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 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 March 31, 2022 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, 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 $2,000,000 in our equity,
with outstanding SoundHound stock options and warrants included on a net
exercise basis.
On April 26, 2022, we consummated our Business Combination with SoundHound
pursuant to the Merger Agreement. The aggregate merger consideration we paid to
SoundHound security holders in connection with the Business Combination was an
amount equal to $2,000,000,000, with outstanding SoundHound stock options and
warrants assumed by us included on a net exercise basis. As a result of the
Business Combination, we own 100% of the outstanding common stock of SoundHound
and we changed our name from "Archimedes Tech SPAC Partners Co." to "SoundHound
AI, Inc" (See Note 9).
Results of Operations
As of March 31, 2022, we have not commenced any operations. All activity for the
period from September 15, 2020 (inception) through March 31, 2022 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 March 31, 2022, we had a net loss of $385,450, which
was comprised of operating costs of $490,053, interest income of $11,857 from
marketable securities held in our Trust Account, and unrealized gain on change
in fair value of warrants of $92,746.
For the three months ended March 31, 2021, we had a net loss of $84,033, which
was comprised of operating costs of $81,441, interest income of $525 from
marketable securities held in our Trust Account, and unrealized loss on change
in fair value of warrants of $3,117.
20
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 March 31, 2022, we had $18,129 of cash held outside of the Trust Account
for our working capital needs.
On April 21, 2022, SP agreed to loan us $167,955 through the SP Promissory Note.
The SP Promissory Note is non-interest bearing and payable in cash upon the
closing of our Business Combination. In the event we fail to complete a Business
Combination prior to the deadline set forth in our governing document, no
payment will be due under the SP Promissory Note and the principal balance of
the SP Promissory Note will be forgiven (See Note 9).
On April 26, 2022, in connection with our Business Combination, we received
approximately $5,356,628 in Trust Proceeds and $113,000,000 in PIPE Proceeds.
The Trust Proceeds and PIPE Proceeds were used for the payment of expenses
incurred by the Company and SoundHound in connection with the Business
Combination and the remaining proceeds will be used for general corporate
purposes of the Company following the Business Combination (See Note 9).
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. Subsequent to the consummation of the Business Combination on
April 26, 2022, our liquidity needs have been satisfied through the remaining
Trust Proceeds and PIPE Proceeds after payment of expenses in connection with
the Business Combination (See Note 9).
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 $18,129 outside of the Trust account as of March 31,
2022, combined with the net Trust Proceeds and PIPE Proceeds that we received
upon the consummation of our Business Combination on April 26, 2022, will be
sufficient to allow us to operate for at least the next 12 months.
Critical Accounting Policies and Estimates
The preparation of the unaudited condensed financial statements in conformity
with 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
We account 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
our control) is classified as temporary equity. At all other times, common stock
is classified as stockholders' equity. Our common stock feature certain
redemption rights that is considered to be outside of our 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 our balance sheet.
21
Net Income (Loss) Per Common Share
We comply 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, we 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, we split the amount to be allocated using a ratio of
76.2% for the Public Shares and 23.8% for the founder non-redeemable shares for
the three months ended March 31, 2022, and a ratio of 40.8% for the Public
Shares and 59.2% for the founder non-redeemable shares for the three months
ended March 31, 2021, respectively, reflective of the respective participation
rights.
Off-Balance Sheet Arrangements
As of March 31, 2022, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K.
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