UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Amendment No. 1
(Mark One)
For the quarterly period ended
For the transition period from to
Commission File No.
| (Exact name of registrant as specified in its charter) |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| (Address of Principal Executive Offices, including zip code) |
| (Registrant’s telephone number, including area code) |
| N/A |
| (Former name, former address and former fiscal year, if changed since last report) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Units, each consisting of one subunit and one-half of one Redeemable Warrant | ACKIU | The | ||
| Subunits included as part of the units, each consisting of one share of common stock, $0.0001 par value, and one-half of one warrant | ACKIT | The Nasdaq Stock Market LLC | ||
| The Nasdaq Stock Market LLC | ||||
| Redeemable Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 | ACKIW | The Nasdaq Stock Market LLC |
Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Indicate by check mark whether
the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☐ Large accelerated filer | ☐ Accelerated filer | |
| ☒ Smaller reporting company | ||
| ☒ Emerging growth company |
If an emerging growth company,
indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes
As of August 23, 2021, there
were
EXPLANATORY NOTE
References throughout this Amendment No. 1 to the Quarterly Report on Form 10-Q to “we,” “us,” the “Company” or “our company” are to Ackrell SPAC Partners I Co., unless the context otherwise indicates.
This Amendment No. 1 (“Amendment No. 1”) to the Quarterly Report on Form 10-Q/A amends the Quarterly Report on Form 10-Q of Ackrell SPAC Partners I Co. (the “Company”) as of and for the quarterly period ended June 30, 2021, as filed with the Securities and Exchange Commission (the “SEC”) on August 23, 2021 (the “Original Quarterly Report”).
On January 10, 2022, the Company filed a Current Report on Form 8-K that disclosed the Company had re-evaluated its conclusion with respect to the materiality of the changes caused by the incorrect classification of a portion of the Company’s subunits included in the units sold in its initial public offering (the “Public Subunits”) that are subject to redemption. Specifically, the Company originally determined the changes were not qualitatively material to the Company’s previously issued financial statements. However, on January 4, 2022, the Company’s management and the audit committee of the Company’s board of directors (the “Audit Committee”), upon further consideration of the material nature of the changes, determined that the change in classification of the Public Subunits subject to redemption and related changes to the Company’s presentation of earnings per share are material quantitatively and the Company should restate its previously issued financial statements that were affected by the changes. As a result, management and the Audit Committee determined that (i) the Company’s audited balance sheet as of December 23, 2020 (the “Audited Balance Sheet”) filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 30, 2020, (ii) audited financial statements as of and for the year ended December 31, 2020 (together with the Audited Balance Sheet, the “Affected Audited Financials”) as reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 31, 2021; (iii) the Company’s unaudited financial statements contained in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 filed with the SEC on May 24, 2021 (the “Q1 Financial Statements”), (iv) the Company’s unaudited financial statements contained in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 filed with the SEC on August 23, 2021 (the “Q2 Financial Statements”), and (v) the Company’s unaudited financial statements contained in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 filed with the SEC on November 15, 2021 (the “Q3 Financial Statements”, together with the Q1 Financial Statements and the Q2 Financial Statements, the “Affected Unaudited Financials” ), should no longer be relied upon due to the reclassification described above. As such, the Company will restate its Affected Audited Financials and Affected Unaudited Financials in this Amendment No.1.
Additionally, on February 3, 2022, the Company filed a Current Report on Form 8-K that disclosed the Company had re-evaluated its prior conclusions with regards to the identified financial statement errors (the “Identified Errors”) associated with the accounting of private warrants and fair value of shares of common stock of the Company issued to the representative of the underwriters for the Company’s initial public offering (the “Representative Shares”). Management had originally evaluated the Identified Errors and had determined that the related impacts were not qualitatively material and thus did not require a restatement of the Affected Audited Financials and Affected Unaudited Financials. However, as a result of the Company’s decision to restate its Affected Audited Financials and Affected Unaudited Financials to report all of the Company’s Public Subunits as temporary equity, management decided to re-evaluate its prior conclusions with regards to the Identified Errors. On February 1, 2022, the Company’s management and the Audit Committee concluded that the Company should also restate its Affected Audited Financials to correct the Identified Errors. As such, the Company will restate its Affected Audited Financials and Affected Unaudited Financials in this Amendment No. 1.
The Company does not expect any of the above changes will have any impact on its cash position and cash held in the trust account established in connection with its initial public offering.
After re-evaluation, the Company’s management has concluded that, in light of the errors described above, a material weakness existed in the Company’s internal control over financial reporting during the affected periods and that the Company’s disclosure controls and procedures were not effective. The Company’s remediation plan with respect to such material weakness is described in more detail below in this Amendment No. 1.
In addition, the Company’s Chief Executive Officer and Chief Financial Officer have provided new certifications dated as of the date of this filing in connection with this Amendment No.1 (Exhibits 31.1, 31.2, 32.1 and 32.2).
Items Amended in This Amendment No.1
For the convenience of the reader, this Amendment No.1 sets forth the Original Quarterly Report in its entirety, as amended to reflect the restatement. No attempt has been made in this Amendment No. 1 to update other disclosures presented in the Original Quarterly Report, except as required to reflect the effects of the restatement. The following items have been amended as a result of the restatement:
| ● | Part I – Item 1. Financial Statements. |
| ● | Part I – Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
| ● | Part I – Item 4. Controls and Procedures. |
| ● | Part II – Item 1A. Risk Factors. |
| ● | Part II – Item 6. Exhibits. |
Except as described above, this Quarterly Report does not amend, update or change any other items or disclosures contained in the Original Quarterly Report. Accordingly, this Quarterly Report should be read in conjunction with the Original Quarterly Report and the Company’s other filings with the SEC. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Original Quarterly Report.
