The following discussion and analysis should be read in conjunction with the financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements reflecting our current expectations, estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the sections entitled "Risk Factors" and "Forward-Looking Statements" appearing elsewhere in this Annual Report on Form 10-K.
Overview
We are a blank check company incorporated on
OnJuly 30, 2021 , we consummated our IPO of 25,000,000 Units, at$10.00 per Unit, generating gross proceeds of$250.0 million , and incurring offering costs of approximately$13.75 million , of which$8.75 million was for deferred underwriting commissions (see Note 4 to our financial statements included in this Annual Report on Form 10-K for the year endedDecember 31, 2021 ). We granted the underwriter a 45-day option to purchase up to an additional 3,750,000 Units at the IPO price to cover over-allotments, if any. OnAugust 3, 2021 , the underwriters partially exercised the over-allotment option, and the closing of the issuance and sale of the additional 3,250,000 Over-Allotment Units occurred onAugust 5, 2021 . The issuance by the Company of the Over-Allotment Units at a price of$10.00 per unit resulted in total gross proceeds of approximately$32.5 million . Simultaneously with the closing of the IPO, we consummated the Private Placement of 800,000 units, at a price of$10.00 per Private Placement Unit with the Sponsor, generating gross proceeds of$8.0 million (see Note 4 to our financial statements included in this Annual Report on Form 10-K for the year endedDecember 31, 2021 ). Simultaneously with the issuance and sale of the Over-Allotment Units, the Company consummated the private placement with the Sponsor of 65,000 Additional Private Placement Units, generating total proceeds of$650,000 . Upon the closing of the IPO and the Private Placement, approximately$250.0 million ($10.00 per Unit) of the net proceeds of the IPO and certain of the proceeds of the Private Placement were placed in a Trust Account, located inthe United States withContinental Stock Transfer & Trust Company acting as trustee, and will be invested only inUnited States "government securities" within the meaning of Section 2(a)(16) of the Investment Company Act, having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invests only in directU.S. government treasury obligations, as determined by us, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below. In addition, a certain anchor investor advanced an aggregate amount of approximately$500,681 to the Company to cover the purchase of Private Placement Units. InApril 2021 , the Company repaid$681 to the anchor investor. Upon the closing of the IPO, the remaining advance of$500,000 was applied to the purchase of the Private Placement Units which the Company has since repaid.
Our management has broad discretion with respect to the specific application of the net proceeds of the IPO and the sale of Private Placement Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that we will be able to complete a Business Combination successfully.
We must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on
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the interest earned on the Trust Account) at the time of the signing of the agreement to enter into the initial Business Combination. However, we will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the prospective partner company or otherwise acquires a controlling interest in the prospective party company sufficient for it not to be required to register as an investment company under the Investment Company Act.
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 income taxes, if any (less up to$100,000 of interest to pay dissolution expenses) divided by the number of the then-outstanding Public Shares, which redemption will completely extinguish Public Shareholders' rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii), to our obligations underCayman Islands law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to consummate a Business Combination within the Combination Period.
As of
Results of Operations
Our entire activity since inception up to
For the period from
Liquidity and Capital Resources
For the period fromFebruary 5, 2021 (inception) throughDecember 31, 2021 , net cash used in operating activities was$1,103,298 , which was due to the change in fair value of the warrant liability of$2,807,641 , changes in working capital of$341,664 , a change in the fair value of the over-allotment option liability of$69,334 , a gain on the expiration of the over-allotment liability of$67,345 , a gain on the forfeiture of warrants accounted for as liabilities of$45,834 , and interest and dividend income on the investments held in the Trust Account of$8,321 , partially offset by a non-cash loss on the sale of warrants of$1,213,542 and expensed offering costs added back to net income of$540,944 , and net income of$482,355 .
For the period from
For the period from
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from an anchor investor of
As of
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 and deferred underwriting commissions), to complete our initial business combination. We may withdraw interest income (if any) to pay income taxes, if any. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the Trust Account. We expect the interest income earned on the amount in the Trust Account (if any) will be sufficient to pay our income taxes. 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 prospective partner, make other acquisitions and pursue our growth strategies.
