Item 1.
Financial Statements.
Armada
Acquisition Corp. I
UNAUDITED CONDENSED BALANCE SHEET
JUNE 30, 2021
Assets
|
|
|
Cash
|
|
$
|
13,746
|
|
Due from Sponsor
|
|
|
29,070
|
|
Prepaid expenses
|
|
|
8,171
|
|
Deferred offering costs
|
|
|
168,285
|
|
Total Assets
|
|
$
|
219,272
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accrued offering costs and expenses
|
|
$
|
62,258
|
|
Advances from related parties
|
|
|
132,352
|
|
Total current liabilities
|
|
|
194,610
|
|
Commitments and Contingencies (Note 6)
|
|
|
—
|
|
Stockholders’ Equity:
|
|
|
|
|
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
|
|
|
—
|
|
Common stock, $0.0001 par value; 100,000,000 shares authorized; 5,175,000 shares issued and outstanding(1)
|
|
|
517
|
|
Additional paid-in capital
|
|
|
28,553
|
|
Accumulated deficit
|
|
|
(4,408
|
)
|
Total stockholders’ equity
|
|
|
24,662
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Equity
|
|
$
|
219,272
|
|
|
(1)
|
Includes up to 675,000 shares subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters
(see Note 5).
|
The accompanying notes
are an integral part of these unaudited condensed financial statements.
Armada
Acquisition Corp. I
UNAUDITED CONDENSED STATEMENTS
OF OPERATIONS
|
|
For the Three Months Ended June 30, 2021
|
|
For the period from November 5, 2020 (Inception) through June 30, 2021
|
Formation cost
|
|
$
|
1,969
|
|
|
$
|
4,408
|
|
Net loss
|
|
$
|
(1,969
|
)
|
|
$
|
(4,408
|
)
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding(1)
|
|
|
4,500,000
|
|
|
|
4,500,000
|
|
Basic and diluted net loss per share
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
(1)
|
Excludes 675,000 shares subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters
(see Note 5).
|
The accompanying notes are
an integral part of these unaudited condensed financial statements.
Armada Acquisition Corp. I
UNAUDITED CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’
EQUITY
FOR THE PERIOD FROM NOVEMBER 5, 2020 (INCEPTION) THROUGH JUNE 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
Additional
|
|
Accumulated
|
|
Total Stockholders'
|
|
|
Shares(1)
|
|
Amount
|
|
Paid-in Capital
|
|
Deficit
|
|
Equity
|
Balance as of November 5, 2020 (inception)
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Common Stock issued to Sponsor
|
|
|
4,312,500
|
|
|
|
431
|
|
|
|
24,569
|
|
|
|
—
|
|
|
|
25,000
|
|
Issuance of Representative shares
|
|
|
250,000
|
|
|
|
25
|
|
|
|
(25
|
)
|
|
|
—
|
|
|
|
—
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,439
|
)
|
|
|
(2,439
|
)
|
Balance as of March 31, 2021
|
|
|
4,562,500
|
|
|
$
|
456
|
|
|
$
|
24,544
|
|
|
$
|
(2,439
|
)
|
|
$
|
22,561
|
|
87,500 of Representative shares returned to the Company
|
|
|
(87,500
|
)
|
|
|
(9
|
)
|
|
|
9
|
|
|
|
—
|
|
|
|
—
|
|
Additional 700,000 shares of Common Stock issued to Sponsor
|
|
|
700,000
|
|
|
|
70
|
|
|
|
4,000
|
|
|
|
—
|
|
|
|
4,070
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,969
|
)
|
|
|
(1,969
|
)
|
Balance as of June 30, 2021
|
|
|
5,175,000
|
|
|
$
|
517
|
|
|
$
|
28,553
|
|
|
$
|
(4,408
|
)
|
|
$
|
24,662
|
|
|
(1)
|
Includes up to 675,000 shares subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters
(see Note 5).
|
The accompanying notes are
an integral part of these unaudited condensed financial statements.
Armada
Acquisition Corp. I
UNAUDITED CONDENSED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM NOVEMBER 5, 2020 (INCEPTION) THROUGH JUNE 30, 2021
Cash Flows from Operating Activities:
|
|
|
Net loss
|
|
$
|
(4,408
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
Amortization of prepaid expenses
|
|
|
2,629
|
|
Changes in current assets and liabilities:
|
|
|
|
|
Accrued expenses
|
|
|
5,400
|
|
Prepaid assets
|
|
|
(10,800
|
)
|
Net cash used in operating activities
|
|
|
(7,179
|
)
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
Advances from related parties
|
|
|
132,352
|
|
Payment of deferred offering costs
|
|
|
(111,427
|
)
|
Net cash provided by financing activities
|
|
|
20,925
|
|
|
|
|
|
|
Net change in cash
|
|
|
13,746
|
|
Cash, November 5, 2020 (inception)
|
|
|
—
|
|
Cash, end of the period
|
|
$
|
13,746
|
|
|
|
|
|
|
Supplemental disclosure of noncash investing and financing activities
|
|
|
|
|
Accrued deferred offering costs
|
|
$
|
56,858
|
|
The accompanying notes are
an integral part of these unaudited condensed financial statements.
