Business context and reporting period
This is Acies Acquisition Corp.’s unaudited Form 10-Q for the quarter ended March 31, 2021—not an operating-company quarterly report from PLAYSTUDIOS, Inc. Acies was a blank-check company with no operating business or revenue. On February 1, 2021, it agreed to combine with PLAYSTUDIOS; the transaction had not closed by quarter-end.
Financial results and liquidity
- Revenue: None; Acies reported no operating revenue.
- Results: Net income was $6.26 million, comprising $7.14 million of noncash gain from the decline in warrant liabilities, $899,486 of operating expenses, $17,626 of trust-account interest, and a $3,558 unrealized investment loss. The gain, rather than operating performance, drove reported income.
- Cash flow: Operating cash use was $797,087. Cash outside the trust account fell to $264,630 from $1.06 million at year-end.
- Liquidity: Working capital was $832,878. Trust-account assets were $215.29 million, restricted for a business combination or shareholder redemptions; they are not ordinary operating cash.
- Balance sheet: Total liabilities were $25.40 million, including $17.80 million of warrant liabilities and $7.53 million of deferred underwriting fees payable upon a completed business combination. The filing reports no long-term debt.
- Margins: Not meaningful for a pre-combination SPAC with no revenue.
Material changes and proposed transaction
- Compared with December 31, 2020, trust assets were broadly unchanged; operating cash declined by about $797,000. Warrant liabilities fell by $7.14 million, generating the quarter’s principal reported gain. Redeemable Class A shares increased to 18.58 million from 17.95 million.
- The proposed merger contemplated $1.041 billion of merger consideration, subject to the agreement’s terms, and up to $150 million of cash consideration for eligible electing holders, subject to limits and available cash. A $250 million PIPE investment was agreed, conditional on closing.
- Closing required customary approvals and conditions, including shareholder approval, Nasdaq listing approval, and at least $200 million of specified available cash for PLAYSTUDIOS, subject to the agreement’s adjustments. The agreement could be terminated if closing had not occurred by August 15, 2021, subject to its terms.
Outlook, risks, contingencies, and unusual items
- Management expected continued transaction-related costs and no operating revenue before a business combination. It said additional financing might be needed if costs exceeded estimates or transaction needs changed; sponsor and insider loans were optional, not committed.
- The filing states that limited funds outside the trust account raised substantial doubt about Acies’s ability to continue as a going concern through one year if a business combination was not completed. Acies had until October 27, 2022 to complete a transaction, with a possible extension to January 27, 2023 under specified conditions.
- A stockholder lawsuit and a separate demand alleged fiduciary-duty and disclosure deficiencies related to the transaction. Acies disputed the allegations but could not predict the outcome.
- Disclosure controls were deemed ineffective as of March 31, 2021 because of the prior reclassification of warrants from equity to liabilities. Management described remediation steps implemented in the second quarter and gave no assurance they would be effective.
- Management said COVID-19 could adversely affect the company’s financial position, operations, or target search, but the impact was not determinable. The filing provided no numerical forecast or guidance for PLAYSTUDIOS.
Important facts for investors to verify
- Confirm transaction status, approvals, closing conditions, available cash after redemptions, and whether the $250 million PIPE was funded.
- Review the merger agreement’s consideration, cash-election limits, earnout terms, dilution, and voting-control provisions.
- Assess cash available outside the trust, possible funding needs, trust redemption exposure, and the deferred underwriting fee.
- Review the warrant valuation and accounting-control remediation, including the noncash nature of the quarter’s reported gain.
- Check subsequent disclosures on the stockholder litigation and any changes to transaction timing or terms.