☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 85-3477678 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||
Units, each consisting of one share of common stock and one-half of one redeemable warrant | ADEX.U | NYSE American LLC | ||
Common Stock, par value $0.0001 per share | ADEX | NYSE American LLC | ||
Redeemable warrants, exercisable for shares of common stock at an exercise price of $11.50 per share | ADEX.WS | NYSE American LLC |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||||
Non-accelerated Filer | ☒ | Smaller reporting company | ☒ | |||||
Emerging growth company | ☒ |
ADIT EDTECH ACQUISITION CORP.
Quarterly Report on Form 10-Q
Table of Contents
1
March 31, 2023 December 31, 2022 (Unaudited) ASSETS Current assets Cash $ 246,733 $ 992,187 Prepaid expenses 94,972 77,774 Cash held in Trust Account for redeemed shares — 1,093,204 Due from related party 740,000 — Total Current Assets 1,081,705 2,163,165 Cash and securities held in Trust Account 25,685,706 25,041,388 TOTAL ASSETS $ 26,767,411 $ 27,204,553 Liabilities, Common Stock Subject to Possible Redemption and Stockholders’ Deficit Current liabilities Accrued offering costs and expenses $ 5,519,459 $ 4,807,419 Due to related party 168,986 138,986 Common stock to be redeemed — 1,093,204 Income taxes payable 830,763 795,203 Interest bearing note 446,087 — Working capital loan - related party 502,683 300,000 Total Current Liabilities 7,467,978 7,134,812 Warrant liability 610,680 459,236 Deferred underwriting discount 6,762,000 6,762,000 TOTAL LIABILITIES 14,840,658 14,356,048 Commitments Common stock subject to possible redemption, 2,467,422 shares at redemption values of $10.48 and $10.24 at March 31, 2023 and December 31, 2022, respectively 25,853,681 25,273,823 Stockholders’ Deficit Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding at March 31, 2023 and December 31, 2022, respectively — — Common stock, $0.0001 par value; 100,000,000 shares authorized; 6,900,000 shares issued and outstanding (excluding 2,467,422 shares at redemption value) at March 31, 2023 and December 31, 2022, respectively 690 690 Additional paid-in capital 523,171 1,103,029 Accumulated deficit (14,450,789 ) (13,529,037 ) Total Shareholders’ Deficit (13,926,928 ) (12,425,318 ) TOTAL LIABILITIES, COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT $ 26,767,411 $ 27,204,553 For the Three Months Ended March 31, 2023 2022 Formation and operating costs $ 932,979 $ 602,133 Loss from operations (932,979 ) (602,133 ) Other income (expense): Change in fair value of warrants (151,444 ) 1,747,419 Trust interest income 200,182 72,450 Interest expense on note (1,951 ) — Total other income, net 46,787 1,819,869 (Loss) Income before provision for income taxes (886,192 ) 1,217,736 Provision for income taxes (35,560 ) — Net (loss) income $ (921,752 ) $ 1,217,736 Basic and diluted weighted average shares outstanding, redeemable common stock 2,467,422 27,600,000 Basic and diluted net (loss) income per share $ (0.10 ) $ 0.04 Basic and diluted weighted average shares outstanding, common stock 6,900,000 6,900,000 Basic and diluted net (loss) income per share $ (0.10 ) $ 0.04 Common Stock Additional Total Shares Amount Paid-in Capital Accumulated Deficit Stockholders’ Deficit Balance as of January 1, 2023 6,900,000 $ 690 $ 1,103,029 $ (13,529,037 ) $ (12,425,318 ) Net loss — — — (921,752 ) (921,752 ) Remeasurement of common stock to redemption value — — (579,858 ) — (579,858) Balance as of March 31, 2023 6,900,000 $ 690 $ 523,171 $ (14,450,789 ) $ (13,926,928 ) Common Stock Additional Total Shares Amount Paid-in Capital Accumulated Deficit Stockholders’ Deficit Balance as of January 1, 2022 6,900,000 $ 690 $ — $ (17,170,488 ) $ (17,169,798 ) Net income — — — 1,217,736 1,217,736 Balance as of March 31, 2022 6,900,000 $ 690 $ — $ (15,952,752 ) $ (15,952,062 ) For the Three Months Ended March 31, 2023 2022 Cash flows from operating activities: Net (loss) income $ (921,752 ) $ 1,217,736 Adjustments to reconcile net (loss) income to net cash used in operating activities: Change in fair value of warrants 151,444 (1,747,419 ) Interest earned on cash and marketable securities held in Trust Account (200,182 ) (72,450 ) Changes in operating assets and liabilities: Interest accrued on interest bearing note 1,951 — Prepaid expenses (17,198 ) 67,508 Deferred legal fees — 2,849,885 Income taxes payable 35,560 — Accrued offering costs and expenses 712,040 (2,720,843 ) Due from related party (740,000 ) — Due to related party 30,000 30,000 Net cash used in operating activities (948,137 ) (375,583 ) Cash flows from investing activities: Deposit in Trust for extension payments (444,136 ) — Cash withdrawn from Trust Account to pay franchise tax and income taxes — 161,000 Cash held in Trust for redeemed shares (1,093,204 ) — Common stock to be redeemed 1,093,204 — Net cash (used in) provided by investing activities (444,136 ) 161,000 Cash flows from financing activities: Proceeds from working capital loan - related party 202,683 — Proceeds from promissory note - extension 444,136 — Net cash provided by financing activities 646,819 — Net change in cash (745,454 ) (214,583 ) Cash, beginning of the period 992,187 462,274 Cash, end of the period $ 246,733 $ 247,691 Supplemental disclosure of noncash investing and financing activities: Remeasurement of carrying value to redemption value $ 579,858 $ — Company Act of 1940 (the “1940 Act”), with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of Rule and Restated Certificate of Incorporation, to complete a Business Combination or otherwise I - I—FINANCIAL INFORMATION
2022 $ 62,588 $ 992,187 51,130 77,774 — 1,093,204 2,163,165 26,328,395 25,041,388 $ 27,204,553 $ 6,165,503 $ 4,807,419 198,986 138,986 — 1,093,204 42,911 795,203 896,771 — 502,683 300,000 7,134,812 632,490 459,236 6,762,000 6,762,000 14,356,048 26,462,922 25,273,823 — — 690 690 — 1,103,029 (15,222,843 ) (13,529,037 ) (12,425,318 ) $ 27,204,553 Formation and operating costs $ 851,031 $ 543,520 $ 1,784,010 $ 1,145,653 Other income: Change in fair value of warrants (21,810 ) 2,923,321 (173,254 ) 4,670,740 Trust interest income 235,553 374,346 435,735 446,796 Interest expense on note (6,548 ) — (8,499 ) — Total other income, net 207,195 3,297,667 253,982 5,117,536 (Loss) Income before provision for income taxes (643,836 ) 2,754,147 (1,530,028 ) 3,971,883 Provision for income taxes (42,148 ) (22,636 ) (77,708 ) (22,636 ) Basic and diluted weighted average shares outstanding, redeemable common stock 2,467,422 27,600,000 2,467,422 27,600,000 Basic and diluted weighted average shares outstanding, common stock 6,900,000 6,900,000 6,900,000 6,900,000 MARCH 31,JUNE 30, 2023 Net loss — — — (921,752 ) (921,752 ) Remeasurement of common stock to redemption value — — (579,858 ) — (579,858 ) Net loss — — — (685,984 ) (685,984 ) Remeasurement of common stock to redemption value — — (523,171 ) (86,070 ) (609,241 ) $ — MARCH 