stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Private
Placement Warrants
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the Private Placement of 6,771,000 Private Placement
Warrants to the Sponsor and Atlas Point Fund, at a price of $1.00 per Private Placement Warrant, generating gross proceeds to
the Company of approximately $6.8 million.
Each
whole Private Placement Warrant is exercisable for a price of $11.50 to purchase one share of Rice’s Class A common stock
or, in certain circumstances, one Class A Unit of Opco together with a corresponding number of shares of Rice’s non-economic
Class B common stock. A portion of the proceeds from the sale of the Private Placement Warrants was added to the proceeds from
the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination
Period, the Private Placement Warrants will expire worthless. The Private Placement Warrants will be non-redeemable and exercisable
on a cashless basis so long as they are held by the Sponsor, Atlas Point Fund or their permitted transferees.
With
certain limited exceptions, the Private Placement Warrants and the securities underlying such warrants will not be transferable,
assignable or saleable until 30 days after the completion of the initial Business Combination.
RICE
ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Related
Party Loans
On
September 1, 2020, the Sponsor agreed to loan the Company an aggregate of up to $300,000 pursuant to a promissory note (the “Note”).
This loan is non-interest bearing and payable upon the completion of the Initial Public Offering. The Company borrowed an aggregate
of approximately $290,000 under the Note. The outstanding balance of the Note was paid in full as of November 10, 2020.
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 Company’s officers and directors may, but are not obligated to, loan the Company funds as may
be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company will repay the
Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would
be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company
may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust
Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation of
a Business Combination or, at the lender’s discretion, up to $1.5 million of such Working Capital Loans may be convertible
into warrants of the post Business Combination entity at a price of $1.00 per warrant. The warrants would be identical to the
Private Placement Warrants. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined
and no written agreements exist with respect to such loans. To date, the Company had no borrowings under the Working Capital Loans.
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 the Company’s behalf such as identifying potential target businesses and performing due
diligence on suitable Business Combinations. The Company’s audit committee will review on a quarterly basis all payments
that were made to the Sponsor, officers or directors, or their affiliates.
Administrative
Support Agreement
Commencing
on the date the Company’s securities are first listed on NYSE, the Company agreed to pay the Sponsor a total of $10,000
per month for office space, utilities, secretarial support and administrative services provided to members of the management team.
Upon completion of the initial Business Combination or the Company’s liquidation, the Company will cease paying these monthly
fees.
Note
6 — Commitments and Contingencies
Forward
Purchase Agreement
The
Company entered into an amended and restated forward purchase agreement (the “Forward Purchase Agreement”) with Atlas
Point Fund, pursuant to which Atlas Point Fund, which is a fund managed by CIBC National Trust but is not affiliated with the
Company or sponsor, agreed to purchase up to $75,000,000 of either (i) a number of units (the “forward purchase units”),
consisting of one share of Class A common stock (the “forward purchase shares”) and one-third of one warrant (the
“forward purchase warrants”), for $10.00 per unit or (ii) a number of forward purchase shares for $9.67 per share (such
forward purchase shares valued at $9.67 per share or the forward purchase units, as the case may be, the “forward purchase
securities”), in a private placement that will close simultaneously with the closing of the Initial Business Combination. The
forward purchase warrants will have the same terms as the public warrants and the forward purchase shares will be identical to the
shares of Class A common stock included in the units being sold in this offering, except the forward purchase shares and the forward
purchase warrants will be subject to transfer restrictions and certain registration rights and the forward purchase units will
consist of only one-third of one forward purchase warrant. The funds from the sale of the forward purchase securities may be used as
part of the consideration to the sellers in the Initial Business Combination, and any excess funds may be used for the working
capital needs of the post-transaction company. This agreement is independent of the percentage of stockholders electing to redeem
their public shares and may provide the Company with an increased minimum funding level for the Initial Business Combination. The
forward purchase agreement is subject to conditions, including the Company extending an offer to Atlas Point Fund to purchase the
forward purchase securities, Atlas Point Fund giving the Company its irrevocable written consent to purchase the forward purchase
securities no later than five days after the Company notifies it of the Company’s intention to meet to consider entering into
a definitive agreement for a proposed Business Combination. Atlas Point Fund may grant or withhold its consent to the purchase
entirely within its sole discretion. Accordingly, if Atlas Point Fund does not consent to the purchase, it will not be obligated to
purchase the forward purchase securities.
RICE
ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Registration
Rights
The
holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans,
if any, (and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants that
may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares) are entitled to registration
rights pursuant to a registration rights agreement. The holders of these securities are entitled to make up to three demands,
excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back”
registration rights with respect to registration statements filed subsequent to the completion of the initial Business Combination.
Additionally, pursuant to the Forward Purchase Agreement, the Company agreed to grant certain registration rights to Atlas Point
Fund in connection with the issuance of any forward purchase units upon the completion of the Company’s Business Combination.
The Company will bear the expenses incurred in connection with the registration of such securities.
Underwriting
Agreement
The
Company granted the underwriters a 45-day option from the date of Initial Public Offering to purchase up to 3,225,000 additional
Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions.
On October 26, 2020, the underwriters partially exercised the over-allotment option to purchase an additional 2,225,000 Units.
The
underwriters were entitled to an underwriting discount of $0.20 per Unit (excluding the Affiliated Units purchased). As a result
of affiliates of the Sponsor purchasing 1,980,000 Units, the Company paid an underwriting discount of approximately $4.3 million
in the aggregate upon the closing of the Initial Public Offering. In addition, the underwriters will be entitled to a deferred
fee of $0.35 per Unit (excluding the Affiliated Units), or approximately $7.6 million 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.
Note 7
— Class A Common Stock Subject to Possible Redemption
The Company’s Class A common stock features
certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of future events.
As of December 31, 2020, there were 23,727,500 shares of Class A common stock outstanding, of which 23,725,000 were subject to possible
redemption and are classified outside of permanent equity in the balance sheet.
The Class A common stock issued in the Initial
Public Offering and issued as part of the Over-Allotment Units were recognized in Class A common stock subject to possible redemption
as follows:
Gross proceeds from initial
public offering
|
|
$
|
237,250,000
|
|
Less:
|
|
|
|
|
Fair value of Public
Warrants at issuance
|
|
|
(14,435,020
|
)
|
Offering costs
allocated to Class A common stock subject to possible redemption
|
|
|
(11,829,130
|
)
|
Plus:
|
|
|
|
|
Accretion
on Class A common stock subject to possible redemption amount
|
|
|
26,264,150
|
|
Class A common
stock subject to possible redemption
|
|
$
|
237,250,000
|
|
Note 8 —
Stockholders’ Deficit
Preferred
Stock — The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per share, with such
designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of
directors. As of December 31, 2020, there were no shares of preferred stock issued or outstanding.
Class A Common
Stock — As of December 31, 2020, the Company is authorized to issue 250,000,000 shares of Class A common stock
with a par value of $0.0001 per share. As of December 31, 2020, there were 23,737,500 shares of Class A common stock issued and
outstanding, of which 23,725,000 shares are subject to possible redemption and therefore classified outside of permanent equity in
the accompanying consolidated balance sheet.
RICE
ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Class
B Common Stock — The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value
of $0.0001 per share. On September 2, 2020, the Company issued 5,750,100 shares of Class B common stock. In October 2020, the
Company effected a dividend of Class B common stock, resulting in an aggregate of 6,181,350 shares of Rice’s Class B common
stock outstanding. All shares and associated amounts have been retroactively restated to reflect the dividend. Of the 6,181,350
shares of Rice’s Class B common stock outstanding, up to 806,250 shares of Class B common stock were subject to forfeiture
to the extent that the underwriters’ over-allotment option is not exercised in full or in part, so that the Initial Stockholders
will collectively own 20% of the Company’s issued and outstanding common stock after the Initial Public Offering (excluding
the Sponsor Shares). On October 26, 2020, the underwriters partially exercised the over-allotment option to purchase an additional
2,225,000 Units; thus, only 250,000 Founder Shares remained subject to forfeiture to the extent the over-allotment option is fully
exercised. On December 5, 2020, the remaining underwriters’ over-allotment option expired unexercised; thus, 250,000 Founder
shares held by the Sponsor were forfeited for no consideration. As of December 31, 2020, there were 5,931,350 shares of Class
B common stock issued and outstanding.
Holders
of the Class A common stock and holders of the Class B common stock will vote together as a single class on all matters submitted
to a vote of the stockholders, except as required by law. Each share of common stock will have one vote on all such matters. Prior
to the initial Business Combination, only holders of Class B common stock will have the right to vote on the election of directors.
Note
9 — Warrant Liability
Warrants —
Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation
of the Units and only whole Public Warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days
after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering; provided in each
case that the Company has an effective registration statement under the Securities Act covering the shares of Class A common stock
issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company permits holders
to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities
Act). The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of the
initial Business Combination, it will use its best efforts to file with the SEC and have an effective registration statement covering
the shares of the Class A common stock issuable upon exercise of the warrants and to maintain a current prospectus relating to
those shares of the Class A common stock until the warrants expire or are redeemed. If a registration statement covering the shares
of the Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day after
the closing of the initial Business Combination, warrant holders may, until such time as there is an effective registration statement
and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on
a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption.
The
warrants have an exercise price of $11.50 per share, subject to adjustments, and will expire five years after the completion of
a Business Combination or earlier upon redemption or liquidation. In addition, if (x) the Company issues additional shares of
Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of the initial Business
Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price
or effective issue price to be determined in good faith by the board and, in the case of any such issuance to the Sponsor or its
affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such
issuance) (the “Newly Issued Price”), the exercise price of the warrants will be adjusted (to the nearest cent) to
be equal to 115% of the Newly Issued Price.
RICE
ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Redemption
of warrants when our Class A common stock equals or exceeds $18.00 per share:
Once
the warrants become exercisable, the Company may redeem the outstanding warrants for cash (except as described herein with respect
to the Private Placement Warrants):
|
●
|
in
whole and not in part;
|
|
●
|
at
a price of $0.01 per warrant;
|
|
●
|
upon
a minimum of 30 days’ prior written notice of redemption; and
|
|
●
|
if,
and only if, the last sale price of the Class A common stock equals or exceeds $18.00
per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations
and the like) for any 20 trading days within a 30-trading day period ending on the third
trading day prior to the date on which the Company sends the notice of redemption to
the warrant holders.
|
The
Company will not redeem the warrants for cash unless a registration statement under the Securities Act covering the shares of
Class A common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of
Class A common stock is available throughout the 30-day redemption period, except if the warrants may be exercised on a cashless
basis and such cashless exercise is exempt from registration under the Securities Act. If the Company calls the warrants for redemption
for cash as described above, the management will have the option to require all holders that wish to exercise warrants to do so
on a “cashless basis.”
Redemption
of warrants when our Class A common stock equals or exceeds $10.00 per share:
Once
the warrants become exercisable, the Company may redeem the outstanding warrants (except as described herein with respect to the
Private Placement Warrants):
|
●
|
in
whole and not in part;
|
|
●
|
at
$0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption
provided that holders will be able to exercise their warrants on a cashless basis prior
to redemption and receive that number of shares of Class A common stock determined by
reference to an agreed table based on the redemption date and the “fair market
value” of Class A common stock;
|
|
●
|
if
and only if, the last sale price of Class A common stock equals or exceeds $10.00 per
share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations
and the like) on the trading day prior to the date on which the Company sends the notice
of redemption to the warrant holders; and
|
|
●
|
if,
and only if, there is an effective registration statement covering the issuance of shares
of Class A common stock issuable upon exercise of the warrants and a current prospectus
relating thereto available throughout the 30- day period after written notice of redemption
is given.
|
The
“fair market value” of the Class A common stock shall mean the volume weighted average price of the Class A common
stock as reported during the 10 trading days ending on the third trading day prior to the date on which the notice of redemption
is sent to the holders of warrants.
None
of the Private Placement Warrants will be redeemable by the Company so long as they are held by the initial purchasers of the
Private Placement Warrants or their permitted transferees.
In
no event will the Company be required to net cash settle any warrant. If the Company is unable to complete a Business Combination
within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive
any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held
outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
See Note 9 for additional disclosures regarding the valuation of the warrant liabilities.
RICE
ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note
10 — Fair Value Measurements
The
fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would
have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction
between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company
seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable
inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is
used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
|
Level 1:
|
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
|
|
|
|
Level 2:
|
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
|
|
|
|
|
Level 3:
|
Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
|
The
Company classifies its U.S. Treasury and equivalent securities as held-to-maturity in accordance with ASC Topic 320 “Investments
- Debt and Equity Securities.” Held-to-maturity securities are those securities which the Company has the ability and intent to
hold until maturity. Held-to-maturity treasury securities are recorded at amortized cost on the accompanying balance sheet and adjusted
for the amortization or accretion of premiums or discounts.
As of December 31, 2020,
assets held in the Trust Account were comprised of $237,307,717 in U.S. Treasury securities. During the period from October 26, 2020
(inception) to December 31, 2020, the Company did not withdraw any interest income from the Trust Account.
The following table
presents information about the Company’s held-to-maturity assets that are measured at fair value on a recurring basis as of
December 31, 2020 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.
The gross holding gains and fair value of held-to-maturity securities as of December 31, 2020, are as follows:
|
|
Fair Value Measured as of December 31, 2020
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments held in Trust Account - U.S. Treasury Securities
|
|
$
|
237,307,717
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
237,307,717
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant Liability - Public Warrants
|
|
|
|
|
|
|
|
|
|
|
27,046,487
|
|
|
|
27,046,487
|
|
Warrant Liability - Private Warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
15,542,000
|
|
|
|
15,542,000
|
|
Total fair value
|
|
$
|
237,307,717
|
|
|
$
|
-
|
|
|
$
|
42,588,487
|
|
|
$
|
279,896,204
|
|
The
Warrants were accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the Company’s
balance sheet. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented
within change in fair value of warrant liabilities in the statement of operations.
Initial Measurement
The Company established
the initial fair value for the Warrants on October 26, 2020, the date of the Company’s Initial Public Offering, using a Monte Carlo
simulation model for the Public Warrants and a Black-Scholes model for the Private Placement Warrants. The Company allocated the proceeds
received from (i) the sale of Units (which is inclusive of one share of Class A common stock and one-half of one Public Warrant), (ii)
the sale of Private Placement Warrants, and (iii) the issuance of Class B common stock, first to the Warrants based on their fair values
as determined at initial measurement, with the remaining proceeds allocated to Class A common stock subject to possible redemption, Class
A common stock and Class B common stock based on their relative fair values at the initial measurement date. The Warrants were classified
as Level 3 at the initial measurement date due to the use of unobservable inputs.
RICE
ACQUISITION CORP.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
The
key inputs into the Monte Carlo simulation model for the Public Warrants and the Black-Scholes model for the Private Placement Warrants
were as follows at initial measurement:
|
|
As of October 26,
2020
|
|
Exercise price
|
|
$
|
11.50
|
|
Stock price
|
|
$
|
9.39
|
|
Term (in years)
|
|
|
6
|
|
Volatility
|
|
|
20
|
%
|
Risk-free interest rate
|
|
|
0.46
|
%
|
Dividend yield
|
|
|
-
|
|
On
October 26, 2020, the fair value of the Public Warrants was determined to be $1.22 per warrant for an aggregate value of $14.4 million.
The fair value of the Private Placement Warrants was determined to be $1.24 per warrant for an aggregate value of $8.4 million.
Subsequent Measurement
The
Warrants are measured at fair value on a recurring basis. The subsequent measurement of the Public Warrants as of December 31, 2020 is
classified as Level 1 due to the use of an observable market quote in an active market.
The
key inputs into the Black-Scholes model for the Private Placement Warrants were as follows as of December 31, 2020:
|
|
As of December 31,
2020
|
|
Exercise price
|
|
$
|
11.50
|
|
Stock price
|
|
$
|
10.83
|
|
Term (in years)
|
|
|
5.82
|
|
Volatility
|
|
|
22.68
|
|
Risk-free interest rate
|
|
|
0.48
|
|
Dividend yield
|
|
|
-
|
|
As
of December 31, 2020, the derived fair value of the Private Placement Warrants was determined to be $2.30 per warrant for an aggregate
value of $15.5 million. The observable fair value of the Public Warrants was $2.20 per warrant for an aggregate value of $27.0 million.
The
following table presents the changes in the fair value of warrant liabilities:
|
|
Private
Placement
|
|
|
Level
|
|
|
Public
|
|
|
Level
|
|
|
Warrant
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value as of September 3, 2020
|
|
$
|
-
|
|
|
|
|
|
|
$
|
-
|
|
|
|
|
|
|
$
|
-
|
|
Initial measurement on October 26, 2020
|
|
$
|
8,425,987
|
|
|
|
3
|
|
|
$
|
14,435,020
|
|
|
|
3
|
|
|
$
|
22,860,007
|
|
Change in fair value
|
|
$
|
7,117,000
|
|
|
|
|
|
|
$
|
12,611,480
|
|
|
|
|
|
|
$
|
19,728,480
|
|
Fair Value as of December 31, 2020
|
|
$
|
15,541,987
|
|
|
|
3
|
|
|
$
|
27,046,500
|
|
|
|
1
|
|
|
$
|
42,588,487
|
|
Due
to the use of quoted prices in an active market (Level 1) to measure the fair value of the Public Warrants, subsequent to initial measurement,
the Company had transfers out of Level 3 totaling $14.4 million during the period from October 26, 2020 through December 31, 2020.
Level
3 financial liabilities consist of the Private Placement Warrant liability for which there is no current market for these securities such
that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within
Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate.
As of October 26, 2020,
at initial measurement, the private warrants value exceeded their cost by approximately $1,654,000. This amount is recognized as loss
on issuance of private placement warrants for the period ending December 31, 2020.
RICE
ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note
11 — Income Taxes
The
Company’s taxable income primarily consists of interest income on the Trust Account. The Company’s general and administrative
expenses are generally considered start-up costs and are not currently deductible. There was no income tax expense for the period
from September 1, 2020 (inception) through December 31, 2020.
The
income tax provision (benefit) consists of the following from September 1, 2020 (inception) through December 31, 2020:
Current
|
|
|
|
|
Federal
|
|
$
|
—
|
|
State
|
|
|
—
|
|
Deferred
|
|
|
|
|
Federal
|
|
|
(68,168
|
)
|
State
|
|
|
—
|
|
Change in valuation allowance
|
|
|
68,168
|
|
Income tax provision
|
|
$
|
—
|
|
The
Company’s net deferred tax assets are as follows as of December 31, 2020:
Start-up/Organization costs
|
|
$
|
61,173
|
|
Net operating loss carryforwards
|
|
|
6,995
|
|
Total deferred tax assets
|
|
|
68,168
|
|
Valuation allowance
|
|
|
(68,168
|
)
|
Deferred tax asset, net of allowance
|
|
$
|
—
|
|
In
assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or
all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation
of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible.
Management considers the scheduled reversal of deferred tax assets, projected future taxable income and tax planning strategies
in making this assessment. After consideration of all of the information available, management believes that significant uncertainty
exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance.
There
were no unrecognized tax benefits as of December 31, 2020. No amounts were accrued for the payment of interest and penalties as of December
31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material
deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
A
reconciliation of the statutory federal income tax rate (benefit) to the Company’s effective tax rate (benefit) is as follows
from September 1, 2020 (inception) through December 31, 2020:
Statutory Federal income tax rate
|
|
|
21.0
|
%
|
Change in Valuation Allowance
|
|
|
(21.0
|
)%
|
Income Taxes Benefit
|
|
|
0.0
|
%
|
Note
12 — Subsequent Events
Management has evaluated
subsequent events to determine if events or transactions occurring through May 13, 2021, the date the consolidated financial statements
was available for issuance, require potential adjustment to or disclosure in the consolidated financial statements and has concluded
that all such events that would require recognition or disclosure have been recognized or disclosed, except for the disclosure in Note
2.
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 10-Q/A
(Amendment
No. 1)
(Mark
One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended March 31, 2021
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from to
Commission
File Number: 001-39644
ARCHAEA
ENERGY INC.
(Exact
name of registrant as specified in its charter)
Delaware
|
|
85-2867266
|
(State
or other jurisdiction of
incorporation
or organization)
|
|
(I.R.S.
Employer
Identification
Number)
|
4444 Westheimer
Road, Suite G450
|
|
|
Houston,
Texas
|
|
77027
|
(Address of principal executive
offices)
|
|
(Zip Code)
|
(346)
708-8272
(Registrant’s
telephone number, including area code)
Rice Acquisition Corp.
102 East Main Street, Second Story
Carnegie, Pennsylvania 15106
(Former
name or former address, if changed since last report)
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class registered
|
|
Trading
Symbol(s)
|
|
Name
of each exchange on which registered
|
Class A common stock, par
value $0.0001 per share
|
|
LFG
|
|
The New York Stock Exchange
|
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☒
|
Smaller reporting company
|
☒
|
|
Emerging growth company
|
☒
|
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No
☐
As
of May 20, 2021, 23,727,500 shares of Class A common stock, par value $0.0001, and 5,931,350 shares of Class B common stock, par
value $0.0001, were issued and outstanding.
EXPLANATORY
NOTE
References
throughout this Amendment No. 1 to the Quarterly Report on Form 10-Q to “we,” “us,” the “Company”
or “our company” are to Archaea Energy Inc., formerly known as Rice Acquisition Corp., unless the context otherwise indicates.
This Amendment No. 1 (this “Amendment No.
1”) to the Quarterly Report on Form 10-Q/A amends and restates the Quarterly Report on Form 10-Q of Archaea Energy Inc., formerly
known as Rice Acquisition Corp., for the quarterly period ended March 31, 2021, filed with the Securities and Exchange Commission (“SEC”)
on May 26, 2021.
On May 26, 2021, the Company filed its Form 10-Q for the quarterly
period ended March 31, 2021 (the “Q1 Form 10-Q”). The Company classified a portion of the redeemable shares of Class A common
stock of the Company (the “Public Shares”) issued as part of the units sold in the Company’s initial public offering
as permanent equity to maintain net tangible assets greater than $5,000,000 on the basis that the Company will consummate its initial
business combination only if the Company has net tangible assets of at least $5,000,001. Previously, the Company did not consider redeemable
stock classified as temporary equity as part of net tangible assets. Effective with these financial statements, the Company revised this
interpretation to include temporary equity in net tangible assets. As a result, management corrected the error by restating all Public
Shares as temporary equity. This resulted in an adjustment to the initial carrying value of the Class A common stock subject to possible
redemption with the offset recorded to additional paid-in capital (to the extent available), accumulated deficit and Class A common stock.
In
connection with the change in presentation for the Class A common stock subject to possible redemption, the Company revised its earnings
per share calculation to allocate income and losses shared pro rata between the two classes of shares. This presentation differs from
the previously presented method of earnings per share, which was similar to the two-class method. The Company determined the change in
classification of the Class A common stock and change to its presentation of earnings per share is quantitatively material and it should
restate its previously issued financial statements.
Therefore, on December 28, 2021, the Company’s
management and the audit committee of the Company’s board of directors (the “Audit Committee”) concluded that the Company’s
previously issued (i) audited balance sheet as of October 26, 2020 (the “Post-IPO Balance Sheet”), as previously revised in
the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2020, filed with the SEC on May 13, 2021 (“2020
Form 10-K/A No. 1”), (ii) audited financial statements included in the 2020 Form 10-K/A No. 1, (iii) unaudited interim financial
statements included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021, filed with the
SEC on May 26, 2021, and (iv) unaudited interim financial statements included in the Company’s Quarterly Report on Form 10-Q for
the quarterly period ended June 30, 2021, filed with the SEC on August 13, 2021 (collectively, the “Affected Periods”), should
be restated to report all Public Shares as temporary equity and should no longer be relied upon.