Armada Acquisition Corp. I
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENT
Note 1 — Organization, Business
Operation and Going Concern
Organization and General
Armada Acquisition Corp. I (the
“Company”) is a newly organized blank check company incorporated as a Delaware corporation on November 5, 2020. The Company
was incorporated for the purpose of effecting a merger, stock exchange, asset acquisition, stock purchase, reorganization or other similar
business combination with one or more businesses (the “Business Combination”). The Company is in the process of searching
for a Business Combination target but has not yet selected any specific Business Combination target. The Company intends to concentrate
its efforts identifying businesses in the financial services industry with particular emphasis on businesses that are providing or changing
technology for traditional financial services.
As of June 30, 2021, the Company
had not commenced any operations. All activity for the period from November 5, 2020 (inception) through June 30, 2021 relates to the Company’s
formation and preparation for the initial public offering (the “IPO”). The Company will not generate any operating revenues
until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the
form of interest income on cash and cash equivalents from the proceeds derived from the IPO.
The Company has selected September
30 as its fiscal year end.
The Company’s sponsor is
Armada Sponsor LLC (the “Sponsor”).
Financing
The registration statement for
the Company’s IPO was declared effective on August 12, 2021 (the “Effective Date”). On August 17, 2021, the Company
consummated the IPO of 15,000,000 units at $10.00 per unit (the “Units”), which is discussed in Note 3.
Simultaneously with the consummation
of the IPO, the Company consummated the private placement of 459,500 shares of common stock (the “Private Shares”), at a price
of $10.00 per share for an aggregate purchase price of $4,595,000.
At August 17, 2021 related to the IPO, transaction costs amounted to $3,342,968 consisting of $1,500,000 of underwriting commissions, and $1,842,968 of other offering costs. In addition, $1,605 of cash was held outside of the Trust Account (as defined below) and is available for working capital purposes. After the close of the IPO, paying offering costs and having excess funds released from the trust account, on August 18, 2021, the Company had $1,163,587 in cash available for working capital purposes.
Trust Account
Following the closing of the IPO
on August 17, 2021 after releasing funds to the Company to be held outside of the Trust, $150,000,000 ($10.00 per Unit) from the net proceeds
of the sale of the Units in the IPO was held in a trust account (the “Trust Account”) and was 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”), having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated
under the Investment Company Act which invest only in direct U.S. government treasury obligations. Except with respect to interest earned
on the funds held in the Trust Account that may be released to the Company to pay income tax obligations, the proceeds from the IPO and
the sale of the Private Shares will not be released from the Trust Account until the earlier of the completion of a Business Combination
or the Company’s redemption of 100% of the outstanding public shares if it has not completed a Business Combination in the required
time period The proceeds held in the Trust Account may be used as consideration to pay the sellers of a target business with which the
Company completes a Business Combination. Any amounts not paid as consideration to the sellers of the target business may be used to finance
operations of the target business.
The Company’s management
has broad discretion with respect to the specific application of the net proceeds of the IPO and the sale of Private Shares, although
substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.
Initial Business
Combination
The Company must complete one
or more initial Business Combinations having an aggregate fair market value of at least 80% of the value of the assets held in the Trust
Account (excluding taxes payable) at the time of the agreement to enter into the initial Business Combination. However, the Company will
only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities
of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment
company under the Investment Company Act. There is no assurance that the Company will be able to complete a Business Combination successfully.
In connection with any proposed
Business Combination, the Company will either (1) seek stockholders’ approval of the initial Business Combination at a meeting called
for such purpose at which stockholders may seek to redeem their shares, regardless of whether they vote for or against the proposed Business
Combination or do not vote at all, into their pro rata share of the aggregate amount then on deposit in the Trust Account (net of taxes
payable), or (2) provide its stockholders with the opportunity to sell their shares to the Company by means of a tender offer (and thereby
avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the Trust
Account (net of taxes payable), in each case subject to the limitations described herein. The decision as to whether the Company will
seek stockholders’ approval of a proposed Business Combination or will allow stockholders to sell their shares to the Company in
a tender offer will be made by the Company, solely in its discretion.
The shares of common stock subject
to redemption will be recorded at a redemption value and classified as temporary equity upon the completion of the IPO, in accordance
with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case,
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 15 months
(or 18 months if extended) from the closing of the IPO to complete the initial Business Combination (the “Combination Period”).
