Item 1.
Financial Statements.
ARCHIMEDES
TECH SPAC PARTNERS CO.
CONDENSED
BALANCE SHEETS
|
|
September 30,
2021
|
|
|
December 31,
2020
|
|
|
|
(unaudited)
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash and cash equivalent
|
|
$
|
628,652
|
|
|
$
|
-
|
|
Prepaid expenses
|
|
|
134,478
|
|
|
|
-
|
|
Total current assets
|
|
|
763,130
|
|
|
|
-
|
|
Marketable securities held in Trust Account
|
|
|
133,007,230
|
|
|
|
-
|
|
Total Assets
|
|
$
|
133,770,360
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Accrued offering costs and expenses
|
|
$
|
126,019
|
|
|
$
|
-
|
|
Due to related party
|
|
|
-
|
|
|
|
716
|
|
Total current liabilities
|
|
|
126,019
|
|
|
|
716
|
|
Warrant liability
|
|
|
161,359
|
|
|
|
-
|
|
Total liabilities
|
|
$
|
287,378
|
|
|
$
|
716
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
Common stock subject to possible redemption, 13,300,000 shares and 0 shares at redemption value as of September 30, 2021 and December 31, 2020, respectively
|
|
$
|
133,007,230
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
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 and 31,000,000 shares authorized, 4,161,000 shares and 0 shares issued and outstanding (excluding 13,300,000 shares and 0 shares subject to possible redemption) as of September 30, 2021 and December 31, 2020, respectively
|
|
|
416
|
|
|
|
-
|
|
Additional paid-in-capital
|
|
|
821,700
|
|
|
|
-
|
|
Accumulated deficit
|
|
|
(346,364
|
)
|
|
|
(716
|
)
|
Total Stockholders’ Equity
|
|
$
|
475,752
|
|
|
$
|
(716
|
)
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Equity
|
|
$
|
133,770,360
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these condensed financial statements.
ARCHIMEDES
TECH SPAC PARTNERS CO.
UNAUDITED
CONDENSED STATEMENTS OF OPERATIONS
|
|
For the
Three Months
Ended
September 30,
2021
|
|
|
For the
Nine Months
Ended
September 30,
2021
|
|
|
For the Period from September 15, 2020 (Inception) to September 30, 2020
|
|
Formation and operating costs
|
|
$
|
229,484
|
|
|
$
|
461,826
|
|
|
$
|
716
|
|
Loss from operations
|
|
|
(229,484
|
)
|
|
|
(461,826
|
)
|
|
|
(716
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
|
|
|
|
|
|
|
|
|
|
Trust interest income
|
|
|
3,352
|
|
|
|
7,230
|
|
|
|
-
|
|
Unrealized gain on change in fair value of warrants
|
|
|
35,057
|
|
|
|
108,948
|
|
|
|
-
|
|
Total other income
|
|
|
38,409
|
|
|
|
116,178
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(191,075
|
)
|
|
$
|
(345,648
|
)
|
|
$
|
(716
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding, common stock subject to redemption
|
|
|
13,300,000
|
|
|
|
9,675,824
|
|
|
|
-
|
|
Basic and diluted net (loss) income per share attributable to common stock subject to redemption
|
|
$
|
(0.01
|
)
|
|
$
|
0.37
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding, common stock
|
|
|
4,161,000
|
|
|
|
3,891,044
|
|
|
|
-
|
|
Basic and diluted net loss per share attributable to common stockholders
|
|
$
|
(0.01
|
)
|
|
$
|
(1.01
|
)
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
ARCHIMEDES
TECH SPAC PARTNERS CO.
UNAUDITED
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
|
|
Common Stock
|
|
|
Additional
Paid-in
|
|
|
Accumulated
|
|
|
Total
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
Balance as of December 31, 2020
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(716
|
)
|
|
$
|
(716
|
)
|
Sale of 12,000,000 Units through IPO
|
|
|
12,000,000
|
|
|
|
1,200
|
|
|
|
119,998,800
|
|
|
|
-
|
|
|
|
120,000,000
|
|
Sale of 1,300,000 Units through over-allotment
|
|
|
1,300,000
|
|
|
|
130
|
|
|
|
12,999,870
|
|
|
|
-
|
|
|
|
13,000,000
|
|
Sale of 416,000 Private Units in private placement
|
|
|
416,000
|
|
|
|
42
|
|
|
|
4,159,958
|
|
|
|
-
|
|
|
|
4,160,000
|
|
Issuance of representative shares
|
|
|
420,000
|
|
|
|
42
|
|
|
|
2,024,421
|
|
|
|
-
|
|
|
|
2,024,463
|
|
Common stock issued to initial stockholders
|
|
|
3,450,000
|
|
|
|
345
|
|
|
|
24,655
|
|
|
|
-
|
|
|
|
25,000
|
|
Forfeiture of founder shares
|
|
|
(125,000
|
)
|
|
|
(13
|
)
|
|
|
13
|
|
|
|
-
|
|
|
|
-
|
|
Underwriting fee
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,660,000
|
)
|
|
|
-
|
|
|
|
(2,660,000
|
)
|
Offering costs charged to the stockholders’ equity
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,449,810
|
)
|
|
|
-
|
|
|
|
(2,449,810
|
)
|
Initial classification of warrant liability
|
|
|
-
|
|
|
|
-
|
|
|
|
(270,307
|
)
|
|
|
-
|
|
|
|
(270,307
|
)
|
Reclassification of offering costs related to Public Shares
|
|
|
-
|
|
|
|
-
|
|
|
|
4,779,936
|
|
|
|
-
|
|
|
|
4,779,936
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(154,573
|
)
|
|
|
(154,573
|
)
|
Subsequent measurement of common stock subject to possible redemption
|
|
|
(13,300,000
|
)
|
|
|
(1,330
|
)
|
|
|
(124,412,583
|
)
|
|
|
-
|
|
|
|
(124,413,913
|
)
|
Subsequent measurement of common stock subject to redemption
|
|
|
-
|
|
|
|
-
|
|
|
|
(13,366,023
|
)
|
|
|
-
|
|
|
|
(13,366,023
|
)
|
Subsequent measurement of common stock subject to redemption (interest earned on trust account)
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,878
|
)
|
|
|
|
|
|
|
(3,878
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2021
|
|
|
4,161,000
|
|
|
$
|
416
|
|
|
$
|
825,052
|
|
|
$
|
(155,289
|
)
|
|
$
|
670,179
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(191,075
|
)
|
|
|
(191,075
|
)
|
Subsequent measurement of common stock subject to redemption (interest earned on trust account)
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,352
|
)
|
|
|
-
|
|
|
|
(3,352
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2021
|
|
|
4,161,000
|
|
|
$
|
416
|
|
|
$
|
821,700
|
|
|
$
|
(346,364
|
)
|
|
$
|
475,752
|
|
|
|
Common Stock
|
|
|
Additional
Paid-in
|
|
|
Accumulated
|
|
|
Total
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
Balance as of September 15, 2020 (inception)
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(716
|
)
|
|
|
(716
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2020
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(716
|
)
|
|
$
|
(716
|
)
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
ARCHIMEDES
TECH SPAC PARTNERS CO.
