UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(MARK ONE)
For the quarter ended
For the transition period from to
Commission file number:
(Exact Name of Registrant as Specified in Its Charter) |
| ||
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
(Address of principal executive offices) |
( |
(Issuer’s telephone number) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol |
| Name of each exchange on which |
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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.
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).
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 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 |
| ☐ |
| ☒ | 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 Exchange Act). Yes
As of November 14, 2022,
BLOCKCHAIN MOON ACQUISITION CORP.
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2022
TABLE OF CONTENTS
i
PART I - FINANCIAL INFORMATION
Item 1. Interim Financial Statements.
BLOCKCHAIN MOON ACQUISITION CORP.
CONDENSED BALANCE SHEETS
September 30, | December 31, | |||||
| 2022 |
| 2021 | |||
Assets | (unaudited) | |||||
Current assets: | ||||||
Cash | $ | | $ | | ||
Due from Related Party | — | | ||||
Prepaid expenses |
| |
| | ||
Total current assets | | | ||||
Investments held in Trust account |
| |
| | ||
Total Assets | $ | | $ | | ||
Liabilities, Common Stock Subject to Possible Redemption and Stockholders' Deficit |
|
|
|
| ||
Current liabilities: | ||||||
Accrued expenses | $ | | $ | | ||
Accrued offering costs | — | | ||||
Income taxes payable | | — | ||||
Due to Related Party |
| |
| — | ||
Total current liabilities |
| |
| | ||
Warrant liability | | | ||||
Deferred underwriters' discount | | | ||||
Total Liabilities | | | ||||
|
|
|
| |||
Commitments and Contingencies |
|
|
|
| ||
Common stock subject to possible redemption $ | | | ||||
|
|
|
| |||
Stockholder’s Deficit: |
|
|
|
| ||
Preferred stock, $ |
|
| ||||
Common stock, $ |
| |
| | ||
Additional paid-in capital |
| — |
| — | ||
Accumulated deficit |
| ( |
| ( | ||
Total Stockholders' deficit |
| ( |
| ( | ||
Total Liabilities, Common Stock Subject to Possible Redemption and Stockholders' Deficit | $ | | $ | | ||
The accompanying notes are an integral part of the unaudited condensed financial statements.
1
BLOCKCHAIN MOON ACQUISITION CORP.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the | ||||||||||||
Period from | ||||||||||||
January 22, | ||||||||||||
2021 | ||||||||||||
For the Nine | (Inception) | |||||||||||
For the Three Months Ended | Months Ended | Through | ||||||||||
September 30, | September 30, | September 30, | ||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 | |||||
Formation and operating costs | $ | | $ | | $ | | $ | | ||||
Loss from Operations | ( | ( | ( | ( | ||||||||
|
|
| ||||||||||
Other income |
|
| ||||||||||
Gain on marketable securities (net), interest on marketable securities held in Trust Account | | — | | — | ||||||||
Change in fair value of warrant liability | | — | | — | ||||||||
Total other income | | — | | — | ||||||||
|
|
| ||||||||||
Loss before provision for income taxes | ( | ( | ( | ( | ||||||||
Provision for income taxes | ( | — | ( | — | ||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
|
|
|
| |||||||||
Basic and diluted weighted average shares outstanding, Common Stock subject to possible redemption | | — |
| |
| — | ||||||
Basic and diluted net loss per share, Common Stock subject to possible redemption | ( | $ | — | ( | $ | — | ||||||
Basic and diluted weighted average shares outstanding, Non-redeemable Common Stock | | |
| |
| | ||||||
Basic and diluted net loss per share, Non-redeemable Common Stock | ( | ( | ( | ( | ||||||||
The accompanying notes are an integral part of the unaudited condensed financial statements.
2
BLOCKCHAIN MOON ACQUISITION CORP.
CONDENSED STATEMENTS OF CHANGES IN COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ (DEFICIT) EQUITY
(UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022
Common Stock Subject to | Additional | Total | ||||||||||||||||||
Possible Redemption |
|
| Common Stock | Paid-in | Accumulated | Stockholders' | ||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Deficit |
| Deficit | |||||||
Balance as of January 1, 2022 | | $ | | | $ | | $ | — | $ | ( | $ | ( | ||||||||
Remeasurement of Common Stock to redemption value | — | | — | — | — | ( | ( | |||||||||||||
Net loss |
| — |
| — | — | — |
| — |
| ( |
| ( | ||||||||
Balance as of March 31, 2022 | | | | | — | ( | ( | |||||||||||||
Remeasurement of Common Stock to redemption value | — | | — | — | — | ( | ( | |||||||||||||
Net loss | — | — | — | — | — | ( | ( | |||||||||||||
Balance as of June 30, 2022 | | | | | — | ( | ( | |||||||||||||
Remeasurement of Common Stock to redemption value | — | | — | — | — | ( | ( | |||||||||||||
Net loss | — | — | — | — | — | ( | ( | |||||||||||||
Balance as of September 30, 2022 | | $ | | | $ | | $ | — | $ | ( | $ | ( | ||||||||
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021 AND FOR THE PERIOD FROM JANUARY 22, 2021 (INCEPTION) THROUGH SEPTEMBER 30, 2021
Common Stock Subject to | Additional | Total | ||||||||||||||||||
Possible Redemption | Common Stock | Paid-in | Accumulated | Stockholders’ | ||||||||||||||||
| Shares |
| Amount |
|
| Shares |
| Amount |
| Capital |
| Deficit |
| Equity | ||||||
Balance as of January 22, 2021 (inception) |
| $ | |
| $ | | $ | | $ | | $ | | ||||||||
Common stock issued to Sponsor |
| — |
| — |
| |
| |
| |
| — |
| | ||||||
Net loss |
| — |
| — |
| — |
| — |
| — |
| ( |
| ( | ||||||
Balance as of March 31, 2021 | — | — | | | | ( | | |||||||||||||
Net loss | — | — | — | — | — | ( | ( | |||||||||||||
Balance as of June 30, 2021 | — | — | | | | ( | | |||||||||||||
Net loss | — | — | — | — | — | ( | ( | |||||||||||||
Balance as of September 30, 2021 |
| | $ | |
| | $ | | $ | | $ | ( | $ | | ||||||
The accompanying notes are an integral part of the unaudited condensed financial statements.