However, if the Company is unable to complete the initial Business Combination within the Combination Period, the Company will (i) cease
all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter,
redeem 100% of the outstanding 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 but net
of taxes payable (and less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares,
which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further
liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, liquidate and dissolve,
subject (in the case of (ii) and (iii) above) to the Company’s obligations under Delaware law to provide for claims of creditors
and the requirements of other applicable law.
The Sponsor, officers and directors
have agreed (i) to vote any shares owned by them in favor of any proposed Business Combination, (ii) not to redeem any shares in connection
with a stockholder vote to approve a proposed initial Business Combination or sell any shares to the Company in a tender offer in connection
with a proposed initial Business Combination, (iii) that the Founder Shares (as defined below) will not participate in any liquidating
distributions from the Company’s Trust Account upon winding up if a Business Combination is not consummated.
The Sponsor has agreed that it
will be liable to ensure that the proceeds in the Trust Account are not reduced below $10.00 per share by the claims of target businesses
or claims of vendors or other entities that are owed money by the Company for services rendered or contracted for or products sold to
the Company. The agreement entered into by the Sponsor specifically provides for two exceptions to the indemnity it has given: it will
have no liability (1) as to any claimed amounts owed to a target business or vendor or other entity who has executed an agreement with
the Company waiving any right, title, interest or claim of any kind they may have in or to any monies held in the Trust Account, or (2)
as to any claims for indemnification by the underwriters of the IPO against certain liabilities, including liabilities under the Securities
Act. However, the Company has not asked its Sponsor to reserve for such indemnification obligations, nor has it independently verified
whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believe that the Sponsor’s only assets are securities
of the Company. Therefore, the Company believes it is unlikely that the Sponsor will be able to satisfy its indemnification obligations
if it is required to do so.
Liquidity and Capital Resources
As of June 30, 2021, the Company
had approximately $13,746 in its operating account and working capital deficit of $24,662 (which includes deferred offering costs of $168,285 that will
be paid with proceeds from the IPO).
The Company’s liquidity
needs up to June 30, 2021 had been satisfied through advances from related parties to cover certain offering costs and formation expenses
of $132,352 (see Note 5). In order to finance transaction costs in connection with a Business Combination, the Company’s Sponsor
or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, provide the Company
with Working Capital Loans, as defined below (see Note 5). As of June 30, 2021, there were no amounts outstanding under any Working Capital
Loans.
Subsequent to the period
covered by this quarterly report on Form 10-Q (the “Quarterly Report”), the Company consummated its IPO (see Note 3) and sales
of the Private Shares (See Note 4). Of the net proceeds from the IPO and the sales of the Private Shares, $150,000,000 of cash was placed
in the Trust Account and $1,605 of cash was held outside of the Trust Account and is available for the Company’s working capital
purposes. After the close of the IPO, paying offering costs and having excess funds released from the trust account, on August 18, 2021,
the Company had $1,163,587 in cash available for working capital purposes.
Based on the foregoing, management
believes that the Company will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation
of a Business Combination or one year from this filing. Over this time period, the Company will be using these funds for paying existing
accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective
target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating
and consummating the Business Combination.
Risks and Uncertainties
Management is continuing to evaluate
the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a
negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific
impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Note 2 — Significant Accounting
Policies
Basis of Presentation
The accompanying unaudited condensed
financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“US
GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly,
they do not include all of the information and footnotes required by US GAAP. In the opinion of management, the unaudited condensed financial
statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and
results for the period presented. Operating results for the period from November 5, 2020 (inception) through June 30, 2021 are not necessarily
indicative of the results that may be expected through September 30, 2021.
The accompanying unaudited condensed
financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Form 8-K and
the final prospectus filed by the Company with the SEC on August 24, 2021 and August 16, 2021, respectively.
Emerging Growth Company Status
The Company is an “emerging
growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified
by the Jumpstart the Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from
various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not
limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure
obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding
a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of
the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until
private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class
of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS
Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging
growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period,
which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company,
as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
This may make comparison of the Company’s financial statements with the financial statements of another public company which is
neither an emerging growth company nor an emerging growth company or which has opted out of using the extended transition period difficult
or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of financial statements
in conformity with US GAAP requires 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 expenses during
the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all short-term
investments with an original maturity of three months or less when purchased to be cash equivalents. The Company had $13,746 in cash and
no cash equivalents as of June 30, 2021.
Deferred Offering Costs
Deferred offering costs consist
of underwriting, legal, accounting and other expenses incurred through the balance sheet date that are directly related to the IPO and
that have been charged to stockholders’ equity upon the completion of the IPO.
