UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer
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(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
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Trading Symbol(s) |
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Name of Each Exchange on Which Registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of August 13, 2024,
GENERATION ASIA I ACQUISITION LIMITED
Quarterly Report on Form 10-Q
Table of Contents
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Item 1. |
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Condensed Balance Sheets as of June 30, 2024 (Unaudited) and December 31, 2023 |
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Unaudited Condensed Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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32 |
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Item 4. |
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33 |
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Item 1. |
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Item 1A. |
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Item 2. |
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33 |
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Item 3. |
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34 |
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Item 4. |
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34 |
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Item 5. |
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Item 6. |
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35 |
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36 |
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2
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
GENERATION ASIA I ACQUISITION LIMITED
CONDENSED BALANCE SHEETS
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June 30, |
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December 31, |
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Assets: |
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(Unaudited) |
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(Audited) |
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Cash |
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$ |
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$ |
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Prepaid expense |
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Due from |
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— |
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Total Current Assets |
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Investments held in Trust Account |
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Total Assets |
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$ |
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$ |
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Liabilities, Shares Subject to Redemption and Shareholders’ Deficit |
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Current Liabilities: |
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Accrued offering expense and expenses |
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$ |
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$ |
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Promissory Note - Related Party |
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Due to |
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— |
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Total Current Liabilities |
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Warrant liability |
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Deferred underwriting commissions |
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Total Liabilities |
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Class A ordinary shares subject to possible redemption, $ |
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Shareholders’ Deficit: |
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Preferred shares, $ |
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Class A ordinary shares, $ |
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Class B ordinary shares, $ |
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Additional paid-in capital |
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— |
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— |
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Accumulated deficit |
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) |
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Total Shareholders’ Deficit |
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( |
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Total Liabilities, Shares Subject to Redemption and Shareholders’ Deficit |
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$ |
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$ |
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The accompanying notes are an integral part of the unaudited condensed financial statements.
3
GENERATION ASIA I ACQUISITION LIMITED
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
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For the Three Months |
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For the Six Months |
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2024 |
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2023 |
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2024 |
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2023 |
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Formation and operating costs |
$ |
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$ |
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$ |
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$ |
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Loss from operations |
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Other income: |
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Interest income and realized gain from sale of treasury securities |
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Gain from debt forgiven |
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— |
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— |
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Change of fair value of warrant liabilities |
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( |
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Total other income, net |
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Net income |
$ |
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$ |
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$ |
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$ |
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Weighted average shares of redeemable Class A non-redeemable ordinary shares outstanding, basic and diluted |
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Basic and diluted net income per Class A non-redeemable share |
$ |
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$ |
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$ |
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$ |
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Weighted average shares of Class A redeemable ordinary shares outstanding |
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— |
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— |
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Basic and diluted net income per Class A redeemable ordinary share |
$ |
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$ |
— |
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$ |
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$ |
— |
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Weighted average shares of Class B ordinary shares outstanding, basic and diluted |
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Basic and diluted net income per Class B share |
$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of the unaudited condensed financial statements.
4
GENERATION ASIA I ACQUISITION LIMITED
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND SIX MONTHS ENDED JUNE 30, 2024
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Class A ordinary shares |
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Class B ordinary shares |
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Additional |
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Accumulated |
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Shareholders’ |
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Shares |
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Amount |
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Shares |
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Amount |
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Paid-in Capital |
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Deficit |
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Deficit |
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Balance as of January 1, 2024 |
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— |
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$ |
— |
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$ |
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$ |
— |
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$ |
( |
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$ |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
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Re-measurement of carrying value to redemption value |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
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Balance as of March 31, 2024 |
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— |
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$ |
— |
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$ |
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$ |
— |
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$ |
( |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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— |
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Conversion of Class B ordinary shares to Class A ordinary shares |
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( |
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— |
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— |
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— |
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Re-measurement of carrying value to redemption value |
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— |
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— |
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— |
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— |
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( |
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( |
