UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period 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) |
| (IRS Employer Identification No.) |
(Address of principal executive offices and zip code) |
( |
(Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
|
| The | ||
|
| The | ||
|
| The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 (Section 232.405 of this chapter) during the preceding 12 months (or 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 the 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 May 15, 2024, there were
COLISEUM ACQUISITION CORP.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Condensed Financial Statements
COLISEUM ACQUISITION CORP.
CONDENSED BALANCE SHEETS
| March 31, 2024 |
| December 31, 2023 | |||
(unaudited) | ||||||
Assets: |
| |||||
Current assets: | ||||||
Prepaid expenses | $ | | $ | — | ||
Total current assets | | — | ||||
Cash and investments held in Trust Account | | | ||||
Total Assets | $ | | $ | | ||
Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit: |
|
|
|
| ||
Current liabilities: | ||||||
Accounts payable and accrued expenses | $ | | $ | | ||
| | |||||
Convertible note payable - related parties | | | ||||
Non-redemption agreement liabilities | | | ||||
Deferred consulting fees | | | ||||
Total current liabilities | | | ||||
Warrant liabilities | |
| | |||
Total Liabilities |
| |
| | ||
|
|
|
| |||
Commitments and Contingencies |
|
|
|
| ||
Class A ordinary shares, $ | | | ||||
Shareholders’ Deficit: |
|
|
|
| ||
Preferred shares, $ |
|
| ||||
Class A ordinary shares, $ |
| |
| | ||
Class B ordinary shares, $ |
| — |
| — | ||
Additional paid-in capital |
| — |
| — | ||
Accumulated deficit | ( | ( | ||||
Total shareholders’ deficit |
| ( |
| ( | ||
Total Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit | $ | | $ |
The accompanying notes are an integral part of the unaudited condensed financial statements.
1
COLISEUM ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
| For the three months ended March 31, | |||||
| 2024 |
| 2023 | |||
General and administrative expenses | $ | | $ | | ||
Loss from operations | ( | ( | ||||
Other income (expenses): | ||||||
Interest earned from cash and investments held in Trust Account | | | ||||
Change in fair value of derivative warrant liabilities | ( | ( | ||||
Loss in connection with non-redemption agreements | ( | — | ||||
Change in fair value of deferred consulting fees | ( | — | ||||
Total other income (expenses) | | | ||||
Net income (loss) | $ | ( | $ | | ||
|
|
| ||||
Weighted average shares outstanding of Class A ordinary shares subject to possible redemption, basic and diluted | | | ||||
Basic and diluted net income (loss) per share, Class A ordinary shares subject to possible redemption | $ | ( | $ | | ||
Weighted average shares outstanding of Class B and non-redeemable Class A ordinary shares, basic and diluted | | | ||||
Basic and diluted net income (loss) per share, Class B and non-redeemable Class A ordinary shares | $ | ( | $ | |
The accompanying notes are an integral part of the unaudited condensed financial statements.
2
COLISEUM ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
For the three months ended March 31, 2024 | |||||||||||||||||||
Ordinary Shares | Additional | Total | |||||||||||||||||
Non-redeemable Class A | Class B | Paid-In | Accumulated | Shareholders’ | |||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Deficit |
| Deficit | ||||||
Balance - December 31, 2023 | | $ | | | $ | | $ | | $ | ( | $ | ( | |||||||
Remeasurement of Public Shares subject to redemption amount | — | — | — | — | — | ( | ( | ||||||||||||
Net loss |
| — |
| — | — | — |
| — |
| ( |
| ( | |||||||
Balance - March 31, 2024 (unaudited) | | $ | | | $ | — | $ | — | $ | ( | $ | ( |
For the three months ended March 31, 2023 | |||||||||||||||||||
Ordinary Shares | Additional | Total | |||||||||||||||||
Non-redeemable Class A | Class B | Paid-In | Accumulated | Shareholders’ | |||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Deficit |
| Deficit | ||||||
Balance - December 31, 2022 | | $ | | | $ | | $ | | $ | ( | $ | ( | |||||||
Remeasurement of Public Shares subject to redemption amount | — | — | — | — | — | ( | ( | ||||||||||||
Net income | — | — | — | — | — | | | ||||||||||||
Balance - March 31, 2023 (unaudited) | — | $ | — | | $ | | $ | — | $ | ( | $ | ( |
The accompanying notes are an integral part of the unaudited condensed financial statements.
3
COLISEUM ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
For the three months ended March 31, | ||||||
| 2024 |
| 2023 | |||
Cash Flows from Operating Activities: | ||||||
Net income (loss) |
| $ | ( | $ | | |
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
|
|
| |||
Interest earned from cash and investments held in Trust Account | ( | ( | ||||
Change in fair value of derivative warrant liabilities | | | ||||
Change in fair value of non-redemption agreement liabilities | | — | ||||
Change in fair value of deferred consulting fees | | — | ||||
Changes in operating assets and liabilities: |
|
| ||||
Prepaid expenses | ( | | ||||
Accounts payable and accrued expenses | ( | | ||||
Due to related parties | | | ||||
Net cash used in operating activities |
| — | ( | |||
Net change in cash |
| — |
| ( | ||
Cash - Beginning of the period |
| — |
| | ||
Cash - End of the period | $ | — | $ | | ||
|
|
|
|
| ||
Supplemental disclosure of noncash activities: |
|
|
|
| ||
Remeasurement of Public Shares subject to possible redemption to redemption amount | $ | | $ | |
The accompanying notes are an integral part of the unaudited condensed financial statements.
4
COLISEUM ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2024
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Coliseum Acquisition Corp. (the “Company”) is a blank check company incorporated in the Cayman Islands on February 5, 2021. The Company was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with
As of March 31, 2024, the Company had not commenced any operations. All activity for the period from February 5, 2021 (inception) through March 31, 2024 relates to the Company’s formation and the initial public offering (the “Initial Public Offering”) as described below, and since the closing of the Initial Public Offering, the search for a prospective initial Business Combination. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of investment income from the proceeds derived from the Initial Public Offering and will recognize other income and expense related to the change in fair value of warrant liabilities.
