Special Note Regarding Forward-Looking Statements
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the financial statements and the
notes thereto contained elsewhere in this annual report. Certain information
contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties.
Overview
We are a newly incorporated blank check company, incorporated on March 5, 2021,
as a Cayman Islands exempted company for the purpose of effecting a merger,
amalgamation, share exchange, asset acquisition, share purchase, reorganization
or other similar business combination with one or more businesses. We intend to
effectuate our initial business combination using cash from the proceeds of our
IPO and the sale of the private placement warrants, our shares, debt or a
combination of cash, shares and debt.
The issuance of additional ordinary shares or preference shares in a business
combination:
• may significantly dilute the equity interest of investors in our IPO, which
dilution would increase if the anti-dilution provisions in the Class B
ordinary shares resulted in the issuance of Class A ordinary shares on a
greater than one-to-one basis upon conversion of the Class B ordinary shares;
• may subordinate the rights of holders of ordinary shares if preference shares
are issued with rights senior to those afforded our ordinary shares;
• could cause a change of control if a substantial number of our ordinary
shares is issued, which result in the resignation or removal of our present
directors and officers;
• may have the effect of delaying or preventing a change of control of us by
diluting the share ownership or voting rights of a person seeking to obtain
control of us;
• may adversely affect prevailing market prices for our units, ordinary shares
and/or warrants; and
67
--------------------------------------------------------------------------------
Table of Contents
• may not result in adjustment to the exercise price of our warrants.
Similarly, if we issue debt or otherwise incur significant indebtedness, it
could result in:
• default and foreclosure on our assets if our operating revenues after an
initial business combination are insufficient to repay our debt obligations;
• acceleration of our obligations to repay the indebtedness even if we make all
principal and interest payments when due if we breach certain covenants that
require the maintenance of certain financial ratios or reserves without a
waiver or renegotiation of that covenant;
• our immediate payment of all principal and accrued interest, if any, if the
debt is payable on demand;
• our inability to obtain necessary additional financing if the debt contains
covenants restricting our ability to obtain such financing while the debt is
outstanding;
• our inability to pay dividends on our ordinary shares;
• using a substantial portion of our cash flow to pay principal and interest on
our debt, which will reduce the funds available for dividends on our ordinary
shares, expenses, capital expenditures, acquisitions and other general
corporate purposes;
• limitations on our flexibility in planning for and reacting to changes in our
business and in the industry in which we operate;
• increased vulnerability to adverse changes in general economic, industry and
competitive conditions and adverse changes in government regulation; and
• limitations on our ability to borrow additional amounts for expenses, capital
expenditures, acquisitions, debt service requirements, execution of our
strategy and other purposes and other disadvantages compared to our
competitors who have less debt.
Results of Operations and Known Trends or Future Events
We have neither engaged in any operations nor generated any revenues to date.
Our only activities since inception have been organizational activities and
those necessary to prepare for our IPO. Following our IPO, we will not generate
any operating revenues until after completion of our initial business
combination. We will generate non-operating income in the form of interest
income on cash and cash equivalents after our IPO. There has been no significant
change in our financial or trading position and no material adverse change has
occurred since the date of our audited financial statements. After our IPO, we
expect to incur increased expenses as a result of being a public company (for
legal, financial reporting, accounting and auditing compliance), as well as for
due diligence expenses. We expect our expenses to increase substantially after
the closing of our IPO.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from inception through December 31, 2022 were organizational
activities, those necessary to prepare for the Initial Public Offering,
described below, the Company's search for a target business with which to
complete a Business Combination and activities in connection with the proposed
Transactions. We do not expect to generate any operating revenues until after
the completion of our initial Business Combination. We generate non-operating
income in the form of interest income on marketable securities. We are incurring
expenses as a result of being a public company (for legal, financial reporting,
accounting and auditing compliance), as well as for due diligence expenses in
connection with completing a Business Combination.
68
--------------------------------------------------------------------------------
Table of Contents
For the year ended December 31, 2022, we had net income of $9,759,713, which
consists of formation and operating costs of $4,463,907, offset by an unrealized
gain on marketable securities held in the Trust Account of $2,395,202, a gain on
settlement of underwriting fees of $202,458, and a gain from the change in fair
value of derivative warrant liabilities of $11,625,960.
For the period from March 5, 2021 (Inception) through December 31, 2021, we had
a net loss of $2,633,699, which consists of formation and operating costs of
$279,246 ($126,866 in professional services fees and $152,380 in general and
administrative expenses), unrealized gain on marketable securities held in the
Trust Account of $20,844, transaction costs allocated to derivative warrant
liability of $396,497, and a loss from the change in fair value of derivative
warrant liabilities of $1,978,800.
Liquidity and Capital Resources
Until the consummation of the Initial Public Offering, the Company's only source
of liquidity was an initial purchase of ordinary shares by the Sponsor and loans
from our Sponsor.
