References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Coliseum Acquisition Corp. References to our "management" or
our "management team" refer to our officers and directors, and references to the
"Sponsor" refer to Coliseum Acquisition Sponsor LLC. 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. Certain
information contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" 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 Quarterly 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 the Risk
Factors section of the Company's final prospectus for its Initial Public
Offering (as defined below) filed with the U.S. Securities and Exchange
Commission (the "SEC"). 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 Quarterly Report as our "initial business combination". We
intend to effectuate our initial business combination using cash from the
proceeds of our initial public offering (the "Initial Public Offering") and the
private placement of the Private Placement Warrants (as defined below), 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 September 30, 2021 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 interest income on cash and cash equivalents held after the 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 September 30, 2021, we had net income of $5,486,983,
which resulted from a gain on the change in fair value of warrant liabilities of
$5,707,500 and unrealized gain on investments held in the Trust Account in the
amount of $12,080, partially offset by operation and formation costs of
$232,597.
For the period from February 5, 2021 (inception) through September 30, 2021, we
had net income of $5,874,881, which resulted from a gain on the change in fair
value of warrant liabilities of $6,562,250 and unrealized gain on investments
held in the Trust Account in the amount of $12,094, partially offset by
operation and formation costs of $292,423 and expensed offering costs of
$407,040.
22
Liquidity and Capital Resources
On June 25, 2021, we consummated an Initial Public Offering of 15,000,000 Units
(the "Units") generating gross proceeds to the Company of $150,000,000.
Simultaneously with the closing of the Initial Public Offering, we completed the
private sale of 3,225,000 warrants to Coliseum Acquisition Sponsor LLC at a
purchase price of $1.50 per warrant (the "Private Placement Warrants"),
generating gross proceeds of $4,837,500.
For the period from February 5, 2021 (inception) through September 30, 2021, net
cash used in operating activities was $1,159,943, which was due to non-cash
adjustments to net income related to the change in fair value of warrant
liabilities of $6,562,250 and unrealized gain on investments held in the Trust
Account of $12,094, and changes in operating assets and liabilities of $867,520,
partially offset by net income of $5,874,881 and non-cash adjustment to net
income related to expensed offering costs of $407,040.
For the period from February 5, 2021 (inception) through September 30, 2021, net
cash used in investing activities was $150,000,000, which was the result of the
amount of net proceeds from the Initial Public Offering and the private
placement sale of warrants being deposited to the Trust Account.
Net cash provided by financing activities for the period from February 5, 2021
(inception) through September 30, 2021 of $152,061,037 was comprised of
$147,750,000 from the issuance of Units in the Initial Public Offering net of
underwriter's discount paid, $4,837,500 in proceeds from the issuance of
warrants in a private placement to our Sponsor and proceeds from the issuance of
a promissory note to our Sponsor of $187,401, partially offset by the payment of
$526,463 for other offering costs associated with the Initial Public Offering
and repayment of the outstanding balance on the promissory note to our Sponsor
of $187,401.
As of September 30, 2021, we had cash of $901,094 held outside the Trust
Account. We intend to use the funds held outside the Trust Account primarily to
identify and evaluate target businesses, perform business due diligence on
prospective target businesses, travel to and from the offices, plants or similar
locations of prospective target businesses or their representatives or owners,
review corporate documents and material agreements of prospective target
businesses, and structure, negotiate and complete a business combination.
We do not believe we will need to raise additional funds following the Initial
Public Offering in order to meet the expenditures required for operating our
business prior to our initial business combination. However, if our estimates of
the costs of identifying a target business, undertaking in-depth due diligence
and negotiating an initial business combination are less than the actual amount
necessary to do so, we may have insufficient funds available to operate our
business prior to our initial business combination. Moreover, we may need to
obtain additional financing either to complete our business combination or
because we become obligated to redeem a significant number of public shares upon
completion of our business combination, in which case we may issue additional
securities or incur debt in connection with such business combination. In
addition, we intend to target businesses larger than we could acquire with the
net proceeds of our Initial Public Offering and the sale of the private
placement warrants and may as a result be required to seek additional financing
to complete such proposed initial business combination. Subject to compliance
with applicable securities laws, we would only complete such financing
simultaneously with the completion of our business combination. If we are unable
to complete our initial business combination because we do not have sufficient
funds available to us, we will be forced to cease operations and liquidate the
trust account. In addition, following our business combination, if cash on hand
is insufficient, we may need to obtain additional financing in order to meet our
obligations.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of September 30, 2021.
