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.
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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.
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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.
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