References to the "Company," "ALSP Orchid Acquisition Corporation I" "our," "us"
or "we" refer to ALSP Orchid Acquisition Corporation I. The following discussion
and analysis of the Company's financial condition and results of operations
should be read in conjunction with the financial statements and the notes
thereto contained elsewhere in this Annual Report on Form 10-K. Certain
information contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this Annual
Report on Form 10-K including, without limitation, statements regarding our
financial position, business strategy and the plans and objectives of management
for future operations, are forward looking statements. When used in this Annual
Report on Form 10-K, words such as "may," "should," "could," "would," "expect,"
"plan," "anticipate," "believe," "estimate," "continue," or the negative of such
terms or other similar expressions, as they relate to us or our management,
identify forward looking statements. Factors that might cause or contribute to
such a discrepancy include, but are not limited to, those described in our other
SEC filings. Such forward looking statements are based on the beliefs of
management, as well as assumptions made by, and information currently available
to, our management. No assurance can be given that results in any
forward-looking statement will be achieved and actual results could be affected
by one or more factors, which could cause them to differ materially. The
cautionary statements made in this Annual Report on Form 10-K should be read as
being applicable to all forward-looking statements whenever they appear in this
Annual Report. For these statements, we claim the protection of the safe harbor
for forward-looking statements contained in the Private Securities Litigation
Reform Act. Actual results could differ materially from those contemplated by
the forward-looking statements as a result of certain factors detailed in our
filings with the SEC. All subsequent written or oral forward-looking statements
attributable to us or persons acting on our behalf are qualified in their
entirety by this paragraph.
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Overview
ALSP Orchid Acquisition Corporation I is a blank check company incorporated on
August 31, 2021, as a Cayman Islands exempted company 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. The Company has generated no operating revenues to date and does not
expect to generate operating revenues until we consummate our initial business
combination. The Company's sponsor is ALSP Orchid Sponsor LLC, a Delaware
limited liability company, which is owned and controlled by Accelerator Life
Sciences Partners II, LP an affiliate of our sponsor.
The registration statement for the Company's initial public offering was
declared effective by the United States Securities and Exchange Commission on
November 18, 2021. On November 23, 2021, the Company consummated its initial
public offering of 17,250,000 units at $10.00 per unit, generating gross
proceeds of approximately $172.5 million ("Initial Public Offering"), and
incurring offering costs of approximately $10.0 million, inclusive of
approximately $6.0 million in deferred underwriting commissions. Each unit
consists of one Class A ordinary share and one half warrant to purchase one
Class A ordinary share at an exercise price of $11.50.
Simultaneously with the closing of our Initial Public Offering, the Company
consummated the private placement of 915,000 private placement units at a price
of $10.00 per private placement unit to the sponsor, generating gross proceeds
of approximately $9.2 million. Each private placement unit is identical to the
Units sold in our initial public offering, subject to certain limited
exceptions.
Upon the closing of our Initial Public Offering and Private Placement,
approximately $176 million of the net proceeds of our Initial Public Offering
and certain proceeds of the Private Placement were placed in a trust account,
located in the United States, with Continental Stock Transfer & Trust Company
acting as trustee ("Trust Account"). The funds in the Trust Account will be
invested only in U.S. government treasury obligations with a maturity of
185 days or less or in money market funds meeting certain conditions under Rule
2a-7 under the Investment Company Act which invest only in direct
U.S. government treasury obligations (collectively "Permitted Investments"),
until the earlier of: (i) the completion of an initial business combination or
(ii) the distribution of the assets held in the trust account. Our management
has broad discretion with respect to the specific application of the net
proceeds of our Initial Public Offering and the private placement, although
substantially all of the net proceeds are intended to be applied toward
consummating an initial business combination. On December 31, 2022, the cash
held in the Trust Account was approximately $177.5 million.
On February 17, 2023, the Company held an Extraordinary General Meeting of its
shareholders (the "Extension Meeting") to vote on a number of proposals,
including a proposal to amend the Company's amended and restated memorandum and
articles of association ( the "Initial Period Extension Amendment") to extend
the initial date by which the Company must consummate an initial business
combination from February 23, 2023 to August 23, 2023, subject to any additional
extensions as provided in the Company's amended and restated memorandum and
articles of association. The Initial Period Extension Amendment was approved by
the Company's shareholders at the Extension Meeting. In connection with the
Extension Meeting, public shareholders holding 15,253,673 Class A Ordinary
Shares validly exercised their right to redeem their public shares for an
aggregate redemption amount of approximately $157.7 million.
