Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in 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 financial statements and the
notes thereto contained elsewhere in this Report.
Overview
We are a blank check company incorporated in the Cayman Islands on May 27, 2020
formed for the purpose of effecting a business combination with one or more
businesses. While we may pursue a business combination target in any business or
industry, we are focusing our search on a target with operations or prospective
operations in the technology, financial services, or media sectors in Southeast
Asia. We intend to effectuate our business combination using cash derived from
the proceeds of the initial public offering and the sale of the private
placement warrants, our shares, debt or a combination of cash, shares and debt.
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.
Extension Amendment and Redemption
On October 13, 2022, we held the 2022 Shareholders Meeting and approved, among
other things, the Extension Amendment, which extended the date by which we must
consummate a business combination from October 20, 2022 (which was 24 months
from the closing of the initial public offering) to October 20, 2023 (or such
earlier date as determined by the board). In connection with the Extension
Amendment, shareholders holding 44,406,317 public shares exercised their right
to redeem such shares for a pro rata portion of the Trust Account. We paid cash
in the aggregate amount of $447,637,640.94, or approximately $10.08 per share to
redeeming shareholders in the Extension Redemptions.
25
Results of Operations
We have neither engaged in any operations nor generated any operating revenues
to date. Our only activities from inception through December 31, 2022 were
organizational activities and those necessary to prepare for the initial public
offering, described below. 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 year ended December 31, 2022, we had net income of $23,216,044, which
consisted of change in fair value of warrant liabilities of $20,366,950 and
interest earnings on marketable securities held in the Trust Account of
$4,550,111, offset by formation and operating costs of $1,701,017.
For the year ended December 31, 2021, we had net income of $89,047,007, which
consisted of change in fair value of warrant liabilities of $92,635,679 and
interest earnings on marketable securities held in the Trust Account of
$330,450, offset by formation and operating costs of $3,919,122.
Liquidity and Capital Resources
On October 20, 2020, we consummated the initial public offering of 55,000,000
units at a price of $10.00 per units, generating gross proceeds of $550,000,000.
Simultaneously with the closing of the initial public offering, we consummated
the sale of 6,000,000 private placement warrants to the sponsor at a price of
$1.50 per private placement warrant generating gross proceeds of $9,000,000.
On October 29, 2020, we issued an additional 4,499,351 units issued for total
gross proceeds of $44,993,510 in connection with the underwriters' partial
exercise of their over-allotment option. Simultaneously with the partial closing
of the over-allotment option, we also consummated the sale of an additional
449,936 private placement warrants at $1.50 per private placement warrant,
generating total proceeds of $674,902.
Following the initial public offering, the partial exercise of their
over-allotment option and the sale of the private placement warrants, a total of
$594,993,510 was placed in the Trust Account. We incurred $26,628,771 in
transaction costs, including $8,174,902 of underwriting fees net of $2,724,968
reimbursed from the underwriters, $17,849,805 of deferred underwriting fees and
$604,064 of other offering costs.
For the year ended December 31, 2022, cash used in operating activities was
$1,933,708. Net income of $23,216,044 was affected by change in fair value of
warrant liabilities of $20,366,950, and interest earned on marketable securities
held in the Trust Account of $4,550,111. Changes in operating assets and
liabilities used $232,691 of cash from operating activities.
For the year ended December 31, 2021, cash used in operating activities was
$2,258,971. Net income of $89,047,007 was affected by change in fair value of
warrant liabilities of $92,635,679, and interest earned on marketable securities
held in the Trust Account of $330,450. Changes in operating assets and
liabilities provided $1,660,151 of cash from operating activities.
As of December 31, 2022, we had cash and marketable securities held in the Trust
Account of $152,362,993. 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. We may
withdraw interest from the Trust Account to pay taxes, if any. To the extent
that our share capital or debt is used, in whole or in part, as consideration to
complete a 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, 2022, we had cash of $23,399. 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, structure, negotiate and complete a
business combination.
On October 13, 2022 we instructed Continental to liquidate the investments held
in the trust account and instead to hold the funds in the trust account in an
interest-bearing demand deposit account at Morgan Stanley, with Continental
continuing to act as trustee, until the earlier of the consummation of our
initial business combination or our liquidation. As a result, following the
liquidation of investments in the trust account, the remaining proceeds from the
initial public offering and private placement are no longer invested in U.S.
government securities or money market funds.
26
In order to fund working capital deficiencies or finance transaction costs in
connection with a 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 a business combination, we may
repay such loaned amounts out of the proceeds of the Trust Account released to
us. 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 $1,500,000 of such loans may be convertible into warrants, at a
price of $1.50 per warrant, at the option of the lender. The warrants would be
identical to the private placement warrants.
On July 9, 2020, we issued the Promissory Note to our sponsor, pursuant to which
we could borrow up to an aggregate principal amount of $300,000. The Promissory
Note was non-interest bearing and payable on the earlier of (i) December 31,
2020 or (ii) the completion of our initial public offering. As of December 31,
2022 and 2021, there was $300,000 outstanding, which is currently due on demand.
