# Net Power Inc. (NPWR) FY 2022 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Net Power Inc.'s 10-K for fiscal year 2022.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1845437/000121390023016333/f10k2022_riceacq2.htm
Accession: 0001213900-23-016333
Filing date: 2023-03-02
Report date: 2022-12-31
Extracted from Item 7 to the first post-MD&A boundary after HTML sanitization.
Confidence: high

Company profile: /company/NPWR/
All MD&A years: /company/NPWR/mda/
Previous year: /company/NPWR/mda/fy2021/ (FY 2021)
Next year: /company/NPWR/mda/fy2023/ (FY 2023)

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

Overview

We are a blank check company
incorporated as a Cayman Islands exempted company on February 2, 2021. As used herein, “we” or the “Company” refers
to Rice Acquisition Corp. II and our majority-owned and controlled operating subsidiary, Rice Acquisition Holdings II LLC (“OpCo”),
unless the context indicates otherwise. We were formed for the purpose of effecting a merger, capital stock exchange, asset acquisition,
stock purchase, reorganization, or similar business combination with one or more businesses (the “Business Combination”).
We are an early stage and emerging growth company and, as such, we are subject to all of the risks associated with early stage and emerging
growth companies.

As of December 31, 2022, we had
not commenced any operations. All activity to date relates to our formation and the preparation for initial public offering (the “Initial
Public Offering”), described below. We will not generate any operating revenues until after the completion of our initial Business
Combination, at the earliest. We generate non-operating income in the form of interest income on investments from the proceeds derived
from the Initial Public Offering (as defined below). We have selected December 31 as its fiscal year end.

Our sponsor is Rice Acquisition
Sponsor II LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for our Initial Public Offering
was declared effective on June 15, 2021. On June 18, 2021, we consummated our Initial Public Offering of 34,500,000 units (the “Units”
and, with respect to the Class A ordinary shares included in the Units being offered, the “Public Shares”), which included
the full exercise of the underwriters’ option to purchase an additional 4,500,000 Units to cover over-allotments, at $10.00 per
Unit, generating gross proceeds of $345.0 million, and incurring offering costs of approximately $19.1 million, of which approximately
$11.7 million and approximately $593,000 was for deferred underwriting commissions and offering costs allocated to the derivative warrant
liabilities, respectively.

Simultaneously with the closing
of the Initial Public Offering, we consummated the private placement (“Private Placement”) of 10,900,000 warrants (each, a
“Private Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of $1.00 per Private
Placement Warrant to our Sponsor, generating proceeds of $10.9 million. Each Private Placement Warrant is exercisable to purchase one
of our Class A ordinary shares or one Class A Unit of OpCo together with a corresponding non-economic Class B ordinary share of the Company.

22

Following the Initial Public
Offering, the Public Shareholders (as defined below) hold a direct economic equity ownership interest in us in the form of Class A ordinary
shares, and an indirect ownership interest in Opco through our ownership of Class A Units of Opco. By contrast, the holders of our Founder
Units and Sponsor Units (each as defined below), including our officers and directors to the extent they hold such shares (the “Initial
Shareholders”), own direct economic interests in Opco in the form of Class B Units and a corresponding non-economic voting equity
interest in us in the form of Class B ordinary shares, as well as a small direct interest through the Sponsor Units. We refer to the 8,624,900
Class B ordinary shares and corresponding number of Class B Units of Opco (or the Class A Units of Opco into which such Class B Units
will convert) collectively as the “Founder Units”. We refer to the 2,500 Class A ordinary shares and the 100 Class A Units
of Opco and a corresponding number of shares of the Company’s non-economic Class B ordinary shares (which together will be exchangeable
into Class A ordinary shares after the initial Business Combination on a one-for-one basis) collectively as the “Sponsor Units”.

Upon the closing of the Initial
Public Offering and the Private Placement, $345,026,000 of the net proceeds of the sale of the Units in the Initial Public Offering and
of the Private Placement Warrants in the Private Placement were placed in a trust account (“Trust Account”) located in the
United States with Continental Stock Transfer & Trust Company acting as trustee, and will be invested only in U.S. “government
securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money
market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940, as amended (the “Investment
Company Act”), which invest only in direct U.S. government treasury obligations, as determined by us, until the earlier of: (i)
the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.

Our management has broad discretion
with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants,
although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There
is no assurance that we will be able to complete a Business Combination successfully. We must complete one or more initial Business Combinations
having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (net of amounts disbursed to management
for working capital purposes, if permitted, and excluding the amount of any deferred underwriting discount held in the Trust Account)
at the time of the agreement to enter into the initial Business Combination. However, we will only complete a Business Combination if
the post-business combination company owns or acquires 50% or more of the voting securities of the target or otherwise acquires a controlling
interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act.

