The accompanying notes are an integral part
of these condensed financial statements.
The accompanying notes are an integral part
of these unaudited condensed financial statements.
The accompanying notes are an integral part
of these unaudited condensed financial statements.
The accompanying notes are an integral part
of these unaudited condensed financial statements.
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 March 31, 2021, the
Company had not yet commenced any revenue-generating operations. All activity through March 31, 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 13,800,000
units (the “Public Units”), which included the full exercise of the underwriter’s overallotment option, generating gross
proceeds of $138,000,000, which is described in Note 4. Each Public Unit consists of (i) one subunit (the “Public Subunit”),
which consists of one share of common stock (the “Public Share”) and one-half of one redeemable warrant, and (ii) one-half
of one redeemable warrant (collectively, the redeemable warrants included in the Public Units and Public Subunits, the “Public Warrants”).
Each whole Public Warrant entitles the holder to purchase one share of common stock at a price of $11.50 per share.
Simultaneously with the closing
of the IPO, the Company consummated the sale of 539,000 units (the “Private Units”) at a price of $10.00 per unit in a private
placement to Ackrell SPAC Sponsors I LLC (the “Sponsor”), the Company’s sponsor, and EarlyBirdCapital, Inc. (“EarlyBirdCapital”),
generating gross proceeds of $5,390,000, which is described in Note 5. Each Private Unit consists of (i) one subunit (the “Private
Subunit”), which consists of one share of common stock (the “Private Share”) and one-half of one redeemable warrant,
and (ii) one-half of one redeemable warrant (collectively, the redeemable warrants included in the Private Units and Private Subunits,
the “Private Warrants”). Each whole Private Warrant entitles the holder to purchase one share of common stock at a price of
$11.50 per share.
Trust Account
Following the closing of the
IPO on December 23, 2020, an amount of $139,380,000 ($10.10 per Unit) from the net proceeds of the sale of the Public and Private Units
in the IPO and private placement was placed in a trust account (“Trust Account”) which will be invested in U.S. government
securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment
Company Act”), with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated
under the Investment Company Act, which invest only in direct U.S. government treasury obligations, until the earlier of (a) the completion
of the Company’s Initial Business Combination, (b) the redemption of any Public Subunits properly submitted in connection with a
stockholder vote to amend the Company’s amended and restated certificate of incorporation, or (c) the redemption of the Company’s
Public Subunits if the Company is unable to complete the Initial Business Combination within the Combination Period (as defined below).
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 80% of the balance in
the Trust Account (net of taxes payable) at the time of the signing an agreement to enter into a Business Combination. However, the Company
will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding voting
securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as
an investment company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business
Combination. The Company will provide its stockholders with the opportunity to redeem all or a portion of their Public Subunits included
in the Public Units sold in the IPO upon the completion of a Business Combination either (i) in connection with a stockholder meeting
called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder
approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The stockholders will
be entitled to redeem their 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 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 100% of its Public Subunits if the Company does not complete a Business Combination, unless the Company
provides the public stockholders with the opportunity to redeem their Public Subunits in conjunction with any such amendment.
Liquidation
The holders of the
Private Securities will not participate in any liquidation distribution with respect to such securities. In the event of such
distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust
Account assets) will be less than the $10.10 per Public Unit in the IPO. The Sponsor has agreed that it will be liable to ensure
that the proceeds in the Trust Account are not reduced below $10.10 per Public Subunit by the claims of target businesses or claims
of vendors or other entities that are owed money by the Company for services rendered or contracted for or products sold to the
Company. The agreement entered into by the Sponsor specifically provides for two exceptions to the indemnity it has given: it
will have no liability (1) as to any claimed amounts owed to a target business or vendor or other entity who has executed an agreement
with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, or
(2) as to any claims for indemnification by the underwriters of the Company’s IPO against certain liabilities, including
liabilities under the Securities Act. The Company has not asked the Sponsor to reserve for such indemnification obligations, nor
have the Company independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believe
that the Sponsor’s only assets are securities of the Company. Therefore, the Company believes it is unlikely that Sponsor
will be able to satisfy its indemnification obligations if it is required to do so.
