Intuitive Machines, Inc. (LUNR) FY 2022 MD&A

Item 7. Management’s Discussion and Analysis
of Financial Condition and Results of Operations.

You should read the following discussion and
analysis of our financial condition and results of operations in conjunction with the audited financial statements and the notes thereto
included in Part II. Item 8. of this Annual Report.

Unless otherwise indicated, references to the
“Company,” “our,” “us” or “we” in this Item 7 refer to Inflection Point Acquisition Corp.,
or IPAX, before the consummation of the Business Combination. The term “New Intuitive Machines” refers to Intuitive Machines,
Inc. after the consummation of the Business Combination.

The financial information included in this
Item 7 is that of IPAX prior to the Business Combination because the Business Combination was consummated subsequent to the period covered
by the audited financial statements included in this Annual Report.

Overview

Until February 13, 2023, we were a blank check
company incorporated on January 27, 2021 as a Cayman Islands exempted company under the name, Inflection Point Acquisition Corp., for
the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with
one or more businesses.

Initial Public Offering and Private Placements

On September 24, 2021, we completed our initial
public offering (“IPO”) of 30,000,000 units, at $10.00 per unit (the “Units”), and issued an additional 2,975,000
Units (the “Over-Allotment Units”) to the underwriters on October 29, 2021 upon their partial exercise of their over-allotment
option, generating aggregate gross proceeds to us of $329,750,000. Each Unit consisted of one of our Class A ordinary shares, $0.0001
par value (the “Class A ordinary shares” or “Public Shares”) and one-half of one redeemable warrant
(each, a “Public Warrant”), with each whole warrant entitling the holder to purchase one Class A ordinary share for $11.50 per
share, subject to adjustment.

Simultaneously with the closing of the IPO, we
sold to our Sponsor, Inflection Point Holdings LLC, a Cayman Islands limited liability company (the “Sponsor”), 6,250,000
private placement warrants (“IPO Private Placement Warrants”) at a price of $1.00 per warrant, and simultaneously with the
sale of the Over-Allotment Units, sold to our Sponsor an additional 595,000 private placement warrants (the “Over-Allotment Private
Placement Warrants” and, together with the IPO Private Placement Warrants, the “Private Placement Warrants”), generating
aggregate gross proceeds to us of $6,845,000.

An aggregate of 12 qualified institutional buyers
(“Anchor Investors”) were allocated and purchased a total of 29,540,000 Units or 98.5% of the Units sold in the IPO. One of
the Anchor Investors, Kingstown 1740 Fund, LP (“Kingstown 1740”), is an affiliate of our Sponsor, and was allocated and purchased
2,900,000 Units in the IPO.

In addition, subject to each Anchor Investor purchasing
100% of the Units allocated to it, in connection with the closing of the IPO, our Sponsor sold membership interests reflecting an allocation
of Class B ordinary shares, par value $0.0001 per share (the “Founder Shares”) to each Anchor Investor, amounting to an aggregate
of 1,625,000 Founder Shares to all Anchor Investors collectively. We estimated the aggregate fair value of these Founder Shares attributable
to Anchor Investors to be approximately $9.68 million, or $5.96 per share. The excess of the fair value of the Founder Shares was determined
to be an offering cost in accordance with Staff Accounting Bulletin Topic 5A. Offering costs allocated to the Public Shares and the Public
Warrants was all charged to shareholder’s equity upon the completion of the IPO.

Transaction costs from the IPO amounted to $26,658,313,
consisting of $4,595,000 of underwriting commissions, $11,541,250 of deferred underwriting commissions, $9,680,125 of excess fair value
of Founder Shares, and $841,938 of other offering costs, with $23,439 allocated to the over-allotment option, $24,538,134 allocated to
the Class A ordinary shares subject to redemption, and $2,096,740 allocated to the Class A ordinary shares not subject to redemption,
the Public Warrants and the Private Placement Warrants.

Following the consummation of the IPO, including
the sale of the Over-Allotment Units, a total of $329,750,000 from the proceeds of the Units in the IPO and the sale of the Over-Allotment
Units was deposited into a trust account (the “Trust Account”). The proceeds from the Private Placement Warrants were used
to pay a portion of the transaction expenses with the remainder deposited into the operating account.