On October 22, 2021, we consummated the Initial Public Offering of 20,000,000
shares, at a price of $10.00 per Unit, generating gross proceeds of
$200,000,000. Simultaneously with the closing of the Initial Public Offering, we
consummated the sale of 8,000,000 Private Placement Warrants to the Sponsor at a
price of $1.00 per warrant, generating gross proceeds of $8,000,000. On
November 15, 2021, the underwriters exercised their overallotment option to
purchase 3,000,000 ordinary shares and 1,500,000 public warrants, at a price of
$10.00 per Unit, generating gross proceeds of $30,000,000. Also on November 15,
2021, we consummated additional sale of 900,000 Private Placement Warrants to
the Sponsor at a price of $1.00 per warrant, generating gross proceeds of
$900,000.
Following the Initial Public Offering and the sale of the Private Placement
Warrants, a total of $232,300,000 was placed in the Trust Account. We incurred
$21,834,402 in transaction costs, including $4,600,000 of underwriting fees,
$8,050,000 of deferred underwriting fees and $9,184,402 of other costs.
For the period ended December 31, 2022, cash used in operating activities was
$446,617. Net income was $9,759,713 and changes in operating assets and
liabilities generated $4,017,290 of cash, which were offset by $14,223,620 in
non-cash adjustments to reconcile net income to net cash used in operations,
including an unrealized gain on marketable securities held in the Trust Account
of $2,395,202, a gain on settlement of underwriting fees of $202,458, and a gain
from the change in fair value of derivative warrant liabilities of $11,625,960.
As of December 31, 2022, we had cash and marketable securities held in the Trust
Account of $234,716,046. We may withdraw interest to pay our income taxes, if
any. We intend to use substantially all of the funds held in the Trust Account,
including any amounts representing interest earned on the Trust Account (which
interest shall be net of taxes payable and excluding deferred underwriting
commissions) to complete our Business Combination. To the extent that our share
capital is used, in whole or in part, as consideration to complete a Business
Combination, the remaining proceeds held in the Trust Account will be used as
working capital to finance the operations of the target business or businesses,
make other acquisitions and pursue our growth strategies.
As of December 31, 2022, we had cash of $48,126. 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, structure, negotiate and complete a
Business Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, our Sponsor or an affiliate of our
Sponsor or certain of our officers and directors may, but are not obligated to,
loan us funds as may be required. If we complete a Business Combination, we
would repay such loaned amounts. In the event that a Business Combination does
not close, we may use a portion of the working capital held outside the Trust
Account to repay such loaned amounts, but no proceeds from our Trust Account
would be used for such repayment. Up to $1,500,000 of such loans may be
convertible into warrants, at a price of $1.00 per warrant unit at the option of
the lender. The warrants would be identical to the Private Placement Warrants.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of identifying a target business, undertaking in-depth due diligence
and negotiating a 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 our 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.
Going Concern Considerations
On a routine basis, we assess going concern considerations in accordance with
Financial Accounting Standards Board ("FASB") Accounting Standards Codification
("ASC") 205-40 "Presentation of Financial Statements - Going Concern". As of
December 31, 2022, we had $48,126 in our operating bank account, a working
capital deficit of $3,649,365, and $234,716,046 of securities held in the Trust
Account to be used for a Business Combination or to repurchase or redeem our
ordinary shares in connection therewith. In connection with our assessment of
going concern considerations in accordance with the Financial Accounting
Standards Board's ("FASB") Accounting Standards Update ("ASU") 2014-15,
"Disclosures of Uncertainties about an Entity's Ability to Continue as a Going
Concern," we have determined that mandatory liquidation and subsequent
dissolution raises substantial doubt about our ability to continue as a going
concern. We believe that we will have sufficient working capital and borrowing
capacity to meet our needs through the earlier of the consummation of a business
combination or one year from this filing. However, there is a risk that our
liquidity may not be sufficient. The Sponsor intends, but is not obligated to,
provide us with Working Capital Loans to sustain operations in the event of a
liquidity deficiency.
We have until April 22, 2023 to consummate a Business Combination. If a Business
Combination is not consummated by this date and our shareholders do not approve
of an extension there will be a mandatory liquidation and subsequent dissolution
of the Company. Uncertainty related to consummation of a Business Combination
raises substantial doubt about our ability to continue as a going concern. No
adjustments have been made to the carrying amounts of assets or liabilities
should we be required to liquidate after April 22, 2023. The financial
statements do not include any adjustment that might be necessary if we are
unable to continue as a going concern. No adjustments have been made to the
carrying amounts of assets or liabilities to reflect a required liquidation
after April 22, 2023.
69
--------------------------------------------------------------------------------
Table of Contents
© Edgar Online, source Glimpses