Allocation of Proceeds
FASB ASC 470-20,
Debt with Conversion and Other Options, addresses the allocation of proceeds from the issuance of convertible debt into its equity and
debt components. The Company applies this guidance to allocate IPO proceeds from the Units between common stock and warrants, using the
residual method by allocating IPO proceeds first to fair value of the warrants, if any, and then common stock. Any amount paid to investors
represents a reduction in the proceeds to be allocated.
Net Loss Per Share
Net loss per share is computed
by dividing net loss by the weighted average number of common stock outstanding during the period, excluding common stock subject to forfeiture
by the Sponsor. Weighted average shares were reduced for the effect of an aggregate of 675,000 shares of common stock that are subject
to forfeiture if the over-allotment option is not exercised by the underwriters (see Note 5). At June 30, 2021, 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
earnings of the Company. As a result, diluted loss per share is the same as basic loss per share for the period presented.
Fair Value of Financial Instruments
The fair value of the Company’s
assets and liabilities approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term
nature.
Income Taxes
The Company accounts for income
taxes under ASC 740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for
both the expected impact of differences between the financial statement 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.
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 June 30, 2021. The Company is currently not aware of any issues under review that could result
in significant payments, accruals or material deviation from its position.
The Company has identified the
United States as its only “major” tax jurisdiction.
The Company may be subject to
potential examination by federal and state taxing authorities in the areas of income taxes since inception. These potential 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.
The provision for income taxes
was deemed to be immaterial for the period from November 5, 2020 (inception) through June 30, 2021.
Recent Accounting Pronouncements
In August 2020, the Financial
Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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)
(“ASU 2020-06”) 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, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted
beginning on January 1, 2021. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position,
results of operations or cash flows.
Management does not believe that
any recently issued, but not effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s
unaudited condensed financial statements.
Stock Based Compensation
On June 16, 2021, the
Sponsor transferred 50,000
shares of common stock to each of its Chief Executive Officer and its President and 35,000
shares of common stock to each of its three
independent directors. The aggregate fair value of these shares was $509,552
at June 30, 2021. We recognize compensation expense related to these transfers according to ASC 718-10-25-20 when the performance
condition associated with these awards is probable of achievement. Since the stock grants contain the performance condition of
consummating a business combination, the Company believes the appropriate accounting treatment is to defer recognition of the
compensation costs until the consummation of an initial business combination. At June 30, 2021, no
compensation expense was recognized related to these shares.
Note 3 — IPO
On August 17, 2021, the Company
consummated its IPO of 15,000,000 Units, at a price of $10.00 per Unit. Each Unit consists of one share of common stock and one-half of
one redeemable warrant. Each whole warrant entitles the holder to purchase one share of common stock at a price of $11.50 per share, subject
to adjustment. Only whole warrants are exercisable. No fractional warrants will be issued upon separation of the units and only whole
warrants will trade.
The warrants will become exercisable 30
days after the completion of the initial Business Combination, and will expire five years after the completion of the initial
Business Combination or earlier upon redemption or liquidation (see Note 7).
Following the closing of the IPO
and settlement of funds on August 17, 2021, $150,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the IPO and
the sales of Private Shares was placed in the Trust Account and will be invested only in U.S. government treasury obligations with a maturity
of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest
only in direct U.S. government treasury obligations.
Note 4 — Private Placement
Simultaneously with the closing
of the IPO, the Sponsor purchased an aggregate of 459,500 Private Shares, at a price of $10.00 per Private Share, for an aggregate purchase
price of $4,595,000 in a private placement. The proceeds from the sale of the Private Shares was added to the proceeds of the IPO and
placed in the Trust Account. If the Company does not complete an initial Business Combination within the Combination Period, the proceeds
from the sale of the Private Shares will be included in the liquidating distribution to the public stockholders and the Private Shares
will be worthless.
Note 5 — Related Party Transactions
Founder Shares
On February 3, 2021, a
related party to the Sponsor paid $25,000,
or approximately $0.006
per share, to cover certain offering costs in consideration for 4,312,500
shares of common stock, par value $0.0001
(the “Founder Shares”). On June 16, 2021, the Sponsor purchased an additional 700,000
Founder Shares at a purchase price of $0.006
per share and transferred 50,000
Founder Shares to each of its Chief Executive Officer and its President and 35,000
Founder Shares to each of its three
independent directors. We recognize compensation expense related to these transfers according to ASC 718-10-25-20 when the
performance condition associated with these awards is probable of achievement. Since the stock grants contain the performance
condition of consummating a business combination, the Company believes the appropriate accounting treatment is to defer recognition
of the compensation costs until the consummation of an initial business combination. At June 30, 2021, the Founder Shares include an
aggregate of up to 675,000
shares subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment option is not exercised in
full or in part.