3
BLOCKCHAIN MOON ACQUISITION CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Period | |||||
from January 22, | ||||||
For the Nine | 2021 (Inception) | |||||
Months Ended | Through | |||||
September 30, | September 30, | |||||
| 2022 |
| 2021 | |||
Cash flows used in Operating Activities: | ||||||
Net loss | $ | ( | $ | ( | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
| ||
Formation costs paid by the Sponsor | — | | ||||
Gain on marketable securities (net), interest on marketable securities held in Trust Account | ( | — | ||||
Change in fair value of warrant liability | ( | — | ||||
Changes in current assets and current liabilities: |
|
|
|
| ||
Prepaid expenses | | ( | ||||
Due from related party | | — | ||||
Due to related party | | — | ||||
Accrued expenses |
| |
| — | ||
Income taxes payable | | — | ||||
Due to related party | — | | ||||
Net cash used in operating activities |
| ( |
| ( | ||
Cash flows used in Investing Activities: | ||||||
Purchases of investments held in Trust Account | ( | — | ||||
Proceeds from maturities of investments held in Trust account | | — | ||||
Net cash used in investing activities | — | — | ||||
|
|
|
| |||
Cash flows (used in) provided by from Financing Activities: |
|
|
|
| ||
Proceeds from issuance of promissory note to related party | — | | ||||
Payment of offering costs |
| ( |
| ( | ||
Net cash (used in) provided by from financing activities |
| ( |
| | ||
|
|
|
| |||
Net change in cash |
| ( |
| | ||
Cash, beginning of the period |
| |
| — | ||
Cash, end of the period | $ | | $ | | ||
|
|
|
|
| ||
Supplemental disclosure of noncash investing and financing activities: |
|
|
|
| ||
Deferred offering costs paid by Sponsor in exchange for issuance of common stock | $ | — | $ | | ||
Deferred offering costs paid by related party | $ | — | $ | | ||
Accretion of Common Stock to redemption value | $ | | $ | — | ||
The accompanying notes are an integral part of the unaudited condensed financial statements.
4
BLOCKCHAIN MOON ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
Note 1 — Organization and Business Operations
Organization and General
Blockchain Moon Acquisition Corp. (the “Company”) is a blank check company incorporated in Delaware on January 22, 2021. The Company was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with
The Company has selected December 31 as its fiscal year end.
As of September 30, 2022, the Company had not commenced any operations. All activity for the period from January 22, 2021 (inception) through September 30, 2022 relates to the Company’s formation, the IPO described below and searching for a business combination target. 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 and gains from the marketable securities held in the Trust Account (as defined below), and gains or losses from the change in fair value of the warrant liabilities. It is an emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
Sponsor and IPO Financing
The Company’s sponsor is Jupiter Sponsor LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for the Company’s IPO was declared effective on October 18, 2021 (the “Effective Date”). On October 21, 2021, the Company consummated its IPO of
Transaction costs related to the IPO and overallotment amounted to $
5
BLOCKCHAIN MOON ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
Trust Account
Following the closing of the IPO on October 21, 2021 and the full exercise of the over-allotment option by the underwriters on October 26, 2021, an amount of $
Initial Business Combination
The Company’s business combination must be with
The Company will provide its public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of the initial business combination either (i) in connection with a stockholder meeting called to approve the initial business combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a proposed initial business combination or conduct a tender offer will be made by the Company, solely in its discretion. The stockholders will be entitled to redeem all or a portion of their public shares upon the completion of the initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account as of business days prior to the consummation of the initial business combination, including interest (which interest shall be net of taxes payable) divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the Trust Account is initially anticipated to be $
If the Company holds a stockholder vote or there is a tender offer for shares in connection with an initial business combination, a stockholder will have the right to redeem his, her or its public Shares for an amount in cash equal to his, her or its pro rata share of the aggregate amount on deposit in the Trust Account as of business days prior to the consummation of the initial business combination, including interest not previously released to the Company to pay its taxes. As a result, such public Shares are recorded at redemption amount and classified as temporary equity upon the completion of the IPO, in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, “Distinguishing Liabilities from Equity.”
6
BLOCKCHAIN MOON ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
The Company initially had
The Sponsor, officers and directors have agreed to (i) waive their redemption rights with respect to their Founder Shares and any public shares they purchase in connection with the completion of the initial business combination and (ii) to waive their redemption rights with respect to their founder shares if the Company fails to complete its initial business combination within the Combination Period (although they will be entitled to redemption rights with respect to any public shares they hold if the Company fails to complete business combination within the prescribed time frame); and (iii) vote their Founder Shares and any public shares purchased during or after the IPO in favor of an initial business combination.
The Company’s Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent auditors) for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (i) $
Going Concern and Liquidity
As of September 30, 2022, the Company had $
The Company has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, suspending the pursuit of a business combination. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all.
7
BLOCKCHAIN MOON ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
On October 19, 2022, the Company held the Extension Meeting to approve an amendment to the Company’s amended and restated certificate of incorporation (the “Charter Amendment”) to extend the date (the “Termination Date”) by which the Company has to consummate a business combination from October 21, 2022 (the “Original Termination Date”) to January 21, 2023 (the “Charter Extension Date”) and to allow the Company, without another stockholder vote, to elect to extend the Termination Date to consummate a business combination on a monthly basis for up to
Accordingly, on October 21, 2022, the Company issued an unsecured promissory note in the principal amount of $
In connection with the vote to approve the Charter Amendment, the holders of
In addition, in order to finance transaction costs in connection with a business combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company Working Capital Loans (Note 5). 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 $
In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s ASC Topic 205-40, “Basis of Presentation - Going Concern”, the Company has until January 21, 2023 (absent any extensions of such period by the Sponsor, pursuant to the terms described above) to consummate a business combination. It is uncertain that the Company will be able to consummate a business combination by this time. If a business combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of the Company. Management has determined that the liquidity condition and mandatory liquidation, should a business combination not occur, and potential subsequent dissolution, raises substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after January 21, 2023. The Company intends to complete a business combination before the mandatory liquidation date. However, there can be no assurance that the Company will be able to consummate any business combination by January 21, 2023.
