Envoy Medical(US:COCH)2023-05-14 16:00PART I. FINANCIAL INFORMATION This section presents the unaudited condensed financial statements and management's discussion and analysis of the company's financial condition and results of operations Item 1. Unaudited Condensed Financial Statements This section presents the unaudited condensed financial statements, including balance sheets, statements of operations, changes in stockholders' deficit, and cash flows, with detailed notes on organization, policies, and recent events Condensed Balance Sheets This table provides a snapshot of the company's assets, liabilities, and stockholders' deficit at specific reporting dates | Metric | March 31, 2023 | December 31, 2022 | | :--------------------------------- | :------------- | :---------------- | | Total Assets | $45,921,288 | $430,621,346 | | Investments held in Trust Account | $44,369,108 | $430,047,193 | | Total Current Liabilities | $9,498,831 | $7,309,756 | | Working capital loan - related party | $2,234,300 | $1,500,000 | | Total Liabilities | $20,977,998 | $18,788,923 | | Total Stockholders' Deficit | $(19,222,815) | $(17,914,770) | Unaudited Condensed Statements of Operations This table details the company's revenues, expenses, and net income over specific three-month periods | Metric | 3 Months Ended March 31, 2023 | 3 Months Ended March 31, 2022 | | :--------------------------------------- | :---------------------------- | :---------------------------- | | Operating expenses: Formation and operating costs | $2,492,581 | $1,489,086 | | Interest earned on investments held in Trust Account | $3,370,272 | $40,410 | | Change in fair value of Forward Purchase Agreements | $681,533 | $(487,249) | | Change in fair value of warrant liabilities | $0 | $14,397,306 | | Income before income tax expense | $1,559,224 | $12,461,381 | | Income tax expense | $841,523 | $0 | | Net income | $717,701 | $12,461,381 | | Basic and diluted net income per common stock, Class A | $0.02 | $0.23 | Unaudited Condensed Statements of Changes in Stockholders' Deficit This table outlines the changes in the company's accumulated deficit and total stockholders' deficit over the reporting period | Metric | Balance as of Jan 1, 2023 | Net Income (3M 2023) | Deemed Dividend (3M 2023) | Balance as of Mar 31, 2023 | | :--------------------------------------- | :------------------------ | :------------------- | :-------------------------- | :------------------------- | | Accumulated Deficit | $(17,915,833) | $717,701 | $(2,025,746) | $(19,223,878) | | Total Stockholders' Deficit | $(17,914,770) | $717,701 | $(2,025,746) | $(19,222,815) | Unaudited Condensed Statement of Cash Flows This table summarizes the cash inflows and outflows from operating, investing, and financing activities for the specified periods | Metric | 3 Months Ended March 31, 2023 | 3 Months Ended March 31, 2022 | | :--------------------------------------- | :---------------------------- | :---------------------------- | | Net cash used in operating activities | $(2,179,577) | $(772,740) | | Net cash provided by investing activities | $389,048,358 | $0 | | Net cash provided by (used in) financing activities | $(386,872,534) | $750,000 | | Net change in cash | $(3,753) | $(22,740) | | Cash at end of period | $104,020 | $127,105 | - Investing activities in Q1 2023 included a significant withdrawal of $387,606,834 from the Trust Account for Class A Shares redemption and $1,441,524 for tax payments73 - Financing activities in Q1 2023 were dominated by the redemption of Class A Shares ($387,606,834) and proceeds from a working capital loan ($734,300)73 Notes to Unaudited Condensed Financial Statements These notes provide detailed explanations and disclosures supporting the unaudited condensed financial statements Note 1 - Organization and Business Operations Anzu Special Acquisition Corp I is a blank check company formed for a Business Combination, generating non-operating income from its Trust Account, which saw significant redemptions in Q1 2023 - The Company is a blank check company incorporated on December 28, 2020, for the purpose of effecting a Business Combination75 - As of March 31, 2023, the Company had not commenced any operations and does not expect to generate operating revenues until after a Business Combination76 - Non-operating income is generated from interest on proceeds from the IPO held in the Trust Account76 - The IPO was consummated on March 4, 2021, raising $425,000,000 from 42,500,000 units (including over-allotment)62275 - $425,000,000 from IPO proceeds and Private Placement Warrants was placed in a Trust Account, invested in U.S. Treasuries or money