Overview
We are a blank check company incorporated 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. We have not identified any potential business
combination target and we have not, nor has anyone on our behalf, initiated any
substantive discussions, directly or indirectly, with any potential business
combination target. We intend to effectuate our initial business combination
using cash from the proceeds of the IPO and the Private Placements, our capital
stock, debt or a combination of cash, stock and debt.
On December 7, 2021, we completed our IPO of 16,500,000 Units and the Private
Placement of an aggregate of 8,235,000 private placement warrants. On December
7, 2021, the Underwriter exercised in full the option granted to them by the
Company to purchase up to 2,475,000 additional Units to cover over-allotments,
and we issued an additional 990,000 private placement warrants in the Additional
Private Placement. An aggregate of $193,545,000 in proceeds from the IPO and the
Private Placements has been placed in the Trust Account.
As of December 31, 2021, we had cash of approximately $1,050,670 and working
capital of approximately $1,184,733. We expect to continue to incur significant
costs in the pursuit of our acquisition plans. We cannot assure you that our
plans to raise capital or to complete our initial business combination will be
successful.
Results of Operations and Known Trends or Future Events
We did not commence operations until after the closing of our IPO in December
2021, and we have not engaged in any significant operations nor generated any
operating revenues to date. We will not generate any operating revenues until
after completion of our initial business combination. We will generate
non-operating income in the form of interest income on cash and cash
equivalents. There has been no significant change in our financial or trading
position and no material adverse change has occurred since the date of our
audited financial statements. We have incurred and expect to continue 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.
Liquidity and Capital Resources
On December 7, 2021, we completed our IPO of 16,500,000 Units and the Private
Placement of an aggregate of 8,235,000 private placement warrants, generating
gross proceeds of $173,235,000.
On December 9, 2021, the Underwriter exercised in full the option granted to
them by the Company to purchase up to 2,475,000 additional Units to cover
over-allotments, and we issued an additional 990,000 private placement warrants
in the Additional Private Placement, generating total gross proceeds of
$25,245,000.
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Following our IPO, the exercise of the over-allotment option and the sale of the
private placement warrants, a total of $193,545,000 was placed in the Trust
Accounts. We incurred $12,517,335 in transaction costs, including $3,795,000 in
cash underwriting fees, $6,641,250 of deferred underwriting fees, $1,248,100 of
offering costs related to the fair value of the Founder Shares sold to Anchor
Investor, and $832,985 of other offering costs.
For the period from March 26, 2021 (inception) through December 31, 2021, cash
used in operating activities was $595,288. Net loss of $1,742,973 was impacted
by interest earned on marketable securities held in the Trust Accounts of
$4,933, change in fair value of warrant liability of $2,432,625, transaction
costs allocable to warrants of $480,506, and changes in operating assets and
liabilities, which used $381,209 of cash from operating activities.
As of December 31, 2021, we had investments of $193,549,932 held in the Trust
Accounts. We intend to use substantially all of the funds held in the Trust
Accounts, including any amounts representing interest earned on the Trust
Accounts (less taxes paid and deferred underwriting commissions) to complete our
initial Business Combination. We may withdraw interest to pay taxes. During the
period ended December 31, 2021, we did not withdraw any interest earned on the
Trust Accounts. To the extent that our capital stock or debt is used, in whole
or in part, as consideration to complete our initial Business Combination, the
remaining proceeds held in the Trust Accounts 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 December 31, 2021, we had cash of $1,050,670 outside of the Trust
Accounts. We intend to use the funds held outside the Trust Accounts 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 our initial Business
Combination.
In addition, 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 or certain of our officers and
directors may, but are not obligated to, loan us funds as may be required. If we
complete our initial business combination, we may repay such loaned amounts out
of the proceeds of the Trust Account released to us. Otherwise, such loans may
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 warrants of the
post-business combination company at a price of $1.00 per warrant at the option
of the lender.
We do not currently believe we will need to raise additional funds in order to
meet the expenditures required for operating our business. However, if our
estimate of the costs of identifying a target business, undertaking in-depth
due diligence and negotiating our initial business combination are less than the
actual amount necessary to do so, we may have insufficient funds available to
operate our business prior to our initial business combination. Moreover, we may
need to obtain additional financing either to complete our initial business
combination or because we become obligated to redeem a significant number of our
public shares upon consummation of our initial 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
initial Business Combination. If we are unable to complete our initial Business
Combination because we do not have sufficient funds available to us, we will be
forced to cease operations and liquidate the Trust Account. 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.
Off-Balance Sheet Arrangements; Commitments and Contractual Obligations
On December 2, 2021, we 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.
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Administrative Support Agreement
On December 2, 2021, the Company entered into an Administrative Support
Agreement pursuant to which the Company's initial business combination or
liquidation, the Company may reimburse an affiliate of the Sponsor up to an
amount of $10,000 per month for office space and secretarial and administrative
support.
Registration Rights
The holders of the Founder Shares, Private Placement Warrants and any warrants
that may be issued upon conversion of the Working Capital Loans (and in each
case holders of their component securities, as applicable) are entitled to
registration rights pursuant to a registration rights agreement effective
December 2, 2021, which requires the Company to register such securities for
resale (in the case of the Founder Shares, only after conversion to our Class A
ordinary shares). The holders of the majority of these securities are entitled
to make up to three demands, excluding short form demands, that the Company
register such securities. In addition, the holders have certain "piggy-back"
registration rights with respect to registration statements filed subsequent to
the consummation of a Business Combination and rights to require the Company to
register for resale such securities pursuant to Rule 415 under the Securities
Act. The Company will bear the expenses incurred in connection with the filing
of any such registration statements.
