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 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 Form 10-K.
Cautionary Note Regarding Forward-Looking Statements
This Form 10-K includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act 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-K including,
without limitation, statements in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations" regarding the Company's financial
position, business strategy and the plans and objectives of management for
future operations, are forward-looking statements. Words such as "anticipate,"
"believe," "continue," "could," "estimate," "expect," "intend," "may," "might,"
"plan," "possible," "potential," "predict," "project," "should," "would" and
similar expressions may identify 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. 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 this
Form 10-K and the Risk Factors section of the Registration Statement on Form S-1
(Registration No. 333-257033) filed with 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.
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Overview
We are a blank check company incorporated on February 23, 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. We intend to effectuate our initial
business combination using cash from the proceeds of the Initial Public Offering
and the sale of the Private Placement Warrants, our shares, debt or a
combination of cash, equity 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.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from inception through December 31, 2022 were organizational
activities, those necessary to prepare for the Initial Public Offering,
described below, and subsequent to our Initial Public Offering, identifying a
target company for a business combination. We do not expect to generate any
operating revenues until after the completion of our initial business
combination. We generate non-operating income in the form of interest income on
marketable securities held after the Initial Public Offering. 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 $6.5 million, which
consisted of change in fair value of warrant liabilities of $6.8 million and
interest earned on marketable securities held in the Trust Account of $2.9
million, partially offset by operating expenses of $3.2 million.
For the period from February 23, 2021 (inception) through December 31, 2021, we
had a net income of $4.0 million, which consisted of change in fair value of
warrant liabilities of $5.0 million and interest earned on marketable securities
held in the Trust Account of $6,631, offset by operating expenses of $603,572
and transaction costs related to warrant issuances of $383,507.
Liquidity and Capital Resources
On July 6, 2021, we consummated our Initial Public Offering of 20,000,000 Units,
at $10.00 per Unit, generating gross proceeds of $200,000,000. Simultaneously
with the closing of the Initial Public Offering, we consummated a Private
Placement in which the Sponsor purchased 6,125,000 Private Placement Warrants at
a price of $1.00 per Private Placement Warrant, generating gross proceeds of
$6,125,000.
Upon the completion of the Initial Public Offering and the Private Placement,
$200,000,000 of cash was placed in the Trust Account from the net proceeds of
the sale of our Initial Public Offering and a portion of the proceeds from the
sale of the Private Placement Warrants. We incurred transaction costs totaling
$11,000,000 of the proceeds of the Initial Public Offering in underwriters' fees
(which amount includes $7,000,000 of the underwriters' deferred discount) and
$1,125,000 of other offering costs.
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
taxes payable and deferred underwriting commissions), to complete our initial
business combination. We may withdraw interest income (if any) to pay income
taxes, if any. Our annual income tax obligations will depend on the amount of
interest and other income earned on the amounts held in the Trust Account. We
expect the interest income earned on the amount in the Trust Account (if any)
will be sufficient to pay our income taxes. To the extent that our equity or
debt is used, in whole or in part, as consideration to complete our initial
business combination, the remaining proceeds held in the Trust Account will be
used as working capital to finance the operations of the partner business or
businesses, make other acquisitions and pursue our growth strategies.
At December 31, 2022, we held $575,469 of cash outside 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 partner businesses or their representatives or owners, review
corporate documents and material agreements of prospective target businesses,
and structure, negotiate and complete a business combination.
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In connection with the Company's assessment of going concern considerations in
accordance with Account Standards Update ("ASU") 2014-15, "Disclosures of
Uncertainties about an Entity's Ability to Continue as a Going Concern,"
management has determined that the mandatory liquidation date (July 6, 2023) is
less than one year from the date of the issuance of the financial statements.
