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 as a Cayman Island exempted company on
March 22, 2021. We were formed for the purpose of effecting a merger, share
exchange, asset acquisition, share purchase, reorganization or other similar
business transaction with one or more businesses (a "Business Combination").
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As of December 31, 2022, we had not commenced any operations. All activity for
the period from March 22, 2021 (inception) through December 31, 2022, relates
our formation, the IPO, and subsequent to the IPO, identifying a target company
for a Business Combination. We will not generate any operating revenues until
after the completion of our Business Combination, at the earliest. We will
generate non-operating income in the form of interest income on cash and cash
equivalents from the proceeds derived from the IPO. 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.
Our sponsor is Innovative International Sponsor I LLC, a Delaware limited
liability company (the "sponsor").
Our registration statement for the IPO was declared effective on October 26,
2021 (the "Effective Date"). On October 29, 2021, we consummated our IPO of
23,000,000 units (the "Units" and, with respect to the ordinary shares included
in the Units being offered, the "Public Shares") at $10.00 per Unit (which
included the full exercise of the underwriters' over-allotment option) and the
sale of 1,060,000 shares (the "Private Placement Shares") at a price of $10.00
per Private Placement Share in a private placement to our Sponsor, Cohen &
Company Capital Markets, a division of J.V.B. Financial Group, LLC ("CCM"), and
Cantor Fitzgerald & Co. ("Cantor"), the representative of the underwriters that
closed simultaneously with the IPO.
Transaction costs amounted to $16,664,843 consisting of $3,173,059 of
underwriting commissions, $12,100,000 of deferred underwriting commissions and
$1,391,784 of other cash offering costs and were charged to equity.
Our initial Business Combination must occur with one or more operating
businesses or assets with an aggregate fair market value equal to at least 80%
of the assets held in the Trust Account (excluding the deferred underwriting
commissions and taxes payable on the income earned on the Trust Account) at the
time of our signing a definitive agreement in connection with the initial
Business Combination. However, we will only complete such Business Combination
if the post-transaction company owns or acquires 50% or more of the issued and
outstanding voting securities of the target or otherwise acquires a controlling
interest in the target business sufficient for it not to be required to register
as an investment company under the Investment Company Act of 1940, (the
"Investment Company Act"). There is no assurance that we will be able to
complete a Business Combination successfully.
Upon the closing of the IPO, management deposited $234,600,000 or $10.20 per
Unit sold in the IPO, including a portion of the proceeds of the Private
Placement Shares, into the Trust Account that to be invested only in U.S.
government treasury obligations with a maturity of 185 days or less or in money
market funds meeting certain conditions under Rule 2a-7 under the Investment
Company Act that invest only in direct U.S. government treasury obligations.
Except with respect to interest earned on the funds held in the Trust Account
that may be released to us to pay our taxes, if any (less up to $100,000
interest to pay dissolution expenses), the proceeds from the IPO and the sale of
the Private Placement Shares deposited into the Trust Account will not be
released from the Trust Account until the earliest of (i) the completion of our
initial Business Combination, the redemption of our public shares properly
tendered in connection with a shareholder vote to amend our amended and restated
memorandum and articles of association (A) to modify the substance or timing of
our obligation to allow redemption in connection with the initial Business
Combination or to redeem 100% of the public shares if we do not complete our
initial Business Combination within 21 months from the closing of the IPO or (B)
with respect to any other provision relating to shareholders' rights or
pre-Business Combination activity and (iii) the redemption of all of the public
shares if we are unable to complete its initial Business Combination within 21
months from the closing of the IPO, subject to applicable law. In connection
with the Extension (as defined below), in January 2023, IOAC shareholders
holding 19,949,665 public shares exercised their right to redeem such shares for
a pro rata portion of the funds in the Trust Account. As a result, approximately
$206.5 million (approximately $10.35 per public share redeemed) was removed from
the Trust Account to pay such holders and approximately $31.5 million remains in
the Trust Account.
