The following discussion and analysis of our 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 were incorporated as a Cayman Islands exempted company on June 29, 2021. We
were incorporated for the purpose of effecting a merger, share exchange, asset
acquisition, share purchase, reorganization or similar Business Combination with
one or more businesses (the "Business Combination"). We have not selected any
specific Business Combination target.
On October 19, 2021, we consummated the IPO of 15,000,000 Units, at a price of
$10.00 per Unit, generating gross proceeds of $150,000,000 and incurring
offering costs of approximately $16,900,000, (of which $5,300,000 was for
deferred underwriting commissions), and approximately $7,987,000 was the excess
of fair value over price paid for Founder Shares sold to the Anchor Investors.
Simultaneously with the closing of the IPO, we consummated the sale of 7,500,000
Private Placement Warrants, at a price of $1.00 per Private Placement Warrant,
in a Private Placement to the Sponsor, generating gross proceeds of $7,500,000.
On October 29, 2021, the underwriters purchased an additional 2,000,000 Units,
generating net proceeds to us of approximately $20,000,000 in the aggregate, and
incurring an additional offering costs of $1,100,000 in connection with the
over-allotment (of which $700,000 was for deferred underwriting fees) and
substantially concurrently with the closing of the partial exercise of the
over-allotment option relating to the IPO, we completed the private sale of an
aggregate of 600,000 additional Private Placement Warrants to our Sponsor at a
purchase price of $1.00 per Private Placement Warrant, generating gross proceeds
to us of $600,000.
Upon the closing of the IPO, the over-allotment and the Private Placement,
approximately $171.7 million ($10.10 per unit) of the net proceeds of the sale
of the Units and the Private Placement Warrants were placed in the Trust Account
and will continue to be invested in United States government treasury bills with
a maturity of 185 days or less or in money market funds investing solely in U.S.
Treasuries and meeting certain conditions under Rule 2a-7 under the Investment
Company Act of 1940, as amended, or the Investment Company Act, as determined by
us, until the earlier of: (i) the completion of a Business Combination and (ii)
the distribution of the Trust Account.
We cannot assure you that our plans to complete our Business Combination will be
successful.
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Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from June 29, 2021 (inception) through December 31, 2022
were organizational activities, those necessary to prepare for the IPO and
identifying a target company 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
investments held in the Trust Account. 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.
For the year ended December 31, 2022, we had a net income of $1,087,752, which
consists of interest income on investments held in the Trust Account of
$2,441,119, offset by general and administrative expenses of $1,353,367.
For the period from June 29, 2021 (inception) through December 31, 2021, we had
a net loss of $463,081, which consists of general and administrative expenses of
$464,987, offset by interest income on investments held in the Trust Account of
$1,906.
Liquidity and Capital Resources
As of December 31, 2022, we had $891,154 in cash and working capital of
$551,240.
Our liquidity needs prior to the consummation of the IPO were satisfied through
the payment of $25,000 from the Sponsor issuance of Founder Shares, and loan
proceeds from the Sponsor of $200,000 under the Note. The Note balance was
settled in connection with the sale of the additional Private Placement
Warrants. Subsequent to the consummation of the IPO, our liquidity has been
satisfied through the net proceeds from the consummation of the IPO and the
Private Placement held outside of the Trust Account.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, the Sponsor, or certain of our officers
and directors or their affiliates may, but are not obligated to, loan us funds
as may be required. If we complete a Business Combination, we would repay such
loaned amounts. In the event that a 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 $1.5 million of such Working Capital Loans may be
convertible into warrants of the post Business Combination entity at a price of
$1.00 per warrant. The warrants would be identical to the Private Placement
Warrants. There are no outstanding balances on the Working Capital Loans as of
December 31, 2022 and 2021.
Based on the foregoing, our management believes that we will have sufficient
working capital and borrowing capacity to meet its needs through the earlier of
the consummation of a Business Combination or through liquidation date. Over
this time period, we will be using the funds held outside of the Trust Account
for paying existing accounts payable and accrued expenses, identifying and
evaluating prospective Business Combination candidates, performing due diligence
on prospective target businesses, paying for travel expenditures, selecting the
target business to merge with or acquire, and structuring, negotiating and
consummating the Business Combination.
In connection with our assessment of going concern considerations in accordance
with the FASB Accounting Standards Update ("ASU")2014-15, "Disclosures of
Uncertainties about an Entity's Ability to Continue as a Going Concern," our
management has determined that if we are unable to complete a Business
Combination by October 19, 2023, then we will cease all operations except for
the purpose of liquidating. The date for mandatory liquidation and subsequent
dissolution raises substantial doubt about our ability to continue as a going
concern. Our managements' plans to consummate a Business Combination prior to
the mandatory liquidation date. No adjustments have been made to the carrying
amounts of assets or liabilities should we be required to liquidate after
October 19, 2023.
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.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities.
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The underwriters are entitled to a deferred fee of $0.35 per unit, or
approximately $6.0 million in the aggregate. The deferred fee will become
payable to the underwriters from the amounts held in the Trust Account solely in
the event that we complete a Business Combination, subject to the terms of the
underwriting agreement.
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:
Class A Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible conversion in accordance
with the guidance in FASB ASC Topic 480 "Distinguishing Liabilities from
Equity." Ordinary shares subject to mandatory redemption are classified as a
liability instrument and measured at redemption value. Conditionally redeemable
ordinary shares (including 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 our control) are classified as
temporary equity. At all other times, ordinary shares are classified as
shareholders' deficit. Our Class A ordinary shares feature certain redemption
rights that are considered to be outside of our control and subject to
occurrence of uncertain future events. Accordingly, Class A ordinary shares
subject to possible redemption are presented at redemption value as temporary
equity, outside of the shareholders' deficit section of our balance sheets.
Immediately upon the closing of the IPO, we recognized the accretion from
initial book value to redemption amount value. The change in the carrying value
of redeemable Class A ordinary shares resulted in charges against additional
paid-in capital and accumulated deficit.
Net Income (Loss) Per Ordinary Share
Net income (loss) per ordinary share is computed by dividing net income (loss)
by the weighted average number of ordinary shares outstanding during the period.
Accretion associated with the redeemable ordinary shares is excluded from
earnings per share as the redemption value approximates fair value.
Recent Accounting Standards
In August 2020, the FASB issued Accounting Standards Update ("ASU") No. 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): Accounting for
Convertible Instruments and Contracts in an Entity's Own Equity ("ASU 2020-06"),
which simplifies accounting for convertible instruments by removing major
separation models required under current GAAP. The ASU also removes certain
settlement conditions that are required for equity-linked contracts to qualify
for the derivative scope exception, and it simplifies the diluted earnings per
share calculation in certain areas. We adopted ASU 2020-06 on June 29, 2021
(inception) using a modified retrospective method for transition. Adoption of
the ASU did not impact our financial position, results of operations or cash
flows.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our financial statements.
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