Filing summary
Entity and period: This is Archimedes Tech SPAC Partners Co.’s unaudited Form 10-Q for the quarter ended September 30, 2021—not a filing under SoundHound AI, Inc.’s name. The supplied filing identifies Archimedes as a blank-check company seeking a business combination, with an intended focus on technology, including AI, cloud services and automotive technology. It does not name SoundHound or disclose a specific target.
Financial and operating results
- Operating status and revenue: Archimedes had not begun revenue-generating operations. It reported no operating revenue; activity related to formation, its March 2021 IPO and the search for a business-combination target.
- Quarter ended September 30, 2021: Operating costs were $229,484; trust-account interest income was $3,352; and a $35,057 unrealized warrant fair-value gain contributed to a net loss of $191,075. Basic and diluted loss per non-redeemable share was $0.01; reported loss per redeemable share was also $0.01.
- Nine months ended September 30, 2021: Operating costs were $461,826; trust-account interest income was $7,230; and the warrant fair-value gain was $108,948. Net loss was $345,648. Reported per-share results were a $0.87 loss for non-redeemable shares and $0.31 income for redeemable shares; the filing’s two-class allocation and redemption-value accretion affect these figures.
- Balance sheet at September 30: Total assets were $133.77 million, including $133.01 million in the trust account and $628,652 of cash outside it. Current liabilities were $126,019; warrant liability was $161,359; and stockholders’ equity was $475,752. Another $133.01 million was classified as common stock subject to possible redemption, outside stockholders’ equity.
- Cash flow for the nine months: Operating activities used $471,001; investing activities used $133.0 million for the trust account; and financing activities provided $134.10 million. Ending cash outside the trust account was $628,652.
- Margins and debt: Operating or gross margins are not meaningful for this pre-revenue SPAC. No senior debt balance was reported; the $125,000 sponsor promissory note was repaid at the IPO closing, and there were no working-capital loans outstanding.
Changes, outlook and risks
- Prior-period accounting revision: In response to SEC guidance, the company reclassified all public shares subject to redemption as temporary equity rather than leaving a portion in permanent equity. It said the errors in earlier filings were not material to those filings, but correcting their cumulative effect was significant to the current-period statements. The company adjusted prior financial information and said it would correct applicable information in future filings.
- Liquidity and going concern: Management said the $628,652 outside the trust was not expected to support operations for at least 12 months if no business combination occurred. It warned that additional financing might be needed and was not assured. The filing states substantial doubt about the company’s ability to continue as a going concern.
- Combination deadline: The company had 18 months from the March 15, 2021 IPO closing to complete a business combination—by September 15, 2022—or face winding up, liquidation and dissolution. Trust funds were generally unavailable for operations before a transaction.
- Contingencies and other risks: The sponsor’s trust-protection indemnity may be difficult to collect; the company said the sponsor’s only assets were believed to be company securities and it had not verified the sponsor’s ability to pay. Management also noted that COVID-19 could adversely affect finances, cash flows or the target search, but said the impact was not readily determinable. No legal proceedings were reported.
- Guidance and controls: No revenue or earnings guidance was provided. Management reported effective disclosure controls, while noting that it needed more time to monitor and assess enhanced controls for redeemable-equity accounting.
Important facts to verify
- Confirm the issuer: the filing is for Archimedes Tech SPAC Partners Co.; the request metadata names SoundHound AI, Inc.
- Check whether any separate filing or subsequent disclosure identifies a business-combination target; none is named in this 10-Q.
- Review the revised temporary-equity classification and the two-class per-share calculations, especially the nine-month $0.31 income per redeemable share despite a consolidated net loss.
- Assess available funds outside the trust, the need and availability of additional financing, and the September 15, 2022 completion deadline.
- Evaluate the practical collectability of the sponsor indemnity and the terms and dilution implications of potential transaction or working-capital financing.