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 Annual Report on 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 Annual Report on Form
10-K.
Overview
We were incorporated as a Cayman Islands exempted company on June 29, 2021. We
were incorporated for the purpose of effecting a merger, share exchange, asset
acquisition, share purchase, reorganization or similar business combination with
one or more businesses (the "Business Combination"). We have not selected any
specific Business Combination target.
On October 19, 2021, we consummated the IPO of 15,000,000 Units, at a price of
$10.00 per Unit, generating gross proceeds of $150,000,000 and incurring
offering costs of approximately $16,900,000, (of which $5,300,000 was for
deferred underwriting commissions), and approximately $7,987,000 was the excess
of fair value over price paid for Founder Shares sold to the Anchor Investors.
Simultaneously with the closing of the IPO, we consummated the sale of 7,500,000
Private Placement Warrants, at a price of $1.00 per Private Placement Warrant,
in a Private Placement to the Sponsor, generating gross proceeds of $7,500,000.
On October 29, 2021, the underwriter purchased an additional 2,000,000 Units,
generating net proceeds to the Company of approximately $20,000,000 in the
aggregate, and incurring an additional offering costs of $1,100,000 in
connection with the over-allotment (of which $700,000 was for deferred
underwriting fees) and substantially concurrently with the closing of the
partial exercise of the over-allotment option relating to the IPO, the Company
completed the private sale of an aggregate of 600,000 additional Private
Placement Warrants to our Sponsor at a purchase price of $1.00 per Private
Placement Warrant, generating gross proceeds to the Company of $600,000.
Upon the closing of the IPO, the over-allotment and the Private Placement,
approximately $171.7 million ($10.10 per unit) of the net proceeds of the sale
of the Units and the Private Placement Warrants were placed in the Trust Account
and will continue to be invested in United States government treasury bills with
a maturity of 185 days or less or in money market funds investing solely in U.S.
Treasuries and meeting certain conditions under Rule 2a-7 under the Investment
Company Act of 1940, as amended, or the Investment Company Act, as determined by
the Company, until the earlier of: (i) the completion of a Business Combination
and (ii) the distribution of the Trust Account.
We cannot assure you that our plans to complete our Business Combination will be
successful.
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Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from June 29, 2021 (inception) through December 31, 2021
were organizational activities, those necessary to prepare for the Initial
Public Offering and identifying a target company for a Business Combination. We
do not expect to generate any operating revenues until after the completion of
our Business Combination. We generate non-operating income in the form of
interest income on investments held in the Trust Account. 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 period from June 29, 2021 (inception) through December 31, 2021, we had
a net loss of $463,081, which consists of general and administrative expenses of
$464,987, offset by interest income on investments held in the Trust Account of
$1,906.
Liquidity and Capital Resources
We consummated our IPO and consummated the exercise of our over-allotment option
as set forth above and completed the sale of our Private Placements Warrants.
Following the Initial Public Offering, the partial exercise of the
over-allotment option, and the sale of the Private Placements Warrants, a total
of approximately $171.7 million was placed in the Trust Account. We incurred
$16.9 million in Initial Public Offering related costs, of which $5.3 million
was for deferred underwriting commissions, and $7.9 million was the excess of
fair value over price paid for Founder Shares sold to certain qualified
institutional buyers or institutional accredited investors.
For the period from June 29, 2021 (inception) through December 31, 2021, cash
used in operating activities was $990,388. Net loss of $463,081 was affected by
general and administrative expenses paid by the Sponsor in exchange for the
issuance of Founder Shares in the amount of $25,000, general and administrative
expenses paid by related party under the promissory note in the amount of $1,803
and interest earned on investments held in the Trust Account of $1,906. Changes
in operating assets and liabilities used $552,204 of cash for operating
activities.
As of December 31, 2021, we had marketable securities held in the Trust Account
of $171,701,906 (including approximately $2,000 of interest income) consisting
of U.S. Treasury Bills with a maturity of 185 days or less. We may withdraw
interest from the Trust Account to pay taxes, if any. We intend to use
substantially all of the funds held in the Trust Account, including any amounts
representing interest earned on the Trust Account (which interest shall be net
of taxes payable and excluding deferred underwriting commissions), to complete
our Business Combination. To the extent that our share capital 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 target business or businesses, make other
acquisitions and pursue our growth strategies.
As of December 31, 2021, we had cash of $1,342,403. 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, and structure,
negotiate and complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, the Sponsor, or certain of our officers
and directors or their affiliates may, but are not obligated to, loan us funds
as may be required. If we complete a Business Combination, we would repay such
loaned amounts. 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
such loaned amounts but no proceeds from our Trust Account would be used for
such repayment. Up to $1.5 million of such Working Capital Loans may be
convertible into warrants of the post Business Combination entity at a price of
$1.00 per warrant. The warrants would be identical to the Private Placement
Warrants.
We do not 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 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 consummation
of our Business Combination, in which case we may issue additional securities or
incur debt in connection with such Business Combination.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 2021.
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Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities.
The underwriters are entitled to a deferred fee of $0.35 per unit, or
approximately $6.0 million 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 the Company completes a 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:
Class A Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible conversion in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480
"Distinguishing Liabilities from Equity." Ordinary shares subject to mandatory
redemption are classified as a liability instrument and measured at redemption
value. Conditionally redeemable ordinary shares (including ordinary shares that
feature redemption rights that are either within the control of the holder or
subject to redemption upon the occurrence of uncertain events not solely within
our control) are classified as temporary equity. At all other times, ordinary
shares are classified as shareholders' equity. Our Class A ordinary shares
feature certain redemption rights that are considered to be outside of our
control and subject to occurrence of uncertain future events. Accordingly, Class
A ordinary shares subject to possible redemption are presented at redemption
value as temporary equity, outside of the shareholders' equity section of our
balance sheets. Immediately upon the closing of the Initial Public Offering,
the Company recognized the accretion from initial book value to redemption
amount value. The change in the carrying value of redeemable Class A ordinary
shares resulted in charges against additional paid-in capital and accumulated
deficit.
Net Income (Loss) Per Ordinary Share
We have two classes of ordinary shares, which are referred to as Class A
ordinary shares and Class B ordinary shares. Income and losses are shared pro
rata between the two classes of ordinary shares. Net income (loss) per ordinary
share is computed by dividing net income (loss) by the weighted average number
of ordinary shares outstanding during the period. Accretion associated with the
redeemable ordinary shares is excluded from earnings per share as the redemption
value approximates fair value.
Recent Accounting Standards
In August 2020, the FASB issued Accounting Standards Update ("ASU") No. 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): Accounting for
Convertible Instruments and Contracts in an Entity's Own Equity ("ASU 2020-06"),
which simplifies accounting for convertible instruments by removing major
separation models required under current GAAP. The ASU also removes certain
settlement conditions that are required for equity-linked contracts to qualify
for the derivative scope exception, and it simplifies the diluted earnings per
share calculation in certain areas. We adopted ASU 2020-06 on June 29, 2021
(inception) using a modified retrospective method for transition. Adoption of
the ASU did not impact our financial position, results of operations or cash
flows.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our condensed financial statements.
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