This Quarterly Report does not reflect adjustments for events occurring after August 23, 2021, the date of the filing of the Original Quarterly Report, except to the extent they are otherwise required to be included and discussed herein and did not substantively modify or update the disclosures herein other than as required to reflect the adjustments described above. This Quarterly Report should be read in conjunction with the Company’s reports filed with the SEC since the date of filing of the Original Quarterly Report and all of the Company’s filings after the date hereof.
ACKRELL SPAC PARTNERS I CO.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2021
TABLE OF CONTENTS
i
PART I – FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
ACKRELL SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
CONDENSED BALANCE SHEETS
| June 30, 2021 | December 31, 2020 | |||||||
| (unaudited) | Restated | |||||||
| Assets | ||||||||
| Cash | $ | $ | ||||||
| Prepaid assets | ||||||||
| Total Current Assets | ||||||||
| Cash and securities held in Trust Account | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Accounts payable and accrued expense | $ | $ | ||||||
| State franchise tax accrual | ||||||||
| Due to related parties | ||||||||
| Total current liabilities | ||||||||
| Warrant liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments | ||||||||
| Common stock subject to possible redemption, | ||||||||
| Stockholders’ Equity: | ||||||||
| Preferred stock, $ | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ( | ) | ||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these condensed financial statements.
1
ACKRELL SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
| For the three months ended June 30, 2021 | For the six months ended June 30, 2021 | For the three months ended June 30, 2020 | For the six months ended June 30, 2020 | |||||||||||||
| Formation and operating costs | $ | $ | $ | $ | ||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income | ||||||||||||||||
| Interest income | - | - | ||||||||||||||
| Change in fair value of warrant liabilities | ( | ) | - | - | ||||||||||||
| Total other income | ( | ) | - | - | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and diluted weighted average shares outstanding, common stock subject to redemption | - | - | ||||||||||||||
| Basic and diluted net income per share attributable to common stock subject to redemption | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||
| Basic and diluted weighted average shares outstanding, common stock | ||||||||||||||||
| Basic and diluted net income per share attributable to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
2
ACKRELL SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
| Total | ||||||||||||||||||||
| Common Stock | Additional Paid-in | Accumulated Earnings | Stockholders’ Equity | |||||||||||||||||
| Shares | Par Value | Capital | (Deficit) | (Deficit) | ||||||||||||||||
| Balance as of December 31, 2019 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||
| Balance as of March 31, 2020 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||
| Balance as of June 30, 2020 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Total | ||||||||||||||||||||
| Common Stock | Additional Paid-in |
Accumulated Earnings |
Stockholders’ Equity |
|||||||||||||||||
| Shares | Par Value | Capital | (Deficit) | (Deficit) | ||||||||||||||||
| Balance as of December 31, 2020 (Restated) | $ | $ | |
$ | ( |
) | $ | |||||||||||||
| Subsequent measurement of common stock subject to possible redemption | - | ( |
) | ( |
) | |||||||||||||||
| Net income | - | |||||||||||||||||||
| Balance as of March 31, 2021 (Restated) | $ | $ | $ | ( |
) | $ | ||||||||||||||
| Subsequent measurement of common stock subject to possible redemption | - | ( |
( |
) | ||||||||||||||||
| Net loss | - | ( |
) | ( |
) | |||||||||||||||
| Balance as of June 30, 2021 | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
ACKRELL SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
| For the | For the | |||||||
| Six Months Ended |
Six Months Ended |
|||||||
| June 30, | June 30, | |||||||
| 2021 | 2020 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income (loss) | $ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Interest earned on investment held in Trust Account | ( |
) | ||||||
| Change in fair value of warrant liabilities | ( |
) | ||||||
| Changes in current assets and current liabilities: | ||||||||
| Prepaid assets | ||||||||
| Accounts payable and accrued expense | ( |
) | ||||||
| State franchise tax accrual | ||||||||
| Due to related parties | ||||||||
| Net cash used in operating activities | ( |
) | ( |
) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Payments of offering costs | ( |
) | ||||||
| Net cash used in by financing activities | ( |
) | ||||||
| Net Decrease in Cash | ( |
) | ( |
) | ||||
| Cash - Beginning | ||||||||
| Cash - Ending | $ | $ | ||||||
| Supplemental Disclosure of Non-cash Financing Activities: | ||||||||
| Increase in account payable for deferred offering costs | $ | $ | ||||||
| Subsequent measurement of common stock subject to redemption (interest earned on trust account) | ||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
4
ACKRELL SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1 — Organization and Business Operations
Organization and General
Ackrell SPAC Partners I Co. (the “Company”) is a blank check company formed under the laws of the State of Delaware on September 11, 2018. The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities (the “Business Combination” or “Initial Business Combination”).
The Company has selected December 31 as its fiscal year end.
As of June 30, 2021, the Company had not yet commenced any revenue-generating operations. All activity through June 30, 2021 relates to the Company’s formation, the Initial Public Offering (as defined below), and the search for a prospective Initial Business Combination. The Company will not generate any operating revenues until after the completion of its Initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the IPO and will recognize changes in the fair value of warrant liability as other income (expense) (See Note 11).
