UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the fiscal year ended
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As of March 28, 2024,
DOCUMENTS INCORPORATED BY REFERENCE
A SPAC I ACQUISITION CORP.
Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2023
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FORWARD LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, or the Exchange Act. The statements contained in this report that are not purely historical are forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipates,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this report may include, for example, statements about our:
| ● | ability to complete our initial business combination; |
| ● | success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination; |
| ● | officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination, as a result of which they would then receive expense reimbursements; |
| ● | potential ability to obtain additional financing to complete our initial business combination; |
| ● | pool of prospective target businesses; |
| ● | the ability of our officers and directors to generate a number of potential investment opportunities; |
| ● | the delisting of our securities from Nasdaq or an inability to have our securities listed on Nasdaq following a business combination; |
| ● | potential change in control if we acquire one or more target businesses for stock; |
| ● | the potential liquidity and trading of our securities; |
| ● | the lack of a market for our securities; |
| ● | use of proceeds not held in the trust account or available to us from interest income on the trust account balance; or |
| ● | financial performance. |
The forward-looking statements contained in this report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws and/or if and when management knows or has a reasonable basis on which to conclude that previously disclosed projections are no longer reasonably attainable.
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part I
ITEM 1. BUSINESS
Introduction
A SPAC I Acquisition Corp. (the “Company,” “we,” “us,” or “our”) is a newly incorporated blank check company incorporated in the British Virgin Islands as a BVI business company for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to herein as our “initial business combination” or “Business Combination.”
The registration statement (the “Registration Statement”) for our initial public offering was declared effective on February 14, 2022 (the “Initial Public Offering” or “IPO”). On February 17, 2022, the Company consummated the IPO of 6,000,000 units (the “Units”). Each Unit consists of one Class A ordinary share (“Ordinary Share”), three-fourths (3/4) of one redeemable warrant (“Warrant”), and one right (“Right”) to receive one-tenth (1/10) of one Ordinary Share upon the consummation of an initial business combination. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $60,000,000. The Company granted the underwriters a 45-day option to purchase up to 900,000 additional Units to cover over-allotments, if any.
Simultaneously with the closing of the IPO, the Company consummated the private placement (“Private Placement”) with A SPAC (Holdings) Acquisition Corp., the Company’s sponsor, of 2,875,000 warrants (the “Private Warrants”) at a price of $1.00 per Private Warrant, generating total proceeds of $2,875,000. The Private Warrants are identical to the public Warrants sold in the IPO, as set forth in the Underwriting Agreement, except as described in the Warrant Agreement.
On February 17, 2022, a total of $60,600,000 ($10.10 per Unit) of the net proceeds from the IPO and the Private Placement were deposited in a trust account established for the benefit of the Company’s public shareholders (the “Trust Account”).
Subsequently, on February 25, 2022, the underwriters notified the Company their election to exercise their over-allotment option in full. The closing of the issuance and sale of the additional Units (the “Over-Allotment Option Units”) occurred on March 1, 2022. The total aggregate issuance by the Company of 900,000 Over-Allotment Option Units at a price of $10.00 per unit generated total gross proceeds of $9,000,000. On March 1, 2022, simultaneously with the closing and sale of the Over-Allotment Option Units, the Company consummated the private sale of an additional 270,000 Private Warrants to the sponsor generating gross proceeds of $270,000.
The Private Warrants were issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, as the transactions did not involve a public offering.
On March 1, 2022, an additional $9,090,000 ($10.10 per Unit) consisting of the net proceeds from the sale of the Over-Allotment Option Units, less the underwriter’s discount of $0.20 per Over-Allotment Option Unit ($180,000), and the gross proceeds from the sale of the additional private warrants ($270,000) were placed in the Trust Account, resulting in a total of $69,690,000 held in the Trust Account as of that date.
