34500000345000000.040.55862500086250000.070.540001849408--12-312023Q1false0086250008625000P10D003450000034500000P2D0.330.33862500086250000001849408ztaqu:RedemptionOfWarrantPricePerShareEqualsOrExceeds18.00Memberus-gaap:CommonClassAMember2023-01-012023-03-310001849408ztaqu:RedemptionOfWarrantPricePerShareEqualsOrExceeds18.00Member2023-01-012023-03-310001849408ztaqu:PublicWarrantsMember2023-01-012023-03-310001849408ztaqu:ZimmerEntityMemberztaqu:ForwardPurchaseAgreementMember2021-06-110001849408ztaqu:BluescapeResourcesCompanyLlcMemberztaqu:ForwardPurchaseAgreementMember2021-06-110001849408us-gaap:OverAllotmentOptionMember2021-06-182021-06-180001849408ztaqu:ForwardPurchaseAgreementMember2021-06-112021-06-110001849408ztaqu:ForwardPurchaseAgreementMemberus-gaap:OverAllotmentOptionMember2021-06-182021-06-180001849408ztaqu:FounderSharesMemberztaqu:SponsorMemberus-gaap:CommonClassAMember2023-01-012023-03-310001849408us-gaap:CommonClassAMemberztaqu:PrivateWarrantsMember2023-01-012023-03-310001849408ztaqu:ForwardPurchaseAgreementMember2023-01-012023-03-310001849408us-gaap:CommonClassAMemberztaqu:PublicWarrantsMember2023-01-012023-03-310001849408ztaqu:FounderSharesMemberztaqu:SponsorMember2023-01-012023-03-3100018494082023-03-062023-03-0600018494082022-09-012022-09-010001849408us-gaap:CommonClassAMemberztaqu:ForwardPurchaseAgreementMember2021-06-112021-06-110001849408ztaqu:FounderSharesMemberztaqu:SponsorMember2021-06-180001849408ztaqu:FounderSharesMemberztaqu:SponsorMember2021-03-310001849408ztaqu:PublicWarrantsMember2021-06-182021-06-180001849408ztaqu:ForwardPurchaseAgreementMember2021-06-112021-06-110001849408us-gaap:IPOMember2023-01-012023-03-310001849408ztaqu:CommonClassaSubjectToRedemptionMemberus-gaap:CommonStockMember2023-01-012023-03-310001849408ztaqu:CommonClassaSubjectToRedemptionMemberus-gaap:CommonStockMember2022-01-012022-03-310001849408us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001849408ztaqu:PrivatePlacementWarrantsMember2021-06-182021-06-180001849408ztaqu:RedemptionOfWarrantPricePerShareEqualsOrExceeds10.00ButLowerThan18.00Memberus-gaap:CommonClassAMemberztaqu:PublicWarrantsMember2023-01-012023-03-310001849408ztaqu:RedemptionOfWarrantPricePerShareEqualsOrExceeds10.00ButLowerThan18.00Memberztaqu:PublicWarrantsMember2023-03-310001849408ztaqu:RedemptionOfWarrantPricePerShareEqualsOrExceeds10.00ButLowerThan18.00Memberus-gaap:CommonClassAMember2023-03-310001849408ztaqu:RedemptionOfWarrantPricePerShareEqualsOrExceeds18.00Member2023-03-310001849408ztaqu:WorkingCapitalLoansWarrantMemberztaqu:RelatedPartyLoansMember2023-03-310001849408ztaqu:RedemptionOfWarrantPricePerShareEqualsOrExceeds18.00Memberztaqu:PublicWarrantsMember2023-01-012023-03-310001849408ztaqu:RedemptionOfWarrantPricePerShareEqualsOrExceeds10.00ButLowerThan18.00Memberztaqu:PublicWarrantsMember2023-01-012023-03-310001849408ztaqu:RedemptionOfWarrantPricePerShareEqualsOrExceeds10.00ButLowerThan18.00Memberus-gaap:CommonClassAMemberztaqu:PublicWarrantsMember2023-03-3100018494082021-06-182021-06-180001849408ztaqu:PublicWarrantsMember2023-03-310001849408ztaqu:FounderSharesMemberztaqu:SponsorMember2021-03-012021-03-310001849408us-gaap:RetainedEarningsMember2023-03-310001849408us-gaap:RetainedEarningsMember2022-12-310001849408us-gaap:RetainedEarningsMember2022-03-310001849408us-gaap:RetainedEarningsMember2021-12-310001849408ztaqu:ZimmerEntityMemberus-gaap:IPOMember2021-06-180001849408us-gaap:OverAllotmentOptionMember2021-06-180001849408us-gaap:IPOMember2021-06-1800018494082021-06-180001849408ztaqu:ForwardPurchaseAgreementMember2021-06-110001849408ztaqu:CommonClassaSubjectToRedemptionMemberus-gaap:CommonStockMember2023-03-310001849408us-gaap:CommonClassBMemberus-gaap:CommonStockMember2023-03-310001849408ztaqu:CommonClassaSubjectToRedemptionMemberus-gaap:CommonStockMember2022-12-310001849408us-gaap:CommonClassBMemberus-gaap:CommonStockMember2022-12-310001849408ztaqu:CommonClassaSubjectToRedemptionMemberus-gaap:CommonStockMember2022-03-310001849408us-gaap:CommonClassBMemberus-gaap:CommonStockMember2022-03-310001849408ztaqu:CommonClassaSubjectToRedemptionMemberus-gaap:CommonStockMember2021-12-310001849408us-gaap:CommonClassBMemberus-gaap:CommonStockMember2021-12-310001849408ztaqu:ForwardPurchaseAgreementMember2021-06-110001849408ztaqu:AdministrativeSupportAgreementMember2023-01-012023-03-310001849408ztaqu:AdministrativeSupportAgreementMember2022-01-012022-03-310001849408ztaqu:PrivatePlacementWarrantsMemberus-gaap:PrivatePlacementMember2021-06-182021-06-180001849408ztaqu:ZimmerEntityMemberus-gaap:IPOMember2021-06-182021-06-180001849408us-gaap:IPOMember2021-06-182021-06-180001849408us-gaap:RetainedEarningsMember2023-01-012023-03-310001849408us-gaap:RetainedEarningsMember2022-01-012022-03-310001849408us-gaap:FairValueInputsLevel3Member2023-03-310001849408us-gaap:FairValueInputsLevel2Member2023-03-310001849408us-gaap:FairValueInputsLevel1Member2023-03-310001849408us-gaap:FairValueInputsLevel3Member2022-12-310001849408us-gaap:FairValueInputsLevel2Member2022-12-310001849408us-gaap:FairValueInputsLevel1Member2022-12-310001849408ztaqu:ForwardPurchaseAgreementMember2023-03-310001849408ztaqu:ForwardPurchaseAgreementMember2022-12-310001849408ztaqu:ForwardPurchaseAgreementMember2023-01-012023-03-310001849408ztaqu:CommonClassaSubjectToRedemptionMember2023-01-012023-03-310001849408us-gaap:CommonClassBMember2023-01-012023-03-310001849408ztaqu:CommonClassaSubjectToRedemptionMember2022-01-012022-03-310001849408us-gaap:CommonClassBMember2022-01-012022-03-310001849408us-gaap:CommonClassAMember2022-01-012022-03-310001849408ztaqu:PreMergerScenarioMemberus-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputPriceVolatilityMemberztaqu:ForwardPurchaseAgreementMember2023-03-310001849408ztaqu:PostMergerScenarioMemberus-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputPriceVolatilityMemberztaqu:ForwardPurchaseAgreementMember2023-03-310001849408us-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputSharePriceMemberztaqu:ForwardPurchaseAgreementMember2023-03-310001849408us-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputRiskFreeInterestRateMemberztaqu:ForwardPurchaseAgreementMember2023-03-310001849408us-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputExpectedTermMemberztaqu:ForwardPurchaseAgreementMember2023-03-310001849408us-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputExpectedDividendRateMemberztaqu:ForwardPurchaseAgreementMember2023-03-310001849408us-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputExercisePriceMemberztaqu:ForwardPurchaseAgreementMember2023-03-310001849408ztaqu:PreMergerScenarioMemberus-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputPriceVolatilityMemberztaqu:ForwardPurchaseAgreementMember2022-12-310001849408ztaqu:PostMergerScenarioMemberus-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputPriceVolatilityMember2022-12-310001849408us-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputSharePriceMemberztaqu:ForwardPurchaseAgreementMember2022-12-310001849408us-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputRiskFreeInterestRateMemberztaqu:ForwardPurchaseAgreementMember2022-12-310001849408us-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputExpectedTermMemberztaqu:ForwardPurchaseAgreementMember2022-12-310001849408us-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputExpectedDividendRateMemberztaqu:ForwardPurchaseAgreementMember2022-12-310001849408us-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputExercisePriceMemberztaqu:ForwardPurchaseAgreementMember2022-12-310001849408ztaqu:CommonClassaSubjectToRedemptionMember2023-03-310001849408us-gaap:CommonClassBMember2023-03-310001849408ztaqu:CommonClassaSubjectToRedemptionMember2022-12-310001849408us-gaap:CommonClassBMember2022-12-310001849408us-gaap:CommonClassAMember2022-12-310001849408us-gaap:CommonClassAMember2023-03-310001849408us-gaap:CommonClassAMemberztaqu:ForwardPurchaseAgreementMember2021-06-110001849408ztaqu:PrivatePlacementWarrantsMemberus-gaap:PrivatePlacementMember2021-06-180001849408ztaqu:PublicWarrantsMember2021-06-1800018494082022-01-012022-03-3100018494082022-03-3100018494082021-12-310001849408us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasurySecuritiesMember2023-03-310001849408us-gaap:USTreasurySecuritiesMember2023-03-310001849408us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasurySecuritiesMember2022-12-310001849408us-gaap:USTreasurySecuritiesMember2022-12-3100018494082023-03-3100018494082022-12-310001849408ztaqu:WarrantsEachWholeWarrantExercisableForOneShareOfClassCommonStockAtExercisePriceMember2023-01-012023-03-310001849408ztaqu:UnitsEachConsistingOfOneShareOfClassCommonStockAndOneThirdOfOneWarrantToPurchaseOneShareOfClassCommonStockMember2023-01-012023-03-310001849408us-gaap:CommonClassAMember2023-01-012023-03-310001849408us-gaap:CommonClassBMember2023-05-120001849408us-gaap:CommonClassAMember2023-05-1200018494082023-01-012023-03-31xbrli:sharesiso4217:USDiso4217:USDxbrli:sharesxbrli:pureztaqu:Yztaqu:itemztaqu:D

