Business context and reporting period
SoundHound AI, Inc.’s Form 10-Q covers the quarter ended March 31, 2022, but the financial statements are for Archimedes Tech SPAC Partners Co., the company’s predecessor—not for SoundHound’s voice AI operating business. Archimedes had not begun revenue-generating operations; its activity was formation, SPAC operations, and pursuing the merger.
On April 26, 2022, after quarter-end, Archimedes completed its business combination with SoundHound, changed its name to SoundHound AI, Inc., and acquired 100% of SoundHound. The stated merger consideration was $2.0 billion in equity, with SoundHound options and warrants assumed on a net-exercise basis.
Financial results and liquidity
Amounts below are U.S. dollars. The filing presents SPAC results; revenue, operating margins, and SoundHound operating results are not provided.
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Revenue | None | None |
| Operating costs / loss from operations | $490,053 | $81,441 |
| Interest income | $11,857 | $525 |
| Warrant fair-value gain (loss) | $92,746 gain | $3,117 loss |
| Net loss | $385,450 | $84,033 |
| Operating cash flow | $(217,166) | $(185,958) |
At March 31, 2022, cash outside the Trust Account was $18,129; prepaid expenses were $78,566; and accrued liabilities were $503,071. Trust Account assets were $133.0 million but generally unavailable for operating needs before the merger. Total assets were $133.1 million, total liabilities $657,839, and warrant liability $154,768. There was no outstanding Working Capital Loan at quarter-end. The filing does not report conventional operating-business debt or a meaningful profit margin.
Changes, outlook, and notable matters
- Operating costs rose from $81,441 to $490,053, while net loss increased from $84,033 to $385,450. Results were affected by SPAC and transaction-related costs, not SoundHound operating performance.
- Cash used in operations was $217,166; there were no investing or financing cash flows during Q1 2022. The cash balance outside the Trust Account fell from $235,295 at December 31, 2021 to $18,129 at March 31, 2022.
- At the April 26 merger closing, $127.7 million was paid to redeeming public shareholders, leaving approximately $5.4 million in Trust proceeds. The company also received $113 million of PIPE proceeds. Proceeds funded transaction expenses, with the remainder intended for general corporate purposes.
- Management expected quarter-end cash combined with net merger and PIPE proceeds to fund operations for at least 12 months. No operating revenue or earnings guidance for SoundHound is provided in this filing.
- The filing reports a material weakness in internal controls over complex financial instruments, including warrant and redeemable-equity classification and representative-share valuation. It notes this weakness had led to restatements of the March, June, and September 2021 interim financial statements. Management described remediation efforts but said additional time was needed to assess their effectiveness.
- Management said COVID-19 could adversely affect financial position, cash flows, or the target search, but the impact was not readily determinable. Management reported no material change to risk factors disclosed in the merger prospectus. No legal proceedings were reported.
Important facts for investors to verify
- Review subsequent SoundHound filings for the acquired business’s revenue, growth, margins, cash burn, and financial condition; they are not included in this SPAC-predecessor quarter.
- Verify cash remaining after merger expenses, the use of PIPE proceeds, and the company’s post-merger liquidity runway.
- Track remediation and independent assessment of the disclosed material weakness, including whether it affects future reporting.
- Check the merger’s final share count, dilution from PIPE shares and warrants, and the effects of public-share redemptions.
- Reconcile transaction-related fees and other closing costs disclosed in the subsequent-events notes against the post-merger financial statements.