Item 7. Management’s Discussion and Analysis
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
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 incorporated in the
Cayman Islands on June 19, 2025, formed 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. 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 units, 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.
Results of Operations
We have neither engaged in any operations nor
generated any revenues to date. Our only activities from June 19, 2025 (inception) through December 31, 2025 were organizational activities
and those necessary to prepare for the initial public offering, described below, and, after our 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 business
combination. Subsequent to the initial public offering, we generate non-operating income in the form of interest income on cash held in
the trust account. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance),
as well as for due diligence expenses.
For the period from June 19, 2025 (inception)
through December 31, 2025, we had net income of $331,924, which consists of interest earned on marketable securities held in Trust Account
of $487,979, offset by operating costs of $156,055.
Liquidity and Capital Resources
On December 17, 2025, the Company consummated
the Initial Public Offering of 34,500,000 units at $10.00 per Unit, which includes the full exercise of the underwriters’ over-allotment
option of 4,500,000 Units, generating gross proceeds of $345,000,000. Simultaneously with the closing of the Initial Public Offering,
the Company consummated the sale of 900,000 Private Placement Units in a private placement to the Sponsor and the underwriters, at a price
of $10.00 per unit, or $9,000,000 in the aggregate.
Following the closing of the initial public offering
and the private placement, a total of $345,000,000 was placed in the trust account. The proceeds held in the trust account will be invested
or held only in either (i) U.S. government securities with a maturity of 185 days or less or in money market funds meeting certain
conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury
obligations, as determined by the Company, or in cash or cash like items (including demand deposit accounts) at a bank, until the earlier
of (i) the completion of a Business Combination and (ii) the distribution of the Trust Account. We incurred $21,286,543 of transaction
costs, consisting of $6,000,000 of cash underwriting fee, $14,700,000 of deferred underwriting fee, and $586,543 of other offering costs.
For the period from June 19, 2025 (inception)
through December 31, 2025, cash used in operating activities was $318,517. Net income of $331,924 was affected by payment of accrued expenses
through promissory note - related party of $10,420, payment of operating expenses through issuance of Class B ordinary shares of $7,000
and interest earned on marketable securities held in Trust Account of $487,979. Changes in operating assets and liabilities used $179,882
of cash from operating activities.
As of December 31, 2025, we had cash held in the
trust account of $345,487,979 consisting of U.S. Treasury Bills with a maturity of 185 days or less. We may withdraw interest from the
trust account as described above. 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 any permitted withdrawals and excluding deferred underwriting commissions),
to complete our business combination. To the extent that our share capital or debt is used, in whole or in part, as consideration to complete
our 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.
67
As of December 31, 2025, we had cash of $2,194,564.
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.
In order to fund working capital deficiencies
or finance transaction costs in connection with a business combination, the Sponsor, or certain of our officers and directors or their
affiliates may, but are not obligated to, loan us funds as may be required. If we complete a business combination, we would repay such
loaned amounts. 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 $2.5 million
of such Working Capital Loans may be converted into units of the post-Business Combination entity at a price of $10.00 per Unit. The private
placement units issued upon conversion of any such loans would be identical to the private placement units sold in the private placement.
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 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 consummation of our business combination, in which case we may issue additional securities or incur debt in connection with such
business combination.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities,
which would be considered off-balance sheet arrangements as of December 31, 2025.
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 reimburse the Sponsor or an affiliate thereof
in an amount equal to $30,000 per month for office space, utilities and secretarial support and administrative services. Upon completion
of the initial Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees.
The underwriters were entitled to an underwriting
discount of $6,000,000, which was paid in cash to the underwriters at the closing of the Initial Public Offering. In addition, the underwriters
are entitled to a deferred underwriting commissions of $0.40 per Unit, or approximately $14,700,000. The deferred underwriting discounts
and commissions will be payable to the underwriters upon the closing of the initial Business Combination, but such amount will be payable
to the underwriters based solely on the amounts remaining in the Trust Account after giving effect to all properly submitted shareholder
redemptions in connection with the consummation of an initial Business Combination.
Critical Accounting Estimates
The preparation of the 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. Making estimates requires management to exercise significant judgement. 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,
the actual results could materially differ from those estimates. As of December 31, 2025, we did not have any critical accounting estimates
to be disclosed.
68
Class A Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to
possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity.” Ordinary shares subject to mandatory redemption are classified as a liability instrument and 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. Accordingly,
ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’
equity section of our balance sheets.
Net Income per Ordinary Share
We apply the two-class method in calculating earnings
per share. Net income per ordinary share, basic and diluted for Class A redeemable ordinary shares is calculated by dividing the interest
income earned on the Trust Account by the weighted average number of Class A redeemable ordinary shares outstanding since original issuance.
Net income per ordinary share, basic and diluted for Class A and Class B non-redeemable ordinary shares is calculated by dividing the
net income, less income attributable to Class A redeemable ordinary shares, by the weighted average number of Class A and Class B non-redeemable
ordinary shares outstanding for the periods presented.
Recent Accounting Standards
Management does not believe that any recently
issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
69
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
As a smaller reporting company,
we are not required to provide the information required by this Item.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA.
This information appears following
Item 15 of this Annual Report and is included herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.