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 our 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. 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.
Overview
We are a blank check company incorporated in the Cayman Islands on
July 21, 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 July 21, 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 July 21, 2025 (inception) through December 31,
2025, we had a net loss of $343,073, which consist of compensation expense $346,500 and formation, general, and administrative costs of
$139,654, partially offset by interest earned on investments held in Trust Account of 119,181 and unrealized gain from fair
value changes of overallotment liability of $23,900.
Liquidity and Capital Resources
On December 24, 2025, we consummated the initial public offering of
20,000,000 units at $10.00 per unit, generating gross proceeds of $200,000,000. Simultaneously with the closing of the initial public
offering, we consummated the sale of an aggregate of 625,000 private placement units to the sponsor and Clear Street, as representative
of the underwriters in the initial public offering, at a price of $10.00 per private placement unit, generating gross proceeds of $6,250,000.
On January 7, 2026, we consummated the closing of an additional 1,500,000 Units sold pursuant to the underwriters’ over-allotment
option, generating gross proceeds of $15,000,000. Simultaneously with the consummation of the over-allotment option on January 7, 2026,
we also consummated the sale of an additional 30,000 private placement units to Clear Street at a price of $10.00 per private placement
unit, generating gross proceeds of $300,000.
Following the initial public offering, the private placement and the
partial exercise of the over-allotment option, a total of $215,000,000 was placed in the trust account. We incurred total transaction
costs amounting to $13,402,955, consisting of $4,300,000 of cash underwriting fees, $8,600,000 of deferred underwriting fees, and $502,955
of other offering costs.
For the period from July 21, 2025 (inception) through December 31,
2025, net cash used in operating activities was $214,299. Net loss of $343,073 was affected by share-based compensation expenses of $346,500,
payment of formation, general, and administrative costs through promissory note – related party of $46,140, payment of formation,
general, and administrative costs through issuance of Class B ordinary shares of $25,000, interest earned on investments held
in Trust Account of $119,181, unrealized gain from fair value changes of overallotment liability of $23,900. Changes in operating assets
and liabilities of used $145,785 cash in operating activities.
As of December 31, 2025, we had cash held in the trust account of $200,119,181
consisting of money market funds. 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.
As of December 31, 2025, we had cash of $1,600,031. 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 will 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. A portion of such Working Capital Loans may be convertible
into private placement units of the post business combination entity at the option of the lender. The units would be identical to the
private placement units.
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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 pay the sponsor an aggregate of $25,000 per month for office space,
administrative and shared personnel support services.
We granted the underwriters a 45-day option to purchase up to 3,000,000
additional units to cover any over-allotments, at the initial public offering price less the underwriting discounts. On January 7,
2026, the underwriters purchased an additional 1,500,000 units pursuant to the partial exercise of the over-allotment option. On February
7, 2026, the over-allotment option to purchase the remaining 1,500,000 units expired.
The underwriters were paid in cash an underwriting discount of $0.20
per unit sold in the initial public offering and the partial exercise by the underwriters of their over-allotment option, or $4,300,000
in the aggregate ($4,000,000 from the base units sold and $300,000 from the additional units sold), which included a $500,000 cash reimbursement
for offering expenses, upon the closing of the initial public offering. In addition, the underwriters are entitled to $0.40 per unit sold
in the initial public offering and the partial exercise by the underwriters of their over-allotment option, $8,600,000 in the aggregate
($8,000,000 from the base units sold and $600,000 from the additional units sold), and is payable to the underwriters based on the percentage
of funds remaining in the trust account after redemptions of public shares, for deferred underwriting commissions to be placed in a trust
account located in the united states and released to the underwriters only upon the completion 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 have the following critical accounting estimates to be disclosed.
Fair Value Measurement
The over-allotment option was accounted for as
a liability in accordance with ASC 815-40 and was presented within liabilities on the balance sheet. The over-allotment option liability
is measured at fair value at inception and on a recurring basis, with changes in fair value presented within changes in fair value of
over-allotment option liability in the statement of operations.
The Company used a Black-Scholes model to value
the over-allotment option. The over-allotment option liability was classified within Level 3 of the fair value hierarchy at the measurement
dates due to the use of unobservable inputs inherent in pricing models are assumptions related to expected share-price volatility, expected
life and risk-free interest rate. The Company estimates the volatility of its ordinary shares 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.
The fair value of Public Warrants was determined
using Monte Carlo Simulation Model. The Public Warrants have been classified within shareholders’ deficit and will not require remeasurement
after issuance. The following table presents the quantitative information regarding market assumptions used in the level 3 valuation of
the public warrants:
December 24,
2025
Volatility
2.5 %
Risk free rate (Continuous)
3.90 %
Stock price
$ 9.85
Expected term to De-SPAC (Years)
2.0
Probability of De-SPAC and market adjustment
27.0 %
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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for smaller
reporting companies.
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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.