As such, the Company has restated or will restate
its financial statements for the Affected Periods.
The above changes did not have any impact on its
cash position or the cash held in the trust account established in connection with the IPO.
After re-evaluation, the Company’s management
has concluded that in light of the errors described above, a material weakness existed in the Company’s internal control over financial
reporting during the Affected Periods and that the Company’s disclosure controls and procedures were not effective. The Company’s
remediation plan with respect to such material weakness is described in more detail in Item 4 to Part 1 of this Amendment No. 1.
Items Amended in this Amendment No. 1
For the convenience of the reader, this Amendment
No. 1 amends and restates the Q1 Form 10-Q in its entirety. As a result, this Amendment No. 1 includes both items that have been changed
as a result of the restatement described above as well as items that are unchanged from the Q1 Form 10-Q. The following items have been
amended in this Amendment No. 1 to reflect the restatement described above:
|
·
|
Part I, Item 1. Condensed Consolidated Financial Statements
|
|
·
|
Part I, Item 4. Controls and Procedures
|
In addition, in accordance with applicable SEC
rules, this Amendment No. 1 includes new certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act from our Chief Executive
Officer (as principal executive officer) and our Chief Financial Officer (as principal financial officer) dated as of the filing date
of this Amendment No. 1.
Except as described above, this Amendment No.
1 does not amend, update or change any other items or disclosures in the Q1 Form 10-Q. This Amendment No. 1 does not purport to reflect
any information or events subsequent to the filing date of the Q1 Form 10-Q. As such, this Amendment No. 1 speaks only as of the date
the Q1 Form 10-Q was filed, and we have not undertaken herein to amend, supplement or update any information contained in the Q1 Form
10-Q to give effect to any subsequent events. Accordingly, this Amendment No. 1 should be read in conjunction with our filings made with
the SEC subsequent to the filing of the Q1 Form 10-Q.
Table
of Contents
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
Quarterly Report on Form 10-Q (this “Report”), including, without limitation, statements under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” 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
Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements can be identified by the
use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,”
“intends,” “plans,” “may,” “will,” “potential,” “projects,” “predicts,”
“continue,” or “should,” or, in each case, their negative or other variations or comparable terminology. There
can be no assurance that actual results will not materially differ from expectations. Such statements include, but are not limited to,
any statements relating to our ability to consummate any acquisition or other business combination and any other statements that are
not statements of current or historical facts. These statements are based on management’s current expectations, but actual results
may differ materially due to various factors, including, but not limited to:
|
●
|
our ability to complete
an initial business combination, including our proposed business combination with Aria Energy LLC and Archaea Energy LLC;
|
|
●
|
our expectations around
the performance of the 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;
|
|
●
|
the ability of our officers
and directors to generate a number of potential investment 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,
including following our initial business combination.
|
The
forward-looking statements contained in this Report are based on our current expectations and beliefs concerning future developments
and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking
statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual
results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and
uncertainties include, but are not limited to, those factors listed above and others described under the heading “Risk Factors”
in Item 1A of Part I in Amendment No. 1 to our Annual Report on Form 10-K for the year ended December 31, 2020. 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. These
risks and others described under “Risk Factors” may not be exhaustive.
By
their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that
may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that
our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ
materially from those made in or suggested by the forward-looking statements contained in this Report. In addition, even if our results
or operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking
statements contained in this Report, those results or developments may not be indicative of results or developments in subsequent periods.
PART I
- FINANCIAL INFORMATION
Item 1.
Condensed Consolidated Financial Statements.
RICE
ACQUISITION CORP.
CONDENSED
CONSOLIDATED BALANCE SHEETS
MARCH
31, 2021
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
|
|
(unaudited)
(as restated)
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash
|
|
$
|
1,027,243
|
|
|
$
|
1,335,167
|
|
Prepaid expenses
|
|
|
662,865
|
|
|
|
662,865
|
|
Total current assets
|
|
|
1,690,108
|
|
|
|
1,998,032
|
|
Investments held in Trust Account
|
|
|
237,345,682
|
|
|
|
237,308,171
|
|
Total Assets
|
|
$
|
239,035,790
|
|
|
$
|
239,306,203
|
|
|
|
|
|
|
|
|
|
|
Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit:
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
$
|
3,064,809
|
|
|
$
|
118,446
|
|
Accounts payable
|
|
|
3,049
|
|
|
|
217,918
|
|
Franchise tax payable
|
|
|
65,481
|
|
|
|
65,481
|
|
Total current liabilities
|
|
|
3,133,339
|
|
|
|
401,845
|
|
Warrant Liabilities
|
|
|
30,814,486
|
|
|
|
42,588,487
|
|
Deferred legal fees
|
|
|
187,500
|
|
|
|
187,500
|
|
Deferred underwriting commissions in connection with the initial public offering
|
|
|
7,610,750
|
|
|
|
7,610,750
|
|
Total liabilities
|
|
|
41,746,075
|
|
|
|
50,788,582
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A common stock subject to possible redemption, $0.0001 par value; 23,725,000 shares at $10.00 per share as of March 31, 2021 and December 31, 2020
|
|
|
237,250,000
|
|
|
|
237,250,000
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Deficit:
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Class A common stock, $0.0001 par value; 250,000,000 shares authorized; 2,500 shares issued and outstanding (excluding 23,725,000 shares subject to possible redemption)
|
|
|
-
|
|
|
|
-
|
|
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 5,931,350 shares issued and outstanding
|
|
|
593
|
|
|
|
593
|
|
Additional paid-in capital
|
|
|
-
|
|
|
|
-
|
|
Accumulated deficit
|
|
|
(39,434,105
|
)
|
|
|
(47,868,812
|
)
|
Total Rice Acquisition Corp deficit
|
|
|
(39,433,512
|
)
|
|
|
(47,868,219
|
)
|
|
|
|
|
|
|
|
|
|
Non-controlling interest in subsidiary
|
|
|
(526,773
|
)
|
|
|
(864,160
|
)
|
|
|
|
|
|
|
|
|
|
Total stockholders’ deficit
|
|
|
(39,960,285
|
)
|
|
|
(48,732,379
|
)
|
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit
|
|
$
|
239,035,790
|
|
|
$
|
239,306,203
|
|
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
RICE
ACQUISITION CORP.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR
THE THREE MONTHS ENDED MARCH 31, 2021
(AS RESTATED)
General and administrative expenses
|
|
$
|
2,999,591
|
|
Franchise tax expense
|
|
|
39,827
|
|
Loss from operations
|
|
|
(3,039,418
|
)
|
Other income/(expense)
|
|
|
|
|
Interest income
|
|
|
37,511
|
|
Change in fair value of warrant liabilities
|
|
|
11,774,001
|
|
Net income
|
|
|
8,772,094
|
|
Net income attributable to non-controlling interest in subsidiary
|
|
|
337,387
|
|
Net income attributable to Rice Acquisition Corp.
|
|
|
8,434,707
|
|
|
|
|
|
|
Weighted average shares outstanding of Class A common stock
|
|
|
23,727,500
|
|
Basic and diluted net income per share, Class A
|
|
$
|
0.30
|
|
Weighted average shares outstanding of Class B common stock
|
|
|
5,931,350
|
|
Basic and diluted net income per share, Class B
|
|
$
|
0.30
|
|
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
RICE
ACQUISITION CORP.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR
THE THREE MONTHS ENDED MARCH 31, 2021
(AS RESTATED)
|
|
Common Stock
|
|
|
Additional
|
|
|
|
|
|
Non-controlling
|
|
|
Total
|
|
|
|
Class A
|
|
|
Class B
|
|
|
Paid-In
|
|
|
Accumulated
|
|
|
Interest in
|
|
|
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
subsidiary
|
|
|
Deficit
|
|
Balance - December 31, 2020
|
|
|
2,500
|
|
|
$
|
-
|
|
|
|
5,931,350
|
|
|
$
|
593
|
|
|
$
|
-
|
|
|
$
|
(47,868,812
|
)
|
|
$
|
(864,160
|
)
|
|
$
|
(48,732,379
|
)
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,434,707
|
|
|
|
337,387
|
|
|
$
|
8,772,094
|
|
Balance - March 31, 2021
|
|
|
2,500
|
|
|
$
|
-
|
|
|
|
5,931,350
|
|
|
$
|
593
|
|
|
$
|
-
|
|
|
$
|
(39,434,105
|
)
|
|
$
|
(526,773
|
)
|
|
$
|
(39,960,285
|
)
|
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
RICE
ACQUISITION CORP.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR
THE THREE MONTHS ENDED MARCH 31, 2021
(AS RESTATED)
Cash Flows from Operating Activities:
|
|
|
|
Net income
|
|
$
|
8,772,094
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
|
Change in fair value of warrant liabilities
|
|
|
(11,774,001
|
)
|
Interest earned on securities held in Trust Account
|
|
|
(37,511
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
Accounts payable
|
|
|
(214,869
|
)
|
Accrued expenses
|
|
|
2,946,363
|
|
Net cash used in operating activities
|
|
|
(307,924
|
)
|
|
|
|
|
|
Net change in cash
|
|
|
(307,924
|
)
|
Cash - beginning of the period
|
|
|
1,335,167
|
|
Cash - end of the period
|
|
$
|
1,027,243
|
|
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
Note 1—Description of Organization, Business
Operations and Basis of Presentation
Rice Acquisition Corp. is a blank check company
incorporated in Delaware on September 1, 2020. As used herein, “the Company” or “Rice” refer to Rice Acquisition
Corp. and its majority-owned and controlled operating subsidiary, Rice Acquisition Holdings LLC (“RAC OpCo”), unless the
context indicates otherwise. The Company was 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 (the “Business Combination”). The
Company is an emerging growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies.
As of March 31, 2021, the Company had not commenced
any operations. All activity for the three months ended March 31, 2021 relates to the search for a prospective initial Business Combination.
The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest.
The Company will generate non-operating income in the form of interest income on cash, cash equivalents and investments from the proceeds
derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end.
The Company’s sponsor is Rice Acquisition
Sponsor LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for the Company’s Initial
Public Offering was declared effective on October 21, 2020. On October 26, 2020, the Company consummated its Initial Public Offering of
23,725,000 units (each, a “Unit” and collectively, the “Units”), including 2,225,000 additional Units that were
issued pursuant to the underwriters’ partial exercise of their over-allotment option (the “Over-Allotment Units”), at
$10.00 per Unit, generating gross proceeds of approximately $237.3 million, and incurring offering costs of approximately $12.5 million,
inclusive of $7.6 million in deferred underwriting commissions (Note 5).
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the private placement (“Private Placement”) of 6,771,000 warrants (each, a “Private
Placement Warrant” and collectively, the “Private Placement Warrants”) to the Sponsor and Atlas Point Energy Infrastructure
Fund, LLC (“Atlas Point Fund”), at a price of $1.00 per Private Placement Warrant, generating gross proceeds to the Company
of approximately $6.8 million (Note 4). Each Private Placement Warrant is exercisable to purchase one share of Rice’s Class A common
stock or, in certain circumstances, one Class A Unit of RAC OpCo together with a corresponding number of shares of Rice’s non-economic
Class B common stock.
Following the Initial Public Offering, the Public
Stockholders (as defined below) hold a direct economic equity ownership interest in Rice in the form of shares of Class A common stock,
and an indirect ownership interest in RAC OpCo through Rice’s ownership of Class A Units of RAC OpCo. By contrast, the Initial Stockholders
(as defined below) own direct economic interests in RAC OpCo in the form of Class B Units and a corresponding non-economic voting equity
interest in Rice in the form of shares of Class B common stock, as well as a small direct interest through the Sponsor Shares (as defined
in Note 4). Sponsor Shares were purchased for $10.00 each and, in the absence of an initial Business Combination, will generally participate
in liquidation or other payments on a pari passu basis with the Public Shares (as defined below). However, given the relatively de minimis
number of Sponsor Shares relative to Public Shares, in many cases the economic, governance or other effects of the Sponsor Shares are
not material to the holders of Class A common stock or warrants, and for simplicity, portions of this disclosure may not fully describe
or reflect these immaterial effects.
Upon the closing of the Initial Public Offering
and the Private Placement, approximately $237.3 million of the net proceeds of the sale of the Units in the Initial Public Offering and
the sale of the Private Placement Warrants in the Private Placement were placed in a trust account (“Trust Account”) located
in the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only in U.S. “government
securities” within the meaning of Section 2(a)(16) of the Investment Company Act (as defined below) having a maturity of 185 days
or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest
only in direct U.S. government treasury obligations, 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.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants,
although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There
is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial
Business Combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (excluding the
amount of any deferred underwriting discount held in Trust) at the time of the agreement to enter into the initial Business Combination.
However, the Company will only complete a Business Combination if the post-business combination company controls 50% or more of the voting
securities of the target or is otherwise not required to register as an investment company under the Investment Company Act of 1940, as
amended (the “Investment Company Act”).
The Company will provide the holders (the “Public
Stockholders”) of the Company’s Public Shares with the opportunity to redeem all or a portion of their Public Shares upon
the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination
or (ii) by means of a tender offer. Unless otherwise stated herein, the term “Public Shares” includes the 2,500 shares of
Class A common stock, par value $0.0001 per share, of the Company held by the Sponsor and forming part of the Sponsor Shares. The decision
as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company,
solely in its discretion. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount
then held in the Trust Account (initially anticipated to be $10.00 per Public Share). The per-share amount to be distributed to Public
Stockholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters
(as discussed in Note 5). These Public Shares will be recorded at a redemption value and classified as temporary equity upon the completion
of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards
Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” The Company will proceed with a Business
Combination if a majority of the shares voted are voted in favor of the Business Combination. The Company will not redeem the Public Shares
in an amount that would cause its net tangible assets to be less than $5,000,001. If a stockholder vote is not required by law and the
Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its Amended and Restated
Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”), conduct the redemptions pursuant to
the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC
prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides
to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation
pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each public stockholder may elect to redeem their
Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks stockholder approval in
connection with a Business Combination, the Initial Stockholders (as defined below) have agreed to vote their Founder Shares (as defined
below in Note 4), Sponsor Shares and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination.
In addition, the Initial Stockholders have agreed to waive their redemption rights with respect to their Founder Shares and Public Shares
in connection with the completion of a Business Combination.
The Amended and Restated Certificate of Incorporation
provides that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is
acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 20% or more of the Public Shares,
without the prior consent of the Company.
If the Company is unable to complete a Business
Combination within 24 months from the closing of the Initial Public Offering, or October 26, 2022 (the “Combination Period”),
the Company 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 pay franchise and
income taxes of the Company or RAC OpCo (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding
Public Shares and Class A Units of RAC OpCo (other than those held by Rice), which redemption will completely extinguish Public Stockholders’
rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii)
as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the 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.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
The Sponsor, Atlas Point Fund and the Company’s
officers and directors (the “Initial Stockholders”) have agreed (i) that any Founder Shares and Sponsor Shares held by them
will not be entitled to redemption rights, and they will waive any such redemption rights for any Public Shares held by them, in connection
with the completion of the initial Business Combination, (ii) that any Founder Shares and Sponsor Shares held by them will not be entitled
to redemption rights, and they will waive any such redemption rights for any Public Shares held by them, in connection with a stockholder
vote to amend our amended and restated certificate of incorporation in a manner that would affect the substance or timing of the Company’s
obligation to redeem 100% of the Public Shares if the Company have not consummated the initial Business Combination within the Combination
Period, (iii) that any Founder Shares held by them are subject to forfeiture, and thus will not be entitled to liquidating distributions
from the Trust Account, and they will waive any such rights to liquidating distributions for any Founder Shares, if the Company fails
to complete the initial Business Combination within the Combination Period (although they will be entitled to liquidating distributions
from the Trust Account with respect to any Public Shares and Sponsor Shares they hold if the Company fails to complete the initial Business
Combination within the Combination Period), and (iv) in certain limited circumstances the Class B Units of RAC OpCo will have more limited
rights to current or liquidating distributions from the Company.
The underwriters agreed to waive their rights
to the deferred underwriting commission (see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination
within the Combination Period and subsequently liquidates and, in such event, such amounts will be included with the other funds held
in the Trust Account that will be available to fund the redemption of the Public Shares and Sponsor Shares. In the event of such distribution,
it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will
be only $10.00. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to
the extent any claims by a third party (except for the Company’s independent registered public accounting firm) for services rendered
or products sold to the Company, or a prospective target business with which the Company has entered into a letter of intent, confidentiality
or other similar agreement or business combination agreement (a “Target”), reduce the amount of funds in the Trust Account
to below the lesser of (i) $10.00 per Public Share or Class A Unit of RAC OpCo not held by Rice and (ii) the actual amount per Public
Share or Class A Unit of RAC OpCo not held by Rice held in the Trust Account as of the date of the liquidation of the Trust Account, if
less than $10.00 per Public Share or Class A Unit of RAC OpCo not held by Rice due to reductions in the value of the trust assets, less
taxes payable, provided that such liability will not apply to any claims by a third party or Target that executed a waiver of any and
all rights to the monies held in the Trust Account (whether or not such waiver is enforceable), nor will it apply to any claims under
the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under
the Securities Act of 1933, as amended (the “Securities Act”). The Company will seek to reduce the possibility that the Sponsor
will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for
the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company
does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the
Trust Account.
Basis of Presentation
The accompanying unaudited condensed consolidated
financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles (“GAAP”)
for interim financial information and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes
required by GAAP. In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentation have
been included. The interim operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2021 or any future interim periods.
The accompanying unaudited condensed consolidated financial statements
should be read in conjunction with the Company’s Amendment No. 2 to Annual Report on Form 10-K/A for the year ended December 31,
2020 as filed with the SEC on December 28, 2021, which contains the audited financial statements and notes thereto. The financial information
as of December 31, 2020 is derived from the audited financial statements presented in the Company’s Amendment No. 2 to Annual Report
on Form 10-K/A for the year ended December 31, 2020.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
Emerging Growth Company
The Company is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”),
and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports
and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder
approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging
growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth
companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period,
which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company,
as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
This may make comparison of the Company’s
condensed consolidated 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.
Risk and Uncertainties
On January 30, 2020, the World Health Organization
(“WHO”) announced a global health emergency because of a new strain of coronavirus (the “COVID-19 outbreak”).
In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact
of the COVID-19 outbreak continues to evolve. The impact of the COVID-19 outbreak on the Company’s results of operations, financial
position and cash flows will depend on future developments, including the duration and spread of the outbreak and related advisories and
restrictions. These developments and the impact of the COVID-19 outbreak on the financial markets and the overall economy are highly uncertain
and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, the Company’s
results of operations, financial position and cash flows may be materially adversely affected. Additionally, the Company’s ability
to complete an initial Business Combination may be materially adversely affected due to significant governmental measures being implemented
to contain the COVID-19 outbreak or treat its impact, including travel restrictions, the shutdown of businesses and quarantines, among
others, which may limit the Company’s ability to have meetings with potential investors or affect the ability of a potential target
company’s personnel, vendors and service providers to negotiate and consummate an initial Business Combination in a timely manner.
The Company’s ability to consummate an initial Business Combination may also be dependent on the ability to raise additional equity
and debt financing, which may be impacted by the COVID-19 outbreak and the resulting market downturn.
Liquidity and Capital Resources
As of March 31, 2021, we had approximately $1.0
million in our operating bank account and a working capital deficit of approximately $1.4 million.
The Company’s liquidity needs to date had
been satisfied through the payment of $26,000 from the Sponsor to purchase the Founder Shares and Sponsor Shares (see Note 4), the loan
under the Note of approximately $290,000 (see Note 4), and the net proceeds from the consummation of the Private Placement not held in
the Trust Account. The Company repaid the Note in full on November 10, 2020. In addition, in order to finance transaction costs in connection
with a Business Combination, the Company’s officers, directors and initial stockholders may, but are not obligated to, provide the
Company Working Capital Loans (see Note 4). As of March 31, 2021, there were no amounts outstanding under any Working Capital Loans.
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, and management has the intent and ability to support the Company through such time
period. Over this time period, the Company will be using the 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.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
Note 2—Summary of Significant Accounting
Policies
Principles of Consolidation and Financial Statement
Presentation
The unaudited condensed consolidated financial
statements include the accounts of the Company and its majority-owned and controlled operating subsidiary after elimination of all intercompany
transactions and balances as of March 31, 2021. The ownership interest of noncontrolling participants in the operating subsidiary is included
as a separate component of stockholders’ deficit. The noncontrolling participants’ share of the net loss is included as “Net
loss attributable to noncontrolling interest in subsidiary” on the accompanying unaudited condensed consolidated statement of operations.
Restatement of Previously Issued Financial
Statements
In connection with the change in presentation
of Class A common stock subject to possible redemption, the Company concluded it should restate its previously issued financial statements
to classify all Class A common stock subject to redemption in temporary equity. In accordance with ASC 480-10-S99, redemption provisions
not solely within the control of the Company require shares subject to redemption to be classified outside of permanent equity. The Company
had previously classified a portion of its Class A common stock in permanent equity. Although the Company did not specify a maximum redemption
threshold, its charter currently provides that the Company will not redeem its Public Shares in an amount that would cause its net tangible
assets to be less than $5,000,001. Previously, the Company did not consider redeemable shares classified as temporary equity as part of
net tangible assets. The Company revised this interpretation to include temporary equity in net tangible assets.
In connection with the change in presentation
for the Class A common stock subject to possible redemption, the Company revised its earnings per share calculation to allocate income
and losses shared pro rata between the two classes of shares. This presentation differs from the previously presented method of earnings
per share, which was similar to the two-class method.
In accordance with SEC Staff Accounting Bulletin
No. 99, “Materiality,” and SEC Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements
when Quantifying Misstatements in Current Year Financial Statements,” the Company evaluated the corrections and has determined that
the related impact was material to the previously filed financial statements that contained the error, reported in the Company’s
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021, filed with the SEC on May 26, 2021. Therefore, the Company,
in consultation with its Audit Committee, concluded that the Company’s Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2021, filed with the SEC on May 26, 2021, should be restated to present all Class A common stock subject to possible redemption
as temporary equity, restate earnings per share and to recognize accretion from the initial book value to redemption value at the time
of its Initial Public Offering. The previously presented unaudited interim financial statements included in the Company’s Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 2021, filed with the SEC on May 26, 2021, should no longer be relied upon.
