References in this quarterly report on Form 10-Q (the "Quarterly Report") to
"we," "us," "our" or the "Company" refer to Generation Asia I Acquisition
Limited. References to our "management" or our "management team" refer to our
officers and directors, and references to the "Sponsor" refer to Generation Asia
LLC, a Cayman Islands limited liability company. The following discussion and
analysis of the Company's financial condition and results of operations should
be read in conjunction with the condensed 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 Quarterly
Report 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 "expect," "believe," "anticipate," "intend," "estimate," "seek,"
"may," "might," "plan," "possible," "potential," "should, "would" 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. 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 for the year ended December 31, 2021, as
filed with the U.S. Securities and Exchange Commission (the "SEC") on March 30,
2022 (the "Annual Report on Form 10-K"). 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 formed under the laws of the Cayman Islands on
March 3, 2021, for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or other similar Business
Combination with one or more businesses. We intend to effectuate an initial
business combination (the "Business Combination") using cash from the proceeds
of our initial public offering (the "IPO") and the private placement of our
private placement warrants, the sale of our shares in connection with the
Business Combination (pursuant to backstop agreements which we currently have no
plan of entering into but may enter into in the future or forward purchase
agreements or otherwise), shares issued to the owners of the target, debt issued
to bank or other lenders or the owners of the target, or a combination of the
foregoing.
We expect to continue to incur significant costs in the pursuit of the Business
Combination. We cannot assure you that our plans to complete the Business
Combination will be successful.
Results of Operations and Known Trends or Future Events
We have neither engaged in any operations nor generated any operating revenues
to date. Our only activities from inception through September 30, 2022 were
organizational activities and those necessary to prepare for our IPO and to
identify a target business for the Business Combination. We do not expect to
generate any operating revenues until after the completion of the Business
Combination, at the earliest. We have generated non-operating income in the form
of interest income on cash and cash equivalents after our IPO. 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 balance sheet of January 24,
2022 as filed with the SEC on February 23, 2022. We expect that we will incur
substantial 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, a Business
Combination.
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On January 19, 2022, the Registration Statement on Form S-1 (File No.
333-260431) (the "Registration Statement") relating to the IPO of the Company
was declared effective by the SEC. On January 24, 2022, we consummated our IPO
of 20,000,000 units (the "Units") at an offering price of $10.00 per Unit and a
private placement of 6,800,000 private placement warrants at a price of $1.00
per warrant (the "Private Placement"), generating gross proceeds of
$206,800,000. A total of $202,000,000 in offering proceeds (the "Offering
Proceeds"), comprised of the net proceeds of the IPO and certain proceeds from
the Private Placement, was placed in a trust account established for the benefit
of the Company's public shareholders and the underwriter of the IPO, with
Continental Stock Transfer & Trust Company acting as trustee (the "Trust
Account"), $2,020,000 was paid to the underwriter and $1,412,619 was deducted
for payment of the other offering expenses in connection with the IPO. The
remaining $1,367,381 in Offering Proceeds was deposited in the operating bank to
be used as our working capital.
On February 1, 2022, the underwriter exercised its over-allotment option in part
to purchase 1,930,000 Units and forfeited the remaining portion of such option
(the "Over-allotment Offering"). Concurrently with the underwriter's exercise of
such option, we consummated a private placement of 579,000 private placement
warrants at a price of $1.00 per warrant (the "Over-allotment Private
Placement"). A total of $19,493,000, comprised of the net proceeds of the
Over-allotment Offering and gross proceeds from the Over-allotment Private
Placement, was placed in the Trust Account.
For the three months ended September 30, 2022, we had net income of $2,665,595
which consisted of unrealized gain on fair value changes of warrants of
$1,742,680 and interest income and realized gain from sale of treasury
securities of $1,168,445, as offset by formation and operating costs of
$245,530.
For the nine months ended September 30, 2022, we had net income of $6,936,793,
which consisted of unrealized gain on fair value changes of warrants of
$7,154,160 and interest income and realized gain from sale of treasury
securities of $1,543,404 as offset by transaction costs allocable to warrants of
$1,004,142 and formation and operating costs of $756,629.
For the three months ended September 30, 2021, we had net loss of $32,162, which
consisted of formation and operating costs.
For the period from March 3, 2021 (inception) through September 30, 2021, we had
net loss of $37,375, which consisted of formation and operating costs.
Going Concern
Our liquidity needs prior to the IPO were satisfied through a payment from our
Sponsor of $25,000 for the founder shares to cover certain offering costs, and
the loan under an unsecured promissory note from our Sponsor of $275,000, which
was fully repaid on January 31, 2022, after the closing of our IPO.
On January 24, 2022, we consummated our IPO of 20,000,000 Units at $10.00 per
Unit and a Private Placement of 6,800,000 private placement warrants at a price
of $1.00 per warrant, generating gross proceeds of $206,800,000. After deducting
$202,000,000 in Offering Proceeds deposited into the Trust Account, $2,020,000
paid to the underwriter and $1,412,619 for payment of the other offering
expenses in connection with the IPO, $1,367,381 was deposited into the operating
bank account to be used as our working capital.