On October 13, 2022, we entered into the Merger Agreement with Zoomcar and
certain other parties. Pursuant to the Merger Agreement, subject to the terms
and conditions set forth therein, (i) the Company will continue out of the
Cayman Islands and re-domesticate into a Delaware corporation and (ii) following
the Domestication, a Delaware subsidiary of our Company will merge with and into
Zoomcar, with Zoomcar continuing as the surviving entity and wholly-owned
subsidiary of the Company, and with each Zoomcar stockholder receiving shares of
post-Domestication Company common stock. In connection with the Zoomcar
Transaction, we also entered into (i) the Ananda Trust Subscription Agreement,
pursuant to which Ananda Trust to subscribe for 1,000,000 newly issued shares of
the common stock (following the Domestication) of the Company at a purchase
price of $10.00 per share; (ii) the Lock-Up Agreements, pursuant to which
certain Zoomcar stockholders agreed to subject certain shares of common stock of
the post-combination company held by them to the restrictions described therein
from the Closing until the termination of applicable lock-up periods described
therein; (iii) the Stockholder Support Agreements, pursuant to which, among
other things, the stockholders party to such Stockholder Support
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Agreements have agreed to support the approval and adoption of the Zoomcar
Transaction and to certain transfer restrictions with respect to their Zoomcar
shares; and (iv) the Sponsor Support Agreement, pursuant to which our sponsor
agreed to (A) vote all ordinary shares of the Company held by our sponsor at any
meeting of the shareholders of the Company in favor of the approval and adoption
of the Merger Agreement and the Zoomcar Transaction; (B) not redeem or transfer
any of the shares held by our sponsor, or deposit into a voting trust or enter
into a voting agreement in consistent with the Sponsor Support Agreement and (C)
waive the anti-dilution right associated with the shares held by our sponsor and
our sponsor shall use its best efforts to cooperate with the Company and Zoomcar
in connection with obtaining the financing transactions.
On September 7, 2022, IOAC issued an unsecured promissory note (the "September
2022 Note"), in the amount of up to $500,000 to Ananda Trust. The September 2022
Note bears no interest and the principal balance is payable on the date of the
consummation of the Company's initial business combination. On or before the
maturity date, Ananda Trust has the option to convert all or any portion of the
principal outstanding under the September 2022 Note into Class A ordinary shares
of the Company at a conversion price of $10.00 per share. The terms of such
shares, if any, would be identical to the terms of the Private Placement Shares.
On January 3, 2023, we issued an unsecured promissory note (the "January 2023
Note"), in the amount of up to $500,000 to Ananda Trust. The proceeds of the
January 2023 Note may be drawn down from time to time prior to the Maturity Date
(as defined below) upon request by the Company.
The January 2023 Note bears no interest, and the principal balance is payable on
the date of the consummation of the Company's initial business combination (the
"Maturity Date"). The January 2023 Note is subject to customary events of
default, the occurrence of certain of which automatically triggers the unpaid
principal balance of the January 2023 Note and all other sums payable with
regard to the January 2023 Note becoming immediately due and payable.
On January 19, 2023, we held the Extraordinary General Meeting ("EGM") for the
purposes of considering and voting upon the Charter and the Trust Agreement
Amendments. At the EGM, the shareholders of the Company approved an amendment
(the "Charter Amendment") to the Company's Amended and Restated Memorandum and
Articles of Association to extend the date by which the Company must consummate
an initial business combination up to six (6) times for an additional one (1)
month each time from January 29, 2023 to July 29, 2023 (which is 21 months from
the closing of the Company's initial public offering).
In connection with the EGM, shareholders holding 19,949,665 public shares
exercised their right to redeem their shares for a pro rata portion of the funds
in the Company's Trust Account. As a result, approximately $206.5 million
(approximately $10.35 per public share redeemed) was removed from the Trust
Account to pay such holders and approximately $31.5 million remains in the Trust
Account. Following redemptions, the Company has 3,050,335 public shares
outstanding.
Our sponsor has agreed to make available to the Company an aggregate amount of
up to $990,000 to be used only for expenses accrued in connection with the
extension of the date by which the Company must consummate an initial business
combination, pursuant to a promissory note in favor of our sponsor (the
"Extension Note"). The Extension Note is non-convertible and bears no interest,
and the principal balance is payable by the Company on the Maturity Date, as
defined in the Extension Note. The issuance of the Extension Note was made
pursuant to the exemption from registration contained in Section 4(a)(2) of the
Securities Act of 1933, as amended.