UNAUDITED
CONDENSED STATEMENT OF CASH FLOWS
|
|
For the
Nine Months
Ended
September 30,
2021
|
|
|
For the Period from September 15, 2020 (Inception) to September 30,
2020
|
|
|
|
|
|
|
|
|
Cash flows from Operating Activities:
|
|
|
|
|
|
|
Net loss
|
|
$
|
(345,648
|
)
|
|
$
|
(716
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities
|
|
|
|
|
|
|
|
|
Unrealized gain on change in fair value of warrants
|
|
|
(108,948
|
)
|
|
|
-
|
|
Interest earned on marketable securities held in Trust Account
|
|
|
(7,230
|
)
|
|
|
-
|
|
Changes in current assets and current liabilities:
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
(134,478
|
)
|
|
|
-
|
|
Accrued offering costs and expenses
|
|
|
126,019
|
|
|
|
716
|
|
Due to related party
|
|
|
(716
|
)
|
|
|
-
|
|
Net cash used in operating activities
|
|
|
(471,001
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
Investment held in Trust Account
|
|
|
(133,000,000
|
)
|
|
|
-
|
|
Net cash used in investing activities
|
|
|
(133,000,000
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash flows from Financing Activities:
|
|
|
|
|
|
|
|
|
Proceeds from IPO and over-allotment
|
|
|
133,000,000
|
|
|
|
-
|
|
Payment of underwriting fees
|
|
|
(2,660,000
|
)
|
|
|
-
|
|
Proceeds from private placement
|
|
|
4,160,000
|
|
|
|
-
|
|
Proceeds from issuance of promissory note to related party
|
|
|
125,000
|
|
|
|
-
|
|
Payment to promissory note to related party
|
|
|
(125,000
|
)
|
|
|
-
|
|
Proceeds from issuance of common stock to initial stockholders
|
|
|
25,000
|
|
|
|
-
|
|
Payment of deferred offering costs
|
|
|
(425,347
|
)
|
|
|
-
|
|
Net cash provided by financing activities
|
|
|
134,099,653
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net change in cash
|
|
|
628,652
|
|
|
|
-
|
|
Cash, beginning of the period
|
|
|
-
|
|
|
|
-
|
|
Cash, end of the period
|
|
$
|
628,652
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
|
|
|
Initial value of common stock subject to possible redemption
|
|
$
|
124,413,913
|
|
|
$
|
-
|
|
Reclassification of offering costs related to Public Shares
|
|
$
|
(4,779,936
|
)
|
|
$
|
-
|
|
Subsequent measurement of common stock subject to redemption
|
|
$
|
13,366,023
|
|
|
$
|
-
|
|
Subsequent measurement of common stock subject to redemption (interest earned on trust account)
|
|
$
|
7,230
|
|
|
$
|
-
|
|
Forfeiture of founder shares
|
|
$
|
13
|
|
|
$
|
-
|
|
Initial classification of warrant liability
|
|
$
|
270,307
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
ARCHIMEDES
TECH SPAC PARTNERS CO.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note
1 — Organization and Business Operations
Organization
and General
Archimedes
Tech SPAC Partners Co. (the “Company”) is a blank check company formed under the laws of the State of Delaware on September
15, 2020. The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization,
reorganization or other similar Business Combination with one or more businesses or entities (the “Business Combination”).
The Company’s focus will be on the artificial intelligence, cloud services and automotive technology sectors. However, the Company
is not limited to the technology industry, or these sectors therein, and the Company may pursue a Business Combination opportunity in
any business or industry it chooses, and it may pursue a company with operations or opportunities outside of the United States.
The
Company has selected December 31 as its fiscal year end.
As
of September 30, 2021, the Company had not commenced any revenue-generating operations. All activity for the period from September 15,
2020 (inception) through September 30, 2021 relates to the Company’s formation, the initial public offering (the “IPO”)
described below, and, since the closing of the IPO, the search for a prospective initial Business Combination. The Company will not generate
any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating
income in the form of interest income on cash and cash equivalents from the proceeds derived from the IPO and will recognize changes
in the fair value of warrant liability as other income or expense, as applicable.
On November 15, 2021, the Company entered into
a definitive merger agreement with SoundHound Inc., a voice artificial intelligence company, pursuant to which the two companies agreed
to consummate a Business Combination (the “Merger Agreement”). The total consideration to be paid by the Company to SoundHound
is $2 billion in equity of the Company, with outstanding SoundHound stock options and warrants included on a net exercise basis. In connection
with the Business Combination, certain accredited investors committed to purchase 11.1 million shares of Class A common stock of the combined
company at a price of $10.00 per share, for total gross proceeds of $111 million, in a private placement that is scheduled to close concurrently
with the Business Combination.
Additional information about the Merger Agreement and related transactions
can be found in the Current Report on Form 8-K filed on November 16, 2021.
The
Company’s sponsor is Archimedes Tech SPAC Sponsors LLC, a Delaware limited liability company (the “Sponsor”).
References
to the Company’s “initial stockholders” refer to the Company’s stockholders prior to the IPO, excluding the holders
of the Representative Shares (See Note 8).
Financing
The registration statement for the Company’s
IPO was declared effective on March 10, 2021 (the “Effective Date”). As discussed in Note 4, on March 15, 2021, the Company
consummated the IPO of 12,000,000 units, (the “Public Units”), at $10.00 per Public Unit, generating gross
proceeds of $120,000,000.
Each Public Unit consists of (i) one subunit (the
“Public Subunit”), which consists of one share of common stock (the “Public Share”) and one-quarter of one redeemable
warrant, and (ii) one-quarter of one redeemable warrant (collectively, the redeemable warrants included in the Public Units and Public
Subunits, the “Public Warrants”); each whole Public Warrant will be exercisable to purchase one share of common stock at a
price of $11.50 per share.
Simultaneously with the closing of the IPO, the Company
consummated the sale of 390,000 private units (the “Private Units”) at a price of $10.00 per Private Unit in
a private placement (the “Private Placement”) to the Sponsor and EarlyBirdCapital, Inc. (“EarlyBirdCapital”),
generating gross proceeds of $3,900,000, which is discussed in Note 5. Each Private Unit consists of (i) one subunit (the “Private
Subunits”), which consists of one share of common stock (the “Private Shares”) and one-quarter of one redeemable warrant,
and (ii) one-quarter of one redeemable warrant (collectively, the redeemable warrants included in the Private Units and Private Subunits,
the “Private Warrants”).
Transaction costs amounted to $4,849,810 consisting
of $2,400,000 of underwriting discount and $2,449,810 of other offering costs.
The
Company granted the underwriters in the IPO a 45-day option to purchase up to 1,800,000 additional Public Units to cover over-allotments,
if any. On March 19, 2021, the underwriters partially exercised the over-allotment option to purchase 1,300,000 Public Units
(the “Over-allotment Units”), generating an aggregate of gross proceeds of $13,000,000, and incurred transaction costs of
$260,000 in underwriting discount. In connection with the underwriters’ exercise of their over-allotment option, the Company
also consummated the sale of an additional 26,000 Private Units at $10.00 per Private Unit to the Sponsor and EarlyBirdCapital,
generating gross proceeds of $260,000.
