References to "we", "us", "our" or the "Company" are to Blockchain Moon
Acquisition Corp., except where the context requires otherwise. The following
discussion should be read in conjunction with our financial statements and
related notes thereto included elsewhere in this report.
Cautionary Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We
have based these forward-looking statements on our current expectations and
projections about future events. These forward-looking statements are subject to
known and unknown risks, uncertainties and assumptions about us that may cause
our actual results, levels of activity,
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performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by such
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "should," "could," "would," "expect,"
"plan," "anticipate," "believe," "estimate," "continue," or the negative of such
terms or other similar expressions. Factors that might cause or contribute to
such a discrepancy include, but are not limited to, those described in our other
Securities and Exchange Commission ("SEC") filings.
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.
We will have only 18 months from the closing of our IPO (or up to 21 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.
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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 $97,852,252. 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 December 31, 2022 was in preparation
for our initial public offering 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 year ended December 31, 2022, we had a net loss of $4,287,805, which
consists of operating costs of $5,406,038, interest expense of $5,271 and
provision for income taxes of $198,311, offset by interest and dividend on
marketable securities held in Trust Account of $191,490, realized gain on
marketable securities held in Trust Account of $963,636, change in fair value of
warrant liabilities of $166,527 and change in fair value of conversion option
liability of $162. Operating costs increased by 5,127,684 primarily due to an
increase in professional and legal fees in connection with the searching for a
target and terminated Business Combination.
For the period from January 22, 2021 through December 31, 2021, we had net loss
of $329,480, which consisted of formation and operating costs of $278,354,
changes in fair value of warrant liabilities of $60,676 and warrants issuance
costs of $679 and offset by realized gain on marketable securities held in Trust
Account of $10,229.
Going Concern and Liquidity
As of December 31, 2022, we had $189,771 in cash and a working capital deficit
of $4,657,982. 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 December 31, 2022, we have no borrowings under the
Working Capital Loans.
On January 20, 2023, the Company elected to exercise a one-month extension of
the date by which Blockchain Moon has to consummate a business combination from
January 21, 2023 to February 21, 2023 (the "Extension"). The Extension is the
first of six one-month extensions permitted under the Company's governing
documents and provides the Company with additional time to complete its initial
business combination. On January 20, 2023, the Company issued an unsecured
promissory note in the initial principal amount of $120,000 (the "Note") to
Jupiter Sponsor LLC in connection with the Extension. Pursuant to the note, the
Company may request an additional aggregate amount of up to $600,000, which may
be drawn down in five equal tranches. 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 Extension. The Sponsor further requested that the Company exercise one-month
extensions of the Termination Date on each of February 21, 2023 and March 21,
2023. Accordingly the Sponsor deposited an aggregate of $159,321 into the trust
account for the February and March 2023 monthly extensions and the remaining
balance of $80,679 remains due to trust. These deposits enabled the Company to
extend the Termination Date to April 21, 2023. These extensions are the first
three of six one-month extensions permitted under the Company's governing
documents, as described in this Report.
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In connection with our assessment of going concern considerations in accordance
with ASC Topic 205-40, "Basis of Presentation - Going Concern," we have until
April 21, 2023 (absent any extensions of such period by the Sponsor, pursuant to
the terms described above) to consummate an initial business combination. It is
uncertain that we 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. 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 April 21, 2023.
Contractual Obligations
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 Company's registration
statement on Form S-1 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 Estimates
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.
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.
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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 Pronouncements
See Note 2 in the audited financial statements for recent accounting
pronouncements.
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