References in this report (the "Annual Report") to "HMAC", "we", "our", "us" or
the "Company" refer to Hainan Manaslu Acquisition Corp. References to our
"management" or our "management team" refer to our officers and directors, and
references to the "Sponsor" refer to Bright Winlong LLC. Certain capitalized
terms used but not defined in the below discussion and elsewhere in this Annual
Report have the meanings ascribed to them in the footnotes to the accompanying
financial statements included as part of this Annual Report.
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the audited financial statements
and the notes thereto included in this Annual Report under "Item 8. Financial
Statements and Supplementary Data." Certain information contained in the
discussion and analysis set forth below includes forward-looking statements that
involve risks and uncertainties.
Overview
We are a blank check company formed under the laws of the Cayman Islands on
September 10, 2021 for the purpose of engaging in a merger, share exchange,
asset acquisition, share purchase, recapitalization, reorganization or other
similar business combination, with one or more target businesses or entities.
Our efforts to identify a prospective target business will not be limited to a
particular industry or geographic region, although we intend to focus on
industries that complement the management team's background, and to capitalize
on the ability of the management team and advisor to identify and acquire a
business. However, we will not consummate our initial Business Combination with
an entity or business with China operations consolidated through a VIE
structure.
On August 15, 2022, we consummated our Initial Public Offering of 6,900,000
Public Units, inclusive of the over-allotment option of 900,000 Public Units.
Each Public Unit consisted of one public share, one Public Warrant and one
Public Right. Our Registration Statement on Form S-1 for the Initial Public
Offering was declared effective by the SEC on August 10, 2022. The Public Units
were sold at an offering price of $10.00 per Public Unit, generating gross
proceeds of $69,000,000.
Simultaneously with the closing of the on August 15, 2022, we consummated the
sale of 341,500 Private Placement Units. The Private Placement Units were sold
at a price of $10.00 per Private Placement Unit in the private placement,
generating gross proceeds of $3,415,000.
Transaction costs amounted to $4,258,182, consisting of $1,380,000 of
underwriting commissions, $2,242,500 of deferred underwriting commissions and
$635,682 of other offering costs.
We will have until nine months from the closing of our IPO, or May 14, 2023, to
consummate our initial business combination. However, if we anticipate that we
may not be able to consummate our initial business combination within nine
months, we may, by resolution of our board if requested by our sponsor, extend
the period of time to consummate a business combination up to nine times, each
by an additional one month (for a total of up to 18 months to complete a
business combination), subject to the sponsor depositing additional funds into
the trust account. For more details about our ability to extend time to complete
business combination, see "Item 1. Business - Ability to Extend Time to Complete
Business Combination" on page 15 of this annual report.
If we are unable to complete our initial business combination within such
9-month (or up to 18-month) time 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 (less up to $60,000 of interest to pay
dissolution expenses (which interest shall be net of taxes payable) divided by
the number of then issued and outstanding public shares, which redemption will
completely extinguish public shareholders' rights as shareholders (including the
right to receive further liquidation distributions, if any), subject to
applicable law, and (iii) as promptly as reasonably possible following such
redemption, subject to the approval of our remaining shareholders and our Board
of Directors, liquidate and dissolve, subject in each case to our obligations
under Cayman Islands law to provide for claims of creditors and the requirements
of other applicable law. For more details about our redemption of public shares
and liquidation if no initial business combination, see "Item 1. Business -
Redemption of Public Shares and Liquidation if No Initial Business Combination"
on page 19 of this annual report.
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Proposed Business Combination with Able View
On November 21, 2022, HMAC entered into the Business Combination Agreement with
Able View, Pubco, Merger Sub, and each of the the Sellers. Pursuant to the
Business Combination Agreement, at the Closing, (i) HMAC will merge with and
into Merger Sub, with HMAC continuing as the surviving entity in the merger, as
a result of which: (a) HMAC will become a wholly owned subsidiary of Pubco and
(b) each issued and outstanding security of HMAC immediately prior to the
consummation of the Merger will no longer be outstanding and will automatically
be cancelled, in exchange for the right of the holder thereof to receive a
substantially equivalent security of Pubco, and (ii) Pubco will acquire all of
the issued and outstanding shares of Able View held by the Sellers in exchange
for ordinary shares of Pubco. Able View is a brand management partners of
international beauty and personal care brands in China. For more information
regarding the business of Able View and the proposed Business Combination, see
the Form F-4 initially filed with the SEC on March 17, 2023, as amended from
time to time.