Trust
Account
Following
the closing of the IPO on March 15, 2021 and the underwriters’ partial exercise of over-allotment option on March 19, 2021, $133,000,000 from
the net proceeds of the sale of the Public Units in the IPO and the sale of the Private Units was placed in a trust account maintained
by Continental Stock Transfer & Trust Company, acting as trustee (the “Trust Account”). The funds held in the Trust Account
is and will be invested only in United States “government securities” within the meaning of Section 2(a)(16) of the Investment
Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under
the Investment Company Act which invest only in direct U.S. government treasury obligations, so that the Company is not deemed to be
an investment company under the Investment Company Act. Except with respect to interest earned on the funds held in the Trust Account
that may be released to the Company to pay its income or other tax obligations, the proceeds will not be released from the Trust Account
until the earlier of the completion of a Business Combination or the redemption of 100% of the outstanding Public Subunits if the
Company 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.
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 on the interest earned on the Trust Account) 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 1940, as amended
(the “Investment Company Act”). There is no assurance that the Company will be able to complete a Business Combination successfully.
The
shares of common stock subject to redemption are 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 continue in existence only until 18 months from the closing of the IPO (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 and (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100%
of the outstanding Public Subunits, at a per-subunit price, payable in cash, equal to the aggregate amount then on deposit in the Trust
Account, including any interest not previously released to the Company (net of taxes payable), divided by the number of then outstanding
Public Subunits, which redemption will completely extinguish public stockholders’ rights as holders of Public Subunits (including
the right to receive further liquidation distributions, if any), subject to applicable law. Public stockholders will also forfeit the
one-quarter of one warrant included in the Public Subunits being redeemed. As promptly as reasonably possible following such redemption,
subject to the approval of the remaining stockholders and its board of directors, the Company will dissolve and liquidate, subject to
its obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
A
public stockholder will be entitled to receive funds from the Trust Account (including interest earned on his, her or its portion of
the Trust Account to the extent not previously released to the Company) only in the event of (i) the redemption of 100% of the outstanding
Public Subunits if the Company has not completed a Business Combination in the required time period, (ii) if that public stockholder
converts such Public Subunits, or sells such Public Subunits to the Company in a tender offer, in connection with a Business Combination
which the Company consummates or (iii) the Company seeks to amend any provisions of its amended and restated certificate of incorporation
that would affect the public stockholders’ ability to convert or sell their Public Subunits to the Company in connection with a
Business Combination or affect the substance or timing of the Company’s obligation to redeem 100% of the Public Subunits if the
Company does not complete a Business Combination within the Combination Period. This redemption right shall apply in the event of
the approval of any such amendment to the Company’s amended and restated certificate of incorporation, whether proposed by the
Sponsor, initial stockholders, executive officers, directors or any other person. In no other circumstances will a public stockholder
have any right or interest of any kind to or in the Trust Account.
The
Sponsor, initial stockholders, officers and directors have agreed (1) to vote any shares of common stock owned by them in favor of any
proposed Business Combination, (2) not to convert any shares in connection with a stockholder vote to approve a proposed initial Business
Combination and (3) not to sell any shares in any tender in connection with a proposed initial Business Combination.
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 Public
Subunit 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, but the Company cannot assure that it will be able to satisfy its indemnification
obligations if it is required to do so. 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 believes 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 Going Concern
As
of September 30, 2021, the Company had cash outside the Trust Account of $628,652 available for its working capital needs. All remaining
cash and securities were held in the Trust Account and is generally unavailable for the Company’s use prior to an initial Business
Combination and is restricted for use either in a Business Combination or to redeem Public Subunits. As of September 30, 2021, none of
the amount on deposit in the Trust Account was available to be withdrawn as described above.
Prior to the completion of the IPO, the Company’s
liquidity needs had been satisfied through receipt of $25,000 from the sale of Founder Shares (see Note 6), advances from the Sponsor
in an aggregate amount of $125,000 under an unsecured promissory note, which were repaid upon the closing of the IPO (see Note 6).
Subsequent to the consummation of the IPO and Private Placement, the Company’s liquidity needs have been satisfied through the net
proceeds from the IPO and Private Placement held outside of the Trust Account.
In addition, in order to finance transaction costs
in connection with a Business Combination, the Company’s Sponsor, initial stockholders, officers, directors and their affiliates
may, but are not obligated to, provide the Company Working Capital Loans, as defined below (see Note 6). To date, there were no amounts
outstanding under any Working Capital Loans.
The Company anticipates that the $628,652 outside
of the Trust account as of September 30, 2021 will not be sufficient to allow the Company to operate for at least the next 12 months,
assuming that a Business Combination is not consummated during that time. Furthermore, if the Company is not able to consummate a Business
Combination by September 15, 2022, it will trigger the Company’s automatic winding up, liquidation and dissolution. These conditions
raise substantial doubt about the Company’s ability to continue as a going concern.
Note 2 — Restatement of Prior Period Financial Statements
As a result of recent guidance to Special Purpose
Acquisition Companies by the SEC regarding redeemable equity instruments, the Company revisited its application of ASC 480-10-S99 on the
Company’s financial statements. The Company had previously classified a portion of its Public Subunits (and the underlying shares
of common stock) in permanent equity. Subsequent to the re-evaluation, the Company’s management concluded that all of its Public
Subunits should be classified as temporary equity. Additionally, the Company’s management re-evaluated the fair value of the Representative
Shares and concluded that the fair value the Company had previously used for the Representative Shares were incorrect and needs to be
restated. The identified errors impacted the Company’s Form 8-K filing on March 19, 2021 containing the IPO balance sheet as of
March 15, 2021, Form 10-Q filing on July 27, 2021 containing financial statements as of March 31, 2021, Form 10-Q filing on August 27,
2021 containing financial statements as of June 30, 2021, and Form 10-Q filing on November 15, 2021 containing financial statements as
of September 30, 2021. In accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” and SEC Staff Accounting Bulletin
No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements;”
the Company evaluated the errors and has determined that the related impacts were material to the aforementioned 8-K and 10-Q filings,
and that correcting the cumulative impact of such errors would be significant to our financial statements for the three months and nine
months ended September 30, 2021. Accordingly, the Company has corrected such material errors by restating its prior financial statements
and classified all Public Subunits as temporary equity as well as restating the fair value of the Representative Shares. The Company will
also correct previously reported financial information for such material errors in future filings, as applicable. The following summarizes
the effect of the revision on each financial statement line item.
Impact of the Restatement
The impact of the restatement on the audited balance
sheet as of March 15, 2021 and unaudited interim condensed financial statements as of and for the three months ended March 31, 2021, June
30, 2021, and September 30, 2021 are presented below.