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( |
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Forfeiture of Class B shares by Sponsor at April 16, 2024 |
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— |
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— |
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( |
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— |
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— |
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Balance as of June 30, 2024 |
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$ |
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$ |
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$ |
— |
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$ |
( |
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$ |
( |
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The accompanying notes are an integral part of the unaudited condensed financial statements
5
GENERATION ASIA I ACQUISITION LIMITED
FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND SIX MONTHS ENDED JUNE 30, 2023
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Class A ordinary shares |
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Class B ordinary shares |
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Additional |
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Accumulated |
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Shareholders’ |
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Shares |
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Amount |
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Shares |
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Amount |
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Paid-in Capital |
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Deficit |
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Deficit |
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Balance as of January 1, 2023 |
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— |
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$ |
— |
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$ |
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$ |
— |
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$ |
( |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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— |
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Re-measurement of carrying value to redemption value |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
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Balance as of March 31, 2023 |
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— |
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$ |
— |
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$ |
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$ |
— |
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$ |
( |
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$ |
( |
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Net income |
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— |
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— |
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— |
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— |
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— |
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Re-measurement of carrying value to redemption value |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
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Forgiven of deferred underwriter commissions |
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— |
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— |
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— |
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— |
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— |
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Balance as of June 30, 2023 |
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— |
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$ |
— |
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$ |
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$ |
— |
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$ |
( |
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$ |
( |
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The accompanying notes are an integral part of the unaudited condensed financial statements
6
GENERATION ASIA I ACQUISITION LIMITED
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
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For the Six Months Ended June 30, |
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2024 |
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2023 |
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Cash Flows from Operating Activities: |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash used in operating activities: |
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Interest earned on investment held in Trust Account |
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( |
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( |
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Gain from debt forgiven |
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— |
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( |
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Change in fair value of warrant liabilities |
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( |
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Changes in current assets and current liabilities: |
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Prepaid assets |
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Accrued offering costs and expenses |
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Due to related parties |
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Net cash used in operating activities |
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Cash Flows from Investing Activities: |
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Purchase of investments held in Trust Account |
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— |
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Disposal of investments held in Trust Account |
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Cash deposited in Trust Account |
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Net cash provided by investing activities |
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— |
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Cash Flows from Financing Activities: |
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Proceeds from issuance of promissory note to related party |
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— |
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Redemption of Class A ordinary shares |
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— |
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Net cash used in financing activities |
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— |
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Net Change in Cash |
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Cash – Beginning |
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Cash – Ending |
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$ |
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$ |
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Supplemental Disclosure of Non-cash Financing Activities: |
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Re-measurement of carrying value of Class A ordinary shares subject to possible redemption to redemption value |
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$ |
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$ |
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Waiver of deferred underwriting commissions |
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$ |
— |
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$ |
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The accompanying notes are an integral part of the unaudited condensed financial statements.
7
GENERATION ASIA I ACQUISITION LIMITED
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2024
Note 1—Organization, Business Operation and Going Concern
Generation Asia I Acquisition Limited (the “Company”) was incorporated as a Cayman Islands exempted company on March 3, 2021. The Company was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). The Company has not selected any Business Combination target and the Company has not, nor has anyone on its behalf, engaged in any substantive discussions, directly or indirectly, with any Business Combination target with respect to an initial Business Combination with it.
As of June 30, 2024, the Company had not commenced any operations. All activity for the period from March 3, 2021 (inception) through June 30, 2024 relates to the Company’s formation, the initial public offering (the “IPO”), and searching for a Business Combination target. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the IPO. The Company has selected December 31 as its fiscal year end..
The Company’s sponsor is Generation Asia LLC, a Cayman Islands limited liability company (the “Sponsor”).
The registration statement for the Company’s IPO was declared effective on January 19, 2022 (the “Effective Date”). On January 24, 2022, the Company consummated the IPO of
Simultaneously with the consummation of the IPO, the Company consummated the private placement of
Transaction costs amounted to $
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.
The Company must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the value of net assets held in the Trust Account (as defined below) (excluding the deferred underwriting commissions and taxes payable on the interest earned on the Trust Account) at the time of signing a definitive agreement in connection with the initial Business Combination. However, the Company will complete the initial Business Combination only if the post-Business Combination company in which its public shareholders own shares will own or acquire 50% or more of the outstanding voting securities of the target or is otherwise not required to
8
register as an investment company under the Investment Company Act (the “Investment Company Act”). There is no assurance that the Company will be able to complete a Business Combination successfully.
Following the closing of the IPO on January 24, 2022 and the partial exercise of the Over-Allotment Option on February 1, 2022, $
The Company will provide the public shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of the initial Business Combination either (i) in connection with a general meeting called to approve the initial Business Combination or (ii) without a shareholder vote by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a proposed initial Business Combination or conduct a tender offer will be made by the Company, solely in its discretion.