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended March 31, 2023

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:  001-40500

ZIMMER ENERGY TRANSITION ACQUISITION CORP.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

    

86-2286053

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.) 

9 West 57th Street, 33rd Floor

New York, New York 10019
(Address of principal executive offices)

10019

(Zip Code)

(212) 371-8688

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading
Symbol(s)

 

Name of each exchange
on which registered

Units, each consisting of one share of Class A
common stock and one-third of one Warrant to
purchase one share of Class A common stock

 

ZTAQU

 

The Nasdaq Stock Market LLC

Class A common stock, par value $0.0001 per share

 

ZT

 

The Nasdaq Stock Market LLC

Warrants, exercisable for one share of Class A
common stock for $11.50 per share

 

ZTAQW

 

The Nasdaq Stock Market LLC

Check whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 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 12, 2023, there were 34,500,000 shares of Class A common stock, $0.0001 par value, and 8,625,000 shares of Class B common stock, $0.0001 par value, issued and outstanding.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

ZIMMER ENERGY TRANSITION ACQUISITION CORP.

CONDENSED BALANCE SHEETS

March 31, 

December 31, 

    

2023

    

2022

(Unaudited)

Assets

Current assets:

Cash

$

478,302

$

897,498

Prepaid expenses

 

165,188

240,104

Total current assets

643,490

1,137,602

Marketable securities held in Trust Account

353,121,936

349,546,111

Total Assets

$

353,765,426

$

350,683,713

Liabilities, Common Stock Subject to Possible Redemption and Stockholders’ Deficit

 

Current liabilities:

Accounts payable and accrued expenses

$

80,214

$

147,091

Income tax payable

1,695,107

933,756

Due to related party

60,000

Total current liabilities

1,775,321

1,140,847

Warrant liabilities

3,858,750

3,530,205

Forward purchase unit derivative liabilities

 

5,844,000

4,430,000

Deferred underwriting discounts and commissions

 

10,850,000

10,850,000

Total liabilities

 

22,328,071

19,951,052

 

Commitments and Contingencies (See Note 7)

 

Class A common stock, $0.0001 par value; 200,000,000 shares authorized; 34,500,000 shares subject to possible redemption at redemption value at March 31, 2023 and December 31, 2022

353,121,936

349,546,111

 

  

 

  

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

 

 

Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 8,625,000 shares issued and outstanding at March 31, 2023 and December 31, 2022

 

863

 

863

Additional paid-in capital

 

 

Accumulated deficit

 

(21,685,444)

(18,814,313)

Total stockholders’ deficit

 

(21,684,581)

(18,813,450)

Total Liabilities, Common Stock Subject to Possible Redemption and Stockholders’ Deficit

$

353,765,426

$

350,683,713

The accompanying notes are an integral part of these unaudited condensed financial statements.

1

ZIMMER ENERGY TRANSITION ACQUISITION CORP.

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

For the Three Months

Ended March 31,

    

2023

    

2022

Formation and operating costs

$

465,368

$

621,687

Loss from operations

(465,368)

(621,687)

Other income

Unrealized (loss) gain on fair value of warrants

(328,545)

19,722,241

Unrealized (loss) gain on fair value of forward purchase units

(1,414,000)

4,397,294

Gain on marketable securities (net), dividends and interest on marketable securities held in Trust Account

3,673,958

8,508

Total other income, net

1,931,413

24,128,043

Income before income taxes

1,466,045

23,506,356

Income tax expense

(761,351)

Net income

$

704,694

$

23,506,356

Weighted average shares outstanding, Class A common stock subject to possible redemption

 

34,500,000

34,500,000

Basic and diluted net income per share, Class A common stock subject to redemption

$

0.04

$

0.55

Weighted average shares outstanding, Class B common stock

8,625,000

8,625,000

Basic and diluted net income per share, Class B common stock

$

(0.07)

$

0.54

The accompanying notes are an integral part of these unaudited condensed financial statements.

2

ZIMMER ENERGY TRANSITION ACQUISITION CORP.

UNAUDITED CONDENSED STATEMENTS OF CHANGES IN COMMON STOCK
SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT

FOR THE THREE MONTHS ENDED MARCH 31, 2023

Common Stock Subject to

Possible Redemption

Common Stock

Additional

Total

Class A

Class B

Paid-In

Accumulated

Stockholders’

    

Shares

    

Amount

  

  

Shares

    

Amount

    

Capital

    

Deficit

    

Deficit

Balance as of December 31, 2022

34,500,000

$

349,546,111

8,625,000

$

863

$

$

(18,814,313)

$

(18,813,450)

Accretion of Class A common stock to redemption value

 

3,575,825

(3,575,825)

(3,575,825)

Net income

704,694

704,694

Balance as of March 31, 2023

34,500,000

$

353,121,936

8,625,000

$

863

$

$

(21,685,444)

$

(21,684,581)

FOR THE THREE MONTHS ENDED MARCH 31, 2023

Common Stock Subject to

Possible Redemption

Common Stock

Additional

Total

Class A

Class B

Paid-In

Accumulated

Stockholders’

    

Shares

    

Amount

    

Shares

    

Amount

    

Capital

    

Deficit

    

Deficit

Balance as of December 31, 2021

34,500,000

$

345,015,191

8,625,000

$

863

$

$

(41,712,960)

$

(41,712,097)

Accretion of Class A common stock to redemption value

8,508

(8,508)

(8,508)

Net income

23,506,356

23,506,356

Balance as of March 31, 2022

34,500,000

$

345,023,699

8,625,000

$

863

$

$

(18,215,112)

$

(18,214,249)

The accompanying notes are an integral part of these unaudited condensed financial statements.