Business Combination with Intuitive Machines
OpCo

On September 16, 2022, the Company entered
into a business combination agreement (the “Business Combination Agreement”) with Intuitive Machines OpCo.

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On February
10, 2023, as contemplated by the Business Combination Agreement and described in the section titled “The Business Combination Proposal”
of the Company’s final prospectus and definitive proxy statement, dated January 24, 2023 (the “Proxy Statement/Prospectus”)
and filed with the SEC on January 24, 2023, the Company filed a notice of deregistration with the Cayman Islands Registrar of Companies,
together with the necessary accompanying documents, and filed a certificate of incorporation (the “Certificate of Incorporation”)
and a certificate of corporate domestication with the Secretary of State of the State of Delaware, pursuant to which the Company was domesticated
and continues as a Delaware corporation, changing its name to “Intuitive Machines, Inc.” (the “Domestication”).

Immediately
prior to the Domestication, each of the then issued and outstanding Class B ordinary shares of the Company, par value $0.0001 per share
(each, a “Class B ordinary share”), converted automatically, on a one-for-one basis, into a Class A ordinary share of the
Company. As a result of and upon the effective time of the Domestication, among other things, (1) each of the then issued and outstanding
Class A ordinary shares automatically converted, on a one-for-one basis, into a share of the Company’s Class A common stock, par
value $0.0001 per share (the “Class A Common Stock”); (2) each of the then issued and outstanding warrants representing the
right to purchase one Class A ordinary share automatically converted into a warrant to acquire one share of the Company’s Class
A Common Stock pursuant to the related warrant agreement (each warrant, an “Intuitive Machines Warrant”); and (3) each of
the then issued and outstanding Units were canceled and each holder thereof was entitled to one share of the Company’s Class A Common
Stock and one-half of one Intuitive Machines Warrant per unit.

On February 13, 2023, we consummated the transactions
contemplated by the Business Combination Agreement, whereby (i) Intuitive Machines OpCo appointed
the Company as its managing member, (ii) we issued to certain existing members of Intuitive Machines OpCo prior to the Business Combination,
a number of shares of our Class B Common Stock, par value $0.0001 per share, having one vote per share and no economic rights or our Class
C Common, par value $0.0001 per share, having three votes per share and no economic rights, in each case, equal to the number of common
units of Intuitive Machines OpCo (“Intuitive Machines OpCo Common Units”) held by such person as of and on the Closing Date
and (iii) we contributed to Intuitive Machines OpCo an amount in cash (the “Available Closing Cash”) equal to the sum of (without
duplication): (a) all amounts in our Trust Account, less (x) amounts required for the redemptions of Cayman Class A Shares by shareholders
of IPAX prior to the Business Combination and (y) our and Intuitive Machines OpCo’s transaction expenses, plus (b) the aggregate
proceeds actually received by IPAX from the Securities Purchase Agreement (the “Securities Purchase Agreement”) with certain
investors (collectively, the “Series A Investors”), pursuant to which the Series A Investors purchased $26.0 million (the
“Series A Investment”) of 10% Series A Cumulative Convertible Preferred Stock, par value $0.0001 per share, of the Company
(“Series A Preferred Stock”) and warrants exercisable to purchase shares of our Class A Common Stock at an initial exercise
price of $15.00 (the “Preferred Investor Warrants”), plus (c) all other cash and cash equivalents of IPAX, determined in accordance
with GAAP as of 11:59 p.m. Eastern Time on February 12, 2023 plus (d) the Founder Subscription Amount (as defined in the Business Combination
Agreement) in exchange for the issuance by Intuitive Machines OpCo to us (w) a number of Intuitive Machines OpCo Common Units equal to
the number of shares of our Class A Common Stock issued and outstanding as of the Closing Date, (x) a number of warrants of Intuitive
Machines OpCo (the “Intuitive Machines OpCo Warrants”) equal to the number of Intuitive Machines Warrants issued and outstanding
as of the Closing Date, (y) a number of Series A preferred units of Intuitive Machines (the “Series A Preferred Units”) equal
to the number of shares of Series A Preferred Stock issued and outstanding as of the Closing Date and issued to the Series A Investors
and (z) a number of Intuitive Machines OpCo preferred investor warrants (the “Intuitive Machines OpCo Preferred Investor Warrants”)
equal to the number of Preferred Investor Warrants delivered to the Series A Investors on the Closing Date (together with the Domestication,
the “Transactions”).

