Blockchain nvestors Acquisition I(BCSA) - 2022 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Provides the unaudited condensed financial statements and management's discussion for the period ended March 31, 2022 Item 1. Condensed Financial Statements Presents unaudited condensed financial statements for Q1 2022, including balance sheets, income, equity, cash flows, and detailed accounting notes Condensed Balance Sheets Details the company's financial position, including assets, liabilities, and shareholders' deficit, as of March 31, 2022 | Metric | March 31, 2022 (Unaudited) | December 31, 2021 | | :-------------------------------------- | :------------------------- | :---------------- | | Assets: | | | | Cash | $176,165 | $380,035 | | Prepaid expenses | $554,725 | $716,442 | | Total current assets | $730,890 | $1,096,477 | | Investments held in Trust Account | $306,008,636 | $306,001,090 | | Total Assets | $306,739,526 | $307,097,567 | | Liabilities: | | | | Accounts payable | $569,650 | $564,026 | | Accrued expenses | $169,928 | $149,102 | | Total current liabilities | $739,578 | $713,128 | | Derivative liabilities | $6,264,400 | $10,962,700 | | Deferred underwriting commissions | $11,280,000 | $11,280,000 | | Total Liabilities | $18,283,978 | $22,955,828 | | Class A ordinary shares subject to possible redemption | $306,000,000 | $306,000,000 | | Shareholders' Deficit: | | | | Class A ordinary shares | $132 | $132 | | Class B ordinary shares | $900 | $900 | | Accumulated deficit | $(17,545,484) | $(21,859,293) | | Total shareholders' deficit | $(17,544,452) | $(21,858,261) | Unaudited Condensed Statement of Operations Reports the company's net income and expenses for the three months ended March 31, 2022 | Metric | Three Months Ended March 31, 2022 | | :------------------------------------------------ | :-------------------------------- | | General and administrative expenses | $347,037 | | General and administrative expenses - related party | $45,000 | | Loss from operations | $(392,037) | | Change in fair value of derivative liabilities | $4,698,300 | | Income earned on investments held in Trust Account | $7,546 | | Net income | $4,313,809 | | Basic and diluted net income per share, Class A | $0.10 | | Basic and diluted net income per share, Class B | $0.10 | Unaudited Condensed Statement of Changes in Shareholders' Deficit Outlines changes in shareholders' deficit, including net income, for the three months ended March 31, 2022 | Metric | December 31, 2021 | Net Income | March 31, 2022 | | :-------------------------------------- | :---------------- | :----------- | :------------- | | Class A Ordinary Shares (Amount) | $132 | — | $132 | | Class B Ordinary Shares (Amount) | $900 | — | $900 | | Additional Paid-in Capital | — | — | — | | Accumulated Deficit | $(21,859,293) | $4,313,809 | $(17,545,484) | | Total Shareholders' Deficit | $(21,858,261) | $4,313,809 | $(17,544,452) | Unaudited Condensed Statement of Cash Flows Summarizes cash flows from operating, investing, and financing activities for the three months ended March 31, 2022 | Metric | Three Months Ended March 31, 2022 | | :------------------------------------------------ | :-------------------------------- | | Net income | $4,313,809 | | Change in fair value of derivative liabilities | $(4,698,300) | | Income earned on investments held in Trust Account | $(7,546) | | Prepaid expenses | $161,717 | | Accounts payable | $5,624 | | Accrued expenses | $20,826 | | Net cash used in operating activities | $(203,870) | | Net change in cash | $(203,870) | | Cash - beginning of the period | $380,035 | | Cash - end of the period | $176,165 | Notes to Unaudited Condensed Financial Statements Explains the company's organization, significant accounting policies, and financial instrument treatments Note 1 – Organization and Business Operations Details the company's formation as a SPAC, its IPO, Trust Account, and business combination requirements - Incorporated June 11, 2021, as a Cayman Islands exempted company, operating as a blank check company (SPAC) to effect a business combination[23] - Initial Public Offering (IPO) commenced November 15, 2021, offering 30,000,000 units at $10.00 per unit, including over-allotment[25] - $306,000,000 from IPO and private placement proceeds deposited into a Trust Account, invested in U.S. government treasury obligations[28] - Must complete a Business Combination with an aggregate fair market value of at least 80% of Trust Account assets within 18 months from IPO closing, or the company will liquidate and redeem Public Shares[27][33] - As of March 31, 2022, the company had $176,000 in its operating bank account and a working capital deficit of approximately $9,000[39] Note 2 - Significant Accounting Policies Outlines accounting principles for interim statements, fair value, derivative liabilities, and share classifications - Unaudited condensed financial statements are presented in conformity with GAAP for interim financial information and SEC regulations[44] - Investments held in