MORINGA ACQUISITION CORP Forward-Looking Statements
All statements other than statements of historical fact included in this annual report including, without limitation, statements under this "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward looking statements. When used in this annual report, words such "may," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "continue," or the negative of such terms or other similar expressions, as they relate to us or our management, identify forward-looking statements.
Factors that might cause or contribute to such a discrepancy include, but are
not limited to, those described in our other
Overview
We are a blank check company incorporated as a
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The issuance of additional ordinary shares in a business combination (whether by our company or by the target company that will serve as the new public company following a business combination):
? may significantly dilute the equity interest of investors in our initial public
offering;
? could cause a change of control if a substantial number of ordinary shares are
issued, which may affect, among other things, our (or the new public company's)
ability to use our net operating loss carry forwards, if any, and could result
in the resignation or removal of the officers and directors of the public
company following the business combination;
? may have the effect of delaying or preventing a change of control of the new
public company by diluting the share ownership or voting rights of a person
seeking to obtain control of it; and
? may adversely affect prevailing market prices for the ordinary shares or
warrants of the new public company following the business combination.
Similarly, if the new public company (following a business combination) issue(s) debt securities or otherwise incur(s) significant indebtedness in connection with the business combination transaction, that could result in:
? default and foreclosure on the public company's assets if its operating
revenues after an initial business combination are insufficient to repay its
debt obligations;
? acceleration of the new public company's obligations to repay the indebtedness
even if it makes all principal and interest payments when due if it breaches
certain covenants that require the maintenance of certain financial ratios or
reserves without a waiver or renegotiation of that covenant;
? immediate payment of all principal and accrued interest, if any, if the debt
security is payable on demand;
? the public company's inability to obtain necessary additional financing if the
debt security contains covenants restricting its ability to obtain such
financing while the debt security is issued and outstanding;
? the public company's inability to pay dividends on its shares;
? using a substantial portion of the public company's cash flow to pay principal
and interest on its debt, which will reduce the funds available for dividends
on ordinary shares if declared, expenses, capital expenditures, acquisitions
and other general corporate purposes;
? limitations on the public company's flexibility in planning for and reacting to
changes in its business and in the industry in which it operates;
? increased vulnerability to adverse changes in general economic, industry and
competitive conditions and adverse changes in government regulation; and
? limitations on the public company's ability to borrow additional amounts for
expenses, capital expenditures, acquisitions, debt service requirements,
execution of its strategy and other purposes and other disadvantages compared
to its competitors that have less debt.
As indicated in the accompanying financial statements, at
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Recent Developments
Entry into a Business Combination Agreement
On
The following description of the Business Combination Agreement does not purport
to be complete and is qualified in its entirety by reference to the Business
Combination Agreement, a copy of which is included as Exhibit 2.1 to our Current
Report on Form 8-K, filed with the
Pursuant to the Business Combination Agreement, at the Closing of the
prospective Transactions contemplated thereunder, and following the Capital
Restructuring (as each such term is defined and described below): (i) Merger Sub
will merge with and into our company, with our company continuing as the
surviving entity and a wholly-owned subsidiary of Holisto (the "Merger"); (ii)
our units, to the extent not previously separated, will be separated into Class
A ordinary shares and warrants; (iii) Class B ordinary shares will be converted
into Moringa Class A Ordinary Shares; (iv) the Class A ordinary shares will be
converted into ordinary shares of Holisto ("Holisto Ordinary Shares") in
accordance with the ratio described below; (v) each Moringa warrant will be
converted into one Holisto warrant (on the same terms contained in the Moringa
warrants, except that each Holisto warrant will represent the right to acquire