For additional information regarding the Transactions,
see the section titled “The Business Combination Proposal” of the Company’s final
prospectus and definitive proxy statement, dated January 24, 2023 (the “Proxy Statement/Prospectus”) and filed with the SEC
on January 24, 2023 and the Company’s Current Report on Form 8-K filed on February 14, 2023.

As a result of the Business Combination, our only
direct assets consist of Intuitive Machines OpCo Common Units, and substantially all of our assets and business are held by Intuitive
Machines OpCo and its subsidiaries. See Note 1 in the notes to our audited financial statements included in Part II. Item 8 in this Annual
Report.

The Series A Investment

On September 16, 2022, concurrently with the execution
of the Business Combination Agreement, IPAX entered into a purchase agreement (the “Series A Purchase Agreement”) with Kingstown
1740 (an existing security holder of the Company and an affiliate of the Sponsor) and Ghaffarian Enterprises, LLC (an affiliate of Kamal
Ghaffarian, an Intuitive Machines founder) (collectively, the “Series A Investors”), pursuant to which, and on the terms and
subject to the conditions of which, New Intuitive Machines agreed to issue and sell to the Series A Investors (i) an aggregate of 26,000
shares of Series A Preferred Stock which would be convertible into shares of New Intuitive Machines Class A Common Stock and (ii) warrants
to purchase 541,667 shares of New Intuitive Machines Class A Common Stock at an initial exercise price of $15.00 per share, subject to
adjustment (the “Preferred Investor Warrants”). The Series A Investment was consummated following the Domestication but immediately
prior to the Closing.

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Tax Receivable Agreement

On February 13, 2023, in connection with the consummation
of the Transactions and as contemplated by the Business Combination Agreement, New Intuitive Machines entered into a Tax Receivable Agreement
(the “Tax Receivable Agreement”) with Intuitive Machines OpCo and certain members of Intuitive Machines OpCo. See Part III.
Item 13. “Certain Relationships and Related Transactions, and Director Independence – Post-Business Combination Arrangements
-Tax Receivables Agreement” for further information.

Equity Facility

On September 16, 2022, the Company entered
into a common stock purchase agreement (the “Cantor Purchase Agreement”), dated September 16, 2022, with CF Principal Investments
LLC (“CFPI”) relating to an equity facility under which shares of newly issued New Intuitive Machines Class A Common Stock
may be sold to CFPI by New Intuitive Machines. Pursuant to the terms of the Cantor Purchase Agreement, New Intuitive Machines will have
the right, but not the obligation, from time to time at its sole discretion, until the first day of the month following the 18-month period
from and after the Commencement (as defined in the Cantor Purchase Agreement), to direct CFPI to purchase up to the lesser of (i) $50 million
of newly issued New Intuitive Machines Class A Common Stock and (ii) the Exchange Cap (as defined in the Cantor Purchase Agreement),
by delivering written notice to CFPI prior to the commencement of trading on any trading day, subject to certain customary conditions
and limitations set forth in the Cantor Purchase Agreement. In connection with the execution of the Cantor Purchase Agreement, the Company
agreed to issue 100,000 shares (the “Commitment Shares”) of New Intuitive Machines’ Class A Common Stock to CFPI. The
Company entered into a registration rights agreement with CFPI, pursuant to which it agreed to register for resale, pursuant to Rule 415
under the Securities Act of 1933, as amended (the “Securities Act”), the shares of New Intuitive Machines’ Class A Common
Stock that are sold to CFPI under the equity facility and the Commitment Shares.

Subscription Agreements

On February 13, 2023, New Intuitive Machines and
Intuitive Machines OpCo entered into subscription agreements with certain legacy investors in Intuitive Machines OpCo (the “SAFE
Investors”) that held simple agreements for future equity (“SAFEs”) of Intuitive Machines OpCo, pursuant to which, among
other things, the SAFE Investors contributed the SAFEs to Intuitive Machines and, in exchange for such contribution, New Intuitive Machines
issued an aggregate of 2,066,666 shares of Class A Common Stock to the SAFE Investors (the “SAFE Exchange”). Immediately following
the consummation of the SAFE Exchange, New Intuitive Machines and Intuitive Machines OpCo exchanged all of the SAFEs received by Intuitive
Machines in the SAFE Exchange for 2,066,666 Intuitive Machines OpCo Common Units in a recapitalization of the SAFEs in order to maintain
a one-to-one ratio of the Intuitive Machines OpCo Common Units owned by Intuitive Machines and the number of outstanding shares of New
Intuitive Machines’ Class A Common Stock in accordance with the A&R Operating Agreement.