The restatement does not have an impact on the Company’s cash position and cash held in the Trust Account.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
The change in the carrying value of the redeemable
Class A common stock at March 31, 2021 resulted in a reclassification of approximately 4.5 million Class A common stock from permanent
equity to temporary equity. The table below presents the effect of the financial statement adjustments related to the restatement discussed
above of the Company’s previously reported unaudited balance sheet as of March 31, 2021:
As of March 31, 2021
|
|
As Previously Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Total assets
|
|
$
|
239,035,790
|
|
|
$
|
-
|
|
|
$
|
239,035,790
|
|
Total liabilities
|
|
$
|
41,746,075
|
|
|
$
|
-
|
|
|
$
|
41,746,075
|
|
Class A common stock subject to possible redemption
|
|
|
192,289,710
|
|
|
|
44,960,290
|
|
|
|
237,250,000
|
|
Preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Class A common stock
|
|
|
450
|
|
|
|
(450
|
)
|
|
|
-
|
|
Class B common stock
|
|
|
593
|
|
|
|
-
|
|
|
|
593
|
|
Additional paid-in capital
|
|
|
18,720,097
|
|
|
|
(18,720,097
|
)
|
|
|
-
|
|
Accumulated deficit
|
|
|
(13,194,362
|
)
|
|
|
(26,239,743
|
)
|
|
|
(39,434,105
|
)
|
Total Rice Acquisition Corp equity (deficit)
|
|
|
5,526,778
|
|
|
|
(44,960,290
|
)
|
|
|
(39,433,512
|
)
|
Non-controlling interest in subsidiary
|
|
|
(526,773
|
)
|
|
|
-
|
|
|
|
(526,773
|
)
|
Total stockholders' equity (deficit)
|
|
$
|
5,000,005
|
|
|
$
|
(44,960,290
|
)
|
|
$
|
(39,960,285
|
)
|
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders' Equity (Deficit)
|
|
$
|
239,035,790
|
|
|
$
|
-
|
|
|
$
|
239,035,790
|
|
The Company’s unaudited statement of shareholders’
equity has been restated to reflect the changes to the impacted shareholders’ equity accounts described above.
The table below presents the effect of the financial
statement adjustments related to the restatement discussed above of the Company’s previously reported unaudited statement of cash
flows for the period from January 21, 2021 (inception) through March 31, 2021:
For the three months ended March 31, 2021
|
|
|
|
|
|
As
Previously
Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Supplemental Disclosure of Noncash Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in value of Class A common stock subject to possible redemption
|
|
$
|
8,772,090
|
|
|
$
|
(8,772,090
|
)
|
|
$
|
-
|
|
In connection with the change in presentation
for the Class A ordinary shares subject to possible redemption, the Company has revised its earnings per share calculation to allocate
income and losses shared pro rata between the two classes of shares. This presentation contemplates a Business Combination as the most
likely outcome, in which case, both classes of shares participate pro rata in the income and losses of the Company. The impact to the
reported amounts of weighted average shares outstanding and basic and diluted earnings per common share is presented below for the Affected
Quarterly Periods:
|
|
Earnings Per Share for Class A common stock
|
|
|
|
As
Previously
Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
For the three months ended March 31, 2021
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
8,772,094
|
|
|
$
|
-
|
|
|
$
|
8,772,094
|
|
Weighted average shares outstanding
|
|
|
23,725,000
|
|
|
|
2,500
|
|
|
|
23,727,500
|
|
Basic and diluted earnings per share
|
|
$
|
-
|
|
|
$
|
0.30
|
|
|
$
|
0.30
|
|
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
Use of Estimates
The preparation of financial statements in conformity
with GAAP requires the Company’s 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. Making estimates requires management to exercise
significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances
that existed at the date of the condensed consolidated financial statements, which management considered in formulating its estimate,
could change in the near term due to one or more future confirming events. One of the more significant accounting estimates included in
these financial statements is the determination of the fair value of the warrant liability. Accordingly, the actual results could differ
significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. There are no cash equivalents as of March 31,
2021.
Investments Held in Trust Account
Upon the closing of the Initial Public Offering
and the Private Placement, the Company was required to place net proceeds of the Initial Public Offering and certain of the proceeds of
the Private Placement in a Trust Account, which may be invested in U.S. government securities, within the meaning set forth in Section
2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or in money market funds meeting certain conditions under
Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations, as determined
by management of the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust
Account. Investments held in Trust Account are classified as trading securities, which are presented on the balance sheet at fair value
at the end of each reporting period. Gains and losses resulting from the change in fair value of investments held in Trust Account are
included in gain on marketable securities, dividends and interest held in Trust Account in the accompanying statement of operations. The
estimated fair values of investments held in Trust Account are determined using available market information, other than for investments
in open-ended money market funds with published daily net asset values (“NAV”), in which case the Company uses NAV as a practical
expedient to fair value. The NAV on these investments is typically held constant at $1.00 per unit.
Fair Value of Financial Instruments
The fair value of the Company’s assets and
liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,” approximates
the carrying amounts represented in the balance sheet.
Offering Costs Associated with the Initial
Public Offering
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 were 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 derivative warrant liabilities were expensed as incurred and
presented as non-operating expenses in the condensed statements of operations. Offering costs associated with the Class A common stock
issued were charged to stockholders’ equity upon the completion of the Initial Public Offering. The Company classifies deferred
underwriting commissions as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets
or require the creation of current liabilities.
Derivative Warrant Liabilities
The Company does not use derivative instruments
to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its 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 FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). 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.
The Public Warrants and the Private Placement
Warrants are recognized as derivative liabilities in accordance with ASC 815. Accordingly, the Company recognizes the warrant instruments
as liabilities at fair value and adjusts the carrying value of the instruments to fair value at each reporting period until they are exercised.
The initial fair value of the Public Warrants issued in connection with the Initial Public Offering were estimated using a Monte Carlo
simulation model. The fair value of the Public Warrants as of March 31, 2021 is based on observable listed prices for such warrants. The
fair value of the Private Placement Warrants as of March 31, 2021 is determined using Black-Scholes option pricing model. The determination
of the fair value of the warrant liability may be subject to change as more current information becomes available and accordingly the
actual results could differ significantly. Derivative warrant liabilities are classified as non-current liabilities as their liquidation
is not reasonably expected to require the use of current assets or require the creation of current liabilities.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
Class A Common Stock Subject to Possible Redemption
The Company accounts for its Class A common stock
subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.”
Class A common stock subject to mandatory redemption (if any) is classified as liability instruments and are measured at fair value. Conditionally
redeemable Class A common stock (including Class A common stock that features redemption rights that are 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, Class A common stock is classified as stockholders’ equity. The Company issued 2,500 shares
of Class A common stock to the Sponsor. These Sponsor Shares will not be transferable and will only be exchangeable into Class A
common stock after the initial business combination, as such are considered non-redeemable and presented as permanent equity in the Company’s
condensed balance sheet. Excluding the Sponsor Shares, the Company’s Class A common stock feature certain redemption rights
that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly,
as of the Initial Public Offering, 23,725,000 shares of Class A 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.
The Company recognizes changes in redemption value
immediately as they occur and adjusts the carrying value of the Class A common stock subject to possible redemption to equal the redemption
value at the end of each reporting period. Effective with the closing of the Initial Public Offering, the Company recognized the accretion
from initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and
accumulated deficit.
Net Income Per Share of Common Stock
The Company complies with accounting and disclosure
requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares, which are referred to as
Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes of shares. Net income (loss)
per common share is calculated by dividing the net income (loss) by the weighted average shares of common stock outstanding for the respective
period.
The calculation of diluted net income (loss) per
share does not consider the effect of the warrants underlying the Units sold in the Initial Public Offering (including the consummation
of the over-allotment) and the private placement warrants to purchase an aggregate of 18,633,500 shares of Class A common stock,
because their exercise is contingent upon future events and their inclusion would be anti-dilutive under the treasury stock method. As
a result, diluted net income (loss) per share is the same as basic net income (loss) per share for the three months ended March 31, 2021.
Accretion associated with the redeemable Class A common stock is excluded from earnings per share as the redemption value approximates
fair value.
The table below presents a reconciliation of the
numerator and denominator used to compute basic and diluted net loss per share for each class of common stock:
|
|
For the Three Months Ended
March 31, 2021
|
|
|
|
Class A
|
|
|
Class B
|
|
Basic and diluted net income per common share:
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
Allocation of net income
|
|
$
|
7,017,799
|
|
|
$
|
1,754,295
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average common shares outstanding
|
|
|
23,727,500
|
|
|
|
5,931,350
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net income per common share
|
|
$
|
0.30
|
|
|
$
|
0.30
|
|
Income Taxes
The Company follows the asset and liability method
of accounting for income taxes under ASC Topic 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for
the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances
are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Deferred tax assets were immaterial
as of March 31, 2021.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
FASB ASC Topic 740 prescribes a recognition threshold
and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in
a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing
authorities. There were no unrecognized tax benefits as of March 31, 2021. The Company recognizes accrued interest and penalties related
to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of March 31,
2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation
from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
The provision for income taxes was immaterial for
the three months ended March 31, 2021.
Recent Accounting Pronouncements
In August 2020, the FASB issued Accounting Standard
Update (the “ASU”) No. 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): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,
which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also
removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception and
it also simplifies the diluted earnings per share calculation in certain areas. The Company early adopted the ASU on January 1, 2021.
Adoption of the ASU did not impact the Company’s financial position, results of operations or cash flows.
Management does not believe that any other recently issued, but not
yet effective, accounting pronouncement if currently adopted would have a material effect on the Company’s condensed consolidated
financial statements.
Note 3—Initial Public Offering
On October 26, 2020, the Company consummated its
Initial Public Offering of 23,725,000 Units, including 2,225,000 Over-Allotment Units that were issued pursuant to the underwriters’
partial exercise of their over-allotment option, at $10.00 per Unit, generating gross proceeds of approximately $237.3 million, and incurring
offering costs of approximately $12.5 million, inclusive of $7.6 million in deferred underwriting commissions. Of the 23,725,000 Units
sold, affiliates of the Sponsor and Atlas Point Fund had purchased 1,980,000 Units (the “Affiliated Units”) and 2,128,500
Units (the “Atlas Units”), respectively, at the Initial Public Offering price. The underwriters did not receive any underwriting
discounts or commissions on the 1,980,000 Affiliated Units.
Each Unit consists of one share of Class A common
stock and one-half of one redeemable warrant (each, a “Public Warrant”). Each whole Public Warrant entitles the holder to
purchase one share of Rice’s Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 6).
Note 4—Related Party Transactions
Founder Shares and Sponsor Shares
In September 2020, the Sponsor paid $25,000 to
cover for certain of expenses of the Company in exchange for issuance of (i) 5,750,100 shares of Rice’s Class B common stock, par
value $0.0001 per share, and (ii) 2,500 shares of Rice’s Class A common stock, par value $0.0001 per share. In September 2020, the
Sponsor received 5,750,000 Class B Units of RAC OpCo (which are profits interest units only). In October 2020, the Sponsor forfeited 90,000
Class B Units of RAC OpCo, and 30,000 Class B Units of RAC OpCo were issued to each of the independent director nominees. The Sponsor
transferred a corresponding number of shares of Class B common stock to the independent director nominees. In October 2020, the Company
effected a dividend, resulting in an aggregate of (i) 6,181,350 shares of Rice’s Class B common stock, and (ii) 2,500 shares of
Rice’s Class A common stock outstanding. All shares and associated amounts have been retroactively restated to reflect the dividend.
Upon a liquidation of RAC OpCo, distributions generally will be made to the holders of RAC OpCo Units on a pro rata basis, subject to
certain limitations with respect to the Class B Units of RAC OpCo, including that, prior to the completion of the initial Business Combination,
such Class B Units will not be entitled to participate in a liquidating distribution.
Also, in September 2020, Rice paid $25,000 to
RAC OpCo in exchange for issuance of 2,500 Class A Units of RAC OpCo. In September 2020, the Sponsor received 100 Class A Units of RAC
OpCo in exchange for $1,000.
The Company refers to the 6,181,250 shares of
Class B common stock and corresponding number of Class B Units of RAC OpCo (or the Class A Units of RAC OpCo into which such Class B Units
will convert) collectively as the “Founder Shares”. The Founder Shares consist of Class B Units of RAC OpCo (and any Class
A Units of RAC OpCo into which such Class B Units are converted) and a corresponding number of shares of Class B common stock, which together
will be exchangeable for shares of Rice’s Class A common stock after the time of the initial Business Combination on a one-for-one
basis, subject to adjustment as provided herein. The Company refers to the 2,500 shares of Rice’s Class A common stock and the 100
Class A Units of RAC OpCo and a corresponding number of shares of Rice’s non-economic Class B common stock (which together will
be exchangeable into shares of Class A common stock after the initial Business Combination on a one-for-one basis) collectively as the
“Sponsor Shares”.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
Upon the closing of the Initial Public Offering,
the Sponsor forfeited 309,063 Class B Units of RAC OpCo, and 309,063 Class B Units of RAC OpCo were issued to Atlas Point Fund. The Sponsor
transferred a corresponding number of shares of Class B common stock to Atlas Point Fund.
The Initial Stockholders agreed to forfeit up
to 806,250 Founder Shares to the extent that the over-allotment option is not exercised in full by the underwriters, so that the Founder
Shares will represent 20.0% of the Company’s issued and outstanding shares after the Initial Public Offering (excluding the Sponsor
Shares). On October 26, 2020, the underwriters partially exercised the over-allotment option to purchase as additional 2,225,000 Units;
thus, only 250,000 Founder Shares remained subject to forfeiture. On December 5, 2020, the remaining unexercised over-allotment expired
unused and therefore the remaining 250,000 shares of Class B common stock were forfeited.
The Class B Units of RAC OpCo will convert into
Class A Units of RAC OpCo in connection with the initial Business Combination on a one-for-one basis, subject to adjustment for stock
splits, stock dividends, reorganizations, recapitalizations and the like and subject to further adjustment as provided herein. The Founder
Shares consist of Class B Units of RAC OpCo (and any Class A Units of RAC OpCo into which such Class B Units are converted) and a corresponding
number of shares of Class B common stock, which together will be exchangeable for shares of Class A common stock after the time of the
initial Business Combination on a one-for-one basis (subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations
and the like), and subject to further adjustment as provided herein. In the case that additional shares of Class A common stock, or equity-linked
securities, are issued or deemed issued in excess of the amounts sold in the Initial Public Offering and related to the closing of the
Business Combination (other than the forward purchase securities), the number of Class A Units of RAC OpCo into which the Class B Units
of RAC OpCo will convert may be adjusted (unless the holders of a majority of the outstanding Founder Shares agree to waive such adjustment
with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon exchange of all
Founder Shares will equal, in the aggregate, on an as-exchanged basis, 20% of the sum of the total outstanding shares of Rice’s
common stock upon completion of the Initial Public Offering, plus all shares of Class A common stock and equity-linked securities issued
or deemed issued in connection with the Business Combination (excluding the forward purchase securities and any shares or equity-linked
securities issued, or to be issued, to any seller in the Business Combination and excluding the Sponsor Shares). In addition, the number
of outstanding shares of Class B common stock will be adjusted through a stock split or stock dividend so that the total number of outstanding
shares of Class B common stock corresponds to the total number of Class A Units of RAC OpCo outstanding (other than those held by Rice)
plus the total number of Class A Units RAC OpCo into which the Class B Units of RAC OpCo are entitled to convert.
The Initial Stockholders agreed, subject to limited
exceptions, not to transfer, assign or sell any of the Founder Shares held by them (and any shares of Class A common stock acquired upon
exchange of Founder Shares) until one year after the date of the consummation of the initial Business Combination or earlier if, subsequent
to the initial Business Combination, (i) the last sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted
for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day
period commencing at least 150 days after the initial Business Combination or (ii) the Company consummates a subsequent liquidation, merger,
stock exchange or other similar transaction which results in all of the stockholders having the right to exchange their shares of common
stock for cash, securities or other property.
Private Placement Warrants
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the Private Placement of 6,771,000 Private Placement Warrants to the Sponsor and Atlas Point
Fund, at a price of $1.00 per Private Placement Warrant, generating gross proceeds to the Company of approximately $6.8 million.
Each whole Private Placement Warrant is exercisable
for a price of $11.50 to purchase one share of Rice’s Class A common stock or, in certain circumstances, one Class A Unit of RAC
OpCo together with a corresponding number of shares of Rice’s non-economic Class B common stock. A portion of the proceeds from
the sale of the Private Placement Warrants was added to the proceeds from the Initial Public Offering held in the Trust Account. If the
Company does not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless.
The Private Placement Warrants will be non-redeemable and exercisable on a cashless basis so long as they are held by the Sponsor, Atlas
Point Fund or their permitted transferees.
With certain limited exceptions, the Private Placement
Warrants and the securities underlying such warrants will not be transferable, assignable or saleable until 30 days after the completion
of the initial Business Combination.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
Related Party Loans
On September 1, 2020, the Sponsor agreed to loan
the Company an aggregate of up to $300,000 pursuant to a promissory note (the “Note”). This loan is non-interest bearing and
payable upon the completion of the Initial Public Offering. The Company borrowed an aggregate of approximately $290,000 under the Note.
The outstanding balance of the Note was paid in full as of November 10, 2020.
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 Company’s officers and
directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company
completes a Business Combination, the Company will repay the Working Capital Loans out of the proceeds of the Trust Account released to
the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that
a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital
Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either
be repaid upon consummation of a Business Combination or, at the lender’s discretion, up to $1.5 million of such Working Capital
Loans may be convertible into warrants of the post Business Combination entity at a price of $1.00 per warrant. The warrants would be
identical to the Private Placement Warrants. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been
determined and no written agreements exist with respect to such loans. To date, the Company had no borrowings under the Working Capital
Loans.
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 the Company’s
behalf such as identifying potential target businesses and performing due diligence on suitable Business Combinations. The Company’s
audit committee will review on a quarterly basis all payments that were made to the Sponsor, officers or directors, or their affiliates.
Administrative Support Agreement
Commencing on the date the Company’s securities
are first listed on NYSE, the Company agreed to pay the Sponsor a total of $10,000 per month for office space, utilities, secretarial
support and administrative services provided to members of the management team. Upon completion of the initial Business Combination or
the Company’s liquidation, the Company will cease paying these monthly fees.
Note 5—Commitments and Contingencies
Forward Purchase Agreement
The Company entered into an amended and restated
forward purchase agreement (the “Forward Purchase Agreement”) with Atlas Point Fund, pursuant to which Atlas Point Fund, which
is a fund managed by CIBC National Trust but is not affiliated with the Company or sponsor, agreed to purchase up to $75,000,000 of either
(i) a number of units (the “forward purchase units”), consisting of one share of Class A common stock (the “forward
purchase shares”) and one-third of one warrant (the “forward purchase warrants”), for $10.00 per unit or (ii) a number
of forward purchase shares for $9.67 per share (such forward purchase shares valued at $9.67 per share or the forward purchase units,
as the case may be, the “forward purchase securities”), in a private placement that will close simultaneously with the closing
of the Initial Business Combination. The forward purchase warrants will have the same terms as the public warrants and the forward purchase
shares will be identical to the shares of Class A common stock included in the units being sold in this offering, except the forward purchase
shares and the forward purchase warrants will be subject to transfer restrictions and certain registration rights and the forward purchase
units will consist of only one-third of one forward purchase warrant. The funds from the sale of the forward purchase securities may be
used as part of the consideration to the sellers in the Initial Business Combination, and any excess funds may be used for the working
capital needs of the post-transaction company. This agreement is independent of the percentage of stockholders electing to redeem their
public shares and may provide the Company with an increased minimum funding level for the Initial Business Combination. The forward purchase
agreement is subject to conditions, including Atlas Point Fund giving the Company its irrevocable written consent to purchase the forward
purchase securities no later than five days after the Company notifies it of the Company’s intention to meet to consider entering
into a definitive agreement for a proposed Business Combination. Atlas Point Fund may grant or withhold its consent to the purchase entirely
within its sole discretion. Accordingly, if Atlas Point Fund does not consent to the purchase, it will not be obligated to purchase the
forward purchase securities.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
Registration Rights
The holders of Founder Shares, Private Placement
Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any, (and any shares of Class A common stock issuable
upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon
conversion of the Founder Shares) are entitled to registration rights pursuant to a registration rights agreement. The holders of these
securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition,
the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the
completion of the initial Business Combination. Additionally, pursuant to the Forward Purchase Agreement, the Company agreed to grant
certain registration rights to Atlas Point Fund in connection with the issuance of any forward purchase units upon the completion of the
Company’s Business Combination. The Company will bear the expenses incurred in connection with the registration of such securities.
Underwriting Agreement
The Company granted the underwriters a 45-day
option from the date of Initial Public Offering to purchase up to 3,225,000 additional Units to cover over-allotments, if any, at the
Initial Public Offering price less the underwriting discounts and commissions. On October 26, 2020, the underwriters partially exercised
the over-allotment option to purchase an additional 2,225,000 Units.
The underwriters were entitled to an underwriting
discount of $0.20 per Unit (excluding the Affiliated Units purchased). As a result of affiliates of the Sponsor purchasing 1,980,000 Units,
the Company paid an underwriting discount of approximately $4.3 million in the aggregate upon the closing of the Initial Public Offering.
In addition, the underwriters will be entitled to a deferred fee of $0.35 per Unit (excluding the Affiliated Units), or approximately
$7.6 million 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.
Risks and Uncertainties
Management continues to evaluate the impact of
the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect
on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily
determinable as of the date of these condensed consolidated financial statements. The condensed consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Note 6—Stockholders’ Deficit
Class A Common Stock — As
of March 31, 2021, the Company is authorized to issue 250,000,000 shares of Class A common stock with a par value of $0.0001 per share.
As of March 31, 2021, there were 23,727,500 shares of Class A common stock outstanding, of which 23,725,000 shares are subject to possible
redemption and therefore classified outside of permanent equity in the accompanying consolidated balance sheet.
Class B Common Stock — The
Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. On September 2, 2020,
the Company issued 5,750,100 shares of Class B common stock. In October 2020, the Company effected a dividend, resulting in an aggregate
of 6,181,350 shares of Rice’s Class B common stock outstanding. All shares and associated amounts have been retroactively restated
to reflect the dividend. Of these, up to 806,250 shares of Class B common stock are subject to forfeiture to the extent that the underwriters’
over-allotment option is not exercised in full or in part, so that the Initial Stockholders will collectively own 20% of the Company’s
issued and outstanding common stock after the Initial Public Offering (excluding the Sponsor Shares). On October 26, 2020, the underwriters
partially exercised the over-allotment option to purchase an additional 2,225,000 Units; thus, only 250,000 Founder Shares remained subject
to forfeiture to the extent the over-allotment option was fully exercised. On December 5, 2020, the remaining unexercised over-allotment
expired unused and therefore the remaining 250,000 shares of Class B common stock were forfeited. As of March 31, 2021, there were 5,931,350
shares of Class B common stock issued and outstanding.
Holders of the Class A common stock and holders
of the Class B common stock will vote together as a single class on all matters submitted to a vote of the stockholders, except as required
by law. Each share of common stock will have one vote on all such matters. Prior to the initial Business Combination, only holders of
Class B common stock will have the right to vote on the election of directors.
Preferred Stock — The Company
is authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per share, with such designations, voting and other rights
and preferences as may be determined from time to time by the Company’s board of directors. As of March 31, 2020, there were no
shares of preferred stock issued or outstanding.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
Warrants — Public Warrants
may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units and only
whole Public Warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business
Combination or (b) 12 months from the closing of the Initial Public Offering; provided in each case that the Company has an effective
registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the Public Warrants
and a current prospectus relating to them is available (or the Company permits holders to exercise their Public Warrants on a cashless
basis and such cashless exercise is exempt from registration under the Securities Act). The Company has agreed that as soon as practicable,
but in no event later than 15 business days after the closing of the initial Business Combination, it will use its best efforts to file
with the SEC and have an effective registration statement covering the shares of the Class A common stock issuable upon exercise of the
warrants and to maintain a current prospectus relating to those shares of the Class A common stock until the warrants expire or are redeemed.