The shareholders will be entitled to redeem all or a portion of their Public Shares upon the completion of the initial Business Combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account calculated as of two business days prior to the consummation of the initial Business Combination, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its taxes, divided by the number of then outstanding Public Shares, subject to the limitations and on the conditions described herein. The amount in the Trust Account is initially anticipated to be $
The ordinary shares subject to redemption will be recorded at a redemption value and classified as temporary equity upon the completion of the IPO, in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such a case, the Company will proceed with a Business Combination if the Company’s ordinary shares would not be a “penny stock” upon such consummation of a Business Combination and, if the Company seeks shareholder approval, a majority of the issued and outstanding shares voted are voted in favor of the Business Combination.
If the Company has not completed the initial Business Combination within 18 months from the consummation of the IPO (or up to 42 months from the consummation of the IPO (the “Combination Period”) if an extension has been made pursuant to the Articles Amendments (as defined below), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than 10 business days thereafter, subject to lawfully available funds therefor, redeem
9
shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining shareholders and the Company’s board of directors, liquidate and dissolve, subject, in the case of clauses (ii) and (iii), to the Company’s obligations under Cayman Islands law to provide for claims of creditors and in all cases subject to the other requirements of applicable law, in which case the public shareholders may only receive $
The Sponsor, officers and directors have agreed to (i) waive their redemption rights with respect to their Founder Shares and Public Shares they hold in connection with the completion of the Business Combination, (ii) waive their redemption rights with respect to their Class B ordinary shares, par value $
The Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or other similar agreement or Business Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $
In connection with the IPO, the Company entered into an Investment Management Trust Agreement (the “Trust Agreement”), dated January 19, 2022, with Continental as trustee. On July 13, 2023, the Company held an extraordinary general meeting of its shareholders (the “2023 Meeting”) to approve an amendment to the Trust Agreement and the amendments to the Company’s Memorandum and Articles (collectively, the “2023 Articles Amendments”) reflecting (i) the extension of the date by which the Company must consummate an initial Business Combination from July 23, 2023 on a monthly basis up to July 23, 2024, and (ii) the reduction of the amount of monthly extension payments which the Sponsor, or its affiliates or designees, must deposit into the Trust Account from $
In connection with the 2023 Meeting and the 2023 Article Amendments, holders of
10
On July 21, 2023, August 21, 2023, September 21, 2023, October 20, 2023, November 21, 2023, December 21, 2023, January 19, 2024, February 21, 2024 and March 21, 2024, the Company deposited nine tranches of $
On January 18, 2024, the Company entered into Amendment No. 2 to the Trust Agreement to provide that Continental may maintain the funds in the Trust Account in an interest-bearing bank demand deposit account, and the Company sent an Investment Instruction Letter to Continental, pursuant to which the Company instructed Continental to move the funds in the Trust Account to such a demand deposit account.
On March 28, 2024, the Company filed Form 25 with the SEC informing the SEC and the NYSE of the delisting of the Company’s securities from the NYSE, which form became effective within 10 days of filing. Concurrently, the Company filed new Form 8-A with the SEC with respect to its Class A ordinary shares which were approved for listing on the Nasdaq Global Market (“Nasdaq”) with the first trading day on April 8, 2024. The Units and warrants to purchase Class A ordinary shares will continue trading over-the-counter.
On April 16, 2024, the Company held an extraordinary general meeting of its shareholders (the “2024 Meeting”). At the 2024 Meeting, the Company’s shareholders approved by special resolutions the amendments to the Company’s Memorandum and Articles (collectively, the “2024 Articles Amendments”) and the amendment to the Trust Agreement, to, among other things, do the following: (a) to extend the date by which the Company must consummate an initial Business Combination from July 23, 2024 on a monthly basis up to July 23, 2025; and (b) to reduce the amount of monthly extension payments which the Sponsor, or its affiliates or designees, must deposit into the Trust Account from an amount equal to the lesser of (x) $
In connection with the 2024 Article Amendments considered at the 2024 Meeting, the Company’s shareholders elected to redeem
Beginning on March 27, 2024, certain shareholders of the Company have submitted to the Company
On March 5, 2021, the Sponsor paid $
On October 20, 2021 and October 21, 2021, in connection with entering into an additional forward purchase agreement, (i) the Company issued to a forward purchaser an aggregate of
11
Company issued
Throughout various dates beginning on March 27, 2024, certain shareholders of the Company have submitted a total of
In April 2024, due to the termination of the forward purchase agreements by their terms prior to the consummation of a Business Combination, the forward purchasers forfeited and cancelled
On each of April 22, 2024, May 21, 2024, June 21, 2024 and July 22, 2024, the Company deposited $
Going Concern
As of June 30, 2024, the Company had $
The Company’s liquidity needs prior to the IPO had been satisfied through a payment from the Sponsor of $
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 if the Company is unable to complete a Business Combination by July 23, 2025, subject to the Sponsor depositing additional funds into the Trust Account, then the Company will cease all operations except for the purpose of liquidating. The date for mandatory liquidation and subsequent dissolution raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are available to be issued.