We will provide the holders
of our outstanding Class A ordinary shares, par value $0.0001 per share (the “Public Shareholders”) with the opportunity to
redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a shareholder
meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether we will seek shareholder
approval of a Business Combination or conduct a tender offer will be made by us, solely in our discretion. The Public Shareholders will
be entitled to redeem their Public Shares for a pro rata portion of the amount then held in the Trust Account (initially at $10.00 per
Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to us to pay our tax
obligations). The per-share amount to be distributed to Public Shareholders who redeem their Public Shares will not be reduced by the
deferred underwriting commissions we will pay to the underwriters. These Public Shares were recorded at a redemption value and classified
as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s
(“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.”
We will proceed with a Business Combination if a majority of the shares voted are voted in favor of the Business Combination. We will
not redeem the Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. If a shareholder vote is
not required by law and we do not decide to hold a shareholder vote for business or other reasons, we will, pursuant to its amended and
restated memorandum and articles of association, conduct the redemptions pursuant to the tender offer rules of the SEC and file tender
offer documents with the SEC prior to completing a Business Combination. If, however, shareholder approval of the transaction is required
by law, or we decide to obtain shareholder approval for business or legal reasons, we will offer to redeem shares in conjunction with
a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each Public Shareholder may
elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. If we seek shareholder
approval in connection with a Business Combination, the Initial Shareholders agreed to vote their Founder Shares and any Public Shares
purchased during or after the Initial Public Offering in favor of a Business Combination. In addition, the Initial Shareholders agreed
to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business
Combination.

23

If we are unable to complete
a Business Combination within 24 months from the closing of the Initial Public Offering, or June 18, 2023 (the “Combination Period”),
we will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business
days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
Trust Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay our or Opco’s
taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number of the then-outstanding Public Shares
and Class A Units of Opco (other than those held by us), which redemption will completely extinguish Public Shareholders’ rights
as shareholders (including the right to receive further liquidating distributions, if any); and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject
in each case, to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable
law. There will be no redemption rights or liquidating distributions with respect to the warrants, which will expire worthless if we fail
to consummate an initial Business Combination within 24 months from the closing of the Initial Public Offering.

Pursuant to the Opco LLC Agreement
and a letter agreement that our Sponsor and our officers and directors have entered into with us, our Sponsor, and our officers and directors
agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares they hold if we fail
to consummate an initial Business Combination within 24 months from the closing of the Initial Public Offering (although they will be
entitled to liquidating distributions from the Trust Account with respect to any Public Shares they hold if we fail to complete an initial
Business Combination within the prescribed time frame).

Proposed Business Combination

On December 13, 2022, we entered
into a Business Combination Agreement (as may be amended, supplemented or otherwise modified from time to time, the “Business Combination
Agreement” and the transactions contemplated thereby, collectively, the “Business Combination”), by and among RONI,
Opco, Topo Buyer Co, LLC, a Delaware limited liability company and a direct, wholly owned subsidiary of Opco (“RONI Buyer”),
Topo Merger Sub, LLC, a Delaware limited liability company and a direct, wholly owned subsidiary of RONI Buyer (“Merger Sub”)
and NET Power.

The Business Combination Agreement
and the Business Combination were unanimously approved by the boards of directors of each of RONI and NET Power. Pursuant to the Business
Combination Agreement, among other things:

[[GREPCENT_TABLE]]
[["","(iv)","RONI will change its jurisdiction of incorporation by deregistering as a Cayman Islands exempted company and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware, upon which, (a) RONI will change its name to \u201cNET Power Inc.\u201d, (b) each then issued and outstanding Class A ordinary share of a par value $0.0001 each in the capital of RONI will convert automatically, on a one-for-one basis, to a share of Class A common stock, par value $0.0001 per share, of RONI (\u201cClass A Common Stock\u201d), (c) each then issued and outstanding Class B ordinary share of a par value $0.0001 each in the capital of RONI will convert automatically, on a one-for-one basis, to a share of Class B common stock, par value $0.0001 per share, of RONI (\u201cClass B Common Stock\u201d), and (d) each issued and outstanding warrant to purchase one Class A ordinary share in the capital of RONI at a price of $11.50 per share will convert automatically, on a one-for-one basis, into a whole warrant exercisable for one share of Class A Common Stock;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","(v)","Following RONI\u2019s domestication, Opco will change its jurisdiction of formation by deregistering as a Cayman Islands limited liability company and continuing and domesticating as a limited liability company formed under the laws of the State of Delaware (together with RONI\u2019s domestication, the \u201cDomestications\u201d), upon which, (a) Opco will change its name to \u201cNET Power Operations LLC\u201d, (b) each then issued and outstanding Class A Unit of Opco will convert automatically, on a one-for-one basis, to a Class A Unit of Opco as issued and outstanding pursuant to the terms of the Second Amended and Restated Limited Liability Company Agreement of Opco to be entered into in connection with the closing of the Business Combination (the \u201cA&R LLC Agreement\u201d), and (c) each then issued and outstanding Class B Unit of Opco will convert automatically, on a one-for-one basis, to either (i) a Class A Unit of Opco as issued and outstanding pursuant to the A&R LLC Agreement or (ii) a Class B Unit of Opco as issued and outstanding pursuant to the terms of the A&R LLC Agreement; and"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","(vi)","Following the Domestications, Merger Sub will merge with and into NET Power, with NET Power surviving the merger as a direct, wholly owned subsidiary of RONI Buyer, on the terms and subject to the conditions of the certificate of merger, pursuant to which (a) all of the equity interests of NET Power that are issued and outstanding immediately prior to the Business Combination will, in connection with the Business Combination, be cancelled, cease to exist and be converted into the right to receive an aggregate of 135,698,078 Class A Units of Opco and an equivalent number of shares of Class B Common Stock (one share of Class B Common Stock together with one Class A Unit or Class B Unit of Opco, a \u201cRONI Interest\u201d), subject to adjustment for (i) NET Power shares issued pursuant to the Amended and Restated Joint Development Agreement, dated December 13, 2022, by and among NET Power; RONI; Opco; Nuovo Pignone International, S.r.l., an Italian limited liability company; and Nuovo Pignone Tecnologie S.r.l., an Italian limited liability company, as of the date on which the closing of the transactions contemplated by the Business Combination Agreement occurs (the \u201cClosing Date\u201d) and (ii) cash funding raised by NET Power following entry into the Business Combination Agreement and retained on its books as of the Closing Date, as allocated pursuant to the Business Combination Agreement, and (b) any equity interests of NET Power that are held in the treasury of NET Power or owned by any subsidiary of NET Power immediately prior to the Business Combination will be cancelled and cease to exist."]]
[[/GREPCENT_TABLE]]

24

Following the Business Combination,
holders of Class A Units of Opco (other than RONI) will have the right (an “exchange right”), subject to certain limitations,
to exchange RONI Interests for, at RONI’s option, (i) shares of Class A Common Stock on a one-for-one basis, subject to adjustment
for stock splits, stock dividends, reorganizations, recapitalizations and the like, or (ii) a corresponding amount of cash. RONI’s
decision to make a cash payment or issue shares upon an exercise of an exchange right will be made by RONI’s independent directors,
and such decision will be based on facts in existence at the time of the decision, which RONI expects would include the relative value
of the Class A Common Stock (including trading prices for the Class A Common Stock at the time), the cash purchase price, the availability
of other sources of liquidity (such as an issuance of preferred stock) to acquire the Class A Units of Opco and alternative uses for such
cash, among other considerations.

Holders of Class A Units of
Opco (other than RONI) will generally be permitted to exercise the exchange right on a quarterly basis, subject to certain de minimis
allowances. In addition, additional exchanges may occur in connection with certain specified events, and any exchanges involving more
than a specified number of Class A Units of Opco (subject to RONI’s discretion to permit exchanges of a lower number of units) may
occur at any time upon ten business days’ advanced notice. The exchange rights will be subject to certain limitations and restrictions
intended to reduce the administrative burden of exchanges upon RONI and ensure that Opco will continue to be treated as a partnership
for U.S. federal income tax purposes.

For additional information
regarding NET Power, the Business Combination and the transactions contemplated thereby, see the registration statement on Form S-4 containing
a preliminary proxy statement and a preliminary prospectus of RONI initially filed with the U.S. Securities and Exchange Commission (the
“SEC”) on December 22, 2022.

Other than as specifically
discussed, this Report does not assume the closing of the Business Combination.

PIPE Financing (Private Placement)

Concurrently with the execution
of the Business Combination Agreement, the Company entered into subscription agreements (the “Subscription Agreements”) with
certain investors. Pursuant to the Subscription Agreements, each investor agreed to subscribe for and purchases, and the Company agreed
to issue and sell to such investors, immediately prior to the closing of the Business Combination, an aggregate of 22,545,000 newly issued
shares of Class A Common Stock for an aggregate purchase price of $225,450,000, on the terms and subject to the conditions set forth in
the Subscription Agreements.

