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. Certain information contained in the discussion and analysis set forth below includes forward-looking
statements that involve risks and uncertainties.
We are a blank check company
incorporated as a Delaware corporation on March 4, 2021 and formed for the purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We have not selected any specific
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 this offering
and the private placement of the private placement warrants, the proceeds of the sale of our shares in connection with our initial business
combination and (pursuant to backstop agreements we may enter into following the consummation of this offering 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.
Our sponsor is controlled
by Jason Wong.
The issuance of additional
shares in connection with an initial business combination to the owners of the target or other investors:
Similarly, if we issue debt
securities or otherwise incur significant debt to bank or other lenders or the owners of a target, it could result in:
Liquidity and Capital Resources
As of December 31, 2021, we
had cash of $1,365,181 and investments held in the Trust Account of $104,535,351. Until the consummation of the initial public offering,
the only source of liquidity was an initial purchase of ordinary shares by our Sponsor, monies loaned by the Sponsor under a certain
unsecured promissory note and advances from our Sponsor. On December 13, 2021, we drew $134,885 against the promissory note and the entire
balance was repaid on December 16, 2021.
On December 13, 2021, we consummated
the Initial Public Offering of 10,350,000 ordinary units (the “Public Units”), which includes the full exercise by the underwriter
of its over-allotment option in the amount of 1,350,000 Public Units, at $10.00 per Public Unit, generating gross proceeds of $103,500,000.
Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 4,721,250 Warrants (the “Private Warrants”)
at a price of $1.00 per warrant in a private placement to Soul Venture Partners LLC (the “Sponsor”), generating gross proceeds
of $4,721,250.
Transaction costs amounted
to $4,832,697, consisting of $1,811,250 of underwriting fees, $2,587,500 of deferred underwriting fees and $433,947 of other offering
costs. In addition, at December 13, 2021, cash of $1,498,937 were held outside of the Trust Account and is available for the payment
of offering costs and for working capital purposes net with $104,535,000 transferred to the Trust Account on December 13, 2021.
We intend to use substantially
all of the funds held in the trust account, including any amounts representing interest earned on the trust account to complete our initial
business combination (less deferred underwriting commissions). We may withdraw interest to pay taxes. We estimate our annual franchise
tax obligations, based on the number of shares of our common stock authorized and outstanding after the completion of this offering,
to be $200,000, which is the maximum amount of annual franchise taxes payable by us as a Delaware corporation per annum, which we may
pay from funds from this offering held outside of the trust account or from interest earned on the funds held in our trust account and
released to us for this purpose. 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 earned on the amount in the trust account will be sufficient to pay our income
and franchise taxes. To the extent that our capital stock 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.
Prior to the completion of
our initial business combination, we will have available to us the approximately $1,100,000 (the amount will remain the same if the over-allotment
option is exercised in full) of proceeds held outside the trust account. We will use these funds 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 an initial business combination.
We do not believe we will
need to raise additional funds following this offering in order to meet the expenditures required for operating our business. 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 initial business combination
or because we become obligated to redeem a significant number of our public shares upon completion of our initial 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 this offering and the sale of the private 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 initial 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 initial business combination, if cash on hand is insufficient,
we may need to obtain additional financing in order to meet our obligations.
Off-balance Sheet Financing Arrangements
We have no obligations, assets
or liabilities which would be considered off-balance sheet arrangements as of December 31, 2021. 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 an agreement to pay our Sponsor a monthly
fee of $10,000 for general and administrative services, including office space, utilities and administrative services to us. We began
incurring these fees on March 4, 2021 and will continue to incur these fees monthly until the earlier of the completion of the business
combination and our liquidation. Also, we are committed to the below:
Registration Rights
The holders of the Founder
Shares, the Private Placement Warrants (and their underlying securities) and the warrants that may be issued upon conversion of the Working
Capital Loans (and their underlying securities) are entitled to registration rights pursuant to a registration rights agreement signed
on the effective date of the Public Offering. The holders of a majority of these securities are entitled to make up to two demands that
we register such securities. The holders of the majority of the Founder Shares can elect to exercise these registration rights at any
time commencing three months prior to the date on which these ordinary shares are to be released from escrow. The holders of a majority
of the Private Placement Warrants and warrants issued in payment of Working Capital Loans made to us (or underlying securities) can elect
to exercise these registration rights at any time after we consummate a Business Combination. In addition, the holders have certain “piggy-back”
registration rights with respect to registration statements filed subsequent to the completion of a Business Combination. We will bear
the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
We are committed to pay the
Deferred Fee ranged between $1,000,000 to $2,250,000, which should equal to the greater of 1) $1,000,000 and 2) 2.5% of the cash remaining
in the Trust Fund with a maximum amount of $2,250,000. The deferred fee can be paid in cash.
Critical Accounting Policies
The preparation of financial
statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“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 not identified any significant accounting policies.
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 Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
480, “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC 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 our own common stock 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 operations.
As the warrants issued upon
the IPO and private placements meet the criteria for equity classification under ASC 480, therefore, the warrants are classified as equity.
|
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Common stock subject to possible redemption |
We account for its common
stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.”
Common stocks subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally
redeemable common stocks (including common stocks 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, common stocks are classified as shareholders’ equity. Our common stocks feature certain redemption rights that are
subject to the occurrence of uncertain future events and considered to be outside of our control. Accordingly, at December 31, 2021,
10,350,000 shares of common stock subject to possible redemption, respectively, are presented as temporary equity, outside of the shareholders’
equity section of our balance sheet.
We comply with the requirements
of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A – “Expenses of Offering”.
Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to
the Public Offering and that were charged to shareholders’ equity upon the completion of the Public Offering.
We calculate net 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
common stock and non-redeemable common stock and the undistributed income (loss) is calculated using the total net 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 common stock. Any remeasurement of the accretion to the redemption value of the common stock subject to
possible redemption was considered to be dividends paid to the public stockholders. As of December 31, 2021, we have not considered the
effect of the warrants sold in the Initial Public Offering and private warrants to purchase an aggregate of 9,896,250 shares in
the calculation of diluted net 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 common stock and then share in our earnings. As a result, diluted loss per share is
the same as basic loss per share for the period presented.
The net income (loss) per
share presented in the statement of operations is based on the following:
| |
Period from March 4,
2021
(inception) through December 31, 2021 | |
Net loss | |
$ | (181,960 | ) |
Accretion of carrying value to redemption value | |
| (13,538,880 | ) |
Net loss including accretion of carrying value to redemption value | |
$ | (13,720,840 | ) |
| |
Period from March 4 (inception)
through December 31, 2021 | |
| |
Redeemable Common Stock | | |
Non-Redeemable Common
Stock | |
Basic and diluted net loss per share: | |
| | |
| |
Numerators: | |
| | |
| |
Allocation of net loss including carrying value to
redemption value | |
$ | (2,638,991 | ) | |
$ | (11,081,849 | ) |
Accretion of carrying value to redemption value | |
| 13,538,880 | | |
| - | |
Allocation of net income (loss) | |
$ | 10,899,889 | | |
$ | (11,081,849 | ) |
Denominators: | |
| | | |
| | |
Weighted-average shares outstanding | |
| 616,887 | | |
| 2,590,480 | |
Basic and diluted net income (loss) per share | |
$ | 17.67 | | |
$ | (4.28 | ) |
part
IV