Generation Asia I Acquisition Limited Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Significant Accounting Policies Basis of Presentation (Policies)

Significant Accounting Policies Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2024

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 $250,000. The Company has not experienced losses on this account.

Cash and Cash Equivalents

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 not have any cash equivalents as of June 30, 2024 and December 31, 2023. The Company held $129,829 and $320,144 in cash as of June 30, 2024 and December 31, 2023, respectively.

Investments held in Trust Account

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 $26,577,291 interest-bearing demand deposit. As of December 31, 2023, investments in the Company’s Trust Account consisted of $83,854,821 money market funds.‌

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 $21,942,071 as a result of the Public Offering (consisting of $2,406,000 of underwriting commissions, $7,675,500 of deferred underwriting commissions, $10,290,473 of incentives to Anchor Investors and $1,570,098 of other offering costs). The offering costs were charged to additional paid-in capital upon the completion of the Public Offering. The Company immediately expensed $1,004,142 of offering costs in connection with the Public Warrants, Private Placement Warrants and Over-Allotment Option that was classified as liabilities.

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 $4,675,500 of the deferred underwriter commission.

The Company accounted for the waived amount of $4,675,500 as a direct reversal of the original deferred underwriting fee transaction. For the period ended December 31, 2023, the Company recorded $126,472 as gain from debt forgiven and charged the remaining of $4,549,028 of such waived deferred underwriting commission into statement of equity.

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 18,344,000 of the Company’s Class A ordinary shares, at June 30, 2024 and 2023, in the calculation of diluted (loss) income per share, since their exercise is contingent upon the future consummation of a business combination which cannot be assured. In connection with the underwriter’s partial exercise of their Over-Allotment Option on February 1, 2022, 482,500 Class B ordinary shares were no longer subject to forfeiture. These shares were excluded from the calculation of weighted average shares outstanding until they were no longer subject to forfeiture. In connection with the 2023 Meeting, holders of 14,230,271 shares of Class A ordinary shares exercised their right to redeem those shares for cash at an approximate price of $10.52 per share, for an aggregate of approximately $149.75 million, leaving 7,699,729 Class A ordinary shares outstanding after the 2023 Meeting. In connection with the 2024 Meeting, holders of 5,342,374 shares of Class A ordinary shares exercised their right to redeem those shares for cash at a redemption price of approximately $11.12 per share, for an aggregate of approximately $59.40 million, leaving 2,357,355 Class A ordinary shares outstanding after the 2024 Meeting.

Beginning on March 27, 2024, certain shareholders of the Company have submitted to the Company 2,437,500 Class B ordinary shares for conversion into Class A ordinary shares, on a one-to-one basis, pursuant to the terms of the Memorandum and Articles, effective on April 23, 2024. Holders of such converted Class A ordinary shares are not eligible to the redemptions set forth in the Memorandum and Articles.

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 1,200,000 Class B ordinary shares held by them, and the Sponsor forfeited and cancelled 800,000 Class B ordinary shares. Thus, following such cancellation and the conversion described in the paragraph above, the aggregate number of issued and outstanding Class B ordinary shares has been reduced to 3,045,000. Accretion associated with the redeemable Class A Ordinary Shares is excluded from earnings per share, as the redemption value approximates fair value.

As a result, diluted net income per ordinary share is the same as basic net income per ordinary share for the periods. The table below presents a reconciliation of the numerator and denominator used to compute basic and diluted net income per share for each class of ordinary shares.


FOR THE THREE MONTHS ENDED JUNE 30, 2024
	Redeemable		Non-redeemable
Numerator	Class A		Class A		Class B
Numerator:
Net income	$	371,601	$	205,311	$	452,314
Denominator
Weighted-average shares outstanding including ordinary shares subject to redemption		3,296,674		1,821,429		4,012,719
Basic and diluted net income per ordinary share	$	0.11	$	0.11	$	0.11

FOR THE SIX MONTHS ENDED JUNE 30, 2024
	Redeemable		Non-redeemable
Numerator	Class A		Class A		Class B
Numerator:
Allocation of net income	$	357,803	$	59,266	$	374,033
Denominator
Weighted-average shares outstanding including ordinary shares subject to redemption		5,498,201		910,714		5,747,611
Basic and diluted net income per ordinary share	$	0.07	$	0.07	$	0.07

FOR THE THREE MONTHS ENDED JUNE 30, 2023
	Redeemable		Non-redeemable
Numerator	Class A		Class A		Class B
Numerator:
Net income	$	3,247,278	$	—	$	1,107,969
Denominator
Weighted-average shares outstanding including ordinary shares subject to redemption		21,930,000		—		7,482,500
Basic and diluted net income per ordinary share	$	0.15	$	—	$	0.15

FOR THE SIX MONTHS ENDED JUNE 30, 2023
	Redeemable		Non-redeemable
Numerator	Class A		Class A		Class B
Numerator:
Allocation of net income	$	3,504,092	$	—	$	1,195,594
Denominator
Weighted-average shares outstanding including ordinary shares subject to redemption		21,930,000		—		7,482,500
Basic and diluted net income per ordinary share	$	0.16	$	—	$	0.16

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.

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:

•

Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;

•

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

•

Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

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.

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 no unrecognized tax benefits as of June 30, 2024 and December 31, 2023. The Company’s management determined that the Cayman Islands is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of June 30, 2024 and December 31, 2023, there were no unrecognized tax benefits and no amounts were accrued for the payment of interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.

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:


Class A ordinary shares subject to redemption, December 31, 2022	$	225,084,808
Less:
Redemption of Class A ordinary shares		(149,750,540	)
Add:
Re-measurement of carrying value to redemption value		8,520,553

Class A ordinary shares subject to redemption December 31, 2023	$	83,854,821
Add:
Re-measurement of carrying value to redemption value		1,470,369

Class A ordinary shares subject to redemption March 31, 2024	$	85,325,190
Less:
Redemption of Class A ordinary shares		(59,395,951	)
Add:
Re-measurement of carrying value to redemption value		648,052

Class A ordinary shares subject to redemption June 30, 2024	$	26,577,291

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.