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 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 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 has the Company independently verified whether the Sponsor has sufficient funds to satisfy its indemnity
obligations. The Company believes 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
and Going Concern
As of June 30, 2021, the Company
had cash outside the Trust Account of $277,086 available for working capital needs. All remaining cash and securities were held in the
Trust Account and are generally unavailable for the Company’s use prior to an Initial Business Combination and are restricted for
use either in a Business Combination or to redeem Public Subunits. As of June 30, 2021, none of the amount on deposit in the Trust Account
was available to be withdrawn as described above.
Through June 30, 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 June
30, 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 $277,086 outside of the Trust account as of June 30, 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 — 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.
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
|
|
$
|
-
|
|
|
$
|
574,676
|
|
|
$
|
574,676
|
|
Total Liabilities
|
|
|
-
|
|
|
|
574,676
|
|
|
|
574,676
|
|
Shares Subject to Possible Redemption
|
|
|
135,094,307
|
|
|
|
4,285,693
|
|
|
|
139,380,000
|
|
Common Stock
|
|
|
479
|
|
|
|
(42
|
)
|
|
|
437
|
|
Additional paid-in capital
|
|
|
5,007,859
|
|
|
|
(4,860,327
|
)
|
|
|
147,532
|
|
Total Stockholders’ Equity
|
|
|
5,000,008
|
|
|
|
(4,860,369
|
)
|
|
|
139,639
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audited Balance Sheet at December 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant Liabilities
|
|
$
|
-
|
|
|
$
|
580,860
|
|
|
$
|
580,860
|
|
Total Liabilities
|
|
|
303,738
|
|
|
|
580,860
|
|
|
|
884,598
|
|
Shares Subject to Possible Redemption
|
|
|
134,983,359
|
|
|
|
4,399,888
|
|
|
|
139,383,247
|
|
Common Stock
|
|
|
480
|
|
|
|
(43
|
)
|
|
|
437
|
|
Additional paid-in capital
|
|
|
5,118,821
|
|
|
|
(4,974,521
|
)
|
|
|
144,300
|
|
Accumulated Deficit
|
|
|
(119,298
|
)
|
|
|
(6,184
|
)
|
|
|
(125,482
|
)
|
Total Stockholders’ Equity
|
|
|
5,000,003
|
|
|
|
(4,980,748
|
)
|
|
|
19,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audited Statement of Operations for the year ended December 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Fair Value of Warrants
|
|
$
|
-
|
|
|
$
|
(6,184
|
)
|
|
$
|
(6,184
|
)
|
Weighted average shares outstanding, basic and diluted
|
|
|
4,198,081
|
|
|
|
(4,198,081
|
)
|
|
|
-
|
|
Basic and diluted weighted average shares outstanding, common stock subject to redemption
|
|
|
-
|
|
|
|
339,344
|
|
|
|
339,344
|
|
Basic and diluted weighted average shares outstanding, common stock not subject to redemption
|
|
|
-
|
|
|
|
3,429,593
|
|
|
|
3,429,593
|
|
Basic and diluted net income (loss) per share
|
|
|
(0.03
|
)
|
|
|
0.03
|
|
|
|
-
|
|
Basic and diluted net income (loss) per share, common stock subject to redemption
|
|
|
-
|
|
|
|
52.43
|
|
|
|
52.43
|
|
Basic and diluted net income (loss) per share, common stock not subject to redemption
|
|
|
-
|
|
|
|
(5.22
|
)
|
|
|
(5.22
|
)
|
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
|
|
$
|
-
|
|
|
$
|
792,428
|
|
|
$
|
792,428
|
|
Issuance of Representative Shares on November 25, 2020 - Stockholders' Equity (Deficit)
|
|
|
15
|
|
|
|
792,428
|
|
|
|
792,443
|
|
Initial Value of Private Warrants
|
|
|
-
|
|
|
|
(574,676
|
)
|
|
|
(574,676
|
)
|
Reclassification of offering costs related to Public Shares
|
|
|
-
|
|
|
|
