The following discussion and analysis of the Company's 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 are a blank check company incorporated in the British Virgin Islands on August 21, 2020 formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or other similar initial business combination with one or more businesses. We intend to effectuate our initial business combination using cash derived from the proceeds of our initial public offering and the sale of the private units, 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 an initial business combination will be successful.

Results of Operations

We have neither engaged in any operations (other than searching for an initial business combination after our initial public offering) nor generated any operating revenues to date. Our only activities from inception through December 31, 2022 were organizational activities, those necessary to prepare for our initial public offering, described below, and, subsequent to our initial public offering, identifying a target company for an initial business combination. We do not expect to generate any operating revenues until after the completion of our initial business combination. We expect to generate non-operating income in the form of interest income on marketable securities held after our initial public offering and changes in fair value of our warrants and promissory note. We expect that we will 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 in connection with searching for, and completing, an initial business combination.

For the year ended December 31, 2022, we had net income of $2,419,605, which consisted of change in fair value of warrant liabilities of $1,877,109 and interest earned on marketable securities held in Trust Account of $701,134 and change in fair value of convertible promissory note - related party of $539,940, partially offset by formation and operational costs of $698,578.

For the year ended December 31, 2021, we had a net income of $3,824,229, which consisted of change in fair value of warrant liabilities of $4,530,016, interest earned on marketable securities held in Trust Account of $35,761 and unrealized gain on marketable securities held in Trust Account of $1,523, offset by formation and operational costs of $743,071.

Liquidity and Capital Resources

Until the consummation of our initial public offering, our only source of liquidity was an initial purchase of ordinary shares by our sponsor and loans from our sponsor.

On October 27, 2020, we consummated our initial public offering of 10,000,000 units at a price of $10.00 per unit, generating gross proceeds of $100,000,000. Simultaneously with the closing of our initial public offering, we consummated the sale of 350,000 private units to our sponsor at a price of $10.00 per private unit generating gross proceeds of $3,500,000.

On November 24, 2020, the Company sold an additional 479,626 units for total gross proceeds of $4,796,260 in connection with the underwriters' partial exercise of their over-allotment option. Simultaneously with the partial closing of the over-allotment option, we also consummated the sale of an additional 9,592 private units at $10.00 per private unit, generating total proceeds of $95,925.



                                       51

  Table of Contents

Following our initial public offering, the partial exercise of the over-allotment option, and the sale of the private units, a total of $104,796,260 was placed in the Trust Account. We incurred $6,168,976 in transaction costs, including $2,095,925 of underwriting fees, $3,667,869 of deferred underwriting fees and $405,182 of other costs.

For the year ended December 31, 2022, net cash used in operating activities was $630,291. Net income of $2,419,605 was impacted by interest earned on marketable securities held in Trust Account of $701,134, change in fair value of warrant liabilities of $1,877,109 and change in fair value of convertible promissory note - related party of $539,940. Changes in operating assets and liabilities provided $68,287 of cash from operating activities.

For the year ended December 31, 2021, net cash used in operating activities was $502,108. Net income of $3,824,229 was impacted by interest earned on marketable securities held in Trust Account of $35,761, change in fair value of warrant liabilities of $4,530,016 and unrealized gain on marketable securities held in Trust Account of $1,523. Changes in operating assets and liabilities provided $240,963 of cash from operating activities.

At December 31, 2022, we held $12,353,160 of cash in the Trust Account of. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account, which interest shall be net of taxes payable and excluding deferred underwriting commissions, to complete our initial business combination. We may withdraw interest from the Trust Account to pay taxes, if any. To the extent that our share capital or debt is used, in whole or in part, as consideration to complete an initial 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.

At December 31, 2022, we held $18,865 of cash outside of the Trust Account. 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, structure, negotiate and complete an initial business combination.

In order to fund working capital deficiencies or finance transaction costs in connection with a 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 an initial business combination, we may repay such loaned amounts out of the proceeds of the Trust Account released to us. In the event that an 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 for such repayment. Up to $1,500,000 of such loans may be convertible into additional private units, at a price of $10.00 per unit, at the option of the lender.

On January 20, 2022, we issued an unsecured promissory note (the "2022 Promissory Note") to our sponsor. The 2022 Promissory Note provided that we may borrow up to an aggregate maximum amount of $600,000 from our sponsor. On January 24, 2022, we made an initial draw on the 2022 Promissory Note of $250,000 and a subsequent draw on November 7, 2022 of $350,000. On February 15, 2023 we issued another unsecured promissory note (the "2023 Promissory Note") to our sponsor. The 2023 Promissory Note provides that we may borrow up to an aggregate maximum amount of $500,000 from our sponsor. Also on February 15, 2023 we made an initial draw on the 2023 Promissory Note of $96,000, followed by a draw of $150,000 on March 31, 2023.

Amounts up to the aggregate maximum amount may and are expected to be drawn down from time to time by us pursuant to the 2023 Promissory Note to fund our working capital requirements and for general corporate purposes. The 2022 Promissory Note and the 2023 Promissory Note do not bear any interest. If we complete an initial business combination, we would repay outstanding loaned amounts under the 2022 Promissory Note and the 2023 Promissory Note. In the event that we are unable to complete an initial business combination, we may use a portion of the working capital held outside its trust account to repay such loaned amounts but no proceeds from its trust account would be used for such repayment. The loans are convertible into units of the Company, at a price of $10.00 per unit, at the option of our sponsor. The units would be identical to those units that were issued to our sponsor in a private placement concurrent with our initial public offering.



                                       52

  Table of Contents

Going Concern

We have until April 27, 2023, to consummate an initial business combination. It is uncertain that we will be able to consummate an initial business combination by this time. If an initial business combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution. We have $67,058 of working capital as of December 31, 2022 and may require additional capital to complete an initial business combination, which is available to us through our 2023 Promissory Note. Management has determined that the liquidity condition and mandatory liquidation, should an initial business combination not occur, and potential subsequent dissolution raises substantial doubt about our ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should we be required to liquidate after April 27, 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. 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, other than described below.

The underwriter is entitled to a deferred fee of $0.35 per unit, or $3,667,869 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 an initial 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:

Warrant Liabilities

We account for the Warrants in accordance with the guidance contained in ASC 815-40 under which the Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, we classify the Warrants as liabilities at their fair value and adjust the 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 statements of operations. The Private Placement Warrants and the Public Warrants for periods where no observable traded price was available are valued using a binomial lattice model. For periods subsequent to the detachment of the Public Warrants from the units, the Public Warrant quoted market price was used as the fair value as of each relevant date, except for December 31, 2020 when the Public Warrants price was derived as the difference between the price of the units and the price of the ordinary shares due to a lack of quoted prices for the public warrants.

Ordinary Shares Subject to Redemption

We account for our ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 "Distinguishing Liabilities from Equity." Ordinary shares subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that features redemption rights that is 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 a component of 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 is presented as temporary equity, outside of the shareholders' deficit section of our balance sheets.


                                       53

Table of Contents

Net Income Per Ordinary Share

Net income per ordinary share is computed by dividing net income 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.

Recent Accounting Standards

In August 2020, the FASB issued 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. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, and it also simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. 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 other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.

© Edgar Online, source Glimpses