Results of Operations

As of December 31, 2022, we had not commenced
any operations. All activity for the period from January 27, 2021 (inception) through December 31, 2022 related to our formation and the
IPO and, subsequent to the closing of the IPO, identifying a target company for an initial business combination. We have neither
engaged in any operations nor generated any revenues or income during the period from inception through December 31, 2022 other than non-operating income in
the form of interest income on cash and cash equivalents from the proceeds derived from the IPO.  Since our IPO through December
31, 2022, we incurred 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.

For the year ended December 31, 2022, we had net
loss of $190,408, which consisted primarily of interest income earned on cash and marketable securities held in Trust Account amounting
to $4,833,790, offset by formation and operating costs amounting to $5,024,198.

For the period from January 27, 2021 (inception)
to December 31, 2021, we had net loss of $315,511, which consisted primarily of formation and operating costs amounting to $491,341 and
over-allotment issuance costs amounting to $23,439 offset by interest income earned on cash and marketable securities held in Trust Account
amounting to $5,798, and change in fair value of over-allotment liability of $193,471.

Liquidity and Capital Resources

As of December 31, 2022, we had $14,932 in cash and working capital
deficit of $4,082,477.

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On September 30, 2021, our Sponsor agreed to provide
us with loans in such amounts as may be required by us to fund our working capital requirements up to an aggregate of $250,000. On
March 8, 2022, our Sponsor agreed to provide us with loans in such amounts as may be required by us to fund our working capital requirements
up to an aggregate of $500,000.

On August 4, 2022, our Sponsor agreed to loan
the Company up to $1,000,000 to be used for ongoing expenses reasonably related to the business of the Company and the consummation of
an initial business combination pursuant to a convertible promissory note (the “Working Capital Note”).

All unpaid principal under the Working Capital
Note was due and payable in full on the earlier of (i) September 24, 2023 and (ii) the effective date of an initial business combination,
involving the Company and one or more businesses (such earlier date, the “Maturity Date”), unless accelerated upon the occurrence
of an event of default as set forth in the Working Capital Note. The Sponsor had the option, at any time on or prior to the Maturity Date,
to convert up to $1,000,000 outstanding under the Working Capital Note into warrants to purchase Class A ordinary shares at a conversion
price of $1.00 per warrant, with each warrant entitling the holder to purchase one Class A ordinary share at a price of $11.50 per share,
subject to the same adjustments applicable to the Private Placement Warrants. As of December 31, 2022, there was $625,000 outstanding
under the Working Capital Note. Subsequent to December 31, 2022, the Company drew an additional $100,000 on the Working Capital Note.
The Working Capital Note was subsequently repaid at Closing.

Until the consummation of the Business Combination,
the Company used the funds not held in the Trust Account for identifying and evaluating target businesses, performing due diligence on
prospective target businesses, traveling to and from the offices, plants or similar location of prospective target businesses or their
representatives or owners, reviewing corporate documents and material agreements of prospective target businesses and structuring, negotiating
and completing the Business Combination.

Upon the closing of the Business Combination,
we received approximately $34 million of gross proceeds to fund operations. We believe that the cash available from the consummation of
the Business Combination and related transactions will be sufficient to fund the short-term liquidity needs and the execution of the business
plan through at least the twelve month-period from the date of the Business Combination.

Prior to the closing of the Business Combination,
holders of 27,481,818 shares of Class A ordinary shares exercised their right to redeem such shares for cash at a price of approximately
$10.18 per share for aggregate payments of $279,884,314. We may need to raise additional capital to fund our operations and our business
plan. There can be no assurance that we will be successful in obtaining capital sufficient to meet our operating needs on terms or a timeframe
acceptable to us or at all. Further, in the event that market conditions preclude our ability to obtain sufficient capital, we may be
required to evaluate additional alternatives in restructuring our business and our capital structure.