Proposed Business Combination
On February 15, 2023, the Company entered into a merger agreement (the “Merger Agreement”) with NewGenIvf Limited, a Cayman Islands exempted company (“NewGen” or “NewGenIvf”), certain shareholders of NewGen (the “Principal Shareholders”), A SPAC I Mini Acquisition Corp., a British Virgin Islands business company (the “Purchaser”), and A SPAC I Mini Sub Acquisition Corp., a Cayman Islands exempted company and wholly-owned subsidiary of the Purchaser (the “Merger Sub”), pursuant to which, among other things, (i) the Company will be merged with and into the Purchaser, the separate corporate existence of the Company will cease and the Purchaser will continue as the surviving corporation and (ii) Merger Sub will merge with and into NewGen and NewGen will continue as the surviving company under the laws of the Cayman Islands and become a wholly owned subsidiary of the Purchaser (the “NewGen Business Combination”). Pursuant to the terms of the Merger Agreement, the aggregate consideration to be paid to existing shareholders of NewGen is $50,000,000, which will be paid entirely in stock, comprised of newly issued Class A ordinary shares of the Purchaser at a price of $10.00 per share.
On June 12, 2023, the Company entered into the First Amendment to Merger Agreement (the “First Amendment”) with NewGen, Principal Shareholders, Purchaser and Merger Sub, to amend the Merger Agreement. Pursuant to the First Amendment, NewGen has agreed to provide non-interest bearing loans in an aggregate principal amount of up to $560,000 (the “Loan”) to the Company to fund any amount that may be required in order to further extend the period of time available for the Company to consummate a business combination and for the Company’s working capital, payment of professional, administrative and operational fees and expenses, and other purposes as mutually agreed by the Company and NewGen. Such Loan will only become repayable upon the closing of the NewGen Business Combination. In addition, pursuant to the First Amendment, subject to receipt of at least $140,000 as part of the Loan from NewGen, A SPAC I agreed to waive its termination rights and the right to receive any break-up fee due to NewGen’s failure to deliver the U.S. GAAP financial statements by February 28, 2023.
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On December 6, 2023, the Company entered into the Second Amendment to Merger Agreement (the “Second Amendment”) with NewGen, the Principal Shareholders, Purchaser and Merger Sub, that amended and modified the Merger Agreement to, among other things, (i) reduce the size of Purchaser’s board of directors following the consummation of the Business Combination to five (5) directors, two (2) of whom will be executive directors designated by NewGenIvf and three (3) of whom will be designated by NewGenIvf to serve as independent directors in accordance with Nasdaq requirements, (ii) provide for the conversion of the NewGenIvf shares issued by NewGenIvf following the original date of the Merger Agreement into Purchaser Class A ordinary shares in connection with the NewGen Business Combination, and (iii) remove the condition that Parent shall have in excess of $5,000,000 in net tangible assets immediately after the NewGen Business Combination.
The Merger Agreement contains customary representations, warranties and covenants of the parties thereto. The consummation of the proposed Merger is subject to certain conditions as further described in the Merger Agreement.
Concurrently with the execution of the Merger Agreement, as amended, the Company, the Purchaser, NewGen and certain shareholders of NewGen (the “Supporting Shareholders”) entered into a voting and support agreement (the “Support Agreement”) pursuant to which such Supporting Shareholders have agreed, among other things, to vote in favor of the NewGen Business Combination, the adoption of the Merger Agreement and any other matters necessary or reasonably requested by the Company, the Purchaser or the Company for consummation of the NewGen Business Combination and the other transactions contemplated by the Merger Agreement.
On March 1, 2024, the Company entered into the Third Amendment to Merger Agreement (the “Third Amendment”) with NewGen, PubCo, Merger Sub and the Principal Shareholders. As described in the Third Amendment, the Company shall issue the Commitment Shares for the Initial Tranche to JAK (as defined below).
On March 28, 2024, the Company entered into the Fourth Amendment to Merger Agreement with NewGen, PubCo, Merger Sub and the Principal Shareholders.
Securities Purchase Agreement
On February 29, 2024, the Company, PubCo, NewGen, the Merger Sub, and certain buyers named therein led by JAK Opportunities VI LLC (collectively, the “Buyers” or “JAK”) entered into a securities purchase agreement (the “Securities Purchase Agreement”), pursuant to which the Company has agreed to issue and sell to the Buyers, in a private placement, an aggregate of up to $3,500,000 principal amount of convertible notes (the “Notes”), consisting of two tranches: (i) an initial tranche (the “Initial Tranche”) of an aggregate principal amount of Notes of up to $1,750,000 and including an original issue discount of up to aggregate $122,500, and (ii) subsequent tranches of an aggregate principal amount of Notes of up to $1,750,000 and including an original issue discount of up to aggregate $122,500. The Initial Tranche is expected to occur on the date of the closing of the Business Combination, subject to the terms and conditions set forth in the Securities Purchase Agreement. Concurrently with each issuance of the Notes, the Buyers will receive a certain amount of ordinary shares of the Purchaser (the “Commitment Shares”). The Commitment Shares to be issued at the Initial Tranche will be converted from NewGenIvf ordinary shares issued to JAK in February 2024 and will be equal to 295,000 ordinary shares of the Purchaser, which will be free trading at the closing of the business combination.