|
|
As Previously
Reported
|
|
|
Adjustments
|
|
|
As Restated
|
|
Balance Sheet at March 15, 2021
|
|
|
|
|
|
|
|
|
|
Common stock subject to possible redemption
|
|
$
|
116,095,120
|
|
|
$
|
3,904,880
|
|
|
$
|
120,000,000
|
|
Common stock
|
|
|
465
|
|
|
|
(39
|
)
|
|
|
426
|
|
Additional paid-in capital
|
|
|
5,004,068
|
|
|
|
(4,158,254
|
)
|
|
|
845,814
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet at March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock subject to possible redemption
|
|
$
|
128,744,590
|
|
|
$
|
4,255,935
|
|
|
$
|
133,000,525
|
|
Common stock
|
|
|
459
|
|
|
|
(43
|
)
|
|
|
416
|
|
Additional paid-in capital
|
|
|
5,084,297
|
|
|
|
(4,255,892
|
)
|
|
|
828,405
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations for the three months ended March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding, common stock subject to redemption
|
|
|
2,059,408
|
|
|
|
247,259
|
|
|
|
2,306,667
|
|
Basic and diluted weighted average shares outstanding, common stock
|
|
|
3,856,614
|
|
|
|
(514,481
|
)
|
|
|
3,342,133
|
|
Basic and diluted net income (loss) per share, common stock subject to redemption
|
|
$
|
0.00
|
|
|
$
|
3.41
|
|
|
$
|
3.41
|
|
Basic and diluted net income (loss) per share, common stock not subject to redemption
|
|
$
|
(0.02
|
)
|
|
$
|
(2.36
|
)
|
|
$
|
(2.38
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Changes in Stockholders’ Equity for the three months ended March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of representative shares - Additional Paid-in-Capital
|
|
$
|
3,458
|
|
|
$
|
2,020,963
|
|
|
$
|
2,024,421
|
|
Issuance of representative shares - Stockholders' Equity (Deficit)
|
|
|
3,500
|
|
|
|
2,020,963
|
|
|
|
2,024,463
|
|
Offering costs charged to the Stockholders' equity
|
|
|
(428,847
|
)
|
|
|
(2,020,963
|
)
|
|
|
(2,449,810
|
)
|
Reclassification of offering costs related to public shares
|
|
$
|
-
|
|
|
$
|
4,779,936
|
|
|
$
|
4,779,936
|
|
Subsequent measurement of common stock subject to redemption
|
|
$
|
-
|
|
|
$
|
(13,366,023
|
)
|
|
$
|
(13,366,023
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Cash Flows for the three months ended March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial value of common stock subject to possible redemption
|
|
$
|
115,841,700
|
|
|
$
|
8,572,213
|
|
|
$
|
124,413,913
|
|
Change in value of common stock subject to possible redemption
|
|
$
|
12,902,890
|
|
|
$
|
(12,902,365
|
)
|
|
$
|
-
|
|
Reclassification of offering costs related to public shares
|
|
$
|
-
|
|
|
$
|
(4,779,936
|
)
|
|
$
|
(4,779,936
|
)
|
Subsequent measurement of common stock subject to redemption
|
|
$
|
-
|
|
|
$
|
13,366,023
|
|
|
$
|
13,366,023
|
|
Subsequent measurement of common stock subject to redemption (interest earned on trust account)
|
|
$
|
-
|
|
|
$
|
525
|
|
|
$
|
525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations for the six months ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net income (loss) per share, common stock subject to redemption
|
|
$
|
0.46
|
|
|
$
|
0.08
|
|
|
$
|
0.54
|
|
Basic and diluted net income (loss) per share, common stock not subject to redemption
|
|
$
|
(1.00
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
(1.17
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Changes in Stockholders’ Equity for the six months ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of representative shares - Additional Paid-in-Capital
|
|
$
|
3,458
|
|
|
$
|
2,020,963
|
|
|
$
|
2,024,421
|
|
Issuance of representative shares - Stockholders' Equity (Deficit)
|
|
|
3,500
|
|
|
|
2,020,963
|
|
|
|
2,024,463
|
|
Offering costs charged to the Stockholders' equity
|
|
|
(428,847
|
)
|
|
|
(2,020,963
|
)
|
|
|
(2,449,810
|
)
|
Reclassification of offering costs related to public shares
|
|
$
|
2,886,166
|
|
|
$
|
1,893,770
|
|
|
$
|
4,779,936
|
|
Subsequent measurement of common stock subject to redemption
|
|
$
|
(11,472,253
|
)
|
|
$
|
(1,893,770
|
)
|
|
$
|
(13,366,023
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Cash Flows for the six months ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification of offering costs related to public shares
|
|
$
|
(2,886,166
|
)
|
|
$
|
(1,893,770
|
)
|
|
$
|
(4,779,936
|
)
|
Subsequent measurement of common stock subject to redemption
|
|
$
|
11,472,253
|
|
|
$
|
1,893,770
|
|
|
$
|
13,366,023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations for the nine months ended September 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net income (loss) per share, common stock subject to redemption
|
|
$
|
0.31
|
|
|
$
|
0.06
|
|
|
$
|
0.37
|
|
Basic and diluted net income (loss) per share, common stock not subject to redemption
|
|
$
|
(0.87
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
(1.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Changes in Stockholders’ Equity for the nine months ended September 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of representative shares - Additional Paid-in-Capital
|
|
$
|
3,458
|
|
|
$
|
2,020,963
|
|
|
$
|
2,024,421
|
|
Issuance of representative shares - Stockholders' Equity (Deficit)
|
|
|
3,500
|
|
|
|
2,020,963
|
|
|
|
2,024,463
|
|
Offering costs charged to the Stockholders' equity
|
|
|
(428,847
|
)
|
|
|
(2,020,963
|
)
|
|
|
(2,449,810
|
)
|
Reclassification of offering costs related to public shares
|
|
$
|
2,886,166
|
|
|
$
|
1,893,770
|
|
|
$
|
4,779,936
|
|
Subsequent measurement of common stock subject to redemption
|
|
$
|
(11,472,253
|
)
|
|
$
|
(1,893,770
|
)
|
|
$
|
(13,366,023
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Cash Flows for the nine months ended September 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification of offering costs related to public shares
|
|
$
|
(2,886,166
|
)
|
|
$
|
(1,893,770
|
)
|
|
$
|
(4,779,936
|
)
|
Subsequent measurement of common stock subject to redemption
|
|
$
|
11,472,253
|
|
|
$
|
1,893,770
|
|
|
$
|
13,366,023
|
|
Note
3 — Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited condensed financial statements are presented in U.S. dollars in conformity with accounting principles generally
accepted in the United States of America (“GAAP”) for financial information and pursuant to the rules and regulations of
the SEC. Accordingly, they do not include all of the information and footnotes required by 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 periods presented. Operating results for the three and nine months ended September 30, 2021 are not
necessarily indicative of the results that may be expected through December 31, 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 March 19, 2021 and March 12, 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 our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage
of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth
companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the
Sarbanes-Oxley Act, 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 another public company which
is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult
or impossible because of the potential differences in accounting standards used.
Use
of Estimates
The
preparation of unaudited condensed financial statement 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 statement. 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 has $628,652 of cash held outside of the Trust Account as of September 30, 2021 and no cash held outside of the Trust
Account as of December 31, 2020. The Company did not have any cash equivalents as of September 30, 2021 and December 31, 2020.
Marketable
Securities Held in Trust Account
At
September 30, 2021, the Company had $133,007,230 in the Trust Account which may be utilized for Business Combination. As of September
30, 2021, the assets held in the Trust Account were invested in Treasury Securities consisting of money market funds.
Fair
Value Measurements
Fair
value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction
between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets
or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
|
●
|
Level 1,
defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
|
|
●
|
Level 2,
defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices
for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
|
|
●
|
Level 3,
defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
|
In
some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In
those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input
that is significant to the fair value measurement.
The
fair value of the Company’s certain assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value
Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet. The fair values of cash and
cash equivalents, prepaid expenses, accounts payable and accrued expenses, and due to related party are estimated to approximate the
carrying values as of September 30, 2021 due to the short maturities of such instruments.
The Company’s warrant liability and the
fair value of its Representative Shares are based on valuation models utilizing management judgment and pricing inputs from observable
and unobservable markets with less volume and transaction frequency than active markets. Significant deviations from these estimates and
inputs could result in a material change in fair value. The fair value of the warrant liability and the fair value of its Representative
Shares are classified as Level 3. See Note 7 for additional information on assets, liabilities and Representative Shares measured at fair
value.