3

ZIMMER ENERGY TRANSITION ACQUISITION CORP.

UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS

For the Three

For the Three

Months Ended

Months Ended

March 31, 

March 31, 

2023

2022

Cash Flows from Operating Activities:

    

    

  

Net income

$

704,694

$

23,506,356

Adjustments to reconcile net income to net cash used in operating activities:

 

 

Gain on marketable securities (net), dividends and interest on marketable securities held in Trust Account

(8,508)

Change in fair value of warrants

328,545

(19,722,241)

Change in fair value of forward purchase units

1,414,000

(4,397,294)

Changes in current assets and current liabilities:

 

 

  

Accrued investment income on marketable securities held in Trust Account

(86,473)

Prepaid expenses

74,916

83,907

Accounts payable and accrued expenses

(66,877)

246,367

Income tax payable

761,351

Due to related party

(60,000)

Net cash provided (used) in operating activities

 

3,070,156

(291,413)

Cash Flows from Investing Activities:

Proceeds of sale of marketable securities

353,133,596

Purchase of marketable securities held in trust

(356,622,948)

Net cash used in investing activities

(3,489,352)

 

  

 

  

Cash Flows from Financing Activities:

 

  

 

  

Advances from related party

30,000

Net cash (used in) provided by financing activities

30,000

 

  

 

Net Change in Cash

 

(419,196)

(261,413)

Cash - Beginning

 

897,498

1,634,576

Cash - Ending

$

478,302

$

1,373,163

 

 

Supplemental Disclosure of Non-cash Financing Activities:

Accretion of Class A common stock to redemption value

$

3,575,825

$

The accompanying notes are an integral part of these unaudited condensed financial statements.

4

ZIMMER ENERGY TRANSITION ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 1 - Organization and Business Operations

Organization and General

Zimmer Energy Transition Acquisition Corp. (the “Company”) is a blank check company incorporated as a Delaware corporation on February 25, 2021, 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 may pursue an initial Business Combination target in any business or industry.

The Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.

As of March 31, 2023, the Company had not commenced any operations. All activity for the period from February 25, 2021 (inception) through March 31, 2023 relates to the Company’s formation and the initial public offering (“IPO”), which is described below. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the IPO.

The Company’s sponsor is ZETA Sponsor LLC (the “Sponsor”), a Delaware limited liability company and an affiliate of a private investment fund managed by Zimmer Partners, LP.

The registration statement for the Company’s IPO was declared effective on June 15, 2021. On June 18, 2021, the Company consummated the IPO of 34,500,000 units (the “Units” and, with respect to the shares of Class A common stock included in the Units, the “public shares”), which includes the exercise in full of the underwriters’ option to purchase an additional 4,500,000 Units, at $10.00 per Unit, generating gross proceeds of $345,000,000. Simultaneously with the closing of the IPO, the Company consummated the sale of 10,550,000 warrants (the “Private Placement Warrants”), at a price of $1.00 per Private Placement Warrant.

Transaction costs of the IPO amounted to $18,426,851, consisting of $6,200,000 of underwriting discounts and commissions, $10,850,000 of deferred underwriting discounts and commissions, and $1,376,851 of other offering costs.

Following the closing of the IPO on June 18, 2021, $345,000,000 ($10.00 per Unit) from the net offering proceeds of the sale of the Units in the IPO and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”) and invested in U.S. government securities, 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 of 1940, as amended (the “Investment Company Act”), which invest only in direct U.S. government treasury obligations. Except with respect to interest earned on the funds held in the Trust Account that may be released to the Company to pay its franchise and income tax obligations, the proceeds from the IPO and the sale of the Private Placement Warrants will not be released from the Trust Account until the earliest to occur of: (1) the completion of the Business Combination; (2) the redemption of any public shares properly submitted in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation (i) to modify the substance or timing of the Company’s obligation to redeem 100% of the public shares if the Company does not complete the Business Combination within 24 months from the closing of the IPO or (ii) with respect to any other provision relating to the rights of holders of the Class A common stock or pre-initial Business Combination activity or (3) the redemption of the public shares if the Company is unable to complete the Business Combination within 24 months from the closing of the IPO, subject to applicable law.

5

The Company will provide its public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of the initial Business Combination either: (1) in connection with a stockholder meeting called to approve the Business Combination; or (2) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a proposed Business Combination or conduct a tender offer will be made by the Company, solely in its 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 the Company to seek stockholder approval under applicable law or stock exchange listing requirements. The public stockholders will be entitled to redeem all or a portion of their public shares upon the completion of the 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 the Company’s franchise and income taxes, divided by the number of then outstanding public shares, subject to limitations. The amount in the Trust Account is initially anticipated to be $10.00 per public share.

The Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the issued and outstanding shares voted are voted in favor of the Business Combination.

The Company will have only 24 months from the closing of the IPO, i.e., through June 18, 2023 (the “Combination Period”), to complete the initial Business Combination. If the Company is unable to complete the initial Business Combination within the Combination Period, the Company will: (1) cease all operations except for the purpose of winding up; (2) 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 the Company to pay its franchise and income taxes (less up to $105,000 of interest to pay dissolution expenses and net of taxes payable), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (3) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s 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. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete the initial Business Combination within the Combination Period.

On June 15, 2021, the Sponsor and the Company’s officers and directors entered into a letter agreement with the Company, pursuant to which they agreed to waive: (1) their redemption rights with respect to any Founder Shares (as defined below) and any public shares held by them in connection with the completion of the initial Business Combination and (2) their rights to liquidating distributions from the Trust Account with respect to any Founder Shares held by them if the Company fails to complete its 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 they hold if the Company fails to complete the Business Combination within the prescribed time frame).

The Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective target business with which the Company has 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 (1) $10.00 per public share and (2) 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 assets in the Trust Account, 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 the Company’s indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). However, the Company has not asked the Sponsor to reserve for such indemnification obligations, nor has the Company independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations, and the Company believes that the Sponsor’s only assets are securities of the Company. Therefore, the Company cannot assure that the 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 the initial Business Combination and redemptions could be reduced to less than $10.00 per public share. In such event, the Company may not be able to complete the initial Business Combination, and a public stockholder would receive such lesser amount per share in connection with any redemption of the public shares. None of the Company’s officers or directors will indemnify the Company for claims by third parties including, without limitation, claims by vendors and prospective target businesses.

6

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”.

In addition, Section 102(b)(1) 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. The Company has elected to take advantage of the benefits of this extended transition period.

Liquidity, Capital Resources and Going Concern

As of March 31, 2023, the Company had $478,302 in cash and working capital deficit of $1,131,831 (net of franchise and income taxes payable).

Subsequent to the consummation of the IPO, the Company’s liquidity has been satisfied through the net proceeds from the consummation of the IPO and the sale of the Private Placement Warrants held outside of the Trust Account. In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor, an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, provide the Company Working Capital Loans (as defined below). As of March 31, 2023, 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 June 18, 2023 (the “Liquidation Deadline”), but may not have sufficient working capital and borrowing capacity to meet its needs through the period that ends twelve months from the date the financial statements are filed. Over the time period through the Liquidation Deadline, 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. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, suspending the pursuit of an initial Business Combination. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all.