The Notes sold in connection with the Securities Purchase Agreement are convertible into the Purchaser’s ordinary shares at an initial conversion price calculated by dividing $1,000,000,000 (“Valuation Cap”) by the number of Purchaser’s Class A Ordinary Shares on a fully diluted basis (the “Conversion Price”). The Notes have an initial maturity date of six (6) months from the issuance date. The Conversion Price is subject to adjustment from time to time for splits, dividends and similar events. The Conversion Price may also be lowered at the Company’s discretion without limitation.
The Notes bear an interest rate of 12.75% per annum, payable on the last day of each quarter, except that upon an event of default, the Notes shall accrue interest at the rate of 17.75% per annum until paid in full. The Notes rank senior to all other existing indebtedness and equity of the Purchaser and are repayable at maturity at 145% of the principal amount. The Notes are prepayable at 175% of the outstanding principal amount, all outstanding and unpaid interest and all other amounts owing under the Notes with at least 30 trading days’ written notice.
The Securities Purchase Agreement contains customary representations, warranties and covenants by, among and for the benefit of the parties, as well as customary indemnification provisions and standstill restrictions for 180 days after each closing of the Notes on the Purchaser’s additional equity or debt capital raising without the consent of the Buyers.
Acknowledgement Agreement
On March 1, 2024, the Company entered into an acknowledgement agreement (the “Acknowledgement Agreement”) with Chardan Capital Markets, LLC (“Chardan”) and NewGen related to the deferred underwriting commission owed to Chardan in connection with the Company’s initial public offering.
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Pursuant to the Acknowledgement Agreement, the Company will satisfy the deferred underwriting commission at the closing of the Business Combination with NewGen, by (i) paying One Million U.S. Dollars (US $1,000,000) in cash to Chardan, (ii) issuing 1,500,000 PubCo ordinary shares (the “Additional Representative Shares”), and (iii) paying Chardan 30% of the gross proceeds from the post-closing financings of the Company, until the deferred underwriting commission is fully paid within 6 months of the closing. The Acknowledgement Agreement also grants Chardan certain registration rights with respect to the ordinary shares and sole right of first refusal for future financings of the Company for a period of 12 months following the closing of the business combination and other considerations not related to the Company’s business combination with NewGenIvf.
See the Current Reports on for 8-K filed by the Company with the SEC on February 16, 2023, June 13, 2023, December 6, 2023 and March 6, 2024 for additional information.
Extension and Redemptions
On February 13, 2023, at its Extraordinary General Meeting (the “First Extension Meeting”), the Company’s shareholders approved a proposal to amend and restate the Company’s amended and restated memorandum and articles of association (the “First Charter Amendment”) to, among other things, allow the Company to extend the date by which it has to complete a business combination up to eight (8) times for an additional one (1) month each time from February 17, 2023 to October 17, 2023. In connection with the shareholders’ vote at the Extension Meeting, 3,272,305 Class A ordinary shares were tendered for redemption. On February 14, 2023, following the shareholder approval, the Company filed the First Charter Amendment with the British Virgin Islands Registrar of Corporate Affairs.