The Sponsor, officers and directors
have agreed not to transfer, assign or sell any Founder Shares held by them until the earliest of (A) 180 days after the completion of
the initial Business Combination and (B) subsequent to the initial Business Combination, the date on which the Company completes a liquidation,
merger, stock exchange, reorganization or other similar transaction that results in all of the public stockholders having the right to
exchange their public shares for cash, securities or other property.
Additionally, upon consummation
of the IPO, the Sponsor sold membership interests in the Sponsor to 10 anchor investors that purchased 9.9% of the units sold in the IPO.
The Sponsor sold membership interests in the Sponsor reflecting an allocation of 131,250 Founder Shares to each anchor investor, or an
aggregate of Founder Shares to all 10 anchor investors, at a purchase price of approximately $0.006 per share. The Company estimated
the aggregate fair value of these Founder Shares attributable to each anchor investor to be $424,491, or $3.23 per share. The Company
has offset the excess of the fair value against the gross proceeds from these anchor investors as a reduction in its additional paid-in
capital in accordance with Staff Accounting Bulletin Topic 5A.
Representative’s Common
Stock
On February 8, 2021, EarlyBirdCapital,
Inc. (“EBC”) and Northland Securities, Inc. (“Northland”) purchased 162,500 and 87,500 shares of common stock
(“representative shares”), respectively, at an average purchase price of approximately $0.0001 per share, or an aggregate
purchase price of $25.00. On May 29, 2021, Northland returned 87,500 shares of common stock to the Company, for no consideration, which
shares were subsequently cancelled.
The representative shares are
identical to the public shares included in the Units that were sold in the IPO, except that the representative shares are subject to certain
transfer restrictions, as described in more detail below.
The holders of the representative
shares have agreed not to transfer, assign or sell any such shares until 30 days after the completion of an initial Business Combination.
In addition, the holders of the representative shares have agreed (i) to waive their redemption rights (or right to participate in
any tender offer) with respect to such shares in connection with the completion of an initial Business Combination and (ii) to waive
their rights to liquidating distributions from the Trust Account with respect to such shares if the Company fails to complete an initial
Business Combination within the Combination Period.
Promissory Note—Related
Party
On February 3, 2021, the Sponsor
agreed to loan the Company up to $ to be used for a portion of the expenses of the IPO. These loans are non-interest bearing, unsecured
and are due at the earlier of or the closing of the IPO. As of June 30, 2021, the Company had $ of borrowings under
the promissory note.
Due from Sponsor
As of June 30, 2021, the Company
was due from the Sponsor $ for the purchase of the Founder Shares.
Working Capital Loans
In order to meet the Company’s
working capital needs following the consummation of the IPO, the Sponsor, officers, directors or their affiliates may, but are not obligated
to, loan the Company funds (“Working Capital Loans”), from time to time or at any time, in whatever amount they deem reasonable
in their sole discretion. Each loan would be non-interest bearing and be evidenced by a promissory note. The notes would either be paid
upon consummation of the initial Business Combination, without interest, or, at holder’s discretion, up to $1,500,000 of the notes
may be converted into shares of common stock at a price of $10.00 per share. The shares would be identical to the Private Shares. In the
event that the initial Business Combination does not close, the Company may use a portion of the working capital held outside the Trust
Account to repay such loaned amounts, but no proceeds from the Trust Account would be used for such repayment.
Administrative Service Fee
Commencing on the Effective
Date, the Company will pay the Sponsor $
per month for office space, utilities and secretarial support. Upon completion of the initial Business Combination or the
Company’s liquidation, the Company will cease paying these monthly fees.
Note 6 — Commitments and
Contingencies
Registration Rights
The holders of the Founder Shares
issued and outstanding on the date of the IPO, as well as the holders of the representative shares, Private Shares and any shares the
Company’s Sponsor, officers, directors or their affiliates may issue in payment of Working Capital Loans made to the Company, will
be entitled to registration rights pursuant to an agreement signed on the Effective Date. The holders of
a majority of these securities (other than the holders of the representative shares) are entitled to make up to two demands that the Company
registers such securities. The holders of the majority of the Founder Shares can elect to exercise these registration rights at any time
commencing three months prior to the date on which these shares of common stock are to be released from escrow. The holders of a majority
of the Private Shares and shares issued to the Company’s Sponsor, officers, directors or their affiliates in payment of Working
Capital Loans made to the Company can elect to exercise these registration rights at any time after the Company consummates a Business
Combination. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements
filed subsequent to the Company’s consummation of a Business Combination. The Company will bear the expenses incurred in connection
with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters
a 45-day option from the date of the IPO to purchase up to an additional 2,250,000 units to cover over-allotments, if any.