Financing
The registration statements
(“Registration Statements”) for the Company’s initial public offering (“Initial Public Offering” or “IPO”)
were declared effective on December 21, 2020. On December 23, 2020, the Company consummated the Initial Public Offering of
Simultaneously with the closing
of the IPO, the Company consummated the sale of
Trust Account
Following the closing of the
IPO on December 23, 2020, an amount of $
5
ACKRELL SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Initial Business Combination
The Company’s Business
Combination must be with one or more target businesses that together have a fair market value equal to at least
The Company will have 12 months from the closing of the IPO to consummate a Business Combination with an opportunity to extend the period of time up to two times each by an additional three months (for a total of up to 18 months to complete a business combination) (the “Combination Period”), subject to the Sponsor depositing into the Trust Account, on or prior to the applicable deadline, additional funds of $1,380,000 ($0.10 per unit) for each of the available three-month extensions. If the Company is unable to consummate a Business Combination within the Combination Period, the Company will redeem 100% of the outstanding Public Subunits for a pro rata portion of the amount then on deposit in the Trust Account (initially approximately $10.10 per subunit, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations).
The Sponsor, EarlyBirdCapital
and the Company’s officer and directors have agreed to (i) waive their conversion rights with respect to their Founder Shares (See
Note 6), Representative Shares (See Note 9) and Private Subunits (collectively, the “Private Securities”) in connection with
the consummation of a Business Combination, (ii) to waive their rights to liquidating distributions from the Trust Account with respect
to their Private Securities if the Company fails to consummate a Business Combination within the Combination Period and (iii) not to propose
an amendment to the Company’s amended and restated certificate of incorporation that would affect the substance or timing of the
Company’s obligation to redeem
Liquidation
6
ACKRELL SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Liquidity and Going Concern
As of June 30, 2021, the Company
had cash outside the Trust Account of $
Through June 30, 2021, the
Company’s liquidity needs were satisfied through receipt of $
The Company’s initial
stockholders, officers, directors or their affiliates may, but are not obligated to, loan the Company funds as may be required (“Working
Capital Loans”). If the Company completes a Business Combination, the Company may repay the Working Capital Loans out of the proceeds
of the Trust Account released to the Company. Otherwise, the Working Capital Loans may be repaid only out of funds held outside the Trust
Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account
to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans, other than
the interest on such proceeds that may be released for working capital purposes. Except for the foregoing, the terms of such Working Capital
Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either
be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $
Until consummation of its Business Combination, the Company will be using the funds not held in the Trust Account, and any additional Working Capital Loans from the Initial Stockholders, the Sponsor, the Company’s officers and directors, or their respective affiliates, for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business Combination.
The Company anticipates that
the $
7
ACKRELL SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 2 — Restatement of Financial Statements
Redeemable Equity Instruments
As a result of recent guidance to Special Purpose Acquisition Companies by the SEC regarding redeemable equity instruments, the Company revisited its application of ASC 480-10-S99 on the Company’s financial statements. The Company had previously classified a portion of its Public Subunits (and the underlying shares of common stock) in permanent equity. Subsequent to the re-evaluation, the Company’s management concluded that all of its Public Subunits should be classified as temporary equity. The identified errors impacted the Company’s Current Report on Form 8-K on December 30, 2020 containing the IPO balance sheet as of December 23, 2020, Annual Report on Form 10-K on March 31, 2021 containing the Company’s financial statements for the fiscal year ended December 31, 2020, Quarterly Report on Form 10-Q on May 24, 2021 containing financial statements as of March 31, 2021, Quarterly Report on Form 10-Q on August 23, 2021 containing financial statements as of June 30, 2021, and Quarterly Report on Form 10-Q on November 15, 2021 containing financial statements as of September 30, 2021. In accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” and SEC Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements;” the Company evaluated the errors and has determined that the related impacts were qualitatively immaterial but quantitatively material to the aforementioned 8-K, 10-K and 10-Q filings, and concluded that the impacted financial statements should be restated to correct the errors.
Warrants & Fair Value of Representative Shares
On April 12, 2021, the Staff of the SEC issued a statement entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies.” In the statement, the SEC Staff, among other things, highlighted potential accounting implications of certain terms that are common in warrants issued in connection with the initial public offerings of special purpose acquisition companies such as the Company. As a result of the Staff statement and in light of evolving views as to certain provisions commonly included in warrants issued by special purpose acquisition companies, the Company re-evaluated the accounting for its Public Warrants and Private Warrants under ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and concluded that the Private Warrants do not meet the criteria to be classified in stockholders’ equity, since the Private Warrants meet the definition of a derivative under ASC 815-40. Additionally, the Company re-evaluated the fair value of the Representative Shares and concluded that the fair value previously used for the Representative Shares was incorrect. The identified errors impacted the Company’s Form 8-K filing on December 30, 2020 containing the IPO balance sheet as of December 23, 2020 and the Company’s Form 10-K filing on March 31, 2021 containing the Company’s 2020 annual financial statements. In accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” and SEC Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements;” the Company evaluated the errors and has determined that the related impacts were qualitatively immaterial to the aforementioned 8-K and 10-K filings but, in consideration that the Company is restating the financial statements contained in the aforementioned filings to correct the classification of Public Subunits as temporary equity, the Company concluded that the impacted financial statements should also be restated to correct the identified errors related to classification of Private Warrants and the fair value of Representative Shares.