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. If we complete our initial
business combination, we may 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 the Trust Account to repay such loaned amounts but no
proceeds from our Trust Account would be used for such repayment. Up to
We do not believe we will need to raise additional funds following the IPO in order to meet the expenditures required for operating our business prior to our initial business combination. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial 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 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. In addition, we intend to target businesses larger than we could acquire with the net proceeds of our IPO and the sale of the private placement warrants and may as a result be required to seek additional financing to complete such proposed initial business combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations. Off-Balance Sheet Arrangements 55
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We did not have any off-balance sheet arrangements as ofDecember 31, 2021 .
Contractual Obligations
OnFebruary 5, 2021 , the Company issued an unsecured promissory note to an affiliate of the Sponsor (the "Promissory Note"), pursuant to which the Company could borrow up to an aggregate of$300,000 to cover expenses related to the IPO. The Promissory Note was non-interest bearing and was payable on the earlier of (i)December 31, 2021 or (ii) the consummation of the IPO. OnAugust 6, 2021 , the Company repaid the outstanding balance under the Promissory Note.
Underwriting Agreement
We granted the underwriters a 45-day option to purchase up to 3,750,000 additional Units to cover over-allotments at the IPO price, less the underwriting discounts and commissions. OnAugust 5, 2021 , the underwriters partially exercised the over-allotment option to purchase an additional 3,250,000 Units at an offering price of$10.00 per Unit for an aggregate purchase price of$32,500,000 . OnSeptember 11, 2021 , the remaining option expired.
The underwriters were paid a cash underwriting discount of
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in
Net Income Per Ordinary Share
Net income per ordinary share is computed by dividing net income by the weighted-average number of ordinary shares outstanding during the period. Accretion associated with the redeemable Class A ordinary shares is excluded from net income per share as the redemption value approximates fair value. Therefore, the loss per share calculation allocates losses shared pro rata between Class A and Class B ordinary shares. As a result, the calculated net income per share is the same for Class A and Class B ordinary shares. Class B ordinary shares subject to forfeiture are included in the calculation of basic income per share as of the date that the forfeiture contingency has lapsed. Class B ordinary shares subject to forfeiture are included in the calculation of diluted income per share as of the beginning of the interim period in which the forfeiture contingency lapsed. We have not considered the effect of the warrants sold in the IPO, Private Placement, and warrants included in the founder units issued to our Sponsor to purchase an aggregate of 12,059,166 shares in the calculation of diluted loss per share, since the exercise of the warrants is contingent upon the occurrence of future events.
Class A Ordinary Shares Subject to Possible Redemption
All of the 28,250,000 Class A ordinary shares sold as part of the units in the IPO contain a redemption feature which allows for the redemption of such Public Shares in connection with the 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 Company's amended and restated memorandum and articles of association. In accordance withSEC and its staff's guidance on redeemable equity instruments, which has been codified in Accounting Standards Codification ("ASC") 480, Distinguishing Liabilities from Equity ("ASC 480"), redemption provisions not solely within our control require ordinary shares subject to redemption to be classified outside of permanent equity. Therefore, all Public Shares have been classified outside of permanent equity. 56
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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.
Warrant Liabilities
We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant's specific terms and applicable authoritative guidance in ASC 480 and ASC Topic 815, Derivatives and Hedging ("ASC 815"). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company's own ordinary shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statement of operations. The initial fair value of the Public Warrants was estimated using a binomial/lattice model and the fair value of the Founder Warrants and Private Placement Warrants was estimated using a Black-Scholes Option Pricing Model.
Recent Accounting Standards
InAugust 2020 , theFinancial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 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) ("ASU 2020-06") to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity's own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity's own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effectiveJanuary 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning onJanuary 1 , 2021.We adopted ASU 2020-06 onFebruary 5, 2021 (inception). Adoption of the ASU did not impact our financial position, results of operations or cash flows.
Our management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying financial statements.
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