The underwriters were paid a cash
underwriting discount of 1.0% of the gross proceeds of the IPO, or $1,500,000 (and are entitled to an additional $225,000 of deferred
underwriting commission payable at the time of an initial Business Combination if the underwriters’ over-allotment is exercised
in full).
Financial Advisory Fee
The Company has engaged Cohen
& Company Capital Markets, a division of J.V.B. Financial Group, LLC (“CCM”), an affiliate of a member of the Sponsor,
to provide consulting and advisory services in connection with the IPO, for which it will receive an advisory fee equal to one (1.0) percent
of the aggregate proceeds of the IPO, or $1,500,000 (or up to $1,725,000 if the underwriters’ over-allotment is exercised in full),
upon closing of the IPO. Affiliates of CCM have and manage investment vehicles with a passive investment in the Sponsor. On August 18,
2021, the Company paid to CCM in aggregate of $1,500,000. CCM has agreed to defer the payment of the portion of the advisory fee attributable
to over-allotment option until the consummation of the initial Business Combination. CCM is engaged to represent the Company’s interests
only. CCM is not participating in the IPO as defined in FINRA Rule 5110(j)(16); it is acting as an independent financial adviser as defined
in FINRA Rule 5110(j)(9). As such, CCM is not acting as an underwriter in connection with the IPO, it will not identify or solicit potential
investors in the IPO or otherwise be involved in the distribution of the IPO. The Company will also engage CCM as an advisor in connection
with the initial Business Combination for which it will earn an advisory fee of 2.25% of the gross proceeds of the IPO, or $3,375,000
(or up to $3,881,250 if the underwriters’ over-allotment is exercised in full), payable at closing of the Business Combination.
Business Combination
Marketing Agreement
The Company will engage the representative
of the underwriter as an advisor in connection with the initial Business Combination to assist in holding meetings with the Company’s
stockholders to discuss the potential Business Combination and the target business’s attributes, introduce the Company to potential
investors that are interested in purchasing the Company’s securities in connection with the initial Business Combination and assist
the Company with press releases and public filings in connection with the Business Combination. The Company will pay the representative
a cash fee for such services upon the consummation of the initial Business Combination in an amount equal to 2.25% of the gross proceeds
of the IPO, or $3,375,000 (or up to $3,881,250 if the underwriters’ over-allotment is exercised in full). The Company will also
pay the representative a separate capital market advisory fee of $2,500,000 upon completion of the initial Business Combination. Additionally,
the Company will pay the representative a cash fee equal to 1.0% of the total consideration payable in the proposed Business Combination
if the representative introduces the Company to the target business with which the Company completes a Business Combination; provided
that the foregoing fee will not be paid prior to the date that is 60 days from the date of the prospectus for the Company’s IPO,
unless such payment would not be deemed underwriters’ compensation in connection with this offering pursuant to FINRA Rule 5110.
Right of First Refusal
If the Company determines to pursue
any equity, equity-linked, debt or mezzanine financing relating to or in connection with an initial Business Combination, then Northland
shall have the right, but not the obligation, to act as book running manager, placement agent and/or arranger, as the case may be, in
any and all such financing or financings. This right of first refusal extends from the date of the IPO until the earlier of the consummation
of an initial Business Combination or the liquidation of the Trust Account if the Company fails to consummate a Business Combination during
the required time period.
Note 7 — Stockholders’
Equity
Preferred stock—The
Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 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 June 30, 2021, there
were no shares of preferred stock issued or outstanding.
Common stock—The
Company is authorized to issue 100,000,000 shares of common stock with a par value of $0.0001 per share. At June 30, 2021, there were
5,175,000 shares of common stock issued and outstanding. On February 3, 2021, affiliates of the Sponsor paid $25,000, or approximately
$0.006 per share, to cover certain offering costs in consideration for 4,312,500 Founder Shares. On February 8, 2021, EarlyBirdCapital,
Inc. and Northland purchased 162,500 and 87,500 representative shares, respectively, at an average purchase price of approximately $0.0001
per share, or an aggregate purchase price of $25.00.
On May 29, 2021, Northland returned
87,500 shares of common stock to the Company, for no consideration, which were subsequently cancelled and on June 16, 2021, the Sponsor
purchased an additional 700,000 shares of common stock at a purchase price of $0.006 per share, resulting in the Sponsor holding an aggregate
of 5,012,500 shares of common stock. On June 16, 2021, the Sponsor transferred 50,000 shares to each of its Chief Executive Officer and
its President and 35,000 shares to each of its three independent directors. At June 30, 2021, the Founder Shares include an aggregate
of up to 675,000 shares subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment option is not exercised
in full or in part.
Common stockholders of record
are entitled to one vote for each share held on all matters to be voted on by stockholders. In connection with any vote held to approve
the initial Business Combination, the Sponsor, as well as all of the Company’s officers and directors, have agreed to vote their
respective shares of common stock owned by them immediately prior to the IPO and any shares purchased in the IPO or following the IPO
in the open market in favor of the proposed Business Combination.