Holisto ordinary shares in lieu of Moringa Class A ordinary shares); (vi)
Moringa will become a wholly-owned subsidiary of Holisto; and (vii) Moringa, as
a wholly-owned subsidiary of Holisto, will change its corporate name to
The number of Holisto Ordinary Shares to be received in exchange for each Moringa Class A ordinary share in the prospective Merger will depend on whether the share was issued to the public pursuant to the registration statement relating to Moringa's initial public offering (a "Moringa Public Share") or whether the share was issued other than as part of Holisto's initial public offering:
(i) each Moringa Class A ordinary share issued to our sponsor and the
underwriters for our IPO, including Class A ordinary shares issued upon
conversion of Class B ordinary shares, which represent all of Moringa's
ordinary shares that were not issued to the public in the IPO, will
automatically be exchanged for one Holisto Ordinary Share; and
(ii) each Moringa Public Share that is not redeemed for cash pursuant to our
amended and restated memorandum and articles of association shall
automatically become and be converted into the right to receive a number of
Holisto Ordinary Shares that is equal to the lower of: (A) 1.6 or (B) the
number yielded by the following calculations: (1) first, calculating the sum
of (a) the Post-Redemption SPAC Share Number (as defined below) plus (b)
1,725,000 (which may be increased by mutual written consent of Moringa and
Holisto), and (2) second, dividing the result of the immediately preceding
sub-clause (1) by the Post-Redemption SPAC Share Number (the "Bonus Plan
Adjustment"). The Post-Redemption SPAC Share Number is the aggregate number
of Moringa Public Shares outstanding after giving effect to all redemptions
of Moringa Public Shares. Under this formula, the more Moringa shares that
are redeemed, the greater the number of Holisto Ordinary Shares that will be
issued in respect of one Moringa Public Share. The maximum ratio will be 1.6
Holisto Ordinary Shares for each Moringa Public Share exchanged in the
Merger, which is the ratio if 75% or more of Moringa Public Shares are
redeemed, and the minimum ratio will be 1.15 Holisto Ordinary Shares for
each Moringa Public Share exchanged in the Merger.
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Because more than 75% of the public shares were redeemed in connection with the Extension Meeting, each remaining public share that is not redeemed in connection with the Holisto Business Combination will be entitled to receive 1.6 Holisto Ordinary Shares.
Prior to the Closing, but subject to the completion of the Closing, Holisto will effect a capital restructuring of its outstanding equity securities (the "Capital Restructuring") so that the only class of outstanding equity of Holisto will be Holisto Ordinary Shares (along with certain options and warrants to be rolled over in connection with the Transactions). To effect the Capital Restructuring, (i) warrants to purchase Holisto Ordinary Shares, Ordinary A Shares and Preferred Shares (with certain exceptions) will be automatically exercised in accordance with their terms; (ii) each existing Simple Agreement for Future Equity ("SAFE") that is outstanding for Holisto securities as of the date of the Business Combination Agreement (excluding any New SAFE Agreement) will be converted automatically into Holisto Ordinary Shares in accordance with the terms of the SAFE agreements; (iii) the preferred shares and ordinary A shares of Holisto (including preferred shares and ordinary A shares issuable upon exercise of warrants that are exercised as part of the Capital Restructuring) will be converted into Holisto Ordinary Shares in accordance with their terms with the result that only Holisto Ordinary Shares will be outstanding. Holisto will then effect a share split, to become effective immediately prior to the Closing, and subject to the effectiveness of the Merger, pursuant to which each Holisto Ordinary Share outstanding as of immediately prior to the effective time of the Merger (but after the exercises and conversions described above, and excluding and prior to the issuance of any shares pursuant to a New SAFE Agreement) will be converted into the number of Holisto Ordinary Shares computed by (A) multiplying each such Holisto Ordinary Share by (B) the conversion ratio described below (the "Conversion Ratio"); and (iv) with respect to outstanding options and warrants to purchase Holisto Ordinary Shares that are not exercised as part of the Capital Restructuring, the number of Holisto Ordinary Shares issuable upon exercise of those securities, as well as the exercise price of those securities, will be adjusted in accordance with the Conversion Ratio. The Conversion Ratio is based on a specific Holisto valuation, and specific share price per Holisto Ordinary Share. The Business Combination Agreement does not provide for any purchase price adjustments to the Conversion Ratio as part of the pre-Closing Capital Restructuring.