On January 26, 2023 and on February 28, 2023, in connection with the Extension,
we deposited $165,000 and $165,000 into the Trust Account, which amount will be
included in the pro rata amount distributed to (i) all of the holders of the
Company's Class A ordinary shares sold in the Company's initial public offering
("Public Shares") upon the Company's liquidation or (ii) holders of Public
Shares who elect to have their shares redeemed in connection with the
consummation of the Company's initial business combination.
We will have until July 29, 2023 (or such earlier date as determined by the
board) to complete the Business Combination (the "Combination Period"). If we
are unable to consummate our Business Combination within the Combination Period,
we will: (i) cease all operations except for the purpose of winding up, (ii) as
promptly as reasonably possible but not more than 10 business days thereafter,
redeem the public shares, at a per-share price, payable in cash, equal to the
aggregate amount then on deposit in the Trust Account, including interest (which
interest shall be net of taxes payable, and less up to $100,000 of interest to
pay dissolution expenses), divided by the number of then issued and outstanding
public shares, which redemption will completely extinguish public shareholders'
rights as shareholders (including the right to receive further liquidation
distributions, if any), subject to applicable law, and (iii) as promptly as
reasonably possible following such redemption, subject to the approval of the
remaining shareholders and our board of directors, liquidate and dissolve,
subject in each case to our obligations under Cayman Islands law to provide for
claims of creditors and the
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requirements of other applicable law. There will be no redemption rights or
liquidating distributions with respect to the warrants, which will expire
worthless if we fail to complete our initial Business Combination within the
Combination Period.
Risks and Uncertainties
In February 2022, Russia commenced a military action with the country of
Ukraine. As a result of this action, various nations, including the United
States, have instituted economic sanctions against Russia. The invasion of
Ukraine may result in market volatility that could adversely affect our stock
price and our search for a target company. Other recent events contributing to a
climate of geopolitical uncertainty include rising tensions between China and
Taiwan. Further, the impact of this action and related sanctions on the world
economy are not determinable as of the date of these financial statements and
the specific impact on our financial condition, results of operations, and cash
flows is also not determinable as of the date of these financial statements.
Management continues to evaluate the impact of the COVID-19 pandemic on the
industry and has concluded that while it is reasonably possible that the virus
could have a negative effect on our financial position, results of our
operations and/or search for a target company, the specific impact is not
readily determinable as of the date of the financial statements. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Recent increases in inflation and interest rates in the United States and
elsewhere may lead to increased price volatility for publicly traded securities,
including ours, and may lead to other national, regional and international
economic disruptions, any of which could make it more difficult for us to
consummate an initial business combination.
On August 16, 2022, the Inflation Reduction Act of 2022 (the "IR Act") was
signed into federal law. The IR Act provides for, among other things, a new U.S.
federal 1% excise tax on certain repurchases of stock by publicly traded U.S.
domestic corporations and certain U.S. domestic subsidiaries of publicly traded
foreign corporations occurring on or after January 1, 2023. The excise tax is
imposed on the repurchasing corporation itself, not its shareholders from which
shares are repurchased. The amount of the excise tax is generally 1% of the fair
market value of the shares repurchased at the time of the repurchase. However,
for purposes of calculating the excise tax, repurchasing corporations are
permitted to net the fair market value of certain new stock issuances against
the fair market value of stock repurchases during the same taxable year. In
addition, certain exceptions apply to the excise tax. The U.S. Department of the
Treasury (the "Treasury") has been given authority to provide regulations and
other guidance to carry out and prevent the abuse or avoidance of the excise
tax.
Any redemption or other repurchase that occurs after December 31, 2022, in
connection with a Business Combination, extension vote or otherwise, may be
subject to the excise tax. Whether and to what extent the Company would be
subject to the excise tax in connection with a Business Combination, extension
vote or otherwise would depend on a number of factors, including (i) the fair
market value of the redemptions and repurchases in connection with the Business
Combination, extension or otherwise, (ii) the structure of a Business
Combination, (iii) the nature and amount of any "PIPE" or other equity issuances
in connection with a Business Combination (or otherwise issued not in connection
with a Business Combination but issued within the same taxable year of a
Business Combination) and (iv) the content of regulations and other guidance
from the Treasury. In addition, because the excise tax would be payable by the
Company and not by the redeeming holder, the mechanics of any required payment
of the excise tax have not been determined. The foregoing could cause a
reduction in the cash available on hand to complete a Business Combination and
in the Company's ability to complete a Business Combination.