Warrants—Each
whole warrant entitles the holder to purchase one share of common stock at a price of $11.50 per share, subject to adjustment as discussed
herein. The warrants will become exercisable 30 days after the completion of the Company’s initial Business Combination.
However, no warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the
shares of common stock issuable upon exercise of the warrants and a current prospectus relating to such shares of common stock. Notwithstanding
the foregoing, if a registration statement covering the shares of common stock issuable upon exercise of the public warrants is not effective
within 90 days following the consummation of the initial Business Combination, warrant holders may, until such time as there is an effective
registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise
warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption
is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless
basis. In the event of such cashless exercise, each holder would pay the exercise price by surrendering the warrants for that number of
shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the
warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below)
by (y) the fair market value. The “fair market value” for this purpose will mean the average reported last sale price of the
shares of common stock for the 5 trading days ending on the trading day prior to the date of exercise. The warrants will expire on the
fifth anniversary of the completion of an initial Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption or
liquidation.
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The Company may call the warrants for redemption, in whole and not in part, at a price of $0.01 per warrant:
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at any time after the warrants become exercisable,
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•
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upon not less than 30 days’ prior written notice of redemption to each warrant holder
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•
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if, and only if, the reported last sale price of the common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations) for any 20 trading days within a 30-trading day period commencing at any time after the warrants become exercisable and ending on the third business day prior to the notice of redemption to warrant holders; and
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if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such warrants.
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If the Company calls the warrants
for redemption as described above, the Company’s management will have the option to require all holders that wish to exercise warrants
to do so on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering the warrants for that
number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying
the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined
below) by (y) the fair market value. The “fair market value” for this purpose shall mean the average reported last sale price
of the shares of common stock for the 5 trading days ending on the third trading day prior to the date on which the notice of redemption
is sent to the holders of warrants.
In addition, if (x) the Company
issues additional shares of 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 common stock (with such issue
price or effective issue price to be determined in good faith by the Company’s board of directors, and in the case of any such issuance
to the Sponsor, initial stockholders or their affiliates, without taking into account any founders’ shares held by them prior to
such issuance), (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), and (z) the Market Value is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest
cent) to be equal to 115% of the greater of (i) the Market Value or (ii) the price at which the Company issues the additional shares of
common stock or equity-linked securities.
Note 8 — Subsequent Events
The Company evaluated subsequent events
and transactions that occurred after the balance sheet date up to the date that the financial statements were available to be issued.
The Company did not identify any subsequent events other than noted below that would have required adjustment or disclosure in these unaudited
condensed financial statements.
On July 23, 2021, the Sponsor purchased
an additional 1,200,000 Founder Shares at a purchase price of $0.006 per share, resulting in the Sponsor holding an aggregate of 6,007,500
shares of common stock and the Chief Executive Officer, President and independent directors holding an aggregate of 205,000 shares of
common stock. At July 23, 2021, the Founder Shares include an aggregate of up to 1,125,000 shares subject to forfeiture by the Sponsor
to the extent that the underwriters’ over-allotment option is not exercised in full or in part.
On August 17, 2021, the Company commenced
the IPO of 15,000,000 units at $10.00 per Unit. Simultaneously with the consummation of the IPO, the Company consummated the private placement
of 459,500 Private Shares, at a price of $10.00 per share for an aggregate purchase price of $4,595,000.
After the close of the IPO, paying offering
costs and having excess funds released from the trust account, on August 18, 2021, the Company had $1,163,587 in cash available for working
capital purposes.
Item 2. Management’s Discussion and Analysis
of Financial Condition and Results of Operations.
References
to “we”, “us”, “our” or the “Company” are to Armada Acquisition Corp. I, except where
the context requires otherwise. The following discussion should be read in conjunction with our unaudited condensed financial statements
and related notes thereto included elsewhere in this report.
Cautionary Note
Regarding Forward-Looking Statements
This
Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking
statements on our current expectations and projections about future events. These forward-looking statements are subject to known and
unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements
to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking
statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,”
“could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,”
“continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy
include, but are not limited to, those described in our other Securities and Exchange Commission (“SEC”) filings.
Overview
We
are a blank check company incorporated in Delaware on November 5, 2020, for the purpose of effecting a merger, stock exchange, asset acquisition,
stock purchase, reorganization or other similar business combination with one or more businesses.
On
August 17, 2021, we consummated our IPO of 15,000,000 units, at $10.00 per unit, generating gross proceeds of $150 million.
Simultaneously
with the closing of the IPO, we consummated the private placement of 459,500 Private Shares for an aggregate purchase price of $4,595,000.