Contemporaneously with the execution of the Business Combination Agreement,
Holisto, Moringa and an institutional investor (the "Investor") entered into a
securities purchase agreement (the "Securities Purchase Agreement") pursuant to
which Holisto agreed to issue to the Investor and the Investor agreed to
purchase from Holisto contemporaneously with the prospective Closing under the
Business Combination Agreement, on and subject to the terms and conditions of
the Securities Purchase Agreement, Holisto's secured senior convertible note
(the "Investor Note"), and a warrant to purchase Holisto Ordinary Shares (the
"Financing Warrant"). The Securities Purchase Agreement was terminated as of
The consummation of the prospective Business Combination is subject to certain conditions as further described in the Business Combination Agreement. For a more detailed description of the Business Combination Agreement, please see the section titled "Business Combination" in Item 1 of this Annual Report
Extension of Date to Consummate a Business Combination and Sponsor Contribution
On
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On
On
Upon approval of the Extension, and based on the sponsor's commitment to make
the Contributions, we issued to the sponsor a non-interest bearing, unsecured
promissory note in a principal amount of up to
In connection with the Extension Meeting, 8,910,433 Class A Ordinary Shares were
redeemed, leaving 3,069,567 Class A Ordinary Shares- of which 2,589,567 are
public shares- outstanding. As such, approximately 77.5% of the public shares
were redeemed and approximately 22.5% of the public shares remain outstanding.
After the satisfaction of such redemptions, the balance in our trust account was
approximately
Amendments to Holisto Business Combination Agreement
On
Following these amendments, the Holisto Business Combination Agreement contains the following amended terms (which differ from the corresponding terms under the original agreement):
(1) in the event that Holisto executes a financing transaction before the closing
of the Holisto Business Combination, any equity securities of Holisto issued
or issuable pursuant to such financing transactions will not reduce our
security holders' share of the combined company upon consummation of the
Holisto Business Combination;
(2) there are no longer any restrictions on either party soliciting any
alternative offers for transactions with third parties;
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(3) if Holisto seeks financing alternatives and solicits other potential
transactions as alternatives to the Holisto Business Combination, it must
provide us at least 24 hours prior written notice before entering into any
such financing or alternative transaction, and before making a related public
filing; and
(4) there is no closing condition for Holisto to have net tangible assets of at
least $5,000,001 upon the completion of the Holisto Business Combination;
instead, Holisto will need to be approved for listing on Nasdaq and to be in
compliance with any set of Nasdaq Stock Market listing requirements
immediately following the closing.
Under Section 7.1 of the Holisto Business Combination Agreement, as amended,
either Moringa or Holisto may terminate the Agreement upon written notice to the
other party, given that the Holisto Business Combination was not consummated on
or prior to
Holisto Registration Statement
On
Unless specifically stated, this Annual Report does not give effect to the
prospective Holisto Business Combination and does not contain a description of
the risks associated with the prospective Holisto Business Combination. Such
risks and effects relating to the prospective Holisto Business Combination are
described in a registration statement on Form F-4, filed by Holisto with the
Nasdaq Deficiency Notice
On
Results of Operations and Known Trends or Future Events
We have not engaged in any revenue-generating operations to date. Our only
activities since inception have been organizational activities, preparations for
our initial public offering and, subsequent to our initial public offering,
searching for, and due diligence related to, potential target companies with
which to consummate a business combination transaction. We have not and will not
generate any operating revenues until after completion of our initial business
combination. We generate non-operating income in the form of interest income on
investments held in our trust account after our initial public offering. There
has been no significant change in our financial or trading position and no
material adverse change has occurred since the
For the years ended
(i) for the year endedDecember 31, 2022 , gain of (x)$131 thousand due to the change in fair value of our private placement warrants, and (y)$1,686 thousand attributable to interest earned on investments held in our trust account (held for the benefit of the public holders of our Class A ordinary shares), offset, in part, by$1,232 thousand of administrative operating expenses; and (ii) for the year endedDecember 31, 2021 , gain of (x) 182 thousand due to the change in fair value of our private placement warrants, and (y)$6 thousand attributable to interest earned on investments held in our trust account (held for the benefit of the public holders of our Class A ordinary shares), offset, in part, by$944 thousand of administrative operating expenses. 52
Liquidity and Capital Resources
We have incurred and expect to continue to incur significant costs in pursuit of our financing and acquisition plans.