There is no assurance that the Company's plans to consummate a business
combination will be successful within 24 months from the closing of the Initial
Public Offering (the "Combination Period"). Additionally, the Company has
incurred and expects to incur significant costs in pursuit of its acquisition
plans. The Company lacks the financial resources it needs to sustain operations
for a reasonable period of time, which is considered to be one year from the
date of the issuance of the financial statements. As a result, there is
substantial doubt that the Company can sustain operations for a period of at
least one-year from the issuance date of these financial statements without
additional funding. The financial statements do not include any adjustments that
might result from the outcome of the uncertainty.
Off-Balance Sheet Arrangements
We had 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 nonfinancial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement our Sponsor
a monthly fee of $10,000 for office space, secretarial and administrative
services. We began incurring these fees on the date our units were listed on
Nasdaq and will continue to incur these fees monthly until the earlier of the
completion of an initial business combination and our liquidation.
The underwriters are entitled to a deferred fee of $0.20 per Unit, or $7,000,000
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:
Derivative Warrant Liabilities
The Company evaluates its financial instruments to determine if such instruments
are derivatives or contain features that qualify as embedded derivatives in
accordance with ASC Topic 815, "Derivatives and Hedging". For derivative
financial instruments that are accounted for as liabilities, the derivative
instrument is initially recorded at its fair value on the grant date and is then
re-valued at each reporting date, with changes in the fair value reported in the
statements of operations. The classification of derivative instruments,
including whether such instruments should be recorded as liabilities or as
equity, is evaluated at the end of each reporting period. Derivative liabilities
are classified in the balance sheet as current or non-current based on whether
or not net-cash settlement or conversion of the instrument could be required
within 12 months of the balance sheet date.
Class A Ordinary Shares Subject to Possible Redemption
The Company accounts for its ordinary shares subject to possible redemption in
accordance with the guidance enumerated in ASC 480 "Distinguishing Liabilities
from Equity". Class A ordinary shares subject to mandatory redemption are
classified as a liability instrument and are measured at fair value.
Conditionally redeemable Class A ordinary shares (including ordinary shares that
feature
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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,
ordinary shares are classified as shareholders' equity. The Company's Class A
ordinary shares feature certain redemption rights that are considered by the
Company to be outside of the Company's control and subject to the occurrence of
uncertain future events. Accordingly, at December 31, 2022 and 2021, all of the
Class A ordinary shares subject to possible redemption in the amount of
$202,891,491 and $200,000,000, respectively, are presented as temporary equity,
outside of the shareholders' equity section of the Company's balance sheet.
Net Income per Ordinary Share
The Company complies with accounting and disclosure requirements of FASB ASC
Topic 260, "Earnings Per Share". Net income per ordinary share is computed by
dividing net income by the weighted average number of ordinary shares
outstanding for the period. The Company applies the two-class method in
calculating income per ordinary share. Accretion associated with the redeemable
Class A ordinary shares is excluded from income per ordinary share as the
redemption value approximates fair value. The calculation of diluted income per
share of ordinary share does not consider the effect of the warrants issued in
connection with the (i) Initial Public Offering, and (ii) the Private Placement
since the exercise of the warrants is contingent upon the occurrence of future
events. As of December 31, 2022 and 2021, the Company did not have any dilutive
securities or other contracts that could, potentially, be exercised or converted
into ordinary share and then share in the earnings of the Company. As a result,
diluted net income per ordinary share is the same as basic net income per
ordinary share for the periods presented.
Recent Accounting Standards
In August 2020, the FASB issued 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)". This ASU reduces the number of
accounting models for convertible debt instruments and convertible preferred
stock and amends the guidance for the derivatives scope exception for contracts
in an entity's own equity to reduce form-over-substance-based accounting
conclusions. In addition, this ASU improves and amends the related EPS guidance.
This standard is effective for us on January 1, 2023, including interim periods
within those fiscal years. Adoption is either a modified retrospective method or
a fully retrospective method of transition. The Company is currently assessing
the impact the new guidance will have on its financial statements.
Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on our
financial statements.
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