Risks and Uncertainties
As a result of the military action commenced in February 2022 by the Russian Federation and Belarus in the country of Ukraine and related economic sanctions, the Company’s ability to consummate a Business Combination, or the operations of a target business with which the Company ultimately consummates a Business Combination, may be materially and adversely affected. In addition, the Company’s ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted by these events, including as a result of increased market volatility, or decreased market liquidity in third-party financing being unavailable on terms acceptable to the Company or at all. The impact of this action and related sanctions on the world economy and the specific impact on the Company’s financial position, results of operations and/or ability to consummate a Business Combination are not yet determinable. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Note 2—Significant Accounting Policies Basis of Presentation
12
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K as filed with the SEC on April 1, 2024. The accompanying condensed balance sheets as of December 31, 2023 has been derived from the Company’s audited financial statements included in the aforementioned Form 10-K. The interim results for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any future periods.
Emerging Growth Company
The Company is 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 it 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.
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 Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth 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. The Company has 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, the Company, 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 the Company’s condensed financial statements with another public company which is neither an emerging growth company nor 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.
Use of Estimates
The preparation of the unaudited condensed financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
One of the more significant accounting estimates included in these unaudited condensed financial statements is the determination of the fair value of the warrant liability and over-allotment liability. Such estimates may be subject to change as more current information becomes available and, accordingly, the actual results could differ significantly from those estimates.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $
Cash and Cash Equivalents
13
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did
Investments Held in Trust Account
The assets held in the Trust Account were held in money market funds and U.S. Treasury securities. The Company classifies its United States Treasury securities as trading securities in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 320, “Investments—Debt and Equity Securities.” Trading securities are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities is included in gain on Investments Held in Trust Account in the accompanying statements of operations. The estimated fair values of investments held in the Trust Account are determined using available market information and classifies as Level 1 measurements. As of June 30, 2024, investments in the Company’s Trust Account consisted of $
Offering Costs associated with the Initial Public Offering
The Company complies with the requirements of ASC 340-10-S99-1, SEC Staff Accounting bulletin Topic 5A – “Expenses of Offering”, and SEC Staff Accounting bulletin Topic 5T – “Accounting for Expenses or Liabilities Paid by Principal Stockholder(s)”. Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the Public Offering. Offering costs directly attributable to the issuance of an equity contract to be classified in equity are recorded as a reduction of equity. Offering costs for equity contracts that are classified as assets and liabilities are expensed immediately. The Company incurred offering costs amounting to $
On June 26, 2023, the Company and the underwriter entered into a fee reduction agreement (the “Fee Reduction Agreement”), pursuant to which the underwriter agreed to waive $
The Company accounted for the waived amount of $
Net Income Per Share
The Company has two classes of shares, Class A ordinary shares and Class B ordinary shares. Earnings and losses are shared pro rata between the two classes of shares. The Company has not considered the effect of the warrants sold in the Public Offering and the Private Placement, including warrants sold to cover the Over-Allotment Option and Private Placement, of
Beginning on March 27, 2024, certain shareholders of the Company have submitted to the Company
14
In April 2024, due to the termination of the forward purchase agreements by their terms prior to the consummation of a Business Combination, the forward purchasers forfeited and cancelled
As a result, diluted net income per ordinary share is the same as basic net income per ordinary share for the periods.
FOR THE THREE MONTHS ENDED JUNE 30, 2024 |
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Basic and diluted net income per ordinary share |
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FOR THE SIX MONTHS ENDED JUNE 30, 2024 |
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Basic and diluted net income per ordinary share |
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FOR THE THREE MONTHS ENDED JUNE 30, 2023 |
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Basic and diluted net income per ordinary share |
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FOR THE SIX MONTHS ENDED JUNE 30, 2023 |
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Weighted-average shares outstanding including ordinary shares subject to redemption |
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Basic and diluted net income per ordinary share |
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Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet, primarily due to its short-term nature.