Results of Operations and Known Trends or Future Events
Through December 31, 2022, 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 IPO and
subsequent to the completion of the IPO, customary business conduct relating to
finding a target for the Business Combination. We will not generate any
operating revenues until after completion of our initial Business Combination.
We expect to generate non-operating income in the form of interest income on
cash and cash equivalents after the 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. 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 since we have entered into the
Merger Agreement with Zoomcar.
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For the year ended December 31, 2022, we had a net loss of $4,625,808, which
consists of formation and operating costs of $8,009,751, offset by interest
income from bank of $56 and interest earned on marketable securities held in the
Trust Account of $3,383,887.
For the period from March 22, 2021 (inception) through December 31, 2021, we had
a net loss of $229,230, which consists of formation and operating costs of
$233,253, offset by interest income from bank of $17 and interest earned on
marketable securities held in the Trust Account of $4,006.
Liquidity and Capital Resources
As of December 31, 2022, we had cash of $10,436 and a working capital deficit of
$6,708,272. Following the consummation of the IPO on October 29, 2021, we had
$2,800,472 of cash available to us, temporarily being held in the Sponsor's bank
account, and working capital of $1,210,696. We opened our operating bank account
and the $2,800,472 was transferred to us from the Sponsor's account on November
1, 2021.
Our liquidity needs were satisfied prior to completion of IPO through advances
on behalf of us of $25,000 from the sale of the Founder Shares to our sponsor
and up to $300,000 in loans from our sponsor under an unsecured promissory note.
As of October 29, 2021, we had borrowed $122,292 under the unsecured promissory
note. The balance was repaid on November 5, 2021. We received net proceeds from
(i) the sale of the units in the IPO, after deducting offering expenses of
approximately $550,000 and underwriting commissions of $4,000,000 (excluding
deferred underwriting commissions of $12,100,000 since the underwriters'
over-allotment option was exercised in full), and (ii) the sale of the Private
Placement Shares for a purchase price of $10,600,000 in the aggregate amount of
$236,050,000 since the underwriters' over-allotment option was exercised in
full. Of this amount, $234,600,000, including $12,100,000 in deferred
underwriting commissions, was deposited into a non-interest-bearing Trust
Account. The funds in the Trust Account were invested only in specified U.S.
government treasury bills or in specified money market funds. The remaining
$1,450,000 is not held in the Trust Account.
On September 7, 2022, the Company issued the September 2022 Note, in the amount
of up to $500,000 to Ananda Trust, an affiliate of the Sponsor. The September
2022 Note is unsecured and bears no interest and the principal balance is
payable on the date of the consummation of the Company's initial Business
Combination (the "Maturity Date"). On or before the Maturity Date, Ananda Trust
has the option to convert all or any portion of the principal outstanding under
the September 2022 Note into Class A ordinary shares of the Company ("Working
Capital Shares") at a conversion price of $10.00 per share. The terms of the
Working Capital Shares, if any, would be identical to the terms of the Private
Placement Shares issued by the Company at the time of its IPO. The September
2022 Note is subject to customary events of default, the occurrence of certain
of which automatically triggers the unpaid principal balance of the September
2022 Note and all other sums payable with regard to the September 2022 Note
becoming immediately due and payable. The conversion feature included in the
September 2022 Note does not meet definition of the derivative instrument.
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 initial business combination. We may withdraw
interest to pay 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. To the extent that our ordinary shares 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.
After completion of our IPO, we had available to us $1,450,000 of proceeds held
outside the Trust Account. We will use these funds 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, and to pay taxes to
the extent the interest earned on the Trust Account is not sufficient to pay our
taxes.
In addition, we could use a portion of the funds not being placed 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
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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.
