References to the "Company," "our," "us" or "we" refer to Corazon Capital V838
Monoceros Corp The following discussion and analysis of the Company's financial
condition and results of operations should be read in conjunction with the
unaudited condensed financial statements and the notes thereto contained
elsewhere in this Quarterly Report on Form 10-Q. Certain information contained
in the discussion and analysis set forth below includes forward-looking
statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q 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, 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. Such statements include, but are not limited
to, possible business combinations and the financing thereof, and related
matters, as well as all other statements other than statements of historical
fact included in this Form 10-Q. 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 blank check company incorporated on January 29, 2021 as a Cayman
Islands exempted company for the purpose of effecting a merger, share exchange,
asset acquisition, share purchase, reorganization or similar business
combination with one or more businesses or entities (the "Business
Combination"), that we have not yet identified. We will not be limited to a
particular industry or geographic region in our identification and acquisition
of a target company.
Our sponsor is Corazon V838 Monoceros Sponsor LLC, a Delaware limited liability
company (the "Sponsor"). The registration statement for our Initial Public
Offering was declared effective on March 23, 2021. On March 26, 2021, we
consummated its Initial Public Offering of 20,000,000 units (the "Units" and,
with respect to the Class A ordinary shares included in the Units being offered,
the "Public Shares"), at $10.00 per Unit, generating gross proceeds of $200.0
million, and incurring offering costs of approximately $11.6 million, of which
$7.0 million was for deferred underwriting commissions. We granted the
underwriter a 45-day option to purchase up to an additional 3,000,000 Units at
the Initial Public Offering price to cover over-allotments, if any. On March 29,
2021, the underwriter sent a notice to partially exercise the over-allotment
option, and on March 31, 2021 purchased an additional 379,900 Units, generating
gross proceeds of approximately $3.8 million (the "Over-Allotment"). We incurred
additional offering costs of approximately $209,000, of which approximately
$133,000 was for deferred underwriting fees.
Simultaneously with the closing of the Initial Public Offering, the Company
consummated the private placement ("Private Placement") of 4,666,667 warrants
(each, a "Private Placement Warrant" and collectively, the "Private Placement
Warrants"), at a price of $1.50 per Private Placement Warrant with the Sponsor,
generating gross proceeds of $7.0 million. Upon the closing of the Initial
Public Offering, the Over-Allotment and the Private Placement, $203.8 million
($10.00 per Unit) of the net proceeds of the Initial Public Offering, the
Over-Allotment and certain of the proceeds of the Private Placement was placed
in a trust account ("Trust Account") with Continental Stock Transfer & Trust
Company acting as trustee and invested in United States "government securities"
within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as
amended, or the Investment Company Act, having a maturity of 185 days or less or
in money market funds meeting certain conditions under Rule 2a-7 promulgated
under the Investment Company Act which invest only in direct U.S. government
treasury obligations, as determined by us, until the earlier of: (i) the
completion of a Business Combination and (ii) the distribution of the Trust
Account as described below.
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Our management has broad discretion with respect to the specific application of
the net proceeds of our Initial Public Offering and the sale of Private
Placement Warrants, although substantially all of the net proceeds are intended
to be applied generally toward consummating a Business Combination. The
Company's initial Business Combination must be with one or more operating
businesses or assets with a fair market value equal to at least 80% of the net
assets held in the Trust Account (excluding the deferred underwriting
commissions and taxes payable on the interest earned on the trust account) at
the time we sign a definitive agreement in connection with the initial Business
Combination. However, we will only complete a Business Combination if the
post-transaction company owns or acquires 50% or more of the outstanding voting
securities of the target or otherwise acquires a controlling interest in the
target sufficient for it not to be required to register as an investment company
under the Investment Company.
If we are unable to complete a Business Combination within 24 months from the
closing of the Initial Public Offering, or March 26, 2023 (the "Combination
Period"), we will (1) cease all operations except for the purpose of winding up;
(2) as promptly as reasonably possible but not more than 10 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 (less up to $100,000 of interest to pay dissolution expenses and which
interest shall be net of taxes payable), divided by the number of then issued
and outstanding Public Shares, which redemption will completely extinguish
Public Shareholders' rights as shareholders (including the right to receive
further liquidating distributions, if any); and (3) as promptly as reasonably
possible following such redemption, subject to the approval of the remaining
shareholders and the board of directors, liquidate and dissolve, subject in each
case to our obligations under Cayman Islands law to provide for claims of
creditors and the requirements of other applicable law.
Liquidity and Going Concern
As of September 30, 2022, we had approximately $927,000 in our operating bank
account and working capital of approximately $504,000.
Our liquidity needs to date have been satisfied through a contribution of
$25,000 from our Sponsor to cover for certain expenses in exchange for the
issuance of the Founder Shares, the loan of approximately $87,000 from our
Sponsor pursuant to a Note, and the proceeds from the consummation of the
Private Placement not held in the Trust Account. We fully repaid the Note as of
March 29, 2021. Further, we expect to incur significant costs in pursuit of our
acquisition plans. We also need to raise additional funds to meet our
obligations and sustain our operations. We are required to liquidate on March
26, 2023 if we are unable to complete a Business Combination by this date. These
factors, among others, raise substantial doubt about the Company's ability to
continue as a going concern. The condensed financial statements do not include
any adjustments that might result from the Company's inability to continue as a
going concern.
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, provide us Working Capital
Loans. As of September 30, 2022, there were no amounts outstanding under the
Working Capital Loans.