On October 9, 2023, at its Extraordinary General Meeting (the “Second Extension Meeting”), the Company’s shareholders (i) approved a proposal to amend and restate the Company’s then current memorandum and articles of association (the “Charter”) to, among other things, allow the Company to extend the date by which it has to complete a business combination up to six (6) times for an additional one (1) month each time from October 17, 2023 to April 17, 2024 by deleting the Charter in its entirety and substituting it with a new amended and restated memorandum and articles of association (the “New Charter”) and (ii) approved a proposal to amend and restate the Company’s then current Charter to remove the net tangible asset requirement from the Charter in order to expand the methods that the Company may employ so as not to become subject to the “penny stock” rules of the Securities and Exchange Commission by deleting the Charter in its entirety and substituting it with the New Charter. In connection with the shareholders’ vote at the Second Extension Meeting, 1,695,224 Class A ordinary shares were tendered for redemption. On October 9, 2023, following the shareholder approval, the Company filed the New Charter with the British Virgin Islands Registrar of Corporate Affairs. On October 11, 2023, the Company made a deposit of $20,000 to the Trust Account and extended the date the Company has to consummate an initial business combination from October 17, 2023 to November 17, 2023. On November 13, 2023, the Company made a deposit of $20,000 to the Trust Account and extended the date the Company has to consummate an initial business combination from November 17, 2023 to December 17, 2023. On December 13, 2023, the Company made a deposit of $20,000 to the Trust Account and extended the date the Company has to consummate an initial business combination from December 17, 2023 to January 17, 2024. On January 15, 2024, February 15, 2024 and March 15, 2024, the Company made a deposit of $20,000 each time to the Trust Account and extended the date the Company has to consummate an initial business combination from January 17, 2024 to April 17, 2024.
On March 4, 2024, the Company completed its special meeting that was originally convened and adjourned on March 1, 2024 (the “Special Meeting”). At the Special Meeting holders of 2,772,905 ordinary shares of the Company were present in person or by proxy, representing 74.41% of the total ordinary shares as of January 4, 2024, the record date for the Special Meeting, and constituting a quorum for the transaction of business. At the Special Meeting, the shareholders approved the reincorporation merger proposal, the acquisition merger proposal, the Nasdaq proposal and the share incentive plan proposal. The Company plans to close the Business Combination transaction as soon as possible and will continue to accept reversal of redemption requests until closing.
Background and Competitive Strengths
We believe the experience and network of relationships of our management and director team will give us distinct advantages in sourcing, structuring and consummating a business combination. We believe that our team has a diverse set of skills, including experience across business development, entrepreneurship, investment, finance and marketing, which will provide us access to proprietary deals, assist us in identifying and evaluating a target, manage risk and effect a successful business combination. However, none of our management and director team is obligated to remain with the company after an acquisition transaction, and we cannot provide assurance that the resignation or retention of our current management will be a term or condition in any agreement relating to an acquisition transaction. Moreover, despite the competitive advantages we believe we have, we remain subject to significant competition with respect to identifying and executing an acquisition transaction.
We will seek to capitalize on the experience and networks of the members of our management and director team: Mr. Claudius Tsang, Mr. Abuzzal Abusaeri, Mr. John Brebeck, and Mr. Giang Nguyen Hoang. Our team consists of highly experienced professionals who have significant experience in investing in both public and private companies. Members of our management also have extensive experience in sourcing and evaluating potential investment opportunities as well as deal negotiation, corporate finance, business operations and management. We have developed a proprietary network of relationships with business leaders, investors and intermediaries that we believe can generate deal flow for us. We believe that our team has a strong and complementary set of skills which will allow us to identify a target, execute a business combination and deliver returns for our shareholders.
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Other Acquisition Considerations
We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor, officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm or another independent firm that commonly renders valuation opinions or an independent accounting firm that our initial business combination is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context.
Unless we complete our initial business combination with an affiliated entity, or our Board of Directors cannot independently determine the fair market value of the target business or businesses, we are not required to obtain an opinion from an independent investment banking firm, another independent firm that commonly renders valuation opinions or from an independent accounting firm that the price we are paying for a target is fair to our company from a financial point of view. If no opinion is obtained, our shareholders will be relying on the business judgment of our Board of Directors, which will have significant discretion in choosing the standard used to establish the fair market value of the target or targets, and different methods of valuation may vary greatly in outcome from one another. Such standards used will be disclosed in our tender offer documents or proxy solicitation materials, as applicable, related to our initial business combination.
Members of our management and director team may directly or indirectly own our Class A ordinary shares and/or private placement warrants and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination.