23
Contractual Obligations
Registration 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) will have
registration rights to require the Company 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 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 a 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 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. 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. The
Company was reimbursed $750,000 by the underwriter for a portion of the
transaction costs in connection with the Initial Public Offering.
Critical Accounting Policies
The preparation of 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 financial statements, and income and expenses
during the periods reported. Actual results could materially differ from those
estimates. We have identified the following critical accounting policies:
Warrant Liabilities
We account for the Private Placement Warrants and the redeemable warrants (the
"Public Warrants") that were included in units issued by the Company in its
Initial Public Offering (collectively, the "Warrants") in accordance with
Accounting Standards Codification ("ASC") 815-40, Derivatives and
Hedging-Contracts in Entity's Own Equity ("ASC 815"), under which the Warrants
do not meet the criteria for equity classification and must be recorded as
liabilities. As the Warrants meet the definition of a derivative as contemplated
in ASC 815, the Warrants are measured at fair value at inception and at each
reporting date in accordance with ASC 820, Fair Value Measurement, with changes
in fair value recognized in the statement of operations in the period of change.
Ordinary Shares Subject to Possible Redemption
All of the 15,000,000 shares of Class A ordinary shares sold as part of the
Units in the Initial Public Offering contain a redemption feature which allows
for the redemption of such Public Shares in connection with the Company's
liquidation, if there is a shareholder vote or tender offer in connection with
the Business Combination and in connection with certain amendments to the
Company's Amended and Restated Certificate of Incorporation. In accordance with
SEC and its staff's guidance on redeemable equity instruments, which has been
codified in Accounting Standards Codification ("ASC") 480-10-S99, redemption
provisions not solely within the control of the Company require ordinary shares
subject to redemption to be classified outside of permanent equity. Therefore,
all Class A ordinary shares has been classified outside of permanent equity.
The Company recognizes changes in redemption value immediately as they occur and
adjusts the carrying value of redeemable ordinary 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.
24
Net Income Per Ordinary Share
Net income per ordinary share is computed by dividing net earnings by the
weighted average number of ordinary shares outstanding during the period. As the
Public Shares are considered to be redeemable at fair value, and a redemption at
fair value does not amount to a distribution different than other shareholders,
Class A and Class B ordinary shares are presented as one class of shares in
calculating net income per ordinary share. As a result, the calculated net
income per ordinary share is the same for Class A and Class B shares of ordinary
shares. Remeasurement of Class A ordinary shares to redemption amount is not
included in the determination of earnings per share because redemption amount of
the Class A ordinary shares approximates fair value. The Company has not
considered the effect of the Warrants sold in the Initial Public Offering and
private placement to purchase an aggregate of 8,225,000 shares in the
calculation of diluted earnings per share, since the exercise of the Warrants
are contingent upon the occurrence of future events and the inclusion of such
Warrants would be anti-dilutive.
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") 2020-06, Debt - Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in
Entity's Own Equity (Subtopic 815-40) ("ASU 2020-06") to simplify accounting for
certain financial instruments. ASU 2020-06 eliminates the current models that
require separation of beneficial conversion and cash conversion features from
convertible instruments and simplifies the derivative scope exception guidance
pertaining to equity classification of contracts in an entity's own equity. The
new standard also introduces additional disclosures for convertible debt and
freestanding instruments that are indexed to and settled in an entity's own
equity. ASU 2020-06 amends the diluted earnings per share guidance, including
the requirement to use the if-converted method for all convertible instruments.
ASU 2020-06 is effective January 1, 2022 and should be applied on a full or
modified retrospective basis, with early adoption permitted beginning on January
1, 2021. The Company early adopted ASU 2020-06 on February 5, 2021. Adoption of
the ASU 2020-06 did not impact the Company's financial position, results of
operations or cash flows.
Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on our
condensed financial statements.
© Edgar Online, source Glimpses