References to the "Company," "Keyarch," "our," "us" or "we" refer to Keyarch
Acquisition Corporation. The following discussion and analysis of the Company's
financial condition and results of operations should be read in conjunction with
the unaudited interim condensed financial statements and the notes thereto
contained elsewhere in this report. 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
This Quarterly Report on Form 10-Q includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Exchange Act. We have based these forward-looking statements
on our current expectations and projections about future events. These
forward-looking statements are subject to known and unknown risks, uncertainties
and assumptions about us that may cause our actual results, levels of activity,
performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by such
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "should," "could," "would," "expect,"
"plan," "anticipate," "believe," "estimate," "continue," or the negative of such
terms or other similar expressions. Factors that might cause or contribute to
such a discrepancy include, but are not limited to, those described in our other
U.S. Securities and Exchange Commission ("SEC") filings.
Overview
We are a blank check company incorporated as a Cayman Islands exempted company
and formed for the purpose of effecting a merger, amalgamation, share exchange,
asset acquisition, share purchase, reorganization or similar business
combination with one or more businesses. Our efforts to identify a prospective
target business will not be limited to a particular industry or geographic
location. However, our Amended and Restated Memorandum and Articles of
Incorporation provides that we shall not undertake our initial Business
Combination with any entity that is based in, located in or with its principal
business operations in China (including Hong Kong and Macau). We intend to
effectuate our initial Business Combination using cash from the proceeds of our
IPO and the sale of the private units, our shares, debt or a combination of
cash, shares and debt.
Our sponsor is Keyarch Global Sponsor Limited, a Cayman Islands limited
liability company. We are an emerging growth company and, as such, we are
subject to all of the risks associated with emerging growth companies.
If we are unable to complete a Business Combination within the Combination
Period, we 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 us to pay our franchise and income taxes, 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 the remaining shareholders and the board of directors, dissolve
and liquidate, subject in each case to our obligations under Cayman Islands law
to provide for claims of creditors and the requirements of other applicable law.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from April 23, 2021 (date of inception) to March 31, 2022
were organizational activities and those necessary to consummate the IPO,
described below. Following our IPO, we do not expect to generate any operating
revenues until after the completion of our Business Combination. We expect to
generate non-operating income in the form of interest income on cash and
marketable securities held after the IPO. We expect 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.
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For the three months ended March 31, 2022, we had a net loss of $360,157, which
consists of loss of approximately $369,085 derived from general and
administrative expenses offset by interest earned on investment held in trust
account of approximately $8,928.
Liquidity and Capital Resources
On January 27, 2022, we consummated our IPO of 10,000,000 units (the "Units"
and, with respect to the ordinary shares included in the Units being offered,
the "Public Shares"), at $10.00 per Unit, generating gross proceeds of
$100,000,000. Simultaneously with the closing of our IPO, we consummated the
sale of 500,000 Private Placement Units at a price of $10.00 per Private
Placement Unit in a Private Placement to the Sponsor and EarlyBirdCapital,
generating total gross proceeds of $5,000,000.
On February 8, 2022, the underwriters in our IPO purchased an additional
1,500,000 Units to exercise its over-allotment option in full at a purchase
price of $10.00 per Unit, generating gross proceeds of $15,000,000.
Simultaneously with the closing of the fully exercise of the over-allotment
option, we completed the private sale of an aggregate of 45,000 Private
Placement Units to the Sponsor and EarlyBirdCapital, at a purchase price of
$10.00 per Private Placement Unit, generating gross proceeds of $450,000.
Transaction costs amounted to $3,471,734 consisting of $2,300,000 of
underwriting discount and $1,171,734 of other offering costs.
Following the closing of our IPO and the sale of over-allotment units, an
aggregate of $116,150,000 ($10.00 per Unit) from the net proceeds and the sale
of the Private Placement Units was held in a Trust Account ("Trust Account"),
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. Any such loans would be on
an interest-free basis and would be repaid only from funds held outside the
trust account or from funds released to us upon completion of our initial
Business Combination. Up to $1,500,000 of such loans may be convertible into
units at a price of $10.00 per unit, at the option of the lender. These units
would be identical to the private units issued to our Sponsor. We do not expect
to seek loans from parties other than our Sponsor or an affiliate of our Sponsor
as we do not believe third parties will be willing to loan such funds and
provide a waiver against any and all rights to seek access to funds in our trust
account.
As of March 31, 2022, we had marketable securities held in the Trust Account of
$116,158,928 consisting of securities held in a treasury trust fund that invests
in United States government treasury bills, bonds or notes with a maturity of
180 days or less. Interest income on the balance in the Trust Account may be
used by us to pay taxes. Through March 31, 2022, we did not withdraw any
interest earned on the Trust Account to pay our taxes. We intend to use
substantially all of the funds held in the Trust Account, to acquire a target
business and to pay our expenses relating thereto. To the extent that our
capital stock is used in whole or in part as consideration to effect a Business
Combination, the remaining funds held in the Trust Account will be used as
working capital to finance the operations of the target business. Such working
capital funds could be used in a variety of ways including continuing or
expanding the target business' operations, for strategic acquisitions and for
marketing, research and development of existing or new products. Such funds
could also be used to repay any operating expenses or finders' fees which we had
incurred prior to the completion of our Business Combination if the funds
available to us outside of the Trust Account were insufficient to cover such
expenses.
As of March 31, 2022, the Company had cash of $631,522 and working capital of
approximately $385,601. The Company's liquidity needs prior to the consummation
of the Initial Public Offering had been satisfied through proceeds from notes
payable and advances from related party and from the issuance of common stock.
Subsequent to the consummation of the Initial Public Offering, the Company
expects that it will need additional capital to satisfy its liquidity needs
beyond the net proceeds from the consummation of the Initial Public Offering and
the proceeds held outside of the Trust Account 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 Initial Business Combination.
Although certain of the Company's initial stockholders, officers and directors
or their affiliates have committed to loan the Company funds from time to time
or at any time, in whatever amount they deem reasonable in their sole
discretion, there is no guarantee that the Company will receive such funds.
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Accordingly, the accompanying financial statement has been prepared in
conformity with U.S. GAAP, which contemplates continuation of the Company as a
going concern and the realization of assets and the satisfaction of liabilities
in the normal course of business. The financial statement does not include any
adjustments that might result from the outcome of this uncertainty. Further, we
have incurred and expect to continue to incur significant costs in pursuit of
our financing and acquisition plans. Management plans to address this
uncertainty during period leading up to the Initial Business Combination. The
Company cannot provide any assurance that its plans to raise capital or to
consummate an Initial Business Combination will be successful. Based on the
foregoing, management believes that the Company will not have sufficient working
capital and borrowing capacity to meet its needs through the earlier of the
consummation of the Initial Business Combination or one year from this filing.
These factors, among others, raise substantial doubt about our ability to
continue as a going concern.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of March 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.
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