The registration statement for the Initial Public Offering was declared effective on June 22, 2021. On June 25, 2021, the Company consummated the Initial Public Offering of
Prior to the Initial Public Offering, Coliseum Acquisition Sponsor LLC (the “Previous Sponsor”), purchased an aggregate of
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of
Following the closing of the Initial Public Offering on June 25, 2021, an amount of $
5
COLISEUM ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2024
The Company will provide the holders of its Public Shares (the “Public Shareholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a general meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Shareholders will be entitled to redeem their Public Shares for a pro rata portion of the amount held in the Trust Account (initially at $
The Company will proceed with a Business Combination if a majority of the shares voted are voted in favor of the Business Combination. If a shareholder vote is not required under applicable law or stock exchange listing requirements and the Company does not decide to hold a shareholder vote for business or other reasons, the Company will, pursuant to its amended and restated memorandum and articles of association as then in effect (the “Articles”), conduct the redemptions pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”), and file tender offer documents with the SEC prior to completing a Business Combination. If the Company seeks shareholder approval in connection with a Business Combination, the Previous Sponsor, Berto LLC (the “New Sponsor”), Harry L. You and the Company’s officers and the other holders of Founder Shares immediately prior to the Initial Public Offering (the “Initial Shareholders”) agreed to vote their Founder Shares and any Public Shares purchased in or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each Public Shareholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction.
Notwithstanding the foregoing, if the Company seeks shareholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Company’s Articles provide that a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of
The Initial Shareholders agreed to waive (i) their redemption rights with respect to any Founder Shares and Public Shares held by them in connection with the consummation of a Business Combination (ii) their redemption rights with respect to any Founder Shares and Public Shares held by them in connection with a shareholder vote to approve an amendment to the Articles (A) that would modify the substance or timing of the Company’s obligation to provide holders of Public Shares the right to have their shares redeemed in connection with an initial Business Combination or to redeem
On June 15, 2023, the Company, the Previous Sponsor and the New Sponsor entered into a Purchase Agreement (the “Purchase Agreement”), pursuant to which, among other things, the Previous Sponsor agreed to sell to the New Sponsor, and the New Sponsor agreed to purchase from Previous Sponsor an aggregate of
6
COLISEUM ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2024
The Company initially had
In connection with the Transfer Transaction, the New Sponsor assumed the obligation to make Contributions in connection with each monthly Extension Period elected by the board of directors. Following the approval of the First Extension, the board of directors elected five Extension Periods and the New Sponsor made an aggregate $
On November 27, 2023, the Company held an extraordinary general meeting in lieu of annual general meeting of the Company (the “November Meeting”). At the November Meeting, shareholders voted on and approved three proposals: (i) an amendment to the Articles to extend (the “Second Extension”) the date by which the Company had to consummate an initial Business Combination (the “Combination Period”) to June 25, 2024, and to allow the Company, without another shareholder vote, by resolution of the board of directors, to elect to further extend such period for an additional
In connection with the shareholder approval of the First Extension on June 22, 2023 and the Second Extension on November 27, 2023, an aggregate of
In connection with the November Meeting, the Company and an affiliate of the New Sponsor, Harry L. You, entered into non-redemption agreements (collectively, the “Non-Redemption Agreements”) with certain of the Company’s existing shareholders and other unaffiliated investors (collectively, the “Non-Redeeming Shareholders”), pursuant to which the Non-Redeeming Shareholders agreed not to redeem an aggregate of
If the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than
7
COLISEUM ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2024
In order to protect the amounts held in the Trust Account, the New Sponsor agreed to be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent registered public accounting firm) 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 (1) $
The Company received a written notice from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) on March 21, 2023 indicating that the Company was not in compliance with Listing Rule 5550(a)(3), which requires the Company to have at least 300 public holders for continued listing on the Nasdaq Capital Market (the “Minimum Public Holders Rule”). The Company submitted a plan to Nasdaq to regain compliance with the Minimum Public Holders Rule on June 26, 2023. Nasdaq approved the plan and granted the Company an extension until September 17, 2023 to demonstrate compliance with the Minimum Public Holders Rule (the “Compliance Period”). On September 20, 2023, the Company received written notice from Nasdaq stating that the Company has not regained compliance with the Minimum Public Holders Rule within the Compliance Period. The Company submitted an appeal to Nasdaq’s delisting determination by requesting a hearing before a Hearings Panel (the “Panel”) on September 27, 2023, pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 Series. Such request automatically stayed the suspension of the Company’s securities pending the Panel’s decision. On November 8, 2023, the Company received written notice from Nasdaq that the Company is in compliance with all applicable continued listing standards.
Going Concern Consideration
As of March 31, 2024, the Company had
In addition, in order to provide the Contribution and to finance transaction costs in connection with a Business Combination, the Company issued a convertible note (“the Convertible Note”) to the New Sponsor with a principal amount up to $
In connection with the management’s assessment of going concern considerations in accordance with FASB ASC Topic 210-40, Presentation of Financial Statements – Going Concern, the Company’s management has determined that the liquidity condition and mandatory liquidation, should a Business Combination not occur, and potential subsequent dissolution raises substantial doubt about its ability to continue as a going concern through the earlier of the liquidation date or the completion of the initial Business Combination. Management plans to address this uncertainty through a Business Combination as discussed above. There is no assurance that the Company’s plans to consummate a Business Combination will be successful or successful within the Combination Period (June 25, 2024, which may be extended to September 25, 2024). These unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
8
COLISEUM ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2024
Risks and Uncertainties
United States and global markets are experiencing volatility and disruption following the geopolitical instability resulting from the ongoing Russia-Ukraine conflict and the recent escalation of the Israel-Hamas conflict. In response to the ongoing Russia-Ukraine conflict, the North Atlantic Treaty Organization (“NATO”) deployed additional military forces to eastern Europe, and the United States, the United Kingdom, the European Union and other countries have announced various sanctions and restrictive actions against Russia, Belarus and related individuals and entities, including the removal of certain financial institutions from the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) payment system. Certain countries, including the United States, have also provided and may continue to provide military aid or other assistance to Ukraine and to Israel, increasing geopolitical tensions among a number of nations. The invasion of Ukraine by Russia and the escalation of the Israel-Hamas conflict and the resulting measures that have been taken, and could be taken in the future, by NATO, the United States, the United Kingdom, the European Union, Israel and its neighboring states and other countries have created global security concerns that could have a lasting impact on regional and global economies. Although the length and impact of the ongoing conflicts are highly unpredictable, they could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions and increased cyber-attacks against U.S. companies. Additionally, any resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets.
