$AENT
ALLIANCE ENTERTAINMENT HOLDING CORP

2022 Q4 Form 10-K Financial Statement

#000141057823000458 Filed on March 30, 2023

View on sec.gov

Income Statement

Concept 2022 Q4 2022
Revenue $0.00 $0.00
YoY Change
Cost Of Revenue
YoY Change
Gross Profit
YoY Change
Gross Profit Margin
Selling, General & Admin $15.04M $58.11M
YoY Change -49.09%
% of Gross Profit
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $500.0K $3.100M
YoY Change -72.8%
% of Gross Profit
Operating Expenses $720.0K $2.610M
YoY Change 109.22% 167.19%
Operating Profit -$17.85M -$2.608M
YoY Change 166.99%
Interest Expense $2.170M $5.820M
YoY Change 334.93% 35.11%
% of Operating Profit
Other Income/Expense, Net -$3.544M $5.816M
YoY Change 37.79%
Pretax Income $1.450M $3.208M
YoY Change 836.75% -1.12%
Income Tax $200.0K $264.5K
% Of Pretax Income 13.79% 8.24%
Net Earnings -$15.52M $2.944M
YoY Change -10123.26% -9.27%
Net Earnings / Revenue
Basic Earnings Per Share -$0.33 $0.60
Diluted Earnings Per Share $0.09 $0.20
COMMON SHARES
Basic Shares Outstanding 47.50M 47.50M
Diluted Shares Outstanding 47.50M 47.50M

Balance Sheet

Concept 2022 Q4 2022
SHORT-TERM ASSETS
Cash & Short-Term Investments $0.00 $0.00
YoY Change -100.0% -100.0%
Cash & Equivalents $17.96K
Short-Term Investments
Other Short-Term Assets $0.00 $0.00
YoY Change -100.0% -100.0%
Inventory
Prepaid Expenses $2.500K
Receivables
Other Receivables
Total Short-Term Assets $20.46K $0.00
YoY Change -97.79% -100.0%
LONG-TERM ASSETS
Property, Plant & Equipment
YoY Change
Goodwill
YoY Change
Intangibles
YoY Change
Long-Term Investments $117.8M $117.8M
YoY Change 1.41% 1.41%
Other Assets
YoY Change
Total Long-Term Assets $117.8M $117.8M
YoY Change 1.42% 1.41%
TOTAL ASSETS
Total Short-Term Assets $20.46K $0.00
Total Long-Term Assets $117.8M $117.8M
Total Assets $117.8M $117.8M
YoY Change 0.64% 0.61%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable
YoY Change
Accrued Expenses $1.643M $1.600M
YoY Change 273.19% 263.43%
Deferred Revenue
YoY Change
Short-Term Debt $500.0K $500.0K
YoY Change
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities $2.410M $2.400M
YoY Change 447.34% 445.14%
LONG-TERM LIABILITIES
Long-Term Debt $0.00 $0.00
YoY Change
Other Long-Term Liabilities $700.0K $700.0K
YoY Change -85.6% -85.6%
Total Long-Term Liabilities $700.0K $700.0K
YoY Change -85.6% -85.6%
TOTAL LIABILITIES
Total Short-Term Liabilities $2.410M $2.400M
Total Long-Term Liabilities $700.0K $700.0K
Total Liabilities $3.104M $3.100M
YoY Change -41.45% -41.52%
SHAREHOLDERS EQUITY
Retained Earnings -$2.415M
YoY Change -44.71%
Common Stock
YoY Change
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity -$2.414M $114.7M
YoY Change
Total Liabilities & Shareholders Equity $117.8M $117.8M
YoY Change 0.64% 0.61%

Cashflow Statement

Concept 2022 Q4 2022
OPERATING ACTIVITIES
Net Income -$15.52M $2.944M
YoY Change -10123.26% -9.27%
Depreciation, Depletion And Amortization $500.0K $3.100M
YoY Change -72.8%
Cash From Operating Activities -$80.00K -$1.209M
YoY Change -33.63% 254.82%
INVESTING ACTIVITIES
Capital Expenditures $50.00K
YoY Change -92.31%
Acquisitions
YoY Change
Other Investing Activities $0.00 $0.00
YoY Change -100.0%
Cash From Investing Activities $0.00 $0.00
YoY Change -100.0%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities 60.00K 502.2K
YoY Change -99.57%
NET CHANGE
Cash From Operating Activities -80.00K -1.209M
Cash From Investing Activities 0.000 0.000
Cash From Financing Activities 60.00K 502.2K
Net Change In Cash -20.00K -706.5K
YoY Change -83.41% -213.56%
FREE CASH FLOW
Cash From Operating Activities -$80.00K -$1.209M
Capital Expenditures $50.00K
Free Cash Flow -$1.259M
YoY Change 27.05%