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of the financial statements. The accompanying financial statements does not include any adjustments that might result from the outcome of this uncertainty.
8
BLOCKCHAIN MOON ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy are not determinable as of the date of these financial statements. The specific impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these financial statements.
NOTE 2. SUMMARY OF 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 Article 8 of Regulation S-X of the U.S. Securities and Exchange Commission (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 statement 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 for the period ended December 31, 2021, as filed with the SEC on April 13, 2022. The interim results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any future periods.
Emerging Growth Company Status
The Company is an “emerging growth company,” as defined in Section 2(a) of 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 of 1934 (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.
Use of Estimates
The preparation of the unaudited condensed 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 unaudited condensed financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
9
BLOCKCHAIN MOON ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
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 financial statement, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly 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 had cash of $
Investments Held in Trust Account
At September 30, 2022, the Company’s investments held in the Trust Account is comprised of $
Offering Costs
The Company complies with the requirements of the ASC 340-10-S99-1. Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the IPO that were directly related to the IPO. The Company incurred offering costs amounting to $
Warrant Liability
The Company accounts for Private Placement Warrants for shares of the Company’s common stock that are not indexed to its own shares as liabilities at fair value on the balance sheet. The warrants will be re-evaluated for the proper accounting treatment at each reporting period and are subject to remeasurement at each balance sheet date and any change in fair value is recognized as a component of other income (expense), net on the statement of operations. The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of the Private Placement Warrants. At that time, the portion of the liability related to the Private Placement Warrants will be reclassified to additional paid-in capital.
Common Stock Subject to Possible Redemption
All of the
10
BLOCKCHAIN MOON ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Such changes are reflected in additional paid-in-capital, or in the absence of additional paid-in capital, in accumulated deficit. On December 31, 2021, the Company accreted $
As of September 30, 2022, and December 31, 2021, the common stock reflected in the balance sheets are reconciled in the following table:
Gross proceeds |
| $ | |
Less: Proceeds allocated to Public Warrants | ( | ||
Less: Common stock issuance costs | ( | ||
Add: Remeasurement of common stock to redemption value | | ||
Common stock subject to possible redemption, as of December 31, 2021 | | ||
Add: Remeasurement of common stock to redemption value |
| | |
Common stock subject to possible redemption, as of March 31, 2022 | | ||
Add: Remeasurement of common stock to redemption value | | ||
Common stock subject to possible redemption, as of June 30, 2022 | | ||
Add: Remeasurement of common stock to redemption value | | ||
Common stock subject to possible redemption, as of September 30, 2022 | $ | |
Income Taxes
The Company accounts for income taxes under ASC 740, “Income Taxes.” ASC 740, Income Taxes, requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the unaudited condensed financial statements 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. As of September 30, 2022 and December 31, 2021, the Company’s deferred tax asset had a full valuation allowance recorded against it. Our effective tax rate was
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
The Company has identified the United States as its only “major” tax jurisdiction. The Company is subject to income taxation by major taxing authorities since inception. These 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.
11
BLOCKCHAIN MOON ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
Net income (Loss) per Common Share
The Company has two classes of shares, which are referred to as the redeemable common stock and the non-redeemable common stock. Earnings and losses are shared pro rata between the two classes of shares. Net income (loss) per common stock is calculated by dividing the net income (loss) by the weighted average common stock outstanding for the respective period. Net loss for the period from inception to IPO was allocated fully to non-redeemable common stock. Diluted net loss per share attributable to common stockholders adjusts the basic net loss per share attributable to common stockholders and the weighted-average common stock outstanding for the potentially dilutive impact of outstanding warrants. However, because the warrants are anti-dilutive, diluted loss per common stock is the same as basic loss per common stock for the period presented. In addition, the Company has not considered the effect of the unit purchase option sold to the underwriter and/or its designees, in the calculation of diluted loss per share, since the exercise of the unit purchase option is contingent upon the occurrence of future events.
With respect to the accretion of common stock subject to possible redemption and consistent with ASC Topic 480-10-S99-3A, the Company treated accretion in the same manner as a dividend, paid to the stockholder in the calculation of the net income (loss) per common stock.
