UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal quarter ended March 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39582

Atlantic Avenue Acquisition Corp

(Exact Name of Registrant as Specified in Its Charter)

Delaware		85-2200249
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

2200 Atlantic Street Stamford, Connecticut		06902
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (203) 989-9709

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Units, each consisting of one share of Class A common stock and one-half of one redeemable warrant	ASAQ.U	New York Stock Exchange
Class A common stock, par value $0.0001 per share	ASAQ	New York Stock Exchange
Redeemable warrants, each whole warrant exercisable	ASAQ WS	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☐		Accelerated Filer ☐
Non-accelerated Filer ☒		Smaller Reporting Company ☒
		Emerging Growth Company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☒ No ☐

As of May 13, 2022, 25,000,000 shares of Class A common stock, par value $0.0001 per share, and 6,250,000 shares of Class B common stock, par value $0.0001 per share, were issued and outstanding, respectively.

ATLANTIC AVENUE ACQUISITION CORP

Quarterly Report on Form 10-Q

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION		Page

Item 1.	Financial Statements	3
	Condensed Balance Sheets as of March 31, 2022 (Unaudited) and December 31, 2021	3
	Unaudited Condensed Statements of Operations for the Three Months Ended March 31, 2022 and March 31, 2021	4
	Unaudited Condensed Statements of Changes in Stockholders’ Deficit for the Three Months Ended March 31, 2022 and March 31, 2021	5
	Unaudited Condensed Statements of Cash Flows for the Three Months Ended March 31, 2022 and March 31, 2021	6
	Notes to Unaudited Condensed Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25

Item 4.	Controls and Procedures	25

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	27

Item 1A.	Risk Factors	27

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 3.	Defaults Upon Senior Securities	27

Item 4.	Mine Safety Disclosures	27

Item 5.	Other Information	27

Item 6.	Exhibits	28

SIGNATURES		29

	March 31, 2022 (Unaudited)			December 31, 2021
Assets
Current assets
Cash	$	939,236		$	1,085,937
Prepaid expenses		67,575			102,713
Total current assets		1,006,811			1,188,650
Investments held in Trust Account		250,037,196			250,021,058
Total Assets	$	251,044,007		$	251,209,708

Liabilities, Redeemable Common Stock and Stockholders’ Deficit
Liabilities:
Current liabilities:
Accounts payable and accrued expenses	$	208,935		$	200,587
Deferred legal fees		2,229,648			2,115,147
Total current liabilities		2,438,583			2,315,734
Warrant liabilities		4,095,000			9,711,500
Total Liabilities		6,533,583			12,027,234

Commitments and Contingencies

Redeemable Common Stock
Class A common stock subject to possible redemption, $0.0001 par value; 25,000,000 shares at $10.00 per share redemption value at March 31, 2022 and December 31, 2021		250,000,000			250,000,000

Stockholders’ Deficit:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding at March 31, 2022 and December 31, 2021		—			—
Class A common stock, $0.0001 par value; 300,000,000 shares authorized; none issued and outstanding, excluding 25,000,000 shares subject to possible redemption at March 31, 2022 and December 31, 2021		—			—
Class B common stock, $0.0001 par value; 30,000,000 shares authorized; 6,250,000 shares issued and outstanding at March 31, 2022 and December 31, 2021		625			625
Additional paid-in capital		—			—
Accumulated deficit		(5,490,201	)		(10,818,151	)
Total Stockholders’ Deficit		(5,489,576	)		(10,817,526	)
Total Liabilities, Redeemable Common Stock and Stockholders’ Deficit	$	251,044,007		$	251,209,708

	For the Three Months Ended March 31, 2022			For the Three Months Ended March 31, 2021
Formation and operating costs	$	304,713		$	93,283
Loss from operations		(304,713	)		(93,283	)

Other income
Interest income		16,163			3,730
Unrealized gain on change in fair value of warrants		5,616,500			6,959,800
Total other income		5,632,663			6,963,530

Net income	$	5,327,950		$	6,870,247

Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption		25,000,000			25,000,000
Basic and diluted net income per share, Class A common stock subject to possible redemption	$	0.17		$	0.22

Basic and diluted weighted average shares outstanding, Class B common stock		6,250,000			6,250,000
Basic and diluted net income per share, Class B common stock	$	0.17		$	0.22

	Class A Common Stock				Class B Common Stock				Additional Paid-in		Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance as of December 31, 2021		—	$	—		6,250,000	$	625	$	—	$	(10,818,151	)	$	(10,817,526	)
Net income		—		—		—		—		—		5,327,950			5,327,950
Balance as of March 31, 2022 (unaudited)		—	$	—		6,250,000	$	625	$	—	$	(5,490,201	)	$	(5,489,576	)

