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.
Results of Operations
Our entire activity from inception up to December 31, 2021 was related to the
Company's formation, the IPO and general and administrative activities and
searching for a business combination target. Since the IPO, our activity has
been limited to the evaluation of business combination candidates, and we will
not be generating any operating revenues until the closing and completion of our
initial business combination. We expect to generate small amounts of
non-operating income in the form of interest income on cash and cash
equivalents. Interest income is not expected to be significant in view of
current low interest rates on risk-free investments (treasury securities). 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 after
this period.
19
Table of Contents
For the period from January 8, 2021 (inception) to December 31, 2021, we had a
net loss of $872,118 which consisted of formation and operating expenses
$960,518, offset by interest earned on marketable securities held in Trust
Account of $3,580, change in fair value of warrant liability of $84,820.
Liquidity and Capital Resources
As of December 31, 2021, we had cash of $336,852 available for working capital
needs.
20
Table of Contents
For the year ended December 31, 2021, cash and cash equivalents used in
operating activities was $235,155. Net loss of $872,118 was affected by noncash
charges related to formation costs paid by Sponsor in exchange for issuance of
Class B ordinary shares of $3,725, interest earned on marketable securities held
in Trust Account of $3,580, change in fair value of warrant liability of $84,820
and cash used in operating activities of $721,638.
Our liquidity needs have been satisfied to date through receipt of $25,000 from
the sale of the insider shares, advances from our sponsor and an affiliate of
our sponsor in an aggregate amount of $200,000, which was cancelled in
connection with the Private Placement and not outstanding as of December 31,
2021, and, following the IPO, the remaining net proceeds from our IPO and
Private Placements.
On January 10, 2022 and March 21, 2022, we received two loans, for an aggregate
of $1,699,975, from the target company, MMV(as define below).
We have incurred and expects to continue to incur significant costs in pursuit
of our acquisition plans. If the 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 its business prior to our Business
Combination. Moreover, we may need to obtain additional financing or draw on the
Working Capital Loans (as defined below) either to complete a Business
Combination or because it becomes obligated to redeem a significant number of
the 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. Subject to compliance with applicable securities laws, we
would only complete such financing simultaneously with the completion of our
Business Combination. If we are unable to complete the Business Combination
because it does not have sufficient funds available, we will be forced to cease
operations and liquidate the Trust Account. In addition, following the Business
Combination, if cash on hand is insufficient, we may need to obtain additional
financing in order to meet our obligations.
In addition, in connection with our 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," we have until July 12, 2022 (after one
extension for a quarter since April 12, 2022, the initial expiration date) to
consummate the proposed Business Combination. It is uncertain that we will be
able to consummate the proposed Business Combination by this time. Management
has determined that the mandatory liquidation, should a business combination not
occur, and potential subsequent dissolution, raises substantial doubt about our
ability to continue as a going concern. No adjustments have been made to the
carrying amounts of assets or liabilities should we be required to liquidate
after July 12, 2022. On August 6, 2021, we entered into a merger agreement (the
"Merger Agreement"), which provides for a business combination between us and
MultiMetaVerse Inc., a Cayman Islands exempted company ("MMV"), which is
discussed in Note 7. We intend to complete the proposed Business Combination
before the mandatory liquidation date. However, there can be no assurance that
we will be able to consummate any business combination by July 12, 2022.
These conditions raise substantial doubt about the Company's ability to continue
as a going concern. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Off-Balance Sheet Financing Arrangements
As of December 31, 2021, we did not have any off-balance sheet arrangements. We
have no obligations, assets or liabilities which would be considered off-balance
sheet arrangements. 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
entered into any non-financial assets.
21
Table of Contents
Contractual Obligations
At December 31, 2021 we did not have any long-term debt, capital lease
obligations, operating lease obligations or long-term liabilities.
Critical Accounting Policies
Management's discussion and analysis of our results of operations and liquidity
and capital resources are based on our audited financial information. We
describe our significant accounting policies in Note 2 - Significant Accounting
Policies, of the Notes to Financial Statements included in this report. Our
audited financial statements have been prepared in accordance with U.S. GAAP.
Certain of our accounting policies require that management apply significant
judgments in defining the appropriate assumptions integral to financial
estimates. On an ongoing basis, management reviews the accounting policies,
assumptions, estimates and judgments to ensure that our financial statements are
presented fairly and in accordance with U.S. GAAP. Judgments are based on
historical experience, terms of existing contracts, industry trends and
information available from outside sources, as appropriate. However, by their
nature, judgments are subject to an inherent degree of uncertainty, and,
therefore, actual results could differ from our estimates.
JOBS Act
The Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We qualify as an "emerging growth company" and
under the JOBS Act are 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 a result, the consolidated financial
statements may not be comparable to companies that comply with new or revised
accounting pronouncements as of 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 controls over financial reporting pursuant to Section 404,(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 Public Company
Accounting Oversight Board regarding mandatory audit firm rotation or a
supplement to the auditor's report providing additional information about the
audit and the consolidated 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 the CEO's compensation to median employee compensation. These exemptions will
apply for a period of five years following the completion of our Initial Public
Offering or until we are no longer an "emerging growth company," whichever is
earlier.
© Edgar Online, source Glimpses