If a registration statement covering the shares of the Class A common stock issuable upon exercise of the warrants is not effective by
the 60th business day after the closing of the initial Business Combination, warrant holders may, until such time as there
is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement,
exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption.
The warrants have an exercise price of $11.50
per share, subject to adjustments, and will expire five years after the completion of a Business Combination or earlier upon redemption
or liquidation. In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital
raising purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price of less
than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the board
and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor
or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), the exercise price of the warrants
will be adjusted (to the nearest cent) to be equal to 115% of the Newly Issued Price.
Redemption of warrants when our Class A common
stock equals or exceeds $18.00 per share:
Once the warrants become exercisable, the Company
may redeem the outstanding warrants for cash (except as described herein with respect to the Private Placement Warrants):
|
●
|
in whole and not in part;
|
|
●
|
at a price of $0.01 per warrant;
|
|
●
|
upon a minimum of 30 days’ prior written notice of redemption; and
|
|
●
|
if, and only if, the last sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.
|
The Company will not redeem the warrants for cash
unless a registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the warrants
is effective and a current prospectus relating to those shares of Class A common stock is available throughout the 30-day redemption period,
except if the warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities
Act. If the Company calls the warrants for redemption for cash as described above, the management will have the option to require all
holders that wish to exercise warrants to do so on a “cashless basis.”
Redemption of warrants when our Class A common
stock equals or exceeds $10.00 per share:
Once the warrants become exercisable, the Company
may redeem the outstanding warrants (except as described herein with respect to the Private Placement Warrants):
|
●
|
in whole and not in part;
|
|
●
|
at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares of Class A common stock determined by reference to an agreed table based on the redemption date and the “fair market value” of Class A common stock;
|
|
●
|
if and only if, the last sale price of Class A common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which the Company sends the notice of redemption to the warrant holders; and
|
|
●
|
if, and only if, there is an effective registration statement covering the issuance of shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating thereto available throughout the 30- day period after written notice of redemption is given.
|
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
The “fair market value” of the Class
A common stock shall mean the volume weighted average price of the Class A common stock as reported during the 10 trading days ending
on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants.
None of the Private Placement Warrants will be
redeemable by the Company so long as they are held by the initial purchasers of the Private Placement Warrants or their permitted transferees.
In no event will the Company be required to net
cash settle any warrant. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates
the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they
receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly,
the warrants may expire worthless.
Note 7—Fair Value Measurements
The fair value of the Company’s financial
assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale
of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the
measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of
observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions
about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities
based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
|
Level 1:
|
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
|
|
|
|
Level 2:
|
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
|
|
|
|
|
Level 3:
|
Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
|
The Company classifies its U.S. Treasury and equivalent
securities as held-to-maturity in accordance with ASC Topic 320 “Investments - Debt and Equity Securities.” Held-to-maturity
securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities
are recorded at amortized cost on the accompanying balance sheet and adjusted for the amortization or accretion of premiums or discounts.
At March 31, 2021, assets held in the Trust Account
were comprised of $237,308,171 in U.S. Treasury securities. For the three months ended March 31, 2021, the Company did not withdraw any
interest income from the Trust Account.
The following table presents information about
the Company’s held-to-maturity assets that are measured at fair value on a recurring basis at March 31, 2021, and indicates the
fair value hierarchy of the valuation inputs the Company utilized to determine such fair value. The gross holding gains and fair value
of held-to-maturity securities at March 31, 2021, are as follows:
|
|
Fair Value Measured as of December 31, 2020
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments held in Trust Account - U.S. Treasury Securities
|
|
$
|
237,308,171
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
237,308,171
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant Liability - Public Warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
17,556,500
|
|
|
|
17,556,500
|
|
Warrant Liability - Private Warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
13,258,000
|
|
|
|
13,258,000
|
|
Total fair value
|
|
$
|
237,308,171
|
|
|
$
|
-
|
|
|
$
|
30,814,500
|
|
|
$
|
268,122,671
|
|
The Warrants were accounted for as liabilities
in accordance with ASC 815-40 and are presented within warrant liabilities on the Company’s balance sheet. The warrant liabilities
are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of
warrant liabilities in the statement of operations.
Initial Measurement
The Company established the initial fair value
for the Warrants on October 26, 2020, the date of the Company’s Initial Public Offering, using a Monte Carlo simulation model for
the Public Warrants and a Black-Scholes model for the Private Placement Warrants. The Company allocated the proceeds received from (i)
the sale of Units (which is inclusive of one share of Class A common stock and one-half of one Public Warrant), (ii) the sale of Private
Placement Warrants, and (iii) the issuance of Class B common stock, first to the Warrants based on their fair values as determined at
initial measurement, with the remaining proceeds allocated to Class A common stock subject to possible redemption, Class A common stock
and Class B common stock based on their relative fair values at the initial measurement date. The Warrants were classified as Level 3
at the initial measurement date due to the use of unobservable inputs.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
Subsequent
Measurement
The Warrants are measured at fair value on a recurring
basis. The subsequent measurement of the Public Warrants as of March 31, 2021 is classified as Level 1 due to the use of an observable
market quote in an active market.
The key inputs into the Black-Scholes model for
the Private Placement Warrants were as follows as of March 31, 2021:
|
|
As of March 31,
2021
|
|
Exercise price
|
|
$
|
11.50
|
|
Stock price
|
|
$
|
10.11
|
|
Term (in years)
|
|
|
5.57
|
|
Volatility
|
|
|
23
|
|
Risk-free interest rate
|
|
|
1.05
|
%
|
Dividend yield
|
|
|
-
|
|
The key inputs into the Black-Scholes model for
the Private Placement Warrants were as follows as of December 31, 2020:
|
|
As of December 31,
2020
|
|
Exercise price
|
|
$
|
11.50
|
|
Stock price
|
|
$
|
10.83
|
|
Term (in years)
|
|
|
5.82
|
|
Volatility
|
|
|
22.68
|
|
Risk-free interest rate
|
|
|
0.48
|
|
Dividend yield
|
|
|
-
|
|
As of March 31, 2021, the derived fair value of
the Private Placement Warrants was determined to be $2.30 per warrant for an aggregate value of $15.5 million. The observable fair value
of the Public Warrants was $2.20 per warrant for an aggregate value of $27.0 million.
The following table presents the changes in the
fair value of warrant liabilities:
|
|
Private
Placement
|
|
|
Level
|
|
|
Public
|
|
|
Level
|
|
|
Warrant
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value as of December 31, 2020
|
|
$
|
15,541,987
|
|
|
|
3
|
|
|
$
|
27,046,500
|
|
|
|
1
|
|
|
$
|
42,588,487
|
|
Change in fair value
|
|
$
|
(2,284,001
|
)
|
|
|
|
|
|
$
|
(9,490,000
|
)
|
|
|
|
|
|
$
|
(11,774,001
|
)
|
Fair Value as of March 31, 2021
|
|
$
|
13,257,986
|
|
|
|
3
|
|
|
$
|
17,556,500
|
|
|
|
1
|
|
|
$
|
30,814,486
|
|
Level 3 financial liabilities consist of the Private
Placement Warrant liability for which there is no current market for these securities such that the determination of fair value requires
significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed
each period based on changes in estimates or assumptions and recorded as appropriate.
During the three months ended March 31, 20201,
there were transfers out of level 3 of $17,556,500. Transfers out of level 3 are measured at the end of the period.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
Note 8—Subsequent Events
Management has evaluated subsequent events to
determine if events or transactions occurring through the date the condensed consolidated financial statements were available for issuance,
require potential adjustment to or disclosure in the condensed consolidated financial statements and has concluded that all such events,
except as below and as noted in Notes 1, 2, 3, 4 and 5, that would require recognition or disclosure have been recognized or disclosed.
Business Combination Agreements
On April 7, 2021, the Company, entered into (i)
the Business Combination Agreement (as may be amended, supplemented or otherwise modified from time to time, the “Aria Merger Agreement”),
by and among the Company Rice Acquisition Holdings LLC, a Delaware limited liability company and direct subsidiary of the Company (“RAC
OpCo”), LFG Intermediate Co, LLC, a Delaware limited liability company and direct subsidiary of RAC OpCo (“RAC Intermediate”),
LFG Buyer Co, LLC, a Delaware limited liability company and a direct subsidiary of RAC Intermediate (“RAC Buyer”), Inigo Merger
Sub, LLC, a Delaware limited liability company and a direct subsidiary of RAC Buyer (“Aria Merger Sub”), Aria Energy LLC,
a Delaware limited liability company (“Aria”), and the Equityholder Representative (as defined therein), pursuant to which,
among other things, Aria Merger Sub will merge with and into Aria, with Aria surviving the merger and becoming a direct subsidiary of
RAC Buyer, and (ii) the Business Combination Agreement, dated as of April 7, 2021 (as may be amended, supplemented or otherwise modified
from time to time, the “Archaea Merger Agreement” and, together with the Aria Merger Agreement, the “Business Combination
Agreements”), by and among the Company, RAC OpCo, RAC Intermediate, RAC Buyer, Fezzik Merger Sub, LLC, a Delaware limited liability
company and direct subsidiary of RAC Buyer (“Archaea Merger Sub”), Archaea Energy, LLC (“Archaea Seller”), a Delaware
limited liability company, and Archaea Energy II, LLC, a Delaware limited liability company (“Archaea” and, together with
Archaea Seller and Aria, the “Companies”), pursuant to which, among other things, Archaea Merger Sub will merge with and into
Archaea, with Archaea surviving the merger and becoming a direct subsidiary of RAC Buyer, in each case, on the terms and subject to the
conditions therein (the transactions contemplated by the Business Combination Agreements, the “Business Combinations”).
Consideration
Pursuant to the terms of the Aria Merger Agreement
and at the Effective Time (as defined therein), (i) all Class A Units of Aria held by a holder of Aria’s Class A Units shall be
cancelled and converted into the right to receive (a) the number of Class A Units of RAC OpCo, (b) the number of Class B common stock,
par value $0.0001 (“Class B Common Stock”), of the Company and (c) the amount of cash as set forth in, and in accordance with,
the Aria Merger Agreement, (ii) all Class B Units of Aria held by a holder of Aria’s Class B Units shall be cancelled and converted
into the right to receive (A) the number of Class A Units of RAC OpCo, (B) the number of shares of Class B Common Stock and (C) the amount
of cash as set forth in, and in accordance with, the Aria Merger Agreement, and (iii) all Class C Units of Aria shall be cancelled and
extinguished without any conversion thereof.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
Pursuant to the terms of the Archaea Merger Agreement
and at the Effective Time (as defined therein), all equity interests of Archaea will be cancelled and converted into the right to receive
(x) the number of Class A Units of RAC OpCo and (y) the number of shares of Class B Common Stock as set forth in, and in accordance with,
the Archaea Merger Agreement.
Following the Business Combinations, holders of
Class A Units of RAC OpCo (other than the Company) will have the right (an “exchange right”), subject to certain limitations,
to exchange Class A Units of RAC OpCo (and a corresponding number of shares of Class B Common Stock) for, at the Company’s option,
(i) shares of Class A Common Stock on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations
and the like, or (ii) a corresponding amount of cash. the Company’s decision to make a cash payment or issue shares upon an exercise
of an exchange right will be made by the Company’s independent directors, and such decision will be based on facts in existence
at the time of the decision, which the Company expects would include the relative value of the Class A Common Stock (including trading
prices for the Class A Common Stock at the time), the cash purchase price, the availability of other sources of liquidity (such as an
issuance of preferred stock) to acquire the Class A Units of RAC OpCo and alternative uses for such cash.
Holders of Class A Units of RAC OpCo (other than
the Company) will generally be permitted to exercise the exchange right on a quarterly basis, subject to certain de minimis allowances.
In addition, additional exchanges may occur in connection with certain specified events, and any exchanges involving more than a specified
number of Class A Units of RAC OpCo (subject to the Company’s discretion to permit exchanges of a lower number of units) may occur
at any time upon ten business days’ advanced notice. The exchange rights will be subject to certain limitations and restrictions
intended to reduce the administrative burden of exchanges upon the Company and ensure that RAC OpCo will continue to be treated as a partnership
for U.S. federal income tax purposes.
Following any exchange of Class A Units of RAC
OpCo (and a corresponding number of shares of Class B Common Stock), RAC will retain the Class A Units of RAC OpCo and cancel the shares
of Class B Common Stock. As the holders of Class A Units of RAC OpCo (other than the Company) exchange their Class A Units of RAC OpCo,
the Company’s membership interest in RAC OpCo will be correspondingly increased, the number of shares of Class A Common Stock outstanding
will be increased, and the number of shares of Class B Common Stock outstanding will be reduced.
Conditions to Consummation of the Business
Combinations
Consummation of the Business Combinations is generally
subject to customary conditions of the respective parties, and conditions customary to special purpose acquisition companies, including
(i) expiration or termination of all applicable waiting periods under HSR, (ii) the absence of any law or governmental order, threatened
or pending, preventing the consummation of the Business Combinations, (iii) completion of the Company Share Redemptions (as defined in
the Business Combination Agreements), (iv) receipt of requisite shareholder approval for consummation of the Business Combinations, (v)
the consummation of the LES Sale (as defined in the Aria Merger Agreement) by Aria and (vi) the issuance by the Federal Energy Regulatory
Commission of an order granting authorization for the Business Combinations pursuant to Section 203 of the Federal Power Act of 1935.
In addition, the parties also have the right to not consummate the Business Combinations in the event that the cash on the balance sheet
of the combined company following the closing of the Business Combinations (the “Combined Company”) would be less than $150,000,000,
subject to the terms of the Business Combination Agreements. Furthermore, the closing of the transactions contemplated by the Aria Merger
Agreement is expressly conditioned on the closing of the transactions contemplated by the Archaea Merger Agreement and vice versa.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
Termination
Each of the Business Combination Agreements may
be terminated by the parties thereto under certain customary and limited circumstances at any time prior to the closing of the Business
Combinations, including, without limitation, by mutual written consent or if the Business Combinations have not been consummated within
150 days from the date of the Business Combination Agreements (subject to certain extensions for up to 30 days for delays as set forth
in the Business Combination Agreements).
Stockholders Agreement
In connection with the closing of the Business
Combinations, the Company, RAC Buyer, RAC OpCo, Sponsor, and certain other individuals affiliated with the Companies (the “Company
Holders”) will enter into a stockholders agreement (the “Stockholders Agreement”) pursuant to which, among other things,
(i) the board of directors of the Combined Company (the “Board”) will consist of seven members, (ii) the holders of a majority
of the Company Interests (as defined in the Stockholders Agreement) held by the RAC Sponsor Holders (as defined in the Stockholders Agreement)
will have the right to designate two directors (the “RAC Sponsor Directors”) for appointment or election to the Board during
the term of the Stockholders Agreement, (iii) the Ares Investors (as defined in the Stockholders Agreement) will have the right to designate
one director (the “Ares Director”) for appointment or election to the Board for so long as the Ares Investors hold at least
50% of the Registrable Securities (as defined in the Stockholders Agreement) held by them on the date that the Business Combinations are
consummated (the “Ares Fall-Away Date”), (iv) the Board shall take all necessary action to designate the person then serving
as the Chief Executive Officer of the Combined Company (the “CEO Director”) for appointment or election to the Board during
the term of the Stockholders Agreement and (v) the Board shall designate three independent directors (the “Independent Directors”)
to serve on the Board during the term of the Stockholders Agreement. The Ares Investors shall have the right to consult on the persons
to be designated as Independent Directors prior to the Ares Fall-Away Date.
PIPE Financing
On April 7, 2021, the Company entered into subscription
agreements (each, a “Subscription Agreement”) with certain investors (the “PIPE Investors”) pursuant to which,
among other things, the PIPE Investors have agreed to subscribe for and purchase, and Rice has agreed to issue and sell to the PIPE Investors,
an aggregate of 30,000,000 shares of Class A Common Stock, par value $0.0001 per share (“Class A Common Stock”), of the Company
for an aggregate purchase price of $300,000,000 on the date of Closing (as defined in each Subscription Agreement), on the terms and subject
to the conditions set forth therein (the “PIPE Financing”). Each Subscription Agreement contains customary representations
and warranties of the Company, on the one hand, and the PIPE Investor, on the other hand, and customary conditions to closing, including
the consummation of the Business Combinations.
Additionally, on April 7, 2021, the Company, RAC
OpCo, Sponsor and Atlas Point Energy Infrastructure Fund, LLC, a Delaware limited liability company (“Atlas”), entered into
an Amendment to Forward Purchase Agreement (the “FPA Amendment”) pursuant to which the Forward Purchase Agreement, dated as
of September 30, 2020 (the “Original Agreement”), by and among such parties was amended to provide that Atlas shall purchase
a total of $20,000,000 of Forward Purchase Securities (as defined in the Original Agreement) and the Forward Purchase Warrants (as defined
in the Original Agreement) will consist of one-eighth of one redeemable warrant (where each whole redeemable warrant is exercisable to
purchase one share of Class A Common Stock at an exercise price of $11.50 per share).
Item 2. Management’s Discussion and Analysis
of Financial Condition and Results of Operations.
References to the “Company,” “our,”
“us” or “we” refer to Rice Acquisition Corp. and its majority-owned and controlled operating subsidiary, Rice
Acquisition Holdings LLC (the “RAC OpCo”), unless the context indicates otherwise. The following discussion and analysis of
the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated
financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis
set forth below includes forward-looking statements that involve risks and uncertainties.
Overview
We are a blank check company incorporated in Delaware
on September 1, 2020 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization
or similar business combination with one or more businesses (the “Business Combination”). Our sponsor is Rice Acquisition
Sponsor LLC, a Delaware limited liability company (“Sponsor”).
The registration statement for our initial public
offering (“Initial Public Offering”) was declared effective on October 21, 2020. On October 26, 2020, we consummated the Initial
Public Offering of 23,725,000 units (each, a “Unit” and collectively, the “Units”), including 2,225,000 additional
Units that were issued pursuant to the underwriters’ partial exercise of their over-allotment option (the “Over-Allotment
Units”), at $10.00 per Unit, generating gross proceeds of approximately $237.3 million, and incurring offering costs of approximately
$12.5 million, inclusive of $7.6 million in deferred underwriting commissions.
Simultaneously with the closing of the Initial
Public Offering, we consummated the private placement (“Private Placement”) of 6,771,000 warrants (each, a “Private
Placement Warrant” and collectively, the “Private Placement Warrants”) to our Sponsor and Atlas Point Energy Infrastructure
Fund, LLC (“Atlas Point Fund”), at a price of $1.00 per Private Placement Warrant, generating gross proceeds of approximately
$6.8 million. Each Private Placement Warrant is exercisable to purchase one share of Rice’s Class A common stock or, in certain
circumstances, one Class A Unit of RAC OpCo together with a corresponding number of shares of Rice’s non-economic Class B common
stock.
Following the Initial Public Offering, our public
stockholders hold a direct economic equity ownership interest in Rice in the form of shares of Class A common stock, and an indirect ownership
interest in RAC OpCo through Rice’s ownership of Class A Units of RAC OpCo. By contrast, the Initial Stockholders (our Sponsor,
Atlas Point Fund and our officers and directors) own direct economic interests in RAC OpCo in the form of Class B Units and a corresponding
non-economic voting equity interest in Rice in the form of shares of Class B common stock, as well as a small direct interest through
the Sponsor Shares (as defined below). Sponsor Shares were purchased for $10.00 each and, in the absence of an initial Business Combination,
will generally participate in liquidation or other payments on a pari passu basis with the Public Shares (as defined below). However,
given the relatively de minimis number of Sponsor Shares relative to Public Shares, in many cases the economic, governance or other effects
of the sponsor shares are not material to the holders of Class A common stock or warrants, and for simplicity, portions of this disclosure
may not fully describe or reflect these immaterial effects.
Upon the closing of the Initial Public Offering
and the Private Placement, approximately $237.3 million of the net proceeds of the sale of the Units in the Initial Public Offering and
the sale of the Private Placement Warrants in the Private Placement were placed in a trust account (“Trust Account”) located
in the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only in U.S. “government
securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money
market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S.
government treasury obligations, as determined by us, until the earlier of: (i) the completion of a Business Combination and (ii) the
distribution of the Trust Account.
If we are unable to complete a Business Combination
within 24 months from the closing of the Initial Public Offering, or October 26, 2022, 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 pay our franchise and income taxes (less up to $100,000 of interest
to pay dissolution expenses), divided by the number of then outstanding Public Shares and Class A Units of RAC OpCo (other than those
held by Rice), which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive
further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of the remaining stockholders and the board of directors, dissolve and liquidate, subject in each case to our
obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
Results of Operations
Our entire activity for the three months ended
March 31, 2021, has been related to identifying a target company for our initial Business Combination. We have neither engaged in any
operations nor generated any revenues to date. We will not generate any operating revenues until after completion of our initial Business
Combination. We will generate non-operating income in the form of interest income on cash and cash equivalents. 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.
For the three months ended March 31, 2021, we
had income of approximately $8.7 million, which consisted of approximately $11.7 million of change in fair value of warrant liabilities
offset by approximately $3.0 million of general and administrative expenses.
Liquidity and Capital Resources
As of March 31, 2021, we had approximately $1.0
million in our operating bank account and a working capital deficiency of approximately $1.4 million.
Our liquidity needs to date had been satisfied
through the payment of $26,000 from our Sponsor to purchase the Founder Shares and Sponsor Shares, a loan under a note agreement with
our Sponsor of approximately $290,000 (the “Note”), and the net proceeds from the consummation of the Private Placement not
held in the Trust Account. The Note was paid in full as of November 10, 2020. In addition, in order to finance transaction costs in connection
with a Business Combination, our officers, directors and Sponsor may, but are not obligated to, provide us working capital loans. As of
March 31, 2021, there were no amounts outstanding under any working capital loans.
Based on the foregoing, management believes that
we 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, the Company will be using these funds held outside of the Trust Account
for paying existing accounts payable, and structuring, negotiating and consummating the Business Combination.
Contractual Obligations
We do not have any long-term debt obligations,
capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities.
On October 21, 2020, we entered into an Administrative
Services Agreement pursuant to which we have agreed to cause RAC OpCo to pay the Sponsor a total of $10,000 per month for office space,
utilities and administrative support. Upon completion of the Initial Business Combination or our liquidation, the agreement will terminate.
The underwriters of the Initial Public Offering
were entitled to underwriting discounts and commissions of 5.5%, of which 2.0% (approximately $4.3 million) was paid at the closing of
the Initial Public Offering and 3.5% (approximately $7.6 million) was deferred. The deferred underwriting discounts and commissions will
become payable to the underwriters upon the consummation of the Initial Business Combination and will be paid from the amounts held in
the Trust Account. The underwriters are not entitled to any interest accrued on the deferred underwriting discounts and commissions.
Critical Accounting Policies
This management’s discussion and analysis
of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have
been prepared in accordance with United States generally accepted accounting principles. The preparation of these condensed consolidated
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 condensed consolidated 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. There have been no significant
changes in our critical accounting policies as discussed in the Company’s Amendment No. 1 to Annual Report on Form 10-K for the
year ended December 31, 2020 as filed with the SEC on May 13, 2021.
Recent Accounting Pronouncements
In August 2020, the FASB issued Accounting Standard
Update (the “ASU”) No. 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): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,
which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also
removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception and
it also simplifies the diluted earnings per share calculation in certain areas. The Company early adopted the ASU on January 1, 2021.