The following table reflects the calculation of basic and diluted net income (loss) per common stock (in dollars, except per share amounts):
| For the Three Months Ended September 30, | |||||
| 2022 |
| 2021 | |||
Net loss | $ | ( | $ | ( | ||
Less: Accretion of temporary equity to redemption value |
| ( |
| — | ||
Net loss including accretion of temporary equity to redemption value | $ | ( | $ | ( | ||
|
| For the Period | ||||
For the Nine | from January 22, | |||||
Months Ended | 2021 (Inception) | |||||
September 30, | Through September 30, | |||||
| 2022 |
| 2021 | |||
Net loss | $ | ( | $ | ( | ||
Less: Accretion of temporary equity to redemption value |
| ( |
| — | ||
Net loss including accretion of temporary equity to redemption value | $ | ( | $ | ( | ||
| For the Three Months Ended September 30, | |||||||||||
2022 | 2021 | |||||||||||
| Redeemable |
| Non-Redeemable |
| Redeemable |
| Non-Redeemable | |||||
Basic and diluted net loss per share: |
|
|
|
|
|
|
|
| ||||
Numerator: |
|
|
|
|
|
|
|
| ||||
Allocation of net loss including accretion of temporary equity | $ | ( | $ | ( | $ | — | $ | ( | ||||
Deemed dividend for accretion of temporary equity to redemption value |
| |
| — |
| — |
| — | ||||
Allocation of net loss | $ | ( | $ | ( | $ | — | $ | ( | ||||
Denominator: |
|
|
|
|
|
|
|
| ||||
Weighted-average shares outstanding |
| |
| |
| — |
| | ||||
Basic and diluted net loss per common stock | ( | ( | $ | — | ( | |||||||
12
BLOCKCHAIN MOON ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
For the Period from January 22, 2021 | ||||||||||||
For the Nine Months Ended September 30, | (Inception) Through September 30, | |||||||||||
| 2022 | 2021 | ||||||||||
| Redeemable |
| Non-Redeemable |
| Redeemable |
| Non-Redeemable | |||||
Basic and diluted net loss per share: |
|
|
|
|
|
|
|
| ||||
Numerator: |
|
|
|
|
|
|
|
| ||||
Allocation of net loss including accretion of temporary equity | $ | ( |
| $ | ( | $ | — | $ | ( | |||
Deemed dividend for accretion of temporary equity to redemption value |
| |
|
| — |
| — |
| — | |||
Allocation of net loss | $ | ( |
| $ | ( | $ | — | $ | ( | |||
Denominator: |
|
|
|
|
|
|
|
| ||||
Weighted-average shares outstanding |
| |
|
| |
| — |
| | |||
Basic and diluted net loss per common stock | ( |
| ( | $ | — | ( | ||||||
In connection with the underwriters’ full exercise of their over-allotment option on October 26, 2021,
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 $
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities which qualify as financial instruments other than warrant liability approximates the carrying amounts represented in the balance sheet, primarily due to its short-term nature.
Fair value measurements are classified on a three-tier hierarchy as follows:
| ● | 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. |
In many cases, a valuation technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy described above. The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy.
13
BLOCKCHAIN MOON ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
Recent Accounting Standards
In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company has determined not to early adopt. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.
Management does not believe that any other recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
NOTE 3. PUBLIC OFFERING
On October 21, 2021, the Company sold
The underwriters had a
NOTE 4. PRIVATE PLACEMENT
On October 21, 2021, simultaneously with the closing of the IPO, the Sponsor purchased from the Company
On October 26, 2021, simultaneously with the sale of the Over-Allotment Option Units, the Company consummated the private sale of an additional
The Private Units, underlying private shares of common stock and private rights and private warrants will not be transferable, assignable or salable until
14
BLOCKCHAIN MOON ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On February 3, 2021, the Sponsor paid $
The Sponsor has agreed not to transfer, assign or sell any of the Founder Shares (except to certain permitted transferees) until, with respect to
Administrative Service Fee
The Company has agreed, commencing on the effective date of the IPO, to pay the Sponsor a total of $
Promissory Note — Related Party
On May 1, 2021, the Company issued an unsecured promissory note to the Sponsor, pursuant to which the Company could borrow up to an aggregate principal amount of $
15
BLOCKCHAIN MOON ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
Related Party Loans
In order to finance transaction costs in connection with a business combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors 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 will repay the Working Capital Loans. In the event that a business combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay the Working Capital Loans but no proceeds from the Trust Account would be used to repay the Working Capital Loans. Up to $
Extension Loans
The Company will have
NOTE 6. COMMITMENTS
Registration Rights
The holders of the Founder Shares, Private Units, Unit Purchase Option (the “UPO”), and units that may be issued on conversion of Working Capital Loans or Extension Loans (and any securities underlying the Private Units, the UPO, or units issued upon conversion of the Working Capital Loans or Extension Loans) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of the IPO requiring the Company to register such securities for resale (in the case of the Founder Shares, only after redemption to the Company’s common stock). The holders of these securities are entitled to make up to
Underwriting Agreement
The underwriters had a
16
BLOCKCHAIN MOON ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
The underwriters were entitled to a cash underwriting discount of two percent (
The underwriters are entitled to a deferred underwriting discount of
Unit Purchase Option
On October 21, 2021, the Company sold to the underwriters and/or its designees, for $
NOTE 7. FAIR VALUE MEASUREMENTS
The following table presents information about the Company’s assets and liabilities that are measured at fair value at September 30, 2022 and December 31, 2021, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
|
| September 30, |
| December 31, | ||||
Description | Level | 2022 | 2021 | |||||
Assets |
|
|
|
|
|
| ||
Cash and marketable Securities held in Trust Account—US Treasuries |
| 1 | $ | | $ | | ||
Liabilities: |
|
|
|
|
|
| ||
Warrant liability – Private Placement Warrants | 3 | $ | — | $ | | |||
Warrant liability – Private Placement Warrants |
| 2 | $ | | $ | — | ||
The Private Placement Warrants were accounted for as liabilities in accordance with ASC Topic 815-40 and are presented within liabilities on the balance sheet. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the statement of operations.
The fair value of the Private Placement Warrants was initially measured at fair value using a Monte Carlo simulation model. The fair value of the Private Placement Warrants has subsequently been measured by reference to the trading price of the Public Warrants, which is considered to be a Level 2 fair value measurement.