ACKRELL SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
Liquidity
As of March 31, 2021, the
Company had cash outside the Trust Account of $363,621 available for working capital needs. All remaining cash and securities were held
in the Trust Account and is generally unavailable for the Company’s use prior to an Initial Business Combination and is restricted
for use either in a Business Combination or to redeem Public Subunits. As of March 31, 2021, none of the amount on deposit in the Trust
Account was available to be withdrawn as described above.
Through March 31, 2021, the
Company’s liquidity needs were satisfied through receipt of $5,000 from the sale of the Founder Shares (See Note 6), advances from
the Sponsor in an aggregate amount of $300,000 which were repaid upon the IPO, and the remaining net proceeds from the IPO and private
placement (See Note 4 and 5) held outside of the Trust Account.
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 $1,500,000 of such
Working Capital Loans may be convertible into units of the post Business Combination entity at a price of $10.00 per unit. As of March
31, 2021 and December 31, 2020, no Working Capital Loans were outstanding.
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 $363,621 outside of the Trust account as of March 31, 2021 will not be sufficient to allow the Company to operate for at least the
next 12 months, assuming that a Business Combination is not consummated during that time. Moreover, the Company may need to obtain additional
financing to consummate its Initial Business Combination but there is no assurance that new financing will be available to the Company
on commercially acceptable terms. Furthermore, if the Company is not able to consummate a business combination by December 23, 2021, it
will trigger the Company’s automatic winding up, liquidation and dissolution. The Company may extend the Combination Period by up
to six months if the Sponsor deposits $1,380,000 into the Company’s Trust Account for each three-month extension but there is no
assurance that the Sponsor will do so. These conditions raise substantial doubt about the Company’s ability to continue as a going
concern.
ACKRELL SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
Note 2 – Revision of Prior Period
Financial Statements
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
(collectively, the “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. The identified errors impacted the Company’s 2020 annual financial statements,
Form 8-K filing on December 30, 2020 containing the IPO balance sheet as of December 23, 2020. 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 not material to any prior annual or 8-K report, but that correcting the cumulative impact of such errors would be
significant to our statement of operations for the three months ended March 31, 2021. Accordingly, the Company has corrected such immaterial
errors by adjusting its December 23, 2020 and December 31, 2020 balance sheets and classified the Private Warrants as liabilities on the
balance sheets at fair value, with subsequent changes in their respective fair values recognized in the statement of operations at each
reporting date. The Company will also correct previously reported financial information for such immaterial errors in future filings,
as applicable. The following summarizes the effect of the revision on each financial statement line item.
As of December 23, 2020
|
|
As Reported
|
|
|
Adjustment
|
|
|
As Adjusted
|
|
Revised Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant Liabilities
|
|
$
|
-
|
|
|
$
|
574,676
|
|
|
$
|
574,676
|
|
Total Liabilities
|
|
|
-
|
|
|
|
574,676
|
|
|
|
574,676
|
|
Shares Subject to Possible Redemption
|
|
|
135,094,307
|
|
|
|
(574,679
|
)
|
|
|
134,519,628
|
|
Common Stock
|
|
|
479
|
|
|
|
6
|
|
|
|
485
|
|
Additional Paid in Capital
|
|
|
5,007,859
|
|
|
|
(3
|
)
|
|
|
5,007,856
|
|
Accumulated Deficit
|
|
|
(8,330
|
)
|
|
|
-
|
|
|
|
(8,330
|
)
|
Total Stockholders’ Equity
|
|
$
|
5,000,008
|
|
|
$
|
3
|
|
|
$
|
5,000,011
|
|
As of December 31, 2020
|
|
As Reported
|
|
|
Adjustment
|
|
|
As Adjusted
|
|
Revised Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant Liabilities
|
|
$
|
-
|
|
|
$
|
580,860
|
|
|
$
|
580,860
|
|
Total Liabilities
|
|
|
303,738
|
|
|
|
580,860
|
|
|
|
884,598
|
|