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 of $250,000. At September 30, 2021 and December 31, 2020, the Company
has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
Common
Stock Subject to Possible Redemption
The
Company accounts for its common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification
(“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption (if
any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock
that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain
events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified
as stockholders’ equity. The Company’s common stock feature certain redemption rights that is considered to be outside of
the Company’s control and subject to the occurrence of uncertain future events. Accordingly, common stock subject to possible redemption
is presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s balance
sheet.
Net
Income (Loss) Per Common Share
The
Company complies with accounting and disclosure requirements of FASB ASC 260, Earnings Per Share. The statements of operations include
a presentation of income (loss) per redeemable Public Share and income (loss) per founder non-redeemable share following the two-class
method of income (loss) per share. In order to determine the net income (loss) attributable to both the public 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 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 ratio of 76% for the Public Shares and 24% for the founder non-redeemable shares for the three months ended
September 30, 2021, and a ratio of 71% for the Public Shares and 29% for the founder non-redeemable shares for the nine months
ended September 30, 2021, reflective of the respective participation rights.
The
earnings per share presented in the condensed statements of operations is based on the following:
|
|
For the three months ended
|
|
|
For the nine months ended
|
|
|
|
September 30, 2021
|
|
|
September 30, 2021
|
|
Net loss
|
|
$
|
(191,075
|
)
|
|
$
|
(345,648
|
)
|
Accretion of temporary equity to redemption value
|
|
|
(3,352
|
)
|
|
|
(13,373,253
|
)
|
Net loss including accretion of temporary equity to redemption value
|
|
$
|
(194,427
|
)
|
|
$
|
(13,718,901
|
)
|
|
|
For the three months ended
|
|
|
For the nine months ended
|
|
|
|
September 30, 2021
|
|
|
September 30, 2021
|
|
|
|
Redeemable
|
|
|
Non-redeemable
|
|
|
Redeemable
|
|
|
Non-redeemable
|
|
Basic and diluted net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of net loss including accretion of temporary equity
|
|
$
|
(148,095
|
)
|
|
$
|
(46,332
|
)
|
|
$
|
(9,784,253
|
)
|
|
$
|
(3,934,648
|
)
|
Accretion of temporary equity to redemption value
|
|
|
3,352
|
|
|
|
-
|
|
|
|
13,373,253
|
|
|
|
-
|
|
Allocation of net income (loss)
|
|
$
|
(144,743
|
)
|
|
$
|
(46,332
|
)
|
|
$
|
3,589,000
|
|
|
$
|
(3,934,648
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding
|
|
|
13,300,000
|
|
|
|
4,161,000
|
|
|
|
9,675,824
|
|
|
|
3,891,044
|
|
Basic and diluted net income (loss) per share
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
0.37
|
|
|
$
|
(1.01
|
)
|
In
connection with the underwriters’ partial exercise of their over-allotment option on March 19, 2021, 325,000 Founder
Shares were no longer subject to forfeiture. These shares were excluded from the calculation of weighted average shares outstanding until
they were no longer subject to forfeiture.
As
of September 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 Company’s earnings. As a result, diluted income (loss) per share is the same
as basic income (loss) per share for the periods presented.
Offering
Costs associated with the Initial Public Offering
The Company complies with the requirements of
the ASC 340-10-S99-1 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 and were
charged to stockholders’ equity upon the completion of the IPO. Accordingly, as of March 15, 2021, offering costs in the aggregate
of $4,849,810 have been charged to stockholders’ equity (consisting of $2,400,000 of underwriting discount and $2,449,810 of
other offering costs).
Derivative
Financial Instruments
The
Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded
derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. Derivative instruments are recorded at fair value
on the grant date and re-valued at each reporting date, with changes in the fair value reported in the statements of operations. Derivative
assets and liabilities are classified on the balance sheet as current or non-current based on whether or not net-cash settlement or conversion
of the instrument could be required within 12 months of the balance sheet date. The Company has determined the warrants are a derivative
instrument.
Income
Taxes
The
Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax
assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements
carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included
the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be
realized.
ASC
740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions
taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be
sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits
as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30,
2021, 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 is subject to income tax examinations by major taxing authorities since inception.
The
Company’s deferred tax assets were deemed to be de minimis as of September 30, 2021.
Risks
and Uncertainties
Management
continues to evaluate the impact of the COVID-19 pandemic 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, cash flows and/or search for a target company,
the specific impact is not readily determinable as of the date of the condensed financial statements. The condensed financial statements
do not include any adjustments that might result from the outcome of this uncertainty.
Recently
Adopted Accounting Standards
In
August 2020, the 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): Accounting for Convertible Instruments and Contracts in an Entity’s
Own Equity (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation
models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts
to qualify for scope exception, and it simplifies the diluted earnings per share calculation in certain areas. The Company adopted ASU
2020-06 on January 1, 2021. Adoption of the ASU did not impact the Company’s financial position, results of operations or cash
flows.
Note
4 — Initial Public Offering
Pursuant
to the IPO on March 15, 2021, the Company sold 12,000,000 Public Units at a purchase price of $10.00 per Public Unit.
Each Public Unit consists of (i) one Public Subunit, which consists of one Public Share and one-quarter of one Public Warrant, and (ii)
one-quarter of one Public Warrant. Each whole warrant entitles the holder to purchase one share of common stock at a price of $11.50 per
share. Each whole warrant will become exercisable 30 days after the completion of an initial Business Combination and will expire on
the fifth anniversary of the completion of an initial Business Combination, or earlier upon redemption or liquidation.
On
March 19, 2021, the underwriters partially exercised the over-allotment option to purchase 1,300,000 Public Units, at a purchase
price of $10.00 per Public Unit, generating gross proceeds to the Company of $13,000,000.
Following
the closing of the IPO on March 15, 2021 and the underwriters’ partial exercise of over-allotment option on March 19, 2021, $133,000,000 from
the net proceeds of the sale of the Public Units in the IPO and the sale of the Private Units was placed in the Trust Account. The funds
held in Trust Account is and will be invested only in United States “government securities” within the meaning of Section
2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under
Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations, so that the
Company is not deemed to be an investment company under the Investment Company Act.
Note
5 — Private Placement
Simultaneously
with the closing of the IPO, the Sponsor and EarlyBirdCapital purchased an aggregate of 390,000 Private Units at a price of
$10.00 per Private Unit in a private placement (the “Private Placement”), generating gross proceeds of $3,900,000.
On
March 19, 2021, simultaneous with the exercise of the over-allotment option, the Sponsor and EarlyBirdCapital purchased an aggregate
of 26,000 additional Private Units, at a purchase price of $10.00 per Private Unit, generating gross proceeds to the Company
of $260,000.
The
Private Units (and underlying Private Subunits, Private Shares, and Private Warrants) are identical to the Public Units except that the
Private Warrants included in the Private Units: (i) will not be redeemable by the Company and (ii) may be exercised for cash or on a
cashless basis, so long as they are held by the initial purchasers or any of their permitted transferees. If the Private Warrants are
held by holders other than the initial purchasers or any of their permitted transferees, the Private Warrants will be redeemable by the
Company and exercisable by the holders on the same basis as the Public Warrants.