Facts In Submission

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<p style="font-family:'Times New Roman','Times','serif';font-size:10pt;margin:0pt 0pt 12pt 0pt;"><b style="font-weight:bold;">NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS</b></p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-indent:18pt;margin:0pt 0pt 12pt 0pt;">Adara Acquisition Corp. (now known as Alliance Entertainment Holding Corp.) (the “Company” or “Alliance”) was incorporated in Delaware on August 5, 2020. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). The Company is not limited to a particular industry or sector for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all the risks associated with early stage and emerging growth companies.</p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-align:justify;margin:0pt 0pt 12pt 0pt;"><b style="font-weight:bold;">Business Combination</b></p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-indent:18pt;margin:0pt 0pt 12pt 0pt;">On February 10, 2023 (the “Closing Date”), Alliance, Adara Acquisition Corp., a Delaware corporation (“Adara”), and Adara Merger Sub, Inc., a Delaware corporation (“Merger Sub”), consummated the closing of the transactions (the “Closing“) contemplated by the Business Combination Agreement, dated June 22, 2022, by and among Alliance, Adara and Merger Sub (the “Business Combination Agreement”), following their approval at a special meeting of the stockholders of Adara held on January 18, 2023 (the “Special Meeting”).</p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-align:justify;margin:0pt 0pt 12pt 0pt;"><b style="font-weight:bold;">Business Prior to the Business Combination</b></p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-indent:18pt;margin:0pt 0pt 12pt 0pt;">As of December 31, 2022, the Company had not commenced any operations. All activity for the period from August 5, 2020 (inception) through December 31, 2022 relates to the Company’s formation and the initial public offering (“Initial Public Offering”), which is described below, and subsequent to the Initial Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the marketable securities held in the Trust Account (as defined below). On June 22, 2022, the Company, Adara Merger Sub Inc., a wholly owned subsidiary of the Company (“Merger Sub”), and Alliance Entertainment Holding Corporation (“Alliance”) entered into a Business Combination Agreement (“BCA”) related to a proposed Business Combination.</p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-indent:18pt;margin:0pt 0pt 12pt 0pt;">The registration statement for the Company’s Initial Public Offering was declared effective on February 8, 2021. On February 11, 2021, the Company consummated the Initial Public Offering of 11,500,000 units (the “Units” and, with respect to the Class A common stock included in the Units sold, the “Public Shares”), which includes the full exercise by the underwriters of their over-allotment option in the amount of 1,500,000 Units, at $10.00 per Unit, generating gross proceeds of $115,000,000 which is described in Note 3.</p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-indent:18pt;margin:0pt 0pt 12pt 0pt;">Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 4,120,000 warrants (the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to Adara Sponsor LLC (the “Sponsor”), generating gross proceeds of $4,120,000, which is described in Note 4.</p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-indent:18pt;margin:0pt 0pt 12pt 0pt;">Transaction costs amounted to $1,529,462, consisting of $1,000,000 in cash underwriting fees, net of reimbursement, and $529,462 of other offering costs.</p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-indent:18pt;margin:0pt 0pt 12pt 0pt;">Following the closing of the Initial Public Offering on February 11, 2021, an amount of $116,150,000 ($10.10 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”), located in the United States and will be invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting certain conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of (i) the completion of a Business Combination and (ii) the distribution of the funds held in the Trust Account, as described below.</p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-indent:18pt;margin:0pt 0pt 12pt 0pt;">On February 10, 2023, Alliance, Adara, and <i style="font-style:italic;">Merger Sub</i>, consummated the closing of the transactions contemplated by the Business Combination Agreement, dated June 22, 2022, following their approval at a special meeting of the stockholders of Adara held on January 18, 2023.