ACHARI VENTURES HOLDINGS CORP. I References in this report (this "Quarterly Report") to "we," "us" or the
"Company" refer to
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Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act that
are not historical facts and involve risks and uncertainties that could cause
actual results to differ materially from those expected and projected. All
statements, other than statements of historical fact included in this Form
10-Q
including, without limitation, statements in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" regarding the
Company's financial position, business strategy and the plans and objectives of
management for future operations, are forward-looking statements. Words such as
"expect," "believe," "anticipate," "intend," "estimate," "seek" and variations
and similar words and expressions are intended to identify such forward-looking
statements. Such forward-looking statements relate to future events or future
performance, but reflect management's current beliefs, based on information
currently available. A number of factors could cause actual events, performance
or results to differ materially from the events, performance and results
discussed in the forward-looking statements. For information identifying
important factors that could cause actual results to differ materially from
those anticipated in the forward-looking statements, please refer to the Risk
Factors section of the Company's final prospectus filed with the U.S. Securities
and Exchange Commission (the "SEC"). The Company's securities filings can be
accessed on the EDGAR section of the SEC's website at www.sec.gov. Except as
expressly required by applicable securities law, the Company disclaims any
intention or obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise.
Overview
Achari Ventures Holdings Corp. I was incorporated in Delaware on January 25,
2021 . The Company was formed for the purpose of entering into a merger, share
exchange, asset acquisition, stock purchase, reorganization or other similar
business transaction with one or more businesses that the Company has not yet
identified (a "Business Combination").
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete a Business
Combination will be successful.
Results of Operations
As of September 30, 2021 , the Company had not commenced any operations. All
activity through September 30, 2021 relates to the Company's formation. The
Company will generate
non-operating
income in the form of interest income from the proceeds derived from the IPO
placed in the Trust Account (defined below).
For the three months ended September 30, 2021 , and for the period January 25,
2021 (inception) through September 30, 2021 , we had a net loss of $1,100 and
$2,249 respectively which consisted of general and administrative expenses.
Liquidity and Capital Resources
The registration statement for the Company's IPO was declared effective on
October 14, 2021 . On October 19, 2021 , the Company consummated the IPO of
10,000,000 units ("Units") with respect to the Common stock included in the
Units being offered (the "Public Shares") at $10.00 per Unit generating gross
proceeds of $100,000,000 , which is discussed in Note 3. The company has selected
December 31 as its fiscal year end.
Simultaneously with the closing of the IPO, the Company consummated the sale of
7,133,333 warrants ("Private Placement Warrants") at a price of $0.75 per
Private Placement Warrant in a private placement to the Company's sponsor,
Achari Sponsor Holdings I LLC (the "Sponsor"), for gross proceeds of $5,350,000
which is described in Note 4.
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Offering costs for the IPO amounted to $6,101,730 , consisting of $2,000,000 of
underwriting fees, $3,500,000 of deferred underwriting fees payable (which are
held in the Trust Account (defined below)) and $601,730 of other costs. As
described in Note 6, the $3,500,000 of deferred underwriting fee payable is
contingent upon the consummation of a Business Combination by October 19, 2022 ,
subject to the terms of the underwriting agreement.
Following the closing of the IPO, $101,500,000 ($10.15 per Unit) from the net
proceeds of the sale of the Units in the IPO and the Private Placement Warrants
was placed in a trust account ("Trust Account") and will be invested in U.S.
government securities, within the meaning set forth in Section 2(a)(16) of the
Investment Company Act of 1940, as amended (the "Investment Company Act"), with
a maturity of 180 days or less or in any open-ended investment company that
holds itself out as a money market fund selected by the Company meeting the
conditions of paragraphs (d)(2), (d)(3) and (d)(4) of
Rule 2a-7 of
the Investment Company Act, as determined by the Company, until the earlier of:
(i) the completion of a Business Combination and (ii) the distribution of the
Trust Account.
For the period January 25, 2021 (inception) through September 30, 2021 , there
was $78 of cash used in operating activities.
We intend to use substantially all of the funds held in the Trust Account,
including any amounts representing interest earned on the Trust Account (less
taxes payable), to complete our Business Combination. To the extent that our
capital stock or debt is used, in whole or in part, as consideration to complete
our Business Combination, the remaining proceeds held in the Trust Account will
be used as working capital to finance the operations of the target business or
businesses, make other acquisitions and pursue our growth strategies.