Each of our sponsors, directors and officers presently has, and in the future any of our sponsors, directors and our officers may have additional, fiduciary or contractual obligations to other entities pursuant to which such officer or director is or will be required to present acquisition opportunities to such entity. Accordingly, subject to his or her fiduciary duties under British Virgin Islands law, if any of our officers or directors becomes aware of an acquisition opportunity which is suitable for an entity to which he or she has then current fiduciary or contractual obligations, he or she will need to honor his or her fiduciary or contractual obligations to present such acquisition opportunity to such entity, and only present it to us if such entity rejects the opportunity. Our amended and restated memorandum and articles of association provide that, subject to his or her fiduciary duties under British Virgin Islands law, we renounce our interest in any corporate opportunity offered to any officer or director unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue. We do not believe, however, that any fiduciary duties or contractual obligations of our directors or officers would materially undermine our ability to complete our business combination.
Our sponsor, officers and directors are, and may become a sponsor, an officer or director of other special purpose acquisition companies with a class of securities registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Notwithstanding that, such officers and directors will continue to have a pre-existing fiduciary obligation to us and we will, therefore, have priority over any special purpose acquisition companies they subsequently join.
Redemption rights for public shareholders upon consummation of our initial business combination
We will provide our public shareholders with the opportunity to redeem all or a portion their shares upon the consummation of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net of taxes payable), divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be $10.10 per share. Our initial shareholder has agreed to waive their right to receive liquidating distributions if we fail to consummate our initial business combination within the requisite time period. However, if our initial shareholder or any of our officers, directors or affiliates acquires public shares in or after the initial public offering, they will be entitled to receive liquidating distributions with respect to such public shares if we fail to consummate our initial business combination within the required time period.
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Redemption of public shares and liquidation if no initial business combination
Our sponsor, officers and directors have agreed that we will complete our initial business combination by April 17, 2024, which we have fully extended the period of time in full to consummate a business combination. If we are unable to consummate our initial business combination within the time period specified in our amended and restated memorandum and articles of association, we will, as promptly as reasonably possible but not more than five business days thereafter, distribute the aggregate amount then on deposit in the trust account (net of taxes payable, and less up to $50,000 of interest to pay dissolution expenses), pro rata to our public shareholders by way of redemption and cease all operations except for the purposes of winding up of our affairs. This redemption of public shareholders from the trust account shall be effected as required by function of our memorandum and articles of association and prior to any voluntary winding up, although at all times subject to the Business Companies Act, 2004 of the British Virgin Islands, as amended (the “Companies Act”).
Following the redemption of public shares, we intend to enter “voluntary liquidation” which is the statutory process for formally closing and dissolving a company under the laws of the British Virgin Islands. Given that we intend to enter voluntary liquidation following the redemption of public shareholders from the trust account, we do not expect that the voluntary liquidation process will cause any delay to the payment of redemption proceeds from our trust account. In connection with such a voluntary liquidation, the liquidator would give notice to creditors inviting them to submit their claims for payment, by notifying known creditors (if any) who have not submitted claims and by placing a public advertisement in at least one newspaper published in the British Virgin Islands newspaper and in at least one newspaper circulating in the location where the company has its principal place of business, and taking any other steps he considers appropriate to identify the company’s creditors, after which our remaining assets would be distributed. As soon as the affairs of the company are fully wound-up, the liquidator must complete his statement of account and file notice with the Registrar that the liquidation is complete. We would be dissolved once the Registrar issues a Certificate of Dissolution.
Our initial shareholder has agreed to waive their redemption rights with respect to their founder shares if we fail to consummate our initial business combination within the applicable period from the closing of our initial public offering.
However, if our initial shareholder, or any of our officers, directors or affiliates acquire public shares in or after the initial public offering, they will be entitled to redemption rights with respect to such public shares if we fail to consummate our initial business combination within the required time period. There will be no redemption rights or liquidating distributions with respect to our private placement warrants, which will expire worthless in the event we do not consummate our initial business combination within the required time period. We will pay the costs of our liquidation from our remaining assets outside of the trust account or interest earned on the funds held in the trust account. However, the liquidator may determine that he or she requires additional time to evaluate creditors’ claims (particularly if there is uncertainty over the validity or extent of the claims of any creditors). Also, a creditor or shareholder may file a petition with the BVI court which, if successful, may result in our liquidation being subject to the supervision of that court. Such events might delay distribution of some or all of our remaining assets.