15
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The Company’s financial instruments are classified as either Level 1, Level 2 or Level 3. These tiers include:
As of June 30, 2024 and December 31, 2023, the carrying values of cash, prepaid expenses, and current liabilities approximate their fair values due to the short-term nature of the instruments. See Note 8 for additional information on assets and liabilities measured at fair value on a recurring basis.
Derivative Financial Instruments
The Company evaluates its 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”. The Company’s derivative instruments are recorded at fair value on the balance sheets with changes in the fair value reported in the statements of operations. Derivative assets and liabilities are classified on 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.
Warrant and Over-allotment Liability
The Company accounts for warrants and over-allotment as either equity-classified or liability-classified instruments based on an assessment of the warrant and Over-Allotment Option’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants and Over-Allotment Option are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants and Over-Allotment Option meet all of the requirements for equity classification under ASC 815, including whether the warrants and Over-Allotment Option are indexed to the Company’s own ordinary shares, among other conditions for equity classification. This assessment is conducted at the time of warrant and Over-Allotment Option issuance and as of each subsequent quarterly period end date while the warrants and Over-Allotment Option are outstanding.
For warrants and Over-Allotment Option that meet all of the criteria for equity classification, they are recorded as a component of additional paid-in capital at the time of issuance. For warrants and over-allotment that do not meet all the criteria for equity classification, they are required to be recorded as a liability at their initial fair value on the date of issuance, and thereafter adjusted to fair value as of each balance sheet date. Changes in the estimated fair value of the warrants and Over-Allotment Option are recognized as a non-cash gain or loss on the statements of operations.
The Company accounted for the Public Warrants (see Note 3), Private Placement Warrants (see Note 4) (together with the Public Warrants, the “Warrants”) and Over-Allotment Option (Note 6) in accordance with the guidance contained in ASC 815-40. The Warrants and over-allotment are not considered indexed to the Company’s own ordinary shares, and as such, they do not meet the criteria for equity treatment and are recorded as liabilities.
16
Income Taxes
The Company accounts for income taxes under FASB ASC 740, “Income Taxes” (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were
There is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s financial statements. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Redeemable Share Classification
The Public Shares contain a redemption feature which allows for the redemption of such Public Shares in connection with the Company’s liquidation, or if there is a shareholder vote or tender offer in connection with the Company’s initial Business Combination. In accordance with ASC 480-10-S99, the Company classifies the Public Shares subject to redemption outside of permanent equity as the redemption provisions are not solely within the control of the Company. The Public Shares sold as part of the Units in the Public Offering will be issued with other freestanding instruments (i.e., Public Warrants) and as such, the initial carrying value of the Public Shares classified as temporary equity will be the allocated proceeds determined in accordance with ASC 470-20.
Class A Shares Subject to Possible Redemption
The Company accounts for its Class A Ordinary Shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity”. Ordinary shares subject to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including 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 the Company’s control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s Class A Ordinary Shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, Public Shares subject to possible redemption are presented as temporary equity, outside of the Shareholders’ deficit section of the Company’s balance sheets.
Under ASC 480-10-S99, the Company has 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 each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security.
As of June 30, 2024, and December 31, 2023, the amount of Class A ordinary shares reflected on the balance sheets are reconciled in the following table:
17
Class A ordinary shares subject to redemption, December 31, 2022 |
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$ |
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Less: |
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Redemption of Class A ordinary shares |
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( |
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Add: |
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Re-measurement of carrying value to redemption value |
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Class A ordinary shares subject to redemption December 31, 2023 |
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$ |
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Add: |
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Re-measurement of carrying value to redemption value |
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Class A ordinary shares subject to redemption March 31, 2024 |
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$ |
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Less: |
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Redemption of Class A ordinary shares |
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( |
) |
Add: |
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Re-measurement of carrying value to redemption value |
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Class A ordinary shares subject to redemption June 30, 2024 |
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$ |
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Recent Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company’s management does not believe the adoption of ASU 2023-09 will have a material impact on its financial statements and disclosures.
Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s condensed financial statements.
Note 3— Initial Public Offering
On January 24, 2022, the Company sold
As of January 24, 2022, an aggregate of
The Company granted the underwriters a
Public Warrants
As of June 30, 2024 and December 31, 2023,
18
connection with such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than
The warrants will become exercisable on the later of
The Company has agreed that as soon as practicable, but in no event later than
Redemption of warrants when the price per Class A ordinary share equals or exceeds $
Once the warrants become exercisable, the Company may redeem the outstanding warrants:
Redemption of warrants when the price per Class A ordinary share equals or exceeds $
Once the warrants become exercisable, the Company may redeem the outstanding warrants:
19
Note 4—Private Placement
Simultaneously with the closing of the IPO, the Sponsor, purchased an aggregate of
The Private Placement Warrants are identical to the warrants included in the Units sold in the IPO.