31,JUNE 30, 2022 $ — Net income — — — 1,217,736 1,217,736 $ — Net income — — — 2,731,511 2,731,511 Accretion of carrying value to redemption value — — — (239,154 ) (239,154 ) $ — Net (loss) income $ (1,607,736 ) $ 3,949,247 Adjustments to reconcile net (loss) income to net cash used in operating activities: Change in fair value of warrants 173,254 (4,670,740 ) Interest earned on cash and marketable securities held in Trust Account (435,735 ) (446,796 ) Interest accrued on interest bearing note 8,499 — Changes in operating assets and liabilities: Prepaid expenses 26,644 126,541 Income taxes payable (752,292 ) 22,636 Accrued offering costs and expenses 1,358,084 459,478 Due to related party 60,000 60,000 Deposit in Trust for extension payments (888,272 ) — Cash withdrawn from Trust Account to pay franchise tax and income taxes 37,000 161,000 Cash held in Trust for redeemed shares (1,093,204 ) — Common stock to be redeemed 1,093,204 — Proceeds from working capital loan—related party 202,683 — Proceeds from promissory note—extension 888,272 — Cash, beginning of the period 992,187 462,274 Remeasurement of carrying value to redemption value $ 1,189,099 $ 239,154 March 31, June 30, 2023,, the Company had not commenced any operations. All activity for the period from October 15, 2020 (inception) through March 31, June 30, 2023 relates to the Company’s formation and the initial public offering (“IPO”), which is described below, and since the closing of the IPO, the search for a prospective initial Business Combination (see Note 7). The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate“Trust“Trust Account”), which were previously held as cash or invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment5, “Distinguishing Liabilities from Equity.”, as amended (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 containing substantially the same information as would be included in a proxy statement 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. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares it purchased during or after the IPO in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction or do not vote at all.JulyJanuary 14, 2023,2024, if the Company’s board of directors approves all six one-month extensionsthe remaining three-month extension allowed under the Company’s Amended6(a)(a) cease all operations except for the purpose of winding up, (b) as promptly as reasonably possible but not more than ten business days thereafter, redeem all of the shares of common stock included as part of the Units sold in the IPO and (c) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and in accordance with applicable law, dissolve and liquidate.liquidate. The current extension date is JuneOctober 14, 2023.MayJune 12, 2023, the board of directors of the Company elected to extend the date by which the Company must complete an initial business combination, on each occasion by one month, from January 14, 2023 to JuneJuly 14, 2023 (the “Extensions”). In connection with the Extensions, GRIID Infrastructure LLC deposited an aggregate of $740,227$888,272 (representing $0.06 per Public Share per month) ($444,136 at March 31, 2023) into the Company’s Trust Account on behalf of the Company. This deposit was loaned to the Company pursuant to a promissory note issued by the Company to GRIID Infrastructure on January 13, 2023 (the “GRIID Note”).2023. The Extensions arewere the first, second, third, fourth, fifth, and fifthsixth of sixprovide provides the Company with additional time to complete its initial business combination.$900,000.$1,800,000. Currently, the outstanding principal amount under the GRIID Note is $740,227.$1,358,272. Interest will accrue on the outstanding principal amount of the GRIID Note at a rate per annum equal to the Applicable Federal Rate set forth by the Internal Revenue Service pursuant to Section 1274(d) of the Internal Revenue Code. The GRIID Note has a maturity date of the earlier of (i) any determination by the Company’s board of directors to liquidate the Company and (ii) the effective date of the merger involving Griid Holdco LLC and the Company pursuant to the Merger Agreement. The failure to timely repay outstanding amounts under the GRIID Note within five days of the maturity date or the occurrence of certain liquidation and bankruptcy events constitute an event of default under the GRIID Note and could result in acceleration of the Company’s repayment obligations thereunder.deadline.deadline. However, if the Sponsor acquired Public Shares in, or acquires Public Shares after, the IPO, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination by the applicable extension deadline.deadline. The IPO underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 7) held in the Trust Account in the event the Company does not complete a Business Combination by the applicable extension deadline 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. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the IPO price per Unit ($10.00).March 31, June 30, 2023,, the Company had approximately $0.2$0.1 million in its operating bank account and approximately $0.7 million due from a related party (which was subsequently repaid) and a working capitaldeficit of approximately $5.6 $7.7 million, excluding approximately $0.8less than $0.1 million in federal income tax payable that can be paid using the funds derived from the interest income earned on Trust Account.Due from a Related PartyIn March 2023, in light of uncertainty regarding the liquidity of certain financial institutions, to safeguard the Company’s cash deposits, the Company’s management and board of directors authorized the temporary transfer of approximately $740,000 from an operating account in the Company’s name to an operating account controlled by a related party. During such time that such funds were held at the operating account controlled by a related party, such related party was under an obligation to maintain such funds and return such funds, plus accrued interest, to the Company promptly upon the Company’s demand. The funds were subsequently returned to the Company’s operating account in April 2023. As of March 31, 2023, the Company had an amount due from related party of $740,000.$0.2$0.1 million in its operating bank account and $0.7 million due from a related party as of March 31,June 30, 2023 will not be sufficient to allow the Company to operate for at least the next 12 months, assuming that a Business Combination is not consummated during that time. The Company has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans. These conditions raise substantial doubt about the Company’s ability to continue as a going concern one year from the issuance date of the condensed consolidated financial statements. Management plans to address this uncertainty through loans from its Sponsor, officers, directors or third parties. None of the Sponsor, officers or directors are under any obligation to advance funds to, or to invest in, the Company. There is no assurance that the Company’s plans to raise capital or to consummate a Business Combination will be successful. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