Any of the above mentioned factors, or any other negative impact on the global economy, capital markets or other geopolitical conditions resulting from the Russian invasion of Ukraine, the escalation of the Israel-Hamas conflict and subsequent sanctions or related actions, could adversely affect the Company’s search for an initial Business Combination and any target business with which the Company may ultimately consummate an initial Business Combination.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of 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 comprehensive 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 presentation 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 Form 10-K as filed with the SEC on April 5, 2024. The interim results for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any future periods.
Emerging Growth Company
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 independent registered public accounting firm 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 shareholder approval of any golden parachute payments not previously approved. The Company has elected to implement the aforementioned exemptions.
9
COLISEUM ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2024
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) 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. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of condensed unaudited financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements and the reported amounts of revenues and expenses during the reporting periods.
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 unaudited condensed financial statements, 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 from those estimates. The initial and recurring valuation of the Public Warrants (see Note 3), the recurring valuation of the Private Placement Warrants and the valuations for the shares associated with the Non - Redemption Agreements required management to exercise significant judgment in its 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 did not have any cash equivalents as of March 31, 2024 and December 31, 2023.
Cash and Investments Held in Trust Account
Until June 27, 2023, when the Company moved its Trust Account out of investment in securities and into an interest-bearing bank deposit account in order to mitigate the risk of being deemed an unregistered investment company, the Company’s portfolio of investments is comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities are included in interest earned from cash and investments held in Trust Account in the accompanying statements of operations. The estimated fair values of investments held in the Trust Account are determined using available market information.
Class A Ordinary Shares Subject to Possible Redemption
All of the outstanding Public Shares contain a redemption feature which allows for the redemption of such shares in connection with the Company’s liquidation, if there is a shareholder vote or tender offer in connection with a Business Combination and in connection with certain amendments to the Articles. In accordance with SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480, redemption provisions not solely within the control of the Company require ordinary shares subject to redemption to be classified outside of permanent equity. Therefore, the carrying value of all Public Shares have been classified outside of permanent equity.
10
COLISEUM ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2024
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of Public Shares to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of Public Shares are affected by charges against additional paid-in capital and accumulated deficit.
As of March 31, 2024 and December 31, 2023, the carrying value of Class A ordinary shares reflected in the balance sheets is reconciled in the following table:
Class A ordinary shares subject to possible redemption as of December 31, 2022 | $ | | |
Plus: |
|
| |
Waiver of Class A ordinary shares subject to possible redemption issuance costs | | ||
Increase in redemption value of Class A ordinary shares subject to possible redemption subject to redemption due to extension | | ||
Less: |
| ||
Redemption of Class A ordinary shares subject to possible redemption | ( | ||
Remeasurement of carrying value to redemption value |
| ( | |
Class A ordinary shares subject to possible redemption as of December 31, 2023 | $ | | |
Plus: |
|
| |
Remeasurement of carrying value to redemption value |
| | |
Class A ordinary shares subject to possible redemption as of March 31, 2024 | $ | |
Derivative Financial Instruments
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. The assessment considers whether the financial instruments are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the financial instruments meet all of the requirements for equity classification under ASC 815, including whether the financial instruments are indexed to the Company’s own ordinary shares, among other conditions for equity classification.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance, and at each balance sheet date thereafter. Changes in the estimated fair value of the liability-classified warrants are recognized as a non-cash gain or loss on the statements of operations. The initial estimated fair value of the Public Warrants was measured using a Monte Carlo simulation approach. The initial and subsequent fair value estimates of the Private Placement Warrants and the subsequent fair value estimates of the Public Warrants when trading volume is low are measured using a modified Black-Scholes option pricing model (see Note 9).
The contingent share receipt and contingent share issuance called for in the Non-Redemption Agreements is a single unit of account, representing a Contingent Forward (as defined in Note 6). Issuance of the Contingent Forward is liability-classified until exercise or expiration of the Optional Extension, at which time classification of the Contingent Forward will be re-assessed. The initial fair value of the Contingent Forward was recognized as a liability in the balance sheets with an offset to non-operating expenses. Subsequent changes in fair value of the liability are recognized in earnings until such time that the instrument ceases to be liability-classified or settles.
11
COLISEUM ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2024
Convertible Note Payable – Related parties
In connection with the Contribution and advances the New Sponsor may make in the future to the Company for working capital expenses, on June 22, 2023, the Company issued a Convertible Note to the New Sponsor with a principal amount up to $
Offering Costs Associated with the Initial Public Offering
The Company complies with the requirements of ASC Topic 340, Other Assets and Deferred Costs (“ASC 340”), and SEC Staff Accounting Bulletin Topic 5A, - Expenses of Offering. Offering costs consist principally of professional and registration fees incurred that are related to the Initial Public Offering. Offering costs were allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs allocated to warrant liabilities were expensed as incurred, presented as non-operating expenses in the statements of operations. Offering costs allocated to the Public Shares were charged against the carrying value of the Public Shares upon the completion of the Initial Public Offering.
Waiver or reduction of offering costs were allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis. Reduction of offering costs allocated to the Public Shares was recognized as a reduction to the carrying value of Public Shares subject to redemption. Offering costs allocated to warrant liabilities were recognized as a gain from extinguishment of liability allocated to warrant liabilities in the statements of operations, which represented the original amount expensed in the Company’s Initial Public Offering.