the Trust Account are comprised of U.S. government securities or money market funds, classified as trading securities or recognized at fair value[48] - Public and Private Placement Warrants are recognized as derivative liabilities at fair value and re-measured each reporting period, with changes recognized in the condensed statement of operations[54] - Class A ordinary shares subject to possible redemption are classified as temporary equity and measured at redemption value[57] - The company is not subject to income taxation in the Cayman Islands, and no unrecognized tax benefits were identified[59][60] Note 3 - Initial Public Offering Details the IPO on November 15, 2021, including units sold, price, and proceeds placed in the Trust Account - IPO consummated on November 15, 2021, with 30,000,000 Units sold at $10.00 per Unit, including over-allotment[66] - Each Unit consists of one Class A ordinary share and one-half of one redeemable warrant, exercisable at $11.50 per share[66] - $306,000,000 from IPO and Private Placement proceeds was placed in a Trust Account[66] Note 4 - Private Placement Describes the private placement to the Sponsor, its proceeds, and Private Placement Warrant characteristics - Sponsor purchased 1,322,000 Private Placement Units at $10.00 per unit, totaling $13,220,000[67] - Each Private Placement Unit consists of one Class A ordinary share and one-half of one Private Placement Warrant[67] - Private Placement Warrants are non-redeemable (except as described in Note 9) and exercisable on a cashless basis when held by the Sponsor or its permitted transferees[67] Note 5 - Related Party Transactions Outlines related party transactions, including Founder Shares, a promissory note, and administrative service fees - Sponsor paid $25,000 for 8,625,000 Class B ordinary shares (Founder Shares), adjusted to 10,000,000 shares after stock split and forfeiture[70] - A promissory note of $131,517 from the Sponsor for IPO expenses was repaid in full on November 15, 2021[72] - The company pays the Sponsor $15,000 per month for administrative support services; $45,000 incurred for the three months ended March 31, 2022[74] - Sponsor or affiliates may provide Working Capital Loans for Business Combination transaction costs, with no outstanding amounts as of March 31, 2022[73] Note 6 - Commitments and Contingencies Details commitments, including registration rights for security holders and deferred underwriting commissions - Holders of Founder Shares, Private Placement Warrants, and securities from Working Capital Loans are entitled to registration rights[78] - Deferred underwriting commissions of $11,280,000 are payable to the underwriters from the Trust Account upon completion of a Business Combination[79] Note 7 - Class A Ordinary Shares Subject to Possible Redemption Explains accounting for Class A ordinary shares classified as temporary equity due to redemption rights - 30,000,000 Class A ordinary shares are subject to possible redemption as of March 31, 2022, and December 31, 2021, and are classified as temporary equity[80] Class A ordinary shares subject to possible redemption | Metric | Amount | | :----------------------------------------------------------------------- | :----------- | | Gross proceeds from Initial Public Offering | $300,000,000 | | Less: Fair value of Public Warrants at issuance | $(11,113,500) | | Less: Offering costs allocated to Class A ordinary shares | $(17,088,566) | | Plus: Accretion of Class A ordinary shares subject to possible redemption | $34,202,066 | | Class A ordinary shares subject to possible redemption | $306,000,000 | Note 8 - Shareholders' Deficit Details authorized and outstanding share capital, including Class A and B ordinary shares, voting rights, and conversion - Authorized 5,000,000 preference shares (none issued) and 500,000,000 Class A ordinary shares[82][84] - 31,322,000 Class A ordinary shares issued and outstanding (excluding 30,000,000 subject to redemption)[84] - 10,000,000 Class B ordinary shares issued and outstanding, with enhanced voting rights for certain matters prior to a Business Combination[85][86] - Class B ordinary shares will convert into Class A ordinary shares at the time of the initial Business Combination, maintaining approximately 25% of total ordinary shares on an as-converted basis[87] Note 9 – Warrants Describes Public and Private Placement Warrants, including exercisability, redemption conditions, and potential adjustments - As of March 31, 2022, and December 31, 2021, there were 15,000,000 Public Warrants and 661,000 Private Placement Warrants outstanding[88] - Public Warrants become exercisable at $11.50 per share on the later of 30 days after Business Combination or 12 months from IPO closing, subject to an effective registration statement[88] - The company may redeem outstanding Public Warrants at $0.01 per warrant if the Redemption Reference Price equals or exceeds $18.00 per share[92] - Private Placement Warrants are non-redeemable (if held by Sponsor/transferees), have transfer restrictions, and