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 7, 2024 formed for the purpose of effecting a merger, share exchange, asset acquisition,
share purchase, reorganization, or similar business combination with one or more businesses (a “Business Combination”). 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.
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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.
The registration statement
for the Company’s Initial Public Offering became effective on October 22, 2025. On October 27, 2025, the Company consummated the
Initial Public Offering of 11,500,000 Units, which includes the full exercise by the underwriters of their over-allotment option of 1,500,000
Units, at $10.00 per Unit, generating gross proceeds of $115,000,000. Simultaneously with the closing of the Initial Public Offering,
the Company consummated the sale of an aggregate of 380,000 Private Placement Units at a price of $10.00 per Private Placement Unit,
generating gross proceeds of $3,800,000.
Following the closing of
the Initial Public Offering, on October 27, 2025, an amount of $115,000,000 ($10.00 per Unit) from the net proceeds of the sale of the
Units and the sale of the Private Placement Units was held in the Trust Account.
On November 21, 2025, the
Company issued a press release announcing that the holders of the Units may elect to separately trade the Ordinary Shares and Rights included
in the Units commencing on November 26, 2025. Those Units that are not separated will continue to trade on the Nasdaq Stock Market LLC
(“Nasdaq”) under the symbol “LAFAU” and the Ordinary Shares and Rights that are separated will trade on Nasdaq
under the symbols “LAFA” and “LAFAR,” respectively.
Results of Operations
We have neither engaged in
any operations nor generated any revenues to date. Our only activities from June 7, 2025 (inception) through December 31, 2025 were
organizational activities, 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 marketable securities 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 year ended
December 31, 2025, we had a net income of $554,273, which consists of interest earned on marketable securities held in Trust Account of
$779,876, offset by formation, general and administrative costs of $225,603.
For the period
from June 7, 2024 (inception) through December 31, 2024, we had a net loss of $8,004, which consists of formation, general and administrative
costs.
Liquidity and Capital Resources
On October 27, 2025, we consummated
the Initial Public Offering of 11,500,000 Units, which includes the full exercise by the underwriters of their over-allotment option
in the amount of 1,500,000 Units, at $10.00 per Unit, generating gross proceeds of $115,000,000. Simultaneously with the closing of the
Initial Public Offering, we consummated the sale of 380,000 the Private Placement Units at a price of $10.00 per Private Placement Unit
in a private placement to the Sponsor and EBC, the representative of the underwriters in the Initial Public Offering, generating gross
proceeds of $3,800,000.
Following the initial public
offering, the full exercise of the over-allotment option, and the sale of the units, a total of $115,000,000 was placed in the Trust Account.
We incurred $6,731,306 of transaction expenses, consisting of $2,300,000 of cash underwriting fee, $4,025,000 of deferred underwriting
fee and $406,306 of other offering costs.
For the year ended December
31, 2025, net cash used in operating activities was $351,873. Net income of $554,273 was affected by interest earned on marketable securities
held in in Trust Account of $779,876. Changes in operating assets and liabilities used $126,270 of cash from operating activities.
For the period from June
7, 2024 (inception) through December 31, 2024, net cash used in operating activities was $0. Net loss of $8,004 was offset by payment
of formation costs through advances from related party.
We intend to use substantially
all of the funds held in the Trust Account, including any amounts representing earnings on the Trust Account (less 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.
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.
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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 converted into private placement units upon consummation of the Business Combination
at a price of $10.00 per unit. The units would be identical to the private placement units.
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. The Company has the completion window to complete the initial Business Combination. Management has determined that the Company has sufficient
funds to finance the working capital needs of the Company within one year from the date of issuance of the financial statements.
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, other than an agreement to pay the
Sponsor or its affiliate a total of $10,000 per month for office space, administrative and support services.
The underwriters were granted
a 45-day option from the date of Initial Public Offering to purchase up to 1,500,000 additional Units to cover over-allotments, if
any, at the Initial Public Offering price less the underwriting discounts and commissions. The underwriters were paid in cash an underwriting
discount of $0.20 per Unit, or $2,300,000 in the aggregate upon the closing of the Initial Public Offering. Additionally, the underwriters
are entitled to a deferred underwriting discount equal to 3.5% of the gross proceeds of the Initial Public Offering, or an aggregate of
$4,025,000.
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.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Not required for smaller reporting companies.
Item 8. Financial Statements and Supplementary Data
This information appears following Item 15 of
this Report and is included herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
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