8
ACKRELL SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Impact of the Restatement
The impact of the restatement on the audited balance sheet as of December 23, 2020, audited financial statements as of and for the year ended December 31, 2020, and unaudited interim condensed financial statements as of and for the three months ended March 31, 2021 are presented below.
| As Previously Reported | Adjustments | As Restated | ||||||||||
| Audited Balance Sheet at December 23, 2020 | ||||||||||||
| Warrant Liabilities | $ | $ | $ | |||||||||
| Total Liabilities | ||||||||||||
| Shares Subject to Possible Redemption | ||||||||||||
| Common Stock | ( | ) | ||||||||||
| Additional paid-in capital | ( | ) | ||||||||||
| Total Stockholders’ Equity | ( | ) | ||||||||||
| Audited Balance Sheet at December 31, 2020 | ||||||||||||
| Warrant Liabilities | $ | $ | $ | |||||||||
| Total Liabilities | ||||||||||||
| Shares Subject to Possible Redemption | ||||||||||||
| Common Stock | ( | ) | ||||||||||
| Additional paid-in capital | ( | ) | ||||||||||
| Accumulated Deficit | ( | ) | ( | ) | ( | ) | ||||||
| Total Stockholders’ Equity | ( | ) | ||||||||||
| Audited Statement of Operations for the year ended December 31, 2020 | ||||||||||||
| Change in Fair Value of Warrants | $ | $ | ( | ) | $ | ( | ) | |||||
| Weighted average shares outstanding, basic and diluted | ( | ) | ||||||||||
| Basic and diluted weighted average shares outstanding, common stock subject to redemption | ||||||||||||
| Basic and diluted weighted average shares outstanding, common stock not subject to redemption | ||||||||||||
| Basic and diluted net income (loss) per share | ( | ) | ||||||||||
| Basic and diluted net income (loss) per share, common stock subject to redemption | ||||||||||||
| Basic and diluted net income (loss) per share, common stock not subject to redemption | ( | ) | ( | ) | ||||||||
9
ACKRELL SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
| As Previously Reported | Adjustments | As Restated | ||||||||||
| Audited Statement of Changes in Stockholders’ Equity for the year ended December, 2020 | ||||||||||||
| Issuance of Representative Shares on November 25, 2020 - Additional Paid-in-Capital | $ | $ | $ | |||||||||
| Issuance of Representative Shares on November 25, 2020 - Stockholders' Equity (Deficit) | ||||||||||||
| Initial Value of Private Warrants | ( | ) | ( | ) | ||||||||
| Reclassification of offering costs related to Public Shares | ||||||||||||
| Other Offering Expenses | ( | ) | ( | ) | ( | ) | ||||||
| Net Loss | ( | ) | ( | ) | ( | ) | ||||||
| Maximum number of redeemable shares - Shares | ( | ) | ( | ) | ( | ) | ||||||
| Maximum number of redeemable shares - Par Value | ( | ) | ( | ) | ( | ) | ||||||
| Maximum number of redeemable shares - Paid-in-Capital | ( | ) | ( | ) | ||||||||
| Maximum number of redeemable shares - Stockholders' Equity (Deficit) | ( | ) | ( | ) | ||||||||
| Subsequent measurement of common stock subject to redemption under ASC 480-10-S99 against additional paid-in-capital (“APIC”) | ( | ) | ( | ) | ||||||||
| Subsequent measurement of common stock subject to redemption under ASC 480-10-S99 against APIC (interest earned on trust account) | ( | ) | ( | ) | ||||||||
| Audited Statement of Cash Flows for the year ended December 31, 2020 | ||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Change in fair value of warrant liabilities | ||||||||||||
| Initial value of warrant liabilities | ||||||||||||
| Initial value of common stock subject to possible redemption | ( | ) | ||||||||||
| Reclassification of offering costs related to Public Shares | ( | ) | ( | ) | ||||||||
| Change in value of common stock subject to possible redemption | ( | ) | ||||||||||
| Subsequent measurement of common stock subject to redemption under ASC 480-10-S99 against APIC | ||||||||||||
| Subsequent measurement of common stock subject to redemption under ASC 480-10-S99 against APIC (interest earned on trust account) | ||||||||||||
| Unaudited Balance Sheet as of March 31, 2021 | ||||||||||||
| Common Stock subject to possible redemption | $ | $ | $ | |||||||||
| Common stocks, $0.0001 par value | ( | ) | ||||||||||
| Additional paid-in capital | ( | ) | ||||||||||
| Total stockholders’ equity (deficit) | ( | ) | ||||||||||
| Unaudited Statement of Operations for the three months ended March 31, 2021 | ||||||||||||
| Weighted average shares outstanding, basic and diluted | ( | ) | ||||||||||
| Basic and diluted weighted average shares outstanding, common stock subject to redemption | ||||||||||||
| Basic and diluted weighted average shares outstanding, common stock not subject to redemption | ||||||||||||
| Basic and diluted net income (loss) per share | $ | $ | ( | ) | $ | |||||||
| Basic and diluted net income (loss) per share, common stock subject to redemption | ||||||||||||
| Basic and diluted net income (loss) per share, common stock not subject to redemption | ||||||||||||
| Unaudited Statement of Changes in Stockholders’ Equity for the three months ended March 31, 2021 | ||||||||||||
| Subsequent measurement of common stock subject to redemption under ASC 480-10-S99 against APIC | $ | $ | ( | ) | $ | ( | ) | |||||
| Unaudited Statement of Cash Flows for the three months ended March 31, 2021 | ||||||||||||
| Subsequent measurement of common stock subject to redemption under ASC 480-10-S99 against APIC (interest earned on trust account) | $ | $ | $ | |||||||||
10
ACKRELL SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 3 — Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K as of December 31, 2020 and for the year ended December 31, 2020 as filed with the SEC on March 31, 2021, which contained the audited financial statements and notes thereto. The interim results for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any future interim periods.
