References to the "Company," "
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
Overview
We are a newly-organized blank check company incorporated as a
While we may pursue an initial Business Combination opportunity in any business, industry, sector or geographical location, we intend to focus on opportunities to acquire companies with innovative and emerging technologies, products or services that have the potential to transform major industries and radically impact society. We intend to acquire a target business or businesses with disruptive technologies that our management team believes can achieve mainstream adoption and create opportunities for long-term appreciation in value.
We are not prohibited from pursuing an initial Business Combination with a
business that is owned by
On
Simultaneously with the consummation of the IPO, we consummated the private
placement of 6,500,000 warrants (7,100,000 warrants when the underwriters'
over-allotment option was fully exercised on
17
If we are unable to consummate our initial Business Combination within such
12-month period (or 15-month period or 18-month period, as applicable), we will:
(i) cease all operations except for the purpose of winding up, (ii) as promptly
as reasonably possible but not more than ten business days thereafter, redeem
the public shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account including interest earned on the
funds held in the trust account and not previously released to us to pay our
taxes (less up to
We cannot assure you that our plans to complete our initial Business Combination will be successful.
Results of Operations
Our entire activity since inception up to
For the three months ended
For the six months ended
Liquidity and Capital Resources
As of
Prior to the completion of the IPO, our liquidity needs had been satisfied
through a capital contribution from the Sponsor of
In addition, in order to finance transaction costs in connection with a Business Combination, our Sponsor or an affiliate of the Sponsor, or certain of our officers and directors may, but are not obligated to, provide us with funds as may be required ("Working Capital Loans"). To date, there were no Working Capital Loans.
Based on the foregoing, we may need to raise additional capital through loans or
additional investments from our Sponsor, stockholders, officers, directors, or
third parties. Our officers, directors and our Sponsor may, but are not
obligated to, loan us funds, from time to time or at any time, in whatever
amount they deem reasonable in their sole discretion, to meet our working
capital needs. Accordingly, we may not be able to obtain additional financing.
If we are unable to raise additional capital, it may be required to take
additional measures to conserve liquidity, which could include, but not
necessarily be limited to, curtailing operations, suspending the pursuit of a
potential transaction, and reducing overhead expenses. We cannot provide any
assurance that new financing will be available to it on commercially acceptable
terms, if at all. We will provide our public stockholders with the opportunity
to redeem all or a portion of their shares of our Common Stock upon the
consummation of our initial Business Combination, subject to the limitations
described herein. In addition, if we are unable to consummate our initial
Business Combination within 12 months following the effectiveness of the IPO,
which is
18 JOBS Act
On
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 controls over financial reporting pursuant to Section 404, (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 the CEO's compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of the IPO or until we are no longer an "emerging growth company," whichever is earlier.
Critical Accounting Policies and Estimates
Management's discussion and analysis of our results of operations and liquidity
and capital resources are based on our unaudited condensed financial
information. We describe our significant accounting policies in Note 2 -
Significant Accounting Policies, of the Notes to Financial Statements included
in this report. Our unaudited condensed financial statements have been prepared
in accordance with
We have identified the following as our critical accounting policies:
Common Stock Subject to Possible Redemption
We account for our shares of Common Stock subject to possible redemption in accordance with the guidance in accounting standards codification ("ASC") Topic 480 "Distinguishing Liabilities from Equity." Shares of Common Stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable Common Stock (including Common Stock that features 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 features certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly, the Common Stock subject to possible redemption is presented as temporary equity, outside of the stockholders' deficit section of our balance sheets.
Net Loss per Share of Common Stock
We comply with accounting and disclosure requirements of the
Derivatives
We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period.
19
We accounted for the 8,625,000 Warrants and the 7,100,000 Private Placement Warrants issued in connection with the IPO and Private Placement in accordance with the guidance contained in ASC 480, "Distinguishing Liabilities from Equity" and ASC 815 "Derivatives and Hedging". The assessment considers whether the instruments are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, or whether the instruments meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to our Common Stock and whether the holders could potentially require "net cash settlement" in a circumstance outside of our control, among other conditions for equity classification. The Public and Private Placement Warrants were deemed to meet equity classification.
Accounting Estimates
The preparation of 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 financial statements and the reported amounts of expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable for a smaller reporting company.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including
our chief executive officer and chief financial officer, we conducted an
evaluation of the effectiveness of our disclosure controls and procedures as of
the end of the fiscal quarter ended
Management intends to implement remediation steps to improve our disclosure controls and procedures and our internal control over financial reporting. Specifically, we intend to expand and improve our review process for common stock subject to redemption and franchise tax expense. We have improved this process by enhancing access to accounting literature and consideration of additional staff with the requisite experience and training to supplement existing accounting professionals.
Disclosure controls and procedures are designed to ensure that information
required to be disclosed by us in our Exchange Act reports is recorded,
processed, summarized, and reported within the time periods specified in the
Changes in Internal Control over Financial Reporting
There were no changes to our internal control over financial reporting that
occurred during our fiscal quarter ended
20 PART II - OTHER INFORMATION Item 1. Legal Proceedings.
There is no material litigation, arbitration or governmental proceeding currently pending against us or any members of our management team in their capacity as such.
Item 1A. Risk Factors.
As of the date of this Quarterly Report, there have been no material changes to
the risk factors disclosed in our Annual Report on Form 10-K for the year ended
Item 2. Unregistered Sales of
Use of Proceeds
On
The net proceeds deposited into the Trust Account are invested in
There has been no material change in the planned use of the proceeds from the
IPO and Private Placement as is described in our final prospectus dated
Item 3.
None.
Item 4. Mine Safety Disclosures.
Not Applicable. Item 5. Other Information. Not Applicable. 21 Item 6. Exhibits.
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
Exhibit Description 3.1 Certification of Incorporation. Incorporated herein by reference to the Registration Statement on Form S-1 filed onNovember 5, 2021 , as Exhibit 3.1 thereto. 3.2 Amended and Restated Certificate of Incorporation. Incorporated herein by reference to the Current Report on Form 8-K filed onDecember 20, 2021 , as Exhibit 3.1 thereto. 3.3 By-Laws. Incorporated herein by reference to the Registration Statement on Form S-1 filed onNovember 5, 2021 , as Exhibit 3.3 thereto. 31.1* Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a). 31.2* Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a). 32.1** Certification of the Chief Executive Officer and Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code. 101.INS* XBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH* XBRL Taxonomy Extension Schema Document 101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* XBRL Taxonomy Extension Label Linkbase Document 101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document 104* Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). * Filed herewith. ** Furnished herewith. 22 SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Ault Disruptive Technologies Corporation Dated:August 23, 2022 /s/William B. Horne William B. Horne Chief Executive Officer (Principal Executive Officer) Dated:August 23, 2022 /s/Kenneth S. Cragun Kenneth S. Cragun Chief Financial Officer (Principal Financial and Accounting Officer) 23
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