In early 2021, prior to the completion of our IPO, our liquidity needs were
satisfied from the availability of up to
At the time of our IPO in February and
We intend to use substantially all of the investments held in the trust account (after reduction for payments to redeeming shareholders) including any amounts representing interest earned on the trust account (which interest shall be net of taxes payable, and excluding potential fees to be payable to the underwriters for advisory services in connection with our initial business combination transaction), to fund our post- business combination company. We may withdraw from the trust interest to pay taxes, if any. Our annual income tax obligations depend on the amount of interest and other income earned on the amounts held in the trust account. To the extent we are acquired as part of our initial business combination (as is the case in the prospective Business Combination with Holisto), the remaining proceeds held in the trust account (less any amounts paid out to redeeming shareholders) will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
Subsequent to our initial public offering, our working capital needs were
initially satisfied primarily by the
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As of
In order to fund working capital deficiencies or finance transaction costs in
connection with the prospective Business Combination or any other initial
business combination, our sponsor or an affiliate of our sponsor may, but are
not obligated to, loan us additional funds as may be required. If we complete
our initial business combination, we would repay such loaned amounts. In the
event that our initial business combination does not close, we may use a portion
of the working capital held outside of the trust account to repay such loaned
amounts, but no proceeds from our trust account would be used for such
repayment. Up to
We believe that we may need to obtain additional funds in order to satisfy our
liquidity needs in our pursuit of an initial business combination, as we have
exhausted all but
We cannot assure you that we will be able to successfully consummate the prospective Holisto Business Combination or any other initial business combination.
It is likely that we will be obligated to redeem a significant number of additional public shares upon completion of our initial business combination, which will reduce the funds from the trust that become available to the surviving company of the business combination. In that case, Holisto (or any other company with which we combine) will likely need to issue additional securities or incur debt in connection with the business combination. Subject to compliance with applicable securities laws, the surviving public company would only complete such financing simultaneously with the completion of our business combination. In addition, following our initial business combination, if cash on hand is insufficient, the new public company surviving from the business combination may need to obtain additional financing in order to meet its obligations.
If we are unable to complete our initial business combination, we will be forced to cease operations and liquidate our trust account, which liquidation would be less than 12 months after the date of this Annual Report. That factor, together with our need for additional funds in order to fund operations until our initial business combination, raise substantial doubt about our ability to continue as a "going concern". Please see the explanatory paragraph under the heading "Substantial Doubt about the Company's Ability to Continue as a Going Concern" in the opinion of our independent auditor on our audited financial statements, which appears in Item 15 of this Annual Report.
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Cash provided by operating activities
For the year ended
? an increase in cash due to a decrease by
a
profit; and
? a decrease in cash in order to eliminate a non-cash gain of
attributable to the change in fair value of our private placement warrants and
was included in our net profit.
Cash provided by financing activities
For the year ended
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay the Sponsor
a monthly fee of
We engaged
Critical Accounting Estimates
Private Warrant Liability
Please refer to Note 6 - Fair Value Measurements to our financial statements for the method and level 3 inputs used for the measurement of the Private Warrant Liability.
No sensitivity analysis was provided, as the range of reasonably possible inputs would not have a material impact on our condensed financial statements taken as a whole.
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