Emerging Growth Company Status
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of financial statements in conformity with US 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. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all
short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company has $
11
ACKRELL
SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Investment Held in Trust Account
As of June 30, 2021, the Company
had $
A decline in the market value of held-to-maturity securities below cost that is deemed to be other than temporary, results in an impairment that reduces the carrying costs to such securities’ fair value. The impairment is charged to earnings and a new cost basis for the security is established. To determine whether an impairment is other than temporary, the Company considers whether it has the ability and intent to hold the investment until a market price recovery and considers whether evidence indicating the cost of the investment is recoverable outweighs evidence to the contrary. Evidence considered in this assessment includes the reasons for the impairment, the severity and the duration of the impairment, changes in value subsequent to year-end, forecasted performance of the investee, and the general market condition in the geographic area or industry the investee operates in. Premiums and discounts are amortized or accreted over the life of the related held-to-maturity security as an adjustment to yield using the effective-interest method. Such amortization and accretion are included in the “interest income” line item in the condensed statements of operations. Interest income is recognized when earned.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the Financial Accounting Standards Board (“FASB”) ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet.
Common Stock (underlying the Public Subunits) Subject to Possible Redemption
The Company accounts for its common stock underlying the Public Subunits that are subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Common stock underlying the Public Subunits subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable common stock underlying Public Subunits (including common stock underlying Public Subunits 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 the Company’s control) are classified as temporary equity. At all other times, common stock underlying the Public Subunits are classified as stockholders’ equity. The Company’s common stock underlying the Public Subunits feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at June 30, 2021 and December 31, 2020, common stock underlying the Public Subunits subject to possible redemption are presented as temporary equity, outside of the stockholders’ equity section of the Company’s condensed balance sheets.
Derivative Financial Instruments
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its 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.
Derivative instruments are recorded at fair value at inception and re-valued at each reporting date, with changes in the fair value reported in the statements of operations.
Derivative assets and liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.
12
ACKRELL
SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Net Loss Per Common Share
The Company complies with accounting and disclosure requirements of
FASB ASC 260, Earnings Per Share. The statements of operations include a presentation of income (loss) per redeemable Public Share and
income (loss) per non-redeemable founder share following the two-class method of income (loss) per share. In order to determine the net
income (loss) attributable to both the public redeemable shares and founder non-redeemable shares, the Company first considered the total
income (loss) allocable to both sets of shares. This is calculated using the total net income (loss) less any dividends paid. For purposes
of calculating net income (loss) per share, any remeasurement of the accretion to redemption value of the common stock subject to possible
redemption was considered to be dividends paid to the public stockholders. Subsequent to calculating the total income (loss) allocable
to both sets of shares, the Company split the amount to be allocated using a ratio of
The earnings per share presented in the condensed statement of operations is based on the following:
| For the three months ended | For the six months ended | |||||||
| June 30, 2021 | June 30, 2021 | |||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Accretion of temporary equity to redemption value | ( | ) | ( | ) | ||||
| Net loss including accretion of temporary equity to redemption value | $ | ( | ) | $ | ( | ) | ||
| For the three months ended | For the six months ended | |||||||||||||||
| June 30, 2021 | June 30, 2021 | |||||||||||||||
| Redeemable | Non-redeemable | Redeemable | Non-redeemable | |||||||||||||
| Basic and diluted net loss per share: | ||||||||||||||||
| Numerator: | ||||||||||||||||
| Allocation of net loss including accretion of temporary equity | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Accretion of temporary equity to redemption value | ||||||||||||||||
| Allocation of net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Denominator: | ||||||||||||||||
| Weighted-average shares outstanding | ||||||||||||||||
| Basic and diluted net loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
As of June 30, 2021, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into common stock and then share in the Company’s earnings. As a result, diluted loss per share is the same as basic loss per share for the periods presented.
Concentration of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution,
which at times, may exceed the Federal depository insurance coverage of $
13
ACKRELL
SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Income Taxes
The Company accounts for income taxes under ASC 740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of June 30, 2021 and December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company has identified the United States as its only “major” tax jurisdiction. The Company may be subject to potential examination by federal and state taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months. The provision for income taxes was deemed to be immaterial as of June 30, 2021 and December 31, 2020.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
Note 4 — Initial Public Offering
On
December 23, 2020, the Company sold
Note 5 — Private Placements
Simultaneously
with the closing of the IPO, the Sponsor and EarlyBirdCapital purchased an aggregate of
The Private Units and their underlying securities are identical to the units sold in the Initial Public Offering except the Private Warrants will be non-redeemable and may be exercised on a cashless basis. The purchasers of the Private Units have agreed not to transfer, assign or sell any of the Private Units or underlying securities (except to the same permitted transferees as the Founder Shares) until the completion of the Business Combination.
If the Company does not complete a Business Combination within the Combination Period, the proceeds of the sale of the Private Units will be used to fund the redemption of the Public Subunits (subject to the requirements of applicable law).
14
ACKRELL
SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 6 — Related Party Transactions
Founder Shares
On
September 11, 2018, the Company issued
On
November 25, 2020, the Sponsor contributed back to the Company, for no consideration,
On December 21, 2020, the Company effected a stock dividend of 0.2 shares of common stock for every share of common stock outstanding, resulting in an aggregate of 3,450,000 Founder Shares outstanding.
