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.
Special Note Regarding Forward-Looking Statements
This Annual Report includes "forward-looking statements" 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 Annual 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" and variations 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 "Cautionary Note Regarding
Forward-Looking Statements," "Summary of Risk Factors," "Item 1A. Risk Factors"
and elsewhere in this 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 incorporated on March 1, 2021 as a Cayman Islands
exempted company for the purpose of effecting a merger, share exchange, asset
acquisition, share purchase, reorganization or similar business combination with
one or more businesses or entities. We have not selected any business
combination target and we have not, nor has anyone on our behalf, initiated any
substantive discussions, directly or indirectly, with any business combination
target. We intend to effectuate our initial business combination using cash from
the proceeds of our Public Offering and the sale of the Private Placement
Warrants, the proceeds of the sale of our shares in connection with our initial
business combination pursuant to the forward purchase agreements (or backstop
agreements we may enter into 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 or other sources.
The registration statement for our Public Offering was declared effective on
October 6, 2021. On October 12, 2021, we consummated the Public Offering of
23,000,000 Units, including 3,000,000 Units that were issued pursuant to the
underwriters' exercise of their over-allotment option in full, at $10.00 per
Unit, generating total gross proceeds of $230,000,000.
Simultaneously with the closing of the Public Offering, we consummated the sale
of 7,150,000 Private Placement Warrants at a price of $1.00 per Private
Placement Warrant in a private placement to our sponsor, Cantor and Odeon
generating gross proceeds of $7,150,000.
Upon the closing of the Public Offering on October 12, 2021, an amount of
$231,150,000 from the net proceeds of the sale of the Units in the Public
Offering and the sale of the Private Placement Warrants was placed in a the
Trust Account and invested only in U.S. government treasury obligations with
maturities of 185 days or less or in money market funds meeting certain
conditions under Rule 2a-7 under the Investment Company Act which invest only in
direct U.S. government treasury obligations, until the earliest of: (i) the
completion of the initial business combination; (ii) the redemption of any
Public Shares properly tendered in connection with a shareholder vote to amend
the Memorandum and Articles of Association to modify the substance or timing of
our obligation to redeem 100% of the Public Shares if we do not complete the
initial business combination by May 12, 2023, since first month of extension has
been exercised, or, if all extensions are exercised, by April 12, 2024; and
(iii) absent an initial business combination by May 12, 2023, since first month
of extension has been exercised, or, if all extensions are exercised, by April
12, 2024), the return of the funds held in the Trust Account to the public
shareholders as part of the redemption of the Public Shares.
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Capital Resources and Going Concern Consideration
Our liquidity needs to date have been satisfied through the payment of $25,000
from our sponsor to cover for certain offering expenses on behalf of us in
exchange for issuance of Founder Shares, a loan under the promissory note in the
amount of $250,000 and advances from our sponsor to cover for certain expenses
on our behalf, and net proceeds from the consummation of the Public Offering and
the Private Placement held outside of the Trust Account. We fully repaid the
promissory note balance on October 12, 2021. We also paid for certain expenses
on behalf of a related party. As of December 31, 2021, we had approximately
$3,500 in amount due from related party outstanding, which was fully paid in
April 2022. Subsequently, we borrowed an additional amount of approximately
$2,800 and fully settled the balance in July 2022.
As of December 31, 2022, we had approximately $70,000 in cash held outside of
the Trust Account and a working capital deficit of approximately $719,000.
For the year ended December 31, 2022, net cash used in operating activities was
approximately $559,000 and net cash provided by financing activities was
approximately $17,000. Net income of approximately $9.3 million was affected by
change in fair value of derivative warrant liabilities of approximately $7.5
million, income from investments held in Trust Account of approximately $3.2
million and changes in operating assets and liabilities used approximately
$883,000 of cash for operating activities. Cash provided by financing activities
resulted from the proceeds from subscription receivable of approximately $20,000
and repayment from advance to related party (net) of approximately $3,000,
partially offset by the payment for offering costs of approximately $6,000.
For the period from March 1, 2021 (inception) through December 31, 2021, net
cash used in operating activities was approximately $710,000, net cash provided
used in investing activities was approximately $231.1 million and net cash
provided by financing activities was approximately $232.5 million. Net income
of approximately $9.3 million was affected by change in fair value of derivative
warrant liabilities of approximately $13.2 million, income from investments held
in Trust Account of approximately $2,000, loss on sale of Private Placement
Warrants of approximately $1.1 million, allocated offering costs of
approximately $2.1 million, and changes in operating assets and liabilities used
approximately 95,000 of cash for operating activities. Cash used in investing
activities was solely for depository in Trust Account. Cash provided by
financing activities resulted from the proceeds from issuance of Class B
ordinary shares to our sponsor of $25,000, proceeds received under promissory
note from our sponsor of $250,000, proceeds from the Public Offering (net of
underwriter's discount) of approximately $226.0 million and proceeds from sale
of Private Placement Warrants of approximately $7.1 million, partially offset by
repayment of promissory note to our sponsor of $250,000, advance to our related
party of approximately $3,000 and payment for offering costs of approximately
$672,000.