Going Concern
We anticipate that the $10,436 of cash held outside of the Trust Account as of
December 31, 2022, might not be sufficient to allow the us to operate for at
least the next 12 months from the issuance of the financial statements, assuming
that a Business Combination is not consummated during that time. Until
consummation of our Business Combination, we will be using the funds not held in
the Trust Account, and any additional Working Capital Loans from the initial
shareholders, the Company's officers and directors, or their respective
affiliates, for identifying and evaluating prospective acquisition candidates,
performing business due diligence on prospective target businesses, traveling to
and from the offices, plants or similar locations of prospective target
businesses, reviewing corporate documents and material agreements of prospective
target businesses, selecting the target business to acquire and structuring,
negotiating and consummating the Business Combination.
None of the sponsor, officers or directors are under any obligation to advance
funds to, or to invest in, the Company. If we are unable to raise additional
capital, we may be required to take additional measures to conserve liquidity,
which could include, but not necessarily be limited to, curtailing operations,
suspending the pursuit of our business plan, and reducing overhead expenses. We
cannot provide any assurance that new financing will be available to it on
commercially acceptable terms, if at all. These conditions raise substantial
doubt about the Company's ability to continue as a going concern for a
reasonable period of time, which is considered to be one year from the issuance
date of the financial statements. In connection with the Company's assessment of
going concern considerations in accordance with Financial Accounting Standard
Board's Accounting Standards Update ("ASU") 2014-15, "Disclosures of
Uncertainties about an Entity's Ability to Continue as a Going Concern," the
Company has until July 29, 2023 (or such earlier date as determined by the
board) to consummate a Business Combination. It is uncertain that the Company
will be able to consummate a Business Combination by this time. If a Business
Combination is not consummated by this date, there will be a mandatory
liquidation and subsequent dissolution of the Company. Management has determined
that the mandatory liquidation, should a Business Combination not occur, and
potential subsequent dissolution raises 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 July 29, 2023 (or such earlier date as determined by the board).
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 2022 and 2021. 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 as described below.
On April 17, 2021, our Sponsor agreed to loan us up to $300,000 to be used for a
portion of the expenses of the IPO. These loans are non-interest bearing,
unsecured and are due at the earlier of December 31, 2021, or the closing of the
IPO. A portion of the loan was repaid upon the closing of the IPO out of the
offering proceeds not held in the Trust Account. As of December 31, 2022 and
2021, we had no borrowings under the promissory note.
On September 7, 2022, we have issued an unsecured promissory note in the amount
of up to $500,000 to the Sponsor. The September 2022 bears no interest and the
principal balance is payable on the date of the consummation of the Company's
initial Business Combination (the "Maturity Date"). On or before the Maturity
Date, the Sponsor has the option to convert all or any portion of the principal
outstanding under the September 2022 Note into Class A ordinary shares of the
Company ("Working Capital Shares") at a conversion price of $10.00 per share.
The terms of the Working Capital Shares, if any, would be identical to the terms
of the Private Placement Shares issued by the Company at the time of its IPO.
The September 2022 Note is subject to customary events of default, the
occurrence of certain of which automatically triggers the unpaid principal
balance of the September 2022 Note and all other sums
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payable with regard to the September 2022 Note becoming immediately due and
payable. The conversion feature included in the September 2022 Note does not
meet definition of the derivative instrument.
Certain Relationships and Related Party Transactions
On April 17, 2021, our sponsor paid $25,000 to cover certain of our offering
costs in exchange for 7,187,500 founder shares. On September 20, 2021, we
effected a dividend of 1.12 shares for each outstanding Class B ordinary share,
resulting in an aggregate of 8,050,000 founder shares being held by our sponsor
(up to 1,060,000 shares of which were subject to forfeiture by our sponsor
depending on the extent to which the underwriters' over-allotment option was
exercised), resulting in a purchase price of approximately $0.003 per share. The
purchase price of the founder shares was determined by dividing the amount of
cash contributed to us by the number of founder shares issued. As such, our
initial shareholders collectively owned approximately 25% of our issued and
outstanding shares (excluding any shares underlying any units our initial
shareholders may purchase in the IPO and the Private Placement Shares our
sponsor intends to purchase in the private placement) after the IPO. None of our
sponsor, officers, and directors intends to purchase any units after the IPO.
We are reimbursing our sponsor for office space, secretarial and administrative
services provided to members of our management team, in the amount of $10,000
per month. Upon completion of our initial business combination or our
liquidation, we will cease paying these monthly fees.