2023.
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10
Stock included as part of the Units sold in the Company’s IPO and (c) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and in accordance with applicable law, dissolve and liquidate.
On July 11, 2023, we obtained stockholder approval to allow us to further extend the time by which we must complete our initial business combination up to an additional two times at the election of our board of directors for an additional three months each time, for a maximum of two three-month extensions.
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| For the Three Months Ended | |||||||||||||
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| 2023 |
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| 2022 | ||||||||||
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| Redeemable common |
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| Non- |
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| Redeemable common |
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| Non- | ||||
Basic and diluted net (loss) income per share: |
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Numerator: |
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Allocation of net (loss) income |
| $ | (242,794 | ) |
| $ | (678,958 | ) |
| $ | 974,189 |
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| 243,547 |
Denominator: |
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Weighted Average Shares Outstanding including common stock subject to redemption |
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| 2,467,422 |
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| 6,900,000 |
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| 27,600,000 |
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|
| 6,900,000 |
Basic and diluted net (loss) income per share |
| $ | (0.10 | ) |
| $ | (0.10 | ) |
| $ | 0.04 |
|
|
| 0.04 |
June 30,
June 30,
common
stock
redeemable
common stock
common
stock
redeemable
common stock
common
redeemable
common stock
common
stock
redeemable
common stock Numerator: Allocation of net (loss) income $ (181,054 ) $ (506,306 ) $ 2,150,495 $ 537,624 $ (423,485 ) $ (1,184,251 ) $ 3,124,684 $ 781,171 Denominator: Weighted Average Shares Outstanding including common stock subject to redemption 2,467,422 6,900,000 27,600,000 6,900,000 2,467,422 6,900,000 27,600,000 6,900,000 Basic and diluted net (loss) income per share $ (0.07 ) $ (0.07 ) $ 0.08 $ 0.08 $ (0.17 ) $ (0.17 ) $ 0.11 $ 0.11
11
Placement Warrants met the criteria for equity accounting treatment. On December 23, 2021, the Private Placement Warrants were modified such that the Private Placement Warrants no longer meet the criteria for equity treatment. As such, the Private Placement Warrants were treated as derivative liability instruments from the date of the modification.
Initial Public Offering
Common stock subject to possible redemption, December 31, 2022 |
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| 25,273,823 |
| 25,273,823 | |||
Add: |
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Remeasurement of carrying value to redemption value |
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| 579,858 |
| 579,858 | |||
Common stock subject to possible redemption, March 31, 2023 |
| $ | 25,853,681 |
| 25,853,681 | |||
Add: | ||||||||
Remeasurement of carrying value to redemption value | 609,241 | |||||||
Common stock subject to possible redemption, June 30, 2023 | $ | 26,462,922 | ||||||
13
14
15
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| March 31, |
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| Quoted Prices In Active Markets |
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| Significant Other Observable Inputs |
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| Significant Other Unobservable Inputs |
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| 2023 |
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| (Level 1) |
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| (Level 2) |
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| (Level 3) |
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Liabilities: |
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Warrant liability – Private Placement Warrants |
| $ | 610,680 |
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| $ | — |
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| $ | — |
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| $ | 610,680 |
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| $ | 610,680 |
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| $ | — |
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| $ | — |
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| $ | 610,680 |
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June 30, 2023 | Quoted Prices In Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||||||
Liabilities: | ||||||||||||||||
Warrant liability – Private Placement Warrants | $ | 632,490 | $ | — | $ | — | $ | 632,490 | ||||||||
$ | 632,490 | $ | — | $ | — | $ | 632,490 | |||||||||
December 31, 2022 | Quoted Prices In Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||||||
Liabilities: | ||||||||||||||||
Warrant liability – Private Placement Warrants | $ | 459,236 | $ | — | $ | — | $ | 459,236 | ||||||||
$ | 459,236 | $ | — | $ | — | $ | 459,236 | |||||||||
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| December 31, |
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| Quoted Prices In Active Markets |
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| Significant Other Observable Inputs |
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| Significant Other Unobservable Inputs |
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| 2022 |
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| (Level 1) |
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| (Level 2) |
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| (Level 3) |
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Liabilities: |
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Warrant liability – Private Placement Warrants |
| $ | 459,236 |
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| $ | — |
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| $ | — |
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| $ | 459,236 |
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| $ | 459,236 |
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| $ | — |
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| $ | — |
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| $ | 459,236 |
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cash.