If the Company is unable to complete an initial business combination within 21
months from the closing of the Initial Public Offering (the ("Initial Period)",
which may be extended in up to two separate instances by an additional three
months each, for a total of up to 24 months or 27 months, as applicable (each
period as so extended, an "Extension Period"), by depositing into the Trust
Account for each three month extension in an amount of $0.10 per unit; provided
that the Initial Period will automatically be extended to 24 months, and any
Extended Period will automatically be extended to 27 or 30 months, as applicable
(any such automatically extended period, the "Automatically Extended Period"),
if the Company has filed (a) a Form 8-K including a definitive merger or
acquisition agreement or (b) a proxy statement, registration statement or
similar filing for an initial business combination but have not completed the
initial business combination during the applicable period (any such Extended
Period or Automatically Extended Period, an "Extension Period"), the Company
will (i) cease all operations except for the purpose of winding up, (ii) as
promptly as reasonably possible but not more than ten business days thereafter,
redeem the public shares, at a per-share price, payable in cash, equal to the
aggregate amount then on deposit in the trust account including interest earned
on the funds held in the trust account and not previously released to the
Company to pay our income taxes (less up to $100,000 of interest to pay
dissolution expenses), divided by the number of then outstanding public shares,
which redemption will completely extinguish public shareholders' rights as
shareholders (including the right to receive further liquidating distributions,
if any), subject to applicable law, and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of our remaining shareholders
and our board of directors, proceed to commence a voluntary liquidation and
thereby a formal dissolution of our Company, subject in each case to our
obligations under Cayman Islands law to provide for claims of creditors and the
requirements of other applicable law. There will be no redemption rights or
liquidating distributions with respect to our warrants, which will expire
worthless if we fail to consummate an initial business combination within 21
months (or during any Extension Period) from the close of our Initial Public
Offering.
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Liquidity and Capital Resources
As of December 31, 2022 and 2021, the Company had approximately $0.5 million and
$1.3 million in working capital, including approximately $0.2 million and
$1.1 million in its operating bank account, respectively.
For the year ended December 31, 2022, and the period from August 31, 2021
(inception) through December 31, 2021, net cash used in operating activities was
$872,151 and $397,674, which was due to changes in working capital of $272,964
and $247,366, our net income (loss) of $353,255 and ($144,643), and interest
income on investments held in the trust account of $1,498,370 and $5,665,
respectively.
For the year ended December 31, 2022, and the period from August 31, 2021
(inception) through December 31, 2021, net cash used in investing activities of
zero and $176,219,076, respectively, was the result of the amount of net
proceeds of $175,950,000 from our Public Offering being deposited to the trust
account and the prepayment of the non-current portion of Director's & Officer's
insurance.
For the year ended December 31, 2022, and the period from August 31, 2021
(inception) through December 31, 2021, net cash provided by financing activities
of zero and $177,700,207 comprised $169,050,000 in proceeds from the issuance of
units in our Public Offering net of underwriter's discount paid and $9,150,000
in proceeds from the issuance of our private placement units, and $25,000 in
proceeds from the issuance of Class B ordinary shares to our Sponsor, offset in
part by the payment of $524,793 for offering costs associated with the Public
Offering, including repayment of $228,000 advanced from an affiliate of our
Sponsor.
Our liquidity needs up to December 31, 2022, had been satisfied through a
contribution of $25,000 from our sponsor to cover for certain expenses on behalf
of us in exchange for the issuance of the founder shares, an advance of
approximately $228,000 from an affiliate of our sponsor and, since the close of
our Initial Public Offering, the proceeds from the consummation of the private
placement not held in the trust account. In order to finance transaction costs
in connection with an initial business combination, our sponsor or an affiliate
of our sponsor, or certain of our officers and directors may, but are not
obligated to, provide us working capital loans. If we complete our initial
business combination, we would repay such loaned amounts out of the proceeds of
the trust account released to us. Otherwise, such loans would be repaid only out
of funds held outside the trust account. In the event that our initial 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 to repay such loaned amounts. Up to $1,500,000 of
such loans may be convertible into units of the post business combination entity
at a price of $10.00 per unit at the option of the lender. The units would be
identical to the private placement units. Except as set forth above, the terms
of such loans, if any, have not been determined and no written agreements exist
with respect to such loans. To date, there are no amounts outstanding under any
working capital loan.