17
BLOCKCHAIN MOON ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
The following table provides quantitative information regarding Level 3 fair value measurements for Private Placement Warrants at December 31, 2021:
| December 31, |
| |
| 2021 | ||
Risk-free interest rate |
| | % |
Expected term |
|
| |
Expected volatility of underlying stock |
| | % |
Dividends |
| | % |
Probability of Business Combination |
| | % |
The following table presents the change in the fair value of Level 3 warrant liabilities:
| Private | ||
Placement | |||
| Warrants | ||
Fair value as of January 1, 2022 | $ | | |
| ( | ||
Transfer of private warrants to Level 2 measurement | ( | ||
Fair value as of March 31, 2022 | — | ||
— | |||
Fair value as of June 30, 2022 | — | ||
— | |||
Fair value as of September 30, 2022 | $ | — | |
Transfers to/from Levels 1, 2 and are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs. The estimated fair value of the Private Placement Warrants that transferred from a Level 3 measurement to a Level 2 fair value measurement during the three and nine months ended September 30, 2022 was $
NOTE 8. STOCKHOLDERS’ (DEFICIT) EQUITY
Preferred Stock — The Company is authorized to issue a total of
Common Stock — The Company is authorized to issue a total of
18
BLOCKCHAIN MOON ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
Common stockholders of record are entitled to
Rights — Except in cases where the Company is not the surviving company in a business combination, each holder of a right will automatically receive -tenth (1/10) of one share of common stock upon consummation of a business combination, even if the holder of a right redeemed all shares held by him, her or it in connection with a Business Combination or an amendment to the Company’s Certificate of Incorporation with respect to its pre-business combination activities. In the event that the Company will not be the surviving company upon completion of a Business Combination, each holder of a right will be required to affirmatively redeem his, her or its rights in order to receive the -tenth (1/10) of a share underlying each right upon consummation of a business combination. No additional consideration will be required to be paid by a holder of Public Rights in order to receive his, her or its additional common stock upon consummation of a business combination. The shares issuable upon exchange of the rights will be freely tradable (except to the extent held by affiliates of the Company). If the Company enters into a definitive agreement for a business combination in which the Company will not be the surviving entity, the definitive agreement will provide for the holders of rights to receive the same per share consideration the holders of the common stock will receive in the transaction on an as-converted into common stock basis.
The Company will not issue fractional shares in connection with an exchange of rights. Fractional shares will either be rounded down to the nearest whole share or otherwise addressed in accordance with the applicable provisions of the Delaware law. As a result, the holders of the rights must hold rights in multiples of ten in order to receive shares for all of the holders’ rights upon closing of a business combination. If the Company is unable to complete a business combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of rights will not receive any of such funds with respect to their rights, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such rights, and the rights will expire worthless. Further, there are no contractual penalties for failure to deliver securities to the holders of the rights upon consummation of a business combination. Additionally, in no event will the Company be required to net cash settle the rights. Accordingly, the rights may expire worthless.
Public and Private Warrants
Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants will become exercisable on the later of (a) the completion of a business combination or (b)
No Public 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. Notwithstanding the foregoing, if a registration statement covering the shares of common stock issuable upon exercise of the warrants is not effective within
19
BLOCKCHAIN MOON ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
No Public Warrants will be exercisable and the Company will not be obligated to issue shares of common stock unless at the time a holder seeks to exercise such warrant, a prospectus relating to the shares of common stock issuable upon exercise of the warrants is current and the shares of common stock have been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants. Under the terms of the warrant agreement, the Company has agreed to use its best efforts to meet these conditions and to maintain a current prospectus relating to the shares of common stock issuable upon exercise of the warrants until the expiration of the warrants. However, the Company cannot guarantee that it will be able to do so and, if the Company does not maintain a current prospectus relating to the shares of common stock issuable upon exercise of the warrants, holders will be unable to exercise their warrants and the Company will not be required to settle any such warrant exercise. If the prospectus relating to the shares of common stock issuable upon the exercise of the warrants is not current or if the shares of common stock are not qualified or exempt from qualification in the jurisdictions in which the holders of the warrants reside, the Company will not be required to net cash settle or cash settle the warrant exercise, the warrants may have no value, the market for the warrants may be limited and the warrants may expire worthless.
The Company may call the warrants for redemption, in whole and not in part, at a price of $
| ● | at any time while the warrants are exercisable; |
| ● | upon not less than |
| ● | if, and only if, the reported last sale price of the shares of common stock equals or exceeds $ |
| ● | if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such warrants at the time of redemption and for the entire |
If the Company calls the warrants for redemption as described above, management will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering the whole 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 by (y) the fair market value. The fair market value shall mean the volume weighted average trading price of the Company’s common stock for the
In addition, if (x) the Company issues additional shares of common stock or equity-linked securities for capital raising purposes in connection with the closing of its initial business combination at an issue price or effective issue price of less than $
The Private Units and their component securities will not be transferable, assignable or salable until
20
BLOCKCHAIN MOON ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
The Company evaluated the Public and Private Warrants as either equity-classified or liability-classified instruments based on an assessment of the warrants’ specific terms and applicable authoritative guidance in FASB ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. Pursuant to such evaluation, the Company further evaluated the Public 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.
Certain adjustments to the settlement amount of the Private warrants are based on a variable that is not an input to the fair value of an option as defined under ASC 815 - 40, and thus the warrants are not considered indexed to the Company’s own stock and not eligible for an exception from derivative accounting. The accounting treatment of derivative financial instruments requires that the Company record a derivative liability upon issuance of the warrants at the closing of the IPO. Accordingly, the Company has classified each Private Warrant as a liability at its fair value, with subsequent changes in their respective fair values recognized in the statement of operations and comprehensive income (loss) at each reporting date.
NOTE 9. SUBSEQUENT EVENTS
The Proposed Business Combination
On October 15, 2022, the Company announced that it executed a Business Combination Agreement (the “Business Combination Agreement”), dated as of October 14, 2022, with Malibu Parent Inc., a Delaware corporation (“New BMAC”), Hermosa Merger Sub LLC, a Delaware limited liability company (“Merger Sub”), and DLTx ASA, a Norwegian public limited liability company (“DLTx”) (the transactions contemplated by the Business Combination Agreement, the “Business Combination”).