Our sponsor, officers and directors, advisers, and any of their respective
affiliates, will be reimbursed for any bona-fide, documented out-of-pocket
expenses incurred in connection with activities on our behalf such as
identifying potential target businesses and performing due diligence on suitable
business combinations. Our audit committee will review on a quarterly basis all
payments that were made by us to our sponsor, officers, directors, advisers, or
any of their respective affiliates and will determine which expenses and the
amount of expenses that will be reimbursed. There is no cap or ceiling on the
reimbursement of out-of-pocket expenses incurred by such persons in connection
with activities on our behalf.
Prior to the closing of the IPO, our sponsor has agreed to loan us up to
$300,000 to be used for a portion of the expenses of the IPO. As of December 31,
2022 and December 31, 2021, we had $500,000 and no borrowings under the
promissory note with our sponsor.
On September 7, 2022, we have issued an unsecured promissory note (the
"September 2022 Note"), in the amount of up to $500,000 to Ananda Trust. The
September 2022 Note bears no interest and the principal balance is payable on
the date of the consummation of the Company's initial business combination (the
"Maturity Date"). On or before the Maturity Date, the Sponsor has the option to
convert all or any portion of the principal outstanding under the September 2022
Note into Class A ordinary shares of the Company ("Working Capital Shares") at a
conversion price of $10.00 per share. The terms of the Working Capital Shares,
if any, would be identical to the terms of the Private Placement Shares issued
by the Company at the time of its IPO. The September 2022 Note is subject to
customary events of default, the occurrence of certain of which automatically
triggers the unpaid principal balance of the September 2022 Note and all other
sums payable with regard to the September 2022 Note becoming immediately due and
payable.
In addition, in order to 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 would repay such loaned amounts. 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 $1,500,000 of such
loans may be convertible into Class A ordinary shares at a price of $10.00 per
share, at the option of the lender. Such shares would be identical to the
Private Placement Shares. The terms of such loans by our officers and directors,
if any, have not been determined and no written agreements exist with respect to
such loans. 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.
Our sponsor, Cantor and CCM purchased an aggregate of 1,060,000 Class A ordinary
shares at a price of $10.00 per share ($10,060,000 in the aggregate) in a
private placement that closed simultaneously with the closing of the IPO. Of
those 1,060,000 Private Placement Shares, our sponsor purchased 960,000 Private
Placement Shares, CCM has purchased 30,000 Private Placement Shares, and Cantor
purchased 70,000 Private Placement Shares. Our sponsor, Cantor and CCM are
permitted to transfer the Private Placement Shares they hold to certain
permitted transferees, including their respective directors, officers, and other
persons or entities affiliated with or related to them, but the transferees
receiving such securities will be subject to the same agreements with respect to
such securities. In addition,
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the Private Placement Shares are not, subject to certain limited exceptions,
transferable or salable until 30 days after the completion of the IPO. The
Private Placement Shares will not be redeemable by us so long as they are held
by the initial purchasers or their respective permitted transferees. If the
Private Placement Shares are held by holders other than the initial purchasers
or their respective permitted transferees, the Private Placement Shares will be
redeemable by us and exercisable by the holders on the same basis as the shares
and warrants included in the units sold in the IPO. Otherwise, and, except as
described under "Description of Securities -Ordinary Shares - Private Placement
Shares" in the final prospectus of the IPO that was filed with the SEC on
October 28, 2021, the Private Placement Shares have terms and provisions that
are identical to those of the Public Shares.
Pursuant to a registration rights agreement that we entered into with our
sponsor, our directors, our officers, Cantor and CCM on or prior to the closing
of the IPO, we are required to register the offer and sale of certain securities
under the Securities Act. These holders, and holders of shares issued upon
conversion of working capital loans, if any, are entitled under the registration
rights agreement to make up to three demands that we register the offer and sale
of certain of our securities held by them under the Securities Act and to have
the resale of the securities covered thereby registered pursuant to Rule 415
under the Securities Act. In addition, these holders have the right to include
the offer and sale of their securities in other registration statements filed by
us. However, the registration rights agreement provides that we will not permit
any registration statement filed under the Securities Act to become effective
until the offer and sale of the securities covered thereby are released from
their lock-up restrictions, as described herein. Notwithstanding the foregoing,
Cantor may not exercise their demand and "piggyback" registration rights after
five and seven years after the effective date of the registration statement of
which this prospectus forms a part and may not exercise their demand rights on
more than one occasion. We will bear the costs and expenses of filing any such
registration statements.