In connection with the Company's assessment of going concern considerations in
accordance with Accounting Standards Codification 205-40, Presentation of
Financial Statements - Going Concern, we have evaluated the Company's liquidity
and financial condition and determined that it is probable the Company will not
be able to meet its obligations over the period of one year from the issuance
date of the financial statements. While the Company plans to seek additional
funding there is no guarantee the Company will be able to borrow such funds from
its Sponsor, an affiliate of the Sponsor, or certain of the Company's officers
and directors, or consummate an initial business combination, in order to meet
its obligations through the earlier of the consummation of an initial business
combination or one year from this filing. We have determined that the
uncertainty surrounding the Company's liquidity condition raises substantial
doubt about its ability to continue as a going concern. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
Management continues to evaluate the impact of the COVID-19 pandemic and has
concluded that the specific impact is not readily determinable as of the date of
the financial statements. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
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Results of Operations
All activity up to December 31, 2021, was in preparation for our formation, our
Initial Public Offering and, since the closing of our Initial Public Offering, a
search for business combination candidates. We will not be generating any
operating revenues until the closing and completion of our initial business
combination.
For the year ended December 31, 2022, and the period from August 31, 2021
(inception) through December 31, 2021, we had net income (loss) of $353,255 and
$(144,643), respectively, which consisted of $905,115 and $110,308,
respectively, in general and administrative expenses, $240,000 and $40,000,
respectively, of related party administrative fees which were offset by income
from our investments held in the Trust Account of $2,140,529 and $5,665, less
provision for income taxes of $642,159 and zero, respectively.
Critical Accounting Policies
This management's discussion and analysis of our financial condition and results
of operations is based on our audited financial statements, which have been
prepared in accordance with U.S. GAAP. The preparation of these financial
statements requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses and the disclosure of
contingent assets and liabilities in our financial statements. On an ongoing
basis, the Company evaluates our estimates and judgments, including those
related to fair value of financial instruments and accrued expenses. The Company
bases its estimates on historical experience, known trends and events and
various other factors that the Company believes to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions. The Company has identified the following as our
critical accounting policies:
Investments Held in the Trust Account
Our portfolio of investments held in the trust account is comprised of U.S.
government securities, within the meaning set forth in Section 2(a)(16) of the
Investment Company Act, with a maturity of 185 days or less, or investments in
money market funds that invest in U.S. government securities, or a combination
thereof. The investments held in the trust account are classified as trading
securities, which are presented on the balance sheet at fair value at the end of
each reporting period. Gains and losses resulting from the change in fair value
of investments held in trust account are included in gain on marketable
securities, dividends and interest held in trust account in the statement of
operations. The estimated fair values of investments held in trust account are
determined using available market information, other than for investments in
open-ended money market funds with published daily net asset values ("NAV"), in
which case the Company uses NAV as a practical expedient to fair value. The NAV
on these investments is typically held constant at $1.00 per unit.
Class A Ordinary Shares Subject to Possible Redemption
All of the Class A ordinary shares sold as part of the Units in our Initial
Public Offering contain a redemption feature which allows for the redemption of
such shares in connection with the Company's liquidation, if there is a
shareholder vote or tender offer in connection with our initial business
combination and in connection with certain amendments to the Company's amended
and restated memorandum and articles of association. In accordance with FASB ASC
Topic 480 ("ASC 480"), 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) are
classified as temporary equity. Ordinary liquidation events, which involve the
redemption and liquidation of all of the entity's equity instruments, are
excluded from the provisions of ASC 480. Accordingly, as of December 31, 2022
and 2021, respectively, 17,250,000 Class A ordinary shares, representing the
public shares, subject to possible redemption at the redemption amount were
presented at redemption value as temporary equity, outside of the shareholders'
deficit section of the Company's balance sheet.