The
Company’s initial stockholders have agreed (A) to vote the Private Shares contained in the Private Subunits in favor of any proposed
Business Combination, (B) not to convert any Private Subunits in connection with a stockholder vote to approve a proposed initial Business
Combination or sell any Private Shares to the Company in a tender offer in connection with a proposed initial Business Combination and
(C) that the Private Subunits shall not participate in any liquidating distribution from the Trust Account upon winding up if a Business
Combination is not consummated. In the event of a liquidation prior to the initial Business Combination, the Private Units will likely
be worthless.
Note
6 — Related Party Transactions
Founder
Shares
On
January 4, 2021, the Sponsor paid $25,000, or approximately $0.009 per share, to cover certain offering costs in consideration for 2,875,000 shares
of common stock, par value $0.0001 (the “Founder Shares”). Up to 375,000 Founder Shares are subject to forfeiture
by the Sponsor depending on the extent to which the underwriters’ over-allotment option is exercised. On March 10, 2021, the Company
effected a stock dividend of 0.2 shares for each founder share outstanding, resulting in an aggregate of 3,450,000 founder
shares outstanding and held by the Sponsor and the Company’s directors (up to 450,000 of which are subject to forfeiture
by the Sponsor if the underwriters’ over-allotment option is not exercised in full). On March 19, 2021, the underwriters partially
exercised the over-allotment option to purchase 1,300,000 Public Units. As a result, 125,000 founder shares were
forfeited as of September 30, 2021.
On
the date of the IPO, the Founder Shares were placed into an escrow account maintained in New York, New York by Continental Stock Transfer& Trust Company, acting as escrow agent. Subject to certain limited exceptions, these shares will not be transferred, assigned,
sold or released from escrow (subject to certain limited exceptions) for a period ending on (1) with respect to 50% of the founder shares,
the earlier of one year after the date of the consummation of the Company’s initial Business Combination and the date on which
the closing price of the Company’s shares of common stock equals or exceeds $12.50 per share (as adjusted for share splits, share
capitalizations, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after Company’s
initial Business Combination and (2) with respect to the remaining 50% of the founder shares, one year after the date of Company’s
consummation of the initial Business Combination, or earlier, in either case, if, subsequent to the initial Business Combination, the
Company consummates a liquidation, merger, stock exchange or other similar transaction which results in all of the stockholders having
the right to exchange their shares of common stock for cash, securities or other property.
Promissory
Note — Related Party
On
January 4, 2021, the Sponsor agreed to loan the Company up to $300,000 to be used for a portion of the expenses of the IPO (the
“Promissory Note”). These loans were non-interest bearing, unsecured and were due at the earlier of March 31, 2021 or the
closing of the IPO.
On
February 1, 2021, the Sponsor funded to the Company $100,000 pursuant to the Promissory Note. On February 10, 2021, the Sponsor
funded to the Company an additional $25,000 pursuant to the Promissory Note, for an aggregate amount of $125,000. On March 15, 2021,
the Promissory Note in an aggregate amount of $125,000 was fully repaid by the Company to the Sponsor.
Related
Party Loans
In
order to meet the working capital needs following the consummation of the IPO if the funds not held in the Trust Account are insufficient,
the Sponsor, initial stockholders, officers, directors and their affiliates may, but are not obligated to, loan the Company funds, from
time to time or at any time, in whatever amount they deem reasonable in their sole discretion (“Working Capital Loans”).
Each Working Capital Loan would be evidenced by a promissory note. The notes would either be paid upon consummation of the initial
Business Combination, without interest, or, at the holder’s discretion, up to $1,500,000 of the notes may be converted into units
at a price of $10.00 per unit. The units would consist of (i) one subunit, which consists of one share of common stock and one-quarter
of one warrant, and (ii) one-quarter of one warrant, where the common stock and warrants would be identical to the common stock and warrants
included in the Private Units. 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 other proceeds from the Trust Account would
be used for such repayment. At September 30, 2021, no such Working Capital Loans were outstanding.
Administrative
Service Fee
Commencing
on the Effective Date of the registration statement through the acquisition of a target business, the Company will pay an affiliate of
the Chief Executive Officer, an aggregate fee of $10,000 per month for providing the Company with office space and certain office
and secretarial services. As of September 30, 2021, the Company has recorded $30,000 and 67,097, respectively, for the three months
ended September 30, 2021 and for the period from March 10, 2021 through September 30, 2021.
Note
7 — Fair Value Measurements
Non-Recurring Fair Value Measurement
The following table presents information about
the Company’s Representative Shares that were measured at fair value on a non-recurring basis as of January 13, 2021 and indicates
the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.
|
|
January 13,
|
|
|
Quoted
Prices In
Active
Markets
|
|
|
Significant
Other
Observable
Inputs
|
|
|
Significant
Other
Unobservable
Inputs
|
|
|
|
2021
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Stockholders’ Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Representative Shares
|
|
$
|
2,024,463
|
|
|
$
|
|
|
|
$
|
-
|
|
|
$
|
2,024,463
|
|
|
|
$
|
2,024,463
|
|
|
$
|
|
|
|
$
|
-
|
|
|
$
|
2,024,463
|
|
The estimated fair value of the Representative
Shares on January 13, 2021, the date the Representative Shares were issued, was determined using Level 3 inputs. Inherent in a Monte-Carlo
simulation model utilizing the probability weighted expected return method are assumptions related to the expected stock-price volatility
(pre-merger), the risk-free interest rate, and the expected restricted term. The Company estimates the volatility of its common stock
based on management’s understanding of the volatility associated with instruments of other similar entities. The risk-free interest
rate is based on the U.S. Treasury Constant Maturity similar to the expected restricted term of the Representative Shares. The expected
restricted term of the Representative Shares is simulated based on management assumptions regarding the timing and likelihood of completing
the IPO and a business combination. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero.
The assumptions used in calculating the estimated fair values represent the Company’s best estimate. However, inherent uncertainties
are involved. If factors or assumptions change, the estimated fair values could be materially different.
The key inputs into the Monte Carlo simulation
model for the Representative Shares were as follows at January 13, 2021:
Input
|
|
January 13,
2021
|
|
Restricted term (years)
|
|
|
1.11
|
|
Expected volatility
|
|
|
12.5
|
%
|
Risk-free interest rate
|
|
|
0.12
|
%
|
Stock price
|
|
$
|
9.37
|
|
Dividend yield
|
|
|
0
|
%
|
Recurring Fair Value Measurement
The
following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring
basis as of September 30, 2021 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such
fair value.
|
|
September 30,
|
|
|
Quoted
Prices In
Active
Markets
|
|
|
Significant
Other
Observable
Inputs
|
|
|
Significant
Other
Unobservable
Inputs
|
|
|
|
2021
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Mutual Fund held in Trust Account
|
|
$
|
133,007,230
|
|
|
$
|
133,007,230
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
133,007,230
|
|
|
$
|
133,007,230
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant Liability
|
|
$
|
161,359
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
161,359
|
|
|
|
$
|
161,359
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
161,359
|
|
The
estimated fair value of the warrant liability on March 15, 2021 and September 30, 2021 is determined using Level 3 inputs. Inherent
in a Monte-Carlo simulation model are assumptions related to expected stock-price volatility (pre-merger and post-merger),
expected term, dividend yield and risk-free interest rate. The Company estimates the volatility of its common stock based on management’s
understanding of the volatility associated with instruments of other similar entities. 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 simulated 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. The assumptions used in calculating the estimated fair values represent
the Company’s best estimate. However, inherent uncertainties are involved. If factors or assumptions change, the estimated fair
values could be materially different.
