Abacus Life(ABL) - 2021 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents the company's financial statements, management's analysis, market risk disclosures, and controls and procedures Financial Statements The unaudited condensed financial statements for June 30, 2021, reflect the company as a pre-business combination SPAC, with net income primarily from non-cash gains on financial instrument fair value changes Condensed Balance Sheets As of June 30, 2021, total assets were $345.3 million, primarily in the Trust Account, while liabilities decreased to $40.8 million due to fair value adjustments, resulting in a $40.5 million stockholders' deficit Condensed Balance Sheet Summary (Unaudited) | Balance Sheet Items | June 30, 2021 (USD) | December 31, 2020 (USD) | | :--- | :--- | :--- | | Assets | | | | Cash | $101,969 | $589,685 | | Cash and securities held in Trust Account | $345,036,411 | $345,026,104 | | Total Assets | $345,324,422 | $345,850,539 | | Liabilities & Stockholders' Equity | | | | Warrant liability | $27,457,500 | $29,811,000 | | Deferred underwriting fee payable | $12,075,000 | $12,075,000 | | Total Liabilities | $40,787,586 | $44,927,315 | | Class A common stock subject to possible redemption | $345,000,000 | $345,000,000 | | Total Stockholders' Equity (Deficit) | ($40,463,164) | ($44,076,776) | Condensed Statements of Operations For the six months ended June 30, 2021, the company reported $3.6 million net income, primarily from non-cash gains on warrant and forward purchase agreement liabilities, contrasting with a $7.2 million net loss for the three-month period due to unfavorable fair value changes Statement of Operations Highlights (Unaudited) | Item | Three Months Ended June 30, 2021 (USD) | Six Months Ended June 30, 2021 (USD) | | :--- | :--- | :--- | | Formation and operating costs | $205,051 | $450,212 | | Change in fair value of warrant liability | ($6,275,500) | $2,353,500 | | Change in fair value of forward purchase agreement | ($700,000) | $1,700,000 | | Net (Loss) Income | ($7,175,334) | $3,613,612 | | Basic and diluted net income per share, Non-redeemable | ($0.83) | $0.42 | Notes to Condensed Financial Statements The notes detail the company's formation as a blank check company, its IPO proceeds in the Trust Account, the deadline for a business combination, significant accounting policies for derivative liabilities, and related party transactions and commitments - The company is a blank check company incorporated on May 22, 2020, to effect a business combination, with an intended focus on the North American energy industry[31] - Following its IPO and over-allotment exercise, the company placed $345 million into a Trust Account[35] The company has until July 27, 2022, to complete a Business Combination[42] - The company has a forward purchase agreement with an affiliate, East Asset Management, LLC, to purchase up to 5,000,000 units for a maximum of $50,000,000, contingent on the closing of a Business Combination[87] - As of June 30, 2021, the company had approximately $102,000 in cash outside the trust account[46] These conditions raise substantial doubt about the company's ability to continue as a going concern through August 17, 2022, without additional financing[48] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's status as a blank check entity with no operations, its $3.6 million net income driven by non-cash gains, and its limited working capital, highlighting the need for additional financing to complete a business combination - The company's activities since inception have been limited to organizational tasks, the IPO, and searching for a Business Combination target[119] Financial Results Summary | Period | Net Income / (Loss) (USD) | Key Drivers | | :--- | :--- | :--- | | Six months ended June 30, 2021 | $3,613,612 | Gain on fair value of warrant liability ($2.4M) and forward purchase agreement ($1.7M) | | Three months ended June 30, 2021 | ($7,175,334) | Loss on fair value of warrant liability ($6.3M) and forward purchase agreement ($0.7M) | - As of June 30, 2021, the company had $101,969 in cash held outside the Trust Account for working capital purposes[125] The Sponsor has committed to provide up to $500,000 in loans for working capital[127] - Contractual obligations include a deferred underwriting fee of $12,075,000 payable upon completion of a business combination and monthly administrative fees of $20,000 to affiliates of the Sponsor[131] Quantitative and Qualitative Disclosures about Market Risk This section is not required for smaller reporting companies, and therefore no disclosure is provided - Disclosure is not required for smaller reporting companies[138] Controls and Procedures Management concluded that disclosure controls and procedures were ineffective as of June 30, 2021, due to a material weakness in accounting for complex financial instruments, leading to financial statement restatement and planned remediation efforts - Management concluded that due to the restatement of its financial statements to reclassify warrants, the company's disclosure controls and procedures were not effective as of June 30, 2021[141] - A material weakness was identified in internal control over financial reporting concerning the accounting for complex financial instruments (warrants)[142] - The company plans to implement remediation measures, including enhanced access to accounting literature and increased communication with third-party professionals[143] PART II – OTHER INFORMATION This section covers legal proceedings, risk factors, unregistered sales of equity securities, and exhibits Legal Proceedings The company reports no legal proceedings - The company has no legal proceedings to report[145] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2020 - No material changes to risk factors have occurred since the filing of the Annual Report on Form 10-K/A[145] Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities or changes in the use of proceeds - None reported[145] Exhibits This section lists the exhibits filed with the Quarterly Report, including officer certifications (pursuant to Sarbanes-Oxley Act Sections 302 and 906) and Inline XBRL documents - Exhibits filed include certifications from the Principal Executive Officer and Principal Financial Officer, as well as XBRL data files[147][148][149][150]