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 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 blank check company formed under the laws of the Cayman Islands in
November 26, 2020 for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or other similar business
combination with one or more businesses. We intend to effectuate our business
combination using cash from the proceeds of the initial public offering and the
sale of the private placement warrants, our capital stock, debt or a combination
of cash, stock and debt.
All activity through December 31, 2021 relates to our formation, initial public
offering, and search for a prospective initial business combination target.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from November 26, 2020 (inception) to December 31, 2021 were
organizational activities and those necessary to consummate the initial public
offering and subsequent to the initial public offering, the search 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 cash and marketable securities held
after the initial public offering. We incur increased expenses as a result of
being a public company (for legal, financial reporting, accounting and auditing
compliance), as well as expenses for due diligence on target companies for our
initial business combination.
For the year ended December 31, 2021, we had a net income of $1,897,877 which
consists of interest earned on investments held in trust account of $8,585,
change in fair value of warrant liability and derivative asset - forward
purchase agreement, net of $2,709,865, offset by operating and formation costs
of $614,675 and offering costs allocated to warrants of $205,898.
For the period from November 26, 2020 through December 31, 2020, we had a net
loss of $6,068 which consisted of operating and formation costs.
Liquidity and Capital Resources
As of December 31, 2021, we had cash of $1,433,753, available for working
capital needs. All remaining cash was held in the trust account and is generally
unavailable for our use except that interest earned on the trust account can be
released to us for payment of taxes, prior to an initial business combination.
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On February 18, 2021, the company consummated the initial public offering of
9,200,000 units, including 1,200,000 units sold pursuant to the full exercise of
the underwriters' option to purchase additional units to cover over-allotments,
at $10.00 per unit, generating gross proceeds of $92,000,000.
Simultaneously with the closing of the initial public offering, the company
consummated the sale of 5,022,222 private placement warrants to the sponsor and
Maxim (3,642,222 private placement warrants to the sponsor and 1,380,000 to
Maxim) at a price of $0.90 per private placement warrant, generating total gross
proceeds of $4,520,000.
Transaction costs amounted to $4,677,181 consisting of $1,840,000 of
underwriting commissions, $2,300,000 of deferred underwriting commissions, the
fair value of the representative shares of $920 and $537,181 of other cash
offering costs.
Following the closing of the initial public offering and the sale of
over-allotment units, an aggregate of $92,000,000 ($10.00 per unit) from the net
proceeds and the sale of the private placement warrants was held in the trust
account.
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) to complete our initial business combination. We may withdraw
interest from the trust account to pay franchise and income 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 a business combination.
The cash held outside of the trust account as of December 31, 2021, may not be
sufficient to allow us to operate until February 18, 2023 (liquidation date),
assuming that an initial business combination is not consummated during that
time. 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 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. If we are unable to 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.
Off-Balance Sheet Arrangements; Commitments and Contractual Obligations
We have no obligations, assets or liabilities which would be considered
off-balance sheet arrangements as of December 31, 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.
We entered into an administrative services agreement pursuant to which we will
pay the sponsor a total of $10,000 per month for office space, utilities,
secretarial and administrative support services
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Critical Accounting Policies
Warrant Liabilities and Derivative Assets - Forward Purchase Agreement
We account for the warrants and the Forward Purchase Agreement ("FPA") as either
equity-classified or liability-classified instruments based on an assessment of
the specific terms of the warrants and FPA and the applicable authoritative
guidance in Financial Accounting Standards Board ("FASB") Accounting Standards
Codification ("ASC") 480, Distinguishing Liabilities from Equity ("ASC 480") and
ASC 815, Derivatives and Hedging ("ASC 815"). The assessment considers whether
the warrants and FPA are freestanding financial instruments pursuant to ASC 480,
meet the definition of a liability pursuant to ASC 480, and meet all of the
requirements for equity classification under ASC 815, including whether the
warrants and FPA are indexed to the Company's own ordinary shares and whether
the warrant holders could potentially require "net cash settlement" in a
circumstance outside of our control, among other conditions for equity
classification. This assessment, which requires the use of professional
judgment, is conducted at the time of issuance of the warrants and execution of
the FPA and as of each subsequent quarterly period end date while the warrants
and FPA are outstanding. For issued or modified warrants that meet all of the
criteria for equity classification, such warrants are required to be recorded as
a component of additional paid-in capital at the time of issuance. For issued or
modified warrants that do not meet all the criteria for equity classification,
such warrants are required to be recorded at their initial fair value on the
date of issuance, and each balance sheet date thereafter. Changes in the
estimated fair value of liability-classified warrants are recognized as a
non-cash gain or loss on the statements of operations.
We account for the warrants and FPA in accordance with ASC 815-40 under which
the warrants and FPA do not meet the criteria for equity classification and must
be recorded as derivatives. The fair value of the Public Warrants was initially
estimated using a Monte Carlo simulation model and has been estimated using its
quoted market price as of December 31, 2021. The fair value of the private
placement warrants has been estimated using the modified Black-Scholes-Merton
model. The fair value of the FPA has been estimated using an adjusted net assets
method.
Offering Costs Associated with the Initial Public Offering
We comply with the requirements of the ASC 340-10-S99-1. Offering costs
consisted of legal, accounting, underwriting fees and other costs incurred
through the initial public offering that were directly related to the initial
public offering. We allocated the offering costs between ordinary shares and
warrants using a relative fair value method, pursuant to which the offering
costs allocated to the public warrants will be expensed immediately.
Accordingly, as of December 31, 2021, allocated offering costs in the aggregate
of $205,898 have been charged to operations.
Class A Ordinary Shares Subject to Possible Redemption
We account for our Class A ordinary shares subject to possible redemption in
accordance with the guidance in Accounting Standards Codification ("ASC") Topic
480 "Distinguishing Liabilities from Equity." Class A ordinary shares subject to
mandatory redemption is classified as a liability instrument and is measured at
fair value. Conditionally redeemable Class A ordinary shares (including Class A
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 the Company's control) is classified as temporary
equity. At all other times, Class A ordinary shares is classified as
shareholders' equity. Most of our Class A ordinary shares feature certain
redemption rights that is considered to be outside of our control and subject to
the occurrence of uncertain future events. Accordingly, 9,200,000 Class A
ordinary shares subject to possible redemption were presented as temporary
equity, outside of the shareholders' equity section of the balance sheet.
Recent Accounting Pronouncements
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
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early adoption permitted beginning on January 1, 2021. The Company is currently
assessing the impact, if any, that ASU 2020-06 would have on its financial
position, results of operations or cash flows.
Management does not believe that any recently issued, but not effective,
accounting standards, if currently adopted, would have a material effect on the
Company's financial statements.
Factors That May Adversely Affect Our Results of Operations
Our results of operations and our ability to complete an initial business
combination may be adversely affected by various factors that could cause
economic uncertainty and volatility in the financial markets, many of which are
beyond our control. Our business could be impacted by, among other things,
downturns in the financial markets or in economic conditions, increases in oil
prices, inflation, increases in interest rates, supply chain disruptions,
declines in consumer confidence and spending, the ongoing effects of the
COVID-19 pandemic, including resurgences and the emergence of new variants, and
geopolitical instability, such as the military conflict in the Ukraine. We
cannot at this time fully predict the likelihood of one or more of the above
events, their duration or magnitude or the extent to which they may negatively
impact our business and our ability to complete an initial business combination.
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