Founder Shares, subject to certain limited exceptions contained in the Registration Statements, will not be transferred, assigned, sold or released from escrow for a period ending on the six-month anniversary of the date of the consummation of the Initial Business Combination or earlier if, subsequent to its Initial Business Combination, the Company consummates a liquidation, merger, stock exchange or other similar transaction which results in all of the stockholders having the right to exchange
Administrative Services Agreement
Commencing
on the effective date of the Registration Statements, the Company has agreed to pay an affiliate of the Company’s Chairman an aggregate
fee of $
Working Capital Loans
In
addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor may, but is not obligated to,
provide the Company Working Capital Loans. If the Company completes a Business Combination, the Company may repay the Working Capital
Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans may be repaid only out of
funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds
held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the
Working Capital Loans, other than the interest on such proceeds that may be released for working capital purposes. Except for the foregoing,
the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans.
The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s
discretion, up to $
Note 7 — Cash and Securities Held in Trust Account
As
of June 30, 2021 and December 31, 2020, cash and securities held in trust account are $
15
ACKRELL
SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 8 — Stockholders’ Equity
Preferred
Stock — The Company is authorized to issue a total of
Common
Stock — The Company is authorized to issue a total of
On
December 23, 2020, the Company sold
As
of June 30, 2021 and December 31, 2020, shares of common stock subject to redemption were
Warrants —
Each whole warrant entitles the registered holder to purchase one share of common stock at a price of $
Note 9 — Commitments & Contingencies
Registration Rights
The holders of the Founder Shares, Private Units (and their underlying securities), Representative Shares (As defined below) and any Units that may be issued upon conversion of the Working Capital Loans (and their underlying securities) will be entitled to registration rights pursuant to an agreement signed on the effective date of the Registration Statements. The holders of a majority of these securities will be entitled to make up to two demands that the Company register such securities. The holders of the majority of the Founder Shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these shares of common stock are to be released from escrow. The holders of a majority of the Private Units and units issued in payment of Working Capital Loans made to the Company (or underlying securities) can elect to exercise these registration rights at any time after the Company consummates an Initial Business Combination. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the Company’s consummation of an Initial Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
16
ACKRELL
SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Underwriters Agreement
On
December 23, 2020, the underwriters were paid a cash underwriting fee of
In
addition, prior to the IPO, the Company issued to EarlyBirdCapital an aggregate of
The Representative Shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following the date of the effectiveness of the Registration Statements pursuant to Rule 5110(g)(1) of the FINRA Manual. Pursuant to FINRA Rule 5110(g)(1), these securities will not be sold during the offering, or sold, transferred, assigned, pledged, or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period of 180 days immediately following the effective date of the Registration Statements, except to any underwriter and selected dealer participating in the offering and their bona fide officers or partners, provided that all securities so transferred remain subject to the lockup restriction above for the remainder of the time period.
Business Combination Marketing Agreement
The
Company has engaged EarlyBirdCapital as an advisor in connection with the Company’s business combination to assist the Company
in holding meetings with the Company’s stockholders to discuss the potential business combination and the target business’
attributes, introduce the Company to potential investors that are interested in purchasing the Company’s securities in connection
with the Company’s Initial Business Combination, assist the Company in obtaining stockholder approval for the business combination
and assist the Company with its press releases and public filings in connection with the Initial Business Combination. The Company will
pay EarlyBirdCapital a cash fee for such services upon the consummation of the Company’s Initial Business Combination in an amount
equal to
Note 10 — Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
| ● | Level 1 - defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; | |
| ● | Level 2 - defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and | |
| ● | Level 3 - defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
17
ACKRELL
SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The fair value of the Company’s certain assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the condensed balance sheet. The fair values of cash and cash equivalents, prepaid assets, accounts payable and accrued expenses, due to related parties are estimated to approximate the carrying values as of June 30, 2021 due to the short maturities of such instruments.
Fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability.
Non-Recurring Fair Value Measurements
The following table presents
information about the Company’s
| November 25, | Quoted Prices In Active Markets | Significant Other Observable Inputs | Significant Other Unobservable Inputs | |||||||||||||
| 2020 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
| Stockholders’ Equity: | ||||||||||||||||
| Representative Shares | $ | $ | $ | $ | ||||||||||||
| $ | $ | $ | $ | |||||||||||||
The estimated fair value of the Representative Shares on November 25, 2020, the date the Representative Shares were issued, was determined using Level 3 inputs. Inherent in a Monte-Carlo simulation model utilizing the probability weighted expected return method are assumptions related to the expected stock-price volatility (pre-merger), the risk-free interest rate, and the expected restricted term. The Company estimates the volatility of its common stock based on management’s understanding of the volatility associated with instruments of other similar entities. The risk-free interest rate is based on the U.S. Treasury Constant Maturity similar to the expected restricted term of the Representative Shares. The expected restricted term of the Representative Shares is simulated based on management assumptions regarding the timing and likelihood of completing the IPO and a business combination. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero. The assumptions used in calculating the estimated fair values represent the Company’s best estimate. However, inherent uncertainties are involved. If factors or assumptions change, the estimated fair values could be materially different.
18
ACKRELL SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The key inputs into the Monte Carlo simulation model for the Representative Shares were as follows at November 25, 2020:
| Input | November 25, 2020 | |||
| Restricted term (years) | ||||
| Expected volatility | % | |||
| Risk-free interest rate | % | |||
| Stock price | $ | |||
| Dividend yield | % | |||
Recurring Fair Value Measurements
As
of June 30, 2021, investment in the Company’s Trust Account consisted of $
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2021 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
| June 30, | Quoted Prices In Active Markets | Significant Other Observable Inputs | Significant Other Unobservable Inputs | |||||||||||||
| Description | 2021 | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
| Assets: | ||||||||||||||||
| Cash held in Trust Account | $ | $ | ||||||||||||||
| U.S. Treasury Securities held in Trust Account | ||||||||||||||||
| Liabilities: | ||||||||||||||||
| Warrant Liability – Private Warrants | $ | $ | $ | $ | ||||||||||||
Transfers to/from Levels 1, 2 and 3 are recognized at the end of the reporting period. There were no transfers between levels for the three and six months ended June 30, 2021.
