Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this Report
including, without limitation, statements in this section regarding our
financial position, business strategy and the plans and objectives of management
for future operations, are forward- looking statements. When used in this
Report, words such as "anticipate," "believe," "estimate," "expect," "intend"
and similar expressions, as they relate to us or our management, identify
forward-looking statements. Such forward-looking statements are based on the
beliefs of our management, as well as assumptions made by, and information
currently available to, our management. Actual results could differ materially
from those contemplated by the forward-looking statements as a result of certain
factors detailed in our filings with the SEC. All subsequent written or oral
forward-looking statements attributable to us or persons acting on our behalf
are qualified in their entirety by this paragraph.
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the consolidated financial
statements and the notes thereto contained elsewhere in this Report.
Overview
We are a blank check company incorporated on July 17, 2019 as a Cayman Islands
exempted company for the purpose of effecting an initial business combination.
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.
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AVN Business Combination
On March 21, 2021, we entered into the AVN Business Combination Agreement with
AVN, an indirect 99.99% owned subsidiary of PT MNC Vision Networks TBK, an
Indonesian public limited liability company, and new holding company for
Vision+, Indonesia's fastest growing OTT business and MNC Play, the 3rd largest
broadband and IPTV operator in Indonesia. Pursuant to the AVN Business
Combination Agreement, subject to the terms and conditions set forth therein, a
newly-formed Cayman Islands subsidiary of AVN would merge with and into our
Company, with our Company surviving the merger as a wholly-owned subsidiary of
AVN, and with AVN becoming the successor US-listed company to our Company.
On September 3, 2021, AVN and the Company entered into the AVN Termination
Agreement to mutually terminate the AVN Business Combination Agreement, pursuant
to Section 9.1(a) thereof.
Indiev Business Combination
On September 26, 2022, the Company entered into the Indiev Merger Agreement with
Indiev, Merger Sub, our sponsor, in the capacity as the representative
thereunder of the stockholders of the Company (other than the stockholders of
Indiev immediately prior to the Closing and their respective successors and
assignees) from and after the Closing of the transactions contemplated by the
Indiev Merger Agreement, and Mr. Hai Shi, in the capacity as the representative
thereunder for the Earnout Participants and their respective successors and
assignees from and after the Closing.
Pursuant to the Indiev Merger Agreement, subject to the terms and conditions set
forth therein, (i) prior to the Closing, Indiev shall convert from a corporation
incorporated under the laws of the State of California into a Delaware
corporation, and the Company will continue out of the Cayman Islands and into
the State of Delaware to re-domicile and become a Delaware corporation, and (ii)
at the Closing, Merger Sub will merge with and into Indiev, with Indiev
continuing as the surviving entity and wholly-owned subsidiary of the Company,
and with each Indiev stockholder receiving shares of Company common stock at the
Closing, as further described below. Simultaneously with entering into the
Indiev Merger Agreement, the Company entered into a Subscription Agreement with
Mr. Hai Shi to purchase a total of 1.5 million shares of our Class A common
stock (after giving effect to the Domestication) in a PIPE in the Company at
$10.00 per share with aggregate gross proceeds to of $15,000,000, to be
consummated immediately prior the Closing, but after the Domestication.
For a full description of the Indiev Merger Agreement and the proposed Indiev
Business Combination, please see "Item 1. Business."
Extension Amendments and Redemptions
On December 27, 2021, we held our 2021 annual general meeting of shareholders
and approved, among other things, the First Extension Amendment, which extended
the date by which we must consummate a business combination from January 17,
2022 (which was 18 months from the closing of the initial public offering) to
October 17, 2022 (or such earlier date as determined by the board). Our sponsor
had the sole discretion whether to continue extending for additional calendar
months until October 17, 2022. In connection with the First Extension Amendment,
shareholders holding 9,669,449 public shares exercised their right to redeem
such public shares for a pro rata portion of the trust account.
In January 2022, in connection with the First Extension Amendment, we paid cash
in the aggregate amount of $96,761,060, or approximately $10.00 per share to
redeeming shareholders in the First Extension Redemption. For each one-month
extension our sponsor deposited the First Contribution of $0.03 per public share
not redeemed in connection with the First Extension Amendment. The first such
First Contribution was due on January 17, 2022 in the amount of $141,167 and
subsequent Contributions were payable monthly through the extension date in
October 2022 . Immediately after the First Extension Redemption, the amount in
the trust account was approximately $47,087,905.
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In connection with the First Extension Amendment, we also issued the Extension
Note, an unsecured promissory note, dated March 29, 2022, in the amount of up to
$1,297,500, to our sponsor. The proceeds of the Extension Note were used solely
for extensions of the time period we have to complete an initial business
combination.