Under the Business Combination Agreement, the aggregate consideration to be paid
to the Sellers is US$400,000,000, which will be paid entirely in shares
comprised of newly issued ordinary shares of Pubco, with each share valued at an
amount equal to (a) (i) the Exchange Consideration, divided by (ii) the total
number of issued and outstanding ordinary shares of Able View, divided by (b)
the price at the Redemption. In addition to the Exchange Consideration, the
Sellers will have the contingent right to receive to an aggregate of 3,200,000
additional Pubco Ordinary Shares as earnout consideration after the Closing as
follows: (i) an aggregate of 1,600,000 additional Pubco Ordinary Shares will be
issued to the Sellers in the event that Pubco reports net revenue in its audited
financial statements for the fiscal year ended December 31, 2023 equal to or in
excess of $170,000,000, and (ii) an aggregate of 1,600,000 additional Pubco
Ordinary Shares will be issued to the Sellers in the event that Pubco reports
net revenue in its audited financial statements for the fiscal year ended
December 31, 2024 equal to or in excess of $200,000,000.
The Business Combination Agreement also calls for additional agreements,
including, among others, the Lock-Up Agreement, Registration Rights Agreement,
Founder Registration Rights Agreement Amendment and Non-Competition Agreements,
as described in this Annual Report under Item 1. Business.
Results of Operations
As of December 31, 2022, the Company had not yet commenced any operations. All
activity from inception up to December 31, 2022 related to our formation and the
initial public offering (the "Initial Public Offering" or "IPO"), which is
described below. Since the Initial Public Offering, our activity has been
limited to the negotiation and consummation of the proposed business combination
with PubCo., and we will not be generating any operating revenues until the
closing and completion of our initial Business Combination. We incur increased
expenses as a result of being a public company (for legal, financial reporting,
accounting and auditing compliance), as well due diligence expenses in
connection with our searches for business combination targets.
For fiscal year ended December 31, 2022, we had a net income of $599,288,
comprising of dividend income earned on investment held in Trust Account of
$795,099, interest income of $6 and other income of $3, partially offset by
general and administrative expenses of $195,820.
For period from September 10, 2021 (inception) through December 31, 2021, we had
a net loss of $42,619, comprising of interest income of $1 and offset by general
and administrative expenses of $42,618.
Liquidity and Capital Resources
As of December 31, 2022, we had $91,780 in its operating bank accounts including
$18,297 restricted cash, $70,830,102 in cash and investments held in the Trust
Account to be used for a Business Combination or to repurchase or redeem its
ordinary share in connection therewith and working capital of approximately
$150,886. Until the consummation of the Initial Public Offering, our only source
of liquidity was an initial purchase of ordinary shares by the Sponsor, Working
Capital Loans provided by the Sponsor under a certain unsecured promissory note
and advances from the Sponsor.
On August 15, 2022, we consummated the Initial Public Offering of 6,900,000
Public Units, including 900,000 Public Units upon the full exercise of the
underwriter's over-allotment option. Each Public Unit consists of one public
share, one Public Warrant and one Public Right. Each Public Warrant entitling
its holder to purchase one ordinary share at a price of $11.50 per share. Each
Right entitles the holder to receive one ordinary share upon consummation of our
Business Combination. The Public Units were sold at an offering price of $10.00
per Public Unit, generating gross proceeds of $69,000,000.
As of August 15, 2022, a total of $70,035,000 of the net proceeds from the
Initial Public Offering and the private placement consummated simultaneously
with the closing of the Initial Public Offering were deposited in the Trust
Account established for the benefit of our public shareholders.
We intend to use substantially all of the net proceeds of the Initial Public
Offering, including the funds held in the Trust Account, to acquire a target
business or businesses and to pay our expenses relating thereto. To the extent
that our capital stock is used in whole or in part as consideration to effect
our Business Combination, the remaining proceeds held in the Trust Account, as
well as any other net proceeds not expended, will be used as working capital to
finance the operations of the target business. Such working capital funds could
be used in a variety of ways including continuing or expanding the target
business' operations, for strategic acquisitions and for marketing, research and
development of existing or new products. Such funds could also be used to repay
any operating expenses or finders' fees which we had incurred prior to the
completion of our Business Combination if the funds available to us outside of
the Trust Account were insufficient to cover such expenses.