Income Taxes
The Company accounts for income taxes under ASC Topic 740, Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the 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 carryforwards. 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.
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 an interim period, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were
12
COLISEUM ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2024
Net (Loss) Income Per Ordinary Share
The Company complies with accounting and disclosure requirements of ASC 260, Earnings Per Share. Net income per ordinary share is computed by dividing net income by the weighted average number of ordinary shares outstanding during the period. Remeasurement associated with the Public Shares subject to redemption is excluded from net income per share as the redemption value approximates fair value. Therefore, the net income per share calculation allocates income shared pro rata between Public Shares and a combination of Class B and non-redeemable Class A ordinary shares. As a result, the calculated net income per ordinary share is the same for Public Shares and a combination of Class B non-redeemable and Class A ordinary shares. The Company has not considered the effect of the Public Warrants and Private Placement Warrants to purchase an aggregate of
The following tables reflect the calculation of basic and diluted net income per ordinary share (in dollars, except per share amounts):
For the three months ended March 31, | ||||||||||||
2024 | 2023 | |||||||||||
Class A ordinary | Class A ordinary | |||||||||||
shares subject to | shares subject to | |||||||||||
possible | Class B and non- | possible | Class B and non- | |||||||||
| redemption |
| redeemable Class A |
| redemption |
| redeemable Class A | |||||
Basic and diluted net (loss) income per ordinary share: | ||||||||||||
Numerator: |
|
|
|
|
|
| ||||||
Allocation of net (loss) income | $ | ( | $ | ( | $ | | $ | | ||||
Denominator: |
|
|
|
|
|
|
|
| ||||
Basic and diluted weighted average ordinary shares outstanding |
| |
| |
| |
| | ||||
Basic and diluted net (loss) income per ordinary share | $ | ( | $ | ( | $ | | $ | |
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Deposit Insurance Corporation coverage of $250,000. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations and cash flows.
Fair Value of Financial Instruments
The Company applies ASC Topic 820, Fair Value Measurement (“ASC 820”), which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances.
13
COLISEUM ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2024
The carrying amounts reflected in the balance sheets for cash, prepaid expenses and other current assets, and accounts payable and accrued expenses approximate fair value due to their short-term nature.
● | Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. |
● | Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. |
● | Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. |
See Note 9 for additional information on assets and liabilities measured at fair value.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed financial statements.
NOTE 3. INITIAL PUBLIC OFFERING
In the Initial Public Offering, the Company sold
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial Public Offering, the Previous Sponsor purchased an aggregate of
NOTE 5. RELATED PARTIES TRANSACTIONS
Founder Shares
On February 17, 2021, the Previous Sponsor paid an aggregate of $
14
COLISEUM ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2024
A total of five anchor investors purchased
Each anchor investor entered into separate anchor commitment letters with the Company and the Previous Sponsor pursuant to which each anchor investor purchased a specified amount of membership interests from the Previous Sponsor upon closing of the Initial Public Offering.
The Previous Sponsor will retain voting and dispositive power over the anchor investors’ portion of the Founder Shares held by the Previous Sponsor until the consummation of the initial Business Combination, following which time the Previous Sponsor will distribute such Founder Shares to the anchor investors (subject to applicable lock-up restrictions). The estimated fair value of the Founder Shares as of the execution of the anchor commitment letters was $
On June 15, 2023, the Company, the Previous Sponsor and New Sponsor entered into an agreement, pursuant to which the Previous Sponsor agreed to sell to the New Sponsor, and the New Sponsor agreed to purchase from Previous Sponsor an aggregate of (i)
The Initial Shareholders agreed that, subject to certain limited exceptions, the Founder Shares (including
Administrative Services Agreement
The Company entered into an agreement, commencing on June 22, 2021, to pay an affiliate of the Previous Sponsor a total of $
On July 25, 2023, the Company entered into a new administrative support agreement with the New Sponsor, pursuant to which the Company agreed to pay the New Sponsor or an affiliate of the New Sponsor a total of $
The Company incurred $
15
COLISEUM ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2024
Related Party Loans and Advances
Advances
As of December 31, 2022, the Company had advanced an aggregate of $
As of March 31, 2024 and December 31, 2023, the New Sponsor had advanced an aggregate of $
Convertible Promissory Note
In connection with the Contribution and advances the New Sponsor may make in the future to the Company for working capital expenses, on June 22, 2023, the Company issued a Convertible Note to the New Sponsor with a principal amount up to $
The option to convert the Convertible Note into warrants qualifies as an embedded derivative under ASC 815 and is required to be recognized at fair value with subsequent changes in fair value recognized in the Company’s statements of operations each reporting period until the Convertible Note is repaid or converted. As of March 31, 2024 and December 31, 2023, the fair value of the embedded conversion option had a de minimis value.
NOTE 6. COMMITMENTS AND CONTINGENCIES
Registration Rights Agreement
The holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Convertible Note or other working capital loans (“Working Capital Loans”) (and any Class A ordinary shares issuable upon the conversion of the Class B ordinary shares or exercise of the Private Placement Warrants and warrants issued upon conversion of the Convertible Note) are entitled to registration rights requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to Class A ordinary shares). The holders of these securities will be entitled to make up to
Underwriting Agreement
The Company granted the underwriter a
16
COLISEUM ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2024
The underwriter was paid a cash underwriting discount of $
Effective as of June 12, 2023, the underwriter of the Initial Public Offering waived its entitlement to the Deferred Underwriting Fee in the amount of $
Non-Redemption Agreements
In connection with the November Meeting, the Company and an affiliate of the New Sponsor, Harry L. You, entered into Non-Redemption Agreements with Non-Redeeming Shareholders, pursuant to which the Non-Redeeming Shareholders agreed not to redeem an aggregate of
As of March 31, 2024 and December 31, 2023, the aggregate fair value of the Contingent Forward was $
Deferred Consulting Fee
On November 22, 2023, the Company engaged a consultant who also holds the Company’s Public Shares to provide the Company with consulting, advisory and related services with respect to the proxy statement that was approved in the November Meeting on November 27, 2023. The Company agreed to pay the consultant aggregate cash fees totaling $
The obligation, which may be share-settled, is an equity-linked financial instrument that is required to be recognized as a liability at fair value, with changes in fair value recognized in the Company’s unaudited condensed statements of operations. The Company recognized the initial fair value of the Deferred Consulting Fee as a liability, upon execution of the consulting agreement in November 2023. As of March 31, 2024 and December 31, 2023, the fair value of the Deferred Consulting Fee was $
17
COLISEUM ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2024
NOTE 7. 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 Company will not be obligated to deliver any Class A ordinary shares pursuant to the exercise of a Public Warrant and will have no obligation to settle such Public Warrant exercise unless a registration statement under the Securities Act covering the issuance of the Class A ordinary shares issuable upon exercise of the Public Warrants is then effective and a current prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration, or a valid exemption from registration is available, including in connection with a cashless exercise permitted as a result of a notice of redemption. No Public Warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their Public Warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption is available.