Business Combination Agreement
The Business Combination Agreement sets forth the terms and conditions of the Business Combination, which includes, among other things, the consummation of the following transactions: (a) prior to the closing of the Business Combination (the “Closing”), DLTx will assign, contribute or otherwise convey certain assets to its subsidiaries such that, by the closing date, the subsidiaries of DLTx will hold all assets of the DLTx company group other than specific, enumerated assets and associated liabilities (the “Conveyances”), in accordance with a plan to be provided by DLTx to the Company (the “Conveyance Plan”); (b) prior to the Closing, on the closing date, the Company will merge with and into Merger Sub, with Merger Sub surviving (the “Merger”, and the effective time of the Merger, the “Effective Time”) as a direct subsidiary of New BMAC, and New BMAC will continue as the public company with (i) each outstanding share of common stock, $
21
BLOCKCHAIN MOON ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
Sponsor Side Letter
The Company, the Sponsor, DLTx, and, solely for purposes of Section 1.3(b) and Article II, Enzo Villani, (“Villani”), concurrently with the execution and delivery of the Business Combination Agreement, have entered into a sponsor letter agreement (the “Sponsor Side Letter”), pursuant to which the Sponsor has agreed, among other things, (A) to vote (or execute and return an action by written consent), or cause to be voted at such meeting (or validly execute and return and cause such consent to be granted with respect thereto), all of its or his Covered Shares (as defined below) (i) in favor of each Transaction Proposal contemplated in the Business Combination Agreement, and (ii) against any action, proposal, transaction or agreement relating to any BMAC Acquisition Proposal (defined below), and (B) not to elect to make or effect a Company Share Redemption with respect to any such Covered Shares. Capitalized terms used but not otherwise defined herein will have the meanings given to them in the Sponsor Side Letter.
In addition, the Sponsor and DLTx have agreed, among other things, (A) to cancel certain equity interests in the Sponsor, upon Closing, for no consideration while New BMAC concurrently redeems, for no consideration,
A “BMAC Acquisition Proposal” means any direct or indirect acquisition (or other business combination), in one or a series of related transactions, by the Company (a) of or with an unaffiliated entity or (b) of all or a material portion of the assets, equity securities or businesses of an unaffiliated entity (in the case of each of clause (a) and (b), whether by merger, consolidation, recapitalization, purchase or issuance of equity securities, purchase of assets, tender offer or otherwise), other than with DLTx and its representatives.
“Covered Shares” means all Sponsor Shares held by the Sponsor, as of the date hereof together with any BMAC Common Shares or any shares of capital stock of the Company acquired.
The Extension Amendment
On October 19, 2022, the Company held the Extension Meeting to approve an amendment to the Company’s amended and restated certificate of incorporation (the “Charter Amendment”) to extend the date (the “Termination Date”) by which the Company has to consummate a business combination from October 21, 2022 (the “Original Termination Date”) to January 21, 2023 (the “Charter Extension Date”) and to allow the Company, without another stockholder vote, to elect to extend the Termination Date to consummate a business combination on a monthly basis for up to
Accordingly, on October 21, 2022, the Company issued the Note in the principal amount of $
In connection with the vote to approve the Charter Amendment, the holders of
22
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Blockchain Moon Acquisition Corp. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Jupiter Sponsor LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the completion of the proposed Business Combination (as defined below), the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements, including that the conditions of the proposed Business Combination are not satisfied. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s (i) registration statement filed in connection with its IPO, (ii) Annual Report on Form 10-K filed with the SEC on April 14, 2022, (iii) Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 filed with the SEC on May 16, 2022, and (iv) Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 filed with the SEC on August 15, 2022. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a recently organized blank check company incorporated in Delaware on January 22, 2021. We were formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. We have not selected any specific business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target. While we may pursue an initial business combination target in any business, industry or geographical location, we intend to focus our search on high growth businesses in blockchain technologies in North America, Europe, and Asia.
On October 21, 2021, we consummated our IPO of 10,000,000 units at $10.00 per unit, and the sale of 400,000 units to our sponsor, at a price of $10.00 per unit in a private placement that closed simultaneously with the IPO. Each Unit consists of one share of common stock, one warrant and one right. Each right entitles the holder thereof to receive one-tenth (1/10) of one share of common stock upon the consummation of an initial business combination. Each warrant entitles the registered holder to purchase one-half (1/2) of a share of common stock at a price of $11.50 per full share, subject to certain adjustments. Our management has broad discretion with respect to the specific application of the net proceeds of the IPO and the private units, although substantially all of the net proceeds are intended to be generally applied toward consummating a business combination. The underwriters have a 45-day option from the date of IPO to purchase up to an additional 1,500,000 units to cover over-allotments, if any. On October 26, 2021 the underwriters fully exercised their over-allotment option.
Upon the closing of the IPO (including the underwriter’s over-allotment option) and the private placement, $115,000,000 was placed in a trust account.
23
We will have only 12 months from the closing of our IPO (or up to 18 months from the closing of the IPO if we extend the period of time to consummate a business combination by the maximum amount) to complete our initial business combination (the “Combination Period”). If we are unable to complete an initial business combination within such period, it will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which interest shall be net of taxes payable, and less up to $100,000 of interest to pay dissolution expenses) divided by the number of then issued and outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our rights, which will expire worthless if we fail to complete our initial business combination within the Combination Period.
On October 19, 2022, we held the Extension Meeting to approve the Charter Amendment to extend the Termination Date by which we have to consummate a business combination from the Original Termination Date to the Charter Extension Date and to allow us, without another stockholder vote, to elect to extend the Termination Date to consummate a business combination on a monthly basis for up to six times by an additional one month each time after the Charter Extension Date, by resolution of our board of directors, if requested by the Sponsor, and upon five days’ advance notice prior to the applicable Termination Date, until July 21, 2023, or a total of up to nine months after the Original Termination Date, unless the closing of our initial business combination shall have occurred prior thereto. Accordingly, on October 21, 2022, we issued the Note to the Sponsor. The Note does not bear interest and matures upon closing of our initial business combination. In the event that we do not consummate a business combination, the Note will be repaid only from amounts remaining outside of the Trust Account, if any. The proceeds of the Note have been deposited in the Trust Account in connection with the Charter Amendment. Upon consummation of a Business Combination, the Payee shall have the option, but not the obligation, to convert the Principal Amount of this Note, in whole or in part at the option of the Payee, into Private Placement Units, each Private Placement Unit consisting of one share of common stock of the Maker, one warrant to purchase one-half of one share of common stock of the Maker and one right to purchase one-tenth of one share of common stock of the Maker. The Private Placement Units shall be identical to the private placement units issued to the Payee at the time of the Maker’s IPO.