On December 15, 2021, we issued the Second Promissory Note of $500,000 to our
sponsor. The Second Promissory Note is due on the earlier of (i) the date on
which we consummate an initial business combination or (ii) the date that the
winding up of the Company is effective.
On February 8, 2022, we issued the Third Promissory Note to our sponsor of
$500,000. The Third Promissory Note carries no interest and is due on the
earlier of (i) the date on which we consummate an initial business combination
or (ii) the date that the winding up of the Company is effective. Our sponsor
has waived rights to the Trust Account under all notes. As of December 31, 2022
and 2021, there was $1,000,000 and $500,000, respectively, outstanding under the
Second and Third Promissory Notes, respectively.
Going Concern
The Company intends to complete a business combination by the end of the
Combination Period. However, in the absence of a completed business combination,
the Company may require additional capital. If the Company is unable to raise
additional capital, it may be required to take additional measures to conserve
liquidity. The Company cannot provide any assurance that new financing will be
available to it on commercially acceptable terms, if at all.
In connection with the Company's assessment of going concern considerations in
accordance with FASB's ASU Topic 2014-15, "Disclosures of Uncertainties about an
Entity's Ability to Continue as a Going Concern," the Company has until October
20, 2023 to consummate a business combination. It is uncertain that the Company
will be able to consummate a business combination by this time. If a business
combination is not consummated by this date, there will be a mandatory
liquidation and subsequent dissolution of the Company. Management has determined
that the liquidity condition and mandatory liquidation, should a business
combination not occur, and potential subsequent dissolution raises substantial
doubt about the Company's ability to continue as a going concern. No adjustments
have been made to the carrying amounts of assets or liabilities should the
Company be required to liquidate after the end of the Combination Period.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 2022. We do not participate in
transactions that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than described below.
27
The underwriters are entitled to a deferred fee of $0.30 per unit, or
$17,849,805. A portion of such amount, not to exceed 25% of the total amount of
the deferred underwriting commissions held in the Trust Account, may be
re-allocated or paid to affiliated or unaffiliated third parties that assist in
consummating a business combination. The election to re-allocate or make any
such payments to affiliated or unaffiliated third parties will be solely at the
discretion of our management team, and such unaffiliated third parties will be
selected by the management team in their sole and absolute discretion. The
deferred fee will become 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. We may, in its sole
discretion, pay up to an additional 1.25% in the aggregate of deferred
underwriting commissions to one or more of the underwriters based on the
underwriters' performance during the business combination process.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with GAAP 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:
Warrant Liability
The Company accounts 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 FASB ASC Topic 480,
Distinguishing Liabilities from Equity ("ASC 480") and FASB 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 and whether the
warrant holders could potentially require "net cash settlement" in a
circumstance outside of the Company's control, 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 as a liability 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 statements of operations. The public warrants for periods where no
observable traded price was available were valued using a Monte Carlo
Simulation. The private placement warrants are valued using a Modified Black
Scholes Model.
Class A Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible redemption in accordance
with the guidance in ASC 480 "Distinguishing Liabilities from Equity." Class A
Ordinary shares subject to mandatory redemption is classified as a liability
instrument and is measured at fair value. Conditionally redeemable ordinary
shares (including ordinary shares that features redemption rights that is either
within the control of the holder or subject to redemption upon the occurrence of
uncertain events not solely within our control) is classified as temporary
equity. At all other times, ordinary shares are classified as shareholders'
deficit. 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 is presented as temporary equity, outside of the shareholders'
deficit section of our balance sheets.
Net Income per Ordinary Share
Net income per ordinary share is computed by dividing net income by the weighted
average number of ordinary share outstanding for the period. The Company applies
the two-class method in calculating earnings per share. Accretion associated
with the redeemable Class A ordinary shares are excluded from earnings per share
as the redemption value approximates fair value.
28
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board issued Accounting
Standards Update ("ASU") Topic 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 effective January 1, 2022 and should be applied on a full or
modified retrospective basis, with early adoption permitted beginning on January
1, 2021. The Company is currently assessing the impact, if any, that ASU 2020-06
would have on its 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 financial statements.
Factors That May Adversely Affect our Results of Operations
Our results of operations and our ability to complete an initial business
combination may be adversely affected by various factors that could cause
economic uncertainty and volatility in the financial markets, many of which are
beyond our control. Our business could be impacted by, among other things,
downturns in the financial markets or in economic conditions, increases in oil
prices, inflation, increases in interest rates, supply chain disruptions,
declines in consumer confidence and spending, the ongoing effects of the
COVID-19 pandemic, including resurgences and the emergence of new variants, and
geopolitical instability, such as the military conflict in Ukraine. We cannot at
this time fully predict the likelihood of one or more of the above events, their
duration or magnitude or the extent to which they may negatively impact our
business and our ability to complete an initial business combination.
© Edgar Online, source Glimpses