Adoption of the ASU did not impact the Company’s financial position, results of operations or cash flows.
Off-Balance Sheet Arrangements
As of March 31, 2021, we did not have any off-balance
sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
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 condensed consolidated 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.
Item 3. Quantitative and Qualitative Disclosures
About Market Risk
We are a smaller reporting company as defined
by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed
to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported
within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our
management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate
to allow timely decisions regarding required disclosure.
Under the supervision and with the participation
of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness
of our disclosure controls and procedures as of the end of the fiscal quarter ended March 31, 2021, as such term is defined in Rules
13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial officer
have concluded that our disclosure controls and procedures were not effective as of March 31, 2021, because of a material weakness in
our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control
over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim
financial statements will not be prevented or detected on a timely basis. Specifically, the Company’s management has concluded
that our control around the interpretation and accounting for certain complex equity and equity-linked instruments issued by the Company,
and presentation of earnings per share was not effectively designed or maintained. This material weakness resulted in the restatement
of the Company’s balance sheet as of October 26, 2020, its annual financial statements for the period ended December 31, 2020 and
its interim financial statements for the quarter ended March 31, 2021. Additionally, this material weakness could result in a misstatement
of the carrying value of equity, equity-linked instruments and related accounts and disclosures, and presentation of earnings per share
that would result in a material misstatement of the financial statements that would not be prevented or detected on a timely basis. As
a result, our management performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance
with accounting principles generally accepted in the United States of America. Accordingly, management believes that the financial statements
included in this Amendment No. 1 on Form 10-Q/A present fairly, in all material respects, our financial position, results of operations
and cash flows for the periods presented. Management understands that the accounting standards applicable to our financial statements
are complex and has since the inception of the Company benefited from the support of experienced third-party professionals with whom
management has regularly consulted with respect to accounting issues. Management intends to continue to further consult with such professionals
in connection with accounting matters.
Changes in Internal Control over Financial
Reporting
There was no change in our internal control over
financial reporting that occurred during the fiscal quarter ended March 31, 2021 that has materially affected, or is reasonably likely
to materially affect, our internal control over financial reporting except as described below.
Our principal executive officer and principal
financial officer performed additional accounting and financial analyses and other post-closing procedures including consulting with subject
matter experts related to the accounting for certain complex equity and equity-linked instruments issued by the Company, and presentation
of earnings per share. The Company’s management has expended, and will continue to expend, a substantial amount of effort and resources
for the remediation and improvement of our internal control over financial reporting. While we have processes to properly identify and
evaluate the appropriate accounting technical pronouncements and other literature for all significant or unusual transactions, we have
expanded and will continue to improve these processes to ensure that the nuances of such transactions are effectively evaluated in the
context of the increasingly complex accounting standards.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors.
As a smaller reporting company, we are not required
to disclose any material changes from risk factors as previously disclosed in our Annual Report on Form 10-K. However, below is a partial
list of material risks, uncertainties and other factors that could have a material effect on the Company and its operations:
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we may not be able to complete our initial business combination in the prescribed time frame;
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our expectations around the performance of a prospective target business or businesses may not be realized;
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we may not be successful in retaining or recruiting required officers, key employees or directors following our initial business combination;
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our officers and directors may have difficulties allocating their time between the Company and other businesses and may potentially have conflicts of interest with our business or in approving our initial business combination;
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we may not be able to
obtain additional financing to complete our initial business combination or reduce the number of shareholders requesting redemption;
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trust account funds may not be protected against third party claims or bankruptcy;
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an active market for our public securities may not develop and you will have limited liquidity and trading; and
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the availability to us of funds from interest income on the trust account balance may be insufficient to operate our business prior to the business combination.
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For more information about our risk factors, see
Item 1A of Part I in Amendment No. 1 to our Annual Report on Form 10-K for the year ended December 31, 2020 and the section titled “Risk
Factors” contained in our preliminary proxy statement filed with the SEC on May 14, 2021, as the same may be amended or supplemented,
and in our definitive proxy statement with respect to our initial business combination, when the same becomes available.
Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds from Registered Securities
On October 26, 2020, we consummated the Initial
Public Offering of 23,725,000 Units, including the Over-Allotment Units. The Units were sold at a price of $10.00 per Unit, generating
gross proceeds of $237,250,000. The underwriters were granted a 45-day option from the date of the final prospectus relating to the Initial
Public Offering to purchase up to 3,225,000 additional Units to cover over-allotments, if any, at $10.00 per Unit, less underwriting discounts
and commissions. On October 23, 2020, the underwriters partially exercised the over-allotment option and, on October 26, 2020, the underwriters
purchased the Over-Allotment Units.
Barclays Capital Inc., AmeriVet Securities Inc.
and Academy Securities Inc. served as underwriters for the Initial Public Offering. The securities sold in the Initial Public Offering
were registered under the Securities Act on a registration statement on Form S-1 (File No. 333-249340). The SEC declared the registration
statement effective on October 21, 2020.
In connection with the closing of the Initial
Public Offering, we paid a total of approximately $4.3 million in underwriting discounts and commissions. In addition, the underwriters
agreed to defer approximately $7.6 million in underwriting discounts and commissions, which amount will be payable upon consummation of
the Initial Business Combination. Prior to the closing of the Initial Public Offering, the Sponsor loaned RAC OpCo approximately $300,000
under the Note.
In connection with the Initial Public Offering,
we incurred offering costs of approximately $12.5 million, inclusive of approximately $7.6 million in deferred underwriting commissions.
Other incurred offering costs consisted principally of preparation fees related to the Initial Public Offering. After deducting the underwriting
discounts and commissions (excluding the deferred portion, which amount will be payable upon consummation of the Initial Business Combination,
if consummated) and the Initial Public Offering expenses, $237.3 million of the net proceeds from our Initial Public Offering and certain
of the proceeds from the private placement of the Private Placement Warrants (or $10.00 per Unit sold in the Initial Public Offering)
was placed in the Trust Account. The net proceeds of the Initial Public Offering and certain proceeds from the sale of the Private Placement
Warrants are held in the Trust Account and invested as described elsewhere in this Quarterly Report on Form 10-Q.
On October 26, 2020, simultaneously with the closing
of the Initial Public Offering and pursuant to separate Private Placement Warrants and Warrant Rights Agreements, dated September 21,
2020, by and among the Company and RAC OpCo, and each of the Sponsor and Atlas Point Fund, the Company completed the private sale of an
aggregate of 6,771,000 Private Placement Warrants at a purchase price of $1.00 per Private Placement Warrant to the Sponsor and Atlas
Point Fund, generating gross proceeds of $6,771,000.
There has been no material change in the planned
use of the proceeds from the Initial Public Offering and Private Placement as is described in the Company’s final prospectus related
to the Initial Public Offering.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
ARCHAEA ENERGY INC.
|
|
|
|
Date: December 28, 2021
|
By:
|
/s/ Chad Bellah
|
|
Name:
|
Chad Bellah
|
|
Title:
|
Chief Accounting Officer
|
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q/A
(Amendment
No. 1)
(Mark
One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended June 30, 2021
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from to
Commission
File Number: 001-39644
ARCHAEA ENERGY INC.
(Exact
name of registrant as specified in its charter)
Delaware
|
|
85-2867266
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification Number)
|
4444 Westheimer Road, Suite G450
|
|
|
Houston, Texas
|
|
77027
|
(Address of principal executive offices)
|
|
(Zip Code)
|
(346) 708-8272
(Registrant’s
telephone number, including area code)
Rice Acquisition Corp.
102 East Main Street, Second Story
Carnegie, Pennsylvania 15106
(Former
name or former address, if changed since last report)
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class registered
|
|
Trading Symbol(s)
|
|
Name of each exchange on which registered
|
Class A common stock, par value $0.0001 per share
|
|
LFG
|
|
The New York Stock Exchange
|
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☒
|
Smaller reporting company
|
☒
|
|
Emerging growth company
|
☒
|
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐
As of August 13, 2021, 23,727,500 shares of Class
A common stock, par value $0.0001, and 5,931,350 shares of Class B common stock, par value $0.0001, were issued and outstanding.
EXPLANATORY NOTE
References throughout this Amendment No. 1
to the Quarterly Report on Form 10-Q to “we,” “us,” the “Company” or “our company” are
to Archaea Energy Inc., formerly known as Rice Acquisition Corp., unless the context otherwise indicates.
This Amendment No. 1 (this “Amendment No.
1”) to the Quarterly Report on Form 10-Q/A amends and restates the Quarterly Report on Form 10-Q of Archaea Energy Inc., formerly
known as Rice Acquisition Corp., for the quarterly period ended June 30, 2021, as filed with the Securities and Exchange Commission (“SEC”)
on August 13, 2021.
On August 13, 2021, the Company filed its Form
10-Q for the quarterly period ended June 30, 2021 (the “Q2 Form 10-Q”). The Company classified a portion of the redeemable
shares of Class A common stock of the Company (the “Public Shares”) issued as part of the units sold in the Company’s
initial public offering as permanent equity to maintain net tangible assets greater than $5,000,000 on the basis that the Company will
consummate its initial business combination only if the Company has net tangible assets of at least $5,000,001. Previously, the Company
did not consider redeemable stock classified as temporary equity as part of net tangible assets. Effective with these financial statements,
the Company revised this interpretation to include temporary equity in net tangible assets. As a result, management corrected the error
by restating all Public Shares as temporary equity. This resulted in an adjustment to the initial carrying value of the Class A common
stock subject to possible redemption with the offset recorded to additional paid-in capital (to the extent available), accumulated deficit
and Class A common stock.
In connection with the change in presentation
for the Class A common stock subject to possible redemption, the Company revised its earnings per share calculation to allocate income
and losses shared pro rata between the two classes of shares. This presentation differs from the previously presented method of earnings
per share, which was similar to the two-class method. The Company determined the change in classification of the Class A common stock
and change to its presentation of earnings per share is quantitatively material and it should restate its previously issued financial
statements.
Therefore, on December 28, 2021, the Company’s
management and the audit committee of the Company’s board of directors (the “Audit Committee”) concluded that the Company’s
previously issued (i) audited balance sheet as of October 26, 2020 (the “Post-IPO Balance Sheet”), as previously revised in
the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2020, filed with the SEC on May 13, 2021 (“2020
Form 10-K/A No. 1”), (ii) audited financial statements included in the 2020 Form 10-K/A No. 1, (iii) unaudited interim financial
statements included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021, filed with the
SEC on May 26, 2021, and (iv) unaudited interim financial statements included in the Company’s Quarterly Report on Form 10-Q for
the quarterly period ended June 30, 2021, filed with the SEC on August 13, 2021 (collectively, the “Affected Periods”), should
be restated to report all Public Shares as temporary equity and should no longer be relied upon.
As such, the Company has restated or will restate
in this Amendment No. 1 its financial statements for the Affected Periods.
The above changes did not have any impact on its cash position or the
cash held in the trust account established in connection with the IPO.
After re-evaluation, the Company’s management
has concluded that in light of the errors described above, a material weakness existed in the Company’s internal control over financial
reporting during the Affected Periods and that the Company’s disclosure controls and procedures were not effective. The Company’s
remediation plan with respect to such material weakness is described in more detail in Item 4 to Part 1 of this Amendment No. 1.
Items Amended in this Amendment No. 1
For the convenience of the reader, this Amendment No. 1 amends and
restates the Q2 Form 10-Q in its entirety. As a result, this Amendment No. 1 includes both items that have been changed as a result of
the restatement described above as well as items that are unchanged from the Q2 Form 10-Q. The following items have been amended in this
Amendment No. 1 to reflect the restatement described above:
|
●
|
Part I, Item 1. Condensed Consolidated Financial Statements
|
|
●
|
Part I, Item 4. Controls and Procedures
|
|
●
|
Part II, Item 6. Exhibits
|
In addition, in accordance with applicable SEC rules, this Amendment
No. 1 includes new certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act from our Chief Executive Officer (as principal
executive officer) and our Chief Financial Officer (as principal financial officer) dated as of the filing date of this Amendment No.
1.
Except as described above, this Amendment No. 1 does not amend, update
or change any other items or disclosures in the Q2 Form 10-Q. This Amendment No. 1 does not purport to reflect any information or events
subsequent to the filing date of the Q2 Form 10-Q. As such, this Amendment No. 1 speaks only as of the date the Q2 Form 10-Q was filed,
and we have not undertaken herein to amend, supplement or update any information contained in the Q2 Form 10-Q to give effect to any subsequent
events. Accordingly, this Amendment No. 1 should be read in conjunction with our filings made with the SEC subsequent to the filing of
the Q2 Form 10-Q.
RICE ACQUISITION CORP.
Form
10-Q
For the Quarter Ended June 30, 2021
Table
of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form
10-Q (this “Report”), including, without limitation, statements under the heading “Item 2. Management’s Discussion
and Analysis of Financial Condition and Results of Operations,” 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 Securities Exchange Act of 1934,
as amended (the “Exchange Act”). These forward-looking statements can be identified by the use of forward-looking terminology,
including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,”
“plans,” “may,” “will,” “potential,” “projects,” “predicts,” “continue,”
or “should,” or, in each case, their negative or other variations or comparable terminology. There can be no assurance that
actual results will not materially differ from expectations. Such statements include, but are not limited to, any statements relating
to our ability to consummate any acquisition or other business combination and any other statements that are not statements of current
or historical facts. These statements are based on management’s current expectations, but actual results may differ materially due
to various factors, including, but not limited to:
|
●
|
our ability to complete an initial business combination, including our proposed business combination with Aria Energy LLC and Archaea Energy LLC;
|
|
●
|
our expectations around the performance of the 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;
|
|
●
|
the ability of our officers and directors to generate a number of potential investment 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, including following our initial business combination.
|
The forward-looking statements
contained in this Report are based on our current expectations and beliefs concerning future developments and their potential effects
on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of
risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially
different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited
to, those factors listed above and others described under the heading “Risk Factors” in Item 1A of Part I in Amendment No.
1 to our Annual Report on Form 10-K/A for the year ended December 31, 2020. 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. These risks and others described under “Risk Factors”
may not be exhaustive.
By their nature, forward-looking statements involve risks and uncertainties
because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking
statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and
developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements
contained in this Report. In addition, even if our results or operations, financial condition and liquidity, and developments in the industry
in which we operate are consistent with the forward-looking statements contained in this Report, those results or developments may not
be indicative of results or developments in subsequent periods.
PART
I - FINANCIAL INFORMATION
Item
1. Condensed Consolidated Financial Statements
RICE
ACQUISITION CORP.
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
|
|
(unaudited)
(as restated)
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash
|
|
$
|
5,290
|
|
|
$
|
1,335,167
|
|
Prepaid expenses
|
|
|
469,693
|
|
|
|
662,865
|
|
Total current assets
|
|
|
474,983
|
|
|
|
1,998,032
|
|
Investments held in Trust Account
|
|
|
237,351,433
|
|
|
|
237,308,171
|
|
Total Assets
|
|
$
|
237,826,416
|
|
|
$
|
239,306,203
|
|
|
|
|
|
|
|
|
|
|
Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit:
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
$
|
7,950,051
|
|
|
$
|
118,446
|
|
Accounts payable
|
|
|
71,571
|
|
|
|
217,918
|
|
Franchise tax payable
|
|
|
99,452
|
|
|
|
65,481
|
|
Total current liabilities
|
|
|
8,121,074
|
|
|
|
401,845
|
|
Deferred legal fees
|
|
|
187,500
|
|
|
|
187,500
|
|
Deferred underwriting commissions in connection with the initial public offering
|
|
|
7,610,750
|
|
|
|
7,610,750
|
|
Derivative warrant liabilities
|
|
|
138,965,647
|
|
|
|
42,588,487
|
|
Total liabilities
|
|
|
154,884,971
|
|
|
|
50,788,582
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A common stock subject to possible redemption, $0.0001 par value; 23,725,000 shares at $10.00 per share as of June 30, 2021 and December 31, 2020, respectively
|
|
|
237,250,000
|
|
|
|
237,250,000
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Deficit:
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Class A common stock, $0.0001 par value; 250,000,000 shares authorized; 2,500 shares issued and outstanding (excluding 23,725,000 shares subject to possible redemption) as of June 30, 2021 and December 31, 2020
|
|
|
-
|
|
|
|
-
|
|
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 5,931,350 shares issued and outstanding as of June 30, 2021 and December 31, 2020
|
|
|
593
|
|
|
|
593
|
|
Additional paid-in capital
|
|
|
-
|
|
|
|
-
|
|
Accumulated deficit
|
|
|
(149,384,365
|
)
|
|
|
(47,868,812
|
)
|
Total Rice Acquisition Corp. deficit
|
|
|
(149,383,772
|
)
|
|
|
(47,868,219
|
)
|
|
|
|
|
|
|
|
|
|
Non-controlling interest in subsidiary
|
|
|
(4,924,783
|
)
|
|
|
(864,160
|
)
|
|
|
|
|
|
|
|
|
|
Total stockholders’ deficit
|
|
|
(154,308,555
|
)
|
|
|
(48,732,379
|
)
|
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit
|
|
$
|
237,826,416
|
|
|
$
|
239,306,203
|
|
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
RICE
ACQUISITION CORP.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2021
(AS
RESTATED)
|
|
For The
Three Months
Ended
June 30,
2021
|
|
|
For The
Six Months
Ended
June 30,
2021
|
|
General and administrative expenses
|
|
$
|
6,168,889
|
|
|
$
|
9,168,480
|
|
Franchise tax expense
|
|
|
33,973
|
|
|
|
73,799
|
|
Total operating expenses
|
|
|
(6,202,862
|
)
|
|
|
(9,242,279
|
)
|
Other income (expense)
|
|
|
|
|
|
|
|
|
Change in fair value of derivative warrant liabilities
|
|
|
(108,151,160
|
)
|
|
|
(96,377,160
|
)
|
Interest earned on investments held in Trust Account
|
|
|
5,752
|
|
|
|
43,263
|
|
Net loss
|
|
|
(114,348,270
|
)
|
|
|
(105,576,176
|
)
|
Net loss attributable to non-controlling interest in subsidiary
|
|
|
(4,398,010
|
)
|
|
|
(4,060,622
|
)
|
Net loss attributable to Rice Acquisition Corp.
|
|
$
|
(109,950,260
|
)
|
|
$
|
(101,515,554
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding of Class A common stock
|
|
|
23,727,500
|
|
|
|
23,727,500
|
|
Basic and diluted net income per share, Class A common stock
|
|
$
|
(3.86
|
)
|
|
$
|
(3.56
|
)
|
Weighted average shares outstanding of Class B common stock
|
|
|
5,931,350
|
|
|
|
5,931,350
|
|
Basic and diluted net loss per share, Class B common stock
|
|
$
|
(3.86
|
)
|
|
$
|
(3.56
|
)
|
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
RICE
ACQUISITION CORP.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2021
(AS RESTATED)
|
|
Common Stock
|
|
|
Additional
|
|
|
|
|
|
Non-controlling
|
|
|
Total
|
|
|
|
Class A
|
|
|
Class B
|
|
|
Paid-In
|
|
|
Accumulated
|
|
|
Interest in
|
|
|
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Subsidiary
|
|
|
Deficit
|
|
Balance - December 31, 2020
|
|
|
2,500
|
|
|
$
|
-
|
|
|
|
5,931,350
|
|
|
$
|
593
|
|
|
$
|
-
|
|
|
$
|
(47,868,812
|
)
|
|
$
|
(864,160
|
)
|
|
$
|
(48,732,379
|
)
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,434,707
|
|
|
|
337,387
|
|
|
|
8,772,094
|
|
Balance - March 31, 2021
|
|
|
2,500
|
|
|
|
-
|
|
|
|
5,931,350
|
|
|
|
593
|
|
|
|
-
|
|
|
|
(39,434,105
|
)
|
|
|
(526,773
|
)
|
|
|
(39,960,285
|
)
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(109,950,260
|
)
|
|
|
(4,398,010
|
)
|
|
|
(114,348,270
|
)
|
Balance - June 30, 2021
|
|
|
2,500
|
|
|
$
|
-
|
|
|
|
5,931,350
|
|
|
$
|
593
|
|
|
$
|
-
|
|
|
$
|
(149,384,365
|
)
|
|
$
|
(4,924,783
|
)
|
|
$
|
(154,308,555
|
)
|
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
RICE
ACQUISITION CORP.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR
THE SIX MONTHS ENDED JUNE 30, 2021
(AS
RESTATED)
Cash Flows from Operating Activities:
|
|
|
|
Net loss
|
|
$
|
(105,576,176
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
Change in fair value of derivative warrant liabilities
|
|
|
96,377,160
|
|
Interest earned on securities held in Trust Account
|
|
|
(43,263
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
Prepaid expenses
|
|
|
193,172
|
|
Accounts payable
|
|
|
(146,347
|
)
|
Accrued expenses
|
|
|
7,831,605
|
|
Franchise tax payable
|
|
|
33,972
|
|
Net cash used in operating activities
|
|
|
(1,329,877
|
)
|
|
|
|
|
|
Net change in cash
|
|
|
(1,329,877
|
)
|
|
|
|
|
|
Cash - beginning of the period
|
|
|
1,335,167
|
|
Cash - end of the period
|
|
$
|
5,290
|
|
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
Note
1—Description of Organization, Business Operations and Basis of Presentation
Rice
Acquisition Corp. is a blank check company incorporated in Delaware on September 1, 2020. As used herein, the “Company” or
“Rice” refer to Rice Acquisition Corp. and its majority-owned and controlled operating subsidiary, Rice Acquisition Holdings
LLC (“RAC OpCo”), unless the context indicates otherwise. The Company was 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 (the “Business
Combination”). The Company is an emerging growth company and, as such, the Company is subject to all of the risks associated with
emerging growth companies.
As of June 30, 2021, the Company had not commenced
any operations. All activity for the three and six months ended June 30, 2021 relates to the search for a prospective initial Business
Combination, including activities in connection with the proposed acquisitions of Aria Energy LLC, a Delaware limited liability company,
and Archaea Energy LLC, a Delaware limited liability company. The Company will not generate any operating revenues until after the completion
of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on
cash, cash equivalents and investments from the proceeds derived from the Initial Public Offering. The Company has selected December 31
as its fiscal year end.
The
Company’s sponsor is Rice Acquisition Sponsor LLC, a Delaware limited liability company (the “Sponsor”). The registration
statement for the Company’s Initial Public Offering was declared effective on October 21, 2020. On October 26, 2020, the Company
consummated its Initial Public Offering of 23,725,000 units (each, a “Unit” and collectively, the “Units”), including
2,225,000 additional Units that were issued pursuant to the underwriters’ partial exercise of their over-allotment option (the
“Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds of approximately $237.3 million, and incurring offering
costs of approximately $12.5 million, inclusive of $7.6 million in deferred underwriting commissions (Note 5).
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 6,771,000
warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) to the Sponsor
and Atlas Point Energy Infrastructure Fund, LLC (“Atlas Point Fund”), at a price of $1.00 per Private Placement Warrant,
generating gross proceeds to the Company of approximately $6.8 million (Note 4). Each Private Placement Warrant is exercisable to purchase
one share of Rice’s Class A common stock or, in certain circumstances, one Class A Unit of RAC OpCo together with a corresponding
number of shares of Rice’s non-economic Class B common stock.