Input |
| March 31, 2023 |
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| December 31, 2022 |
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Expected term (years) |
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| 0.95 |
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| 0.91 |
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Expected volatility |
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| 7.30 | % |
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| 8.3 | % |
Risk-free interest rate |
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| 4.67 | % |
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| 4.74 | % |
Stock price |
| $ | 10.34 |
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| $ | 10.11 |
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Dividend yield |
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| 0.00 | % |
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| 0.00 | % |
Exercise price |
| $ | 11.50 |
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| $ | 11.50 |
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Input | June 30, 2023 | December 31, 2022 | ||||||
Expected term (years) | 0.79 | 0.91 | ||||||
Expected volatility | 6.4 | % | 8.3 | % | ||||
Risk-free interest rate | 5.43 | % | 4.74 | % | ||||
Stock price | $ | 10.56 | $ | 10.11 | ||||
Dividend yield | 0.00 | % | 0.00 | % | ||||
Exercise price | $ | 11.50 | $ | 11.50 |
The following table sets forth a summary of the changes in the Level 3 fair value classification:
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| Warrant Liability |
| Warrant Liability | ||||
Fair value as of December 31, 2021 |
| $ | 5,044,441 |
| $ | 5,044,441 | ||
Change in fair value |
|
| (1,747,419) |
| (1,747,419 | ) | ||
Fair value as of March 31, 2022 |
| $ | 3,297,022 |
| 3,297,022 | |||
Change in fair value | (2,923,321 | ) | ||||||
Fair value as of June 30, 2022 | $ | 373,701 | ||||||
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Fair value as of December 31, 2022 |
| $ | 459,236 |
| $ | 459,236 | ||
Change in fair value |
| 151,444 |
| 151,444 | ||||
Fair value as of March 31, 2023 |
| $ | 610,680 |
| 610,680 | |||
Change in fair value | 21,810 | |||||||
Fair value as of June 30, 2023 | $ | 632,490 | ||||||
17
Merger will automatically be converted into and become the right to receive such unit’s proportionate share, as determined in accordance with the Merger Agreement, of 58,500,000 shares of the Company’s Common Stock.
18
of the Purchaser in the event that GRIID consummates such a transaction in lieu of the Merger or any other Business Combination transaction the result of which is GRIID continuing as a publicly listed company.
2022.
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| if, and only if, the reported last sale price of the 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 commencing once the warrants become exercisable and ending commencing once the warrants become exercisable and ending three business days before the Company sends the notice of redemption to the warrant holders. |
19
On April 5,July 11, 2023, the Company obtained stockholder approval to allow the Company to further extend the time by which it must complete its initial business combination up to an additional two times at the election of the board of directors for an additional three months each time, for a maximum of two three-month extensions. Effective as of such date, the Company amended its amended and Mayrestated certificate of incorporation, as amended, to provide for such extensions. In connection with the stockholders’ vote, holders of 467,396 shares of Common Stock exercised their right to redeem such shares for a pro rata portion of the funds in the Company’s Trust Account, representing approximately $4.9 million (approximately $10.58 per share).
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
References to the “Company,” “Adit EdTech Acquisition Corp.,” “our,” “us” or “we” refer to Adit EdTech Acquisition Corp. 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 Quarterly Report on Form 10-Q10-Q.. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings.
Overview
We are a blank check company incorporated in Delaware and formed for the purpose of effecting an initial business combination with one or more target businesses. We intend to effectuate our initial business combination using cash from the proceeds of our initial public offering (the “IPO”(the “IPO”) and the private placement of the warrants consummated simultaneous with the IPO (the “Private“Private Placement Warrants”Warrants”), our stock, debt or a combination of cash, stock and debt.
The issuance of additional shares of our common stock in a business combination:
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may subordinate the rights of holders of our 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 is 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 management team; may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us; and may adversely affect prevailing market prices for our common stock and/or warrants. | |
Similarly, if we issue debt securities, it could result in:
default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations; 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; our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; our inability to obtain necessary additional financing if the debt security contains covenants;
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| restricting our ability to obtain such financing while the debt security is outstanding; our inability to pay dividends on our common stock; 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, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes; limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements and execution of our strategy; and other purposes and other disadvantages compared to our competitors who have less debt. |
On January 14, 2021, we completed our IPO of 24,000,000 units (the “Units”“Units”). Each Unit consists of one share of our commoncommon stock and one-half of one redeemable warrant. Each whole warrant entitles the holder thereof to purchase one share of common stock at an exercise price of $11.50 per share, subject to adjustment. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $240,000,000.
On January 14, 2021, simultaneously with the consummation of the IPO, we completed a private placement of an aggregate of 6,550,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, generating gross proceeds of $6,550,000.
