References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to BioPlus Acquisition Corp. References to our "management" or
our "management team" refer to our officers and directors, references to the
"Sponsor" refer to BioPlus Sponsor LLC. 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
Quarterly Report. Certain information contained in the discussion and analysis
set forth below includes forward-looking statements that involve risks and
uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities Act")
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") that are not historical facts, and involve risks and
uncertainties that could cause actual results to differ materially from those
expected and projected. All statements, other than statements of historical fact
included in this Quarterly Report including, without limitation, statements in
this "Management's Discussion and Analysis of Financial Condition and Results of
Operations" regarding the Company's financial position, business strategy and
the plans and objectives of management for future operations, are
forward-looking statements. Words such as "expect," "believe," "anticipate,"
"intend," "estimate," "seek" and variations and similar words and expressions
are intended to identify such forward-looking statements. Such forward-looking
statements relate to future events or future performance, but reflect
management's current beliefs, based on information currently available. A number
of factors could cause actual events, performance or results to differ
materially from the events, performance and results discussed in the
forward-looking statements. For information identifying important factors that
could cause actual results to differ materially from those anticipated in the
forward-looking statements, please refer to the Risk Factors section of the
Company's Annual Report on Form 10-K filed with the U.S. Securities and Exchange
Commission (the "SEC") on March 11, 2022 and our quarterly reports on Form 10-Q
filed on May 12, 2022 and August 10, 2022, respectively. The Company's
securities filings can be accessed on the EDGAR section of the SEC's website at
www.sec.gov. Except as expressly required by applicable securities law, the
Company disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information, future events
or otherwise.
Overview
We are a blank check company incorporated in the Cayman Islands on February 11,
2021 for the purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar Business Combination with
one or more target businesses. We intend to effectuate our initial Business
Combination using cash from the proceeds of our Initial Public Offering and the
concurrent private placement, the proceeds of the sale of our shares in
connection with our initial Business Combination, shares issued to the owners of
the target, debt issued to bank or other lenders or the owners of the target, or
a combination of the foregoing.
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 through September 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 three months ended September 30, 2022, we had net income of $659,131,
which consisted of interest earned on investments held in the Trust Account of
$949,499, offset by formation and operating costs of $290,368.
For the nine months ended September 30, 2022, we had net income of $477,730,
which consisted of interest earned on investments held in the Trust Account of
$1,275,211, offset by formation and operating costs of $852,981.
For the three months ended September 30, 2021, we had net loss of $877, which
consisted of formation and operating costs.
For the period from February 11, 2021 (inception) through September 30, 2021, we
had net loss of $7,017, which consisted of formation and operating costs.
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Liquidity and Capital Resources
On December 7, 2021, we consummated the Initial Public Offering of 23,000,000
Units, which includes the full exercise by the underwriter of its over-allotment
option in the amount of 3,000,000 Units, at $10.00 per Unit, generating gross
proceeds of $230,000,000. Simultaneously with the closing of the Initial Public
Offering, we consummated the sale of 560,000 Placement Units at a price of
$10.000 per Placement Unit in a private placement to the Sponsor and Cantor,
generating gross proceeds of $5,600,000.
Following the Initial Public Offering, the full exercise of the over-allotment
option, and the sale of the Placement Units, a total of $234,600,000 was placed
in the Trust Account. We incurred $14,483,021 in Initial Public Offering related
costs, including $4,000,000 of underwriting fees and $683,021 of other offering
costs.
For the nine months ended September 30, 2022, cash used in operating activities
was $460,969. Net income of $477,730 was affected by interest earned on
investments held in the Trust Account of $1,275,211. Changes in operating assets
and liabilities provided $340,516 of cash for operating activities.
For the period from February 11, 2021 (inception) through September 30, 2021,
cash used in operating activities was $10,232. Net loss of $7,017 was influenced
by formation costs. Changes in operating assets and liabilities provided $3,215
of cash for operating activities.
As of September 30, 2022, we had investments held in the Trust Account of
$235,883,906 (including approximately $1,284,000 of interest income) consisting
of U.S. Treasury Bills with a maturity of 185 days less and or money market
funds investing solely in U.S. government treasury obligations and meeting
certain conditions under Rule2a-7under the Investment Company Act. 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 September 30, 2022, we had cash of $107,073. 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 Units of the post-Business Combination entity at a price of
$10.00 per Unit. The Units would be identical to the Private Placement Units.
