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.
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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.
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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.
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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.
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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.
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