Following
the Initial Public Offering, the Public Stockholders (as defined below) hold a direct economic equity ownership interest in Rice in the
form of shares of Class A common stock, and an indirect ownership interest in RAC OpCo through Rice’s ownership of Class A Units
of RAC OpCo. By contrast, the Initial Stockholders (as defined below) own direct economic interests in RAC OpCo in the form of Class
B Units and a corresponding non-economic voting equity interest in Rice in the form of shares of Class B common stock, as well as a small
direct interest through the Sponsor Shares (as defined in Note 4). Sponsor Shares were purchased for $10.00 each and, in the absence
of an initial Business Combination, will generally participate in liquidation or other payments on a pari passu basis with the Public
Shares (as defined below). However, given the relatively de minimis number of Sponsor Shares relative to Public Shares, in many cases
the economic, governance or other effects of the Sponsor Shares are not material to the holders of Class A common stock or warrants,
and for simplicity, portions of this disclosure may not fully describe or reflect these immaterial effects.
Upon
the closing of the Initial Public Offering and the Private Placement, approximately $237.3 million of the net proceeds of the sale of
the Units in the Initial Public Offering and the sale of the Private Placement Warrants in the Private Placement were placed in a trust
account (“Trust Account”) located in the United States with Continental Stock Transfer & Trust Company acting as trustee,
and invested only in U.S. “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act (as
defined below) having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated
under the Investment Company Act which invest only in direct U.S. government treasury obligations, 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.
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering
and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward
consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully.
The Company must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the net
assets held in the Trust Account (excluding the amount of any deferred underwriting discount held in Trust) at the time of the agreement
to enter into the initial Business Combination. However, the Company will only complete a Business Combination if the post-business combination
company controls 50% or more of the voting securities of the target or is otherwise not required to register as an investment company
under the Investment Company Act of 1940, as amended (the “Investment Company Act”).
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
The
Company will provide the holders of the Company’s Public Shares (the “Public Stockholders”) with the opportunity to
redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder
meeting called to approve the Business Combination or (ii) by means of a tender offer. Unless otherwise stated herein, the term “Public
Shares” includes the 2,500 shares of Class A common stock, par value $0.0001 per share, of the Company held by the Sponsor and
forming part of the Sponsor Shares. The decision as to whether the Company will seek stockholder approval of a Business Combination or
conduct a tender offer will be made by the Company, solely in its discretion. The Public Stockholders will be entitled to redeem their
Public Shares for a pro rata portion of the amount then held in the Trust Account (initially anticipated to be $10.00 per Public Share).
The per-share amount to be distributed to Public Stockholders who redeem their Public Shares will not be reduced by the deferred underwriting
commissions the Company will pay to the underwriters (as discussed in Note 5). These Public Shares will be recorded at a redemption value
and classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards
Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities
from Equity.” The Company will proceed with a Business Combination if a majority of the shares voted are voted in favor of the
Business Combination. The Company will not redeem the Public Shares in an amount that would cause its net tangible assets to be less
than $5,000,001. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business
or other reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated
Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange
Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however,
stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal
reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant
to the tender offer rules. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they
vote for or against the proposed transaction. If the Company seeks stockholder approval in connection with a Business Combination, the
Initial Stockholders (as defined below) have agreed to vote their Founder Shares (as defined below in Note 4), Sponsor Shares and any
Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination. In addition, the Initial Stockholders
have agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion
of a Business Combination.
The
Amended and Restated Certificate of Incorporation provides that a Public Stockholder, together with any affiliate of such stockholder
or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more
than an aggregate of 20% or more of the Public Shares, without the prior consent of the Company.
If
the Company is unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or October
26, 2022 (the “Combination Period”), the Company 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 pay franchise and income taxes of the Company or RAC OpCo (less up to $100,000 of interest to
pay dissolution expenses), divided by the number of then outstanding Public Shares and Class A Units of RAC OpCo (other than those held
by Rice), which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive
further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of the remaining stockholders and the 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.
The
Sponsor, Atlas Point Fund and the Company’s officers and directors (the “Initial Stockholders”) have agreed (i) that
any Founder Shares and Sponsor Shares held by them will not be entitled to redemption rights, and they will waive any such redemption
rights for any Public Shares held by them, in connection with the completion of the initial Business Combination, (ii) that any Founder
Shares and Sponsor Shares held by them will not be entitled to redemption rights, and they will waive any such redemption rights for
any Public Shares held by them, in connection with a stockholder vote to amend our amended and restated certificate of incorporation
in a manner that would affect the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company
have not consummated the initial Business Combination within the Combination Period, (iii) that any Founder Shares held by them are subject
to forfeiture, and thus will not be entitled to liquidating distributions from the Trust Account, and they will waive any such rights
to liquidating distributions for any Founder Shares, if the Company fails to complete the initial Business Combination within the Combination
Period (although they will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares and Sponsor
Shares they hold if the Company fails to complete the initial Business Combination within the Combination Period), and (iv) in certain
limited circumstances the Class B Units of RAC OpCo will have more limited rights to current or liquidating distributions from the Company.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
The
underwriters agreed to waive their rights to the deferred underwriting commission (see Note 5) held in the Trust Account in the event
the Company does not complete a Business Combination within the Combination Period and subsequently liquidates and, in such event, such
amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares
and Sponsor Shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining available
for distribution (including Trust Account assets) will be only $10.00. In order to protect the amounts held in the Trust Account, the
Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (except for the Company’s independent
registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business with which
the Company has entered into a letter of intent, confidentiality or other similar agreement or business combination agreement (a “Target”),
reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share or Class A Unit of RAC OpCo not held
by Rice and (ii) the actual amount per Public Share or Class A Unit of RAC OpCo not held by Rice held in the Trust Account as of the
date of the liquidation of the Trust Account, if less than $10.00 per Public Share or Class A Unit of RAC OpCo not held by Rice due to
reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third
party or Target that executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable),
nor will it apply to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain
liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). The Company will
seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to
have all vendors, service providers (except for the Company’s independent registered public accounting firm), prospective target
businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest
or claim of any kind in or to monies held in the Trust Account.
Business Combination Agreements
On April 7, 2021, the Company entered into (i)
the Business Combination Agreement (as amended, supplemented or otherwise modified from time to time, the “Aria Merger Agreement”),
by and among the Company, RAC OpCo, LFG Intermediate Co, LLC, a Delaware limited liability company and direct subsidiary of RAC OpCo (“RAC
Intermediate”), LFG Buyer Co, LLC, a Delaware limited liability company and a direct subsidiary of RAC Intermediate (“RAC
Buyer”), Inigo Merger Sub, LLC, a Delaware limited liability company and a direct subsidiary of RAC Buyer (“Aria Merger Sub”),
Aria Energy LLC, a Delaware limited liability company (“Aria”), and the Equityholder Representative (as defined therein),
pursuant to which, among other things, Aria Merger Sub will merge with and into Aria, with Aria surviving the merger and becoming a direct
subsidiary of RAC Buyer, and (ii) the Business Combination Agreement, dated as of April 7, 2021 (as amended, supplemented or otherwise
modified from time to time, the “Archaea Merger Agreement” and, together with the Aria Merger Agreement, the “Business
Combination Agreements”), by and among the Company, RAC OpCo, RAC Intermediate, RAC Buyer, Fezzik Merger Sub, LLC, a Delaware limited
liability company and direct subsidiary of RAC Buyer (“Archaea Merger Sub”), Archaea Energy, LLC (“Archaea Seller”),
a Delaware limited liability company, and Archaea Energy II, LLC, a Delaware limited liability company (“Archaea” and, together
with Archaea Seller and Aria, the “Companies”), pursuant to which, among other things, Archaea Merger Sub will merge with
and into Archaea, with Archaea surviving the merger and becoming a direct subsidiary of RAC Buyer, in each case, on the terms and subject
to the conditions therein (the transactions contemplated by the Business Combination Agreements, the “Business Combinations”).
Consideration
Pursuant to the terms of the Aria Merger Agreement
and at the Effective Time (as defined therein), (i) all Class A Units of Aria held by a holder of Aria’s Class A Units shall be
cancelled and converted into the right to receive (a) the number of Class A Units of RAC OpCo, (b) the number of Class B common stock,
par value $0.0001 (“Class B Common Stock”), of the Company and (c) the amount of cash as set forth in, and in accordance with,
the Aria Merger Agreement, (ii) all Class B Units of Aria held by a holder of Aria’s Class B Units shall be cancelled and converted
into the right to receive (A) the number of Class A Units of RAC OpCo, (B) the number of shares of Class B Common Stock and (C) the amount
of cash as set forth in, and in accordance with, the Aria Merger Agreement, and (iii) all Class C Units of Aria shall be cancelled and
extinguished without any conversion thereof.
Pursuant to the terms of the Archaea Merger Agreement
and at the Effective Time (as defined therein), all equity interests of Archaea will be cancelled and converted into the right to receive
(x) the number of Class A Units of RAC OpCo and (y) the number of shares of Class B Common Stock as set forth in, and in accordance with,
the Archaea Merger Agreement.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
Following the Business Combinations, holders of
Class A Units of RAC OpCo (other than the Company) will have the right (an “exchange right”), subject to certain limitations,
to exchange Class A Units of RAC OpCo (and a corresponding number of shares of Class B Common Stock) for, at the Company’s option,
(i) shares of Class A Common Stock on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations
and the like, or (ii) a corresponding amount of cash. the Company’s decision to make a cash payment or issue shares upon an exercise
of an exchange right will be made by the Company’s independent directors, and such decision will be based on facts in existence
at the time of the decision, which the Company expects would include the relative value of the Class A Common Stock (including trading
prices for the Class A Common Stock at the time), the cash purchase price, the availability of other sources of liquidity (such as an
issuance of preferred stock) to acquire the Class A Units of RAC OpCo and alternative uses for such cash.
Holders of Class A Units of RAC OpCo (other than
the Company) will generally be permitted to exercise the exchange right on a quarterly basis, subject to certain de minimis allowances.
In addition, additional exchanges may occur in connection with certain specified events, and any exchanges involving more than a specified
number of Class A Units of RAC OpCo (subject to the Company’s discretion to permit exchanges of a lower number of units) may occur
at any time upon ten business days’ advanced notice. The exchange rights will be subject to certain limitations and restrictions
intended to reduce the administrative burden of exchanges upon the Company and ensure that RAC OpCo will continue to be treated as a partnership
for U.S. federal income tax purposes.
Following any exchange of Class A Units of RAC
OpCo (and a corresponding number of shares of Class B Common Stock), RAC will retain the Class A Units of RAC OpCo and cancel the shares
of Class B Common Stock. As the holders of Class A Units of RAC OpCo (other than the Company) exchange their Class A Units of RAC OpCo,
the Company’s membership interest in RAC OpCo will be correspondingly increased, the number of shares of Class A Common Stock outstanding
will be increased, and the number of shares of Class B Common Stock outstanding will be reduced.
Conditions to Consummation of the Business
Combinations
Consummation of the Business Combinations is generally
subject to customary conditions of the respective parties, and conditions customary to special purpose acquisition companies, including
(i) expiration or termination of all applicable waiting periods under HSR, (ii) the absence of any law or governmental order, threatened
or pending, preventing the consummation of the Business Combinations, (iii) completion of the Company Share Redemptions (as defined in
the Business Combination Agreements), (iv) receipt of requisite stockholder approval for consummation of the Business Combinations, (v)
the consummation of the LES Sale (as defined in the Aria Merger Agreement) by Aria and (vi) the issuance by the Federal Energy Regulatory
Commission of an order granting authorization for the Business Combinations pursuant to Section 203 of the Federal Power Act of 1935.
In addition, the parties also have the right to not consummate the Business Combinations in the event that the cash on the balance sheet
of the combined company following the closing of the Business Combinations (the “Combined Company”) would be less than $150,000,000,
subject to the terms of the Business Combination Agreements. Furthermore, the closing of the transactions contemplated by the Aria Merger
Agreement is expressly conditioned on the closing of the transactions contemplated by the Archaea Merger Agreement and vice versa.
Termination
Each of the Business Combination Agreements may
be terminated by the parties thereto under certain customary and limited circumstances at any time prior to the closing of the Business
Combinations, including, without limitation, by mutual written consent or if the Business Combinations have not been consummated within
150 days from the date of the Business Combination Agreements (subject to certain extensions for up to 30 days for delays as set forth
in the Business Combination Agreements).
Stockholders Agreement
In connection with the closing of the Business
Combinations, the Company, RAC Buyer, RAC OpCo, Sponsor, and certain other individuals affiliated with the Companies (the “Company
Holders”) will enter into a stockholders agreement (the “Stockholders Agreement”) pursuant to which, among other things,
(i) the board of directors of the Combined Company (the “Board”) will consist of seven members, (ii) the holders of a majority
of the Company Interests (as defined in the Stockholders Agreement) held by the RAC Sponsor Holders (as defined in the Stockholders Agreement)
will have the right to designate two directors (the “RAC Sponsor Directors”) for appointment or election to the Board during
the term of the Stockholders Agreement, (iii) the Ares Investors (as defined in the Stockholders Agreement) will have the right to designate
one director (the “Ares Director”) for appointment or election to the Board for so long as the Ares Investors hold at least
50% of the Registrable Securities (as defined in the Stockholders Agreement) held by them on the date that the Business Combinations are
consummated (the “Ares Fall-Away Date”), (iv) the Board shall take all necessary action to designate the person then serving
as the Chief Executive Officer of the Combined Company (the “CEO Director”) for appointment or election to the Board during
the term of the Stockholders Agreement and (v) the Board shall designate three independent directors (the “Independent Directors”)
to serve on the Board during the term of the Stockholders Agreement. The Ares Investors shall have the right to consult on the persons
to be designated as Independent Directors prior to the Ares Fall-Away Date.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
PIPE Financing
On April 7, 2021, the Company entered into subscription
agreements (each, a “Subscription Agreement”) with certain investors (the “PIPE Investors”) pursuant to which,
among other things, the PIPE Investors have agreed to subscribe for and purchase, and Rice has agreed to issue and sell to the PIPE Investors,
an aggregate of 30,000,000 shares of Class A Common Stock, par value $0.0001 per share (“Class A Common Stock”), of the Company
for an aggregate purchase price of $300,000,000 on the date of Closing (as defined in each Subscription Agreement), on the terms and subject
to the conditions set forth therein (the “PIPE Financing”). Each Subscription Agreement contains customary representations
and warranties of the Company, on the one hand, and the PIPE Investor, on the other hand, and customary conditions to closing, including
the consummation of the Business Combinations.
Additionally, on April 7, 2021, the Company, RAC
OpCo, Sponsor and Atlas Point Energy Infrastructure Fund, LLC, a Delaware limited liability company (“Atlas”), entered into
an Amendment to Forward Purchase Agreement (the “FPA Amendment”) pursuant to which the Forward Purchase Agreement, dated as
of September 30, 2020 (the “Original Agreement”), by and among such parties was amended to provide that Atlas shall purchase
a total of $20,000,000 of Forward Purchase Securities (as defined in the Original Agreement) and the Forward Purchase Warrants (as defined
in the Original Agreement) will consist of one-eighth of one redeemable warrant (where each whole redeemable warrant is exercisable to
purchase one share of Class A Common Stock at an exercise price of $11.50 per share).
Basis
of Presentation
The accompanying unaudited condensed consolidated
financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles (“GAAP”)
for interim financial information and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes
required by GAAP. In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentation have
been included. The interim operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2021 or any future periods.
The accompanying unaudited condensed
consolidated financial statements should be read in conjunction with the Company’s Amendment No. 2 to Annual Report on Form
10-K/A for the period ended December 31, 2020 as filed with the SEC on December 28, 2021, which contains the audited financial
statements and notes thereto. The financial information as of December 31, 2020 is derived from the audited financial statements
presented in the Company’s Amendment No. 2 to Annual Report on Form 10-K/A for the period ended December 31, 2020.
Emerging
Growth Company
The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our
Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required
to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations
regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding
advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do
not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with
the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected
not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application
dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time
private companies adopt the new or revised standard.
This
may make comparison of the Company’s condensed consolidated 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.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
Risk
and Uncertainties
On
January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus
(the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase
in exposure globally. The full impact of the COVID-19 outbreak continues to evolve. The impact of the COVID-19 outbreak on the Company’s
results of operations, financial position and cash flows will depend on future developments, including the duration and spread of the
outbreak and related advisories and restrictions. These developments and the impact of the COVID-19 outbreak on the financial markets
and the overall economy are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted
for an extended period, the Company’s results of operations, financial position and cash flows may be materially adversely affected.
Additionally, the Company’s ability to complete an initial Business Combination may be materially adversely affected due to significant
governmental measures being implemented to contain the COVID-19 outbreak or treat its impact, including travel restrictions, the shutdown
of businesses and quarantines, among others, which may limit the Company’s ability to have meetings with potential investors or
affect the ability of a potential target company’s personnel, vendors and service providers to negotiate and consummate an initial
Business Combination in a timely manner. The Company’s ability to consummate an initial Business Combination may also be dependent
on the ability to raise additional equity and debt financing, which may be impacted by the COVID-19 outbreak and the resulting market
downturn.
Liquidity
and Capital Resources
As
of June 30, 2021, we had approximately $5,000 in our operating bank account and a working capital deficit of approximately $7.6 million.
The
Company’s liquidity needs to date had been satisfied through the payment of $26,000 from the Sponsor to purchase the Founder Shares
and Sponsor Shares (see Note 4), the loan under the Note of approximately $290,000 (see Note 4), and the net proceeds from the consummation
of the Private Placement not held in the Trust Account. The Company repaid the Note in full on November 10, 2020. In addition, in order
to finance transaction costs in connection with a Business Combination, the Company’s officers, directors and initial stockholders
may, but are not obligated to, provide the Company Working Capital Loans (see Note 4). As of June 30, 2021, there were no amounts outstanding
under any Working Capital Loans.
Based
on the foregoing, management believes that the Company will have sufficient borrowing capacity to meet its needs through the earlier
of the consummation of a Business Combination or one year from this filing, and management has the intent and ability to support the
Company through such time period. Over this time period, the Company will be using the 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.
Note
2—Summary of Significant Accounting Policies
Principles
of Consolidation and Financial Statement Presentation
The
unaudited condensed consolidated financial statements include the accounts of the Company and its majority-owned and controlled operating
subsidiary after elimination of all intercompany transactions and balances as of June 30, 2021 and December 31, 2020. The ownership interest
of noncontrolling participants in the operating subsidiary is included as a separate component of stockholders’ equity. The noncontrolling
participants’ share of the net loss is included as “Net loss attributable to noncontrolling interest in subsidiary”
on the accompanying unaudited condensed consolidated statement of operations.
Restatement of Previously Issued Financial
Statements
In connection with the change in presentation
of Class A common stock subject to possible redemption, the Company concluded it should restate its previously issued financial statements
to classify all Class A common stock subject to redemption in temporary equity. In accordance with ASC 480-10-S99, redemption provisions
not solely within the control of the Company require shares subject to redemption to be classified outside of permanent equity. The Company
had previously classified a portion of its Class A common stock in permanent equity. Although the Company did not specify a maximum redemption
threshold, its charter currently provides that the Company will not redeem its Public Shares in an amount that would cause its net tangible
assets to be less than $5,000,001. Previously, the Company did not consider redeemable shares classified as temporary equity as part of
net tangible assets. The Company revised this interpretation to include temporary equity in net tangible assets.
In connection with the change in presentation
for the Class A common stock subject to possible redemption, the Company revised its earnings per share calculation to allocate income
and losses shared pro rata between the two classes of shares. This presentation differs from the previously presented method of earnings
per share, which was similar to the two-class method.
In accordance with SEC Staff Accounting Bulletin
No. 99, “Materiality,” and SEC Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements
when Quantifying Misstatements in Current Year Financial Statements,” the Company evaluated the corrections and has determined that
the related impact was material to the previously filed financial statements that contained the error, reported in the Company’s
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021, filed with the SEC on August 13, 2021. Therefore, the Company,
in consultation with its Audit Committee, concluded that the Company’s Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 2021, filed with the SEC on August 13, 2021, should be restated to present all Class A common stock subject to possible redemption
as temporary equity, restate earnings per share and to recognize accretion from the initial book value to redemption value at the time
of its Initial Public Offering. The previously presented unaudited interim financial statements included in the Company’s Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 2021, filed with the SEC on August 13, 2021, should no longer be relied upon.
The restatement does not have an impact on the Company’s cash position and cash held in the Trust Account.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
The change in the carrying value of the redeemable
Class A common stock at June 30, 2021 resulted in a reclassification of approximately 15.9 million Class A common stock from permanent
equity to temporary equity. The table below presents the effect of the financial statement adjustments related to the restatement discussed
above of the Company’s previously reported unaudited balance sheet as of June 30, 2021:
As of June 30, 2021
|
|
As Previously Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Total assets
|
|
$
|
237,826,416
|
|
|
$
|
-
|
|
|
$
|
237,826,416
|
|
Total liabilities
|
|
$
|
154,884,971
|
|
|
$
|
-
|
|
|
$
|
154,884,971
|
|
Class A common stock subject to possible redemption
|
|
|
77,941,440
|
|
|
|
159,308,560
|
|
|
|
237,250,000
|
|
Preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Class A common stock
|
|
|
1,594
|
|
|
|
(1,594
|
)
|
|
|
-
|
|
Class B common stock
|
|
|
593
|
|
|
|
-
|
|
|
|
593
|
|
Additional paid-in capital
|
|
|
133,067,223
|
|
|
|
(133,067,223
|
)
|
|
|
-
|
|
Accumulated deficit
|
|
|
(123,144,622
|
)
|
|
|
(26,239,743
|
)
|
|
|
(149,384,365
|
)
|
Total Rice Acquisition Corp equity (deficit)
|
|
|
9,924,788
|
|
|
|
(159,308,560
|
)
|
|
|
(149,383,772
|
)
|
Non-controlling interest in subsidiary
|
|
|
(4,924,783
|
)
|
|
|
-
|
|
|
|
(4,924,783
|
)
|
Total stockholders’ equity (deficit)
|
|
$
|
5,000,005
|
|
|
$
|
(159,308,560
|
)
|
|
$
|
(154,308,555
|
)
|
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Equity (Deficit)
|
|
$
|
237,826,416
|
|
|
$
|
-
|
|
|
$
|
237,826,416
|
|
The Company’s unaudited statement of stockholders’
equity has been restated to reflect the changes to the impacted stockholders’ equity accounts described above.