On October 12, 2022, we held our 2022 annual general meeting of shareholders and
approved, among other things, the Second Extension Amendment, which extended the
date by which we must consummate a business combination from October 17, 2022 to
July 17, 2023 (or such earlier date as determined by the board). Our sponsor has
sole discretion whether to continue extending for additional calendar months
until July 17, 2023. In connection with the Second Extension Redemption,
shareholders holding 4,188,197 public shares exercised their right to redeem
such public shares for a pro rata portion of the trust account.
In connection with the Second Extension Amendment, we also issued the Second
Extension Note, an unsecured promissory note, dated October 17, 2022, in the
amount of up to $153 655, to our sponsor. The proceeds of the Second Extension
Note have been and will continue to be used solely for extensions of the time
period we have to complete an initial business combination.
Results of Operations
We have neither engaged in any operations nor generated any operating revenues
to date. Our only activities from inception through December 31, 2022 were
organizational activities and those necessary to prepare for the initial public
offering. 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 the initial public offering. 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, a business combination.
For the year ended December 31, 2022, we had net income of $3,008,083, which
consists of a gain due to changes in fair value of warrant liabilities of
$4,497,031, operating expenses of $1,759,463, offset by interest and dividends
earned on marketable securities held in the trust account of $270,514.
For the year ended December 31, 2021, we had net income of $6,050,466, which
consists of a gain due to changes in fair value of warrant liabilities of
$7,457,876, operating expenses of $1,440,989, offset by interest earned from
bank of $3 and interest earned on marketable securities held in the trust
account of $33,576.
Liquidity and Capital Resources
On July 17, 2020, we consummated the initial public offering of 12,500,000
units, and on July 21, 2020, we consummated the sale of an additional 1,875,000
units, which included the full exercise by the underwriters of their
over-allotment option, at $10.00 per unit, generating aggregate gross proceeds
of $143,750,000. Each unit consists of one Class A ordinary share, par value
$0.0001 per share, and one-half of one redeemable warrant, with each whole
warrant entitling the holder thereof to purchase one share of Class A ordinary
share for $11.50 per share. Simultaneously with the closing of the initial
public offering and the full exercise of the over-allotment option, we
consummated the sale of an aggregate of 4,375,000 private placement warrants to
our sponsor in the private placement at a price of $1.00 per warrant, generating
aggregate gross proceeds of $4,375,000.
Following the initial public offering, the exercise of the over-allotment option
and the private placement, a total of $143,750,000 was placed in the trust
account. We incurred $8,394,954 in transaction costs, including $2,875,000 of
underwriting fees, $5,031,250 of deferred underwriting fees and $488,704 of
other offering costs in connection with the initial public offering and the
private placement. Of these amounts, transactions costs of $186,456 attributable
to the issuance of the warrants were expensed during 2020.
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For the year ended December 31, 2022, net cash used in operating activities was
$1,388,732. Net income of $3,008,083 primarily related to the income from change
in fair market value of derivative warrant liabilities of $4,497,031 interest
and dividends earned on marketable securities of $270,514 and changes in
operating assets and liabilities, which used $370,730 of cash from operating
activities.
At December 31, 2022 and 2021, we had cash and marketable securities held in the
trust account of $5,397,789 and $143,849,320, respectively. 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 (if
applicable) and deferred underwriting commissions) to complete our business
combination. To the extent that our shares or debt is used, in whole or in part,
as consideration to complete our business combination, the remaining proceeds
held in the trust account will be used as working capital to finance the
operations of the post-business combination entity, make other acquisitions and
pursue our growth strategies.
At December 31, 2022 and 2021, we had cash of $34,262 and $112,687,
respectively, held 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 a
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 Working Capital Loans, as may be required. If we complete a business
combination, we may repay any such Working Capital Loans out of the proceeds of
the trust account released to us. In the event that a business combination does
not close, we may use a portion of the working capital held outside the trust
account to repay any such Working Capital Loans, 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 warrants, at a price of $1.00 per warrant, at the option of the
lender. The warrants would be identical to the private placement warrants.
Other than as disclosed in this Report, we do not presently 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 a 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 business combination or because we become obligated to
redeem a significant number of our public shares upon completion of our business
combination, in which case we may issue additional securities or incur debt in
connection with such business combination.
We issued the Promissory Notes to the sponsor, which consist of (i) two
unsecured promissory notes in the amount of up to $300,000, each, which were
issued on August 2, 2021 and October 20, 2021, respectively, (ii) the First
Extension Note, an unsecured promissory note, in the amount of up to $1,297,500,
and (iii) the Second Extension Note, an unsecured promissory note in the
aggregate principal amount of up to $153,655. The Promissory Notes are
non-interest bearing and payable at the earlier of (a) the date on which the
initial business combination is completed and (b) the date of liquidation of the
Company. The Promissory Notes are not convertible into equity or warrants. As of
December 31, 2022 and 2021, we had $3,232,050 and $600,000, respectively,
outstanding borrowings under the Promissory Notes.