As a result of the above, in connection with the Company’s assessment of going concern considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that the Company expects to have sufficient working capital and borrowing capacity to meet its needs through June 18, 2023, but the liquidity conditions raise substantial doubt about the Company’s ability to continue as a going concern through the twelve-month period from the date the financial statements are filed. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

Risks and Uncertainties

Management continues to evaluate the impact of the COVID-19 pandemic, the Russia-Ukraine war, recent turmoil in the banking sector and volatility in the financial markets, and has concluded that while it is reasonably possible that these uncertainties 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 unaudited condensed financial statements. The unaudited condensed financial statements do not include any adjustments that might result from the outcome of these uncertainties.

7

The Company’s results of operations and ability to complete an initial Business Combination may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond the Company’s control. The Company’s business could be impacted by, among other things, downturns in the financial markets (including the banking sector) or in economic conditions, inflation, increases in interest rates, supply chain disruptions, the ongoing effects of the COVID-19 pandemic, including resurgences and the emergence of new variants, and geopolitical instability, such as the military conflict in the Ukraine. Management cannot at this time fully predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact the Company and its ability to complete an initial Business Combination.

Note 2 - Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Certain information or footnote disclosures normally included in unaudited condensed financial statements prepared in accordance with US GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair statement of the financial position, operating results and cash flows for the periods presented.

The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The interim results for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any future periods.

Use of Estimates

The preparation of the unaudited condensed 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 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 unaudited condensed 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 Equivalents

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash and cash equivalents. The Company did not have any cash equivalents as of March 31, 2023 and December 31, 2022.

Marketable Securities Held in Trust Account

The assets held in the Trust Account were invested in U.S. Treasury Securities and reported at fair value. The Company’s portfolio of investments held in the Trust Account 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, investments in money market funds that invest in U.S. government securities, cash, or a combination thereof. Gains and losses resulting from the change in fair value of these securities is included in gain on marketable securities (net), dividends and interest on marketable securities held in Trust Account in the accompanying Statements of Operations. The estimated fair values of the investments held in the Trust Account are determined using available market information.

On September 1, 2022, the Company withdrew $271,831 from the Trust Account to pay its liability for Delaware franchise tax obligations. On March 6, 2023, the Company withdrew $98,132 from the Trust Account to pay its liability for Delaware franchise tax obligations. Franchise tax expense is included in the formation and operating costs in the Company’s Statements of Operations.

8

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage. Exposure to cash and cash equivalents credit risk is reduced by monitoring the credit rating and public filings of such financial institution. These concentrations of credit risk may be elevated due the recent turmoil in the banking sector. The Company has not experienced losses on this account.

Warrants

The Company accounts for the Public Warrants (as defined below) and Private Placement Warrants as liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent reporting period while the warrants are outstanding. Because the Company does not control the occurrence of events, such as a tender offer or exchange, that may trigger cash settlement of the warrants where not all of the stockholders also receive cash, the warrants do not meet the criteria for equity treatment thereunder, as such, the warrants must be recorded as a derivative liability. Changes in fair value are recognized in the unaudited condensed Statements of Operations in unrealized gain (loss) on fair value of warrants.

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 480. Class A common stock subject to mandatory redemption (if any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable Class A common stock (including 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’ deficit. 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 March 31, 2023 and December 31, 2022, 34,500,000 shares of Class A common stock subject to possible redemption is presented, at redemption value, as temporary equity, outside of the stockholders’ deficit 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 redeemable common stock to equal the redemption value at the end of each reporting period. Such changes are reflected in additional paid-in capital, or in the absence of additional paid-in capital, in accumulated deficit. For the three months ended March 31, 2023 and March 31, 2022, the Company recorded $3,575,825 and $8,508, respectively, in accretion related to earnings accrued on marketable securities held in the Trust Account. Accretion attributable to the holders of the Company’s Class A common stock subject to possible redemption is reduced by the amounts that the Company withdrew to pay its liability for Delaware franchise tax obligations.

Offering Costs

The Company complies with the requirements of the ASC 340-10-S99-1, Other Assets and Deferred Costs - Overall - SEC Materials, and SEC Staff Accounting Bulletin (“SAB”) Topic 5A, Expenses of Offering. Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the IPO. Offering costs are charged against the carrying value of Class A common stock or the unaudited condensed Statements of Operations based on the relative value of the Class A common stock and the Public Warrants to the proceeds received from the Units sold upon the completion of the IPO.

Derivative Financial Instruments

The Company accounts for derivative financial instruments in accordance with ASC 815. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value upon issuance and remeasured at each reporting date, with changes in the fair value reported in the unaudited condensed Statements of Operations. The classification of derivative financial instruments is evaluated at the end of each reporting period.

9

Income Taxes

ASC 740, Income Taxes, requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the unaudited condensed financial statements and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. As of March 31, 2023 and December 31, 2022, the Company had deferred tax assets of $500,823 and $413,276, respectively, which had a full valuation allowance recorded against it.

ASC 740-270-25-2 requires that an annual effective tax rate be determined, and such annual effective rate applied to year to date income in interim periods under ASC 740-270-30-5. Our effective tax rate was 51.93% and 0.00% for the three months ended March 31, 2023 and 2022, respectively. The effective tax rate differs from the statutory tax rate of 21% for the three months ended March 31, 2023 and 2022, due to changes in fair value in warrant liabilities, as well as changes in Forward Purchase Unit assets and liabilities.

ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position 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. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of March 31, 2023 and December 31, 2022, respectively. 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 has identified the United States as its only “major” tax jurisdiction.

The Company is subject to income taxation by major taxing authorities since inception. These examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

Net Income (Loss) Per Common Stock

The unaudited condensed Statements of Operations include a presentation of income (loss) per Class A common stock subject to possible redemption and income (loss) per founder non-redeemable share following the two-class method of income per share. In order to determine the net income (loss) attributable to both the public Class A redeemable shares and founder non-redeemable shares, the Company first considered the total income (loss) allocable to both sets of shares. This is calculated using the total net income (loss) less any dividends paid. For purposes of calculating net income (loss) per share, any remeasurement of the accretion to redemption value of the Class A common stock subject to possible redemption was considered to be dividends paid to the public stockholders. Subsequent to calculating the total income (loss) allocable to both sets of shares, the Company split the amount to be allocated using a weighted average ratio of the Class A public shares and the founder non-redeemable shares for the three months ended March 31, 2023 and 2022, reflective of the respective participation rights.

10

The earnings per share presented in the unaudited Statements of Operations is based on the following:

    

For the three months ended

March 31, 

    

2023

    

2022

Net income

$

704,694

$

23,506,356

Accretion of temporary equity to redemption value

(3,575,825)

(8,508)

Net (loss) income including accretion of temporary equity to redemption value

$

(2,871,131)

$

23,497,848

For the three months ended March 31,

2023

2022

    

Class A

    

Class B

    

Class A

    

Class B

Basic and diluted net income (loss) per share:

Numerator:

Allocation of net income (loss) including accretion of temporary equity

$

(2,296,905)

$

(574,226)

$

18,798,278

$

4,699,570

Allocation of accretion of temporary equity to redemption value

3,575,825

8,508

Allocation of net income (loss)

$

1,278,920

$

(574,226)

$

18,806,786

$

4,699,570

Denominator:

Weighted-average shares outstanding

34,500,000

8,625,000

34,500,000

8,625,000

Basic and diluted net income (loss) per share

$

0.04

$

(0.07)

$

0.55

$

0.54

As of  March 31, 2023 and December 31, 2022, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into common stock and then share in the Company’s earnings. As a result, diluted income (loss) per share is the same as basic income (loss) per share for the periods presented.

Fair Value Measurement of Financial Instruments

Fair value is defined as the price which would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-tier fair value hierarchy which prioritizes the inputs used in the valuation methodologies is as follows:

Level 1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 Inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.

Level 3 Inputs - Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

For a detailed discussion of the allocation of the assets and liabilities recorded at the fair value to levels of fair value hierarchy, see Note 5 for the fair value leveling disclosures of assets and liabilities that are recorded at fair value in the accompanying balance sheets on a recurring basis.

For assets and liabilities that qualify as financial instruments and are not recorded at fair value in the accompanying balance sheets, the estimated fair value approximates the carrying amounts primarily due to the short term nature of these financial instruments.