The table below presents the effect of the financial
statement adjustments related to the restatement discussed above of the Company’s previously reported unaudited statement of cash
flows for the period from January 21, 2021 (inception) through June 30, 2021:
For the three months ended June 30, 2021
|
|
As Previously Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Supplemental Disclosure of Noncash Financing Activities:
|
|
|
|
|
|
|
|
|
|
Change in value of Class A common stock subject to possible redemption
|
|
$
|
105,576,180
|
|
|
$
|
(105,576,180
|
)
|
|
$
|
-
|
|
In connection with the change in presentation
for the Class A common stock subject to possible redemption, the Company has revised its earnings per share calculation to allocate income
and losses shared pro rata between the two classes of shares. This presentation contemplates a Business Combination as the most likely
outcome, in which case, both classes of shares participate pro rata in the income and losses of the Company. The impact to the reported
amounts of weighted average shares outstanding and basic and diluted earnings per common share is presented below for the Affected Quarterly
Periods:
|
|
Earnings Per Share for Class A common stock
|
|
|
|
As Previously Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
For the three months ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(114,348,270
|
)
|
|
$
|
-
|
|
|
$
|
(114,348,270
|
)
|
Weighted average shares outstanding
|
|
|
23,725,000
|
|
|
|
2,500
|
|
|
|
23,727,500
|
|
Basic and diluted earnings per share
|
|
$
|
-
|
|
|
$
|
(3.86
|
)
|
|
$
|
(3.86
|
)
|
For the six months ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(105,576,176
|
)
|
|
$
|
-
|
|
|
$
|
(105,576,176
|
)
|
Weighted average shares outstanding
|
|
|
23,725,000
|
|
|
|
2,500
|
|
|
|
23,727,500
|
|
Basic and diluted earnings per share
|
|
$
|
-
|
|
|
$
|
(3.56
|
)
|
|
$
|
(3.56
|
)
|
|
|
Earnings Per Share for Class B common stock
|
|
|
|
As Previously Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
For the three months ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(114,348,270
|
)
|
|
$
|
-
|
|
|
$
|
(114,348,270
|
)
|
Weighted average shares outstanding
|
|
|
5,933,850
|
|
|
|
(2,500
|
)
|
|
|
5,931,350
|
|
Basic and diluted earnings per share
|
|
$
|
(0.47
|
)
|
|
$
|
(3.39
|
)
|
|
$
|
(3.86
|
)
|
For the six months ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(105,576,176
|
)
|
|
$
|
-
|
|
|
$
|
(105,576,176
|
)
|
Weighted average shares outstanding
|
|
|
5,933,850
|
|
|
|
(2,500
|
)
|
|
|
5,931,350
|
|
Basic and diluted earnings per share
|
|
$
|
(0.05
|
)
|
|
$
|
(3.51
|
)
|
|
$
|
(3.56
|
)
|
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
Use
of Estimates
The
preparation of financial statements in conformity with GAAP requires the Company’s 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. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate
of the effect of a condition, situation or set of circumstances that existed at the date of the condensed consolidated financial statements,
which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly,
the actual results could differ significantly from those estimates.
Cash
and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
There are no cash equivalents as of June 30, 2021 and December 31, 2020.
Investments
Held in Trust Account
The
Company’s portfolio of investments is comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16)
of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government
securities and generally have a readily determinable fair value, or a combination thereof. When the Company’s investments held
in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s
investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities
and investments in money market funds are presented on the balance sheets at fair value at the end of each reporting period. Gains and
losses resulting from the change in fair value of these securities is included in income on investments held in the Trust Account in
the accompanying unaudited condensed consolidated statements of operations. The estimated fair values of investments held in the Trust
Account are determined using available market information.
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements
and Disclosures,” equal or approximate the carrying amounts represented in the condensed consolidated balance sheets.
Offering
Costs Associated with the Initial Public Offering
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 were
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 derivative warrant liabilities were expensed as incurred and presented as non-operating
expenses in the condensed statements of operations. Offering costs associated with the Class A common stock issued were charged against
the carrying value of the Class A common stock subject to possible redemption upon the completion of the Initial Public Offering. The
Company classifies deferred underwriting commissions as non-current liabilities as their liquidation is not reasonably expected to require
the use of current assets or require the creation of current liabilities.
Derivative
Warrant Liabilities
The
Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates
all of its 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 FASB ASC Topic 815, “Derivatives and Hedging” (“ASC
815”). 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.
The
Public Warrants and the Private Placement Warrants are recognized as derivative liabilities in accordance with ASC 815. Accordingly,
the Company recognizes the warrant instruments as liabilities at fair value and adjusts the carrying value of the instruments to fair
value at each reporting period until they are exercised. The initial fair value of the Public Warrants issued in connection with the
Initial Public Offering were estimated using a Monte Carlo simulation model. The fair value of the Public Warrants as of June 30, 2021
is based on observable listed prices for such warrants. The fair value of the Private Placement Warrants as of June 30, 2021 is determined
using Black-Scholes option pricing model. The determination of the fair value of the warrant liability may be subject to change as more
current information becomes available and accordingly the actual results could differ significantly. Derivative warrant liabilities are
classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require
the creation of current liabilities.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
Class A Common Stock Subject to Possible
Redemption
The Company accounts for its Class A common stock
subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.”
Class A common stock subject to mandatory redemption (if any) is classified as liability instruments and are measured at fair value. Conditionally
redeemable Class A common stock (including Class A common stock that features redemption rights that are 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, Class A common stock is classified as stockholders’ equity. The Company issued 2,500 shares
of Class A common stock to the Sponsor. These Sponsor Shares will not be transferable and will only be exchangeable into Class A
common stock after the initial business combination, as such are considered non-redeemable and presented as permanent equity in the Company’s
condensed balance sheet. Excluding the Sponsor Shares, the Company’s Class A common stock feature certain redemption rights
that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly,
as of the Initial Public Offering, 23,725,000 shares of Class A 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.
The Company recognizes changes in redemption value immediately as they
occur and adjusts the carrying value of the Class A common stock subject to possible redemption to equal the redemption value at the end
of each reporting period. Effective with the closing of the Initial Public Offering, the Company recognized the accretion from initial
book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and accumulated
deficit.
Net
Income Per Share of Common Stock
The Company complies with accounting and disclosure
requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares, which are referred to as
Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes of shares. Net income (loss)
per common share is calculated by dividing the net income (loss) by the weighted average shares of common stock outstanding for the respective
period.
The calculation of diluted net income (loss)
per share does not consider the effect of the warrants underlying the Units sold in the Initial Public Offering (including the consummation
of the over-allotment) and the private placement warrants to purchase an aggregate of 18,633,500 shares of Class A common stock,
because their exercise is contingent upon future events and their inclusion would be anti-dilutive under the treasury stock method. As
a result, diluted net income (loss) per share is the same as basic net income (loss) per share for the three and six months ended June
30, 2021. Accretion associated with the redeemable Class A common stock is excluded from earnings per share as the redemption value approximates
fair value.
The table below presents a reconciliation of the
numerator and denominator used to compute basic and diluted net loss per share for each class of common stock:
|
|
For the Three Months Ended
June 30, 2021
|
|
|
For the Six Months Ended
June 30, 2021
|
|
|
|
Class A
|
|
|
Class B
|
|
|
Class A
|
|
|
Class B
|
|
Basic and diluted net income per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of net loss
|
|
$
|
(91,480,235
|
)
|
|
$
|
(22,868,035
|
)
|
|
$
|
(84,462,436
|
)
|
|
$
|
(21,113,740
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average common shares outstanding
|
|
|
23,727,500
|
|
|
|
5,931,350
|
|
|
|
23,727,500
|
|
|
|
5,931,350
|
|
Basic and diluted net income per common share
|
|
$
|
(3.86
|
)
|
|
$
|
(3.86
|
)
|
|
$
|
(3.56
|
)
|
|
$
|
(3.56
|
)
|
Income
Taxes
The
Company follows the asset and liability method of accounting for income taxes under ASC Topic 740, “Income Taxes.” Deferred
tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period
that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected
to be realized. As of June 30, 2021 and December 31, 2020, the Company had deferred tax assets of approximately $1,932,000 and $618,000,
respectively, with a full valuation allowance against them.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
FASB
ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement
of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely
than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of June 30, 2021. The Company
recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the
payment of interest and penalties as of June 30, 2021. The Company is currently not aware of any issues under review that could result
in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major
taxing authorities since inception.
The
provision for income taxes was de minimis for the three and six months ended June 30, 2021.
Recent
Accounting Pronouncements
In
August 2020, the FASB issued Accounting Standard Update (the “ASU”) No. 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): Accounting for
Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing
major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked
contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain
areas. The Company early adopted the ASU on January 1, 2021. Adoption of the ASU did not impact the Company’s financial position,
results of operations or cash flows.
Management
does not believe that any other recently issued, but not yet effective, accounting pronouncement if currently adopted would have a material
effect on the Company’s condensed consolidated financial statements.
Note
3—Initial Public Offering
On
October 26, 2020, the Company consummated its Initial Public Offering of 23,725,000 Units, including 2,225,000 Over-Allotment Units that
were issued pursuant to the underwriters’ partial exercise of their over-allotment option, at $10.00 per Unit, generating gross
proceeds of approximately $237.3 million, and incurring offering costs of approximately $12.5 million, inclusive of $7.6 million in deferred
underwriting commissions. Of the 23,725,000 Units sold, affiliates of the Sponsor and Atlas Point Fund had purchased 1,980,000 Units
(the “Affiliated Units”) and 2,128,500 Units (the “Atlas Units”), respectively, at the Initial Public Offering
price. The underwriters did not receive any underwriting discounts or commissions on the 1,980,000 Affiliated Units.
Each
Unit consists of one share of Class A common stock and one-half of one redeemable warrant (each, a “Public Warrant”). Each
whole Public Warrant entitles the holder to purchase one share of Rice’s Class A common stock at a price of $11.50 per share, subject
to adjustment (see Note 6).
Note
4—Related Party Transactions
Founder
Shares and Sponsor Shares
In
September 2020, the Sponsor paid $25,000 to cover for certain of expenses of the Company in exchange for issuance of (i) 5,750,100 shares
of Rice’s Class B common stock, par value $0.0001 per share, and (ii) 2,500 shares of Rice’s Class A common stock, par value
$0.0001 per share. In September 2020, the Sponsor received 5,750,000 Class B Units of RAC OpCo (which are profits interest units only).
In October 2020, the Sponsor forfeited 90,000 Class B Units of RAC OpCo, and 30,000 Class B Units of RAC OpCo were issued to each of
the independent director nominees. The Sponsor transferred a corresponding number of shares of Class B common stock to the independent
director nominees. In October 2020, the Company effected a dividend, resulting in an aggregate of (i) 6,181,350 shares of Rice’s
Class B common stock, and (ii) 2,500 shares of Rice’s Class A common stock outstanding. All shares and associated amounts have
been retroactively restated to reflect the dividend. Upon a liquidation of RAC OpCo, distributions generally will be made to the holders
of RAC OpCo Units on a pro rata basis, subject to certain limitations with respect to the Class B Units of RAC OpCo, including that,
prior to the completion of the initial Business Combination, such Class B Units will not be entitled to participate in a liquidating
distribution.
Also,
in September 2020, Rice paid $25,000 to RAC OpCo in exchange for issuance of 2,500 Class A Units of RAC OpCo. In September 2020, the
Sponsor received 100 Class A Units of RAC OpCo in exchange for $1,000.
The
Company refers to the 6,181,250 shares of Class B common stock and corresponding number of Class B Units of RAC OpCo (or the Class A
Units of RAC OpCo into which such Class B Units will convert) collectively as the “Founder Shares”. The Founder Shares consist
of Class B Units of RAC OpCo (and any Class A Units of RAC OpCo into which such Class B Units are converted) and a corresponding number
of shares of Class B common stock, which together will be exchangeable for shares of Rice’s Class A common stock after the time
of the initial Business Combination on a one-for-one basis, subject to adjustment as provided herein. The Company refers to the 2,500
shares of Rice’s Class A common stock and the 100 Class A Units of RAC OpCo and a corresponding number of shares of Rice’s
non-economic Class B common stock (which together will be exchangeable into shares of Class A common stock after the initial Business
Combination on a one-for-one basis) collectively as the “Sponsor Shares”.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
Upon
the closing of the Initial Public Offering, the Sponsor forfeited 309,063 Class B Units of RAC OpCo, and 309,063 Class B Units of RAC
OpCo were issued to Atlas Point Fund. The Sponsor transferred a corresponding number of shares of Class B common stock to Atlas Point
Fund.
The
Initial Stockholders agreed to forfeit up to 806,250 Founder Shares to the extent that the over-allotment option is not exercised in
full by the underwriters, so that the Founder Shares will represent 20.0% of the Company’s issued and outstanding shares after
the Initial Public Offering (excluding the Sponsor Shares). On October 26, 2020, the underwriters partially exercised the over-allotment
option to purchase as additional 2,225,000 Units; thus, only 250,000 Founder Shares remained subject to forfeiture. On December 5, 2020,
the remaining unexercised over-allotment expired unused and therefore the remaining 250,000 shares of Class B common stock were forfeited.
The
Class B Units of RAC OpCo will convert into Class A Units of RAC OpCo in connection with the initial Business Combination on a one-for-one
basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like and subject to further
adjustment as provided herein. The Founder Shares consist of Class B Units of RAC OpCo (and any Class A Units of RAC OpCo into which
such Class B Units are converted) and a corresponding number of shares of Class B common stock, which together will be exchangeable for
shares of Class A common stock after the time of the initial Business Combination on a one-for-one basis (subject to adjustment for stock
splits, stock dividends, reorganizations, recapitalizations and the like), and subject to further adjustment as provided herein. In the
case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts
sold in the Initial Public Offering and related to the closing of the Business Combination (other than the forward purchase securities),
the number of Class A Units of RAC OpCo into which the Class B Units of RAC OpCo will convert may be adjusted (unless the holders of
a majority of the outstanding Founder Shares agree to waive such adjustment with respect to any such issuance or deemed issuance) so
that the number of shares of Class A common stock issuable upon exchange of all Founder Shares will equal, in the aggregate, on an as-exchanged
basis, 20% of the sum of the total outstanding shares of Rice’s common stock upon completion of the Initial Public Offering, plus
all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the Business Combination (excluding
the forward purchase securities and any shares or equity-linked securities issued, or to be issued, to any seller in the Business Combination
and excluding the Sponsor Shares). In addition, the number of outstanding shares of Class B common stock will be adjusted through a stock
split or stock dividend so that the total number of outstanding shares of Class B common stock corresponds to the total number of Class
A Units of RAC OpCo outstanding (other than those held by Rice) plus the total number of Class A Units RAC OpCo into which the Class
B Units of RAC OpCo are entitled to convert.
The
Initial Stockholders agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares held by them (and
any shares of Class A common stock acquired upon exchange of Founder Shares) until one year after the date of the consummation of the
initial Business Combination or earlier if, subsequent to the initial Business Combination, (i) the last sale price of the Class A common
stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like)
for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination or (ii)
the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the stockholders
having the right to exchange their shares of common stock for cash, securities or other property.
Private
Placement Warrants
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the Private Placement of 6,771,000 Private Placement Warrants
to the Sponsor and Atlas Point Fund, at a price of $1.00 per Private Placement Warrant, generating gross proceeds to the Company of approximately
$6.8 million.
Each
whole Private Placement Warrant is exercisable for a price of $11.50 to purchase one share of Rice’s Class A common stock or, in
certain circumstances, one Class A Unit of RAC OpCo together with a corresponding number of shares of Rice’s non-economic Class
B common stock. A portion of the proceeds from the sale of the Private Placement Warrants was added to the proceeds from the Initial
Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the
Private Placement Warrants will expire worthless. The Private Placement Warrants will be non-redeemable and exercisable on a cashless
basis so long as they are held by the Sponsor, Atlas Point Fund or their permitted transferees.
With
certain limited exceptions, the Private Placement Warrants and the securities underlying such warrants will not be transferable, assignable
or saleable until 30 days after the completion of the initial Business Combination.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
Related
Party Loans
On
September 1, 2020, the Sponsor agreed to loan the Company an aggregate of up to $300,000 pursuant to a promissory note (the “Note”).
This loan was non-interest bearing and payable upon the completion of the Initial Public Offering. The Company borrowed an aggregate
of approximately $290,000 under the Note. The outstanding balance of the Note was paid in full as of November 10, 2020. Subsequent to
the repayment, the facility was no longer available to the Company.
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 Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working
Capital Loans”). If the Company completes a Business Combination, the Company will repay the Working Capital Loans out of the proceeds
of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the
Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust
Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.
The Working Capital Loans would either be repaid upon consummation of a Business Combination or, at the lender’s discretion, up
to $1.5 million of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of
$1.00 per warrant. The warrants would be identical to the Private Placement Warrants. Except for the foregoing, the terms of such Working
Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. As of June 30, 2021 and December
31, 2020, the Company had no borrowings under the Working Capital Loans.
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 the Company’s behalf such as identifying potential target businesses and performing due diligence
on suitable Business Combinations. The Company’s audit committee will review on a quarterly basis all payments that were made to
the Sponsor, officers or directors, or their affiliates.
Administrative
Support Agreement
Commencing
on the date the Company’s securities are first listed on NYSE, the Company agreed to pay the Sponsor a total of $10,000 per month
for office space, utilities, secretarial support and administrative services provided to members of the management team. Upon completion
of the initial Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees. For the three
and six months ended June 30, 2021, the Company incurred expenses of $30,000 and $60,000 under this agreement, respectively. As of June
30, 2021 and December 31, 2020, the Company had $20,000 and $30,000 outstanding for services in connection with such agreement on the
accompanying condensed consolidated balance sheets, respectively.
Note
5—Commitments and Contingencies
Forward
Purchase Agreement
The
Company entered into an amended and restated forward purchase agreement (the “Forward Purchase Agreement”) with Atlas Point
Fund, pursuant to which Atlas Point Fund, which is a fund managed by CIBC National Trust but is not affiliated with the Company or sponsor,
agreed to purchase up to $75,000,000 of either (i) a number of units (the “forward purchase units”), consisting of one share
of Class A common stock (the “forward purchase shares”) and one-third of one warrant (the “forward purchase warrants”),
for $10.00 per unit or (ii) a number of forward purchase shares for $9.67 per share (such forward purchase shares valued at $9.67 per
share or the forward purchase units, as the case may be, the “forward purchase securities”), in a private placement that
will close simultaneously with the closing of the Initial Business Combination. The forward purchase warrants will have the same terms
as the public warrants and the forward purchase shares will be identical to the shares of Class A common stock included in the units
being sold in this offering, except the forward purchase shares and the forward purchase warrants will be subject to transfer restrictions
and certain registration rights and the forward purchase units will consist of only one-third of one forward purchase warrant. The funds
from the sale of the forward purchase securities may be used as part of the consideration to the sellers in the Initial Business Combination,
and any excess funds may be used for the working capital needs of the post-transaction company. This agreement is independent of the
percentage of stockholders electing to redeem their public shares and may provide the Company with an increased minimum funding level
for the Initial Business Combination. The forward purchase agreement is subject to conditions, including Atlas Point Fund giving the
Company its irrevocable written consent to purchase the forward purchase securities no later than five days after the Company notifies
it of the Company’s intention to meet to consider entering into a definitive agreement for a proposed Business Combination. Atlas
Point Fund may grant or withhold its consent to the purchase entirely within its sole discretion. Accordingly, if Atlas Point Fund does
not consent to the purchase, it will not be obligated to purchase the forward purchase securities.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
Registration
Rights
The
holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any,
(and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued
upon conversion of Working Capital Loans and upon conversion of the Founder Shares) are entitled to registration rights pursuant to a
registration rights agreement. The holders of these securities are entitled to make up to three demands, excluding short form demands,
that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect
to registration statements filed subsequent to the completion of the initial Business Combination. Additionally, pursuant to the Forward
Purchase Agreement, the Company agreed to grant certain registration rights to Atlas Point Fund in connection with the issuance of any
forward purchase units upon the completion of the Company’s Business Combination. The Company will bear the expenses incurred in
connection with the registration of such securities.
Underwriting
Agreement
The
Company granted the underwriters a 45-day option from the date of Initial Public Offering to purchase up to 3,225,000 additional Units
to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions. On October 26,
2020, the underwriters partially exercised the over-allotment option to purchase an additional 2,225,000 Units.
The
underwriters were entitled to an underwriting discount of $0.20 per Unit (excluding the Affiliated Units purchased). As a result of affiliates
of the Sponsor purchasing 1,980,000 Units, the Company paid an underwriting discount of approximately $4.3 million in the aggregate upon
the closing of the Initial Public Offering. In addition, the underwriters will be entitled to a deferred fee of $0.35 per Unit (excluding
the Affiliated Units), or approximately $7.6 million 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.
Risks
and Uncertainties
Management
continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that
the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target
company, the specific impact is not readily determinable as of the date of these condensed consolidated financial statements. The condensed
consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Note
6—Stockholders’ Deficit
Class A Common Stock — The
Company is authorized to issue 250,000,000 shares of Class A common stock with a par value of $0.0001 per share. As of June 30, 2021 and
December 31, 2020, there were 23,727,500 shares of Class A common stock issued and outstanding, of which 23,725,000 shares of Class A
common stock are subject to possible redemption and therefore classified outside of permanent equity in the accompanying condensed consolidated
balance sheets.
Class
B Common Stock — The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001
per share. As of June 30, 2021 and December 31, 2020, there were 5,931,350 shares of Class B common stock issued and outstanding.
Holders
of the Class A common stock and holders of the Class B common stock will vote together as a single class on all matters submitted to
a vote of the stockholders, except as required by law. Each share of common stock will have one vote on all such matters. Prior to the
initial Business Combination, only holders of Class B common stock will have the right to vote on the election of directors.
Preferred
Stock — The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per share, with such
designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors.
As of June 30, 2021 and December 31, 2020, there were no shares of preferred stock issued or outstanding.
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
Note
7—Warrants
As
of June 30, 2021 and December 31, 2020, the Company had 11,862,500 Public Warrants and 6,771,000 Private Placement Warrants outstanding,
respectively.
Public
Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units
and only whole Public Warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion
of a Business Combination or (b) 12 months from the closing of the Initial Public Offering; provided in each case that the Company has
an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the
Public Warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their Public Warrants
on a cashless basis and such cashless exercise is exempt from registration under the Securities Act). The Company has agreed that as
soon as practicable, but in no event later than 15 business days after the closing of the initial Business Combination, it will use its
best efforts to file with the SEC and have an effective registration statement covering the shares of the Class A common stock issuable
upon exercise of the warrants and to maintain a current prospectus relating to those shares of the Class A common stock until the warrants
expire or are redeemed. If a registration statement covering the shares of the Class A common stock issuable upon exercise of the warrants
is not effective by the 60th business day after the closing of the initial Business Combination, warrant holders may, until
such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective
registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act
or another exemption.
The
warrants have an exercise price of $11.50 per share, subject to adjustments, and will expire five years after the completion of a Business
Combination or earlier upon redemption or liquidation. In addition, if (x) the Company issues additional shares of Class A common stock
or equity-linked securities for capital raising purposes in connection with the closing of the initial Business Combination at an issue
price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to
be determined in good faith by the board and, in the case of any such issuance to the Sponsor or its affiliates, without taking into
account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”),
the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the Newly Issued Price.
Redemption
of warrants when our Class A common stock equals or exceeds $18.00 per share:
Once
the warrants become exercisable, the Company may redeem the outstanding warrants for cash (except as described herein with respect to
the Private Placement Warrants):
|
●
|
in whole
and not in part;
|
|
●
|
at a price
of $0.01 per warrant;
|
|
●
|
upon a
minimum of 30 days’ prior written notice of redemption; and
|
|
●
|
if, and only if, the last sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.
|
The
Company will not redeem the warrants for cash unless a registration statement under the Securities Act covering the shares of Class A
common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of Class A common
stock is available throughout the 30-day redemption period, except if the warrants may be exercised on a cashless basis and such cashless
exercise is exempt from registration under the Securities Act. If the Company calls the warrants for redemption for cash as described
above, the management will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.”