market funds64255 - The Company must complete a Business Combination by September 30, 2023, or face mandatory liquidation and redemption of public shares82 - On March 7, 2023, stockholders redeemed 38,187,226 Class A shares, resulting in approximately $387.6 million being removed from the Trust Account, leaving $44.3 million84 Note 2 - Summary of Significant Accounting Policies This note details the company's significant accounting policies, including U.S. GAAP conformity, emerging growth company status, and specific treatments for investments, derivatives, and income taxes - The financial statements are prepared in conformity with U.S. GAAP and SEC rules, reflecting normal recurring adjustments91 - The Company is an 'emerging growth company' and has elected not to opt out of the extended transition period for new or revised financial accounting standards93112 - Significant accounting estimates include the determination of the fair value of warrant liabilities95 - Investments held in the Trust Account are classified as trading securities or money market funds and recognized at fair value137 - Class A common stock subject to possible redemption is classified as temporary equity and presented at redemption value139117 - Offering costs related to the IPO were charged to temporary stockholders' equity, except those associated with Public Warrants which were expensed118121 - Warrants are accounted for as derivative liabilities at fair value, re-measured each reporting period, with changes recognized in the statements of operations125143241 - Forward Purchase Agreements (FPAs) are recognized as derivative assets at fair value, re-measured each reporting period146 - The effective tax rate was 54% for Q1 2023, differing from the statutory 21% due to changes in fair value of warrants, FPA, and valuation allowance on deferred tax assets129 - The Inflation Reduction Act of 2022 introduces a 1% excise tax on stock repurchases after January 1, 2023, which could impact cash available for redemptions or business combinations131170 Note 3 - Initial Public Offering This note details the IPO of 42,500,000 units at $10.00 per unit, generating $425,000,000, and discusses the underwriters' deferred discount - The IPO involved 42,000,000 units initially, with an additional 500,000 units issued from the underwriters' partial over-allotment option, totaling $425,000,000 gross proceeds13562 - Underwriters were entitled to a deferred discount of $14,875,000, of which $4,462,500 was reversed in September 2022 due to underwriters resigning135202 Note 4 - Private Placement This note describes the private sale of 12,500,000 Private Placement Warrants to the Sponsor for $12,500,000, with proceeds added to the Trust Account - 12,500,000 Private Placement Warrants were sold to the Sponsor for $12,500,000, with proceeds added to the Trust Account78174 - Private Placement Warrants are identical to Public Warrants but are not transferable, assignable, or salable until 30 days after a Business Combination, and are exercisable on a cashless basis and non-redeemable by initial purchasers174175 Note 5 - Related Party Transactions This note details transactions with the Sponsor and affiliates, including Founder Shares, working capital promissory notes, and administrative service fees - The Sponsor purchased 10,625,000 Founder Shares (Class B common stock) for $25,000, which are not subject to forfeiture176 - Founder Shares and Class A common stock received upon conversion are subject to lock-up periods post-Business Combination160 - The Company issued a 2022 Promissory Note to the Sponsor for up to $1,500,000 working capital loan, extended to December 31, 2023. As of March 31, 2023, $1,500,000 was outstanding1485179 - A 2023 Promissory Note was issued to the Sponsor for up to $1,190,000 working capital loan, with $734,300 outstanding as of March 31, 2023180257 - The Company pays an affiliate of the Sponsor $40,521 per month for administrative services, incurring $121,563 for the three months ended March 31, 2023 and 2022181 - The Company also reimburses an affiliate of the Sponsor for due diligence and other expenses, with $146,577 incurred in Q1 2023164 Note 6 - Commitments and Contingencies This note covers registration rights, underwriting agreements, and Forward Purchase Agreements, including the termination of previous FPAs and waiver of deferred underwriting fees - Holders of Founder Shares, Private Placement Warrants, and warrants from Working Capital Loans are entitled to registration rights165 - Underwriters were entitled to a deferred discount of $14,875,000, but $4,462,500 was reversed in September 2022, and the remaining $10,412,500 was waived in February 2023 by the remaining underwriter for the Proposed Business Combination166202261 - On April 17, 2023, the Company and Forward Purchasers terminated the Forward Purchase Agreements dated December 6, 2021247 - The previous Forward Purchase Agreements included commitments for up to $80,000,000 in convertible notes and $40,000,000 in forward purchase securities, plus an option for up to $120,000,000 in new equity securities185203204 Note 7 - Class A Common Stock Subject to Possible Redemption This note details Class A common stock subject to possible redemption, classified as temporary equity, whose value significantly decreased due to Q1 2023 redemptions - Class A common stock is subject to redemption rights and classified as temporary equity139206 | Metric | March 31, 2023 | December 31, 2022 | | :--------------------------------------- | :------------- | :---------------- | | Shares issued and outstanding (shares) | 4,312,774 | 42,500,000 | | Value at redemption value | $44,166,105 | $429,747,193 | - Redemptions of Class A common stock in Q1 2023 significantly reduced the number of outstanding shares and the total value subject to redemption207 Note 8 - Stockholders' Deficit This note describes the authorized and outstanding shares of Preferred, Class A, and Class B Common Stock, including their voting rights and conversion features - The Company is authorized to issue 1,000,000 shares of preferred stock, with none issued or outstanding209 - 400,000,000 shares of Class A common stock are authorized, with 4,312,774 shares outstanding as of March 31, 2023, all subject to possible redemption210 - 40,000,000 shares of Class B common stock are authorized, with 10,625,000 shares issued and outstanding, primarily held by the Sponsor191 - Class B common stock converts to Class A common stock on a one-for-one basis upon Business Combination, subject to adjustment212 Note 9 – Fair Value Measurements This note explains the fair value hierarchy (Level 1, 2, 3) for financial instruments, classifying Public Warrants as Level 1, Private Warrants as Level 2, and FPAs as Level 3 - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)142 - Public Warrants are classified as Level 1, Private Warrants as Level 2123125193 - Forward Purchase Agreements (FPAs) and the working capital loan conversion option are classified as Level 3 fair value measurements146194195 | Metric | December 31, 2022 | Change in fair value | March 31, 2023 | | :--------------------------------------- | :---------------- | :------------------- | :------------- | | FPA assets | $353,731 | $681,533 | $1,035,264 | | Metric | December 31, 2022 | Issuance of loan | March 31, 2023 | | :--------------------------------------- | :---------------- | :----------------- | :------------- | | Working capital loan | $1,500,000 | $734,300 | $2,234,300 | Note 10 - Warrant Liabilities This note describes the terms of Public Warrants, including exercisability, redemption provisions, and their accounting treatment as derivative liabilities - Public Warrants become exercisable on the later of 30 days after Business Combination completion or 12 months from IPO closing, expiring five years from Business Combination199 - The Company may redeem Public Warrants at $0.01 per warrant if Class A common stock price equals or exceeds $18.00 for 20 trading days within a 30-day period220223 - The Company may also redeem Public Warrants at $0.10 per warrant if Class A common stock price equals or exceeds $10.00, allowing cashless exercise prior to redemption236 - The Company has 26,666,666 outstanding warrants (14,166,666 public, 12,500,000 private) as of March 31, 2023 and December 31, 2022225 - Warrants are classified as derivative liabilities at fair value, with changes recognized in the statements of operations241 Note 11 - Subsequent Events This note discloses post-balance sheet events, including the Business Combination Agreement with Envoy Medical Corporation and the termination of previous Forward Purchase Agreements - On April 17, 2023, the Company entered into a Business Combination Agreement with Envoy Medical Corporation, a U.S.