The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with our audited financial
statements and the notes related thereto which are included in "Item 8.
Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
Certain information contained in the discussion and analysis set forth below
includes forward-looking statements. Our actual results may differ materially
from those anticipated in these forward-looking statements as a result of many
factors, including those set forth under "Special Note Regarding Forward-Looking
Statements," "Item 1A. Risk Factors" and elsewhere in this Annual Report on Form
10-K.
Overview
We are a blank check company incorporated in the Cayman Islands on December 6,
2021 formed for the purpose of entering into a merger, capital stock exchange,
asset acquisition, stock purchase, recapitalization, reorganization or other
similar business combination with one or more businesses or entities ("Business
Combination"). We intend to effectuate our Business Combination using cash
derived from the proceeds of the Initial Public Offering and the sale of the
Private Placement Warrants, our shares, debt or a combination of cash, shares
and debt.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete a Business
Combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from December 6, 2021 (inception) through November 30, 2022
were organizational activities, those necessary to prepare for the Initial
Public Offering, described below, and identifying a target company for a
Business Combination. We do not expect to generate any operating revenues until
after the completion of our Business Combination. We generate non-operating
income in the form of interest income on marketable securities held in the Trust
Account. 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 period from December 6, 2021 (inception) through November 30, 2022, we
had a net income of $817,089, which consists of interest income on marketable
securities held in the Trust Account of $1,483,349 and an unrealized gain on
marketable securities held in our Trust Account of $1,993, offset by operating
and formation costs of $668,253.
Liquidity and Capital Resources
On April 18, 2022, we consummated the Initial Public Offering of 11,500,000
Units, at a price of $10.00 per Unit, which includes the exercise of the
over-allotment option in full of 1,500,000 Units, generating gross proceeds of
$115,000,000. Simultaneously with the closing of the Initial Public Offering, we
consummated the private sale of 5,000,000 Private Placement Warrants at a price
of $1.00 per Private Placement Warrant in a private placement to the Sponsor
generating gross proceeds to the Company in the amount of $5,000,000.
Following the Initial Public Offering, the full exercise of the over-allotment
option, and the sale of the Private Units, a total of $117,300,000 was placed in
the Trust Account. We incurred $5,724,785 in Initial Public Offering related
costs, including $1,150,000 of underwriting fees and $4,025,000 of deferred
underwriting fees and $549,784 of other offering costs.
For the period from December 6, 2021 (inception) through November 30, 2022, cash
used in operating activities was $664,685. Net income of $817,089 was affected
by interest earned on marketable securities held in the Trust Account of
$1,483,349 and an unrealized gain on marketable securities held in the Trust
account of $1,993. Changes in operating assets and liabilities used $3,568 of
cash for operating activities.
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As of November 30, 2022, we had marketable securities held in the Trust Account
of $118,785,342 (including $1,485,342 of interest income and unrealized gains)
consisting of U.S. Treasury Bills with a maturity of 185 days or less. We may
withdraw interest from the Trust Account to pay 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 (less income taxes payable),
to complete our Business Combination. To the extent that our share capital or
debt is used, in whole or in part, as consideration to complete our 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 November 30, 2022, we had cash of $360,530. 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.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, the Sponsor, or certain of our officers
and directors or their affiliates 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 Working Capital Loans may be
convertible into warrants of the post-Business Combination entity at a price of
$1.00 per warrant at the option of the lender.
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 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 consummation of our Business Combination, in which case we may issue
additional securities or incur debt in connection with such Business
Combination.
In connection with our assessment of going concern considerations in accordance
with FASB ASU 2014-15, "Disclosures of Uncertainties about an Entity's ability
to Continue as a Going Concern," we have determined that if we are unable to
raise additional funds to alleviate liquidity needs as well as complete a
Business Combination by July 18, 2023, then we will cease all operations except
for the purpose of liquidating. The liquidity condition and the date for
mandatory liquidation and subsequent dissolution raises substantial doubt about
our ability to continue as a going concern. We plan to consummate a Business
Combination prior to the mandatory liquidation date. No adjustments have been
made to the carrying amounts of assets or liabilities should we be required to
liquidate after July 18, 2023.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of November 30, 2022. We do not participate in
transactions that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or purchased any non-financial assets.
Contractual obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay an
affiliate of the Sponsor $20,000 per month for office space, utilities and
secretarial and administrative support and to reimburse the Sponsor for any
out-of-pocket expenses related to identifying, investigating, and completing an
initial Business Combination commencing on the filing of the initial draft
registration statement. We began incurring these fees on January 27, 2022 and
will continue to incur these fees monthly until the earlier of the completion of
the Business Combination and our liquidation.
The underwriters will be entitled to a deferred underwriting discount of 3.5% of
the gross proceeds of the IPO, which aggregates to $4,025,000, upon the
completion of the Company's initial Business Combination, subject to the terms
of the underwriting agreement.
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Critical Accounting Policies
The preparation of 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 not identified any critical accounting policies.
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, 2024 and should be applied on a full or
modified retrospective basis, with early adoption permitted beginning on
January 1, 2021. The Company continues to evaluate the impact of ASU 2020-06 on
its financial statements.
Management does not believe that any other recently issued, but not yet
effective, accounting pronouncements, if currently adopted, would have a
material effect on the Company's financial statements.
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