On January 15, 2021, the IPO underwriters exercised their over-allotment option in full, and, on January 19, 2021, the IPO underwriters purchased an additional 3,600,000 Units at an offering price of $10.00 per Unit, generating gross proceeds of $36,000,000. Simultaneously with the closing of the sale of additional Units, we sold an additional 720,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, generating gross proceeds of $720,000. As of January 19, 2021, an aggregate amount of $276,000,000 of the net proceeds from the IPO (including the additional 3,600,000 Units and additional 720,000 Private Placement Warrants) were deposited in our trust account established in connection with the IPO (the “Trust Account”).
We paid a total of approximately $5.5 million in underwriting discounts and commissions and approximately $0.6 million for other costs and expenses related to the IPO.
We will have until the applicable extension date, the latest of which is JulyJanuary 14, 2023,2024, if our board of directors approves all six one-month extensionsthe remaining three-month extension allowed under our amended and restated certificate of incorporation, as amended, to complete a business combination or otherwise (a) cease all operations except for the purpose of winding up, (b) as promptly as reasonably possible but not more than ten business days thereafter, redeem all of the shares of common stock included as part of the Units and (c) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and in accordance with applicable law, dissolve and liquidate. The current extension datebusiness combination deadline is JuneOctober 14, 2023.
In connection with the stockholders’ vote at a special meeting of stockholders held on December 23, 2022, holders of 25,132,578 shares of common stock exercised their right to redeem such shares for a pro rata portion of the funds in the Trust Account, representing approximately $253.6 million (approximately $10.09 per share). In connection with the stockholders’ vote at a special meeting of stockholders held on July 11, 2023, holders of 467,396 shares of common stock exercised their right to redeem such shares for a pro rata portion of the funds in the Trust Account, representing approximately $4.9 million (approximately $10.58 per share).
Results of Operations
Our entire activity since inception up to March 31,June 30, 2023 relates to our formation, the IPO and, since the closing of the IPO,, a search for a business combination candidate. We will not be generating any operating revenues until the closing and completion of our initial business combination, at the earliest.
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Three Months Ended June 30, 2023 and 2022
For the three months ended March 31,June 30, 2023,, we had net loss of approximately $0.9$0.7 million,, which consisted ofchange in fair value of warrant liability of approximately $22,000, interest on note of approximately $7,000, approximately $0.9 million in formation and operating costs and provision for income taxes of approximately $42,000, offset by interest earned on marketable securities held in the Trust Account of approximately $0.2 million.
For the three months ended June 30, 2022, we had net income of approximately $2.7 million, which consisted of change in fair value of warrant liability of approximately $2.9 million and interest earned on marketable securities held in the Trust Account of approximately $0.2$0.4 million, offset by approximately $0.9$0.5 million in formation and operating costs and provision for income taxes of approximately $36,000.$23,000.
23Six Months Ended June 30, 2023 and 2022
For the threesix months ended March 31, 2022,June 30, 2023, we had net incomeloss of approximately $1.2$1.6 million, which consisted of approximately $0.6 million in formation and operating costs, offset by approximately $0.1 million in interest earned on cash held in the Trust Account and change in fair value of warrant liability of approximately $1.7$0.2 million, interest on note of approximately $8,000, approximately $1.8 million in formation and operating costs and provision for income taxes of approximately $78,000, offset by interest earned on marketable securities held in the Trust Account of approximately $0.4 million.
For the six months ended June 30, 2022, we had net income of approximately $3.9 million, which consisted of change in fair value of warrant liability of approximately $4.7 million and approximately $0.4 million in interest earned on marketable securities held in the Trust Account, offset by approximately $1.1 million in formation and operating costs and provision for income taxes of approximately $23,000.
Liquidity and Capital Resources
As of March 31,June 30, 2023,, we had approximately $0.2$0.1 million in our operating bank account and approximately $0.7 million due from a related party (which was subsequently repaid), and a working capitaldeficit of approximately $5.6$7.7 million, excluding approximately $0.8 million$43,000 in federal income tax payable that can be paid using the funds derived from the interest income earned on Trust Account.
Prior to the completion of the IPO,, our liquidity needs had been satisfied through a capital contribution from the Sponsor of $25,000 in exchange for shares of our common stock,, to cover certain offering costs, and a loan under an unsecured promissory note from the Adit EdTech Sponsor, LLC (the “Sponsor”“Sponsor”) of $150,000. Subsequent to the consummation of the IPO and the concurrent private placement,, our liquidity needs have been satisfied through the proceeds from the consummation of the Private Placement Warrants not held in the Trust Account.
In addition, in order to finance transaction costs in connection with a business combination, our Sponsor or an affiliate of the Sponsor, or certain of our officers and directors may, but are not obligated to, provide us working capital loans.
On August 6, 2021, we issued an unsecured promissory note to the Sponsor in connection with a working capital loan made by the Sponsor to us pursuant to which we were permitted to borrow up to $300,000 in the aggregate, until such promissory note was amended and restated on March 12, 2023 to permit borrowing up to $1,000,000 (as so amended and restated, the “Working Capital Note”). The Working Capital Note is non-interest bearing and payable on the earlier to occur of (i) the applicable extension date or (ii) the effective date of a business combination. Any amounts outstanding under the Working Capital Note are convertible into warrants, at a price of $1.00 per warrant at the option of the Sponsor, the terms of which shall be identical to the Private Placement Warrants. As of March 31,June 30, 2023, we had borrowed $502,683 under the Working Capital Note.