As of December 31, 2022, we had cash held in the Trust Account of approximately
$234.4 million. 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 initial business combination. To the extent that
our equity or debt is used, in whole or in part, as consideration to complete
our initial 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.
We have incurred and expect to continue to incur significant costs in pursuit of
our acquisition plans. In connection with our assessment of going concern
considerations in accordance with FASB ASC Topic 205-40, "Presentation of
Financial Statements - Going Concern," we have until May 12, 2023, since first
month of extension has been exercised, or, if all extensions are exercised, by
April 12, 2024, to consummate a Business Combination. It is uncertain that we
will be able to consummate a business combination by this time, and if a
business combination is not consummated by this date, then there will be a
mandatory liquidation and subsequent dissolution of our company.
Our management has determined that the liquidity condition and mandatory
liquidation, should a business combination not occur, and potential subsequent
dissolution raises substantial doubt about our ability to continue as a going
concern for a period of time within one year after the date that the financial
statements are issued.
We plan to address this uncertainty through the initial business combination.
There is no assurance that our plans to consummate the initial business
combination will be successful or successful by May 12, 2023 (as may be extended
by the Board in one-month increments up until April 12, 2024). The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
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Risks and Uncertainties
Our management continues to evaluate the impact of the COVID-19 pandemic and has
concluded that while it is reasonably possible that the virus could have a
negative effect on our financial position, results of its operations, and/or
search for a target company, the specific impact is not readily determinable as
of the date of the financial statements. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
In February 2022, the Russian Federation invaded Ukraine. As a result of this
action, various nations, including the United States, have instituted economic
sanctions against the Russian Federation. Further, the impact of this action and
related sanctions on the world economy are not determinable as of the date of
these financial statements. The specific impact on our financial condition,
results of operations, and cash flows is also not determinable as of the date of
these financial statements.
Results of Operations
Our entire activity since inception up to December 31, 2022 related to our
formation, the preparation for the Public Offering, and since the closing of the
Public Offering, the search for a prospective initial business combination
target. We will not be generating any operating revenues until the closing and
completion of our initial business combination, at the earliest. We will
generate non-operating income in the form of interest income from the amount
held in the Trust Account.
For the year ended December 31, 2022, we had net income of approximately $9.3
million, which consisted of a gain of approximately $7.5 million from the change
in fair value of derivative warrant liabilities and approximately $3.2 million
in income from investments held in Trust Account and interest income on
operating account, which were partially offset by approximately $1.4 million in
operating and formation expenses (of which approximately $103,000 was for
related party administrative fees).
For the period from March 1, 2021 (inception) through December 31, 2021, we had
net income of approximately $9.3 million, which resulted from a gain on change
in the fair value of warrant liabilities of approximately $13.2 million, and
approximately $1,500 in income from investments held in Trust Account and
interest income on operating account, partially offset by operating and
formation costs of approximately $616,000, expensed offering costs of
approximately $2.1 million, and a loss on the sale of private placement warrants
of approximately $1.1 million.
Off-Balance Sheet Arrangements
As of December 31, 2022, we did not have any off-balance sheet arrangements.
Contractual Obligations
Registration Rights Agreement
The holders of the Founder Shares, Private Placement Warrants and 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 and warrants
issued upon conversion of working capital loans) are entitled to registration
rights pursuant to a registration rights agreement signed on the effective date
of the registration statement for our Initial Public Offering. 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 consummation of a business combination. We have granted Cantor and
Odeon or their designees or affiliates certain registration rights relating to
these securities. The underwriters may not exercise their demand and "piggyback"
registration rights after five and seven years, respectively, after the
effective date of the registration statement relating to the Public Offering and
may not exercise demand rights on more than one occasion. We bear the expenses
incurred in connection with the filing of any such registration statements.
Underwriters Agreement
In connection with the Public Offering, the underwriters were granted a 45-day
option from the date of the prospectus to purchase up to 3,000,000 additional
Units to cover over-allotments. On October 12, 2021, the underwriters fully
exercised the over-allotment option to purchase an additional 3,000,000 Units at
an offering price of $10.00 per Unit, generating additional gross proceeds of
$30,000,000 to us.
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The underwriters were paid a cash underwriting discount of $0.20 per Unit
(excluding over-allotment Units) in the Public Offering, or $4,000,000 in the
aggregate upon the closing of the Public Offering. In addition, $0.50 per Unit
(excluding over-allotment Units), and $0.70 per over-allotment Unit (totaling
$12,100,000 in aggregate) is payable to the underwriters for deferred
underwriting commission. The deferred fee is 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.
Administrative Support Agreement
On October 6, 2021, we entered into an agreement with IX Acquisition Services
LLC, an entity owned by an affiliate of our Sponsor, to pay a total of up to
$10,000 per month for office space, secretarial and administrative services.