In connection with the vote to approve the Charter Amendment, the holders of 9,724,108 public shares of our common stock properly exercised their right to redeem their shares (and did not withdraw their redemption) for cash at a redemption price of approximately $10.06 per share, for an aggregate redemption amount of approximately $97,852,300. Following such redemptions, approximately $17,870,500 was left in trust and 1,775,892 shares of common stock held by public stockholders remained outstanding.
We cannot assure you that our plans to complete our initial business combination will be successful.
Results of Operations
Our entire activity since inception up to September 30, 2022 was in preparation for our IPO and searching for a business combination target. We will not generate any operating revenues until the closing and completion of our initial business combination, at the earliest.
For the three months ended September 30, 2022, we had a net loss of $552,136, which consists of operating costs of $1,100,978, and provision for income taxes of $111,490, offset by interest income on marketable securities held in the Trust Account of $622,859, change in fair value of warrant liabilities of $37,473.
For the nine months ended September 30, 2022, we had a net loss of $1,219,013, which consists of operating costs of $2,075,893, and provision for income taxes of $127,962, offset by interest income on marketable securities held in the Trust Account of $823,927, change in fair value of warrant liabilities of $160,915.
For the three months ended September 30, 2021, we had net loss of $90, which consisted of formation and operating costs.
For the period from January 22, 2021 through September 30, 2021, we had net loss of $1,690, which consisted of formation and operating costs.
24
Going Concern and Liquidity
As of September 30, 2022, we had $251,842 in cash and a working capital deficit of $1,135,446. Prior to the consummation of our IPO, our liquidity needs were satisfied through receipt of a $25,000 capital contribution from our sponsor in exchange for the issuance of the Founder Shares to our sponsor, and a $250,000 in note payable to our sponsor. Subsequent to the consummation of the IPO, we received the net proceeds not held in the Trust Account of approximately $1.4 million.
We have incurred and expect to continue to incur significant costs in pursuit of our financing and acquisition plans. If we are unable to raise additional capital, we may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, suspending the pursuit of a business combination. We cannot provide any assurance that new financing will be available to us on commercially acceptable terms, if at all.
In addition, in order to finance transaction costs in connection with a business combination, our sponsor or an affiliate of our sponsor, or certain of our officers and directors may, but are not obligated to, loan us working capital loans. 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 $1.5 million of such working capital loans may be convertible into warrants at a price of $10.00 per unit. The units would be identical to the private placement units. As of September 30, 2022, we have no borrowings under the Working Capital Loans.
On October 19, 2022, the Company held the Extension Meeting to approve the Charter Amendment to extend the Termination date by which the Company has to consummate a business combination from the Original Termination Date to the Charter Extension Date and to allow the Company, without another stockholder vote, to elect to extend the Termination Date to consummate a business combination on a monthly basis for up to six times by an additional one month each time after the Charter Extension Date, by resolution of the Company’s board of directors, if requested by the Sponsor, and upon five days’ advance notice prior to the applicable Termination Date, until July 21, 2023, or a total of up to nine months after the Original Termination Date, unless the closing of the Company’s initial business combination shall have occurred prior thereto.
Accordingly, on October 21, 2022, the Company issued the Note to the Sponsor. The Note does not bear interest and matures upon closing of the Company’s initial business combination. In the event that the Company does not consummate a business combination, the Note will be repaid only from amounts remaining outside of the Trust Account, if any. The proceeds of the Note have been deposited in the Trust Account in connection with the Charter Amendment. Upon consummation of a Business Combination, the Payee shall have the option, but not the obligation, to convert the Principal Amount of this Note, in whole or in part at the option of the Payee, into units of the Maker (each, a “Private Placement Unit”), each Private Placement Unit consisting of one share of common stock of the Maker, one warrant to purchase one-half of one share of common stock of the Maker and one right to purchase one-tenth of one share of common stock of the Maker. The Private Placement Units shall be identical to the private placement units issued to the Payee at the time of the Maker’s IPO.
In connection with the vote to approve the Charter Amendment, the holders of 9,724,108 public shares of our common stock properly exercised their right to redeem their shares (and did not withdraw their redemption) for cash at a redemption price of approximately $10.06 per share, for an aggregate redemption amount of approximately $97,852,300. Following such redemptions, approximately $17,870,500 was left in trust and 1,775,892 shares of common stock held by public stockholders remained outstanding.
In connection with our assessment of going concern considerations in accordance with ASC Topic 205-40, “Basis of Presentation - Going Concern,” we have until January 21, 2023 (absent any extensions of such period by the Sponsor, pursuant to the terms described above) to consummate the proposed Business Combination. It is uncertain that we will be able to consummate the proposed Business Combination by this time. If a business combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution. Management has determined that the liquidity condition and mandatory liquidation, should a business combination not occur, and potential subsequent dissolution, raises substantial doubt about our ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should we be required to liquidate after January 21, 2023. We intend to complete the proposed Business Combination before the mandatory liquidation date. However, there can be no assurance that we will be able to consummate any business combination by January 21, 2023.
25
Registration Rights
The holders of the Founder Shares, Private Units, Unit Purchase Option (the “UPO”), and units that may be issued on conversion of Working Capital Loans or Extension Loans (and any securities underlying the Private Units, the UPO, or units issued upon conversion of the Working Capital Loans or Extension Loans) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of the IPO requiring us to register such securities for resale (in the case of the Founder Shares, only after redemption to the Company’s common stock). The holders of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion of its initial business combination and rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act. Furthermore, notwithstanding the foregoing, pursuant to FINRA Rule 5110, Chardan Capital Markets, LLC (the representative of the underwriters) may not exercise its demand and “piggyback” registration rights after five and seven years, respectively, after the effective date of the registration statement of which this prospectus forms a part and may not exercise its demand rights on more than one occasion.