Upon
the closing of the IPO on August 17, 2021, $150,000,000 ($10.00 per unit) from the net proceeds of the sale of the units in the IPO and
the sale of Private Shares were placed in the Trust Account.
If
we are unable to complete the initial Business Combination within the Combination Period, we will (i) cease all operations except for
the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the
outstanding 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 but net of taxes payable ( and less
up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will
completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation 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, liquidate and dissolve, subject (in the case of (ii) and (iii) above) to our obligations
under Delaware law to provide for claims of creditors and the requirements of other applicable law.
We cannot
assure you that our plans to complete our initial business combination will be successful.
Results of Operations
Our
entire activity since inception up to June 30, 2021 was our formation and preparation for our IPO. We will not generate any operating
revenues until the closing and completion of our initial business combination, at the earliest.
For
the three months ended June 30, 2021, we had net loss of $1,969, which consisted of formation and operating costs of $1,969.
For
the period from November 5, 2020 through June 30, 2021, we had net loss of $4,408, which consisted of formation and operating costs of
$4,408.
Liquidity and
Capital Resources
As
of June 30, 2021, we had approximately $13,746 in our operating account and working capital deficit of $143,623 (excluding deferred offering
costs).
Our
liquidity needs up to June 30, 2021 had been satisfied through advances from related parties to cover certain offering costs and formation
expenses of $132,352 (see Note 5). In order to finance transaction costs in connection with a Business Combination, the Sponsor or an
affiliate of the Sponsor or certain of our officers and directors may, but are not obligated to, provide us with Working Capital Loans,
as defined below (see Note 5). As of June 30, 2021, there were no amounts outstanding under any Working Capital Loans.
Subsequent
to the period covered by this quarterly report on Form 10-Q (the “Quarterly Report”), we consummated our IPO (see Note 3)
and the sales of Private Shares (See Note 4). Of the net proceeds from the IPO and the sales of Private Shares, $150,000,000 of cash was
placed in the Trust Account and $1,605 of cash was held outside of the Trust Account and is available for the Company’s working
capital purposes. After the closing of the IPO, paying offering costs and having excess funds released from the trust account, on August
18, 2021, the Company had $1,163,587 in cash available for working capital purposes.
Based on
the foregoing, management believes that we will have sufficient working capital and borrowing capacity to meet our needs through the earlier
of the consummation of a Business Combination or one year from this filing. Over this time period, we will be using these funds for paying
existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on
prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring,
negotiating and consummating the Business Combination.
Critical Accounting
Policies
The
preparation of these unaudited condensed financial statements in conformity with US GAAP requires 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 unaudited
condensed financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those
estimates. We have identified the following as our critical accounting policies:
Deferred Offering
Costs
Deferred
offering costs consisted of legal and accounting expenses incurred through the balance sheet date that were directly related to the IPO
and that were charged to stockholders’ equity upon the completion of the IPO on August 17, 2021.
Recent Accounting
Pronouncements
In August
2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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) (“ASU 2020-06”) 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, 2022 and should be applied on a full or modified retrospective basis, with early adoption
permitted beginning on January 1, 2021. We are currently assessing the impact, if any, that ASU 2020-06 would have on its financial position,
results of operations or cash flows.
Management
does not believe that any recently issued, but not effective, accounting pronouncements, if currently adopted, would have a material effect
on our unaudited condensed financial statements.
Off-Balance Sheet Arrangements;
Commitments and Contractual Obligations
Registration
Rights
The holders
of the Founder Shares issued and outstanding on the date of the IPO, as well as the holders of the representative shares, Private Shares
and any shares the sponsor, officers, directors or their affiliates may issue in payment of Working Capital Loans made to us, will be
entitled to registration rights pursuant to an agreement to be signed prior to or on the effective date of the IPO. The holders of a majority
of these securities (other than the holders of the representative shares) are entitled to make up to two demands that we register such
securities. The holders of the majority of the Founder Shares can elect to exercise these registration rights at any time commencing three
months prior to the date on which these shares of common stock are to be released from escrow. The holders of a majority of the Private
Shares and shares issued to the Sponsor, officers, directors or their affiliates in payment of Working Capital Loans made to us can elect
to exercise these registration rights at any time after we consummate a business combination. In addition, the holders have certain “piggy-back”
registration rights with respect to registration statements filed subsequent to the consummation of a business combination. We will bear
the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
We granted
the underwriters a 45-day option from the date of the IPO to purchase up to an additional 2,250,000 units to cover over-allotments, if
any.
The underwriters
were paid a cash underwriting discount of 1.0% of the gross proceeds of the IPO, or $1,500,000 (and are entitled to an additional $225,000
of deferred underwriting commission payable at the time of an initial Business Combination if the underwriters’ over-allotment is
exercised in full).