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 as a British
Virgin Islands business company on April 16, 2021 for the purpose of entering into a merger, share exchange, asset acquisition,
share purchase, recapitalization, reorganization or other similar business combination with one or more target businesses. Our efforts
to identify a prospective target business will not be limited to a particular industry or geographic region. As such, although we are
not targeting target companies in China, we may consider a business combination with an entity or business with a physical presence or
other significant ties to China, including Hong Kong and Macau, which may subject the post-business combination business to the
laws, regulations and policies of China. We intend to utilize cash derived from the proceeds of the Initial Public Offering, our securities,
debt or a combination of cash, securities and debt, in effecting a business combination.
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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.
Results of Operations
We have neither engaged in any operations nor generated
any operating revenues to date. Our only activities since inception 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 initial business combination. We expect to generate
non-operating income in the form of interest income on marketable securities held after the initial public offering. We expect that we
will incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance),
as well as for due diligence expenses in connection with searching for, and completing, a business combination.
For the years ended December 31, 2024 and 2025, we
had a net loss of $140,962 and $221,014, respectively, which consisted of formation and operating expenses.
Liquidity and Capital Resources
On February 2, 2026, the Company consummated its
Initial Public Offering of 5,750,000 Units, at $10.00 per Unit, generating gross proceeds of $57,500,000, including the full exercise
by the underwriters of their over-allotment option in the amount of 750,000 units. Simultaneously with the closing of the Initial Public
Offering, the Sponsor purchased an aggregate of 186,250 units at a price of $10.00 per unit for an aggregate purchase price of $1,862,500
in a private placement.
A total of $57,500,000 of the net proceeds from the
Initial Public Offering and the Private Placement were deposited in a trust account established for the benefit of the Company’s
public stockholders, with Equinity Trust Company, LLC acting as trustee.
We intend to use substantially all of the net proceeds
of this offering and the sale of the private units, including the funds held in the trust account (excluding deferred underwriting discounts)
to acquire a target business or businesses and to pay our expenses relating thereto. To the extent that our shares 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 or businesses. 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 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.
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As of December 31, 2025, we had $1,824,242 in cash
and a working capital deficit of $3,590,521. The Company’s liquidity needs prior to the consummation of the IPO had been satisfied
through a payment from the Sponsor of $25,000 for the founder shares and an aggregate of up to $6,500,000 in loans available from the
sponsor under an unsecured promissory note executed on May 1, 2021 and an unsecured promissory note executed on May 1 and November
15, 2025, and due at the closing of this offering. As of December 31, 2025, we have borrowed $5,414,763 under the promissory note with
the sponsor. Subsequent to the consummation of the Initial Public Offering, the Company expects that it will need additional capital
to satisfy its liquidity needs beyond the net proceeds from the consummation of the Initial Public Offering and the proceeds held outside
of the Trust Account for paying existing accounts payable, identifying and evaluating prospective business combination candidates, performing
due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire,
and structuring, negotiating and consummating the Initial Business Combination. Although certain of the Company’s initial shareholders,
officers and directors or their affiliates have committed to loan the Company funds from time to time or at any time, in whatever amount
they deem reasonable in their sole discretion, there is no guarantee that the Company will receive such funds.
The Company will use 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
addition, we could use a portion of the funds not being placed in trust to pay commitment fees for financing, fees to consultants to
assist us with our search for a target business or as a down payment or to fund a “no-shop” provision (a provision designed
to keep target businesses from “shopping” around for transactions with other companies or investors on terms more favorable
to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention
to do so. If we entered into an agreement where we paid for the right to receive exclusivity from a target business, the amount that
would be used as a down payment or to fund a “no-shop” provision would be determined based on the terms of the specific business
combination and the amount of our available funds at the time. Our forfeiture of such funds (whether as a result of our breach or otherwise)
could result in our not having sufficient funds to continue searching for, or conducting due diligence with respect to, prospective target
businesses.
The Company has incurred and expects to continue
to incur significant professional costs to remain as a publicly traded company and to incur significant transaction costs in pursuit
of the consummation of a Business Combination. In connection with the Company’s assessment of going concern considerations in accordance
with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties
about an Entity’s Ability to Continue as a Going Concern,” management has determined that these conditions raise substantial
doubt about the Company’s ability to continue as a going concern. In addition, if the Company is unable to complete a Business
Combination within the Combination Period, the Company’s board of directors would proceed to commence voluntary liquidation and
thereby a formal dissolution of the Company. There is no assurance that the Company’s plans to consummate a Business Combination
will be successful within the Combination Period. As a result, management has determined that such an additional condition also raises
substantial doubt about the Company’s ability to continue as a going concern. The financial statement does not include any adjustments
that might result from the outcome of this uncertainty.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements
as defined in Item 303(a)(4)(ii) of Regulation S-K 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.
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Commitments and Contractual Obligations
We do not have any long-term debt, capital lease
obligations, operating lease obligations or long-term liabilities, other than agreements with affiliates of Sponsor to pay an aggregate
of $6,831 per month for office space, utilities, and secretarial and administrative support.
The underwriters were entitled to a cash underwriting
discount of half and one percent (1.5%) of the gross proceeds of the Initial Public Offering, amounting to $862,500.
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.
Recent Accounting Standards
Management does not believe that any other recently
issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our 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.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.