Business context and reporting period
This is Anzu Special Acquisition Corp I’s Form 10-K for the fiscal year ended December 31, 2022, filed April 3, 2023. Despite the request metadata, this is a SPAC filing—not Envoy Medical, Inc.’s operating-company 10-K. Anzu had no operating business or revenue and was seeking a business combination. Its proposed transaction with Envoy Medical was described as a letter of intent, not a completed or definitive agreement.
Financial results and liquidity
| Metric | 2022 | 2021 |
|---|---|---|
| Operating revenue | None | None |
| Formation and operating costs | $4.89 million | $5.20 million |
| Net income (loss) | $19.23 million | $(0.25) million |
| Interest on trust investments | $6.13 million | $0.04 million |
| Cash used in operating activities | $2.66 million | $3.24 million |
| Cash at year-end | $107,773 | $149,845 |
| Working capital | $(7.09) million | $(1.82) million |
2022 net income was not operating-driven: it included a $20.00 million gain from the decline in fair value of warrant liabilities and $6.13 million in trust interest, partly offset by costs and $1.50 million of income tax expense. Warrant liabilities fell from $21.06 million to $1.07 million. The filing reports no operating margins; they are not meaningful for this pre-combination SPAC.
At December 31, 2022, the trust account held $430.05 million, while redeemable Class A shares were recorded at $429.75 million. Total liabilities were $18.79 million, including a $1.50 million sponsor working-capital loan, $10.41 million in deferred underwriting fees, and $1.07 million in warrant liabilities. Stockholders’ deficit was $17.91 million. The sponsor loan was non-interest-bearing and due upon the earlier of maturity or a business combination.
Material changes and subsequent events
- Net income improved from a $0.25 million loss in 2021, primarily because of warrant fair-value changes and trust interest—not revenue growth.
- In February 2023, stockholders extended Anzu’s business-combination deadline from March 4 to September 30, 2023. Holders redeemed 38,187,226 public shares for approximately $387.6 million, or $10.15 per share. About $45.1 million remained in the trust, and 4,312,774 Class A shares remained outstanding.
- The filing separately states that approximately $43.9 million was in trust as of March 27, 2023; the text does not clearly reconcile this figure with the approximately $45.1 million reported after the extension redemptions.
- In February 2023, the remaining underwriter waived $10.41 million in deferred fees solely in connection with the proposed Envoy transaction. This was subsequent to year-end and does not establish that the transaction will close.
Outlook, risks and unusual items
Anzu said it expected to execute definitive Envoy transaction documents in April 2023 and close in late Q2 or early Q3 2023, subject to conditions and financing. The letter of intent included a condition that more than $40 million be in trust immediately before redemptions at closing. The filing cautions that definitive documents or a closing may not occur. Forward purchase agreements contemplate up to $80 million of convertible notes and $40 million of forward-purchase securities, plus an opportunity to offer up to $120 million of other equity securities; purchases are conditional, and investors’ investment committees are not obligated to approve them.
The auditor’s report raises substantial doubt about Anzu’s ability to continue as a going concern if it cannot secure funding and complete a business combination by the deadline. Anzu reported only $31,944 of cash outside the trust as of March 24, 2023. Sponsor funding is not assured. If no combination is completed by the deadline, public shares are subject to redemption and warrants may expire worthless; creditor claims could reduce distributions.
Management identified a material weakness in controls over accounting for the extinguishment of a significant contingent obligation and concluded disclosure controls and internal control over financial reporting were ineffective at December 31, 2022. Anzu restated its 2022 interim statements after revising the accounting for an underwriter fee waiver; the auditor’s report highlights this restatement. The filing also describes a potential 1% federal excise tax on certain redemptions, with insurance coverage described only for a liquidation during 2023. The proposed transaction, financing availability, high redemptions, sponsor control, conflicts of interest, and the September 30, 2023 deadline are material risks.
Important facts for investors to verify
- Confirm the correct issuer: this filing is for Anzu Special Acquisition Corp I, not Envoy Medical, and does not provide Envoy’s operating results.
- Check whether definitive Envoy transaction agreements were executed, whether the transaction closed, and the final terms, financing, and redemption conditions.
- Reconcile the reported post-redemption trust amounts of approximately $45.1 million and $43.9 million, and confirm current trust cash and shares outstanding.
- Verify whether forward-purchase financing or other funding was actually committed and funded; the disclosed agreements are conditional.
- Assess the going-concern warning, limited cash outside trust, sponsor-loan terms, auditor-fee waiver treatment, and remediation of the material weakness.
- Review dilution and control implications: the sponsor held approximately 70.3% of voting power after redemptions, and founder shares and potential financing securities may materially dilute public investors.