As of September 30, 2022, we held approximately $327,424 in our operating bank
account. Our working capital as of September 30, 2022 was $294,253.
For the nine months ended September 30, 2022, net cash used in operating
activities was $2,080,661. Net income of $6,936,793 was affected by interest
earned on investments held in the Trust Account of $1,543,404, change in fair
value of warrant liability of $7,154,160 and transaction costs allocable to
warrants of $1,004,142. Changes in operating assets and liabilities used
$1,332,782 of cash for operating activities.
For the period from March 3, 2021 (inception) through September 30, 2021, net
cash used in operating activities was $23,357. This was primarily attributable
to our net loss of $37,375, as offset by payment of formation costs through
issuance of Class B ordinary shares of $8,602.
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We believe that we will have sufficient working capital and borrowing capacity
to meet our needs through the earlier of the consummation of a Business
Combination or 24 months from the date of the IPO. Over this time period, we
will be using these funds for paying existing accounts payable, identifying and
evaluating prospective Business Combination candidates, performing due diligence
on prospective target businesses, paying for travel expenditures, selecting the
target business to merge with or acquire, and structuring, negotiating and
consummating the Business Combination.
If our estimates of the costs of undertaking in-depth due diligence and
negotiating the Business Combination are less than the actual amount necessary
to do so, we may have insufficient funds available to operate our business prior
to the Business Combination. Moreover, we may need to obtain additional
financing either to consummate the Business Combination or because we become
obligated to redeem a significant number of our public shares upon consummation
of the Business Combination, in which case we may issue additional securities or
incur debt in connection with such Business Combination. In order to fund
working capital deficiencies or to finance transaction costs in connection with
an intended Business Combination, our Sponsor, initial shareholders, officers,
directors or their affiliates may, but are not obligated to, loan the Company
funds as may be required ("Working Capital Loans"). If the Company completes the
Business Combination, the Company may repay the Working Capital Loans out of the
proceeds of the Trust Account released to the Company. Otherwise, the Working
Capital Loans may be repaid only out of funds held outside the Trust Account. In
the event that the Business Combination does not close, the Company may use a
portion of the working capital held outside the Trust Account to repay the
Working Capital Loans but no proceeds from the Trust Account would be used to
repay the Working Capital Loans. The terms of the Working Capital Loans, if any,
have not been determined and no written agreements exist with respect to such
loans. As of September 30, 2022, there were no amounts outstanding under any
Working Capital Loans.
Following the Business Combination, if cash on hand is insufficient, we may need
to obtain additional financing in order to meet our obligations.
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," management has determined that if the Company
is unable to complete a Business Combination by July 23, 2023 (or October 23,
2023, if the Company has entered into a definitive agreement during the first 18
months from the closing of the IPO, without the Sponsor depositing additional
funds into the Trust Account and, if needed, January 23, 2024, subject to the
Sponsor depositing additional funds into the Trust Account), then the Company
will cease all operations except for the purpose of liquidating. The date for
mandatory liquidation and subsequent dissolution raise substantial doubt about
the Company's ability to continue as a going concern within one year after the
date that the financial statements are available to be issued.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of September 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
As of September 30, 2022, we do not have any long-term debt, capital lease
obligations, operating lease obligations or long-term liabilities, other than an
agreement to pay our Sponsor or an affiliate thereof up to $10,000 per month for
office space, utilities, secretarial and administrative support services. We
began incurring these fees on January 19, 2022 and will continue to incur these
fees monthly until the earlier of the completion of the Business Combination and
our liquidation.
The underwriter is entitled to a deferred fee of $0.35 per Unit, or $7,675,500
in the aggregate. The deferred fee will become payable to the underwriter from
the amounts held in the Trust Account. The deferred commissions will be released
to the underwriter only on and concurrently with completion of a Business
Combination, subject to the terms of the underwriting agreement.
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Critical Accounting Policies
The accompanying financial statements are presented in conformity with
accounting principles generally accepted in the United States of America ("US
GAAP") and pursuant to the rules and regulations of the U.S. The preparation of
financial statements and related disclosures in conformity with US GAAP 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:
Offering Costs
We comply with the requirements of ASC 340-10-S99-1, SEC Staff Accounting
bulletin Topic 5A - "Expenses of Offering", and SEC Staff Accounting bulletin
Topic 5T - "Accounting for Expenses or Liabilities Paid by Principal
Stockholder(s)". Offering costs consist principally of professional and
registration fees incurred through the balance sheet date that are related to
the IPO. Offering costs directly attributable to the issuance of an equity
contract to be classified in equity are recorded as a reduction of equity.
Offering costs for equity contracts that are classified as assets and
liabilities are expensed immediately.
Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board ("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.
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. We are currently assessing the impact, if any, that ASU 2020-06 would
have on the Company's financial position, results of operations or cash flows.
Management does not believe that any other recently issued, but not yet
effective, accounting pronouncements, if currently adopted, would have a
material effect on our financial statements.
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GENERATION ASIA I ACQUISITION LIMITED 