-based medical device company228243 - The Proposed Business Combination involves Merger Sub merging into Envoy, with Envoy becoming a wholly-owned subsidiary and the Company changing its name to 'Envoy Medical, Inc.'243 - The merger consideration includes 15 million shares of Class A Common Stock for Envoy common stock holders244 - Concurrently, the Sponsor agreed to forfeit 12,500,000 private placement warrants and some Class B common stock, and subscribe for $10,000,000 of Series A Convertible Preferred Stock1 - Key Stockholders of Envoy (owning ~40.1%) agreed to vote in favor of the Business Combination1229246 - On April 17, 2023, the Company and Forward Purchasers terminated the Forward Purchase Agreements dated December 6, 2021247 - On April 17, 2023, the Company entered into a Forward Share Purchase Agreement with Meteora Special Opportunity Fund I, LP and affiliates, for the potential purchase of up to 4,300,000 Class A common stock shares268 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition, operations, and liquidity, focusing on its blank check status and recent redemptions Special Note Regarding Forward-Looking Statements This section highlights that the report contains forward-looking statements subject to risks and uncertainties, with no obligation to update them - The report contains forward-looking statements that involve risks and uncertainties, which could cause actual results to differ materially249 - The Company disclaims any intention or obligation to update or revise forward-looking statements249 Overview This section provides a general overview of the company's purpose as a blank check company and its intent to effect a Business Combination - The Company is a blank check company formed to effect a Business Combination271 - The Company intends to effectuate a Business Combination using cash from IPO proceeds, Private Placement Warrants, capital stock, debt, or a combination250 - On April 17, 2023, the Company entered into a Business Combination Agreement with Envoy Medical Corporation251 Recent Developments This section outlines recent key events, including the Business Combination Agreement with Envoy Medical Corporation and its expected closing timeline - Merger Sub will merge with Envoy, with Envoy becoming a wholly-owned subsidiary and the Company changing its name to 'Envoy Medical, Inc.'89 - The Proposed Business Combination is expected to close in the third quarter of 2023, subject to customary closing conditions39 Results of Operations This section analyzes the company's financial performance, detailing changes in net income, interest income, and operating costs | Metric | 3 Months Ended March 31, 2023 | 3 Months Ended March 31, 2022 | | :--------------------------------------- | :---------------------------- | :---------------------------- | | Net income | $717,701 | $12,461,381 | | Interest income on Trust Account | $3,370,272 | $40,410 | | Change in fair value of warrant liability | $0 | $14,397,306 | | Operating costs | $2,492,581 | $1,489,086 | | Income tax expense | $841,523 | $0 | - The significant decrease in net income in Q1 2023 compared to Q1 2022 is primarily due to the absence of a large gain from the change in fair value of warrant liability ($14.4 million in Q1 2022)273 Liquidity and Capital Resources This section discusses the company's cash position, working capital, Trust Account balance, and its ability to continue as a going concern - As of March 31, 2023, the Company had $104,020 in its operating bank account and a working capital deficit of $8,981,914274 - $425,000,000 from IPO proceeds and Private Placement Warrants was deposited in the Trust Account255301 - Stockholders redeemed 38,187,226 Class A shares for approximately $387.6 million, leaving $44.3 million in the Trust Account as of March 31, 2023278 - The maturity date of the 2022 Promissory Note (Working Capital Loan) from the Sponsor was extended to December 31, 2023277 - A new 2023 Promissory Note for up to $1,190,000 working capital loan was issued, with $734,300 outstanding as of March 31, 2023257 - The Company's liquidity conditions raise substantial doubt about its ability to continue as a going concern if a Business Combination is not consummated by September 30, 2023110280 Off-Balance Sheet Financing Arrangements This section confirms the absence of any off-balance sheet arrangements, obligations, assets, or liabilities - The Company has no off-balance sheet arrangements, obligations, assets, or liabilities as of March 31, 2023281 Contractual Obligations This section details the company's contractual commitments, including administrative service fees and the waiver of deferred underwriting discounts - The remaining deferred underwriting discount of $10,412,500 was waived in February 2023 by the remaining underwriter for the Proposed Business Combination261 - The Company pays an affiliate of the Sponsor $40,251 monthly for administrative services282 Critical Accounting Policies This section outlines the critical accounting policies that require significant judgment and estimation in financial reporting Warrant Liabilities This section details the accounting treatment of warrants