19
ACKRELL
SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 11 — Warrant Liabilities
At
June 30, 2021 and December 31, 2020, there were
The
Company utilizes a Monte Carlo simulation model to value the warrants at each reporting period, with changes in fair value recognized
in the statement of operations. The estimated fair value of the warrant liability is determined using Level 3 inputs. Inherent in
a Monte Carol simulation model are assumptions related to expected stock price volatility, expected life, risk-free interest rate and
dividend yield. The Company estimates the volatility of its shares of common stock based on historical volatility that matches the expected
remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for
a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is simulated based on management
assumptions regarding the timing and likelihood of completing a business combination. The dividend rate is based on the historical rate,
which the Company anticipates to remain at zero. Once the warrants become exercisable, the Company may redeem the outstanding warrants
when the price per share of common stock equals or exceeds $
The aforementioned warrant liabilities are not subject to qualified hedge accounting.
The following table provides quantitative information regarding Level 3 fair value measurements of the Private Warrants:
| As of June 30, 2021 | As of December 31, 2020 | |||||||
| Stock price | $ | $ | ||||||
| Strike price | $ | $ | ||||||
| Term (in years) | ||||||||
| Volatility | % | % | ||||||
| Risk-free rate | % | % | ||||||
| Dividend yield | % | % | ||||||
Note 12 — Subsequent Events
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued and has concluded that all such events that would require adjustment or disclosure have been recognized or disclosed.
20
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Ackrell SPAC Partners I Co. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Ackrell SPAC Sponsors I LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Exchange Act that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s final prospectus for its initial public offering filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company formed under the laws of the State of Delaware on September 11, 2018 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses. We intend to effectuate our business combination using cash from the proceeds of the initial public offering and the sale of the private units, our capital stock, debt or a combination of cash, stock and debt.
All activity through June 30, 2021 relates to our formation, initial public offering, and search for a prospective Initial Business Combination.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities from inception through June 30, 2021 were organizational activities and those necessary to prepare for the initial public offering, described below, and searching for a prospective Initial Business Combination. We do not expect to generate any operating revenues until after the completion of our Initial Business Combination. We expect to generate non-operating income in the form of interest income on marketable securities held after the initial public offering and will recognize changes in the fair value of warrant liability as other income (expense) (See Note 11). We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the three and six months ended June 30, 2021, we had a net loss of $353,298 and $233,161, respectively, which consisted of operating costs of $284,480 and 484,275, respectively, interest income of $5,271 and 29,318 on marketable securities held in the Trust Account, respectively and a decrease in fair value of warrant liabilities of $74,089 in the three months ended June 30, 2021 and an increase in fair value of warrant liabilities of $221,796 in the six months ended June 30, 2021.
For the three and six months ended June 30, 2020, we had a net loss of $125 and $1,389, respectively, which consisted of formation and operating costs of $125 and $1,389.
21
Liquidity and Capital Resources
On December 23, 2020, we consummated the initial public offering of 13,800,000 units, which included the full exercise of the underwriter’s option to purchase up to an additional 1,800,000 units at the initial public offering price to cover over-allotments, at a price of $10.00 per unit, generating gross proceeds of $138,000,000. Simultaneously with the closing of the initial public offering, we consummated the sale of 539,000 placement units at a price of $10.00 per placement unit in a private placement to the Sponsor and EarlyBirdCapital, Inc., generating gross proceeds of $5,390,000.
Following the initial public offering and the private placement, a total of $139,380,000 was placed in the trust account. We incurred $4,085,051 in transaction costs, including $2,760,000 of underwriting fees and $1,325,051 of other offering costs.
As of June 30, 2021, we had marketable securities held in the Trust Account of $139,412,565 consisting of both cash and U.S. treasury bills with a maturity of 185 days or less.
We had $277,086 of cash held outside of the Trust Account as of June 30, 2021 and $677,130 as of December 31, 2020. The Company did not have any cash equivalents as of June 30, 2021 and December 31, 2020.
We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account to complete our business combination. We may withdraw interest to pay taxes. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our business combination, the remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
We intend to use the funds held outside the trust account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a business combination.
In order to fund working capital deficiencies or finance transaction costs in connection with a business combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a business combination, we may repay such loaned amounts out of the proceeds of the trust account released to us. In the event that a business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts, but no proceeds from our trust account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into units, at a price of $10.00 per unit, at the option of the lender. The units would be identical to the placement units.
We anticipate that the $277,086 outside of the Trust account as of June 30, 2021 will not be sufficient to allow us to operate for at least the next 12 months, assuming that a Business Combination is not consummated during that time. Moreover, we may need to obtain additional financing to consummate our Initial Business Combination but there is no assurance that new financing will be available to us on commercially acceptable terms. Furthermore, if we are not able to consummate a Business Combination by December 23, 2021, it will trigger our automatic winding up, liquidation and dissolution. We may extend the Combination Period by up to six months if the Sponsor deposits $1,380,000 into our Trust Account for each three-month extension but there is no assurance that the Sponsor will do so. These conditions raise substantial doubt about our ability to continue as a going concern.