Redemption
of warrants when our Class A common stock equals or exceeds $10.00 per share:
Once
the warrants become exercisable, the Company may redeem the outstanding warrants (except as described herein with respect to the Private
Placement Warrants):
|
●
|
in whole
and not in part;
|
|
●
|
at $0.10
per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their
warrants on a cashless basis prior to redemption and receive that number of shares of Class A common stock determined by reference
to an agreed table based on the redemption date and the “fair market value” of Class A common stock;
|
|
●
|
if and only if, the last sale price of Class A common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which the Company sends the notice of redemption to the warrant holders; and
|
|
|
|
|
●
|
if, and only if, there is an effective registration statement covering the issuance of shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating thereto available throughout the 30- day period after written notice of redemption is given.
|
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
The
“fair market value” of the Class A common stock shall mean the volume weighted average price of the Class A common stock
as reported during the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to
the holders of warrants.
None
of the Private Placement Warrants will be redeemable by the Company so long as they are held by the initial purchasers of the Private
Placement Warrants or their permitted transferees.
In
no event will the Company be required to net cash settle any warrant. If the Company is unable to complete a Business Combination within
the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such
funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust
Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
Note
8—Fair Value Measurements
The
fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would
have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction
between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company
seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable
inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is
used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and
liabilities:
|
Level
1:
|
Quoted
prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions
for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
|
|
|
|
Level
2:
|
Observable
inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities
and quoted prices for identical assets or liabilities in markets that are not active.
|
|
|
|
|
Level
3:
|
Unobservable
inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
|
The
following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring
basis as of June 30, 2021 and December 31, 2020, and indicates the fair value hierarchy of the valuation techniques that the Company
utilized to determine such fair value:
June
30, 2021
Description
|
|
Quoted Prices in Active Markets
(Level 1)
|
|
|
Significant Other Observable Inputs
(Level 2)
|
|
|
Significant Other Unobservable Inputs
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
Investments held in Trust Account - U.S. Treasury securities
|
|
$
|
237,351,433
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative warrant liabilities - Public warrants
|
|
$
|
67,616,251
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Derivative warrant liabilities - Private placement warrants
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
71,349,396
|
|
December
31, 2020
Description
|
|
Quoted Prices in Active Markets
(Level 1)
|
|
|
Significant Other Observable Inputs
(Level 2)
|
|
|
Significant Other Unobservable Inputs
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
Investments held in Trust Account - U.S. Treasury securities
|
|
$
|
237,308,171
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative warrant liabilities - Public warrants
|
|
$
|
27,046,500
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Derivative warrant liabilities - Private placement warrants
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
15,541,987
|
|
RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AS RESTATED)
Transfers
to/from Levels 1, 2, and 3 are recognized at the beginning of the reporting period. There were no transfers to/from Levels 1, 2, and
3 during the three and six months ended June 30, 2021.
Level 1
assets include investments in U.S. treasury securities. The Company uses inputs such as actual trade data, quoted market prices from
dealers or brokers, and other similar sources to determine the fair value of its investments.
The
Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within derivative warrant liabilities on the
Company’s condensed consolidated balance sheets. The warrant liabilities are measured at fair value at inception and on a recurring
basis, with changes in fair value presented within change in fair value of warrant liabilities in the statement of operations.
For
periods where no observable traded price is available, the fair value of the Public Warrants was estimated using a Monte Carlo simulation
model. For periods subsequent to the detachment of the Public Warrants from the Units, the fair value of the Public Warrants is based
on the observable listed price for such warrants. The estimated fair value of the Private Placement Warrants, and the Public Warrants
prior to being separately listed and traded, is determined using Level 3 inputs. Inherent in a Monte Carlo simulation are assumptions
related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility
of its common stock based on historical volatility of select peer companies that matches the expected remaining life of the warrants.
The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected
remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The
dividend rate is based on the historical rate, which the Company anticipates remaining at zero.
The
Warrants are measured at fair value on a recurring basis. The measurement of the Public Warrants as of June 30, 2021 and December 31,
2020 is classified as Level 1 due to the use of an observable market quote in an active market.
The
key Level 3 fair value measurement inputs into the Black-Scholes model for the Private Placement Warrants as of June 30, 2021 and December
31, 2020 are as follows:
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
Exercise price
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
Stock price
|
|
$
|
18.05
|
|
|
$
|
10.83
|
|
Volatility
|
|
|
52.0
|
%
|
|
|
22.7
|
%
|
Term (in years)
|
|
|
5.25
|
|
|
|
5.82
|
|
Risk-free rate
|
|
|
0.91
|
%
|
|
|
0.48
|
%
|
The
change in the fair value of the derivative warrant liabilities, measured using Level 3 inputs, for the three and six months ended
June 30, 2021 is summarized as follows:
Derivative warrant liabilities at January 1, 2021
|
|
$
|
15,541,987
|
|
Change in fair value of derivative warrant liabilities
|
|
|
(2,284,001
|
)
|
Derivative warrant liabilities at March 31, 2021
|
|
|
13,257,986
|
|
Change in fair value of derivative warrant liabilities
|
|
|
58,091,410
|
|
Derivative warrant liabilities at June 30, 2021
|
|
$
|
71,349,396
|
|
Level
3 financial liabilities consist of the Private Placement Warrant liability for which there is no current market such that the determination
of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair
value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate.
Note
9—Subsequent Events
Management has evaluated subsequent events to determine if events or
transactions occurring through the date the condensed consolidated financial statements were issued, require potential adjustment to or
disclosure in the condensed consolidated financial statements and has concluded that all such events, except as noted above and as noted
in Notes 1, 2, 3, 4 and 5, that would require recognition or disclosure have been recognized or disclosed.
Item 2. Management’s Discussion and Analysis
of Financial Condition and Results of Operations.
References to the “Company,” “our,”
“us” or “we” refer to Rice Acquisition Corp. and its majority-owned and controlled operating subsidiary, Rice
Acquisition Holdings LLC (“RAC OpCo”), unless the context indicates otherwise. The following discussion and analysis of the
Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated
financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis
set forth below includes forward-looking statements that involve risks and uncertainties.
Overview
We are a blank check company incorporated in Delaware
on September 1, 2020 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization
or similar business combination with one or more businesses (the “Business Combination”). Our sponsor is Rice Acquisition
Sponsor LLC, a Delaware limited liability company (“Sponsor”).
The registration statement for our initial public
offering (“Initial Public Offering”) was declared effective on October 21, 2020. On October 26, 2020, we consummated the Initial
Public Offering of 23,725,000 units (each, a “Unit” and collectively, the “Units”), including 2,225,000 additional
Units that were issued pursuant to the underwriters’ partial exercise of their over-allotment option (the “Over-Allotment
Units”), at $10.00 per Unit, generating gross proceeds of approximately $237.3 million, and incurring offering costs of approximately
$12.5 million, inclusive of $7.6 million in deferred underwriting commissions.
Simultaneously with the closing of the Initial
Public Offering, we consummated the private placement (“Private Placement”) of 6,771,000 warrants (each, a “Private
Placement Warrant” and collectively, the “Private Placement Warrants”) to our Sponsor and Atlas Point Energy Infrastructure
Fund, LLC (“Atlas Point Fund”), at a price of $1.00 per Private Placement Warrant, generating gross proceeds of approximately
$6.8 million. Each Private Placement Warrant is exercisable to purchase one share of Rice’s Class A common stock or, in certain
circumstances, one Class A Unit of RAC OpCo together with a corresponding number of shares of Rice’s non-economic Class B common
stock.
Following the Initial Public Offering, our public
stockholders hold a direct economic equity ownership interest in Rice in the form of shares of Class A common stock, and an indirect ownership
interest in RAC OpCo through Rice’s ownership of Class A Units of RAC OpCo. By contrast, the Initial Stockholders (our Sponsor,
Atlas Point Fund and our officers and directors) own direct economic interests in RAC OpCo in the form of Class B Units and a corresponding
non-economic voting equity interest in Rice in the form of shares of Class B common stock, as well as a small direct interest through
the Sponsor Shares (as defined below). Sponsor Shares were purchased for $10.00 each and, in the absence of an initial Business Combination,
will generally participate in liquidation or other payments on a pari passu basis with the Public Shares (as defined below). However,
given the relatively de minimis number of Sponsor Shares relative to Public Shares, in many cases the economic, governance or other effects
of the sponsor shares are not material to the holders of Class A common stock or warrants, and for simplicity, portions of this disclosure
may not fully describe or reflect these immaterial effects.
Upon the closing of the Initial Public Offering
and the Private Placement, approximately $237.3 million of the net proceeds of the sale of the Units in the Initial Public Offering and
the sale of the Private Placement Warrants in the Private Placement were placed in a trust account (“Trust Account”) located
in the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only in U.S. “government
securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money
market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S.
government treasury obligations, as determined by us, until the earlier of: (i) the completion of a Business Combination and (ii) the
distribution of the Trust Account.
If we are unable to complete a Business Combination
within 24 months from the closing of the Initial Public Offering, or October 26, 2022, 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 pay our franchise and income taxes (less up to $100,000 of interest
to pay dissolution expenses), divided by the number of then outstanding Public Shares and Class A Units of RAC OpCo (other than those
held by Rice), which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive
further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of the remaining stockholders and the board of directors, dissolve and liquidate, subject in each case to our
obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
Proposed Business Combination
On
April 7, 2021, the Company entered into (i) the Business Combination Agreement (as amended, supplemented or otherwise modified from time
to time, the “Aria Merger Agreement”), by and among the Company, RAC OpCo, LFG Intermediate Co, LLC, a Delaware limited liability
company and direct subsidiary of RAC OpCo (“RAC Intermediate”), LFG Buyer Co, LLC, a Delaware limited liability company and
a direct subsidiary of RAC Intermediate (“RAC Buyer”), Inigo Merger Sub, LLC, a Delaware limited liability company and a direct
subsidiary of RAC Buyer (“Aria Merger Sub”), Aria Energy LLC, a Delaware limited liability company (“Aria”), and
the Equityholder Representative (as defined therein), pursuant to which, among other things, Aria Merger Sub will merge with and into
Aria, with Aria surviving the merger and becoming a direct subsidiary of RAC Buyer, and (ii) the Business Combination Agreement, dated
as of April 7, 2021 (as amended, supplemented or otherwise modified from time to time, the “Archaea Merger Agreement” and,
together with the Aria Merger Agreement, the “Business Combination Agreements”), by and among the Company, RAC OpCo, RAC Intermediate,
RAC Buyer, Fezzik Merger Sub, LLC, a Delaware limited liability company and direct subsidiary of RAC Buyer (“Archaea Merger Sub”),
Archaea Energy, LLC (“Archaea Seller”), a Delaware limited liability company, and Archaea Energy II, LLC, a Delaware limited
liability company (“Archaea” and, together with Archaea Seller and Aria, the “Companies”), pursuant to which,
among other things, Archaea Merger Sub will merge with and into Archaea, with Archaea surviving the merger and becoming a direct subsidiary
of RAC Buyer, in each case, on the terms and subject to the conditions therein, and certain related agreements, as further described in
Note 1 to the condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.
Results of Operations
Our entire activity for the three and six months
ended June 30, 2021, has been related to identifying a target company for our initial Business Combination. We have neither engaged in
any operations nor generated any revenues to date. We will not generate any operating revenues until after completion of our initial Business
Combination. We will generate non-operating income in the form of interest income from the proceeds from the IPO. 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.
For the three months ended June 30, 2021, we had
a loss of approximately $131.8 million, which consisted of approximately $125.6 million of change in fair value of warrant liabilities,
approximately $6.2 million of general and administrative expenses, approximately $34,000 of franchise tax expense, partially offset by
approximately $6,000 in interest earned on investments held in Trust Account.
For the six months ended June 30, 2021, we had
a loss of approximately $123.0 million, which consisted of approximately $113.8 million of change in fair value of warrant liabilities,
approximately $9.2 million of general and administrative expenses, approximately $74,000 of franchise tax expense, partially offset by
approximately $43,000 in interest earned on investments held in Trust Account.
Liquidity and Capital Resources
As of June 30, 2021, we had approximately $5,000
in our operating bank account and a working capital deficiency of approximately $7.6 million.
Our liquidity needs to date had been satisfied
through the payment of $26,000 from our Sponsor to purchase the Founder Shares and Sponsor Shares, a loan under a note agreement with
our Sponsor of approximately $290,000 (the “Note”), and the net proceeds from the consummation of the Private Placement not
held in the Trust Account. The Note was paid in full as of November 10, 2020. In addition, in order to finance transaction costs in connection
with a Business Combination, our officers, directors and Sponsor may, but are not obligated to, provide us working capital loans. As of
June 30, 2021, there were no amounts outstanding under any working capital loans.
Based on the foregoing, management believes that
we 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, the Company will be using these funds held outside of the Trust Account
for paying existing accounts payable, and structuring, negotiating and consummating the Business Combination.
Contractual Obligations
We do not have any long-term debt obligations,
capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities.
On October 21, 2020, we entered into an Administrative
Services Agreement pursuant to which we have agreed to cause RAC OpCo to pay the Sponsor a total of $10,000 per month for office space,
utilities and administrative support. Upon completion of the Initial Business Combination or our liquidation, the agreement will terminate.
The underwriters of the Initial Public Offering
were entitled to underwriting discounts and commissions of 5.5%, of which 2.0% (approximately $4.3 million) was paid at the closing of
the Initial Public Offering and 3.5% (approximately $7.6 million) was deferred. The deferred underwriting discounts and commissions will
become payable to the underwriters upon the consummation of the Initial Business Combination and will be paid from the amounts held in
the Trust Account. The underwriters are not entitled to any interest accrued on the deferred underwriting discounts and commissions.
Critical Accounting Policies
This management’s discussion and analysis
of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have
been prepared in accordance with United States generally accepted accounting principles. The preparation of these condensed consolidated
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 condensed consolidated 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. There have been no significant
changes in our critical accounting policies as discussed in the Company’s Amendment No. 1 to Annual Report on Form 10-K/A for the
year ended December 31, 2020 as filed with the SEC on May 13, 2021.
Recent Accounting Pronouncements
In August 2020, the FASB issued Accounting Standard
Update (the “ASU”) No. 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): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,
which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also
removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception and
it also simplifies the diluted earnings per share calculation in certain areas. The Company early adopted the ASU on January 1, 2021.
Adoption of the ASU did not impact the Company’s financial position, results of operations or cash flows.
Off-Balance Sheet Arrangements
As of June 30, 2021, we did not have any off-balance
sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
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 condensed consolidated 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.
Item 3. Quantitative and Qualitative Disclosures
About Market Risk
We are a smaller reporting company as defined
by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed
to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported
within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our
management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate
to allow timely decisions regarding required disclosure.
Under the supervision and with the participation
of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness
of our disclosure controls and procedures as of the end of the fiscal quarter ended June 30, 2021, as such term is defined in Rules 13a-15(e)
and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial officer have concluded
that our disclosure controls and procedures were not effective as of June 30, 2021, because of a material weakness in our internal control
over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting,
such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements
will not be prevented or detected on a timely basis. Specifically, the Company’s management has concluded that our control around
the interpretation and accounting for certain complex equity and equity-linked instruments issued by the Company, and presentation of
earnings per share was not effectively designed or maintained. This material weakness resulted in the restatement of the Company’s
balance sheet as of October 26, 2020, its annual financial statements for the period ended December 31, 2020 and its interim financial
statements for the quarters ended March 31, 2021 and June 30, 2021. Additionally, this material weakness could result in a misstatement
of the carrying value of equity, equity-linked instruments and related accounts and disclosures, and presentation of earnings per share
that would result in a material misstatement of the financial statements that would not be prevented or detected on a timely basis. As
a result, our management performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance
with accounting principles generally accepted in the United States of America. Accordingly, management believes that the financial statements
included in this Amendment No. 1 on Form 10-Q/A present fairly, in all material respects, our financial position, results of operations
and cash flows for the periods presented. Management understands that the accounting standards applicable to our financial statements
are complex and has since the inception of the Company benefited from the support of experienced third-party professionals with whom management
has regularly consulted with respect to accounting issues. Management intends to continue to further consult with such professionals in
connection with accounting matters.
Changes in Internal Control over Financial
Reporting
There was no change in our internal control over
financial reporting that occurred during the fiscal quarter ended June 30, 2021 that has materially affected, or is reasonably likely
to materially affect, our internal control over financial reporting except as described below.
Our principal executive officer and principal
financial officer performed additional accounting and financial analyses and other post-closing procedures including consulting with subject
matter experts related to the accounting for certain complex equity and equity-linked instruments issued by the Company, and presentation
of earnings per share. The Company’s management has expended, and will continue to expend, a substantial amount of effort and resources
for the remediation and improvement of our internal control over financial reporting. While we have processes to properly identify and
evaluate the appropriate accounting technical pronouncements and other literature for all significant or unusual transactions, we have
expanded and will continue to improve these processes to ensure that the nuances of such transactions are effectively evaluated in the
context of the increasingly complex accounting standards.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors.
As a smaller reporting company, we are not required
to disclose any material changes from risk factors as previously disclosed in our Annual Report on Form 10-K/A. However, below is a partial
list of material risks, uncertainties and other factors that could have a material effect on the Company and its operations:
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we may not be able to complete our initial business combination in the prescribed time frame;
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our expectations around the performance of a prospective target business or businesses may not be realized;
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we may not be successful in retaining or recruiting required officers, key employees or directors following our initial business combination;
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our officers and directors may have difficulties allocating their time between the Company and other businesses and may potentially have conflicts of interest with our business or in approving our initial business combination;
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we may not be able to obtain additional financing to complete our initial business combination or reduce the number of shareholders requesting redemption;
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trust account funds may not be protected against third party claims or bankruptcy;
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an active market for our public securities may not develop and you will have limited liquidity and trading; and
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the availability to us of funds from interest income on the trust account balance may be insufficient to operate our business prior to the business combination.
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For more information about our risk factors, see
Item 1A of Part I in Amendment No. 1 to our Annual Report on Form 10-K/A for the period ended December 31, 2020 and the section titled
“Risk Factors” contained in our definitive proxy statement filed with the SEC on August 12, 2021, as the same may be amended
or supplemented, with respect to our initial business combination.
Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds from Registered Securities
On October 26, 2020, we consummated the Initial
Public Offering of 23,725,000 Units, including the Over-Allotment Units. The Units were sold at a price of $10.00 per Unit, generating
gross proceeds of $237,250,000. The underwriters were granted a 45-day option from the date of the final prospectus relating to the Initial
Public Offering to purchase up to 3,225,000 additional Units to cover over-allotments, if any, at $10.00 per Unit, less underwriting discounts
and commissions. On October 23, 2020, the underwriters partially exercised the over-allotment option and, on October 26, 2020, the underwriters
purchased the Over-Allotment Units.
Barclays Capital Inc., AmeriVet Securities Inc.
and Academy Securities Inc. served as underwriters for the Initial Public Offering. The securities sold in the Initial Public Offering
were registered under the Securities Act on a registration statement on Form S-1 (File No. 333-249340). The SEC declared the registration
statement effective on October 21, 2020.
In connection with the closing of the Initial
Public Offering, we paid a total of approximately $4.3 million in underwriting discounts and commissions. In addition, the underwriters
agreed to defer approximately $7.6 million in underwriting discounts and commissions, which amount will be payable upon consummation of
the Initial Business Combination. Prior to the closing of the Initial Public Offering, the Sponsor loaned RAC OpCo approximately $300,000
under the Note.
In connection with the Initial Public Offering,
we incurred offering costs of approximately $12.5 million, inclusive of approximately $7.6 million in deferred underwriting commissions.
Other incurred offering costs consisted principally of preparation fees related to the Initial Public Offering. After deducting the underwriting
discounts and commissions (excluding the deferred portion, which amount will be payable upon consummation of the Initial Business Combination,
if consummated) and the Initial Public Offering expenses, $237.3 million of the net proceeds from our Initial Public Offering and certain
of the proceeds from the private placement of the Private Placement Warrants (or $10.00 per Unit sold in the Initial Public Offering)
was placed in the Trust Account. The net proceeds of the Initial Public Offering and certain proceeds from the sale of the Private Placement
Warrants are held in the Trust Account and invested as described elsewhere in this Quarterly Report on Form 10-Q.
On October 26, 2020, simultaneously with the closing
of the Initial Public Offering and pursuant to separate Private Placement Warrants and Warrant Rights Agreements, dated September 21,
2020, by and among the Company and RAC OpCo, and each of the Sponsor and Atlas Point Fund, the Company completed the private sale of an
aggregate of 6,771,000 Private Placement Warrants at a purchase price of $1.00 per Private Placement Warrant to the Sponsor and Atlas
Point Fund, generating gross proceeds of $6,771,000.
There has been no material change in the planned
use of the proceeds from the Initial Public Offering and Private Placement as is described in the Company’s final prospectus related
to the Initial Public Offering.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits.
Exhibit Number
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Description
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2.1†
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Aria Merger Agreement (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K (File No. 001-39644) filed with the SEC on April 7, 2021).
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2.2†
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Archaea Merger Agreement (incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K (File No. 001-39644) filed with the SEC on April 7, 2021).
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2.3†
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Amendment No. 1 to Business Combination Agreement, dated as of May 12, 2021, by and among the RAC Buyer, Aria and the Equityholder Representative (incorporated by reference to Exhibit 2.3 to the Company’s Quarterly Report on Form 10-Q (File No. 001-39644) filed with the SEC on August 13, 2021).
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2.4†
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Amendment No. 2 to Business Combination Agreement, dated as of June 11, 2021, by and among the RAC Buyer, Aria and the Equityholder Representative (incorporated by reference to Exhibit 2.4 to the Company’s Quarterly Report on Form 10-Q (File No. 001-39644) filed with the SEC on August 13, 2021).
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2.5†
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Amendment No. 3 to Business Combination Agreement, dated as of August 3, 2021, by and among the RAC Buyer, Aria and the Equityholder Representative (incorporated by reference to Exhibit 2.5 to the Company’s Quarterly Report on Form 10-Q (File No. 001-39644) filed with the SEC on August 13, 2021).
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2.6†
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Amendment No. 1 to Business Combination Agreement, dated as of May 12, 2021, by and among the RAC Buyer and Archaea Energy II, LLC (incorporated by reference to Exhibit 2.6 to the Company’s Quarterly Report on Form 10-Q (File No. 001-39644) filed with the SEC on August 13, 2021).
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3.1
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Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-39644) filed with the SEC on October 27, 2020).
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3.2
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Bylaws (incorporated by reference to the Company’s Registration Statement on Form S-1, filed with the SEC on October 6, 2020).
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10.1
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Form of Subscription Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-39644) filed with the SEC on April 7, 2021).
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10.2
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FPA Amendment (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 001-39644) filed with the SEC on April 7, 2021).
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31.1*
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Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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31.2*
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Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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32.1**
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Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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32.2**
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Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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101.INS
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Inline XBRL Instance Document.
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101.SCH
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Inline XBRL Taxonomy Extension Schema Document.
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101.CAL
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Inline XBRL Taxonomy Extension Calculation Linkbase Document.
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101.DEF
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Inline XBRL Taxonomy Extension Definition Linkbase Document.
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101.LAB
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Inline XBRL Taxonomy Extension Label Linkbase Document.
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101.PRE
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Inline XBRL Taxonomy Extension Presentation Linkbase Document.
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104
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Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
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†
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Certain
schedules and similar attachments have been omitted. The Company agrees to furnish supplementally a copy of any omitted schedule or attachment
to the SEC upon its request.
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SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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ARCHAEA ENERGY INC.
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Date: December 28, 2021
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By:
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/s/ Chad Bellah
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Name:
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Chad Bellah
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Title:
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Chief Accounting Officer
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27
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