</p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-indent:18pt;margin:0pt 0pt 12pt 0pt;">Following the consummation of the Merger on the Closing Date, Adara changed its name from Adara Acquisition Corp. to Alliance Entertainment Holding Corporation.</p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-indent:18pt;margin:0pt 0pt 12pt 0pt;">In connection with the Special Meeting and the Business Combination, holders of 11,332,830 shares of Adara Class A common stock, par value $0.0001 per share (<span style="font-style:italic;font-weight:bold;">“Adara Common Stock”</span>), or 99.1% of the shares with redemption rights, properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.22 per share, for an aggregate redemption amount of $116,581,703. After giving effect to the redemption of public shares, there are currently 167,170 shares of the Company’s Class A common stock issued <span style="-sec-ix-hidden:Hidden_mbcY3bO9sUSUNSVpgj7tqQ;"><span style="font-family:'Times New Roman','Times','serif';font-size:10pt;font-style:normal;font-weight:normal;">outstanding</span></span> and there was $1,719,690.75 remaining balance in the trust count. The remaining amount in the trust account was used to fund the Business Combination.</p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-align:justify;margin:0pt 0pt 12pt 0pt;"><span style="font-style:italic;font-weight:bold;">Conversion and Exchange of Equity in the Business Combination</span></p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-indent:18pt;margin:0pt 0pt 12pt 0pt;">Pursuant to the Business Combination Agreement, at the effective time of the Business Combination, Adara issued (i) 47,500,000 shares of Class A common stock of Adara (“<span style="font-style:italic;font-weight:bold;">Company Common Stock</span>”) to holders of common stock of Alliance (“<span style="font-style:italic;font-weight:bold;">Alliance Common Stock</span>”) and (ii) 60,000,000 shares of Class E Common stock of Adara (“<span style="font-style:italic;font-weight:bold;">Company Class E Common Stock</span>”) to the Alliance Stockholders were placed in an escrow account to be released to the Alliance stockholders and converted into Company Common Stock upon the occurrence of certain Triggering Events and Merger Sub will merge with and into Alliance, with Alliance surviving the merger and becoming a wholly owned direct subsidiary of Adara.</p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-align:justify;margin:0pt 0pt 12pt 0pt;"><span style="font-style:italic;font-weight:bold;">Liquidity Capital Resources and Going Concern</span></p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-align:justify;text-indent:18pt;margin:0pt;">As of December 31, 2022, the Company had cash of $17,956 not held in the Trust Account and available for working capital purposes and working capital deficit of $1,720,465. As of December 31, 2022, liquidity concerns were present. On February 10, 2023, the Company closed its Business Combination with Alliance Entertainment Holding Corporation which historically has not presented a going concern issue. Accordingly, as a result of the merger, the going concern has been alleviated.</p>
CY2022Q4 adra Transaction Costs
TransactionCosts
1529462
CY2022Q4 adra Sale Of Stock Underwriting Fees
SaleOfStockUnderwritingFees
1000000
CY2022Q4 adra Sale Of Stock Other Offering Costs
SaleOfStockOtherOfferingCosts
529462
CY2022Q4 us-gaap Cash
Cash
17956
CY2022 adra Working Capital Deficit
WorkingCapitalDeficit
1720465
CY2022 us-gaap Antidilutive Securities Excluded From Computation Of Earnings Per Share Amount
AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount
9870000
CY2022 us-gaap Use Of Estimates
UseOfEstimates
<p style="font-family:'Times New Roman','Times','serif';font-size:10pt;margin:0pt 0pt 12pt 0pt;"><span style="font-style:italic;font-weight:bold;">Use of Estimates</span></p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-indent:18pt;margin:0pt 0pt 12pt 0pt;">The preparation of the consolidated financial statements in conformity with GAAP requires the Company’s 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.</p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-indent:18pt;margin:0pt 0pt 12pt 0pt;">Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. The warrants liabilities are the Company’s most significant estimate. Accordingly, the actual results could differ significantly from those estimates.</p>
CY2022 us-gaap Adjustments To Additional Paid In Capital Stock Issued Issuance Costs
AdjustmentsToAdditionalPaidInCapitalStockIssuedIssuanceCosts
1442918
CY2021Q1 adra Transaction Costs Incurred In Connection With Ipo
TransactionCostsIncurredInConnectionWithIpo
86544
CY2022 us-gaap Concentration Risk Credit Risk
ConcentrationRiskCreditRisk