Underwriter's Agreement
The Company paid a cash underwriting discount of 2.00% of the gross proceeds of
the IPO, or $3,795,000 due to the exercise of the over-allotment option in full.
In addition, the underwriter will be entitled to a deferred fee of three and a
half percent (3.50%) of the gross proceeds of the IPO, or $6,641,250. The
deferred fee will become payable to the underwriter from the amounts held in the
Trust Account solely in the event that the Company completes a Business
Combination, subject to the terms of the underwriting agreement. The underwriter
has reimbursed the Company for $550,000 for offering expenses. The reimbursement
of these costs has been accounted for as a reduction to offering costs of the
IPO.
Critical Accounting Policies and Estimates
This management's discussion and analysis of our financial condition and results
of operations is based on our financial statements, which have been prepared in
accordance with GAAP. The preparation of our 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, we evaluate our
estimates and judgments, including those related to fair value of financial
instruments and accrued expenses. We base our estimates on historical
experience, known trends and events and various other factors that we believe 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 its critical accounting policies:
Warrant Liabilities
The Company accounts for the Warrants as either equity-classified or
liability-classified instruments based on an assessment of the specific terms of
the Warrants and the 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 they are freestanding
financial instruments pursuant to ASC 480, meet the definition of a liability
pursuant to ASC 480, and meet all of the requirements for equity classification
under ASC 815, including whether the Warrants are indexed to the Company's own
common shares and whether the holders of the Warrants could potentially require
"net cash settlement" in a circumstance outside of the Company's control, among
other conditions for equity classification. This assessment, which requires the
use of professional judgment, is conducted at the time of issuance of the
Warrants 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, such 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,
such 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 liability-classified warrants are recognized as a
non-cash gain or loss on the statements of operations.
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Class A Ordinary Shares Subject to Possible Redemption
Class A ordinary shares subject to mandatory redemption (if any) are classified
as liability instruments and are measured at fair value. 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. At all other times,
Class A ordinary shares is classified as shareholders' equity. Our Class A
ordinary shares feature certain redemption rights that are considered to be
outside of our control and subject to the occurrence of uncertain future events.
Accordingly, at December 31, 2021, 18,975,000 shares of Class A ordinary shares
subject to possible redemption are presented as temporary equity, outside of the
shareholders' deficit section of the Company's balance sheet.
Net Income Per Ordinary Share
Basic income per ordinary share is computed by dividing net income applicable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding during the period. Consistent with FASB 480, ordinary shares subject
to possible redemption, as well as their pro rata share of undistributed trust
earnings consistent with the two-class method, have been excluded from the
calculation of income per ordinary share for the period from March 26, 2021
(inception) to December 31, 2021. Such shares, if redeemed, only participate in
their pro rata share of trust earnings. Diluted income per share includes the
incremental number of ordinary shares to be issued to settle warrants, as
calculated using the treasury method. For period from March 26, 2021 (inception)
to December 31, 2021, the Company did not have any dilutive warrants, securities
or other contracts that could potentially, be exercised or converted into
ordinary shares. As a result, diluted income per ordinary share is the same as
basic income per ordinary share for all periods presented.
Recently Issued 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's Own Equity (Subtopic 815-40) ("ASU 2020-06")
to simplify accounting for certain financial instruments. ASU 2020-06 eliminates
the current models that require separation of beneficial conversion and cash
conversion features from convertible instruments and simplifies the derivative
scope exception guidance pertaining to equity classification of contracts in an
entity's own equity. The new standard also introduces additional disclosures for
convertible debt and freestanding instruments that are indexed to and settled in
an entity's own equity. ASU 2020-06 amends the diluted earnings per share
guidance, including the requirement to use the if-converted method for all
convertible instruments. As a smaller reporting company, ASU 2020-06 is
effective January 1, 2024 and should be applied on a full or modified
retrospective basis, with early adoption permitted beginning on January 1, 2021.
The Company is currently assessing the impact, if any, that ASU 2020-06 would
have on its financial position, results of operations or cash flows.
Management does not believe that any recently issued, but not yet effective,
accounting pronouncements, if currently adopted, would have a material effect on
the Company's financial statements.
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. Section 102(b)(1) of the JOBS Act exempts emerging
growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a
Securities Act registration statement declared effective or do not have a class
of securities registered under the Exchange Act) are required to comply with the
new or revised financial accounting standards. The JOBS Act provides that a
company can elect to opt out of the extended transition period and comply with
the requirements that apply to non-emerging growth companies but any such an
election to opt out is irrevocable. We have elected to irrevocably opt out of
such extended transition period, which means that when a standard is issued or
revised and it has different application dates for public or private companies,
we will adopt the new or revised standard at the time public companies adopt the
new or revised standard. This may make comparison of our financial statements
with another emerging growth company that has not opted out of using the
extended transition period difficult or impossible because of the potential
differences in accountant standards used.
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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 PCAOB
regarding mandatory audit firm rotation or a supplement to the auditor's report
providing additional information about the audit and the 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 IPO or until we are no longer an "emerging
growth company," whichever is earlier.
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