Financial Statements and MD&A of Intuitive
Machines OpCo

In light of the consummation of the Business Combination,
the historical financial statements of IPAX ceased to be representative of the consolidated financial position, results of operations,
stockholders’ equity and cash flows of New Intuitive Machines. As described in the “Basis of Presentation” section of
this Annual Report, in future reporting periods, our
financial statements will be prepared on a consolidated basis with the financial statements of Intuitive Machines OpCo beginning on the
Closing Date and will represent a continuation of the financial statements of Intuitive Machines OpCo.

The consolidated financial position, results of operations,
stockholders’ equity and cash flows of Intuitive Machines OpCo as of and for the years ended December 31, 2022 and 2021 (“OpCo
Financial Statements”), and management’s discussion and analysis of the OpCo Financial Statements, including known trends
and uncertainties regarding the future consolidated financial position, results of operations, stockholders’ equity and cash flows
of Intuitive Machines OpCo will be filed as exhibits to Amendment No. 2 to the Company’s Current Report on Form 8-K to be filed
with the SEC on or about March 30, 2023.

Risks and Uncertainties

We have evaluated the impact of the COVID-19 pandemic
and Russian-Ukraine war on the industry and have concluded that while it is reasonably possible that the virus and the war could have
a negative effect on our financial position, results of its operations and/or search for a target company, the specific impact is not
readily determinable as of the date of the financial statements included elsewhere in this Annual Report. The financial statements do
not include any adjustments that might result from the outcome of this uncertainty.

Off-Balance Sheet Financing Arrangements

As of December 31, 2022, we had no obligations,
assets or liabilities, which would be considered off-balance sheet arrangements.

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Contractual Obligations

As of December 31, 2022, we did not have any long-term
debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities.

Administrative Services Agreement

Commencing on September 21, 2021, we agreed to
pay Kingstown Capital Management L.P., an affiliate of our Sponsor, $15,000 per month for office space, utilities and secretarial
and administrative support services. Upon the consummation of the Business Combination, we ceased paying such monthly fees.

Registration Rights

As of December 31, 2022, certain securityholders
of IPAX had registration rights to require us to register a sale of any of our securities held by them and our any other securities acquired
by them prior to the consummation of our initial business combination pursuant to a registration rights agreement entered into in connection
with the IPO. Pursuant to the registration rights agreement and assuming $1,500,000 of Working Capital Loans were converted into additional
warrants, we would have been obligated to register up to 21,588,750 Class A ordinary shares and 8,345,000 warrants. The holders of
these securities were entitled to make up to three demands, excluding short form demands, that we register such securities. In addition,
the holders had certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion
of our initial business combination. We will bear the expenses incurred in connection with the filing of any such registration statements.

At the Closing, the Company, the Sponsor and certain
securityholders of the Company entered into an amended and restated registration rights agreement (the “A&R Registration Rights
Agreement”), pursuant to which, among other things, the Sponsor and such securityholders were granted certain customary registration
rights, on the terms and subject to the conditions therein, with respect to securities of the Company that they hold following the Business
Combination. See Part III. Item 13. “Certain Relationships and Related Transactions, and Director Independence – A&R Registration
Rights Agreement.”

Underwriting Agreement

We granted the underwriters a 45-day option from
the effective date of the IPO to purchase up to an additional 4,500,000 Units to cover over-allotments, if any. On October 29, 2021, the
underwriters partially exercised the over-allotment option and purchased 2,975,000 Over-Allotment Units, generating aggregate gross proceeds
of $29,750,000, and forfeited their option to purchase the remaining 1,525,000 Units.

The Company provided a discount to the underwriters
at the closing of the Public Offering of 2.0% per Unit, or $4,595,000, excluding the proceeds from the purchase of an aggregate of 10,000,000
Units by certain of our Anchor Investors, $4,000,000 of which was payable upon the closing of the IPO and $595,000 was payable upon closing
of the Over-Allotment. Additionally, the underwriting agreement states that the Company will pay Citigroup Global Markets Inc. (“Citi”) a
deferred discount of $0.35 per Unit sold in the Public Offering including pursuant to the Over-Allotment, or an aggregate of $11,541,250
upon the Company’s completion of an initial business combination, which would be payable from the amounts held in the Trust Account
solely in the event that we complete an initial business combination, subject to the terms of the underwriting agreement.