If the Private Placement Warrants are held by holders other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by the holders on the same basis as the warrants included in the units being sold in the IPO. If the Company does not complete its initial Business Combination within the Combination Period, the Private Placement Warrants will expire worthless.
Note 5—Related Party Transactions
Founder Shares
On March 5, 2021, the Sponsor paid $
On February 1, 2022, the Sponsor surrendered
In connection with the IPO, the Anchor Investors acquired from the Sponsor an aggregate of
Throughout various dates beginning on March 27, 2024, certain shareholders of the Company have submitted a total
20
In April 2024, due to the termination of the forward purchase agreements by their terms prior to the consummation of a Business Combination, the forward purchasers forfeited and cancelled
The initial shareholders have agreed not to transfer, assign or sell any of their Founder Shares and any Class A ordinary shares issuable upon conversion thereof until the earlier to occur of: (i) one year after the completion of the initial Business Combination; or (ii) the date on which the Company completes a liquidation, merger, share exchange or other similar transaction after the initial Business Combination that results in all of the Company’s shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property; except to certain permitted transferees and under certain circumstances. Any permitted transferees will be subject to the same restrictions and other agreements of the initial shareholders with respect to any Founder Shares (the “Lock-up”). Notwithstanding the foregoing, if (1) the closing price of the Company’s Class A ordinary shares equals or exceeds $
Promissory Note—Related Party
On March 5, 2021, the agreed to loan the Company up to $
On July 21, 2023, the Company, issued a non-convertible unsecured promissory note to the Sponsor, for a collective principal amount of $
On September 30, 2023, the Company issued a non-convertible unsecured promissory note to the Sponsor, for a collective principal amount of $
On February 6, 2024, the Company issued a non-convertible unsecured promissory note to the Sponsor, for a collective principal amount of $
On May 3, 2024, the Company issued a non-convertible unsecured promissory note to the Sponsor, for a collective principal amount of $
21
Working Capital Loans
In order to fund working capital deficiencies or to finance transaction costs in connection with an intended Business Combination, the Sponsor or an affiliate of the Sponsor may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes the initial Business Combination, the Company may repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans may be repaid only out of funds held outside the Trust Account. In the event that the initial Business Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay the Working Capital Loans but no proceeds from the Trust Account would be used to repay the Working Capital Loans.
As of June 30, 2024 and December 31, 2023, the Company did
Due to Related Parties
As of June 30, 2024 and December 31, 2023, the amounts due to were $
Commencing on the Effective Date, the Company agreed pay to an affiliate of the Sponsor $
Note 6—Commitments & Contingencies
Registration and Shareholder Rights
The holders of the (i) Founder Shares, which were issued in a private placement prior to the closing of the IPO and (ii) Private Placement Warrants, which were issued in a private placement simultaneously with the closing of the IPO, and the Class A ordinary shares underlying such Private Placement Warrants have registration rights to require the Company to register a sale of any of the Company’s securities held by them pursuant to that certain registration rights agreement. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company registers such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of an initial Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriter Agreement
The Company granted the underwriter a
On January 24, 2022 and February 1, 2022, the Company paid cash underwriting commissions of $
The underwriter was entitled to a deferred underwriting commission of
22
On June 26, 2023, the Company and the underwriter entered into a fee reduction agreement (the “Fee Reduction Agreement”), pursuant to which the underwriter agreed to waive $
The Company accounted for the waived amount of $
Forward Purchase Agreement
The Company entered into forward purchase agreements with certain forward purchasers, pursuant to which the forward purchasers intend to purchase an aggregate of
The obligations under the forward purchase agreements will not depend on whether any Class A ordinary shares are redeemed by the Public Shareholders. The forward purchase shares will be identical to the shares of Class A ordinary shares included in the Units being sold in the IPO, except that they will be subject to transfer restrictions and registration rights. The forward purchase warrants will have the same terms as the Public Warrants.
The forward purchasers may purchase less than
In April 2024, the forward purchase agreements were terminated in accordance with the terms stated in such agreements.
Anchor Investments
As of June 30, 2024, 13 qualified institutional buyers or institutional accredited investors who are not affiliated with the Sponsor or any member of the Company’s management (the “Anchor Investors”) have purchased an aggregate of