The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed financial statements and the notes thereto contained elsewhere in this Report.
Special Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this section and elsewhere in this Report regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. When used in this Report, words such as "anticipate," "believe," "estimate," "expect," "intend" and similar expressions, as they relate to us or our management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Please see "Cautionary Note Regarding Forward-Looking Statements" above.
Overview
We are a newly organized, blank check company incorporated as a
We intend to effectuate our initial business combination using cash from the proceeds of our IPO and the Private Placement of the private placement warrants, the proceeds of the sale of our securities in connection with our initial business combination (pursuant any forward purchase agreements or backstop agreements we may enter into), 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 or other sources.
The issuance of additional shares or equity-linked securities in connection with our initial business combination to the owners of the target or other investors:
· may significantly dilute the equity interest of investors, 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 Class A ordinary shares if preference
shares are issued with rights senior to those afforded our Class A ordinary shares;
· could cause a change in control if a substantial number of Class A ordinary
shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors;
· 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, Class A ordinary
shares and/or warrants; and 30
· may not result in adjustment to the exercise price of our warrants.
Similarly, if we issue debt securities or otherwise incur significant debt, 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 Class A 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 Class A ordinary shares if declared, 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 or prevailing interest rates; 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
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 the initial public offering, described below. Subsequent to our initial public offering, we have been focused on identifying a target company for our initial business combination. We will not generate any operating revenues until after completion of our initial business combination. We generate non-operating income in the form of interest income on cash and cash equivalents held after the initial public offering. 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. 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. Additionally, we recognize non-cash gains and losses withing other income (expense) related to changes in recurring fair value measurement of our warrant liabilities at each reporting period.
For the period from
31
Liquidity and Capital Resources
Our initial liquidity needs were satisfied prior to the completion of the IPO
through amounts advanced from our Sponsor, which included a
On
A total of
At
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 taxes payable and deferred underwriting commissions) to complete our initial business combination. We may withdraw interest to pay our taxes, if any. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the Trust Account. We expect the interest income earned on the amount in the Trust Account (if any) will be sufficient to pay our taxes. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our initial 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.
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 our initial business combination, and to pay taxes to the extent the interest earned on the Trust Account is not sufficient to pay our taxes.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business prior to our initial business
combination, other than funds available from loans from our Sponsor. However, if
our estimates of the costs of identifying a target business, undertaking
in-depth due diligence and negotiating an initial 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. In
order to fund working capital deficiencies or finance transaction costs in
connection with an intended initial 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 our initial
business combination, we may repay such loaned amounts out of the proceeds held
in the Trust Account released to us. In the event that our initial 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
Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our Sponsor or an affiliate of our Sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account.
32
We expect our primary liquidity requirements during that period to include
approximately
These amounts are estimates and may differ materially from our actual expenses. In addition, we could use a portion of the funds not held in trust to pay commitment fees for financing, fees to consultants to assist us with our search for a target business or as a down payment or to fund a "no-shop" provision (a provision designed to keep target businesses from "shopping" around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into an agreement where we paid for the right to receive exclusivity from a target business, the amount that would be used as a down payment or to fund a "no-shop" provision would be determined based on the terms of the specific business combination and the amount of our available funds at the time. Our forfeiture of such funds (whether as a result of our breach or otherwise) could result in our not having sufficient funds to continue searching for, or conducting due diligence with respect to, prospective target businesses.
Moreover, we may need to obtain additional financing to complete our initial business combination, either because the transaction requires more cash than is available from the proceeds held in our Trust Account or because we become obligated to redeem a significant number of our public shares upon completion of the business combination, in which case we may issue additional securities or incur debt in connection with such business combination. If we do not complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities.
Registration Rights
The holders of founder shares, private placement warrants, and securities that
may be issued upon conversion of working capital loans, if any, are entitled to
registration rights pursuant to a registration rights agreement dated as of
Underwriting Agreement
The underwriters were paid a cash underwriting discount of
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in
33 Warrant Liabilities
We account for the warrants issued in connection with our initial public offering in accordance with Accounting Standards Codification ("ASC") 815-40, "Derivatives and Hedging-Contracts in Entity's Own Equity" ("ASC 815"), under which the warrants do not meet the criteria for equity classification and must be recorded as liabilities. As the warrants meet the definition of a derivative as contemplated in ASC 815, the warrants are measured at fair value at issuance and at each reporting date in accordance with ASC 820, Fair Value Measurement, with changes in fair value recognized in the Statement of Operations in the period of change. In accordance with ASC 825-10 "Financial Instruments", the Company has concluded that a portion of the transaction costs which directly related to the IPO and the sale of the private placement warrants should be allocated to the warrants based on their relative fair value against total proceeds, and recognized as transaction costs in the statement of operations.
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