Filing identity and reporting period
Important: The supplied filing is Archimedes Tech SPAC Partners Co.’s Form 10-Q for the quarter ended June 30, 2021—not a SoundHound AI, Inc. filing. It describes a blank-check company seeking a business combination, so its results should not be attributed to SoundHound.
Business context and financial results
Archimedes was formed to pursue a business combination, with a stated focus on artificial intelligence, cloud services, and automotive technology. It had not begun revenue-generating operations by June 30, 2021; revenue and operating margins are therefore not applicable.
- Three months ended June 30, 2021: Operating costs of $150,901; net loss of $70,540, including $3,353 of trust interest and a $77,008 unrealized warrant-liability gain.
- Six months ended June 30, 2021: Operating costs of $232,342; net loss of $154,573, including $3,878 of trust interest and a $73,891 unrealized warrant-liability gain.
- Cash and liquidity: $803,506 in cash outside the trust and $133.0 million in trust-account marketable securities at quarter-end. Trust funds were generally unavailable for operating needs before a business combination or redemption.
- Cash flows, six months: $296,147 used in operations, $133.0 million used in investing, and $134.1 million provided by financing; ending cash was $803,506.
- Debt and liabilities: No working-capital loans were outstanding. The $125,000 sponsor promissory note was repaid at the IPO closing. The balance sheet reported a $196,416 warrant liability.
Changes, outlook, and risks
- The company raised $133 million of gross IPO and over-allotment proceeds, placed $133 million in trust, and reported $133.0 million plus interest in the trust at quarter-end.
- The filing revised prior-period presentation after reassessing redeemable shares: all public shares subject to redemption were classified as temporary equity. Management said the earlier errors were immaterial to prior filings but their cumulative correction would significantly affect the second-quarter statement of operations.
- Management believed working capital and borrowing capacity would meet needs through the earlier of a business combination or one year from the filing. No specific transaction guidance was provided.
- The company had 18 months from the March 2021 IPO closing to complete a business combination; otherwise it would wind up and redeem public shares. The filing said there was no assurance a transaction would be completed.
- The sponsor’s trust-value indemnity may be difficult to collect: the company had not verified the sponsor’s ability to pay and believed its assets were primarily company securities.
- COVID-19 could adversely affect the company or its target search, but the impact was not determinable. Management reported disclosure controls were effective and said steps had addressed the previously disclosed material weakness in internal controls related to warrant accounting.
Key facts to verify
- Confirm the intended issuer: this filing is for Archimedes Tech SPAC Partners Co., not SoundHound AI, Inc.
- Review the temporary-equity revision and its effects on prior-period financial statements and per-share results.
- Distinguish unrestricted operating cash from trust funds restricted for a business combination or redemptions.
- Assess the business-combination deadline, funding needs, and sponsor’s capacity to meet its indemnification obligations.