25

Liquidity and Going Concern

As of December 31, 2022, we
had approximately $1.6 million in our operating bank account and a working capital deficit of approximately $3.1 million.

Our liquidity needs through
December 31, 2021 have been satisfied through a payment of $25,000 from our Sponsor to cover for certain expenses in exchange for the
issuance of the Founder Shares, the loan of approximately $126,000 from our Sponsor pursuant to the Note, and the proceeds from the consummation
of the Private Placement not held in the Trust Account. We fully repaid the Note balance upon closing of the Initial Public Offering.
In addition, in order to finance transaction costs in connection with a Business Combination, our Sponsor or an affiliate of our Sponsor,
or certain of our officers and directors may, but are not obligated to, provide us with Working Capital Loans. As of December 31, 2022
and 2021, there were no amounts outstanding under any Working Capital Loans.

In connection with the
Company’s assessment of going concern considerations in accordance with FASB Accounting Standards Update (“ASU”)
2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has
determined that the liquidity needs, mandatory liquidation and subsequent dissolution raises substantial doubt about the
Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or
liabilities should the Company be required to liquidate after June 18, 2023. The consolidated financial statements do not include
any adjustment that might be necessary if the Company is unable to continue as a going concern. The Company intends to complete a
Business Combination before the mandatory liquidation date. Over this time period, we will be using these funds for paying existing
accounts payable, identifying and evaluating prospective initial 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 Business Combination.

Our management continues to
evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus 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 consolidated financial statements. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

In February 2022, the Russian
Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including
the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and
related sanctions on the world economy are not determinable as of the date of these consolidated financial statements.

Results of Operations

Our entire activity to date
was in preparation for our formation and the Initial Public Offering, and, subsequent to the Initial Public Offering, identifying a target
company for a Business Combination. We will not be generating any operating revenues until the closing and completion of our initial Business
Combination at the earliest.

For the year ended December
31, 2022, we had net income of approximately $4.2 million, which consisted of approximately $5.2 million in non-operating gain resulting
from the change in fair value of derivative warrant liabilities and approximately $4.9 million of interest earned on investments held
in the trust account, partially offset by approximately $5.8 million in general and administrative expenses and $120,000 in general and
administrative related party expenses. Of the approximately $4.2 million net income, approximately $4.1 million of it is attributable
to Rice Acquisition Corp. II while the remaining approximately $163,000 is attributable to a non-controlling interest in a subsidiary.

For the period from February
2, 2021 (inception) through December 31, 2021, we had net loss of approximately $10.2 million, which consisted of approximately $6.7 million
non-operating loss resulting from the change in fair value of derivative warrant liabilities, approximately $2.2 million in loss upon
issuance of private placement warrants, approximately $593,000 in offering costs associated with derivative warrant liabilities, and approximately
$697,000 in general and administrative expenses, partially offset by approximately $18,000 of interest earned on investments held in the
trust account. Of the approximately $10.2 million net loss, approximately $9.8 million of it is attributable to Rice Acquisition Corp.
II while the remaining approximately $392,000 is attributable to a non-controlling interest in a subsidiary.

26

Contractual Obligations

Related Party Loans

On February 10, 2021, our
Sponsor agreed to loan us an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering pursuant to a promissory
note (the “Note”). This Note was non-interest bearing and payable upon the completion of the Initial Public Offering. As of
June 16, 2021, we borrowed approximately $167,000 under the Note. We repaid the Note in full on December 14, 2021 and borrowing is no
longer available.

Administrative Services Agreement

Commencing on the date that
our securities were first listed on the New York Stock Exchange, we agreed to pay our Sponsor a total of $10,000 per month for office
space, secretarial and administrative services provided to us. Upon completion of the initial Business Combination or our liquidation,
we will cease paying these monthly fees. For the year ended December 31, 2022 and for the period from February 2, 2021 (inception) through
December 31, 2021, there were $120,000 and $65,000 in fees incurred and paid under this agreement, respectively. There was no outstanding
payable balance as of December 31, 2022 and 2021.

Critical Accounting Policies and Estimates

This management’s discussion
and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared
in accordance with U.S. GAAP. The preparation of these consolidated 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
consolidated 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 our critical accounting policies:

Derivative Warrant Liabilities

We do not use derivative instruments
to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of its financial instruments, including issued stock
purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant
to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments,
including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.