On
November 27, 2022, in connection with the proposed Business Combination, Citi agreed to waive its entitlement to the deferred underwriting
commission of $11,541,250 to which it became entitled upon completion of the Company’s IPO, subject to the completion of an initial
business combination. As a result, the Company recorded
$11,541,250 to additional paid-in capital in relation to the reduction of the deferred underwriter fee in the accompanying condensed financial
statements. As of December 31, 2022 and December 31, 2021, the deferred underwriting fee payable was $0 and $11,541,250, respectively.

Professional Service Agreement

We reimbursed our Sponsor for services provided
by one of our Sponsor’s employees who served as our Chief of Staff (“COS”). The COS received $12,500 per month for services
rendered, commencing September 25, 2021, through the closing of our initial business combination. For the year ended December 31, 2022,
we recorded $191,668 of compensation for services provided. As of December 31, 2022, there was $0 due to the COS. Upon the consummation
of the Transactions, the professional services agreement was terminated.

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Critical Accounting Policies

This management’s discussion and analysis
of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with
US GAAP. The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our financial statements. On an ongoing
basis, we evaluate our estimates and judgments, including those related to fair value of financial instruments and accrued expenses. We
base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under
the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We
have identified the following as its critical accounting policies:

Offering Costs

We comply with the requirements of the ASC 340-10-S99-1. Offering
costs consists of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that are directly related
to the Public Offering. Offering costs are allocated to the separable financial instruments issued in the Public Offering based on
a relative fair value basis, compared to total proceeds received. Transaction costs amounted to $26,658,313, consisting of $4,595,000
of underwriting commissions, $11,541,250 of deferred underwriting commissions, $9,680,125 of excess fair value of founder shares, and
$841,938 of other offering costs, with $23,439 included in the statements of operations as an allocation for the over-allotment option,
$24,538,134 included in temporary equity as an allocation for the Class A ordinary shares subject to redemption, and $2,096,740 included
in additional paid-in capital as an allocation for the Class A ordinary shares not subject to redemption, the Public Warrants and the
Private Placement Warrants.

Subject to each Anchor Investor purchasing 100%
of the Units allocated to it in the IPO, and in connection with the closing of the IPO, our Sponsor sold membership interests reflecting
an allocation of an aggregate of 1,625,000 Founder Shares to the Anchor Investors collectively. We, through an independent valuations
expert, estimated the aggregate fair value of these Founder Shares attributable to Anchor Investors to be approximately $9.68 million,
or $5.96 per share. The excess of the fair value of the Founder Shares was determined to be an offering cost in accordance with Staff
Accounting Bulletin Topic 5A.

Class A Ordinary Shares Subject to Possible
Redemption

All of the Class A ordinary shares sold as part
of the Units in the IPO contain a redemption feature which allows for the redemption of such Public Shares in connection with our liquidation,
if there is a shareholder vote or tender offer in connection with an initial business combination and in connection with certain amendments
to our amended and restated memorandum and articles of association. In accordance with SEC and its staff’s guidance on redeemable
equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within our control require ordinary shares
subject to redemption to be classified outside of permanent equity.

The Class A ordinary shares are subject to SEC
and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99. If it is probable that the
equity instrument will become redeemable, we have the option to either accrete changes in the redemption value over the period from the
date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption
date of the instrument or to recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the
instrument to equal the redemption value at the end of each reporting period. We recognize changes in redemption value immediately as
they occur. Immediately upon the closing of the IPO and the Over-Allotment, we recognized the remeasurement from initial book value to
redemption amount value. The change in the carrying value of redeemable ordinary shares resulted in charges against additional paid-in
capital.

Related Party Redemption Waiver Agreement

In September 2021, we entered into a redemption
waiver agreement with one of our Anchor Investors, Kingstown 1740, whereby Kingstown 1740 agreed to waive its redemption rights on 1,386,989
Class A ordinary shares it held. These Class A ordinary shares are classified as shareholders’ equity in the financial statements
included in this Annual Report.