Upon completion of a business combination or our liquidation, we will cease
paying these monthly fees. During the year ended December 31, 2022 and for the
period from March 1, 2021 (inception) through December 31, 2021, we incurred
expenses in connection with such services of approximately $103,000 and
approximately $26,000, respectively, included within operating and formation
expenses on the accompanying statements of operations.
Critical Accounting Policies and Estimates
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
All of the 23,000,000 Class A ordinary shares sold as part of the Units in the
Public Offering and subsequent full exercise of the underwriters' over-allotment
option contain a redemption feature which allows for the redemption of such
Public Shares in connection with our liquidation, if there is a shareholder vote
or tender offer in connection with the business combination and in connection
with certain amendments to the Amended and Restated Memorandum and Articles of
Association. In accordance with SEC and its staff's guidance on redeemable
equity instruments, which has been codified in ASC 480, redemption provisions
not solely within the control of our company require ordinary shares subject to
redemption to be classified outside of permanent equity. Therefore, all Public
Shares have been classified outside of permanent equity.
We recognize changes in redemption value immediately as they occur and adjusts
the carrying value of redeemable ordinary shares to equal the redemption value
at the end of each reporting period. Increases or decreases in the carrying
amount of redeemable ordinary shares are affected by charges against additional
paid in capital and accumulated deficit.
Net Income Per Ordinary Share
We comply with accounting and disclosure requirements of FASB ASC Topic 260,
"Earnings Per Share." We have two classes of 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 shares.
Net income per ordinary share is computed by dividing net income by the
weighted-average number of ordinary shares outstanding during the period.
Remeasurement associated with the redeemable Class A ordinary shares is excluded
from net income per share as the redemption value approximates fair value.
Therefore, the income per share calculation allocates income shared pro rata
between Class A and Class B ordinary shares. We have not considered the effect
of the exercise of the Public Warrants and Private Placement Warrants (as
defined in Note 4) to purchase an aggregate of 18,650,000 shares in the
calculation of diluted income per share, since the exercise of the warrants is
contingent upon the occurrence of future events.
Derivative Financial Instruments
We evaluate our financial instruments to determine if such instruments are
derivatives or contain features that qualify as embedded derivatives in
accordance with ASC Topic 815, "Derivatives and Hedging" ("ASC 815"). Derivative
instruments are initially recorded at fair value on the grant date and re-valued
at each reporting date, with changes in the fair value reported in the
statements of operations. The classification of derivative instruments,
including whether such instruments should be recorded as liabilities or as
equity, is re-
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assessed at the end of each reporting period. Derivative warrant liabilities are
classified as non-current liabilities as their liquidation is not reasonably
expected to require the use of current assets or require the creation of current
liabilities.
We evaluated the Public Warrants and Private Placement Warrants in accordance
with ASC 480 and ASC 815 and concluded that a provision in the warrant agreement
related to certain tender or exchange offers precludes the Public Warrants and
Private Placement Warrants from being accounted for as components of equity. As
the Public Warrants and Private Placement Warrants meet the definition of a
derivative as contemplated in ASC 815, they were recorded as derivative
liabilities on the balance sheets and measured at fair value at inception (on
the date of the Public Offering) and at each reporting date in accordance with
ASC 820, "Fair Value Measurement" ("ASC 820"), with changes in fair value
recognized in the statements of operations in the period of change. The
determination of fair value for the warrant liabilities represents a significant
estimate within the financial statements.
Recent Accounting Pronouncements
Management does not believe there are any material recently issued, but not yet
effective, accounting standards that, if currently adopted, would have a
material effect on our financial statements.
Recent Developments
Extension
On April 10, 2023 the Company received shareholder approval to amend its
Memorandum and Articles of Association to extend the date by which it must
complete an initial business combination from April 12, 2023 to May 12, 2023
(the "Extension"). The shareholders also approved a proposal (the "Redemption
Limitation Amendment Proposal") to amend the Memorandum and Articles of
Association to eliminate (i) the limitation that the Company may not redeem
public shares in an amount that would cause the Company's net tangible assets to
be less than $5,000,001 and (ii) the limitation that the Company shall not
consummate a business combination unless the Company has net tangible assets of
at least $5,000,001 immediately prior to, or upon consummation of, or any
greater net tangible asset or cash requirement that may be contained in the
agreement relating to, such business combination. The shareholders also approved
a proposal (the "Founder Share Amendment Proposal") to provide for the right of
a holder of the Company's Class B ordinary shares, par value $0.0001 per share,
to convert into Class A ordinary shares, par value $0.0001 per share, on a
one-for-one basis at any time and from time to time prior to the closing of a
business combination at the election of the holder. In connection with the vote
to approve the Extension, the holders of 18,336,279 Class A ordinary shares
properly exercised their right to redeem their shares for cash at a redemption
price of approximately $10.30 per share, for an aggregate redemption amount of
approximately $189 million. After the satisfaction of such redemptions, the
balance in the Company's Trust Account is approximately $48 million.
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