Results of Operations
Our entire activity since inception up to September 30, 2022 related to our
formation, the preparation for the Initial Public Offering, and since the
closing of the Initial Public Offering, the search for a prospective initial
Business Combination. We will not be generating 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 net income of
approximately $1.6 million, which consisted of approximately $920,000 in net
gain from investments held in the trust account and non-operating income of
approximately $849,000 resulting from changes in fair value of derivative
warrant liabilities, partially offset by approximately $179,000 in general and
administrative expenses and $30,000 in administrative expenses - related party.
For the three months ended September 30, 2021, we had net income of
approximately $3.1 million, which consisted of non-operating income of
approximately $3.3 million for the change in fair value of derivative warrant
liabilities and approximately $3,000 in net gain from investments held in Trust
Account, partially offset by approximately $96,000 in general and administrative
expenses and $30,000 in administrative expenses - related party.
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For the nine months ended September 30, 2022, we had net income of approximately
$7.9 million, which consisted of approximately $1.2 million in net gain from
investments held in the trust account and non-operating income of approximately
$7.5 million resulting from changes in fair value of derivative warrant
liabilities, partially offset by approximately $770,000 in general and
administrative expenses and $90,000 in administrative expenses - related party.
For the period from January 29, 2021 (Inception) through September 30, 2021, we
had net income of approximately $2.4 million, which consisted of non-operating
income of approximately $3.3 million for the change in fair value of derivative
warrant liabilities and approximately $10,000 in net gain from investments held
in Trust Account, partially offset by approximately $408,000 in general and
administrative expenses, $60,000 in administrative expenses - related party and
approximately $428,000 in financing costs for derivative warrant liabilities.
Contractual Obligations
Registration and Shareholder Rights
The holders of the Founder Shares, Private Placement Warrants, and warrants that
may be issued upon conversion of Working Capital Loans (and any Class A ordinary
shares issuable upon the exercise of the Private Placement Warrants or warrants
issued upon conversion of the Working Capital Loans and upon conversion of the
Founder Shares) were entitled to registration rights pursuant to a registration
and shareholder rights agreement signed upon the effective date of the Initial
Public Offering. The holders of these securities were entitled to make up to
three demands, excluding short form demands, that the Company register such
securities. In addition, the holders have certain "piggy-back" registration
rights with respect to registration statements filed subsequent to the
completion of the initial Business Combination. The Company will bear the
expenses incurred in connection with the filing of any such registration
statements.
Underwriting Agreement
The Company granted the underwriter a 45-day option from the date of this
prospectus to purchase up to 3,000,000 additional Units at the Initial Public
Offering price less the underwriting discounts and commissions. On March 29,
2021, the underwriter sent a notice to partially exercise the over-allotment
option, and on March 31, 2021 purchased an additional 379,900 Units.
The underwriter was entitled to an underwriting discount of $0.20 per unit, or
$4.0 million in the aggregate, paid upon the closing of the Initial Public
Offering. In addition, $0.35 per unit, or $7.0 million in the aggregate will be
payable to the underwriter for deferred underwriting commissions. The deferred
fee will become payable to the underwriter from the amounts held in the Trust
Account solely in the event that the Company completes a Business Combination,
subject to the terms of the underwriting agreement.
Upon the consummation of the Over-Allotment on March 31, 2021, the underwriter
was entitled to an aggregate of approximately $76,000 in fees, paid upon closing
and an additional deferred underwriting commission of approximately $133,000.
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 accompanying condensed financial
statements. The condensed financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
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Critical Accounting Policies
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses. A summary of our significant accounting policies is
included in Note 2 to our condensed financial statements in Part I, Item 1 of
this Quarterly Report on Form 10-Q. Certain of our accounting policies are
considered critical, as these policies are the most important to the depiction
of our condensed financial statements and require significant, difficult or
complex judgments, often employing the use of estimates about the effects of
matters that are inherently uncertain. Such policies are summarized in the
Management's Discussion and Analysis of Financial Condition and Results of
Operations section in our Annual Report on Form 10-K. There have been no
significant changes in the application of our critical accounting policies
during the nine months ended September 30, 2022.
Recent Accounting Pronouncements
See Note 2 to the unaudited condensed financial statements included in Part I,
Item 1 of this Quarterly Report on Form 10-Q for a discussion of recent
accounting pronouncements.
Off-Balance Sheet Arrangements
As of September 30, 2022, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K.
JOBS Act
The Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We qualify as an "emerging growth company" and
under the JOBS Act are allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded)
companies. We are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting
standards on the relevant dates on which adoption of such standards is required
for non-emerging growth companies. As a result, the condensed financial
statements may not be comparable to companies that comply with new or revised
accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the
other reduced reporting requirements provided by the JOBS Act. Subject to
certain conditions set forth in the JOBS Act, if, as an "emerging growth
company," we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an auditor's attestation report on our system of
internal controls over financial reporting pursuant to Section 404, (ii) provide
all of the compensation disclosure that may be required of non-emerging growth
public companies under the Dodd-Frank Wall Street Reform and Consumer Protection
Act, (iii) comply with any requirement that may be adopted by the PCAOB
regarding mandatory audit firm rotation or a supplement to the auditor's report
providing additional information about the audit and the financial statements
(auditor discussion and analysis) and (iv) disclose certain executive
compensation related items such as the correlation between executive
compensation and performance and comparisons of the CEO's compensation to median
employee compensation. These exemptions will apply for a period of five years
following the completion of our Initial Public Offering or until we are no
longer an "emerging growth company," whichever is earlier.
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