Additionally, in any liquidation proceedings of the company under British Virgin Islands law, the funds held in our trust account may be included in our estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any such claims deplete the trust account we may not be able to return to our public shareholders the liquidation amounts payable to them.
If we do not complete an initial business combination and expend all of the net proceeds of our initial public offering, other than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account or any amount that may be deposited into the trust account to extend the date by which the Company has to complete a business combination, the per-share redemption amount received by shareholders upon our dissolution would be approximately $10.10. The proceeds deposited in the trust account could, however, become subject to the claims of our creditors, which would have higher priority than the claims of our public shareholders. The actual per-share redemption amount received by shareholders may be less than $10.10, plus interest (net of taxes payable, and less up to $50,000 of interest to pay dissolution expenses).
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Although we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public shareholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. In order to protect the amounts held in the trust account or any amount that may be deposited into the trust account to extend the date by which the Company has to complete a business combination, our sponsor agreed that it will be liable to us, if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amounts in the trust account to below $10.10 per share, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of the initial public offering against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third party claims. However, our sponsor may not be able to satisfy those obligations. Other than as described above, none of our other officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses. We have not independently verified whether our sponsor has sufficient funds to satisfy his indemnity obligations and believe that our sponsor’s only assets are securities of our company. We believe the likelihood of our sponsor having to indemnify the trust account is limited because we will endeavor to have all vendors and prospective target businesses as well as other entities execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account.
If we are deemed insolvent for the purposes of the Insolvency Act, 2003 of the British Virgin Islands, as amended (the “Insolvency Act”) (i.e. (i) we fail to comply with the requirements of a statutory demand that has not been set aside under section 157 of the Insolvency Act; (ii) execution or other process issued on a judgment, decree or order of a British Virgin Islands Court in favor of a creditor of the company is returned wholly or partly unsatisfied; or (iii) either the value of the company’s liabilities exceeds its assets, or the company is unable to pay its debts as they fall due), then there are very limited circumstances where prior payments made to shareholders or other parties may be deemed to be a “voidable transaction” for the purposes of the Insolvency Act. A voidable transaction would include, for these purposes, payments made as “unfair preferences” or “transactions at an undervalue”. A liquidator appointed over an insolvent company who considers that a particular transaction or payment is a voidable transaction under the Insolvency Act could apply to the British Virgin Islands Courts for an order setting aside that payment or transaction in whole or in part.
Additionally, if we enter insolvent liquidation under the Insolvency Act, the funds held in our trust account will likely be included in our estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any insolvency claims deplete the trust account you may not be able to return to our public shareholders the liquidation amounts due them.
Our public shareholders will be entitled to receive funds from the trust account only (i) in the event of a redemption of the public shares prior to any winding up in the event we do not consummate our initial business combination within 12 months of the closing of the offering (or April 17, 2024, if we decide to extend the period of time to consummate a business combination), (ii) if they redeem their shares in connection with an initial business combination that we consummate or (iii) if they redeem their shares in connection with a shareholder vote to amend our amended and restated memorandum and articles of association (A) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within the time period specified in our amended and restated memorandum and articles of association, or (B) with respect to any other provision relating to shareholders’ rights or pre-business combination activity. In no other circumstances shall a shareholder have any right or interest of any kind to or in the trust account. In the event we seek shareholder approval in connection with our initial business combination, a shareholder’s voting in connection with the business combination alone will not result in a shareholder’s redeeming its shares to us for an applicable pro rata share of the trust account. Such shareholder must have also exercised its redemption rights described above.
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Competition
In identifying, evaluating and selecting a target business, we may encounter intense competition from other entities having a business objective similar to ours. Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources than us and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe there may be numerous potential target businesses that we could complete a business combination with utilizing the net proceeds of the initial public offering, our ability to compete in completing a business combination with certain sizable target businesses may be limited by our available financial resources. Furthermore, the requirement that, so long as our securities are listed on Nasdaq, we acquire a target business or businesses having a fair market value equal to at least 80% of the value of the trust account (less deferred underwriting discounts and any taxes payable on interest earned and less any interest earned thereon that is released to us for taxes) at the time of the agreement to enter into the business combination, our obligation to pay cash in connection with our public shareholders who exercise their redemption rights, and our outstanding private placement warrants and the potential future dilution they represent, may not be viewed favorably by certain target businesses. Any of these factors may place us at a competitive disadvantage in successfully negotiating our initial business combination.
