The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our audited financial statements
and the notes related thereto which are included in "Item 8. Financial
Statements and Supplementary Data" of this Annual Report on Form 10-K. Certain
information contained in the discussion and analysis set forth below includes
forward-looking statements. Our actual results may differ materially from those
anticipated in these forward-looking statements as a result of many factors,
including those set forth under "Special Note Regarding Forward-Looking
Statements," "Item 1A. Risk Factors" and elsewhere in this Annual Report on
Form 10-K.
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 audited 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 Annual Report on Form 10-K/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 (the "Business Combination"). 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 December 31, 2021 relates to our formation, IPO, which was
consummated on March 15, 2021, the search for a prospective initial Business
Combination target, and efforts toward consummating the initial Business
Combination.
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 Inc. is $2 billion
in equity of the Company, with outstanding SoundHound Inc. 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 and in the
Amendment No. 1 to Form S-4 filed on February 14, 2022.
14
Results of Operations
As of December 31, 2021, we have not commenced any operations. All activity for
the period from September 15, 2020 (inception) through December 31, 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 year ended December 31, 2021, we had a net loss of $981,884, which was
comprised of operating costs of $1,015,260, interest income of $10,583 from
marketable securities held in our Trust Account, and unrealized gain on change
in fair value of warrants of $22,793.
For the period from September 15, 2020 (inception) through December 31, 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 December 31, 2021, we had $235,295 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 $235,295 outside of the Trust account as of December 31,
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.
15
Critical Accounting Policies and Estimates
The preparation of the financial statements in conformity with US GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of expenses
during the reporting period. Actual results could differ from those estimates.
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 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 72.8% for the Public
Shares and 27.2% for the founder non-redeemable shares for the year ended
December 31, 2021, reflective of the respective participation rights.
Off-Balance Sheet Arrangements
As of December 31, 2021, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K.
16
© Edgar Online, source Glimpses