11

Recent Accounting Standards

In August 2020, FASB issued ASU 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) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments, and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2024 and should be applied on a full or modified retrospective basis. The Company is currently assessing the impact, if any, it would have on its financial position, results of operations or cash flows.

Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s unaudited condensed financial statements.

Note 3 - Initial Public Offering

On June 18, 2021, the Company consummated its IPO of 34,500,000 Units (including 4,500,000 Units pursuant to the underwriters’ full exercise of their over-allotment option) at a price of $10.00 per Unit, generating gross proceeds of $345,000,000. Each Unit consists of one share of Class A common stock, par value $0.0001 per share, and one-third of one redeemable warrant (each, a “Public Warrant”). Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment.

Note 4 - Private Placement

Simultaneously with the closing of the IPO, the Sponsor purchased an aggregate of 10,550,000 Private Placement Warrants at a price of $1.00 per warrant ($10,550,000 in the aggregate), each exercisable to purchase one share of Class A common stock at a price of $11.50 per share. A portion of the purchase price of the Private Placement Warrants was added to the proceeds from the IPO held in the Trust Account. The Company recorded the excess of the fair value of the Private Placement Warrants over the proceeds of $2,829,377 as a financing expense at the time of IPO.

Note 5 - Derivative Financial Instruments

Warrants

Each whole warrant entitles the holder to purchase one share of the Company’s Class A common stock at a price of $11.50 per share, subject to adjustment. The Public Warrants will become exercisable on the later of (a) 30 days after the consummation of a Business Combination or (b) 12 months from the closing of the IPO. 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 Company’s 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 its affiliates, as applicable, prior to such issuance) (the “newly issued price”) and (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination on the date of the consummation of the initial Business Combination (net of redemptions), the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the newly issued price, the $18.00 per share redemption trigger price described below under “Redemption of warrants for cash when the price per share of Class A common stock equals or exceeds $18.00” will be adjusted (to the nearest cent) to be equal to 180% of the newly issued price, and the $10.00 per share redemption trigger price described below under “Redemption of warrants when the price per share of Class A Common Stock equals or exceeds $10.00 but is lower than $18.00” will be adjusted (to the nearest cent) to be equal to the newly issued price.

The warrants will expire at 5:00 p.m., New York City time on the warrant expiration date, which is five years after the completion of the initial Business Combination or earlier upon redemption or liquidation. On the exercise of any warrant, the warrant exercise price will be paid directly to the Company and not placed in the Trust Account.

12

The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the shares of Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations described below with respect to registration. No warrant will be exercisable and the Company will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless the Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a warrant, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In no event will the Company be required to net cash settle any warrant. In the event that a registration statement is not effective for the exercised warrants, the purchaser of a Unit containing such warrant will have paid the full purchase price for the Unit solely for the share of Class A common stock underlying such Unit.

The Company has agreed that as soon as practicable, but in no event later than fifteen (15) business days, after the closing of the initial Business Combination, the Company will use its best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the shares of Class A common stock issuable upon exercise of the warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. Notwithstanding the above, if the 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, the Company may, at its 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 the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but the Company will be required to use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.

Redemption of warrants when the price per share of Class A common stock equals or exceeds $18.00

Once the warrants become exercisable, the Company may redeem the outstanding Public Warrants for cash:

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 reported 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 we send the notice of redemption to the warrant holders (such price, the “market value”).

Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00 but is lower than $18.00

Once the warrants become exercisable, the Company may redeem the outstanding Public Warrants:

in whole and not in part;
at a price of $0.10 per warrant, provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares based on the redemption date and the fair market value of the shares of Class A common stock;
upon a minimum of 30 days’ prior written notice of redemption;
if, and only if, the last reported sale price of the 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 we send the notice of redemption to the warrant holders; and

13

if the last reported sale price of the Class A common stock on the trading day prior to the date on which we send the notice of redemption to the warrant holders is less than $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above.

The “fair market value” of the Class A common stock shall mean the average reported last sale price of the Class A common stock for the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of warrants. The Company will provide its warrant holders with the final fair market value no later than one business day after the ten-trading day period described above ends. In no event will the warrants be exercisable in connection with this redemption feature for more than 0.361 shares of Class A common stock per whole warrant (subject to adjustment).

The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants and the Class A common stock issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or saleable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable, except as described above, so long as they are held by the Sponsor or its permitted transferees. If the Private Placement Warrants are held by someone other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

If a tender offer, exchange or redemption offer shall have been made to and accepted by the holders of the Class A common stock (other than a tender, exchange or redemption offer made by the Company in connection with redemption rights held by stockholders as provided for in the amended and restated certificate of incorporation or as a result of the repurchase of shares of Class A common stock by the Company if a proposed initial Business Combination is presented to the stockholders for approval) and upon completion of such offer, the offeror owns beneficially more than 50% of the outstanding shares of Class A common stock, the holder of the warrant shall be entitled to receive the highest amount of cash, securities or other property to which such holder would actually have been entitled as a stockholder if such warrant had been exercised, accepted such offer and all of the Class A common stock held by such holder had been purchased pursuant to the offer. If less than 70% of the consideration receivable by the holders of the Class A common stock in the applicable event is payable in the form of common equity in the successor entity that is listed on a national securities exchange or is quoted in an established over-the-counter market, and if the holder of the warrant properly exercises the warrant within thirty days following the public disclosure of the consummation of the applicable event by the Company, the warrant price shall be reduced by an amount equal to the difference (but in no event less than zero) of (i) the warrant price in effect prior to such reduction minus (ii) (A) the Per Share Consideration (as defined in the warrant agreement) minus (B) the value of the warrant based on the Black-Scholes Warrant Model for a Capped American Call on Bloomberg Financial Markets.

The Company accounts for the Public Warrants and Private Placement Warrants as liabilities in accordance with the guidance contained in ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity. Because the Company does not control the occurrence of events, such as a tender offer or exchange, that may trigger cash settlement of the warrants where not all of the stockholders also receive cash, the warrants do not meet the criteria for equity treatment thereunder, as such, the warrants must be recorded as a derivative liability.

Additionally, certain adjustments to the settlement amount of the Private Placement Warrants are based on a variable that is not an input to the fair value of a “fixed-for-fixed” option as defined under ASC 815-40, and thus the Private Placement Warrants are not considered indexed to the Company’s own stock and not eligible for an exception from derivative accounting.

14

Forward Purchase Agreements

On June 11, 2021, the Company entered into a forward purchase agreement (the “Committed FPA”) with ZP Master Utility Fund, Ltd., an affiliate of the Sponsor (the “Zimmer Entity”), and a forward purchase agreement (the “Uncommitted FPA” and, together with the Committed FPA, the “Forward Purchase Agreements”) with Bluescape Resources Company LLC (“Bluescape Resources” and, together with the Zimmer Entity, the “Forward Purchasers”). Pursuant to the Forward Purchase Agreements, the Zimmer Entity agreed to purchase 10,000,000 units and Bluescape Resources agreed to purchase up to 10,000,000 units, with each unit consisting of one share of Class A common stock and one-third of one warrant to purchase one share of Class A common stock, at $11.50 per share, subject to adjustment, for a purchase price of $10.00 per unit (the “Forward Purchase Units”). The shares of Class A common stock to be issued under the Forward Purchase Agreements will have no redemption rights and will have no right to liquidating distributions from the Trust Account. The warrants to be issued as part of the Forward Purchase Agreements will be identical to the Private Placement Warrants. The purchase of the Forward Purchase Units will take place in one or more private placements to occur concurrently and only in connection with the closing of the Business Combination. The forward purchase shares and forward purchase warrants (and underlying shares of Class A common stock) are subject to registration rights. The obligation of Bluescape Resources to purchase the Forward Purchase Units pursuant to the Uncommitted FPA is subject to the approval of its investment committee.