Conflicts of Interest
Each of our officers and directors presently has, and in the future any of our directors and our officers may have additional, fiduciary or contractual obligations to other entities pursuant to which such officer or director is or will be required to present acquisition opportunities to such entity. Accordingly, subject to his or her fiduciary duties under British Virgin Islands law, if any of our officers or directors becomes aware of an acquisition opportunity which is suitable for an entity to which he or she has then current fiduciary or contractual obligations, he or she will need to honor his or her fiduciary or contractual obligations to present such acquisition opportunity to such entity, and only present it to us if such entity rejects the opportunity. Our amended and restated memorandum and articles of association provide that, subject to his or her fiduciary duties under British Virgin Islands law, we renounce our interest in any corporate opportunity offered to any officer or director unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue. We do not believe, however, that any fiduciary duties or contractual obligations of our directors or officers would materially undermine our ability to complete our business combination.
Emerging Growth Company Status and Other Information
We are an emerging growth company as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (which we refer to herein as the JOBS Act). As such, we are eligible to 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 of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
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 a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an 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 financial statement 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.
We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the date of the IPO, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our shares of common stock that are held by non-affiliates exceeds $700 million as of the prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three year period.
Employees
We currently have one officer. This individual is not obligated to devote any specific number of hours to our matters but he intends to devote as much of his time as he deems necessary to our affairs until we have completed our initial business combination. The amount of time he will devote in any time period will vary based on whether a target business has been selected for our initial business combination and the stage of the business combination process we are in. We do not intend to have any full time employees prior to the consummation of our initial business combination.
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ITEM 1A. RISK FACTORS
As a smaller reporting company, we are not required to make disclosures under this Item.
Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability continue as a “going concern.”
As of December 31, 2023, the Company had cash of $42,224 and a working capital deficit of $2,191,485. Further, we have incurred and expect to continue to incur significant costs as a public company (for legal, financial reporting, accounting and auditing compliance), as well as expenses in connection with our initial business combination activities. Management’s plans to address any need for additional capital are discussed in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We cannot assure you that any efforts to raise capital (if required) or to consummate an initial business combination will be successful. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The consolidated financial statement contained elsewhere in this Form 10-K do not include any adjustments that might result from our inability to continue as a going concern.
If we were considered to be a “foreign person,” we might not be able to complete an initial business combination with a U.S. target company if such initial business combination is subject to U.S. foreign investment regulations or review by a U.S. government entity, such as the Committee on Foreign Investment in the United States (“CFIUS”).
Our sponsor is controlled by or has substantial ties with non-U.S. persons domiciled outside the U.S. Acquisitions and investments by non-U.S. persons in certain U.S. businesses may be subject to rules or regulations that limit foreign ownership. CFIUS is an interagency committee authorized to review certain transactions involving investments by foreign persons in U.S. businesses that have a nexus to critical technologies, critical infrastructure and/or sensitive personal data in order to determine the effect of such transactions on the national security of the U.S. Were we considered to be a “foreign person” under such rules and regulations, any proposed business combination between us and a U.S. business engaged in a regulated industry or which may affect national security could be subject to such foreign ownership restrictions, CFIUS review and/or mandatory filings.
If our potential initial business combination with a U.S. business falls within the scope of foreign ownership restrictions, we may not be able to consummate an initial business combination with such business. In addition, if our potential business combination falls within CFIUS’s jurisdiction, we may be required to make a mandatory filing or determine to submit a voluntary notice to CFIUS, or to proceed with the initial business combination without notifying CFIUS and risk CFIUS intervention, before or after closing the initial business combination. CFIUS may decide to block or delay our initial business combination, impose conditions to mitigate national security concerns with respect to such initial business combination or order us to divest all or a portion of a U.S. business of the combined company if we had proceeded without first obtaining CFIUS clearance. The potential limitations and risks may limit the attractiveness of a transaction with us or prevent us from pursuing certain initial business combination opportunities that we believe would otherwise be beneficial to us and our shareholders. As a result, the pool of potential targets with which we could complete an initial business combination may be limited and we may be adversely affected in terms of competing with other special purpose acquisition companies which do not have similar foreign ownership issues.