On October 9, 2022, we entered into a settlement and release agreement with Griid Holdco LLC (“GRIID”) and its affiliates and Blockchain Access UK Limited (“Blockchain”) and certain of its affiliates (the “Blockchain Settlement and Release Agreement”), pursuant to which Blockchain waived any potential defaults under the Third Amended and Restated Credit Agreement between GRIID and Blockchain, dated November 19, 2021 (the “Prior Credit Agreement”) and the parties agreed to release each other from any claims related to the Prior Credit Agreement. Also on October 9, 2022, GRIID and its affiliates entered into the Fourth Amended and Restated Loan Agreement (the “Credit Agreement”) with Blockchain and its affiliates. The Credit Agreement amended and restated the Prior Credit Agreement in its entirety, providing for a restructured senior secured term loan in the amount of approximately $57.4 million, which represents GRIID’s outstanding obligations under the Prior Credit Agreement after giving effect to the Credit Agreement. GRIID also issued to Blockchain a warrant in connection with the credit agreement, which will be automatically adjusted and exercised for an exercise price of $0.01 into a number of GRIID Class B units to be equal to 10% of the issued and outstanding capital stock of the continuing company following the Merger (“New GRIID”) immediately following the closing of the Merger.
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On December 6, 2022, we and EarlyBirdCapital, Inc. (“EarlyBird”) entered into an amendment to the underwriting agreement dated as of January 11, 2021, relating to our IPO (as so amended, the “underwriting agreement”). Among other things, the amendment reduces the amount of the deferred underwriting commission payable to EarlyBird to $6,762,000, which amount, together with reimbursement of EarlyBird’s legal expenses in an amount not to exceed $150,000 (the “Expense Reimbursement”), will be payable as follows: (i) upon the closing of our initial business combination, in an amount equal to the lesser of (A) $3,381,000 plus the Expense Reimbursement and (B) the balance of our trust account, after all amounts payable in connection with stockholder redemptions have been so paid and (ii) the remainder pursuant to a convertible promissory note (the “EarlyBird Note”) to be made by the surviving company of our initial business combination (the “Maker”) upon the consummation of our initial business combination. If we do not consummate an initial business combination, no deferred underwriting commission will be payable to EarlyBird. The amendment also provides customary registration rights to EarlyBird for the shares of common stock of the Maker (the “Maker’s common stock”) issuable upon conversion of the EarlyBird Note.
The EarlyBird Note is expected to bear interest at a rate of 8% per annum and is expected to mature upon the one-year anniversary of the date of its issuance upon consummation of our initial business combination (the “Maturity Date”). The EarlyBird Note is expected to provide that the full amount of the EarlyBird Note may be converted at EarlyBird’s election on the Maturity Date or any date on which the Maker elects to voluntarily prepay any or all of the outstanding principal and accrued interest into shares of the Maker’s common stock, at a per share conversion price equal to 90% of the trailing five trading day volume weighted
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average price of a share of the Maker’s common stock. The EarlyBird Note is also expected to contain a provision precluding conversion to the extent such conversion would result in an issuance exceeding the maximum number of shares of the Maker’s common stock permitted to be issued without a vote of the Maker’s stockholders.
The EarlyBird Note is expected to provide for mandatory prepayments from time to time after the date of the EarlyBird Note’s issuance, in amounts equal to 15% of the gross proceeds received by the Maker from any equity lines, forward purchase agreements or other equity financings consummated by Maker prior to the Maturity Date. The EarlyBird Note is also expected to provide for penalty-free prepayments in whole or in part, at the election of the Maker.
The form of EarlyBird Note provides that the Maturity Date may be accelerated upon the occurrence of certain customary Events of Default (as defined therein). Upon the occurrence an Event of Default, the EarlyBird Note would bear interest at a rate of 15% per annum from, and including, the Maturity Date (or such earlier date if the obligation to repay the EarlyBird Note is accelerated) to, but excluding, the date of repayment.
On January 12, 2023, February 8, 2023, March 12, 2023, April 5, 2023, May 12, 2023 and MayJune 12, 2023, our board of directors elected to extend the date by which we must complete an initial business combination by one month each time, from January 14, 2023 to JuneJuly 14, 2023 (the “Extensions”“Initial Extensions”). In connection with the Initial Extensions, GRIID Infrastructure LLC (“GRIID Infrastructure”) deposited an aggregate of $740,227$888,272 (representing $0.06 per IPO Share per month) ($444,136 at March 31, 2023) into our trust account for its public stockholders on behalf of us. This deposit is loaned to us pursuant to a promissory note issued by us to GRIID Infrastructure on January 13, 2023 (the “GRIID Note”).2023. The Initial Extensions are the first, the second, the third, fourth, fifth, and fifthsixth of six one-month extensions permitted under our governing documents and provide us with additional time to complete our initial business combination.
On July 11, 2023, we obtained stockholder approval to allow us to further extend the time by which we must complete our initial business combination up to an additional two times at the election of our board of directors for an additional three months each time, for a maximum of two three-month extensions. Effective as of such date, we amended our amended and restated certificate of incorporation, as amended, to provide for such extensions. In connection with the stockholders’ vote, holders of 467,396 shares of common stock exercised their right to redeem such shares for a pro rata portion of the funds in the Trust Account, representing approximately $4.9 million (approximately $10.58 per share).
On July 12, 2023, our board of directors elected to extend the date by which we must complete an initial business combination by three months, from July 14, 2023 to October 14, 2023 (the “Second Extension”). In connection with the first and second month of the Second Extension, GRIID Infrastructure deposited an aggregate of $120,000 ($60,000 per month representing approximately $0.03 per public share) into the Trust Account. This deposit is loaned to us pursuant to an amended and restated promissory note issued by us to GRIID Infrastructure (the “GRIID Note”) on July 12, 2023. This three-month extension is the first of two three-month extensions permitted under our governing documents and provides us with additional time to complete its initial business combination.