The Company agreed that as soon as practicable, but in no event later than fifteen (
Redemption of Public Warrants when the price per Class A ordinary share equals or exceeds $
● | in whole and not in part; |
● | at a price of $ |
● | upon not less than |
● | if, and only if, the last reported sale price of the Class A ordinary shares for any |
The Company will not redeem the Public Warrants as described above unless a registration statement under the Securities Act covering the issuance of the Class A ordinary shares issuable upon exercise of the Public Warrants is then effective and a current prospectus relating to those Class A ordinary shares is available throughout the
redemption period. If and when the Public Warrants become redeemable by the Company, the Company may exercise its redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws.18
COLISEUM ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2024
Redemption of Public Warrants when the price per Class A ordinary share equals or exceeds $
● | in whole and not in part; |
● | at $ |
● | if, and only if, the Reference Value equals or exceeds $ |
● | if the Reference Value is less than $ |
The fair market value of the Company’s Class A ordinary shares shall mean the volume weighted average price of the Class A ordinary shares during the
In addition, if (x) the Company issues additional ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at an issue price or effective issue price of less than $
The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants and the Class A ordinary shares issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until
As of March 31, 2024 and December 31, 2023, there were
19
COLISEUM ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2024
The Public Warrants and the Private Placement Warrants are derivate warrant liabilities in accordance with ASC 815. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The warrant liabilities are subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liabilities are adjusted to current fair value, with the change in fair value recognized in the Company’s statements of operations. The Company will reassess the classification at each balance sheet date. If the classification changes as a result of events during the period, the warrants will be reclassified as of the date of the event that causes the reclassification. Refer to Note 9 for additional information on the fair value measurements of these warrants.
NOTE 8. SHAREHOLDERS’ DEFICIT
Preferred shares — The Company is authorized to issue
Class A ordinary shares — The Company is authorized to issue
Class B ordinary shares — The Company is authorized to issue
Class A ordinary shareholders and Class B ordinary shareholders of record are entitled to
The Class B ordinary shares will automatically convert into Class A ordinary shares at the time of a Business Combination, or earlier at the option of the holder, on a
20
COLISEUM ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2024
NOTE 9. FAIR VALUE MEASUREMENT
The following tables present information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023, and indicate the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
March 31, 2024
Quoted Prices in Active | Significant Other Observable | Significant Other | |||||||
Markets | Inputs | Unobservable Inputs | |||||||
Description |
| (Level 1) |
| (Level 2) |
| (Level 3) | |||
Liabilities: |
|
|
|
|
|
| |||
Warrant liability – Public Warrants | $ | — | $ | | $ | — | |||
Warrant liability – Private Placement Warrants | $ | — | $ | — | $ | | |||
Deferred consulting fees | $ | — | $ | — | $ | | |||
Non-redemption agreement liabilities | $ | — | $ | — | $ | |
December 31, 2023
Quoted Prices in Active | Significant Other Observable | Significant Other | |||||||
Markets | Inputs | Unobservable Inputs | |||||||
Description |
| (Level 1) |
| (Level 2) |
| (Level 3) | |||
Liabilities: |
|
|
|
|
|
| |||
Warrant liability – Public Warrants | $ | — | $ | | $ | — | |||
Warrant liability – Private Placement Warrants | $ | — | $ | — | $ | | |||
Deferred consulting fees | $ | — | $ | — | $ | | |||
Non-redemption agreement liabilities | $ | — | $ | — | $ | |
The Company initially utilized a Monte Carlo simulation model for the initial valuation of the Public Warrants. The subsequent measurement of the Public Warrants was classified as Level 1 due to the use of an observable market quote in an active market under the ticker MITAW. In September 2023, the fair value measurements for Public Warrants were transferred to Level 2 due to low trading volume.
The Company utilizes a modified Black-Scholes method to value the Private Placement Warrants at each reporting period, with changes in fair value recognized in the Company’s statements of operations. The estimated fair value of the Private Placement Warrants are determined using Level 3 inputs. Inherent in a binomial options pricing model are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its ordinary shares based on historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the date of valuation for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero.
Transfers to/from Levels 1, 2, and 3 are recognized at the end of the reporting periods. The estimated fair value of the Public Warrants transferred from a Level 3 measurement to a Level 1 fair value measurement after the Public Warrants were separately listed and traded in August 2021. Starting in September 2023, the fair value measurement for Public Warrants was transferred to Level 2 measurement due to low trading volume.
21
COLISEUM ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2024
The following table provides the significant inputs to the modified Black-Scholes method for the fair value of the Private Placement Warrants:
As of March 31, | As of December 31, |
| |||||
| 2024 |
| 2023 |
| |||
Stock price | $ | $ | |||||
Exercise price | $ | $ | |||||
Expected term (in years) | |||||||
Volatility (*) | % | % | |||||
Risk-free rate | % | % | |||||
Fair value of warrants | $ | $ |
*The probability of completing a Business Combination is considered within the volatility implied by the traded price of the Public Warrants which is used to value the Private Placement Warrants.