The Company accounts for the Forward Purchase Agreements in accordance with the guidance in ASC 815-40 and accounts for such agreements as derivative liability/asset. The value of the liability/asset is subject to re-measurement at each balance sheet date, with changes in fair value recognized in the unaudited condensed Statements of Operations.

The following presents the Company’s fair value hierarchy for assets and liabilities measured at fair value on non-recurring basis as of March 31, 2023.

    

Level 1

    

Level 2

    

Level 3

    

Total

Assets:

  

 

Marketable securities held in Trust Account – U.S. Money Market

$

353,121,936

$

$

$

353,121,936

Liabilities:

 

 

  

 

Warrant liabilities

 

(2,012,500)

(1,846,250)

(3,858,750)

Forward purchase unit liabilities

(5,844,000)

(5,844,000)

Total

$

351,109,436

$

(1,846,250)

$

(5,844,000)

$

343,419,186

The following presents the Company’s fair value hierarchy for assets and liabilities measured at fair value on non-recurring basis as of December 31, 2022.

    

Level 1

    

Level 2

    

Level 3

    

Total

Assets:

  

 

Marketable securities held in Trust Account – U.S. Money Market

$

349,546,111

$

$

$

349,546,111

Liabilities:

 

Warrant liabilities

 

(1,841,150)

(1,689,055)

(3,530,205)

Forward purchase unit liabilities

 

(4,430,000)

(4,430,000)

Total

$

347,704,961

$

(1,689,055)

$

(4,430,000)

$

341,585,906

The marketable securities held in the Trust Account are invested in money market funds and are classified as Level 1 in the hierarchy of fair value measurements. They are measured at the net asset value basis based on the active market exchanges.

Taking into account that the estimated fair values of the Private Placement Warrants and Forward Purchase Units are determined using some unobservable inputs including the Company’s own data, adjusted for other reasonably available information. Inherent in a Black-Scholes-Merton model are assumptions related to expected stock-price volatility (pre-merger and post-merger), expected term, dividend yield and risk-free interest rate. The pre-merger volatility is based on management’s understanding of the volatility associated with instruments of other similar entities. The post-merger volatility is derived using a Monte Carlo simulation to solve for the volatility implied by the trading price of the Public Warrants as of the valuation date. The risk-free interest rate is based on the U.S. Treasury Constant Maturity similar to the expected remaining life of the warrants. The expected life of the warrants is estimated based on management assumptions regarding the timing and likelihood of completing a Business Combination. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero.

15

The estimated fair value of the Public Warrants is determined based on the publicly traded price of the Public Warrants which is Level 1 inputs.

The following table presents information about the assumptions used to value the Company’s liabilities classified as Level 3 in the fair value hierarchy that are measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022.

Forward Purchase Units

Inputs

    

December 31, 2022

    

March 31, 2023

 

Exercise price

 

$

10.00

 

$

10.00

Volatility

 

3.00% pre-merger/
3.00% post-merger

 

3.3% pre-merger/
3.3% post-merger

Expected term to business combination

 

0.46 year

0.22 year

Risk-free rate

 

4.76

%

4.83

%

Dividend yield

 

0.00

%

0.00

%

Stock price

 

$

9.95

$

10.13

The following table presents information about the transfer to/from Levels 1, 2, and 3 within the fair value hierarchy for the three months ended March 31, 2023:

    

Forward Purchase

Units

Fair value as of December 31, 2022

$

4,430,000

Change in valuation inputs or other assumptions

1,414,000

Fair value as of March 31, 2023

$

5,844,000

Note 6 - Related Party Transactions

Working Capital Loans

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. 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. 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. Up to $1,500,000 of such Working Capital Loans may be convertible into private placement warrants at a price of $1.00 per warrant at the option of the lender. As of March 31, 2023 and December 31, 2022, the Company had no borrowings under any Working Capital Loans.

Services Agreement

Commencing on the date of the IPO, the Company entered into an administrative services agreement pursuant to which the Company pays Zimmer Partners, LP a total of $10,000 per month for office space, utilities and secretarial and administrative support. Upon completion of the Company’s Business Combination or its liquidation, the Company will cease paying these monthly fees. For each of the three months ended March 31, 2023 and 2022, $30,000 of administrative fees were incurred. The amounts owing to related parties as of March 31, 2023 and December 31, 2022 were $0 and $60,000, respectively.

Forward Purchase Agreement

On June 11, 2021, the Company entered into the Committed FPA with the Zimmer Entity providing for the purchase by the Zimmer Entity of an aggregate of 10,000,000 Forward Purchase Units at a purchase price of $10.00 per unit, in a private placement to occur concurrently with the closing of the Business Combination. The proceeds from the sale of the Forward Purchase Units may be used as part of the consideration to the sellers in the Business Combination, expenses in connection with the Business Combination or for working capital in the post-Business Combination company.

16

The terms and provisions of the forward purchase warrants to be issued as part of the Forward Purchase Units are identical to those of the Private Placement Warrants.

Zimmer Entity Participation in IPO

On June 18, 2021, the Zimmer Entity purchased $35,000,000 public Units (3,500,000 Units at $10.00 per Unit) in the IPO. The underwriters did not receive any underwriting discounts or commissions on the public Units purchased by the Zimmer Entity.

Founder Shares

In March 2021, the Company issued 8,625,000 shares of its Class B common stock (the “Founder Shares”) for an aggregate purchase price of $25,000. Up to 1,125,000 Founder Shares were subject to forfeiture by the Sponsor depending on the extent to which the underwriters’ over-allotment option was exercised. As a result of the underwriters’ exercise of the over-allotment option in full, there were no shares subject to forfeiture as of the consummation of the IPO on June 18, 2021.

The initial stockholders agreed, subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares until the earlier to occur of (A) one year after the completion of the initial Business Combination or (B) subsequent to the initial Business Combination, (x) if the closing 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 (y) the date on which the Company completes a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.

Note 7 - Commitments & Contingencies

Registration Rights

The holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (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 requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to the Class A common stock). The holders of at least 20% in interest of the then-outstanding number of these securities are entitled to demand that the Company file a registration statement covering such securities and to require the Company to effect up to an aggregate of three underwritten offerings of 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. In addition, the shares of Class A common stock and warrants (and underlying shares of Class A common stock) purchased by the Zimmer Entity as part of the Units in the IPO are entitled to registration rights under the registration rights agreement. The Zimmer Entity is not subject to any lock-up period with respect to any securities it purchased in the IPO. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

Pursuant to the Forward Purchase Agreements, the Company has agreed to use reasonable best efforts (i) to file within 30 days after the closing of the Business Combination a registration statement with the SEC for a secondary offering of the forward purchase shares and the forward purchase warrants (and underlying shares of Class A common stock), (ii) to cause such registration statement to be declared effective promptly thereafter but in no event later than 60 days after the initial filing, (iii) to maintain the effectiveness of such registration statement until the earliest of (A) the date on which the Forward Purchasers or their respective assignees cease to hold the securities covered thereby, and (B) the date all of the securities covered thereby can be sold publicly without restriction or limitation under Rule 144 under the Securities Act and (iv) after such registration statement is declared effective, cause the Company to conduct firm commitment underwritten offerings, subject to certain limitations. In addition, the Forward Purchase Agreements provide for certain “piggy-back” registration rights to the holders of forward purchase securities to include their securities in other registration statements filed by the Company.

17

Underwriting Agreement

The Company granted the underwriter a 45-day option from the date of the final prospectus relating to the IPO to purchase up to 4,500,000 additional Units to cover over-allotments, if any, at the IPO price less the underwriting discounts and commissions. On June 18, 2021, the underwriter’s over-allotment option was exercised in full.

On June 18, 2021, the Company paid underwriting discounts and commissions of $6,200,000 in the aggregate. Additionally, deferred underwriting discounts and commissions of $10,850,000, will be payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes an initial Business Combination, subject to the terms of the underwriting agreement.