	For the Three Months Ended March 31, 2022			For the Three Months Ended March 31, 2021
Cash flows from operating activities:
Net income	$	5,327,950		$	6,870,247
Adjustments to reconcile net income to net cash used in operating activities:
Interest earned on investments held in Trust Account		(16,138	)		(3,693	)
Gain on change in fair value of warrants		(5,616,500	)		(6,959,800	)
Changes in operating assets and current liabilities:
Prepaid expenses		35,138			39,825
Accounts payable and accrued expenses		8,348			(36,209	)
Deferred legal fees		114,501
Net cash used in operating activities		(146,701	)		(89,630	)

Net change in cash		(146,701	)		(89,630	)
Cash, beginning of the period		1,085,937			1,527,662
Cash, end of the period	$	939,236		$	1,438,032

	For the three months ended March 31, 2022				For the three months ended March 31, 2021
	Class A		Class B		Class A		Class B
Basic and diluted net income per share:
Numerator:
Allocation of net income	$	4,262,360		1,065,590	$	5,496,198	$	1,374,049
Denominator:
Weighted average shares outstanding		25,000,000		6,250,000		25,000,000		6,250,000
Basic and diluted net income per share	$	0.17		0.17	$	0.22	$	0.22

Gross proceeds from IPO	$	250,000,000
Less:
Proceeds allocated to Public Warrants		(12,538,750	)
Common stock issuance costs		(5,591,035	)
Plus:
Accretion of carrying value to redemption value		18,129,785
Contingently redeemable Class A common stock	$	250,000,000

1.	For cash:
	■	in whole and not in part;
	■	at a price of $0.01 per warrant;
	■	upon a minimum of 30 days’ prior written notice of redemption; and
	■	if, and only if, the last reported sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.

2.	For Class A common stock (commencing 90 days after the warrants become exercisable):
	■	in whole and not in part;
	■	at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares of Class A common stock to be determined by reference to a table included in the warrant agreement, based on the redemption date and the fair market value of Class A common stock;
	■	if, and only if, the last reported sale price of the Class A common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which the Company sends the notice of redemption to warrant holders;
	■	if, and only if, the Private Placement Warrants are also concurrently exchanged at the same price (equal to a number of shares of Class A common stock) as the outstanding Public Warrants; and
	■	if, and only if, there is an effective registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating thereto available throughout the 30-day period after written notice of redemption is given.

	March 31, 2022		Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Assets:
Money Market funds held in Trust Account	$	250,037,196	$	250,037,196	$	—	$	—
	$	250,037,196	$	250,037,196	$	—	$	—
Liabilities:
Warrant Liabilities—Public Warrants	$	2,625,000	$	2,625,000	$	—	$	—
Warrant Liabilities—Private Placement Warrants		1,470,000		—		1,470,000		—
	$	4,095,000	$	2,625,000	$	1,470,000	$	—

	December 31, 2021		Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Assets:
Money Market funds held in Trust Account	$	250,021,058	$	250,021,058	$	—	$	—
	$	250,021,058	$	250,021,058	$	—	$	—
Liabilities:
Warrant Liabilities—Public Warrants	$	6,250,000	$	6,250,000	$	—	$	—
Warrant Liabilities—Private Placement Warrants		3,461,500		—		—		3,461,500
	$	9,711,500	$	6,250,000	$	—	$	3,461,500

	Private Placement Warrant Liabilities
Fair value as of December 31, 2021	$	3,461,500
Revaluation of warrant liabilities included in other income within the unaudited condensed statement of operations for the three months ended March 31, 2022		(1,991,500)
Fair value as of March 31, 2022	$	1,470,000

Input	December 31, 2021
Stock price	$	9.80
Exercise price	$	11.50
Risk free rate		1.22	%
Annual volatility		10.50	%
Time to exercise (years)		4.50

No.		Description of Exhibit
31.1*		Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		XBRL Instance Document
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

	ATLANTIC AVENUE ACQUISITION CORP

Date: May 16, 2022	By:	/s/ Ashok Nayyar
		Ashok Nayyar
		Chief Executive Officer (Principal Executive Officer)

	ATLANTIC AVENUE ACQUISITION CORP

Date: May 16, 2022	By:	/s/ Barry Best
		Barry Best
		Chief Financial Officer (Principal Financial Officer)

	Private Placement Warrant Liabilities
Fair value as of December 31, 2020	$	7,620,200
Revaluation of warrant liabilities included in other income within the unaudited condensed statement of operations for the three months ended March 31, 2021		(2,459,800	)
Fair value as of March 31, 2021	$	5,160,400

Beginning Balance	$	3,461,500
Revaluation of warrant liabilities included in other income within the statement of operations for the three months ended March 31, 2022		(1,991,500	)
Transfer to Level 2		(1,470,000	)
Fair value of Level 3 as of March 31, 2022	$	—

SEC Form 10-Q filed by Atlantic Street Acquisition Corp