Net Income (Loss) Per Share
The Company complies with accounting and disclosure requirements of FASB ASC
Topic 260 ("ASC 260"), "Earnings Per Share." Net loss per ordinary share is
computed by dividing net loss by the weighted average number of ordinary shares
outstanding during the period. The Company has not considered the effect of the
warrants sold in
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our Initial Public Offering and private placement to purchase an aggregate of
9,082,500 shares of Class A ordinary shares in the calculation of diluted
earnings per share, since the exercise of warrants is contingent upon the
occurrence of future events and their inclusion would be anti-dilutive under the
treasury stock method.
The Company's statement of operations for the year ended December 31, 2022, and
the period from August 31, 2021 (inception) through December 31, 2021, includes
a presentation of income (loss) per share for ordinary shares subject to
redemption in a manner similar to the two-class method of income (loss) per
share. In order to determine net income (loss) attributable to both the Class A
and Class B ordinary shares the Company first considered the total income (loss)
allocable to both set of shares, including the accretion of Class A redeemable
shares to redemption value which represents the difference between the gross
proceeds of the Initial Public Offering, net of offering costs, and the
redemption value of the redeemable shares of $10.20 per share. Net income (loss)
per share, basic and diluted, for Class A ordinary shares is calculated by
dividing the net income (loss) allocated to the Class A ordinary shares during
the reporting period by the weighted average number of Class A ordinary shares
outstanding since original issuance. Net income (loss) per share, basic and
diluted, for Class B non-redeemable ordinary shares is calculated by dividing
the net income (loss) allocated to the Class B non-redeemable ordinary shares by
the weighted average number of Class B non-redeemable ordinary shares
outstanding for the period. At December 31 2022 and 2021, respectively, the
Company did not have any dilutive securities and other contracts that could,
potentially, be exercised or converted into ordinary shares and then participate
in the earnings. As a result, diluted income (loss) per common share is the same
as basic net income (loss) per common share for the year ended December 31,
2022, and the period from August 31, 2021 (inception) through December 31, 2021.
Warrants
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 ASC 480 and FASB ASC
Topic 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. For issued or modified warrants that meet all of the criteria for
equity classification, the 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, the
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 the warrants are recognized as a non-cash gain or loss on the
statements of operations. The warrants issued in our Initial Public Offering and
Private Placement are equity classified.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective,
accounting pronouncements, if currently adopted, would have a material impact on
our audited financial statements.
Off-Balance Sheet Arrangements
As of December 31, 2022 and 2021, the Company did not have any off-balance sheet
arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have
any commitments or contractual obligations.
Contractual Obligations
Registration and Shareholder Rights
The holders of the Founder Shares, Private Placement Shares and warrants that
may be issued upon conversion of working capital loans, if any, are entitled to
registration rights pursuant to a registration rights agreement signed on the
effective date of our Initial Public Offering. The holders of these securities
are entitled to demand that the
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Company register such securities. In addition, the holders have certain
registration rights which provides that the Company will not permit any
registration statement filed under the Securities Act to become effective until
termination of the applicable lock-up period, which occurs (i) in the case of
the founder shares, as described in Note 4, and (ii) in the case of the private
placement units and the respective Class A ordinary shares underlying the
private placement warrants, 30 days after the completion of an initial business
combination.
The Company will bear the expenses incurred in connection with the filing of any
such registration statements.
Underwriting Agreement
The Company granted the underwriters a 45-day option from the date of the final
prospectus relating to our Initial Public Offering to purchase up to 2,250,000
additional units to cover over-allotments, if any, at $10.00 per unit, less
underwriting discounts and commissions. The underwriters exercised this option
in full on November 23, 2021.
The underwriters were paid a cash underwriting discount of two percent (2%) of
the gross proceeds of our Initial Public Offering, or $3,450,000. Additionally,
the underwriters will be entitled to a deferred underwriting commission of 3.5%
or $6,037,500 of the gross proceeds of our Initial Public Offering held in the
Trust Account solely upon the completion of the Company's initial business
combination subject to the terms of the underwriting agreement.
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. The Company will qualify as an "emerging growth
company" and under the JOBS Act will be allowed to comply with new or revised
accounting pronouncements based on the effective date for private (not publicly
traded) companies. The Company is electing to delay the adoption of new or
revised accounting standards, and as a result, the Company 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 such, our
financial statements may not be comparable to companies that comply with public
company effective dates.
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ALSP ORCHID ACQUISITION CORPORATION I 