Pursuant to the GRIID Note, we may borrow up to $900,000$1.8 million in the aggregate. The GRIID Note is interest-bearing, at a rate per annum equal to the Applicable Federal Rate set forth by the Internal Revenue Service pursuant to Section 1274(d) of the Internal Revenue Code, and payable on the earlier of (i) the date on which a definitive decision to liquidate our Company is made by our board of directors, and (ii) the closing of the Merger, unless accelerated upon the occurrence of an event of default. Any outstanding principal amount under the GRIID Note may be prepaid by us, at our election and without penalty.
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Going Concern Consideration
We anticipate that the approximately $0.2$0.1 million in the operating bank account and approximately $0.7 million due from a related party as of March 31,June 30, 2023 will not be sufficient to allow us to operate for at least the next 12 months, assuming that a business combination is not consummated during that time. We have incurred and expect to continue to incur significant costs in pursuit of its financing and acquisition plans. These conditions raise substantial doubt about our ability to continue as a going concern one year from the issuance date of the financial statements. Management plans to address this uncertainty through loans from the Sponsor, officers, directors, or third parties. None of the Sponsor, officers or directors are under any obligation to advance funds to or to invest in us. There is no assurance that the plans to raise capital or to consummate a business combination will be successful. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Further, if we are unable to complete a Business Combination prior to the applicable extension date, then we will (a) cease all operations except for the purpose of winding up, (b) as promptly as reasonably possible but not more than ten business days thereafter, redeem all of the Public Shares and (c) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and in accordance with applicable law, dissolve and liquidate. The date for mandatory liquidation and subsequent dissolution as well as our working capital deficit raise substantial doubt about our ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should we be required to liquidate after the applicable extension date.
Off-Balance Sheet Financing Arrangements
As of March 31,June 30, 2023,, we did not have any off-balance sheet arrangements. We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into any non-financial assets.
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On September 9, 2022, we and Griid Infrastructure LLC (“Griid Infrastructure”) entered into a share purchase agreement (the “Share Purchase Agreement”) with GEM Global Yield LLC SCS (the “Purchaser”) and GEM Yield Bahamas Limited relating to a share subscription facility. Pursuant to the Share Purchase Agreement, following the Merger (as defined below), subject to certain conditions and limitations set forth in the Share Purchase Agreement, New GRIID shall have the right, but not the obligation, from time to time at its option, to issue and sell to the Purchaser up to $200.0 million of its shares of common stock.
On November 29, 2021, we entered into an agreement and plan of merger (the “Initial Merger Agreement”) by and among us, ADEX Merger Sub, LLC, a Delaware limited liability company and a wholly owned direct subsidiary of the Company (“Merger Sub”), and GRIID. On December 23, 2021, October 17, 2022, and February 8, 2023, the parties to the Initial Merger Agreement amended the Initial Merger Agreement.
The Merger Agreement and the transactions contemplated thereby were unanimously approved by the board of directors of ADEX and the board of managers of GRIID.
Contractual Obligations
At March 31,June 30, 2023,, we did not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than what is disclosed in the condensed balance sheet.
JOBS Act
The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We will qualify as an “emerging growth company” and under the JOBS Act will be 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, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
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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 the IPO or until we are no longer an “emerging growth company,” whichever is earlier.
Critical Accounting Policies
Management’s discussion and analysis of our results of operations and liquidity and capital resources are based on our unaudited condensed consolidated financial information. We describe our significant accounting policies in Note 2 - 2—Significant Accounting Policies of the Notes to Financial Statements included in this Quarterly Report on Form 10-Q10-Q.. Our unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. Certain of our accounting policies require that management apply significant judgments in defining the appropriate assumptions integral to financial estimates. On an ongoing basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with U.S. GAAP. Judgments are based on historical experience, terms of existing contracts, industry trends and information available from outside sources, as appropriate. However, by their nature, judgments are subject to an inherent degree of uncertainty, and, therefore, actual results could differ from our estimates.
We have identified the following as our critical accounting policies:
Common Stock Subject to Possible Redemption
All of the outstanding Public Shares contain a redemption feature, which allows for the redemption of such Public Shares in connection with our liquidation, if there is a stockholder vote or tender offer in connection with a business combination or in
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connection with certain amendments to our amended and restated certificate of incorporation, as amended. In accordance with ASC 480-10-S99, redemption provisions not solely within the control of the Company require shares of common stock subject to redemption to be classified outside of permanent equity. Therefore, shares of common stock were classified outside of permanent equity as of March 31,June 30, 2023 and December 31, 2022.
We recognize changes in redemption value immediately as they occur upon the IPO and will adjust the carrying value of redeemable shares of common stock to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable shares of common stock are recorded as charges against additional paid-in capital and accumulated deficit.
On December 23, 2022, we held a special meeting of stockholders in which the stockholders approved an amendment to our amended and restated certification of incorporation, as amended, to extend the date by which we must consummate an initial business combination up to six times at the election of our board of directors for an additional one month each time (for a maximum of six one-month extensions) or otherwise (a) cease all operations except for the purpose of winding up, (b) as promptly as reasonably possible but not more than ten business days thereafter, redeem all of the shares of common stock included as part of the Units sold in our IPO and (c) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and in accordance with applicable law, dissolve and liquidate. On July 11, 2023, we obtained stockholder approval to allow us to further extend the time by which we must complete our initial business combination up to an additional two times at the election of our board of directors for an additional three months each time, for a maximum of two three-month extensions.
In connection with the stockholders’ vote at the special meeting of stockholders on December 23, 2022, holders of 25,132,578 shares of common stock exercised their right to redeem such shares for a pro rata portion of the funds in our Trust Account, representing approximately $253.6 million (approximately $10.09 per share). Following redemptions, we havehad 2,467,422 IPO Shares outstanding.
