Item 7. Management’s Discussion and Analysis
Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations.
References to the “Company,”
“us,” “our,” or “we” refer to Columbus Acquisition Corp. The following discussion and analysis of
our financial condition and results of operations should be read in conjunction with our audited financial statements and related notes
herein.
The following discussion
and analysis of the Company’s financial condition and results of operations should be read in conjunction with our audited financial
statements and the notes related thereto which are included in “Item 8. Financial Statements and Supplementary Data”
of this Annual Report on Form 10-K. Certain information contained in the discussion and analysis set forth below includes forward-looking
statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors,
including those set forth under “Special Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors”
and elsewhere in this Annual Report on Form 10-K.
Overview
We are a blank check company
formed under the laws of Cayman Island on January 18, 2024, for the purpose of effecting a merger, share exchange, asset acquisition,
share purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities. We intend
to effectuate our business combination using cash derived from the proceeds of the IPO, our securities, debt or a combination of cash,
securities and debt, in effecting a business combination. Our efforts to identify a prospective target business will not be limited to
a particular industry or geographic location but will initially focus on Asia. We have not selected any target business for our initial
business combination.
We expect to continue to
incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to raise capital or to complete
our initial business combination will be successful.
Initial Public Offering and Private Placement
On January 24, 2025, the
Company consummated its IPO of 6,000,000 Units. Each Unit consists of one ordinary shares and one Right to receive one-seventh of one
ordinary share upon the completion of the initial business combination. The Units were sold at an offering price of $10.00 per Unit,
generating total gross proceeds of $60,000,000.
Substantially concurrently
with the closing of the IPO, the Company completed the private sale of 234,290 Private Units to the Sponsor. Each Private Unit consists
of one Ordinary Share and one Right. The Private Units were sold at a purchase price of $10.00 per Private Unit, generating gross proceeds
to the Company of $2,342,900.
The proceeds of $60,000,000
($10.00 per Unit) in the aggregate from the IPO and the Private Placement were placed in the Trust Account with Continental Stock Transfer
& Trust Company acting as trustee.
On March 10, 2025, the Sponsor
forfeited 225,000 Founder Shares (as defined below) for no consideration as the underwriters of the IPO did not exercise the over-allotment
option. As a result, the Sponsor currently holds 1,698,290 Ordinary Shares in total, including 1,464,000 Founder Shares and 234,290 Ordinary
Shares included in the Private Units.
Our management has broad
discretion with respect to the specific application of the proceeds of the IPO and the Private Placement that are held outside of the
Trust Account, although substantially all the net proceeds are intended to be applied generally towards consummating a business combination
and working capital.
Results of Operations and Known Trends or
Future Events
We
have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational
activities and those necessary to prepare for the IPO. Following the IPO, we have not generated, and do not expect to generate any operating
revenues until after completion of our initial business combination. We will generate non-operating income in the form of interest income
on cash and cash equivalents after the IPO. There has been no significant change in our financial or trading position and no material
adverse change has occurred since the date of our audited financial statements. After the IPO, we incur increased expenses as a result
of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for expenses associated with
the search for target opportunities.
For the period from January
18, 2024 (inception) through December 31, 2024, we had a net loss of $77,094, all of which consisted of formation and operating costs.
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Liquidity and Capital Resources
As
of December 31, 2024, we had no cash and a working capital deficit of $252,128. Upon completion of the IPO, $1,007,756 was held outside
of the Trust Account. We intend to use substantially all of the net proceeds of the IPO, 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 share capital is used in
whole or in part as consideration to effect our initial 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 initial business combination if the funds available
to us outside of the Trust Account were insufficient to cover such expenses.
Over the next 12 months (assuming
a business combination is not consummated prior thereto), we will be using the funds held outside of the Trust Account for identifying
and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and
from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements
of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the business
combination.
If our estimates of the costs
of undertaking in-depth due diligence and negotiating our initial business combination is less than the actual amount necessary to do
so, or the amount of interest available to us from the Trust Account is less than we expect as a result of the current interest rate
environment, 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 consummate our initial business combination or because we become obligated to redeem
a significant number of our public shares upon consummation of our initial business combination, in which case we may issue additional
securities or incur debt in connection with such business combination. Subject to compliance with applicable securities laws, we would
only consummate such financing simultaneously with the consummation of our initial business combination. Following our initial business
combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
We
have incurred and expect to continue to incur significant costs to remain as a publicly traded company and to incur significant transaction
costs in pursuit of the consummation of a Business Combination. We do not believe we will need to raise additional funds in order to
meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking
in-depth due diligence and negotiating a 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 our 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
connection with the Company’s assessment of going concern considerations in accordance with ASC Subtopic 205-40, Presentation of
Financial Statements - Going Concern, the Company may need to raise additional capital through loans or additional investments from its
Sponsor, shareholders, officers, directors, or third parties. The Company’s officers, directors and Sponsor may, but are not obligated
to, loan the Company funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet
the Company’s working capital needs. Accordingly, the Company may not be able to obtain additional financing. If the Company is
unable to raise additional capital, it 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.
The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all.
The
Company’s liquidity condition raises substantial doubt about the Company’s ability to continue as a going concern for a
period of time within one year after the date that the accompanying financial statements are issued. Management plans to address
this uncertainty are through seeking new financing to complete a Business Combination. If a Business Combination is not consummated
by the end of the Combination Period, currently January 22, 2026, and the Combination Period is not extended, there will be a
mandatory liquidation and subsequent dissolution of the Company, which also 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 Combination Period. The Company intends to complete the initial Business Combination
before the end of the Combination Period. However, there can be no assurance that the Company will be able to consummate any
Business Combination by the end of the Combination Period.
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Off-Balance Sheet
Financing Arrangements
We have no obligations, assets
or liabilities that would be considered off-balance sheet arrangements as of December 31, 2024. 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
As of December 31, 2024,
we do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities.
The Founder Shares, the ordinary
shares included in the Private Units, and any Ordinary shares that may be issued upon conversion of Working Capital Loans (and any underlying
securities) will be entitled to registration rights pursuant to a registration and shareholder rights agreement entered into in connection
with the IPO. The holders of these securities are entitled to make up to three demands, excluding short form demands, that we register
such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements
filed subsequent to our completion of our initial business combination. We will bear the expenses incurred in connection with the filing
of any such registration statements.
Critical Accounting Estimates
In preparing these financial
statements in conformity with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported expenses during the reporting
period.
Making estimates requires
management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation
or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate,
could change in the near term due to one or more future confirming events. Accordingly, actual results may differ from these estimates.
We have not identified any critical accounting estimates.
Recent Accounting Standards
In November 2023, the FASB
issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires the disclosure
of additional segment information. ASU No. 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods
within fiscal years beginning after December 15, 2024. The Company adopted this guidance as of December 31, 2024.
In December 2023, the FASB
issued ASU 2023-09, Income taxes (Topic 740): Improvements to Income Tax Disclosure (“ASU 2023-09”), which
enhances the transparency and usefulness of income tax disclosures. ASU 2023-09 will be effective for fiscal years beginning after December
15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. Management
does not believe the adoption of ASU 2023-09 will have a material impact on our financial statements and disclosures.
Management does not believe
that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect
on our financial statements.