may be exercised on a cashless basis[91] Note 10 - Fair Value Measurements Breaks down assets and liabilities measured at fair value using the three-tier hierarchy and valuation techniques - Investments held in Trust Account (mutual funds) are classified as Level 1 fair value measurements[96][97] - Public Warrants were transferred from Level 3 to Level 1 in January 2022 due to active trading[95][96] - Private Placement Warrants are valued using Level 3 inputs via a stochastic trinomial tree model[96][98] Level 3 Fair Value Measurement Inputs | Input | December 31, 2021 | March 31, 2022 | | :--------------- | :---------------- | :------------- | | Exercise price | $11.50 | $11.50 | | Stock price | $9.83 | $9.93 | | Volatility | 14.3% | 5.3% | | Term (years) | 5 | 5 | | Risk-free rate | 1.32% | 2.32% | | Dividend yield | 0.0% | 0.0% | Change in Fair Value of Derivative Liabilities (Level 3) | Metric | Amount | | :------------------------------------------------ | :----------- | | Derivative warrant liabilities at December 31, 2021 | $10,962,700 | | Transfer of Public Warrants to Level 1 | $(10,500,000) | | Change in fair value of derivative warrant liabilities | $(198,300) | | Derivative warrant liabilities at March 31, 2022 | $264,400 | Note 11 - Subsequent Events States that management reviewed subsequent events and identified no events requiring adjustment or disclosure - No subsequent events identified that would require adjustment or disclosure in the condensed financial statements[102] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition, operational results, liquidity, and business combination search for Q1 2022 Cautionary Note Regarding Forward-Looking Statements Highlights forward-looking statements subject to risks and uncertainties, with no obligation to update - The report includes forward-looking statements based on current expectations and projections, subject to known and unknown risks, uncertainties, and assumptions[105] - The company disclaims any intention or obligation to update or revise any forward-looking statements[105] Overview Overview of the company's SPAC formation, IPO, private placement, Trust Account, and business combination strategy - Blockchain Coinvestors Acquisition Corp. I is a blank check company formed on June 11, 2021, to effect a business combination[106] - Consummated an Initial Public Offering (IPO) on November 15, 2021, raising $300,000,000 gross proceeds, and a private placement of 1,322,000 units for $13,220,000[107][108] - $306,000,000 from IPO and private placement proceeds was placed in a Trust Account, invested in U.S. government securities[109] - Intends to concentrate on business combination opportunities in financial services, technology, and blockchain-enabled sectors[111] - Must complete a Business Combination within 18 months from IPO closing, with a fair market value of at least 80% of Trust Account assets[113][112] Results of Operations Summarizes Q1 2022 financial performance, including net income, non-operating gains, and administrative expenses - The company reported a net income of approximately $4.3 million for the three months ended March 31, 2022[114] - Non-operating gain from change in fair value of derivative liabilities: ~$4.7 million - Income from investments held in Trust Account: ~$8,000 - Offset by general and administrative expenses: ~$347,000 and $45,000 to a related party - No operating revenues are generated until the completion of an initial Business Combination[114] Liquidity and Capital Resources Discusses cash position, working capital, and ability to meet liquidity needs through a business combination or one year - As of March 31, 2022, the company had approximately $176,000 in cash and a working capital deficit of approximately $9,000[115] - Liquidity needs were met through Sponsor payments, a repaid promissory note, and net proceeds from the IPO and Private Placement[116] - Management believes the company has sufficient working capital and borrowing capacity to meet its needs through the earlier of a Business Combination or one year from filing[117] - The specific impact of the COVID-19 pandemic and the Russia-Ukraine conflict on the company's financial position and search for a target is not readily determinable[118][119] Commitments and Contractual Obligations Confirms no long-term debt, capital lease, operating lease, or other long-term liabilities as of March 31, 2022 - As of March 31, 2022, the company did not have any long-term debt, capital lease obligations, operating lease obligations, or long-term liabilities[119] Administrative Services Agreement Details the monthly administrative service fee paid to the Sponsor, ceasing upon business combination or liquidation - The company pays its Sponsor $15,000 per month for secretarial and administrative services and office space, which will cease upon completion of a Business Combination or liquidation[120] Underwriting Agreement Outlines cash underwriting discount paid at IPO closing and deferred commissions payable upon business