The Public Warrants and the
Private Placement Warrants are recognized as derivative liabilities in accordance with ASC 815. Accordingly, we recognize the warrant
instruments as liabilities at fair value and adjusts the carrying value of the instruments to fair value at each reporting period. The
liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our
consolidated statements of operations. The initial fair value of the Public Warrants and the Private Placement Warrants were estimated
using a Monte Carlo simulation model. While the fair value of the Private Placement Warrants continues to be measured under a Monte Carlo
simulation model, subsequent to the Public Warrants being traded on an active market, the fair value of the Public Warrants has since
been based on the observable listed prices for such warrants. The determination of the fair value of the warrant liability may be subject
to change as more current information becomes available and accordingly the actual results could differ significantly. Derivative warrant
liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets
or require the creation of current liabilities.

27

Class A Ordinary Shares Subject to Possible
Redemption

We account for our ordinary
shares subject to possible redemption in accordance with the guidance in ASC 480. Class A ordinary shares subject to mandatory redemption
(if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A ordinary shares (including
Class A 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, Class A ordinary
shares are classified as shareholders’ equity. Our Class A ordinary shares feature certain redemption rights that are considered
to be outside of our control and subject to occurrence of uncertain future events. Although we did not specify a maximum redemption threshold,
our amended and restated memorandum and articles of association provides that currently, we will not redeem our Public Shares in an amount
that would cause its net tangible assets (shareholders’ equity) to be less than $5,000,001. Accordingly, as of the Initial Public
Offering, 34,500,000 Class A ordinary shares subject to possible redemption at the redemption amount were presented at redemption value
as temporary equity, outside of the shareholders’ equity section of our consolidated balance sheets.

Under ASC 480-10-S99, we have
elected to recognize changes in the redemption value immediately as they occur and adjust the carrying value of the security to equal
the redemption value at the end of the reporting period. This method would view the end of the reporting period as if it were also the
redemption date of the security. Effective with the closing of the Initial Public Offering, we recognized the accretion from initial book
value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit.

Net Income (Loss) per Ordinary Share

We comply with accounting
and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” We have two classes of shares, which are referred
to as Class A ordinary shares and Class B ordinary shares. Income and losses are shared pro rata between the two classes of shares. This
presentation assumes a Business Combination as the most likely outcome. Net income (loss) per ordinary share is calculated by dividing
the net income (loss) by the weighted average shares of ordinary shares outstanding for the respective period.

The calculation of diluted
net income (loss) per ordinary share does not consider the effect of the warrants issued in connection with the Initial Public Offering
and the Private Placement to purchase an aggregate of 19,525,000 ordinary shares in the calculation of diluted income (loss) per share,
because their exercise is contingent upon future events and their inclusion would be anti-dilutive under the treasury stock method. As
a result, diluted net income (loss) per share is the same as basic net income (loss) per share for the year ended December 31, 2022 and
for the period from February 2, 2021 (inception) through December 31, 2021. Accretion associated with the redeemable Class A ordinary
shares is excluded from earnings per share as the redemption value approximates fair value.

Recent accounting standards

In August 2020, the FASB issued
ASU No. 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s
Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”),
which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also
removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and
it simplifies the diluted earnings per share calculation in certain areas. We adopted ASU 2020-06 on January 1, 2021, with no material
impact upon adoption.

In June 2022, the FASB issued
ASU 2022-03, ASC Subtopic 820 “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The
ASU amends ASC 820 to clarify that a contractual sales restriction is not considered in measuring an equity security at fair value and
to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value.
The ASU applies to both holders and issuers of equity and equity-linked securities measured at fair value. The amendments in this ASU
are effective for the Company in fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early
adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The
Company is still evaluating the impact of this pronouncement on the consolidated financial statements.

28

Our management does not believe
that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on our
consolidated financial statements.

Off-Balance Sheet Arrangements

As of December 31, 2022 and
2021, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments
or contractual obligations.

JOBS Act

On April 5, 2012, the JOBS
Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying
public companies. We will qualify as an “emerging growth company” and under the JOBS Act will be allowed to comply with new
or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay
the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the
relevant dates on which adoption of such standards is required for non-emerging growth companies. As such, our consolidated financial
statements may not be comparable to companies that comply with public company effective dates.

Additionally, we are in the
process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain
conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not
be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial
reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public
companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by
the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing
additional information about the audit and the consolidated financial statements (auditor discussion and analysis) and (iv) disclose certain
executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s
compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of the Initial
Public Offering or until we are no longer an “emerging growth company,” whichever is earlier.