In order to finance transaction costs in connection with a Business Combination,
the Sponsor or an affiliate of the Sponsor, or certain of the Company's officers
and directors may, but are not obligated to, loan the Company funds as may be
required ("Working Capital Loans"). If the Company completes a Business
Combination, the Company would repay the Working Capital Loans out of the
proceeds of the Trust Account released to the Company. Otherwise, the Working
Capital Loans would be repaid only out of funds held outside the Trust Account.
In the event that a Business Combination does not close, the Company may use a
portion of proceeds held outside the Trust Account to repay the Working Capital
Loans but no proceeds held in the Trust Account would be used to repay the
Working Capital Loans. Except for the foregoing, the terms of such Working
Capital Loans, if any, have not been determined and no written agreements exist
with respect to such loans. The Working Capital Loans would either be repaid
upon consummation of a Business Combination, without interest, or, at the
lender's discretion, up to $1.5 million of such Working Capital Loans may be
convertible into warrants of the post Business Combination entity at a price of
$0.75 per warrant. The warrants would be identical to the Private Placement
Warrants. As of September 30, 2021 , there were no Working Capital Loans
outstanding. Subsequent to our IPO on October 19, 2021 , $1,703,896 of cash was
held outside of trust account to support our working capital requirements.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of identifying a target business, undertaking
in-depth
due diligence and negotiating a Business Combination are less than the actual
amount necessary to do so, we may have insufficient funds available to operate
our business prior to our Business Combination. Moreover, we may need to obtain
additional financing either to complete our Business Combination or because we
become obligated to redeem a significant number of our Public Shares upon
consummation of our Business Combination, in which case we may issue additional
securities or incur debt in connection with such Business Combination.
Off-Balance
Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance
sheet arrangements as of September 30, 2021 . We do not participate in
transactions that create relationships with entities or financial partnerships,
often referred to as variable interest entities, which would have been
established for the purpose of facilitating
off-balance
sheet arrangements. We have not entered into any
off-balance
sheet financing arrangements, established any special purpose entities,
guaranteed any debt or commitments of other entities, or purchased any
non-financial
assets.
Contractual obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities.
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The underwriter is entitled to deferred underwriting commissions of $3,500,000
in the aggregate. The deferred fee will become payable to the underwriter from
the amounts held in the Trust Account solely in the event that the Company
completes a Business Combination, subject to the terms of the underwriting
agreement.
JOBS Act
On April 5, 2012 , the JOBS Act was signed into law. The JOBS Act contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We will qualify as an "emerging growth company" and
under the JOBS Act will be allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded)
companies. We are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting
standards on the relevant dates on which adoption of such standards is required
for
non-emerging
growth companies. As such, our financial statements may not be comparable to
companies that comply with public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the
other reduced reporting requirements provided by the JOBS Act. Subject to
certain conditions set forth in the JOBS Act, if, as an "emerging growth
company," we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an auditor's attestation report on our system of
internal control over financial reporting pursuant to Section 404 of the
Sarbanes-Oxley Act, (ii) provide all of the compensation disclosure that may be
required of
non-emerging
growth public companies under the Dodd-Frank Wall Street Reform and Consumer
Protection Act, (iii) comply with any requirement that may be adopted by the
PCAOB regarding mandatory audit firm rotation or a supplement to the auditor's
report providing additional information about the audit and the financial
statements (auditor discussion and analysis) and (iv) disclose certain executive
compensation related items such as the correlation between executive
compensation and performance and comparisons of executive compensation to median
employee compensation. These exemptions will apply for a period of five years
following the completion of our IPO or until we are no longer an "emerging
growth company," whichever is earlier.
Critical Accounting Policies
The preparation of unaudited condensed financial statements and related
disclosures in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements, and
income and expenses during the periods reported. Actual results could materially
differ from those estimates.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As of September 30, 2021 , we were not subject to any market or interest rate
risk. The net proceeds held in the Trust Account have been invested in U.S.
government treasury bills, notes or bonds with a maturity of 185 days or less,
or in certain money market funds that invest solely in U.S. treasuries. Due to
the short-term nature of these investments, we believe there will be no
associated material exposure to interest rate risk.
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