combination - Underwriters received a cash underwriting discount of $0.55 per Unit, totaling $16,500,000, with $5,220,000 paid at IPO closing[122] - Deferred underwriting commissions of $11,280,000 are payable from the Trust Account upon completion of the initial business combination[122] Critical Accounting Estimates Identifies derivative warrant liabilities as the sole critical accounting estimate requiring significant management judgment - Derivative warrant liabilities are identified as the only critical accounting estimate, requiring significant management judgment[123] Recent Accounting Standards Management believes no recently issued, but not yet effective, accounting standards will materially affect financial statements - Management does not believe any recently issued, but not yet effective, accounting standards would have a material effect on the financial statements if currently adopted[124] JOBS Act Discusses the company's 'emerging growth company' status under the JOBS Act and its accounting and reporting implications - The company qualifies as an 'emerging growth company' under the JOBS Act, allowing it to delay the adoption of new or revised accounting pronouncements[125] - This election may make the company's financial statements not comparable to companies that comply with new accounting pronouncements as of public company effective dates[125] - The company is evaluating other reduced reporting requirements provided by the JOBS Act, such as exemptions from auditor attestation reports on internal controls[126] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is not required to provide detailed market risk disclosures - The company is a smaller reporting company and is not required to provide the information otherwise required under this item[127] Item 4. Controls and Procedures Details evaluation of disclosure controls and procedures, confirming effectiveness and no material internal control changes Evaluation of Disclosure Controls and Procedures The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2022 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2022[129] - Disclosure controls and procedures provide reasonable, not absolute, assurance that objectives are met[130] Changes in Internal Control over Financial Reporting Confirms no material changes in internal control over financial reporting during the most recent fiscal quarter - There were no material changes in internal control over financial reporting during the most recent fiscal quarter[131] PART II. OTHER INFORMATION Presents other required information, including legal proceedings, risk factors, equity sales, defaults, and exhibits Item 1. Legal Proceedings Confirms that there are no legal proceedings to report for Blockchain Coinvestors Acquisition Corp. I - No legal proceedings to report[132] Item 1A. Risk Factors Indicates no material changes to risk factors, except for the potential impact of the SEC's new SPAC proposal - No material changes to risk factors disclosed in the Form 10-K filed March 31, 2022, other than the potential impact of the SEC's new SPAC proposal[132] - The SEC's new SPAC proposal (March 30, 2022) could make the completion of a Business Combination more difficult, costly, and time-consuming[132] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities States that there were no unregistered sales of equity securities or use of proceeds from registered securities to report - No unregistered sales of equity securities or use of proceeds from registered securities to report[133] Item 3. Defaults Upon Senior Securities Confirms that there were no defaults upon senior securities - No defaults upon senior securities[133] Item 4. Mine Safety Disclosures States that there are no mine safety disclosures to report - No mine safety disclosures to report[133] Item 5. Other Information Indicates that there is no other information to report under this item - No other information to report under this item[133] Item 6. Exhibits Lists the exhibits filed with the report, including Inline XBRL Taxonomy Extension documents and officer certifications - Inline XBRL Taxonomy Extension Schema Document (101.SCH) - Inline XBRL Instance Document (101.INS) - Inline XBRL Taxonomy Extension Calculation Linkbase Document (101.CAL) - Inline XBRL Taxonomy Extension Definition Linkbase Document (101.DEF) - Inline XBRL Taxonomy Extension Label Linkbase Document (101.LAB) - Inline XBRL Taxonomy Extension Presentation Linkbase Document (101.PRE) - Cover page formatted as Inline XBRL (104)[133][135] - Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) or 15(d)-14(a) and 18 U.S.C. Section 1350 (Sarbanes-Oxley Act Sections 302 and 906)[133] SIGNATURES Contains official signatures of the Principal Executive Officer and Principal Accounting Officer, affirming report submission - The report is signed by Lou Kerner, Chief Executive Officer and Director (Principal Executive Officer), and Mitchell Mechigian, Chief Financial Officer (Principal Accounting Officer)[138] - Date of signing: May 16, 2022[138]