We do 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 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.
Liquidity and Going Concern
As of September 30, 2022, the Company had $107,073 in its operating bank account
and a working capital of $312,544. In order to finance transaction costs in
connection with a Business Combination, the Sponsor or an affiliate of the
Sponsor, or certain of the Company's officers and directors may, but are not
obligated to, provide the Company Working Capital Loans (as defined below) (see
Note 5).
Also, in connection with the Company's assessment of going concern
considerations in accordance with the authoritative guidance in FASB Accounting
Standards Update ("ASU") Subtopic 205-40, "Presentation of Financial
Statements-Going Concern," management has determined that if the Company is
unable to raise additional funds to alleviate liquidity needs as well as
complete a Business Combination by June 7, 2023 then the Company will cease all
operations except for the purpose of liquidating. The liquidity condition as
well as the date for mandatory liquidation and subsequent dissolution raise
substantial doubt about the Company's ability to continue as a going concern. No
adjustments have been made to the carrying amounts of assets or liabilities
should the Company be required to liquidate after June 7, 2023. The Company
intends to complete a Business Combination before the mandatory liquidation
date.
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Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of September 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 a total of $20,000 per month for office space,
utilities and secretarial and administrative support services. We began
incurring these fees on December 2, 2021 and will continue to incur these fees
monthly until the earlier of the completion of the Business Combination and our
liquidation.
The underwriters were entitled to a cash underwriting discount of $0.20 per
Unit, or $4,000,000 in the aggregate, which was paid upon the closing of the
Initial Public Offering. In addition, the underwriters are entitled to a
deferred fee of (i) $0.40 per Unit of the gross proceeds of the initial
20,000,000 Units sold in the Initial Public Offering, or $8,000,000 in the
aggregate, and (ii) $0.60 per Unit of the gross proceeds from the Units sold
pursuant to the over-allotment option, or $1,800,000. The deferred fee will
become payable to the underwriters from the amounts held in the Trust Account
solely in the event that the Company completes a Business Combination, subject
to the terms of the underwriting agreement.
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 identified the following critical accounting policies:
Class A Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible conversion in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480
"Distinguishing Liabilities from Equity." Ordinary shares subject to mandatory
redemption are classified as a liability instrument and measured at fair value.
Conditionally redeemable ordinary shares (including ordinary shares that feature
redemption rights that are either within the control of the holder or subject to
redemption upon the occurrence of uncertain events not solely within our
control) are classified as temporary equity. At all other times, ordinary shares
are classified as shareholders' equity. Our ordinary shares feature certain
redemption rights that are considered to be outside of our control and subject
to occurrence of uncertain future events. Accordingly, ordinary shares subject
to possible redemption are presented at redemption value as temporary equity,
outside of the shareholders' deficit section of our balance sheets.
Net Income (Loss) Per Ordinary Share
We have two classes of shares, which are referred to as Class A ordinary shares
and Class B ordinary shares. Income and losses are shared pro rata between the
two classes of shares. Net income (loss) per ordinary share is calculated by
dividing the net income (loss) by the weighted average shares of ordinary shares
outstanding for the respective period. Accretion associated with the redeemable
shares of Class A ordinary shares is excluded from the earnings per share as the
redemption value approximates fair value.
Recent Accounting Standards
In June 2016, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") 2016-13, Financial Instruments-Credit Losses
(Topic 326): Measurement of Credit Losses on Financial Instruments, which
requires entities to measure all expected credit losses for financial assets
held at the reporting date based on historical experience, current conditions,
and reasonable and supportable forecasts. ASU 2016-13 also requires additional
disclosures regarding significant estimates and judgments used in estimating
credit losses, as well as the credit quality and underwriting standards of an
entity's portfolio. ASU 2016-13 is effective for fiscal years beginning after
December 15, 2022, including interim periods within those fiscal years, with
early adoption permitted. The Company expects to adopt the provisions of this
guidance on January 1, 2023. The adoption is not expected to have a material
impact on the Company's condensed financial statements.
Besides the above, the Company's management does not believe that any recently
issued, but not yet effective, accounting standards, if currently adopted, would
have a material effect on the accompanying unaudited condensed financial
statements.
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