References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Vickers Vantage Corp. I References to our "management" or our
"management team" refer to our officers and directors, and references to the
"Sponsor" refer to Vickers Venture Fund VI Pte Ltd and Vickers Venture Fund VI
(Plan) Pte Ltd. The following discussion and analysis of the Company's financial
condition and results of operations should be read in conjunction with the
condensed consolidated financial statements and the notes thereto contained
elsewhere in this Quarterly Report. Certain information contained in the
discussion and analysis set forth below includes forward-looking statements that
involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act
that are not historical facts and involve risks and uncertainties that could
cause actual results to differ materially from those expected and projected. All
statements, other than statements of historical fact included in this Form 10-Q
including, without limitation, statements in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" regarding the
completion of the Proposed Business Combination (as defined below), the
Company's financial position, business strategy and the plans and objectives of
management for future operations, are forward-looking statements. Words such as
"expect," "believe," "anticipate," "intend," "estimate," "seek" and variations
and similar words and expressions are intended to identify such forward-looking
statements. Such forward-looking statements relate to future events or future
performance, but reflect management's current beliefs, based on information
currently available. A number of factors could cause actual events, performance
or results to differ materially from the events, performance and results
discussed in the forward-looking statements, including that the conditions of
the Proposed Business Combination are not satisfied. For information identifying
important factors that could cause actual results to differ materially from
those anticipated in the forward-looking statements, please refer to the Risk
Factors section of the Company's Annual Report on Form 10-K filed with the U.S.
Securities and Exchange Commission (the "SEC"). The Company's securities filings
can be accessed on the EDGAR section of the SEC's website at www.sec.gov. Except
as expressly required by applicable securities law, the Company disclaims any
intention or obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated in the Cayman Islands on February 21,
2020 for the purpose of effecting a merger, share exchange, asset acquisition,
share purchase, reorganization or similar business combination with one or more
businesses or entities. We intend to effectuate our Business Combination using
cash derived from the proceeds of the Initial Public Offering and the sale of
the Private Placement Warrants, our shares, debt or a combination of cash,
shares and debt.
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.
On January 10, 2022, we extended the period of time to consummate a Business
Combination to April 11, 2022. The Sponsors deposited $1,035,000 into the Trust
Account made in the form of non-interest-bearing loans. If the Company completes
an initial business combination, the Company will, at the option of the
Sponsors, repay the amounts evidenced by the Convertible Promissory Notes or
convert a portion or all of the total amount into warrants at a price of $0.75
per warrant, which warrants are identical to the Private Placement Warrants
issued. If a Business Combination is not consummated, the Convertible Promissory
Notes will not be repaid by the Company and all amounts owed thereunder by the
Company will be forgiven except to the extent that the Company has funds
available to it outside of its Trust Account.
On April 11, 2022, we extended the period of time to consummate a Business
Combination to July 11, 2022. The Sponsors deposited $1,035,000 into the Trust
Account made in the form of non-interest-bearing loans. On July 11, 2022, we
extended the period of time to consummate a Business Combination to August 11,
2022. The Sponsors deposited $323,888 into the Trust Account made in the form of
non-interest-bearing loans If the Company completes an initial business
combination, the Company will, at the option of the Sponsors, repay the amounts
evidenced by the Simple Promissory Notes. If a Business Combination is not
consummated, the Simple Promissory Notes will not be repaid by the Company and
all amounts owed thereunder by the Company will be forgiven except to the extent
that the Company has funds available to it outside of its Trust Account.
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On June 30, 2022, we held an extraordinary general meeting of its shareholders
(the "Meeting"), to amend the Company's Amended and Restated Memorandum and
Articles of Association (the "Extension Amendment") to (i) extend the date by
which the Company has to consummate an initial business combination from July
11, 2022 (the "Original Termination Date") to August 11, 2022 (the "Extended
Date") and (ii) allow the Company without another shareholder vote, to elect to
extend the date to consummate a business combination on a monthly basis for up
to five times by an additional one month each time after the Extended Date, upon
five days' advance notice prior to the applicable deadlines, until January 11,
2023 or a total of up to six months after the Original Termination Date (the
"Extension Proposal"). The Company's shareholders approved the Extension
Amendment at the Meeting. On July 5, 2022, the Company filed the Extension
Amendment with the Cayman Islands Registrar of Companies.