Note 8 - Stockholders’ Deficit

Preferred Stock - The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share and 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, 2023 and December 31, 2022, there were no shares of preferred stock issued or outstanding.

Class A Common Stock - The Company is authorized to issue a total of 200,000,000 shares of Class A common stock with a par value of $0.0001 per share. As of March 31, 2023 and December 31, 2022, there were 34,500,000 shares of Class A common stock issued and outstanding.

Class B Common Stock - The Company is authorized to issue a total of 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. As of March 31, 2023 and December 31, 2022, there were 8,625,000 shares of Class B common stock issued and outstanding.

The shares of Class B common stock will automatically convert into shares of Class A common stock at 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. 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 IPO and related to the closing of the initial Business Combination, including pursuant to a specified future issuance, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance, including a specified future issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of the IPO plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the initial Business Combination (excluding any shares or equity-linked securities issued, or to be issued, to any seller in the Business Combination).

18

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References in this report (this “Quarterly Report”) to “we,” “us” or the “Company” refer to Zimmer Energy Transition Acquisition Corp. References to our “management” or our “management team” refer to our officers, references to the “sponsor” refer to ZETA Sponsor LLC, a Delaware limited liability company. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report includes “forward-looking statements” that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements contained in this Quarterly Report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or 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 in the section entitled “Risk Factors” of our final prospectus for our Public Offering (as defined below) filed with the Securities and Exchange Commission (the “SEC”), our Annual Report on Form 10-K for the year ended December 31, 2022, this Quarterly Report and in our other SEC filings. 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.

Overview

We are a blank check company incorporated on February 25, 2021 as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. Our sponsor is an affiliate of a private investment fund management by Zimmer Partners, LP (“Zimmer”), a Delaware limited partnership that manages several investment vehicles. Although we may pursue an acquisition opportunity in any business or industry, we intend to capitalize on the Zimmer platform to identify, acquire and operate a business in industries that may provide opportunities for attractive risk-adjusted returns in the energy value chain in North America, with a focus on energy transition and sustainability. This broadly includes environmental, social and governance growth-focused companies in the energy, industrial, and infrastructure sectors.

The registration statement for our initial public offering (our “Public Offering”) was declared effective on June 15, 2021. On June 18, 2021, we consummated our Public Offering of 34,500,000 units (the “Units”), which includes the exercise in full of the underwriters’ option to purchase an additional 4,500,000 Units, at a price of $10.00 per Unit, generating gross proceeds to us of $345,000,000. Transaction costs for the Public Offering amounted to $18,426,851, consisting of $6,200,000 of underwriting discounts and commissions, $10,850,000 of deferred underwriting discounts and commissions, and $1,376,851 of other offering costs.

Simultaneously with the consummation of the Public Offering, we completed the private sale (the “Private Placement”) of 10,550,000 private placement warrants (the “Private Placement Warrants”) at a purchase price of $1.00 per warrant, generating gross proceeds to us of $10,550,000.

19

$345,000,000 of the gross proceeds ($10.00 per Unit) of the Public Offering and the Private Placement (including the over-allotment Units) were deposited into a U.S.-based trust account (the “Trust Account”) with Continental Stock Transfer & Trust Company acting as trustee (“Trustee”), and invested only in U.S. “government securities,” within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less, or in money market funds meeting the conditions of paragraphs (d)(1), (d)(2), (d)(3) and (d)(4) of Rule 2a-7 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 our initial business combination and (ii) the distribution of the Trust Account as otherwise permitted under our amended and restated certificate of incorporation.

If we are unable to complete an initial business combination within 24 months from the closing of the Public Offering, or June 18, 2023, 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 us to pay our franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses and net of taxes payable), divided by the number of then-outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, 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.

Results of Operations

As of March 31, 2023, we had not commenced any operations. All activity for the period from February 25, 2021 (inception) through March 31, 2023 relates to our formation and Public Offering, and, since the completion of the Public Offering, our search for a target to consummate an initial business combination. We will not generate any operating revenues until after the completion of an initial business combination, at the earliest. We will generate non-operating income in the form of interest income from the proceeds derived from the Public Offering and placed in the Trust Account.

For the three months ended March 31, 2023, we had net income of $704,696, consisting of dividends and interest on investments held in the Trust Account of $3,673,958, offset by an unrealized loss on fair value of warrants and Forward Purchase Units (as defined below) of $1,742,545, formation and operating costs of $465,366 and income tax provision of $761,351.

For the three months ended March 31, 2022, we had net income of $23,506,356, consisting of an unrealized gain on fair value of warrants and Forward Purchase Units (as defined below) of $24,119,535 and gain on marketable securities (net), dividends and interest on investment held in the Trust Account of $8,508, offset by formation and operating costs of $621,687.

Liquidity, Capital Resources and Going Concern

On June 18, 2021, we consummated our Public Offering of 34,500,000 Units, which includes the exercise in full of the underwriters’ option to purchase an additional 4,500,000 Units at the initial public offering price to cover over-allotments. Each Unit consists of one share of Class A common stock, $0.0001 par value per share, and one-third of one redeemable warrant (“Warrant”). Each whole Warrant entitles the holder thereof to purchase one share of our Class A common stock at a price of $11.50 per share, subject to adjustment, and only whole Warrants are exercisable. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $345,000,000. Since August 6, 2021, holders of the Units may elect to separately trade the shares of Class A common stock and Warrants included in the Units. No fractional Warrants are issued upon separation of the Units and only whole Warrants trade. Simultaneously with the consummation of the Public Offering and the issuance and sale of the Units on June 18, 2021, we consummated the Private Placement of 10,550,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, generating total proceeds of $10,550,000.

Transaction costs for the Public Offering amounted to $18,426,851, consisting of $6,200,000 of underwriting discounts and commissions, $10,850,000 of deferred underwriting discounts and commissions, and $1,376,851 of other offering costs.

Upon closing of the Public Offering and the Private Placement, a total of $345,000,000 ($10.00 per Unit) was placed in the Trust Account. The proceeds held in the Trust Account have been 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.

20

As of March 31, 2023, we had cash outside our Trust Account of $478,302 and had working capital deficit of $1,131,831 (excluding franchise and income taxes payable). The reduction in cash balances outside of our Trust Account is attributable to payment of expenses related to administrative and operating activities. All remaining cash from the Public Offering is held in the Trust Account and is generally unavailable for use prior to an initial business combination. We believe the cash outside of our Trust Account will be sufficient to meet the expenditures required for operating our business through June 18, 2023, but might not be sufficient to meet expenditures required for operating our business for the twelve-month period following the date the financial statements included in this Quarterly Report are filed.

We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less franchise and income taxes payable and deferred underwriting discounts and commissions) and the proceeds from the sale of the Forward Purchase Units to complete our initial business combination. We may withdraw interest to pay our franchise and income taxes. We estimate our annual franchise tax obligations for the taxable years beginning after the completion of our Public Offering, based on the number of shares of our common stock authorized and outstanding after the completion of our Public Offering, to be $200,000, which is the maximum amount of annual franchise taxes payable by us as a Delaware corporation per annum. We will also be liable for income tax based on the results of operations and applicable tax rates. We will pay both franchise and income taxes from funds from the Public Offering held outside of the Trust Account or from interest earned on funds held in the Trust Account and released by the Trustee to use for this purpose. Our 2022 franchise tax amounted to $200,000. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the Trust Account reduced by our operating expense and franchise taxes. We expect the interest earned on the amount in the Trust Account will be sufficient to pay our income taxes. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our initial business combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.

We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business prior to our initial business combination. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to complete our initial business combination or because we become obligated to redeem a significant number of our public shares upon completion of our initial business combination, in which case we may issue additional securities or incur debt in connection with such initial business combination, which may include a specified future issuance. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our initial business combination. If we are unable to 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. In addition, following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations. However, it is uncertain that we will consummate an initial business combination by June 18, 2023. If an initial business combination is not consummated by this date, we will, in accordance with our amended and restated certificate of incorporation, redeem our public shares and subsequently dissolve the Company.