Shares Subject to Redemption
|
|
|
134,983,359
|
|
|
|
(580,871
|
)
|
|
|
134,402,488
|
|
Common Stock
|
|
|
480
|
|
|
|
6
|
|
|
|
486
|
|
Additional Paid in Capital
|
|
|
5,118,821
|
|
|
|
6,189
|
|
|
|
5,125,010
|
|
Accumulated Deficit
|
|
|
(119,298
|
)
|
|
|
(6,184
|
)
|
|
|
(125,482
|
)
|
Total Stockholders’ Equity
|
|
$
|
5,000,003
|
|
|
$
|
11
|
|
|
$
|
5,000,014
|
|
ACKRELL SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
For
the Year Ended December 31, 2020
|
|
As Reported
|
|
|
Adjustment
|
|
|
As Adjusted
|
|
Revised Statement of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of warrant liabilities
|
|
|
-
|
|
|
|
(6,184
|
)
|
|
|
(6,184
|
)
|
Total other income (expense)
|
|
|
3,247
|
|
|
|
(6,184
|
)
|
|
|
(2,937
|
)
|
Net loss
|
|
$
|
(115,544
|
)
|
|
$
|
(6,184
|
)
|
|
$
|
(121,728
|
)
|
Weighted average shares outstanding, basic and diluted
|
|
|
4,198,081
|
|
|
|
-
|
|
|
|
4,198,081
|
|
Basic and diluted net loss per share
|
|
$
|
(0.03
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.03
|
)
|
For
the Year Ended December 31, 2020
|
|
As Reported
|
|
|
Adjustment
|
|
|
As Adjusted
|
|
Revised Statement of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(115,544
|
)
|
|
$
|
(6,184
|
)
|
|
$
|
(121,728
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of warrant liabilities
|
|
|
-
|
|
|
|
6,184
|
|
|
|
6,184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Non-cash financing activities disclosure
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial value of warrant liabilities
|
|
$
|
-
|
|
|
$
|
574,676
|
|
|
$
|
574,676
|
|
Initial value of Common stock subject to possible redemption
|
|
$
|
135,094,307
|
|
|
$
|
574,679
|
|
|
$
|
134,519,628
|
|
Change in value of Common stock subject to possible redemption
|
|
$
|
(110,948
|
)
|
|
$
|
(6,192
|
)
|
|
$
|
(117,140
|
)
|
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 months ended March 31, 2021 are not necessarily indicative of the results to be expected
for the year ending December 31, 2021 or for any future interim periods.
ACKRELL SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
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 $363,621
of cash held outside of the Trust Account as of March 31, 2021 and $677,130 as of December 31, 2020. The Company did not have any cash
equivalents as of March 31, 2021 and December 31, 2020.
Investment Held in Trust Account
As of March 31, 2021,
the Company had $139,407,294 in the Trust Account which may be utilized for Business Combination. As of March 31, 2021, the Trust
Account consisted of both cash and Treasury securities. The Company classifies its United States Treasury securities as held-to-maturity
in accordance with FASB ASC Topic 320 “Investments - Debt and Equity Securities.” Held-to-maturity securities are
those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities are
recorded at amortized cost and adjusted for the amortization or accretion of premiums or discounts.
ACKRELL SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
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 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) 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 March 31, 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.
ACKRELL SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
Net Income / (Loss) per Common Stock
The Company complies with accounting
and disclosure requirements ASC Topic 260, “Earnings Per Share.” Net income per share is computed by dividing net income by
the weighted average number of shares of common stock issued and outstanding for the periods. At March 31, 2021 and March 31, 2020, the
Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into shares of common
stock and then share in the income of the Company. As a result, diluted income per share is the same as basic income per shares for the
periods presented. For the three months ended March 31, 2020, weighted average shares were reduced for the effect of an aggregate of 487,500
shares of common stock that are subject to forfeiture if the over-allotment option is not exercised by the underwriters.
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 $250,000. The Company has not experienced losses on these accounts
and management believes the Company is not exposed to significant risks on such accounts.