<p style="font-family:'Times New Roman','Times','serif';font-size:10pt;margin:0pt 0pt 12pt 0pt;"><span style="font-style:italic;font-weight:bold;">Concentration of Credit Risk</span></p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-indent:18pt;margin:0pt 0pt 12pt 0pt;">The Company has significant cash balances at financial institutions which throughout the year regularly exceed the federally insured limit of $250,000. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company's financial condition, results of operations, and cash flows.</p>
CY2022Q4 adra Maximum Number Of Demands For Registration Of Securities
MaximumNumberOfDemandsForRegistrationOfSecurities
3
CY2021Q4 us-gaap Preferred Stock Shares Authorized
PreferredStockSharesAuthorized
1000000
CY2022Q4 us-gaap Preferred Stock Shares Authorized
PreferredStockSharesAuthorized
1000000
CY2021Q4 us-gaap Preferred Stock Par Or Stated Value Per Share
PreferredStockParOrStatedValuePerShare
0.0001
CY2022Q4 us-gaap Preferred Stock Par Or Stated Value Per Share
PreferredStockParOrStatedValuePerShare
0.0001
CY2021Q4 us-gaap Preferred Stock Shares Issued
PreferredStockSharesIssued
0
CY2022Q4 us-gaap Preferred Stock Shares Issued
PreferredStockSharesIssued
0
CY2021Q4 us-gaap Deferred Tax Assets Operating Loss Carryforwards
DeferredTaxAssetsOperatingLossCarryforwards
39841
CY2022Q4 us-gaap Deferred Tax Assets Other
DeferredTaxAssetsOther
686083
CY2021Q4 us-gaap Deferred Tax Assets Other
DeferredTaxAssetsOther
181309
CY2022Q4 us-gaap Deferred Tax Assets Gross
DeferredTaxAssetsGross
686083
CY2021Q4 us-gaap Deferred Tax Assets Gross
DeferredTaxAssetsGross
221150
CY2022Q4 us-gaap Deferred Tax Assets Valuation Allowance
DeferredTaxAssetsValuationAllowance
686083
CY2021Q4 us-gaap Deferred Tax Assets Valuation Allowance
DeferredTaxAssetsValuationAllowance
221150
CY2022 us-gaap Current Federal Tax Expense Benefit
CurrentFederalTaxExpenseBenefit
264485
CY2022 us-gaap Deferred Federal Income Tax Expense Benefit
DeferredFederalIncomeTaxExpenseBenefit
-464933
CY2021 us-gaap Deferred Federal Income Tax Expense Benefit
DeferredFederalIncomeTaxExpenseBenefit
-221150
CY2022 adra Increase Decrease In Valuation Allowance
IncreaseDecreaseInValuationAllowance
464933
CY2021 adra Increase Decrease In Valuation Allowance
IncreaseDecreaseInValuationAllowance
221150
CY2022 us-gaap Income Tax Expense Benefit
IncomeTaxExpenseBenefit
264485
CY2021Q4 us-gaap Operating Loss Carryforwards
OperatingLossCarryforwards
0
CY2022Q4 us-gaap Operating Loss Carryforwards
OperatingLossCarryforwards
0
CY2022 adra Increase Decrease In Valuation Allowance
IncreaseDecreaseInValuationAllowance
464933
CY2021 adra Increase Decrease In Valuation Allowance
IncreaseDecreaseInValuationAllowance
221150
CY2022 us-gaap Effective Income Tax Rate Reconciliation At Federal Statutory Income Tax Rate
EffectiveIncomeTaxRateReconciliationAtFederalStatutoryIncomeTaxRate
0.210
CY2021 us-gaap Effective Income Tax Rate Reconciliation At Federal Statutory Income Tax Rate
EffectiveIncomeTaxRateReconciliationAtFederalStatutoryIncomeTaxRate
0.210
CY2022 us-gaap Effective Income Tax Rate Reconciliation State And Local Income Taxes
EffectiveIncomeTaxRateReconciliationStateAndLocalIncomeTaxes
0.000
CY2021 us-gaap Effective Income Tax Rate Reconciliation State And Local Income Taxes
EffectiveIncomeTaxRateReconciliationStateAndLocalIncomeTaxes
0.000
CY2022 us-gaap Effective Income Tax Rate Reconciliation Change In Enacted Tax Rate
EffectiveIncomeTaxRateReconciliationChangeInEnactedTaxRate
0.000
CY2021 us-gaap Effective Income Tax Rate Reconciliation Change In Enacted Tax Rate
EffectiveIncomeTaxRateReconciliationChangeInEnactedTaxRate
0.000
CY2022 adra Effective Income Tax Rate Reconciliation Change In Deferred Tax Assets Warrant Liability Percent
EffectiveIncomeTaxRateReconciliationChangeInDeferredTaxAssetsWarrantLiabilityPercent
-0.273
CY2021 adra Effective Income Tax Rate Reconciliation Change In Deferred Tax Assets Warrant Liability Percent
EffectiveIncomeTaxRateReconciliationChangeInDeferredTaxAssetsWarrantLiabilityPercent
-0.278
CY2022 us-gaap Effective Income Tax Rate Reconciliation Change In Deferred Tax Assets Valuation Allowance
EffectiveIncomeTaxRateReconciliationChangeInDeferredTaxAssetsValuationAllowance
0.145
CY2021 us-gaap Effective Income Tax Rate Reconciliation Change In Deferred Tax Assets Valuation Allowance
EffectiveIncomeTaxRateReconciliationChangeInDeferredTaxAssetsValuationAllowance
0.068
CY2022 us-gaap Effective Income Tax Rate Continuing Operations
EffectiveIncomeTaxRateContinuingOperations
0.082
CY2022 us-gaap Fair Value Measurement With Unobservable Inputs Reconciliation Recurring Basis Asset Transfers Out Of Level3
FairValueMeasurementWithUnobservableInputsReconciliationRecurringBasisAssetTransfersOutOfLevel3
0

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