As a result of the above, in connection with the Company’s assessment of going concern considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that the Company expects to have sufficient working capital and borrowing capacity to meet its needs through June 18, 2023, but the liquidity conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Our amended and restated certificate of incorporation provides that we will have 24 months from the closing of the Public Offering, or until June 18, 2023, to complete the initial business combination. If the Company is unable to complete the initial business combination within such time period, we will: (1) cease all operations except for the purpose of winding up, (2) 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 the Company to pay its franchise and income taxes (less up to $105,000 of interest to pay dissolution expenses and net of taxes payable), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (3) as promptly as reasonably possible following such redemption, subject to the approval of our 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. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if the Company fails to complete the initial business combination within such time period.

21

Commitments and Contractual Obligations

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than as described below.

Registration Rights

The holders of the (i) shares of our Class B common stock, par value $0.0001 per share (the “Founder Shares”), which were issued in a private placement prior to the closing of the Public Offering, (ii) Private Placement Warrants and (iii) private placement warrants that may be issued upon conversion of working capital loans (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 dated as of June 15, 2021. The holders of at least 20% in interest of the then-outstanding number of these securities are entitled to demand that we file a registration statement covering such securities subsequent to the completion of the initial business combination and to require us to effect up to an aggregate of three underwritten offerings of 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. In addition, the shares of Class A common stock and Warrants (and underlying shares of Class A common stock) purchased by the Zimmer Entity (as defined below) as part of the Units in the Public Offering are entitled to registration rights under the registration rights agreement. The Zimmer Entity is not subject to any lock-up period with respect to any securities it purchased in the Public Offering. We will bear the expenses incurred in connection with the filing of any such registration statements.

Pursuant to the Forward Purchase Agreements (as defined below), we agreed to use reasonable best efforts (i) to file within 30 days after the closing of the initial business combination a registration statement with the SEC for a secondary offering of the forward purchase shares and the forward purchase warrants (and underlying shares of Class A common stock), (ii) to cause such registration statement to be declared effective promptly thereafter but in no event later than 60 days after the initial filing, (iii) to maintain the effectiveness of such registration statement until the earliest of (A) the date on which the Forward Purchasers (as defined below) or their respective assignees cease to hold the securities covered thereby, and (B) the date all of the securities covered thereby can be sold publicly without restriction or limitation under Rule 144 under the Securities Act of 1933, as amended and (iv) after such registration statement is declared effective, cause us to conduct firm commitment underwritten offerings, subject to certain limitations. In addition, the Forward Purchase Agreements provide for certain “piggy-back” registration rights to the holders of forward purchase securities to include their securities in other registration statements filed by us.

Administrative Services Agreement

Pursuant to an administrative services agreement, dated June 15, 2021, we have agreed to pay Zimmer a total of $10,000 per month from funds held outside the Trust Account for office space, utilities and secretarial and administrative support. Upon the earlier of the consummation by the Company of an initial business combination or the Company’s liquidation, the Company will cease paying these monthly fees. For the three months ended March 31, 2023 and 2022, $30,000 of administrative fees were incurred. The amounts owing to related parties as of March 31, 2023 and December 31, 2022 were $0 and $60,000, respectively.

Forward Purchase Agreements

On June 11, 2021, we entered into forward purchase agreements (the “Forward Purchase Agreements”) with ZP Mater Utility Fund, Ltd. (the “Zimmer Entity”) and Bluescape Resources Company LLC (“Bluescape Resources” and, together with the Zimmer Entity, the “Forward Purchasers”). Pursuant to the Forward Purchase Agreements, the Zimmer Entity agreed to purchase 10,000,000 units and Bluescape Resources agreed to purchase up to 10,000,000 units, with each unit consisting of one share of Class A common stock and one-third of one warrant to purchase one share of Class A common stock, at $11.50 per share, subject to adjustment, for a purchase price of $10.00 per unit (the “Forward Purchase Units”). The obligation of Bluescape Resources to purchase the Forward Purchase Units pursuant to its Forward Purchase Agreement is subject to the approval of its investment committee. The purchase of the Forward Purchase Units will take place in one or more private placements to occur concurrently and only in connection with the closing of the initial business combination. The proceeds from the sale of Forward Purchase Units may be used as part of the consideration to the sellers in the initial business combination, expenses in connection with the initial business combination or for working capital in the post-business combination company.

22

Underwriting Agreement

The underwriters in the Public Offering are entitled to deferred underwriting discounts and commissions of $10,850,000, which will be payable to the underwriters from the amounts held in the Trust Account solely in the event that we complete an initial business combination, subject to the terms of the underwriting agreement.

Critical Accounting Estimates

The preparation of condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates.

We have not identified any critical accounting estimates other than estimates and assumptions related to the input values in the valuation models used in the valuation of the Company’s Private Placement Warrants and Forward Purchase Units, classified as Level 3 in the hierarchy of fair value measurements of financial instruments, specifically, assumptions related to expected stock-price volatility (pre-merger and post-merger), expected term, dividend yield and risk-free interest rate. The pre-merger volatility is based on our understanding of the volatility associated with instruments of other similar entities. The post-merger volatility is derived using a Monte Carlo simulation to solve for the volatility implied by the trading price of the public warrants as of the valuation date. The risk-free interest rate is based on the U.S. Treasury Constant Maturity similar to the expected remaining life of the warrants. The expected life of the warrants is estimated based on our assumptions regarding the timing and likelihood of completing an initial business combination. The dividend rate is based on the historical rate, which we anticipate to remain at zero.

We evaluate such estimates and assumptions each reporting period and reflect changes in the valuation methodologies that we use.

For further discussion of these items and their impact on the values of financial instruments included in our financial statements, see Note 5 “Derivative Financial Instruments” to our financial statements.

Recent Accounting Pronouncements

Please see Note 2 “Summary of Significant Accounting Policies” to our condensed financial statements.

JOBS Act

On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” under the JOBS Act and are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We elected 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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide the information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure controls 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 the Securities Exchange Act of 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.

23

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Quarterly Report (the “Evaluation Date”). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of the Evaluation Date due to the previous material weakness in our internal control over financial reporting related to the classification of reinvestment of gain on marketable securities held in our Trust Account in cash flows from operating activities rather than cash flows from investing activities in the statements of cash flows for the quarter ended December 31, 2022, as described in Item II, Part 9A of our Annual Report on Form 10-K for the year ended December 31, 2022. In light of the material weakness, management has provided processes and controls over the internal communications within the Company and its financial advisors. We have provided and plan to provide enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding accounting.

Changes in Internal Control over Financial Reporting

Other than the remediation efforts described above, there was no change 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) that occurred during the period covered by this Quarterly Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

24

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None.

ITEM 1A. RISK FACTORS.

As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

25

ITEM 6. EXHIBITS.

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report.

Exhibit No.

    

Description of Exhibit

31.1*

Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*

Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**

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.

32.2**

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.

101.INS*

Inline XBRL Instance Document

101.CAL*

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.SCH*

Inline XBRL Taxonomy Extension Schema Document

101.DEF*

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*

Inline XBRL Taxonomy Extension Labels Linkbase Document

101.PRE*

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104*

The cover page of this Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, formatted in Inline XBRL (contained in Exhibit 101)

*Filed herewith.
**Furnished.

26

SIGNATURES

Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ZIMMER ENERGY TRANSITION ACQUISITION CORP.

Date: May 12, 2023

By:

/s/ Stuart J. Zimmer

Name:

Stuart J. Zimmer

Title:

Chief Executive Officer and Chairman of the Board

Date: May 12, 2023

By:

/s/ Jonathan Cohen

Name:

Jonathan Cohen

Title:

Chief Financial Officer

27

Zimmer Energy Transition... (NASDAQ:ZT)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more Zimmer Energy Transition... Charts.
Zimmer Energy Transition... (NASDAQ:ZT)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more Zimmer Energy Transition... Charts.