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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.
Accordingly, we may not be able to obtain additional financing. If we are unable
to raise additional capital, we may be required to take additional measures to
conserve liquidity, which could include, but not necessarily be limited to,
curtailing operations, suspending the pursuit of a potential transaction, and
reducing overhead expenses. We cannot provide any assurance that new financing
will be available to us on commercially acceptable terms, if at all. In
addition, if we are unable to complete a business combination by May 14, 2023,
our board of directors would proceed to commence a voluntary liquidation and
thereby a formal dissolution of us. There is no assurance that our plans to
consummate a business combination will be successful by May 14, 2023. These
conditions raise substantial doubt about our ability to continue as a going
concern. through one year from the date of these financial statements if a
Business Combination is not consummated. These financial statements do not
include any adjustments relating to the recovery of the recorded assets or the
classification of the liabilities that might be necessary should we be unable to
continue as a going concern.
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 VIEs, 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.
Advances from a related party
As of December 31, 2022 and 2021, the Company had a temporary advance of
$3,003 and $0 from a related party for the payment of costs related to the
Initial Public Offering, respectively. The balance is unsecured, interest-free
and has no fixed terms of repayment.
Registration Rights
Pursuant to a registration rights agreement dated as of August 10, 2022, the
holders of the Founder Shares, Private Placement Units (including securities
contained therein), and units (including securities contained therein) that may
be issued on conversion of Working Capital Loans or extension loans (and) are
entitled to registration rights pursuant to a registration rights agreement. The
holders of these securities are entitled to make up to three demands, excluding
short form demands, that the Company registers such securities. In addition, the
holders have certain "piggy-back" registration rights with respect to
registration statements filed subsequent to the Company's completion of initial
Business Combination and rights to require the Company to register for resale
such securities pursuant to Rule 415 under the Securities Act. The Company will
bear the expenses incurred in connection with the filing of any such
registration statements.
Underwriting Agreement
The underwriters are entitled to a deferred fee of 3.25% of the gross proceeds
of the Initial Public Offering, or $2,242,500 until the closing of the Business
Combination.
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Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with U.S. 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. The Company has identified the following significant accounting
policies:
Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible redemption in accordance
with the guidance in ASC Topic 480 "Distinguishing Liabilities from Equity."
Ordinary shares subject to mandatory redemption (if any) is classified as a
liability instrument and is measured at fair 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 ordinary shares feature certain redemption rights that
are considered to be outside of our control and subject to occurrence of
uncertain future events.
Warrant accounting
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 FASB ASC 480 and 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 our own ordinary shares
and whether the warrant holders could potentially require "net cash settlement"
in a circumstance outside of our 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
equity 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 liabilities 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
comprehensive loss.
As the warrants issued in the Initial Public Offering and private placement meet
the criteria for equity classification under ASC 480, therefore, the warrants
are classified as equity.
Net Income (Loss) Per Share
We calculate net income (loss) per share in accordance with ASC Topic
260, "Earnings per Share." In order to determine the net income (loss)
attributable to both the redeemable shares and non-redeemable shares, we first
considered the undistributed income (loss) allocable to both the redeemable
ordinary shares and non-redeemable ordinary shares and the undistributed loss is
calculated using the total net income (loss) less any dividends paid. We then
allocated the undistributed income (loss) ratably based on the weighted average
number of shares outstanding between the redeemable and non-redeemable ordinary
shares. Any remeasurement of the accretion to redemption value of the ordinary
shares subject to possible redemption was considered to be dividends paid to the
public shareholders. As of December 31, 2022, we has not considered the effect
of the warrants sold in the Initial Public Offering to purchase an aggregate of
6,900,000 shares in the calculation of diluted net income (loss) per share,
since the exercise of the warrants is contingent upon the occurrence of future
events and the inclusion of such warrants would be anti-dilutive and we did not
have any other dilutive securities and other contracts that could, potentially,
be exercised or converted into ordinary share and then share in the earnings of
the Company. As a result, diluted income (loss) per share is the same as basic
income (loss) per share for the periods presented.
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.
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