The Company recognized loss in connection with increases in the fair value of warrant liabilities of $
The following table provides the significant inputs to the Black-Scholes method for the fair value of the non-redemption agreement liabilities:
| As of March 31, 2024 |
| As of December 31, 2023 |
| |||
Stock price | $ | | $ | | |||
Expected term (in years) |
| |
| | |||
Risk-free rate |
| | % |
| | % | |
Probability of closing of merger |
| | % |
| | % |
The Company recognized loss in connection with changes in fair value of non-redemption agreement liabilities of $
The following table provides the significant inputs to the Black-Scholes method for the fair value of the deferred consulting fees:
| As of March 31, 2024 |
| As of December 31, 2023 |
| |||
Number of shares |
| |
| | |||
Redemption rate | $ | | $ | | |||
Probability of closing of merger |
| | % |
| | % | |
Fair value of deferred consulting fees | $ | | $ | |
The Company recognized loss in connection with changes in fair value of deferred consulting fees of $
The changes in the Level 3 fair value of the derivative warrant liabilities are summarized as follows:
For the three months ended March 31, 2024:
Balance as of December 31, 2023 - Level 3 |
| $ | |
Change in fair value of deferred consulting fees |
| | |
| | ||
Change in fair value of derivative warrant liabilities - Private Warrants |
| | |
Balance as of March 31, 2024 - Level 3 | $ | |
22
COLISEUM ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2024
For the three months ended March 31, 2023:
Balance as of December 31, 2022 - Level 3 |
| $ | |
Change in fair value of derivative warrant liabilities - Private Warrants |
| | |
Balance as of March 31, 2023 - Level 3 | $ | |
NOTE 10. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the unaudited condensed financial statements were issued. Based upon this review, the Company did not identify any subsequent events that required adjustment or disclosure in the unaudited condensed financial statements, except as noted below.
Subsequent to March 31, 2024, the New Sponsor advanced an additional amount of $
23
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis of our 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. References in this quarterly report (this “Report”) to the “Company,” “us” or “we” refer to Coliseum Acquisition Corp. References to our “management” or our “management team” refer to our officers and directors.
Special Note Regarding Forward-Looking Statements
This Report includes “forward-looking statements” 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 Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding 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. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to “Item 1A. Risk Factors” in this Report, our Annual Report on Form 10-K for the year ended December 31, 2023 and in our other Securities and Exchange Commission (“SEC”) filings. 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 blank check company incorporated on February 5, 2021, as a Cayman Islands exempted company and formed for the purpose of effectuating a merger, share exchange, asset acquisition, share purchase, reorganization or other similar business combination, involving one or more businesses, which we refer to throughout this Report as our “initial Business Combination”. We intend to effectuate our initial Business Combination using cash from the proceeds of our Initial Public Offering and the private placement of the Private Placement Warrants, the proceeds of the sale of our shares in connection with our initial Business Combination (pursuant to forward purchase agreements or backstop agreements we may enter into following the consummation of the Initial Public Offering or otherwise), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing.
Results of Operations
We have neither engaged in any operations nor generated any operating revenues to date. Our only activities for the period from February 5, 2021 (inception) through March 31, 2024 were organizational activities, those necessary to prepare for the Initial Public Offering described below and, after the Initial Public Offering, identifying a target company for a business combination. We do not expect to generate any operating revenues until after the completion of our initial Business Combination. We will generate non-operating income in the form of investment income on cash, cash equivalents and investments held after our Initial Public Offering and will recognize other income and expense related to the change in fair value of warrant liabilities. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the three months ended March 31, 2024, we had net loss of $241,883, which resulted from general and administrative expenses of $337,620, loss resulted from change in fair value of warrant liabilities of $213,850 and losses resulted from change in fair value of non-redemption agreement liabilities of $80,139 and change in fair value of deferred consulting fees of $13,498, partially offset by interest income earned from cash and investments held in the Trust Account in the amount of $403,224.
For the three months ended March 31, 2023, we had net income of $698,754, which resulted from a gain on investments held in the Trust Account in the amount of $1,721,897, partially offset by a loss on the change in fair value of warrant liabilities of $575,750 and general and administrative expenses of $447,393.
24
Liquidity and Capital Resources; Going Concern Consideration
For the three months ended March 31, 2024, net cash used in operating activities was $0, which was due to net loss of $241,883, non-cash adjustments to net loss related to interest earned from cash and investments held in Trust Account of $403,224, partially offset by losses resulted in change in its fair value of non-redemption agreements of $80,139, change in fair value of warrant liabilities of $213,850, change in fair value of deferred consulting fees of $13,498, and changes in operating assets and liabilities of $337,620.
For the three months ended March 31, 2023, net cash used in operating activities was $167,042, which was due to non-cash adjustments to net income related to the change in fair value of warrant liabilities of $575,750 and a gain on investments held in the Trust Account of $1,721,897, partially offset by net income of $698,754 and changes in operating assets and liabilities of $280,351.
There were no cash flows from investing activities for the three months ended March 31, 2024 and 2023.
There were no cash flows from financing activities for the three months ended March 31, 2024 and 2023.
As of March 31, 2024, we had no cash held outside of the Trust Account and a working capital deficit of $2,672,158. We have incurred and expects to continue to incur significant costs in pursuit of our acquisition plans.
In addition, in order to provide the Contribution and to finance transaction costs in connection with a Business Combination, we issued a Convertible Note to the New Sponsor with a principal amount up to $1.5 million on June 22, 2023 as discussed above. As of March 31, 2024, we had $500,000 outstanding under the Convertible Note.
In connection with the management’s assessment of going concern considerations in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 210-40, “Presentation of Financial Statements – Going Concern,” our 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 through the earlier of the liquidation date or the completion of the initial Business Combination. We plan to address this uncertainty through a consummating a business combination. There is no assurance that our plans to consummate a business combination will be successful or successful within the Combination Period (June 25, 2024, which may be extended to September 25, 2024). The unaudited condensed financial statements included in this Report do not include any adjustments that might result from the outcome of this uncertainty.
