Summary
The company reported revenue of $5.15 million for the quarter and $21.20 million for the full year. Operating loss was $0.55 million in the quarter and $1.02 million for the year. Net loss came to $0.64 million in the quarter and $0.98 million for the full year. Diluted EPS for the full year was -$1.18. Operating margin was -10.7% for the quarter and -4.8% for the year. Deferred revenue stood at $21.00 million. Operating cash flow was negative $0.39 million for the quarter and negative $0.86 million for the year. Capital expenditures were $0.40 million in the quarter and $0.64 million for the year.
Operationally, the quarter's main event was the merger agreement signed with SoundHound Inc. on November 15, 2021. The deal values SoundHound at $2 billion in equity of the combined company, with outstanding stock options and warrants included on a net exercise basis. In connection with the merger, certain accredited investors committed to buy 11.1 million shares of Class A common stock at $10.00 per share, for total gross proceeds of $111 million. That private placement is scheduled to close concurrently with the business combination. The filing also notes that the company was formed on September 15, 2020, and that its IPO closed on March 15, 2021, with 12,000,000 public units sold at $10.00 per unit, generating $120,000,000 in gross proceeds. The underwriters later partially exercised their over-allotment option for 1,300,000 public units at $10.00 per unit, adding $13,000,000. A private placement of 390,000 units at $10.00 raised $3,900,000, and an additional 26,000 private units raised $260,000.
The risk section carries substantial weight. Management stated that the cash held outside the trust account will not be sufficient to operate for at least the next 12 months if a business combination is not completed. The company also said it may need additional financing to consummate the initial business combination, and it warned that there is no assurance new financing will be available on commercially acceptable terms. Before the IPO, liquidity needs were met by a $25,000 founder share payment and a $125,000 unsecured promissory note from the sponsor. That note was fully paid on March 15, 2021. If the business combination is not consummated by September 15, 2022, the company will trigger an automatic winding up, liquidation and dissolution. These conditions raise substantial doubt about its ability to continue as a going concern. The filing also disclosed a material weakness in internal control over financial reporting tied to accounting for complex financial instruments, including classification of warrant liabilities, redeemable equity, and valuation of representative shares. That weakness led to restatement of the company's balance sheet as of March 15, 2021, and its interim financial statements for the quarters ended March 31, June 30, and September 30, 2021.
Management said it improved internal controls during the quarter ended December 31, 2021. The company enhanced education for its accountants and retained third-party valuation professionals to conduct periodic fair value assessments of complex financial instruments. It believes these efforts are effective, but it needs more time to monitor and assess their ultimate effectiveness. The merger remains the central value driver. The filing points investors to the Current Report on Form 8-K filed on November 16, 2021, and to Amendment No. 1 to Form S-4 filed on February 14, 2022, for more detail on the transaction. The only forward-looking timeline in the filing is the September 15, 2022 deadline for completing the business combination. The company also said it had no off-balance sheet arrangements as of December 31, 2021. It reported no material exposure to market or interest rate risk because the trust assets were invested in short-term U.S. government securities or money market funds. Until the merger closes, the company's financial profile is dominated by the reported revenue and losses, the deferred revenue balance, and the cash burn reflected in negative operating cash flow.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2021 | Q3 FY2021 | QoQ | Q4 FY2020 | YoY |
|---|---|---|---|---|---|
| Operating income (loss) | -$553.4K | -$229.5K | -141.2% | — | — |
| Net income (loss) | -$636.2K | -$191.1K | -233.0% | — | — |
Risks
Management states that the $235,295 of cash held outside the Trust Account as of December 31, 2021 will not be sufficient to operate for at least the next 12 months if a Business Combination is not consummated, raising substantial doubt about going concern. This follows a net loss of $981,884 for the year ended December 31, 2021 and operating cash flow of negative $864,358 for the same year to date period.
The company has no operations and no operating revenue, and must complete its initial Business Combination with SoundHound Inc. by September 15, 2022 or face automatic winding up, liquidation and dissolution. Additional financing may be required to consummate the $2 billion equity Business Combination and there is no assurance it will be available on commercially acceptable terms.
Management concluded disclosure controls and procedures were not effective as of December 31, 2021 because of a material weakness in accounting for complex financial instruments, including classification of warrant liabilities, redeemable equity and valuation of representative shares. This weakness resulted in restatement of the balance sheet as of March 15, 2021 and interim financial statements for the quarters ended March 31, June 30 and September 30, 2021, and remediation requires more time to assess ultimate effectiveness.
The Business Combination pays $2 billion in equity of the company to SoundHound Inc., and accredited investors committed to purchase 11.1 million shares of Class A common stock at $10.00 per share for gross proceeds of $111 million in a private placement closing concurrently with the deal, which could substantially dilute existing holders.
Summary, forecast, risks and KPIs are extracted from SOUNDHOUND AI, INC.'s SEC filings for Q4 FY2021 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.