In connection with its solicitation of proxies in connection with the Extension
Proposal, the Company was required to permit its public shareholders to redeem
their ordinary shares. Of the 13,800,000 ordinary shares outstanding with
redemption rights, the holders of 4,073,605 ordinary shares elected to redeem
their shares at a per share redemption price of $10.25. As a result,
approximately $41.8 million will be removed from the Trust Account to pay such
holders and approximately $99.8 million will remain in the Trust Account.
Following the redemptions, the Company will have 9,726,395 ordinary shares with
redemption rights outstanding and the Company will deposit approximately
$323,888 (or approximately $0.0333 per ordinary share that remains outstanding)
for each calendar month, or portion thereof, that is needed by the Company to
complete an initial business combination from July 11, 2022.
As of the date of this filing, the company deposited an aggregate of $647,776
into the Trust Account to extend the date to consummate a business combination
to September 11, 2022.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from February 21, 2020 (inception) through June 30, 2022
were organizational activities, those necessary to prepare for the Initial
Public Offering, described below, 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 marketable securities 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 three months ended June 30, 2022, we had net income of $1,561,125, which
consists of change in fair value of conversion option liability of $76,788,
change in fair value of warrant liability gain of $2,530,800, interest on
mandatorily redeemable ordinary shares liability of $192,049, and income on
investments in the Trust Account of $203,904, offset by amortization of debt
discount of $8,280 and operating costs of $1,434,136.
For the six months ended June 30, 2022, we had net income of $754,903, which
consists of change in fair value of conversion option liability of $6,892,
change in fair value of warrant liability gain of $2,120,400, interest on
mandatorily redeemable ordinary shares liability of $192,049, and income on
investments in the Trust Account of $205,859, offset by amortization of debt
discount of $15,746 and operating costs of $1,754,551.
For the three months ended June 30, 2021, we had a net loss of $233,749, which
consists of by operating costs of $172,140 and change in fair value of warrant
liability gain $68,400 offset by interest income on investments in the Trust
Account of $6,791.
For the six months ended June 30, 2021, we had a net income of $1,095,104, which
consists of by interest income on investments in the Trust Account of $26,212
and change in fair value of warrant liability gain $4,035,600 offset by
operating costs of $337,296, initial issuance of private warrants of $2,599,200
and transaction cost allocated to warrant liabilities of $30,212.
Liquidity and Capital Resources
On January 11, 2021 we consummated the Initial Public Offering of 13,800,000
Units at $10.00 per Unit, generating gross proceeds of $138,000,000 which is
described in Note 3. Simultaneously with the closing of the Initial Public
Offering, we consummated the sale of 6,840,000 Private Placement Warrants at a
price of $0.75 per Private Placement Warrant in a private placement to the
Sponsors, generating gross proceeds of $5,130,000, which is described in Note 4.
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Following the Initial Public Offering, full exercise of the over-allotment
option, and the sale of the Private Placement Warrants, a total of $139,380,000
was placed in the Trust Account. We incurred $8,149,473 in transaction costs,
including $2,400,000 of underwriting fees, $5,190,000 of deferred underwriting
fees and $559,473 of other offering costs.
For the six months ended June 30, 2022, cash used in operating activities was
$1,621,649. Net income of $754,903 was affected by change in fair value of
conversion option liability of $6,892, change in fair value of warrant liability
gain of $2,120,400, amortization of debt discount of $15,746, interest on
mandatorily redeemable ordinary shares liability of $192,049, and income on
investments in the Trust Account of $205,859. Changes in operating assets and
liabilities provided $132,902 of cash for operating activities.
For the six months ended June 30, 2021, cash used in operating activities was
$551,630. Net income of $1,095,104 was affected by transaction cost allocated to
warrant liabilities of $30,212, change in fair value of warrant liability of
$4,035,600, loss on initial issuance of private warrants of $2,599,200 and
interest earned on marketable securities held in the Trust Account of $26,212.
Changes in operating assets and liabilities used $214,334 of cash for operating
activities.
As of June 30, 2022, we had marketable securities held in the Trust Account of
$141,686,598 (including $237,598 of income from money market funds, which are
primarily invested in U.S. Treasury securities. We may withdraw interest from
the Trust Account to pay taxes, if any. 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 income taxes payable), to complete our
Business Combination. To the extent that our share capital or debt is used, in
whole or in part, as consideration to complete our 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.