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 March 31, 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 March 31, 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 13,800,000 Public Units at a price of $10.00 per Public Unit, including the issuance of 1,800,000 Public Units
as a result of the underwriters’ full exercise of their over-allotment option. Each Public Unit consists of (i) one Public
Subunit, which consists of one public share and one-half of one Public Warrant, and (ii) one-half of one Public Warrant. Each whole
warrant entitles the holder to purchase one share of common stock at a price of $11.50 per share. (See Note 8).
ACKRELL SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
Note 5 — Private Placements
Simultaneously with the closing
of the IPO, the Sponsor and EarlyBirdCapital purchased an aggregate of 539,000 Private Units, at a price of $10.00 per unit, for an aggregate
purchase price of $5,390,000. A portion of the proceeds from the sale of Private Units were added to the net proceeds from the IPO held
in the Trust Account.
The Private Units and their
underlying securities are identical to the units sold in the Initial Public Offering except the Private Warrants (as defined in Note 8)
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).
Note 6 — Related Party Transactions
Founder Shares
On September 11, 2018,
the Company issued 3,737,500 shares of common stock to its initial stockholder (the “Founder Shares”), Able SPAC Holding
LLC, for $5,000 in cash, or approximately $0.0013 per share, in connection with formation (See Note 8).
On November 25, 2020, the
Sponsor contributed back to the Company, for no consideration, 862,500 Founder Shares for cancellation, resulting in an aggregate of 2,875,000
Founder Shares outstanding.
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 $10,000
per month for providing the Company with office space and certain office and secretarial services. This arrangement will terminate upon
completion of the Company’s Initial Business Combination or the distribution of the Trust Account to the Company’s public
stockholders. For the three months ended March 31, 2021, the Company has accrued $33,548 of administrative fees as a due to related party.
ACKRELL SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
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 $1,500,000 of such Working Capital Loans may be convertible
into units of the post Business Combination entity at a price of $10.00 per unit. As of March 31, 2021 and December 31, 2020, no Working
Capital Loans were outstanding.
Note 7 — Cash and Securities
Held in Trust Account
As of March 31, 2021 and December 31, 2020, cash and securities held
in trust account are $139,407,294 and $139,383,247, respectively, and will not be released until the earlier of (a) the completion of
the Company’s Initial Business Combination, (b) the redemption of any Public Subunits properly submitted in connection with a stockholder
vote to amend the Company’s amended and restated certificate of incorporation, or (c) the redemption of the Company’s Public
Subunits if the Company is unable to complete the Initial Business Combination within the Combination Period.
Note 8 —
Stockholders’ Equity
Preferred Stock —
The Company is authorized to issue a total of 1,000,000 preferred shares of at par value of $0.0001 each. At March 31, 2021 and
December 31, 2020, there were no shares of preferred shares issued or outstanding.
Common Stock —
The Company is authorized to issue a total of 100,000,000 shares of
common stock at par value of $0.0001 each.
On December 23, 2020, the Company sold 13,800,000 shares of common
stock as part of the IPO. Simultaneously with the closing of the IPO, the Sponsor purchased an aggregate of 539,000 shares of common stock.
As of March 31, 2021 and December 31, 2020, shares of common stock
subject to redemption were 13,319,072 and 13,307,177, respectively. The total number of shares of common stock outstanding at March 31,
2021 and December 31, 2020 was 4,849,928 and 4,861,823, respectively.