3,655,046
|
|
|
|
3,655,046
|
|
Other Offering Expenses
|
|
|
(532,623
|
)
|
|
|
(792,428
|
)
|
|
|
(1,325,051
|
)
|
Net Loss
|
|
|
(155,543
|
)
|
|
|
(6,184
|
)
|
|
|
(121,727
|
)
|
Maximum number of redeemable shares - Shares
|
|
|
(13,364,689
|
)
|
|
|
(435,311
|
)
|
|
|
(13,800,000
|
)
|
Maximum number of redeemable shares - Par Value
|
|
|
(1,336
|
)
|
|
|
(44
|
)
|
|
|
(1,380
|
)
|
Maximum number of redeemable shares - Paid-in-Capital
|
|
|
(134,982,023
|
)
|
|
|
11,510,162
|
|
|
|
(123,471,861
|
)
|
Maximum number of redeemable shares - Stockholders' Equity (Deficit)
|
|
|
(134,983,359
|
)
|
|
|
11,510,118
|
|
|
|
(123,473,241
|
)
|
Subsequent measurement of common stock subject to redemption under ASC 480-10-S99 against additional paid-in-capital (“APIC”)
|
|
|
-
|
|
|
|
(19,561,805
|
)
|
|
|
(19,561,805
|
)
|
Subsequent measurement of common stock subject to redemption under ASC 480-10-S99 against APIC (interest earned on trust account)
|
|
|
-
|
|
|
|
(3,247
|
)
|
|
|
(3,247
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audited Statement of Cash Flows for the year ended December 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(115,543
|
)
|
|
$
|
(6,184
|
)
|
|
$
|
(121,727
|
)
|
Change in fair value of warrant liabilities
|
|
|
-
|
|
|
|
6,184
|
|
|
|
6,184
|
|
Initial value of warrant liabilities
|
|
|
-
|
|
|
|
574,676
|
|
|
|
574,676
|
|
Initial value of common stock subject to possible redemption
|
|
|
135,094,307
|
|
|
|
(11,621,066
|
)
|
|
|
123,473,241
|
|
Reclassification of offering costs related to Public Shares
|
|
|
-
|
|
|
|
(3,655,046
|
)
|
|
|
(3,655,046
|
)
|
Change in value of common stock subject to possible redemption
|
|
|
(110,948
|
)
|
|
|
110,948
|
|
|
|
-
|
|
Subsequent measurement of common stock subject to redemption under ASC 480-10-S99 against APIC
|
|
|
-
|
|
|
|
19,561,805
|
|
|
|
19,561,805
|
|
Subsequent measurement of common stock subject to redemption under ASC 480-10-S99 against APIC (interest earned on trust account)
|
|
|
-
|
|
|
|
3,247
|
|
|
|
3,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Balance Sheet as of March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock subject to possible redemption
|
|
$
|
134,522,628
|
|
|
$
|
4,884,666
|
|
|
$
|
139,407,294
|
|
Common stocks, $0.0001 par value
|
|
|
485
|
|
|
|
(48
|
)
|
|
|
437
|
|
Additional paid-in capital
|
|
|
(5,345
|
)
|
|
|
125,598
|
|
|
|
120,253
|
|
Total stockholders’ equity (deficit)
|
|
|
5,000,011
|
|
|
|
(4,884,666
|
)
|
|
|
115,345
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Statement of Operations for the three months ended March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding, basic and diluted
|
|
|
18,169,000
|
|
|
|
(18,169,000
|
)
|
|
|
0
|
|
Basic and diluted weighted average shares outstanding, common stock subject to redemption
|
|
|
-
|
|
|
|
13,800,000
|
|
|
|
13,800,000
|
|
Basic and diluted weighted average shares outstanding, common stock not subject to redemption
|
|
|
-
|
|
|
|
4,369,000
|
|
|
|
4,369,000
|
|
Basic and diluted net income (loss) per share
|
|
$
|
0.01
|
|
|
$
|
(0.01
|
)
|
|
$
|
-
|
|
Basic and diluted net income (loss) per share, common stock subject to redemption
|
|
|
-
|
|
|
|
0.01
|
|
|
|
0.01
|
|
Basic and diluted net income (loss) per share, common stock not subject to redemption
|
|
|
-
|
|
|
|
0.01
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
$
|
-
|
|
|
$
|
(24,047
|
)
|
|
$
|
(24,047
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
$
|
-
|
|
|
$
|
24,047
|
|
|
$
|
24,047
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 $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.
