Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q (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 unaudited condensed financial statements and the notes thereto included in this Report under “Item 1. Financial Statements.”
Overview
We are a blank check company incorporated in the Cayman Islands on May 3, 2021 formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or other similar Business Combination with one or more businesses. We intend to effectuate our initial Business Combination using cash derived from the proceeds of the Initial Public Offering and the sale of the Placement Warrants, our shares, debt or a combination of cash, shares and debt. We are not limited to a particular industry or sector for purposes of completing a Business Combination although we previously focused our search within the technology industry along the trendlines set by a new wave of cloud native companies that combine artificial intelligence, intelligent automation and proprietary access to data to deliver actionable insights for enterprise businesses. As previously disclosed by the Company, the Board has determined, for commercial and other reasons, to change the focus of the Company’s search for a Business Combination. The Company is currently focusing its search within the life sciences industry. We are an early stage and emerging growth company and, as such, we are subject to all of the risks associated with early stage and emerging growth companies.
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.
Recent Developments
On April 20, 2023, we held the Extension Meeting at which our shareholders approved an amendment to the our Amended and Restated Memorandum and Articles of Association to (i) extend the date by which we must consummate our initial Business Combination from April 21, 2023 to October 21, 2023 (or such earlier date as determined by the Board) and (ii) provide for the right of a holder of Class B ordinary shares to convert such shares into Class A ordinary shares on a one-for-one basis at any time prior to the closing of the initial Business Combination at the option of such holder of Class B ordinary shares. The Company filed the Charter Amendment with the Secretary of State of the State of Delaware on April 21, 2023.
In connection with the vote to approve the Extension Amendment Proposal, holders of 23,233,981 Class A ordinary shares properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.49 per share, for an aggregate redemption amount of approximately $243,620,483.
Following the approval of the Extension Amendment Proposal, on April 20, 2023, the Company issued the Extension Note in the aggregate principal amount of up to $900,000 to the Sponsor, pursuant to which the Sponsor agreed to loan to the Company up to $900,000 to deposit into the Trust Account for the Public Shares that were not redeemed in connection with the extension of the Company’s termination date from April 21, 2023 to October 21, 2023 (or such earlier date as determined by the Board).
The Company will deposit $150,000 into the Trust Account for each calendar month (commencing on April 21, 2023 and ending on the 21st day of each subsequent month), or portion thereof, that is needed by the Company to complete an initial Business Combination until October 21, 2023, and such amount will be distributed either to: (i) all of the holders of Public Shares upon the Company’s liquidation or (ii) holders of Public Shares who elect to have their shares redeemed in connection with the consummation of the initial Business Combination. $150,000 was deposited into the Trust Account on April 21, 2023.
The Extension Note bears no interest and is repayable in full upon the date of the consummation of the initial Business Combination or the liquidation of the Company. Notwithstanding, as the Sponsor’s election at any time prior to payment in full of the principal balance of the Extension Note, the Sponsor may elect to convert the unpaid principal balance of this Extension Note into that number of units, each unit consisting of one Class A ordinary share of the Company and one half of one warrant, each whole warrant exercisable for one Class A ordinary share of the Company, equal to: (x) the portion of the principal amount of this Extension Note being converted pursuant to the Extension Note, divided by (y) $10.00, rounded up to the nearest whole number of units.
The foregoing description is qualified in its entirety by reference to the Extension Note, a copy of which is included as Exhibit 10.1 to this Report and is incorporated herein by reference.
In addition, on April 21, 2023, we issued an aggregate of 7,499,999 Class A ordinary shares to the Sponsor upon the conversion of an equal number of the Company’s Class B ordinary share held by the Sponsor. The 7,499,999 Class A ordinary shares issued in connection with the Conversion are subject to the same restrictions as applied to the Class B ordinary shares before the Conversion, including, among others, certain transfer restrictions, waiver of redemption rights and the obligation to vote in favor of an initial Business Combination as described in the prospectus for the Initial Public Offering.
Results of Operations
We have neither engaged in any operations nor generated any operating revenues to date. Our only activities from inception through March 31, 2023 were organizational activities and those necessary to prepare for the Initial Public Offering, described below, and following the Initial Public Offering, identifying a target company for a Business Combination. 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 three months ended March 31, 2023, we had a net income of $3,045,536, which consisted of interest earned on investment held in the Trust Account of $3,339,414, offset by operating expense of $293,878.
For the three months ended March 31, 2022, we had a net loss of $147,258, which consisted of operating expenses of $213,017, offset by interest earned on investment held in the Trust Account of $65,759.
Liquidity and Capital Resources
On October 21, 2021, we consummated our initial public offering of 30,000,000 units, including 3,900,000 Units issued pursuant to the partial exercise of the underwriters’ over-allotment option. Each Unit consists of one Public Share and one-half of one redeemable Public Warrant, with each whole warrant entitling the holder thereof to purchase one Class A ordinary share for $11.50 per share. The Units were sold at a price of $10.00 per Unit, generating gross proceeds of $300,000,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 700,000 Placement Units at a price of $10.00 per Placement Unit in a private placement to our Sponsor and the representatives of the underwriters, generating gross proceeds of $7,000,000.
Following the Initial Public Offering and the sale of the Placement Units and the Sponsor Loan from the Sponsor to the Company of $6,220,000 as of the closing date of the Initial Public Offering, a total of $306,000,000 was placed in the Trust Account. We incurred transaction costs of $17,078,457, consisting of $5,220,000 of underwriting fees, and $11,280,000 of deferred underwriting fees and $578,457 of other offering costs.
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