The following discussion and analysis of our financial condition and results of
operations should be read together with our unaudited condensed financial
statements and related notes appearing elsewhere in this Quarterly Report, and
our audited financial statements and related notes thereto as of, and for the
year ended,
Overview
We are a blank check company incorporated as a
The issuance of additional ordinary shares in a business combination:
? may significantly dilute the equity interest of investors in our initial public
offering, which dilution would increase if the anti-dilution provisions of 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 preferred
shares are issued with rights senior to those afforded our Class A ordinary
shares;
? could cause a change of control if a substantial number of our 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; and
? may adversely affect prevailing market prices for our Class A ordinary shares
and/or warrants. 2
Similarly, if we issue debt securities or otherwise incur significant indebtedness, 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 security is payable on demand;
? our inability to obtain necessary additional financing if the debt security
contains covenants restricting our ability to obtain such financing while the
debt security is issued and outstanding;
? our inability to pay dividends on our 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 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; 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.
As indicated in the accompanying financial statements, at
3
Results of Operations and Known Trends or Future Events
We have not engaged in any revenue-generating operations to date. Our only
activities since inception have been organizational activities, preparations for
our initial public offering and, subsequent to our initial public offering,
searching for, and due diligence related to, potential target companies with
which to consummate a business combination transaction. We have not and 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
funds held in our trust account after our initial public offering. There has
been no significant change in our financial or trading position and no material
adverse change has occurred since the
Liquidity and Capital Resources
We have incurred and expect to continue to incur significant costs in pursuit of our financing and acquisition plans.
In early 2021, prior to the completion of our initial public offering, our
liquidity needs were satisfied from the availability of up to
At the time of our initial public offering in February and
We intend to use substantially all of the funds held in the trust account (after reduction for payments to redeeming shareholders) including any amounts representing interest earned on the trust account (which interest shall be net of taxes payable, and excluding potential fees to be payable to the underwriters for advisory services in connection with our initial business combination transaction), to fund our post- business combination company. We may withdraw from the trust interest to pay taxes, if any. Our annual income tax obligations 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, or if we are acquired as part of our initial business combination, the remaining proceeds held in the trust account (less any amounts paid out to redeeming shareholders) will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
4
Subsequent to our initial public offering, our working capital needs were
initially satisfied primarily by the
We use these funds outside of the trust account primarily towards our primary liquidity requirements, consisting of identifying and evaluating target businesses, performing 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 of corporate documents and material agreements of prospective target businesses, structuring, negotiating and completing a business combination, paying for administrative and support services, and paying taxes to the extent the interest earned on the trust account is not sufficient to pay our taxes. In addition, we use these funds for payment of legal and accounting fees related to regulatory reporting requirements, including Nasdaq and other regulatory fees, and funds for working capital to cover miscellaneous expenses and reserves.
We may also use a portion of the funds outside of the 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 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.
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 may, but are not obligated to, loan us additional 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 of the
trust account to repay such loaned amounts but no proceeds from our trust
account would be used for such repayment. Up to
We believe that we will need to obtain additional funds in order to satisfy our
liquidity needs in our pursuit of an initial business combination. While we
intend to rely upon the remaining
We cannot assure you that we will be able to successfully consummate an initial business combination.
It is likely that we will be obligated to redeem a significant number of our public shares upon completion of our initial business combination, which will reduce the funds from the trust that become available to the surviving company of the business combination. In that case, we will likely need to issue additional securities or incur debt in connection with the business combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our business combination. 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.
5
If we are unable to complete our initial business combination, we will be forced to cease operations and liquidate our trust account, which liquidation would be less than 12 months after the date of this Quarterly Report. That factor, together with our need for additional funds in order to fund operations until our initial business combination, raise substantial doubt about our ability to continue as a "going concern". Please see the explanatory paragraph under the heading "Substantial Doubt about the Company's Ability to Continue as a Going Concern" in the opinion of our independent auditor on our audited financial statements, which appears in Item 15 of our 2021 Annual Report.
Critical Accounting Estimates
Private Warrant Liability
Please refer to Note 6 - Fair Value Measurements to our condensed financial statements included in Item 1 for the method and level 3 inputs used for the measurement of the Private Warrant Liability.
The risk of exposure is estimated using a sensitivity analysis of potential changes in the significant unobservable inputs, primarily the volatility input that is the most susceptible to valuation risk, as well as observable inputs, e.g. the Company's publicly traded warrants.
An increase or decrease of 10% to the volatility input as of
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