Underwriters Agreement
The underwriters had a 45-day option from the date of IPO to purchase up to an additional 1,500,000 units to cover over-allotments at $10.00 per unit, if any. On October 26, 2021 the underwriters exercised the over-allotment option in full, resulting in total gross proceeds to the Company of $15,000,000, and incurred $300,000 of underwriting commissions, and $525,000 of deferred underwriting commissions.
The underwriters were entitled to a cash underwriting discount of two percent (2%) of the gross proceeds of the Proposed Public Offering, or $2,000,000 (or up to $2,300,000 if the underwriters’ over-allotment is exercised in full). On October 21, 2021 and October 26, 2021, the Company paid a cash underwriting commissions of $2,300,000 and recorded it as offering costs.
The underwriters are entitled to a deferred underwriting discount of 3.5% of the gross proceeds of the IPO held in the Trust Account, or $4,025,000 in the aggregate, upon the completion of the Company’s initial Business Combination subject to the terms of the underwriting agreement, which were accounted as deferred underwriters’ discount.
Critical Accounting Policies
The preparation of these 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.
Common Stock Subject to Possible Redemption
We account for our common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Shares of common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. Our common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, shares of common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ equity section of our balance sheet.
26
Net Income (Loss) Per Common Share
We have two classes of shares, which are referred to as the redeemable common stock and the non-redeemable common stock. Earnings and losses are shared pro rata between the two classes of shares. Net income (loss) per common stock is calculated by dividing the net income (loss) by the weighted average common stock outstanding for the respective period. Net loss for the period from inception to IPO was allocated fully to non-redeemable common stock. Diluted net loss per share attributable to common stockholders adjusts the basic net loss per share attributable to common stockholders and the weighted-average common stock outstanding for the potentially dilutive impact of outstanding warrants. However, because the warrants are anti-dilutive, diluted loss per common stock is the same as basic loss per common stock for the period presented. In addition, we have not considered the effect of the unit purchase option sold to the underwriter and/or its designees, in the calculation of diluted loss per share, since the exercise of the unit purchase option is contingent upon the occurrence of future events.
With respect to the accretion of common stock subject to possible redemption and consistent with ASC Topic 480-10-S99-3A, we treated accretion in the same manner as a dividend, paid to the stockholder in the calculation of the net income (loss) per common stock.
Warrant Liability
We account for our warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for liability classification under ASC 815. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
Our Private Placement Warrants meet the criteria as liability classified derivative instruments and are recorded at fair value on the grant date and re-valued at each reporting date, with changes in the fair value reported in the statements of operations. We will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of the Private Placement Warrants. At that time, the portion of the liability related to the Private Placement Warrants will be reclassified to additional paid-in capital.
Recent Accounting Standards
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021.
Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
27
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Report, is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our current chief executive officer and chief financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of September 30, 2022, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of September 30, 2022, our disclosure controls and procedures were effective.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
28
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 1A. Risk Factors
Factors that could cause our actual results to differ materially from those in this report include the risk factors previously disclosed in (i) our registration statement filed in connection with our IPO, (ii) our Annual Report on Form 10-K filed with the SEC on April 14, 2022, (iii) our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 filed with the SEC on May 16, 2022 and (iv) our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 filed with the SEC on August 15, 2022. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risks could arise that may also affect our business or ability to consummate an initial business combination. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC. We also plan to file a registration statement on Form S-4, which will include a proxy statement for a special meeting of our stockholders in connection with the proposed Business Combination, which will include additional risk factors relating to the Company, DLTx and the proposed Business Combination.
A new 1% U.S. federal excise tax could be imposed on us in connection with redemptions by us of our shares.
On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, which, among other things, imposes a 1% excise tax on the fair market value of stock repurchased by “covered corporations” beginning in 2023, with certain exceptions (the “Excise Tax”). The Excise Tax is imposed on the repurchasing corporation itself, not its stockholders from which the stock is repurchased. Because we are a Delaware corporation and our securities are trading on Nasdaq, we believe that we are a “covered corporation” for this purpose. The amount of the Excise Tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the Excise Tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the Excise Tax. The U.S. Department of Treasury has been given authority to provide regulations and other guidance to carry out, and prevent the abuse or avoidance of the Excise Tax; however, no guidance has been issued to date. It is uncertain whether, and/or to what extent, the Excise Tax could apply to any redemptions of our public shares after December 31, 2022, including any redemptions in connection with a Business Combination or in the event we do not consummate a Business Combination within the time period set forth in our amended and restated certificate of incorporation.
Any redemption or other repurchase that we make that occurs after December 31, 2022 may be subject to the Excise Tax. Whether and to what extent we would be subject to the Excise Tax would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with our initial business combination, (ii) the structure of a Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with the business combination but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the U.S. Department of Treasury.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
We have not sold any unregistered securities during the quarter ended September 30, 2022. There were no other prior unregistered securities to report which have not been previously included in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.
Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosures
None
Item 5. Other Information
None
29
Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
No. |
| Description of Exhibit |
31.1* | ||
31.2* | ||
32.1+ | ||
32.2+ | ||
101.INS* | Inline XBRL Instance Document | |
101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | Inline XBRL Taxonomy Extension Labels Linkbase Document | |
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104* | Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit) |
* Filed herewith.
+ In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.
30
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BLOCKCHAIN MOON ACQUISITION CORP. | ||
Date: November 14, 2022 | By: | /s/ Enzo A. Villani |
Name: | Enzo A. Villani | |
Title: | Chief Executive Officer and Chairman | |
(Principal Executive Officer) | ||
Date: November 14, 2022 | By: | /s/ Wes Levitt |
Name: | Wes Levitt | |
Title: | Chief Financial Officer and Director | |
(Principal Accounting and Financial Officer) | ||
31