ACKRELL SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
Warrants —
Each whole warrant entitles the registered holder to purchase one share
of common stock at a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing on the later of 30 days
after the completion of an Initial Business Combination or 12 months from the closing of the Company’s IPO and will expire on the
fifth anniversary of the completion of an Initial Business Combination, or earlier upon redemption or liquidation. However, no warrants
will be exercisable for cash unless the Company has an effective and current registration statement covering the shares of common stock
issuable upon exercise of the warrants and a current prospectus relating to such shares of common stock. Notwithstanding the foregoing,
if a registration statement covering the shares of common stock issuable upon exercise of the Public Warrants is not effective within
a specified period following the consummation of Initial Business Combination, warrant holders may, until such time as there is an effective
registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise
warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption
is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless
basis. In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of common stock
equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied
by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair
market value. The “fair market value” for this purpose will mean the average reported last sale price of the shares of common
stock for the 5 trading days ending on the trading day prior to the date of exercise. The warrants will expire on the fifth anniversary
of completion of an Initial Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation. The
Private Warrants, as well as any warrants underlying additional units the Company may issue to Sponsor, officers, directors or their affiliates
in payment of Working Capital Loans made to us, will be identical to the warrants underlying the units sold in the Company’s IPO
except that such warrants will be exercisable for cash or on a cashless basis, at the holder’s option, and will not be redeemable
by us, in each case so long as they are still held by the Sponsor, EarlyBirdCapital or their permitted transferees.
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.
Underwriters Agreement
The Company granted the underwriters a 45-day option to purchase up
to 1,800,000 additional Public Units to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and
commissions. On December 23, 2020, the underwriters exercised its full over-allotment option of 1,800,000 units.
On December 23, 2020,
the underwriters were paid a cash underwriting fee of 2% of the gross proceeds of the IPO, totaling $2,760,000.
In addition, prior to the
IPO, the Company issued to EarlyBirdCapital an aggregate of 380,000 shares of common stock (the “Representative Shares”) at
approximately $0.0001 per share.
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.
ACKRELL SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
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 3.5% of the gross proceeds of the IPO (exclusive of any applicable finders’ fees which might become
payable); provided that up to 30% of the fee may be allocated at the Company’s sole discretion to other FINRA members (including,
with EarlyBirdCapital’s prior consent which shall not be unreasonably withheld, companies affiliated with the Company or
the Company’s officers or directors, including Ackrell Capital) that assist the Company in identifying or consummating an
Initial Business Combination.
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.
|
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 March 31, 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.
ACKRELL SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
As of December 31, 2020, investment
in the Company’s Trust Account consisted of $946 in cash and $139,382,301 in U.S. Treasury Securities. The value of the cash held
in Trust Account, U.S. Treasury Securities held in Trust Account and Private Warrant liability was determined by quoted prices in active
markets (Level 1), significant other observable inputs (Level 2) and significant other unobservable inputs (Level 3), respectively, as
of December 31, 2020.
The following table
presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as
of March 31, 2021 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
|
|
March 31,
|
|
|
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
|
|
$
|
1,522
|
|
|
|
1,522
|
|
|
|
-
|
|
|
$
|
-
|
|
U.S. Treasury Securities held in Trust Account
|
|
|
139,405,772
|
|
|
|
-
|
|
|
|
139,405,772
|
|
|
|
-
|
|
|
|
|
139,407,294
|
|
|
|
1,522
|
|
|
|
139,405,772
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant Liability – Private Warrants
|
|
$
|
284,975
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
284,975
|
|
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 months ended March 31,
2021.
Note 11 — Warrant Liabilities
At March 31, 2021
and December 31, 2020, there were 539,000 Private Warrants outstanding, which the Company accounts for as derivative warrant liabilities
in accordance with ASC 815-40. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts
the instruments to fair value at each reporting period. The liabilities are subject to remeasurement at each balance sheet date
until exercised, and any change in fair value is recognized in the Company’s statement of operations. The fair value of
warrants issued by the Company in connection Private Placement has been estimated using Monte Carlo simulations at each measurement
date.
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 $18.00. The assumptions used in calculating the estimated fair values at the end of the reporting period represent the
Company’s best estimate. However, inherent uncertainties are involved. If factors or assumptions change, the estimated fair values
could be materially different.
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
March 31,
2021
|
|
|
As of
December 31,
2020
|
|
Stock price
|
|
$
|
9.63
|
|
|
$
|
9.22
|
|
Strike price
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
Term (in years)
|
|
|
5.68
|
|
|
|
5.92
|
|
Volatility
|
|
|
12.9
|
%
|
|
|
24.2
|
%
|
Risk-free rate
|
|
|
1.08
|
%
|
|
|
0.49
|
%
|
Dividend yield
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
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.