Contractual Obligations
Registration Rights
The holders of the Class B ordinary 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 conversion of the Class B ordinary shares or exercise of the Private Placement Warrants) have registration rights to require us to register a sale of any of its securities held by them pursuant to a registration rights agreement. 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 the completion of a business combination. We will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
We granted the underwriter a 45-day option to purchase up to 2,250,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and commissions, which the underwriter did not exercise and expired on August 6, 2021.
The underwriter was paid a cash underwriting fee of $0.20 per unit, or $3,000,000 in the aggregate. In addition, $0.375 per unit, or $5,625,000 in the aggregate will be payable to the underwriter for deferred underwriting commissions (“Deferred Underwriting Fee”). The Deferred Underwriting Fee was to become payable to the underwriter from the amounts held in the Trust Account solely in the event that we complete a business combination, subject to the terms of the underwriting agreement.
25
Effective as of June 12, 2023, the underwriter of our Initial Public Offering resigned and withdrew from its role in any business combination and waived its entitlement to the Deferred Underwriting Fee in the amount of $5,625,000. We recognized $5,349,375 of the Deferred Underwriting Fee waiver as a reduction to the carrying value of Public Shares subject to redemption with the remaining balance of $275,625 recognized as a gain from extinguishment of liability allocated to warrant liabilities in the statements of operations, which represents the original amount expensed in our Initial Public Offering.
Convertible Promissory Note – Related Parties
In connection with the Contribution and advances our New Sponsor may make in the future to us for working capital expenses, on June 22, 2023, we issued a Convertible Note to our New Sponsor with a principal amount up to $1.5 million. The Convertible Note bears no interest and is repayable in full upon the earlier of (a) the date of the consummation of our initial Business Combination, or (b) the date of our liquidation. If we do not consummate an initial Business Combination by the end of the Combination Period, the Convertible Note will be repaid only from funds held outside of the Trust Account or will be forfeited, eliminated or otherwise forgiven. Upon the consummation of our initial Business Combination, the outstanding principal of the Convertible Note may be converted into warrants, at a price of $1.50 per warrant, at the option of our New Sponsor. Such warrants will have terms identical to the Private Placement Warrants. As of March 31, 2024 and December 31, 2023, we had $500,000 outstanding under the Convertible Note.
The option to convert the Convertible Note into warrants qualifies as an embedded derivative under ASC 815 and is required to be recognized at fair value with subsequent changes in fair value recognized in our statements of operations each reporting period until the Convertible Note is repaid or converted. As of the funding date and March 31, 2024, the fair value of the embedded conversion option had a de minimis value.
Non-Redemption Agreements
In connection with the November Meeting, our company and an affiliate of our New Sponsor, Harry L. You, entered into Non-Redemption Agreements with Non-Redeeming Shareholders, pursuant to which the Non-Redeeming Shareholders agreed not to redeem an aggregate of 2,023,236 Public Shares and to vote all of such shares in favor of the proposals brought before the November Meeting. In exchange for these commitments from the Non-Redeeming Shareholders, Mr. You agreed to forfeit at the closing of our initial Business Combination (i) the First Tranche of 455,228 Founder Shares in consideration of the extension to June 25, 2024, and (ii) if applicable, the Second Tranche of 151,743 Founder Shares in consideration for the Optional Extension to September 25, 2024 (collectively, an aggregate of 606,971 Forfeited Shares), and we agreed to issue to the Non-Redeeming Shareholders a number of newly issued ordinary shares of our company in an amount equal to the Forfeited Shares. Our management determined that the contingent share forfeiture by Mr. You and contingent share issuance to the Non-Redeeming Shareholders is a single unit of account (hereinafter referred to as the “Contingent Forward”). The Contingent Forward is classified as a liability.
As of March 31, 2024 and December 31, 2023, the aggregate fair value of the Contingent Forward was $274,816 and $194,677, respectively. We recognized a loss in change in the fair value of non-redemption agreements of $80,139 for the three months ended March 31, 2024.
Deferred Consulting Fee
On November 22, 2023, we engaged a consultant who also holds our Public Shares to provide us with consulting, advisory and related services with respect to the proxy statement that was approved in the November Meeting on November 27, 2023. We agreed to pay the consultant aggregate cash fees totaling $250,000 and a deferred fee (“Deferred Consulting Fee”) at the closing of the business combination, following the satisfaction of redemption demands validly submitted by the consultant. At that time, we shall pay the consultant directly from the Trust Account an amount in cash equal to the product of (i) 100,000 and (ii) the per-share redemption price of the Public Shares (the “Share Consideration Payment”). In order for the consultant to receive the Share Consideration Payment, the consultant must not redeem 100,000 Public Shares at the time of the business combination redemption deadline. If the consultant does not hold 100,000 Public Shares through the redemption deadline for the business combination, the consultant will receive 100,000 Founder Shares at the time of business combination closing in lieu of the Share Consideration Payment.
The obligation, which may be share-settled, is an equity-linked financial instrument that is required to be recognized as a liability at fair value, with changes in fair value recognized in the Company’s statements of operations. We recognized the initial fair value of the Deferred Consulting Fee as a liability, upon execution of the consulting agreement in November 2023. As of March 31, 2024 and December 31, 2023, the fair value of the Deferred Consulting Fee was $274,816 and $194,677, respectively. Loss resulted from change
26
in fair value of such instrument of $13,498 was recognized in the Company’s statements of operations for the three months ended March 31, 2024. The estimated fair value of the Deferred Consulting Fee is determined using Level 3 inputs.
Critical Accounting Policies and Estimates
The preparation of unaudited condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following accounting policies as those that require significant judgments, assumptions and estimates and that have a significant impact on our financial condition and results of operations. These policies are considered critical because they may result in fluctuations in our reported results from period to period due to the significant judgments, estimates and assumptions about highly complex and inherently uncertain matters and because the use of different judgments, assumptions or estimates could have a material impact on our financial condition or results of operations. We evaluate our critical accounting estimates and judgments required by our policies on an ongoing basis and update them as appropriate based on changing conditions.