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 $139,412,565 in the Trust Account which may be utilized for Business Combination. As of June 30, 2021 and December 31, 2020, 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.
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.
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 76% for the Public Shares and 24% for
the non-redeemable founder shares for the three and six months ended June 30, 2021, reflective of the respective participation rights.
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
|
|
$
|
(353,298
|
)
|
|
$
|
(233,161
|
)
|
Accretion of temporary equity to redemption value
|
|
|
(5,271
|
)
|
|
|
(29,318
|
)
|
Net loss including accretion of temporary equity to redemption value
|
|
$
|
(358,569
|
)
|
|
$
|
(262,479
|
)
|
|
|
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
|
|
$
|
(272,346
|
)
|
|
$
|
(86,223
|
)
|
|
$
|
(199,362
|
)
|
|
$
|
(63,117
|
)
|
Accretion of temporary equity to redemption value
|
|
|
5,271
|
|
|
|
—
|
|
|
|
29,318
|
|
|
|
—
|
|
Allocation of net loss
|
|
$
|
(267,075
|
)
|
|
$
|
(86,223
|
)
|
|
$
|
(170,044
|
)
|
|
$
|
(63,117
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding
|
|
|
13,800,000
|
|
|
|
4,369,000
|
|
|
|
13,800,000
|
|
|
|
4,369,000
|
|
Basic and diluted net loss per share
|
|
$
|
(0.02
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
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 $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.
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 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).
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 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).
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 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 and six months ended June 30, 2021, the Company has accrued $30,000 and $63,548 of
administrative fees as a due to related party.
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 June 30, 2021 and December 31, 2020, no Working Capital Loans were outstanding.
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 $139,412,565 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.
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 1,000,000 preferred shares of at par value of $0.0001 each. At June
30, 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 June 30, 2021 and December 31, 2020, shares of common stock subject to redemption were 13,800,000. The total number of shares of common
stock outstanding at June 30, 2021 and December 31, 2020 was 4,369,000.
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.
ACKRELL
SPAC PARTNERS I CO.
(f.k.a. ABLE ACQUISITION CORP.)
NOTES
TO UNAUDITED CONDENSED FINANCIAL 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.
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.
|
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 150,000 Representative Shares that were issued on and measured at fair value on a non-recurring
basis as of November 25, 2020 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such
fair value.
|
|
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
|
|
$
|
792,443
|
|
|
|
$
|
|
|
$
|
-
|
|
|
$
|
792,443
|
|
|
|
$
|
792,443
|
|
|
|
$
|
|
|
$
|
-
|
|
|
$
|
792,443
|
|
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.
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)
|
|
|
1.02
|
|
Expected volatility
|
|
|
11.8
|
%
|
Risk-free interest rate
|
|
|
0.11
|
%
|
Stock price
|
|
$
|
9.14
|
|
Dividend yield
|
|
|
0
|
%
|
Recurring Fair Value Measurements
As
of June 30, 2021, investment in the Company’s Trust Account consisted of $2,545 in cash and $139,410,020 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 June 30, 2021.
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
|
|
$
|
2,545
|
|
|
|
2,545
|
|
|
|
-
|
|
|
$
|
-
|
|
U.S. Treasury Securities held in Trust Account
|
|
|
139,410,020
|
|
|
|
-
|
|
|
|
139,410,020
|
|
|
|
-
|
|
|
|
|
139,412,565
|
|
|
|
2,545
|
|
|
|
139,410,020
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant Liability – Private Warrants
|
|
$
|
359,064
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
359,064
|
|
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.
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 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
June 30,
2021
|
|
|
As of
December 31,
2020
|
|
Stock price
|
|
$
|
9.63
|
|
|
$
|
9.22
|
|
Strike price
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
Term (in years)
|
|
|
5.48
|
|
|
|
5.92
|
|
Volatility
|
|
|
14.0
|
%
|
|
|
24.2
|
%
|
Risk-free rate
|
|
|
0.95
|
%
|
|
|
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.