The
key inputs into the Monte Carlo simulation model for the warrant liability were as follows at March 15, 2021:
Input
|
|
March 15,
2021
|
|
Expected term (years)
|
|
|
5.99
|
|
Expected volatility
|
|
|
24.3
|
%
|
Risk-free interest rate
|
|
|
1.06
|
%
|
Stock price
|
|
$
|
9.36
|
|
Dividend yield
|
|
|
0
|
%
|
Exercise price
|
|
$
|
11.5
|
|
The
key inputs into the Monte Carlo simulation model for the warrant liability were as follows at September 30, 2021:
Input
|
|
September 30,
2021
|
|
Expected term (years)
|
|
|
5.52
|
|
Expected volatility
|
|
|
14.8
|
%
|
Risk-free interest rate
|
|
|
1.07
|
%
|
Stock price
|
|
$
|
9.61
|
|
Dividend yield
|
|
|
0
|
%
|
Exercise price
|
|
$
|
11.5
|
|
The
following table sets forth a summary of the changes in the fair value of the warrant liability for the nine months ended September 30,
2021:
|
|
Warrant
Liability
|
|
Fair value as of December 31, 2020
|
|
$
|
-
|
|
Initial fair value of warrant liability upon issuance at IPO
|
|
|
270,307
|
|
Change in fair value
|
|
|
(108,948
|
)
|
|
|
|
|
|
Fair value as of September 30, 2021
|
|
$
|
161,359
|
|
Note
8 — Commitments and Contingencies
Registration
Rights
The
holders of the Founder Shares and Representative Shares (as defined below) issued and outstanding on the date of the IPO, as well as
the holders of the Private Units and any units the Sponsor, officers, directors or their affiliates may be issued in payment of Working
Capital Loans made to the Company (and all underlying securities), will be entitled to registration rights pursuant to an agreement signed
on March 10, 2021. The holders of a majority of these securities are entitled to make up to two demands that the Company use its best
efforts to 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 Representative Shares, Private Units and units issued to the Sponsor, officers, directors or their affiliates in
payment of Working Capital Loans made to the Company (or underlying securities) can elect to exercise these registration rights at any
time after the Company consummates a Business Combination. Notwithstanding anything to the contrary, EarlyBirdCapital may only make
a demand on one occasion and only during the five-year period beginning on March 10, 2021. In addition, the holders have certain “piggy-back”
registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination; provided,
however, that EarlyBirdCapital may participate in a “piggy-back” registration only during the seven-year period beginning
on the effective date of the registration statement. The Company will bear the expenses incurred in connection with the filing of any
such registration statements.
Underwriters
Agreement
EarlyBirdCapital
and I-Bankers Securities, Inc. (the “Underwriters”) have a 45-day option from the date of the IPO to purchase up to an additional
1,800,000 Public Units to cover over-allotments, if any. The Underwriters were entitled to a cash underwriting discount of two percent
(2%) of the gross proceeds of the IPO, or $2,400,000 (or up to $2,760,000 if the underwriters’ over-allotment is exercised
in full). On March 15, 2021, the Company paid, in aggregate, a fixed underwriting discount of $2,400,000.
On
March 19, 2021, the Underwriters partially exercised the over-allotment option to purchase 1,300,000 Public Units and were,
in aggregate, paid a fixed underwriting discount of $260,000.
EarlyBirdCapital
will have the right of first refusal for a period commencing from the consummation of the IPO until the consummation of the initial Business
Combination (or the liquidation of the Trust Account in the event that the Company fails to consummate the initial Business Combination
within the Combination Period) to act as book running manager, placement agent and/or arranger for all financings where the Company seeks
to raise equity, equity-linked, debt or mezzanine financings relating to or in connection with the initial Business Combination.
In
addition, under certain circumstances EarlyBirdCapital will be granted, for a period of one year from the closing of the IPO, the right
to act as lead underwriter for the next U.S. registered public offering of securities, undertaken by any of the Company’s officers,
for the purpose of raising capital and placing 90% or more of the proceeds in a trust or escrow account to be used to acquire one
or more operating businesses in the technology industry that have not been identified at the time of the IPO.
Business
Combination Marketing Agreement
The
Company has engaged EarlyBirdCapital as an advisor in connection with the Business Combination to assist the Company in holding meetings
with its stockholders to discuss the potential Business Combination and the target business’ attributes, introduce the Company
to potential investors that are interested in purchasing the Company’s securities in connection with the initial Business Combination,
assist the Company in obtaining stockholder approval for the Business Combination and assist the Company with its press releases and
public filings in connection with the Business Combination. The Company will pay EarlyBirdCapital a cash fee for such services upon
the consummation of its initial Business Combination in an amount equal to 3.5% of the gross proceeds of the IPO (exclusive of any applicable
finders’ fees which might become payable); provided that up to 30% of the fee may be allocated at the Company’s sole discretion
to other FINRA members (including, with EarlyBirdCapital’s prior consent which shall not be unreasonably withheld, companies affiliated
with the Company or its officers or directors) that assist the Company in identifying or consummating an initial Business Combination.
Representative
Shares
On January 13, 2021, the Company has issued to
EarlyBirdCapital and its designees an aggregate of 350,000 representative shares at a purchase price of $0.0001 per share
(the “Representative Shares”). The fair value of the Representative Shares was determined to be $2,024,463 (See Note 7). On
March 10, 2021, the Company effected a stock dividend of 0.2 shares of common stock for every share of common stock outstanding,
resulting in an additional 70,000 representative shares issued to EarlyBirdCapital for no consideration and an aggregate of 420,000 representative
shares outstanding. The holders of the Representative Shares have agreed not to transfer, assign or sell any such shares without the Company’s
prior consent until the completion of the initial Business Combination. In addition, the holders of the Representative Shares have agreed
(i) to waive their conversion rights (or right to participate in any tender offer) with respect to such shares in connection with the
completion of the 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 its initial Business Combination within the Combination Period.
The
Representative Shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately
following March 10, 2021 pursuant to Rule 5110(g)(1) of the FINRA Manual. Pursuant to FINRA Rule 5110(g)(1), these securities will not
be sold during the IPO, or sold, transferred, assigned, pledged, or hypothecated, or be the subject of any hedging, short sale, derivative,
put or call transaction that would result in the economic disposition of the securities by any person for a period of 180 days immediately
following the March 10, 2021 or commencement of sales of the IPO, except to any underwriter and selected dealer participating in the
IPO and their bona fide officers or partners, provided that all securities so transferred remain subject to the lock-up restriction above
for the remainder of the time period.
Business
Combination Legal Services Agreement
The
Company has entered into an agreement with its legal counsel, Loeb & Loeb (“Loeb”), whereby the Company is required to
pay a total of $250,000 in retainer fees to Loeb for services related to the initial Business Combination upon the completion of certain
milestones. The balance of any additional legal fees incurred related to the initial Business Combination will be due at the closing
of the SPAC Merger. As of September 30, 2021, the Company had paid a total of $50,000 of retainer fees to Loeb.
Note
9 — Stockholders’ Equity
Preferred
Stock — The Company is authorized to issue 1,000,000 shares of preferred stock at par value of $0.0001 per
share. As of September 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 September 30, 2021, there were 4,161,000 shares of common stock issued and outstanding, excluding 13,300,000 shares
of common stock subject to possible redemption.