In connection with the stockholders’ vote at a special meeting of stockholders held on July 11, 2023, holders of 467,396 shares of common stock exercised their right to redeem such shares for a pro rata portion of the funds in the Trust Account, representing approximately $4.9 million (approximately $10.58 per share). Following redemptions, we have 2,000,026 IPO Shares outstanding.
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Derivative Financial Instruments
We do not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of our financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-40, “Derivatives and Hedging – Contracts inEntity’s Own Stock (“ASC 815-40”).” 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.
At March 31,June 30, 2023, we evaluated both the Public Warrants and Private Placement Warrants under ASC 480 and ASC 815-40. Such guidance provides that, because the Private Placement Warrants do not meet the criteria for equity treatment thereunder, each Private Placement Warrant must be recorded as a liability. Accordingly, we classified each warrant as a liability at its fair value. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in our statements of operations. The private placement warrants had met the requirement for equity accounting treatment when initially issued. On December 23, 2021, the Private Placement Warrants were modified such that the Private Placement Warrants no longer meet the criteria for equity treatment. As such, the Private Placement warrants were treated as derivative liability instruments from the date of the modification.
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board (“FASB”) issued 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” (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, and it also simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. We are currently assessing the impact, if any, that ASU 2020-06 would have on our financial position, results of operations or cash flows.
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our consolidated financial statements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
As of March 31,June 30, 2023, we were not subject to any market or interest rate risk. As of March 31,June 30, 2023, the net proceeds of our IPO, including amounts in the Trust Account, were held solely in cash. Due to the short-term nature of cash, we believe there will be no associated material exposure to interest rate risk.
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Item 4. Controls and Procedures.
Disclosurecontrols and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under Securities Exchange Actof 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
As required by Rules 13a-15and 15d-15 under15d-15under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2023. June 30, 2023.
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Changes in Internal Control over Financial Reporting
Except as discussed above, there was no change in our internal control over financial reporting that occurred during the quarter ended of March 31, June 30, 2023 covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1.Legal Proceedings.
From time to time, we are subject to claims in legal proceedings arising in the normal course of our business. We do not believe that we are currently party to any pending legal actions that could reasonably be expected to have a material adverse effect on our business, financial condition, results of operations, or cash flows.
Item 1A.Risk Risk Factors.
We have included in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, a description of certain risks and uncertainties that could affect our business, future performance or financial condition (the “Risk Factors”). During the three months ended March 31,June 30, 2023, there were no material changes from the disclosure provided in the Form 10-K for the year ended December 31, 2022.2022, except as set forth below. Investors should consider the Risk Factors prior to making an investment decision with respect to our stock.
Redemptions of shares of our common stock may subject us to excise tax obligations.
The Inflation Reduction Act of 2022, signed into law on August 16, 2022, introduced a new excise tax on repurchases of stock after December 31, 2022 by domestic corporations whose stock is traded on an established securities market. The U.S. Department of the Treasury and the Internal Revenue Service have issued initial guidance on which taxpayers may rely until proposed regulations are published. The new excise tax is imposed on the repurchasing corporation, not the stockholders whose stock is repurchased. The tax is imposed at a rate of 1% of the fair market value of the stock repurchased during the corporation’s taxable year, reduced by the fair market value of stock issued during the taxable year and any repurchased stock that is statutorily excepted from the excise tax. Because we are a Delaware corporation and our common stock is listed on the NYSE American, repurchases of our stock for cash will be subject to this 1% excise tax, subject to the amount of common stock we may issue. The excise tax will be imposed for any taxable year only if the amount of common stock repurchased (without regard to the value of stock issued during the year or excepted from the excise tax) exceeds $1 million.
Accordingly, redemptions in connection with the business combination, or any other redemption or other repurchase that has occurred or occurs after December 31, 2022, including the redemptions paid in connection with our stockholder meeting on July 11, 2023, may result in the imposition of the excise tax. Whether and to what extent we will be subject to the excise tax on a redemption of our common stock will depend on a number of factors, including whether we will issue any common stock during the applicable taxable year.
Under the initial guidance, the due date for payment of the excise tax for the current taxable year is April 30, 2024. We have confirmed that funds in the trust account, including the interest earned thereon, shall not be used to pay for any excise tax that may be levied on us in connection with any redemptions of our shares of common stock. Therefore, the imposition of the excise tax could result in a reduction in cash available on hand to complete any business combination and in our ability to complete any such business combination.
Item 2.Unregistered Sales of EquityEquity Securities and Use of Proceeds.
None
Item 3.Defaults UponUpon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 4.Mine Safety Disclosures.5. Other Information.
Not Applicable.
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Item 5.Other Information.
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant; Other Events.6. Exhibits
On May 12, 2023, the board of directors of the Company elected to extend the date by which the Company must complete an initial business combination by one month, from May 14, 2023 to June 14, 2023. In connection with this Extension, GRIID Infrastructure deposited an aggregate of $148,045 (representing $0.06 per Public Share) into the Company’s Trust Account for its public stockholders on behalf of the Company. These deposits are loaned to the Company pursuant to the GRIID Note issued by the Company to GRIID Infrastructure on January 13, 2023. This Extension is the fifth of six one-month extensions permitted under the Company’s amended and restated certificate of incorporation, as amended, and provides the Company with additional time to complete its initial business combination.
Exhibit | Description | |
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* | Filed herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.
Adit EdTech Acquisition Corp. | ||||
Dated: | /s/ David L. Shrier | |||
David L. Shrier Chief Executive Officer and Chairman (Principal Executive Officer) | ||||
Dated: | /s/ John J. D’Agostino | |||
John J. D’Agostino Chief Financial Officer (Principal Financial Officer and Accounting Officer) |
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