Net Loss Per Ordinary Share

We comply with accounting and disclosure requirements
of ASC Topic 260, “Earnings Per Share.” Our statements of operations include a presentation of loss per share for ordinary
shares subject to possible redemption in a manner similar to the two-class method of loss per share. The remeasurement associated with
the redeemable Class A ordinary shares is excluded from net loss per ordinary share as the redemption value approximates fair value. Net
loss per share, basic and diluted, for Class A redeemable ordinary shares is calculated by dividing interest income earned and realized
gains or losses on the Trust Account for the year ended December 31, 2022 and for the period from January 27, 2021 (Inception) to December
31, 2021, by the weighted average number of Class A ordinary shares outstanding since original issuance. We have not considered the effect
of the Public Warrants or the Private Placement Warrants to purchase an aggregate of 23,332,500 of our Class A ordinary shares in
the calculation of diluted loss per share, since their exercise is contingent upon future events. Net loss per share, basic and diluted,
for Class A and Class B non-redeemable ordinary shares is calculated by dividing the net loss, adjusted for income or loss attributable
to Class A ordinary shares, by the weighted average number of Class A and Class B non-redeemable ordinary shares outstanding for the period.
Class A non-redeemable ordinary shares and Class B non-redeemable ordinary shares, which include the Founder Shares, do not have any redemption
features and do not participate in the income or losses of the Trust Account. At December 31, 2022 and 2021, we did not have any dilutive
securities and other contracts that could, potentially, be exercised or converted into ordinary shares and then share in the earnings
of our company. As a result, diluted loss per share is the same as basic loss per share for the period presented.

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Derivative Financial Instruments

We evaluate our financial instruments to determine
if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives
and Hedging.” Derivative instruments are initially recorded at fair value on the grant date and re-valued at each reporting date,
with changes in the fair value reported in the statements of operations. Derivative assets and liabilities are classified in the balance
sheets as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within
12 months of the balance sheet date.

We evaluated the warrants in accordance with ASC
815-40, “Derivatives and Hedging — Contracts in Entity’s Own Equity,” and concluded that there were no indexation
or tender offer provisions in the warrant agreement that precluded the warrants from being accounted for as components of equity, and
the warrants meet the criteria in ASC 815-40-25 to be classified in shareholders’ deficit. Fair value of the Public and Private
Placement Warrants was determined by an independent valuation expert as of September 24, 2021 (the date of the IPO) and October 29, 2021
(the date of the Over-Allotment) using a Monte Carlo Model. Proceeds from the IPO and subsequent partial exercise of the over-allotment
option allocated to the Public Warrants was an aggregate $11,995,753 ($11,025,229, net of offering costs) and is recorded in additional
paid-in capital. Proceeds from the issuance of the Private Placement Warrants were $6,845,000 ($6,831,701, net of offering costs) and
is recorded in additional paid-in capital.

Forward Purchase Agreement

In September 2021, we entered into a forward purchase
agreement (“FPA”) pursuant to which certain affiliates of our Sponsor (“Kingstown”) agreed to purchase up to 5,000,000
forward purchase Class A ordinary shares (“Forward Purchase Shares”), for $10.00 per share, or an aggregate amount of up to
$50,000,000, in a private placement that will close concurrently with the closing of our initial business combination, subject to approval
by the Kingstown investment committee. We have the right, in our sole discretion, to reduce the amount of Forward Purchase Shares that
Kingstown may purchase pursuant to the FPA. We have not considered the effect of the Forward Purchase Shares in the calculation of diluted
income per share, since their issuance is contingent upon future events.

We evaluated the FPA under ASC 480 and ASC 815-40
to determine the appropriate accounting treatment. The FPA does not meet the criteria to be classified as a liability under ASC 480. In
addition, there is no net cash settlement feature and settlement will be in gross physical delivery of Class A ordinary shares; therefore,
the FPA should be classified as equity. However, as the issuance of Forward Purchase Shares is contingent on several factors, including
the consummation of an initial business combination, approval by the Kingstown investment committee, and our discretion, we will record
the FPA when it becomes probable that the triggering events will occur. Until such time, due to the contingent nature of the FPA, we will
disclose the contingency in the notes to our financial statements.

The FPA was terminated on November 30, 2022.

Inflation

We do not believe that inflation had a material
impact on our business, revenues or operating results during the period presented.

Emerging Growth Company Status

We are an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS
Act”), and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies
that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports
and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder
approval of any golden parachute payments not previously approved.

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Further, Section 102(b)(1) of the JOBS Act
exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies
(that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply
with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected
not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application
dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies
adopt the new or revised standard. This may make comparison of our financial statements with another public company which is either not
an emerging growth company or an emerging growth company which has opted out of using the extended transition period difficult or impossible
because of the potential differences in accounting standards used.