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 “Cautionary
Note Regarding Forward-Looking Statements and Risk Factor Summary,” and elsewhere in this annual report on Form 10-K.
Overview
We are a blank check company incorporated in the
Cayman Islands on August 7, 2025 formed for the purpose of merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization
or similar business combination with one or more businesses. We intend to effectuate an initial business combination using cash from the
proceeds of our IPO and the sale of the private placement units, the proceeds of the sale of our securities in connection with an initial
business combination (pursuant to forward purchase agreements or backstop agreements we may enter), securities issued to the owners of
the target of an initial business combination, debt issued to bank or other lenders or the owners of the target of an initial business
combination, or a combination of the foregoing or other sources.
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.
12
Results of Operations
We have neither engaged in any operations nor
generated any revenues to date. Our only activities from August 7, 2025 (inception) through December 31, 2025 were organizational
activities, those necessary to prepare for the IPO, described below, and 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. We generate non-operating income
in the form of interest earned on investments held in Trust Account. We incur expenses as a result of being a public company for legal,
financial reporting, accounting and auditing compliance.
For the period from August 7, 2025 (inception)
through December 31, 2025, we had net income of $370,459, which consists of income earned on investments held in Trust Account of
$535,814 and change in fair value of over-allotment liability of $28,000, partially offset by formation, general and administrative expenses
of $193,355.
Liquidity and Capital Resources
On December 10, 2025, we consummated the
IPO of 25,000,000 units at $10.00 per unit, including 2,500,000 units issued pursuant to the partial exercise by the underwriters of their
over-allotment option, generating gross proceeds of $250,000,000. Simultaneously with the closing of the IPO, we consummated the sale
of an aggregate of 685,000 private placement units (the “Private Placement Units”) at a price of $10.00 per Private Placement
Unit, in a private placement to the Sponsor and the representative of the underwriters of the Initial Public Offering, generating gross
proceeds of $6,850,000.
Following the IPO, a total of $250,000,000 was
placed in the trust account (the “Trust Account”). Upon the underwriters’ partial exercise of the over-allotment option,
transaction costs amounted to $14,449,003, consisting of $5,000,000 of cash underwriting fee, $8,750,000 of deferred underwriting fee,
and $699,003 of other offering costs.
For the period from August 7, 2025 (inception)
through December 31, 2025, cash used in operating activities was $228,357. Net income of $370,459 was affected by interest earned
on investments held in the Trust Account of $535,814 and change in fair value of over-allotment liability of $28,000. Changes in operating
assets and liabilities used $35,002 of cash for operating activities.
As of December 31, 2025, we had investments
held in the Trust Account of $250,535,814. We intend to use substantially all of the funds held in the Trust Account, including any amounts
representing interest earned on the Trust Account (less income taxes payable, if any), 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.
As of December 31, 2025, we had cash of $1,071,605.
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 $1,500,000 of
such Working Capital Loans may be convertible into Private Placement Units of the post business combination entity at a price of $10.00
per unit at the option of the lender. At December 31, 2025, no Working Capital Loans were outstanding.
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.
13
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities,
which would be considered off-balance sheet arrangements as of December 31, 2025. 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.
The underwriters had a 45-day option
from the effective date of the registration statement for the Initial Public Offering to purchase up to an additional 3,375,000 units
to cover over-allotments, if any.
The underwriters were paid a cash underwriting
discount of $5,000,000 ($0.20 per Unit offered in the IPO). Additionally, the underwriters are entitled to a contingent, deferred fee
of $0.35 per Unit, or $8,750,000. The contingent, deferred fee will become payable to the Underwriter from the amounts held in the Trust
Account solely in the event that the Company completes a business combination. Per the underwriting agreement, $0.10 per Unit of such
$0.35 per Unit shall be due solely on amounts remaining in the trust account following all properly submitted shareholder redemptions
in connection with the consummation of our initial business combination and $0.05 per Unit of such $0.35 per Unit shall be allocable by
us to third parties that are members of FINRA, but that are not participating in the IPO, that assist us in consummating our initial business
combination.
Critical Accounting Estimates
The preparation of financial statements and related
disclosures in conformity with accounting principles generally accepted in the United States of America 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.
Warrant Instruments
The Company accounts for the public and private
warrants issued in connection with its initial public offering and the private placement in accordance with the guidance contained in
FASB ASC Topic 815, “Derivatives and Hedging”. Accordingly, the Company evaluated and classified the warrant instruments under
equity treatment at their assigned values. The fair value of public warrants was determined using Black-Scholes Simulation Model. The
public warrants have been classified within shareholders’ deficit and will not require remeasurement after issuance. The key inputs
used in the valuation of the public warrants are as follows:
December 10,
2025
Implied ordinary share price
$
9.91
Exercise price
$
11.50
Simulation term (years)
7.00
Risk-free rate
3.92
%
Estimated implied volatility
2.10
%
Market adjustment
47.66
%
Calculated value per warrant
$
0.56
14
Over-allotment Option
The Company reports its over-allotment option
at fair value. Changes in the estimated fair value of the over-allotment option are recognized as non-cash gains or losses in
the statements of operations. The fair value of our over-allotment option was determined using a Black-Scholes valuation model. The Black-Scholes
valuation model uses significant inputs related to expected share-price volatility, expected life and risk-free interest rate. The Company
estimates the volatility of its ordinary share based on historical volatility that matches the expected remaining life of the option.
The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to
the expected remaining life of the option. The expected life of the option is assumed to be equivalent to their remaining contractual
term. As each of these items are out of the control of management, significant uncertainty exists in the Black-Scholes valuation model
and the underlying assumptions. Deviations from these estimates could result in a significate difference to our financial results. As
the changes in fair value have no impact to our cash, changes in fair value of the over-allotment option and derivations from our estimates
of fair value have no impact on our cash inflows or outflows.
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’
deficit section of our balance sheets.
Net (Loss) Income Per Ordinary Share
Net (loss) income per ordinary share is computed
by dividing net (loss) income by the weighted average number of ordinary shares outstanding for the period. Subsequent measurement of
the redeemable Class A ordinary shares is excluded from (loss) income per ordinary share as the redemption value approximates fair value.
We calculate our earnings per share to allocate net income pro rata to Class A and Class B ordinary shares. This presentation contemplates
a Business Combination as the most likely outcome, in which case, both classes of ordinary shares share pro rata in the income of our
Company.
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 the Company’s financial
statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
As a smaller reporting company
we are not required to make disclosures under 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.
15
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.