as derivative liabilities, measured at fair value and adjusted periodically - Warrants are classified as liabilities at their fair value and adjusted at each reporting period, with changes recognized in the unaudited condensed statements of operations262 Class A Common Stock Subject to Possible Redemption This section explains the classification and measurement of Class A common stock subject to possible redemption as temporary equity - Class A common stock subject to possible redemption is classified as temporary equity and measured at redemption value264 Net Income Per Common Stock This section describes the computation of net income per common stock using the two-class method, excluding accretion from earnings per share - Net income per common stock is computed using the two-class method, with accretion associated with redeemable Class A common stock excluded from earnings per share285 Recent Accounting Standards This section discusses the company's assessment of the impact of recently issued accounting standards, specifically ASU No. 2020-06 - The Company is assessing the impact of ASU No. 2020-06, which simplifies accounting for convertible instruments and diluted earnings per share calculations, effective for fiscal years beginning after December 15, 2023286 Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk - The Company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk265 Item 4. Controls and Procedures The company's disclosure controls and procedures were ineffective as of March 31, 2023, due to a material weakness in internal control over financial reporting Evaluation of Disclosure Controls and Procedures This section details the evaluation of the company's disclosure controls and procedures, which were deemed ineffective as of March 31, 2023 - Disclosure controls and procedures were not effective as of March 31, 2023, due to a material weakness in internal control over financial reporting266 Material Weakness This section identifies a material weakness in internal control over financial reporting related to the accounting for a significant contingent obligation - A material weakness existed relating to the accounting treatment for the extinguishment of a significant contingent obligation, leading to a restatement of prior financial statements289 Changes in Internal Control Over Financial Reporting This section reports that no material changes in internal control over financial reporting occurred during Q1 2023 - No material changes in internal control over financial reporting occurred during Q1 2023, other than those described290 PART II. OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and exhibits Item 1. Legal Proceedings The company is not currently involved in any material legal proceedings outside the ordinary course of business - The Company is not currently involved in any material legal proceedings outside the ordinary course of business300 Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for FY2022 - No material changes to risk factors disclosed in the Annual Report on Form 10-K for FY202226 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the proceeds from the IPO and Private Placement Warrants, their deposit into the Trust Account, and funds held for working capital - $425,000,000 from IPO and Private Placement Warrants proceeds was deposited into the Trust Account301 - Transaction costs for the IPO amounted to $24,006,835301 - As of March 31, 2023, $104,020 cash was held outside the Trust Account for working capital301 Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities - No defaults upon senior securities29 Item 4. Mine Safety Disclosures The company has no mine safety disclosures to report - No mine safety disclosures302 Item 5. Other Information This section serves as a placeholder and contains no specific information in the provided text - This section is a placeholder and contains no specific information in the provided text30 Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report, including the Business Combination Agreement, related agreements, and financial information in iXBRL format - Key exhibits include the Business Combination Agreement, Sponsor Support and Forfeiture Agreement, Subscription Agreement, Shareholder Support Agreement, and Promissory Notes30330430532293294 - Financial information for the quarter ended March 31, 2023, is provided in iXBRL format3436307 SIGNATURES This section contains the official signatures of the company's Chief Executive Officer and Chief Financial Officer - The report is signed by Dr. Whitney Haring-Smith (Chief Executive Officer) and Daniel Hirsch (Chief Financial Officer) on May 15, 202339