As of June 30, 2022, we had cash of $351,272. 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.
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 $1,500,000 of such loans may be convertible into warrants
at a price of $0.75 per warrant, at the option of the lender. The warrants would
be identical to the Private Placement Warrants. As of June 30, 2022, we entered
in convertible promissory notes with the Sponsors pursuant to which the Sponsors
agreed to the loan the Company an aggregate principal amount of $2,035,000 (the
"Convertible Promissory Notes") non-interest-bearing loan that is payable at
consummation of a Business Combination. Up to $1,500,000 of the Convertible
Promissory Note may be converted into warrants at a price of $0.75 per warrant
at the option of the Sponsors. The warrants would be identical to the Private
Placement Warrants.
Going Concern
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," we have determined that the liquidity condition
and date for mandatory liquidation and dissolution raise substantial doubt about
the Company's ability to continue as a going concern through September 11, 2022
(extension date), the scheduled liquidation date of the Company if it does not
complete a Business Combination prior to such date. These condensed consolidated
financial statements do not include any adjustments relating to the recovery of
the recorded assets or the classification of the liabilities that might be
necessary should the Company be unable to continue as a going concern.
If the Company is unable to raise additional capital, it may be required to take
additional measures to conserve liquidity, which could include, but not
necessarily be limited to, suspending the pursuit of a Business Combination. The
Company cannot provide any assurance that new financing will be available to it
on commercially acceptable terms, if at all.
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Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of June 30, 2022. 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.
The underwriters are entitled to a deferred fee of (i) 3.5% of the gross
proceeds of the initial 12,000,000 Units sold in the Initial Public Offering, or
$4,200,000, and (ii) 5.5% of the gross proceeds from the Units sold pursuant to
the over-allotment option, or $990,000. The deferred fee will be paid in cash
upon the closing of a Business Combination from the amounts held in the Trust
Account, subject to the terms of the underwriting agreement
Critical Accounting Policies
The preparation of condensed consolidated 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:
Warrant Liability
The Company accounts for warrants as either equity-classified or
liability-classified instruments based on an assessment of the warrant's
specific terms and 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 are
freestanding financial instruments pursuant to ASC 480, meet the definition of a
liability pursuant to ASC 480, and whether the warrants meet all of the
requirements for equity classification under ASC 815, including whether the
warrants are indexed to the Company's own ordinary shares, among other
conditions for equity classification. This assessment, which requires the use of
professional judgment, is conducted at the time of warrant issuance and as of
each subsequent quarterly period end date while the warrants are outstanding. We
account for the warrants issued in connection with our Initial Public Offering
in accordance with the guidance contained in ASC 815 under which the public
warrants meet the criteria for equity treatment and the private warrants do not
meet the criteria for equity treatment and must be recorded as liabilities.
Accordingly, we classify the private warrants as liabilities at their fair value
and adjust the private warrants to fair value at each reporting period. This
liability is subject to re-measurement at each balance sheet date until
exercised, and any change in fair value is recognized in our statement of
operations. The fair value of the warrants was estimated using a Black-Scholes
option pricing formula.
Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible conversion in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480
"Distinguishing Liabilities from Equity." Ordinary shares subject to mandatory
redemption are classified as a liability instrument and measured at fair 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' 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 are presented at redemption value as temporary equity,
outside of the shareholders' deficit section of our condensed consolidated
balance sheets.
Net Income (Loss) Per Ordinary Share
Net income (loss) per ordinary share is computed by dividing net loss by the
weighted average number of ordinary shares outstanding during the period.
Accretion associated with the redeemable shares of ordinary shares is excluded
from earnings per share as the redemption value approximates fair value.
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Recent Accounting Standards
In August 2020, the 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' Own Equity (Subtopic 815-40): Accounting for
Convertible Instruments and Contracts in an Entity' 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. Management is currently evaluating the new
guidance but does not expect the adoption of this guidance to have a material
impact on the Company's financial statements.
Management does not believe that any other recently issued, but not yet
effective, accounting pronouncements, if currently adopted, would have a
material effect on the Company's condensed consolidated financial statements.
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