Derivative Financial Instruments
We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815,“Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. The assessment considers whether the financial instruments are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the financial instruments meet all of the requirements for equity classification under ASC 815, including whether the financial instruments are indexed to our own ordinary shares, among other conditions for equity classification.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance, and at each balance sheet date thereafter. Changes in the estimated fair value of the liability-classified warrants are recognized as a non-cash gain or loss on the statements of operations. The initial estimated fair value of the Public Warrants was measured using a Monte Carlo simulation approach. The initial and subsequent fair value estimates of the Private Placement Warrants and the subsequent fair value estimates of the Public Warrants when trading volume is low are measured using a modified Black-Scholes option pricing model.
The contingent share receipt and contingent share issuance called for in the Non-Redemption Agreements is a single unit of account, representing a Contingent Forward. Issuance of the Contingent Forward is liability-classified until exercise or expiration of the Optional Extension, at which time classification of the Contingent Forward will be re-assessed. The initial fair value of the Contingent Forward was recognized as a liability in the balance sheet with an offset to non-operating expenses. Subsequent changes in fair value of the liability are recognized in earnings until such time that the instrument ceases to be liability-classified or settles.
Public Shares Subject to Possible Redemption
The Public Shares issued in our Initial Public Offering contain a redemption feature which allows for the redemption of such Public Shares in connection with our liquidation, if there is a shareholder vote or tender offer in connection with the business combination and in connection with certain amendments to our second amended and restated certificate of incorporation. In accordance with SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480, redemption provisions not solely within our control require ordinary shares subject to redemption to be classified outside of permanent equity. Therefore, the carrying value of all Public Shares have been classified outside of permanent equity.
We recognize changes in redemption value immediately as they occur and adjusts the carrying value of redeemable Public Shares to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable ordinary shares are affected by charges against additional paid in capital and accumulated deficit.
27
Net Income (Loss) Per Ordinary Share
We comply with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net income per ordinary share is computed by dividing net income by the weighted average number of ordinary shares outstanding during the period. Remeasurement associated with the Class A ordinary shares is excluded from net income per share as the redemption value approximates fair value.
Therefore, the net income (loss) per share calculation allocates income shared pro rata between Public Shares and a combination of Class B and non-redeemable Class A ordinary shares. As a result, the calculated net income per ordinary share is the same for Public Shares and a combination of Class B and non-redeemable Class A ordinary shares. We have not considered the effect of the outstanding warrants to purchase an aggregate of 8,225,000 shares in the calculation of diluted net income per share, since the exercise of the warrants are contingent upon the occurrence of future events. As a result, diluted income (loss) per share is the same as basic income per share for the periods presented.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our unaudited condensed financial statements.
28
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
This item is not applicable as we are a smaller reporting company.
ITEM 4. DISCLOSURE CONTROLS AND PROCEDURES.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2024. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were effective.
Changes in Internal Control Over Financial Reporting
During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
29
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There is no material litigation, arbitration or governmental proceeding currently pending against us or any members of our management team.
ITEM 1A. RISK FACTORS
Factors that could cause our actual results to differ materially from those in this Report are any of the risks described in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on April 5, 2024 (the “Annual Report”). Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Report, there have been no material changes to the risk factors disclosed in the Annual Report. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On June 25, 2021, we consummated the Initial Public Offering of 15,000,000 Units at $10.00 per Unit, generating gross proceeds of $150,000,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 3,225,000 Private Placement Warrants at a price of $1.50 per Private Placement Warrant in a private placement to Coliseum Acquisition Sponsor LLC, generating gross proceeds of $4,837,500. Prior to the Initial Public Offering, the Previous Sponsor purchased an aggregate of 4,312,500 Founder Shares for an aggregate purchase price of $25,000, or approximately $0.006 per share. In connection with the Transfer Transaction a portion of the Founder Shares and Private Placement Warrants were transferred from the Previous Sponsor to the New Sponsor.
Transaction costs amounted to $9,176,463 consisting of $3,000,000 of underwriting fees, $5,625,000 of deferred underwriting fees, and $551,463 of other offering costs. We were reimbursed $750,000 by the underwriter for such transaction costs.
Following the closing of the Initial Public Offering on June 25, 2021, an amount of $150,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in the Trust Account. Following redemptions in connection with the First Extension and the Second Extension, we currently have $31,372,982 held in the Trust Account. There has been no material change in the planned use of proceeds from our Initial Public Offering as described in our final prospectus dated June 22, 2021, which was filed with the SEC on June 24, 2021, though the amount available has decreased as a result of redemptions.
On June 12, 2023, we received a formal letter from our underwriter in the Initial Public Offering advising that it had waived any entitlement it may have to the deferred underwriting fee of $5,625,000.
The securities sold in our Initial Public Offering were registered under the Securities Act on a registration statement on Form S-1 (File No. 333-254513). The SEC declared the registration statement effective on June 22, 2021.
The issuance of the Founder Shares and Private Placement Warrants were made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. No underwriting discounts or commissions were paid with respect to such sales.
30
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
31
ITEM 6. EXHIBITS
The following exhibits are filed as part of, or incorporated by reference into, this Report on Form 10-Q.
Exhibit No. |
| Description |
31.1* | ||
31.2* | ||
32.1** | ||
32.2** | ||
101.INS* | XBRL Instance Document | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.SCH* | XBRL Taxonomy Extension Schema Document | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | XBRL Taxonomy Extension Labels Linkbase Document | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | |
104* | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
* | Filed herewith. |
** | Furnished. |
32
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Coliseum Acquisition Corp. | |||
Date: May 15, 2024 | By: | /s/ Charles Wert | |
Name: Charles Wert | |||
Title: Chief Executive Officer | |||
Date: May 15, 2024 | By: | /s/ Oanh Truong | |
Name: Oanh Truong | |||
Title: Chief Financial Officer |
33