Public
Warrants
Each
whole warrant entitles the holder to purchase one common stock at a price of $11.50 per share, subject to adjustment as discussed below,
at any time commencing 30 days after the completion of an initial Business Combination. 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.
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 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 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
Company may call the warrants for redemption (excluding the Private Warrants and any warrants underlying additional units issued to the
Sponsor, initial stockholders, officers, directors or their affiliates in payment of Working Capital Loans made to the Company), 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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upon
not less than 30 days’ prior written notice of redemption to each warrant holder,
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If,
and only if, the reported last sale price of the shares of common stock equals or exceeds $18.00 per share (as adjusted for stock splits,
stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30 trading day period commencing 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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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 (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 Founder 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, and the $18.00 redemption trigger price will be adjusted to 180% of this
amount.
Note
10 — Subsequent Events
On November 15, 2021, the Company entered into
the Merger Agreement with SoundHound Inc., a voice artificial intelligence company, pursuant to which the two companies agreed to consummate
a Business Combination. The total consideration to be paid by the Company to SoundHound is $2 billion in equity of the Company, with outstanding
SoundHound stock options and warrants included on a net exercise basis. In connection with the Business Combination, certain accredited
investors committed to purchase 11.1 million shares of Class A common stock of the combined company at a price of $10.00 per share, for
total gross proceeds of $111 million, in a private placement that is scheduled to close concurrently with the Business Combination.
Additional information about the Merger Agreement and related transactions
can be found in the Current Report on Form 8-K filed on November 16, 2021.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References
to the “Company,” “Archimedes Tech SPAC Partners Co.” “our,” “us” or “we”
refer to Archimedes Tech SPAC Partners Co. The following discussion and analysis of the Company’s 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 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 on Form 10-Q/A 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
were formed on September 15, 2020 for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase,
recapitalization, reorganization or other similar business combination with one or more target businesses. Our efforts to identify a
prospective target business will not be limited to a particular industry or geographic region, though we intend to focus our search on
a business operating in the technology industry. We intend to utilize cash derived from the proceeds of this offering, our securities,
debt or a combination of cash, securities and debt, in effecting a business combination.
All
activity through September 30, 2021 relates to our formation, IPO, which was consummated on March 15, 2021, and search for a prospective
initial business combination target.
On November 15, 2021, we entered into a definitive
merger agreement with SoundHound Inc., a voice artificial intelligence company, pursuant to which the two companies agreed to consummate
a Business Combination (the “Merger Agreement”). The total consideration to be paid to SoundHound is $2 billion in equity
of the Company, with outstanding SoundHound stock options and warrants included on a net exercise basis. In connection with the Business
Combination, certain accredited investors committed to purchase 11.1 million shares of Class A common stock of the combined company at
a price of $10.00 per share, for total gross proceeds of $111 million, in a private placement that is scheduled to close concurrently
with the Business Combination.
Additional information about the Merger Agreement and related transactions
can be found in the Current Report on Form 8-K filed on November 16, 2021.
Results
of Operations
As
of September 30, 2021, we have not commenced any operations. All activity for the period from September 15, 2020 (inception) through
September 30, 2021 relates to our formation, IPO and, after our IPO, identifying a target company for a Business Combination. We will
not generate any operating revenues until after the completion of our initial Business Combination, at the earliest. We will generate
non-operating income in the form of interest income from the proceeds derived from the IPO and placed in the Trust Account.
For
the three months ended September 30, 2021, we had a net loss of $191,075, which was comprised of operating costs of $229,484, interest
income of $3,352 from marketable securities held in our Trust Account, and unrealized gain on change in fair value of warrants of $35,057.
For
the nine months ended September 30, 2021, we had a net loss of $345,648, which was comprised of operating costs of $461,826, interest
income of $7,230 from marketable securities held in our Trust Account, and unrealized gain on change in fair value of warrants of $108,948.
For
the period from September 15, 2020 (inception) through September 30, 2020, we had a net loss of $716, which was comprised of operating
costs of $716.
Liquidity
and Capital Resources
On
March 15, 2021, we consummated the IPO of 12,000,000 Public Units at a price of $10.00 per Public Unit, generating gross proceeds of
$120,000,000. Simultaneously with the closing of the IPO, we consummated the sale of 390,000 Private Units at a price of $10.00 per Private
Unit in a private placement to the Sponsor and EarlyBirdCapital, generating gross proceeds of $3,900,000.
On
March 19, 2021, the underwriters partially exercised the over-allotment option to purchase 1,300,000 Public Units, at a purchase price
of $10.00 per Public Unit, generating gross proceeds of $13,000,000. In connection with the underwriters’ exercise of their
over-allotment option, we also consummated the sale of an additional 26,000 Private Units at $10.00 per Private Unit to the Sponsor and
EarlyBirdCapital, generating gross proceeds of $260,000.
Following
the closing of the IPO on March 15, 2021 and the underwriters’ partial exercise of over-allotment option on March 19, 2021, $133,000,000
from the net proceeds of the sale of the Public Units in the IPO and the sale of the Private Units was placed in the Trust Account and
the remaining net proceeds was deposited in our operating bank account.
As of September 30, 2021, we had $628,652 of cash
held outside of the Trust Account for our working capital needs.
Prior
to the completion of the IPO, our liquidity needs had been satisfied through a payment from the Sponsor of $25,000 for the founder shares,
and the loan under an unsecured promissory note from the Sponsor of $125,000. We fully paid the note to the Sponsor on March 15, 2021.
Subsequent to the consummation of the IPO and Private Placement, our liquidity needs have been satisfied through the proceeds from the
consummation of the Private Placement not held in the Trust Account.
In
addition, in order to finance transaction costs in connection with a Business Combination, our Sponsor, initial stockholders, officers,
directors and their affiliates may, but are not obligated to, provide us Working Capital Loans. To date, there were no amounts outstanding
under any Working Capital Loans.
We anticipate that the $628,652 outside of the Trust account as of September
30, 2021 will not be sufficient to allow us to operate for at least the next 12 months, assuming that a Business Combination is not consummated
during that time. Moreover, we may need to obtain additional financing to consummate our Initial Business Combination but there is no
assurance that new financing will be available to us on commercially acceptable terms. Furthermore, if we are not able to consummate a
Business Combination by September 15, 2022, it will trigger our automatic winding up, liquidation and dissolution. These conditions raise
substantial doubt about our ability to continue as a going concern.
Critical
Accounting Policies and Estimates
The
preparation of the 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:
Common
Stock Subject to Possible Redemption
The
Company accounts for its common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification
(“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption (if
any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock
that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain
events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified
as stockholders’ equity. The Company’s common stock feature certain redemption rights that is considered to be outside of
the Company’s control and subject to the occurrence of uncertain future events. Accordingly, common stock subject to possible redemption
is presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s balance
sheet.
Net
Loss Per Common Share
Net
loss per common share is computed by dividing net loss by the weighted average number of common stock outstanding for each of the periods.
The calculation of diluted loss per common share does not consider the effect of the warrants issued in connection with the (i) IPO,
(ii) exercise of overallotment and (iii) Private Placement since the exercise price of the warrants is higher than the market price.
The warrants are exercisable to purchase 6,858,000 shares of common stock in the aggregate.
Off-Balance Sheet Arrangements
As
of September 30, 2021, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.