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On March 29, 2022, we issued a Working Capital Note, an unsecured promissory
note in the amount of up to $1,000,000, to our sponsor. On March 31, 2023, we
issued another Working Capital Note, an unsecured promissory note in the amount
of up to $1,000,000, to our sponsor. The proceeds of both Working Capital Notes
will be used for costs in connection with our initial business combination or as
general working capital.
On September 16, 2022, we instructed Continental to liquidate
the investments held in the trust account and instead to hold the funds in the
trust account in a non-interest-bearing demand deposit account at JPMorgan Chase
Bank, with Continental continuing to act as trustee, until the earlier of the
consummation of our initial business combination or our liquidation. As a
result, following the liquidation of investments in the trust account, the
remaining proceeds from the initial public offering and private placement are no
longer invested in U.S. government securities or money market funds.
Going Concern
In connection with our assessment of going concern considerations in accordance
with ASU Topic 2014-15, "Disclosures of Uncertainties about an Entity's Ability
to Continue as a Going Concern," we have determined that we do not currently
have adequate liquidity to sustain operations, which consist solely of pursuing
an initial business combination. While we expect to have sufficient access to
additional sources of capital if necessary, there is no current commitment on
the part of any financing source to provide additional capital and no assurances
can be provided that such additional capital will ultimately be available.
Additionally, we have determined that if we are unable to complete a business
combination by the end of the Combination Period, then the Company will cease
all operations except for the purpose of liquidating. The liquidity condition
and date for mandatory liquidation and subsequent redemption of shares raise
substantial doubt about the Company's ability to continue as a going concern. No
adjustments have been made to the carrying amounts of assets or liabilities
should the Company be required to liquidate the end of the Combination Period.
We intend to complete a business combination before the mandatory liquidation
date. Our independent registered public accounting firm, Withum, in its report
on the consolidated financial statements contained elsewhere in this Report have
expressed substantial doubt about 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 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 as described below.
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The underwriters are entitled to a deferred fee of $0.35 per unit, or $5,031,250
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 a
business combination, subject to the terms of the underwriting agreement. A
portion of such amount, not to exceed 25% of the total amount of the deferred
fee held in the trust account, may be re-allocated or paid to unaffiliated
thirds parties that assist us in consummating a business combination. The
election to re-allocate or make any such payments to unaffiliated third parties
will be solely at the discretion our management team, and such unaffiliated
third parties will be selected by the management team in their sole and absolute
discretion.
Pursuant to the Amendment to Underwriting Agreement entered on September 26,
2022, the underwriters are entitled to a deferred fee of a total of $1,500,000
in cash and 200,000 shares of our common stock. The deferred fee will become
deliverable at this specific Closing, subject to the terms of the Underwriting
Agreement and the Amendment to the Underwriting Agreement.
Pursuant to a registration rights agreement entered into on July 14, 2020, the
holders of the founder shares, private placement warrants and any warrants that
may be issued upon conversion of Working Capital Loans (and any Class A ordinary
shares issuable upon the exercise of the private placement warrants or warrants
issued upon conversion of the Working Capital Loans and upon conversion of the
founder shares) are entitled to registration rights requiring us to register
such securities for resale (in the case of the Founder Shares, only after
conversion to the Class A ordinary shares). The holders of these securities are
entitled to make up to three demands, excluding short form demands, that we
register such securities. In addition, the holders have certain "piggy-back"
registration rights with respect to registration statements filed subsequent to
the completion of a business combination and rights to require us to register
for resale such securities pursuant to Rule 415 under the Securities Act. The
registration rights agreement does not contain liquidated damages or other cash
settlement provisions resulting from delays in registering our securities. We
will bear the expenses incurred in connection with the filing of any such
registration statements.
Critical Accounting Estimates
The preparation of financial statements and related disclosures in conformity
with 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 not identified any critical accounting estimates.
Factors That May Adversely Affect Our Results of Operations
Our results of operations and our ability to complete an initial business
combination may be adversely affected by various factors that could cause
economic uncertainty and volatility in the financial markets, many of which are
beyond our control. Our business could be impacted by, among other things,
downturns in the financial markets or in economic conditions, increases in oil
prices, inflation, increases in interest rates, supply chain disruptions,
declines in consumer confidence and spending, the ongoing effects of the
COVID-19 pandemic, including resurgences and the emergence of new variants, and
geopolitical instability, such as the military conflict in Ukraine. We cannot at
this time fully predict the likelihood of one or more of the above events, their
duration or magnitude or the extent to which they may negatively impact our
business and our ability to complete an initial business combination.
33© Edgar Online, source Glimpses
MALACCA STRAITS ACQUISITION COMPANY LIMITED 