Simultaneously with the signing of the Merger Agreement, Ananda Trust, an
affiliate of our sponsor and of Mohan Ananda and Elaine Price, the Chief
Executive Officer and Chief Financial Officer of the Company, respectively,
entered into the Ananda Trust Subscription Agreement with the Company to
subscribe for 1,000,000 newly issued shares of the Company's common stock
(following the Domestication) at a purchase price of $10.00 per share.
Simultaneously with the signing of the Merger Agreement, Ananda Trust also
invested an aggregate of $10,000,000 in Zoomcar, in exchange for the Ananda
Trust Note. At the Closing of the Merger, Zoomcar's repayment obligations under
the Ananda Trust Note will be offset against Ananda Trust's payment obligations
under the Ananda Trust Subscription Agreement and Ananda Trust will receive
newly issued shares of the Company in accordance with the terms of the Ananda
Trust Subscription Agreement. In the event that the Business Combination is not
consummated by the one-year anniversary of the Ananda Trust Note (or upon the
earlier termination of the Merger Agreement), the Ananda Trust Note issued by
Zoomcar in consideration of the Ananda Trust Investment will be exchanged for a
new convertible promissory note issued by Zoomcar, and such note will be
convertible upon the consummation of a subsequent financing in which Zoomcar
raises an aggregate of at least $5 million, and the Ananda Trust Subscription
Agreement will terminate automatically.
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We will qualify as an "emerging growth company" and
under the JOBS Act will be allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded)
companies. We are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting
standards on the relevant dates on which adoption of such standards is required
for non-emerging growth companies. As such, our financial statements may not be
comparable to companies that comply with public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the
other reduced reporting requirements provided by the JOBS Act. Subject to
certain conditions set forth in the JOBS Act, if, as an "emerging growth
company," we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an auditor's attestation report on our system of
internal control over financial reporting pursuant to Section 404 of the
Sarbanes-Oxley Act, (ii) provide all of the compensation disclosure that may be
required of non-emerging growth public companies under the Dodd-Frank Wall
Street Reform and Consumer Protection Act, (iii) comply with any requirement
that may be adopted by the PCAOB regarding mandatory audit firm rotation or a
supplement to the auditor's report providing additional information about the
audit and the financial statements (auditor discussion and analysis) and
(iv) disclose certain executive compensation related items such as the
correlation between executive compensation and performance and comparisons of
executive compensation to median employee compensation. These exemptions will
apply for a period of five years following the completion of our IPO or until we
are no longer an "emerging growth company," whichever is earlier.
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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 identified the following critical accounting policies:
Ordinary Shares Subject to Redemption
We account for our ordinary shares subject to possible redemption in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480,
"Distinguishing Liabilities from Equity." Ordinary shares subject to mandatory
redemption is classified as a liability instrument and is measured at fair
value. Conditionally redeemable ordinary shares (including ordinary shares that
features 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) is 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 is presented as temporary equity, outside of the
shareholders' deficit section of our balance sheets. The Company recognizes
changes in redemption value immediately as they occur and adjusts the carrying
value of redeemable ordinary shares to equal the redemption value at the end of
each reporting period. Increases or decreases in the carrying amount of
redeemable ordinary shares are affected by charges against additional paid in
capital and accumulated deficit.
Net Income (Loss) Per Ordinary Share
We apply the two-class method in calculating earnings per share. Net income
(loss) per ordinary share is computed by dividing the pro rata net income (loss)
between the redeemable ordinary shares and the non-redeemable ordinary shares of
by the weighted average number of ordinary shares outstanding for each of the
periods. The calculation of diluted income (loss) per share does not consider
the effect of the warrants issued in connection with the IPO since the exercise
of the warrants are contingent upon the occurrence of future events and the
inclusion of such warrants would be anti-dilutive.
Recent Accounting Pronouncements
Management does not believe that any other recently issued, but not effective,
accounting standards, if currently adopted, would have a material effect on the
Company's financial statements.
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