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Critical Accounting Policies and Estimates
The preparation of the unaudited condensed financial statements in conformity with US 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 unaudited condensed financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. We have identified the following as our critical accounting policies:
Common Stock Subject to Possible Redemption
The Company accounts for its common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption (if any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock feature certain redemption rights that is considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet.
Derivative Financial Instruments
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its 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.
Derivative instruments are recorded at fair value at inception and re-valued at each reporting date, with changes in the fair value reported in the statements of operations.
Derivative assets and liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.
Net Loss Per Common Share
The Company complies with accounting and disclosure requirements of FASB ASC 260, Earnings Per Share. The statements of operations include a presentation of income (loss) per redeemable Public Share and income (loss) per non-redeemable Founder Share following the two-class method of income (loss) per share. In order to determine the net income (loss) attributable to both the public redeemable shares and founder non-redeemable shares, the Company first considered the total income (loss) allocable to both sets of shares. This is calculated using the total net income (loss) less any dividends paid. For purposes of calculating net income (loss) per share, any remeasurement of the accretion to redemption value of the common stock subject to possible redemption was considered to be dividends paid to the public stockholders.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of June 30, 2021.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than described below.
We have engaged EarlyBirdCapital, Inc. as an advisor in connection with our business combination to assist us in holding meetings with our stockholders to discuss the potential business combination and the target business’ attributes, introduce us to potential investors that are interested in purchasing our securities in connection with our initial business combination, assist us in obtaining stockholder approval for the business combination and assist us with our press releases and public filings in connection with the business combination. We will pay EarlyBirdCapital, Inc. a cash fee of up to $4,830,000 for such services upon the consummation of our initial business combination (exclusive of any applicable finders’ fees which might become payable); provided that up to 30% of the fee may be allocated at our sole discretion to other FINRA members that assist us in identifying or consummating an initial business combination.
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The preparation of condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the period reported. Actual results could materially differ from those estimates. We have not identified any critical accounting policies.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required for smaller reporting companies.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
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 SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended June 30, 2021, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that, during the period covered by this report, our disclosure controls and procedures were not effective because of a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Specifically, the material weakness identified in our internal controls related to our accounting for complex financial instruments as described in the Explanatory Note to this Amendment No. 1. This material weakness resulted in the restatement of our audited balance sheet as of December 23, 2020, our audited financial statements as of and for the fiscal year ended December 31, 2020, and our unaudited interim financial statements as of and for the quarters ended March 31, 2021 and June 30, 2021.
Changes in Internal Control over Financial Reporting
During the most recently completed fiscal quarter ended September 30, 2021, we have enhanced our internal controls over financial reporting relating to Private Warrants, redeemable equity instruments and Representative Shares by continuing to regularly assess the fair value of our Private Warrants, recognizing all Public Subunits as temporary equity and adopting a more robust approach to assessing the fair value of our equity instruments. We believe our efforts are effective in identifying and appropriately applying applicable accounting requirements but we believe we will need additional time to monitor and assess our efforts to evaluate their ultimate effectiveness. There have been no changes in our internal controls over financial reporting, except as previously noted, that has materially affected, or is reasonably likely to affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in our Registration Statements. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report, other than as described below, there have been no material changes to the risk factors disclosed in our Registration Statements, except we may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
We have identified a material weakness in our internal control over financial reporting as of June 30, 2021. If we are unable to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any changes and material weaknesses identified through such evaluation in those internal controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
As described elsewhere in this Amendment No.1, we identified a material weakness in our internal control over financial reporting relating to (i) our classification of a portion of public subunits (and including the underlying common stock) subject to possible redemption in permanent equity rather than temporary equity and (ii) accounting of Private Warrants and fair value of shares of Representative Shares. Specifically, our management has concluded that our control around the interpretation and accounting for certain complex financial instruments, such as warrants, redeemable Public Subunits and Representative Shares, was not effectively designed or maintained. This material weakness resulted in the restatement of our audited balance sheet as of December 23, 2020, audited financial statements as of and for the year ended December 31, 2020, and unaudited interim financial statements as of and for the quarters ended March 31, 2021 and June 30, 2021. Additionally, a misstatement of the warrant liability, Public Subunits, Representative Shares and related accounts and disclosures would result in a material misstatement of the financial statements that would not be prevented or detected on a timely basis. As a result of this material weakness, our management concluded that our internal control over financial reporting was not effective as of June 30, 2021.
Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects.
If we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
For a description of the use of the proceeds generated in our initial public offering, see Part II, Item 2 of the Company’s quarterly report on Form 10-Q/A for the quarter ended March 31, 2021. There has been no material change in the planned use of the proceeds from the Company’s initial public offering and private placement as is described in the Company’s final prospectus, dated December 21, 2020.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
None.
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Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
| * | Filed herewith. |
| ** | Furnished. |
| (1) | Previously filed as an exhibit to our Current Report on Form 8-K filed on December 28, 2020 and incorporated by reference herein. |
| (2) | Previously filed as an exhibit to our Current Report on Form 8-K filed on December 30, 2020 and incorporated by reference herein. |
| (3) | Previously filed as an exhibit to our Registration Statement on Form S-1 filed on December 1, 2020 and incorporated by reference herein. |
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ACKRELL SPAC PARTNERS I CO. | ||
| Date: February 7, 2022 | By: | /s/ Jason Roth |
| Name: | Jason Roth | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
| Date: February 7, 2022 | By: | /s/ Long Long |
| Name: | Long Long | |
| Title: | Chief Financial Officer | |
| (Principal Accounting and Financial Officer) | ||
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