Moreover, the process of government review, whether by CFIUS or otherwise, could be lengthy. Because we have only a limited time to complete our initial business combination, our failure to obtain any required approvals within the requisite time-period may require us to liquidate. If we liquidate, our public shareholders may only receive their pro rata share of amounts held in the Trust Account, and our warrants will expire worthless. This will also cause you to lose any potential investment opportunity in a target company and the chance of realizing future gains on your investment through any price appreciation in the combined company.
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ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 1C. CYBERSECURITY
As a blank check company, we have no operations and therefore do not have any operations of our own that face material cybersecurity threats. However, we do depend on the digital technologies of third parties, including information systems, infrastructure and cloud applications and services, any sophisticated and deliberate attacks on, or security breaches in, systems or infrastructure or the cloud that we utilize, including those of third parties, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential data. Because of our reliance on the technologies of third parties, we also depend upon the personnel and the processes of third parties to protect against cybersecurity threats, and we have no personnel or processes of our own for this purpose. In the event of a cybersecurity incident impacting us, the management team will report to the board of directors and provide updates on the management team’s incident response plan for addressing and mitigating any risks associated with such an incident. As an early-stage company without significant investments in data security protection, we may not be sufficiently protected against such occurrences. We also lack sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination of them, could have material adverse consequences on our business and lead to financial loss.
ITEM 2. PROPERTIES
We currently maintain our executive offices at Level 39, Marina Bay Financial Centre, Tower 2, 10 Marina Boulevard, Singapore 018983. We consider our current office space adequate for our current operations.
ITEM 3. LEGAL PROCEEDINGS
We may be subject to legal proceedings, investigations and claims incidental to the conduct of our business from time to time. We are not currently a party to any material litigation or other legal proceedings brought against us. We are also not aware of any legal proceeding, investigation or claim, or other legal exposure that has a more than remote possibility of having a material adverse effect on our business, financial condition or results of operations.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
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part II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our units began to trade on The Nasdaq Capital Market, or Nasdaq, under the symbol “ASCAU” on February 15, 2022. Our ordinary shares, warrants and rights commenced separate trading on Nasdaq on or about March 17, 2022, under the symbols “ASCA,” “ASCAW” and “ASCAR,” respectively.
Holders of Record
At March 28, 2024, there were 3,726,471 ordinary shares issued and outstanding held by four holders of record. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of ordinary shares whose shares are held in the names of various security brokers, dealers, and registered clearing agencies.
Dividends
We have not paid any cash dividends on our ordinary shares to date and do not intend to pay cash dividends prior to the completion of our initial business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of our initial business combination. The payment of any cash dividends subsequent to our initial business combination will be within the discretion of our Board of Directors at such time and we will only pay such dividend out of our profits or share premium (subject to solvency requirements) as permitted under laws of the British Virgin Islands. In addition, our Board of Directors is not currently contemplating and does not anticipate declaring any share capitalizations in the foreseeable future. Further, if we incur any indebtedness in connection with our initial business combination, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.
Securities Authorized for Issuance Under Equity Compensation Plans
None.
Recent Sales of Unregistered Securities
None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
On February 13, 2023, at its First Extension Meeting, the Company’s shareholders approved a proposal to amend and restate the Company’s amended and restated memorandum and articles of association (the “Charter Amendment”) to, among other things, allow the Company to extend the date by which it has to complete a business combination up to eight (8) times for an additional one (1) month each time from February 17, 2023 to October 17, 2023. In connection with the shareholders’ vote at the First Extension Meeting, the holders of 3,272,305 Class A ordinary shares exercised their right to redeem their shares for cash at a redemption price of approximately $10.29 per share, for an aggregate redemption amount of approximately $33.7 million. As such, approximately 47.4% of the public shares were redeemed and approximately 52.6% of the public shares remain outstanding.
On October 9, 2023, at its Second Extension Meeting, the Company’s shareholders approved a proposal to amend and restate the Company’s amended and restated memorandum and articles of association (the “Charter Amendment”) to, among other things, allow the Company to extend the date by which it has to complete a business combination up to six (6) times for an additional one (1) month each time from October 17, 2023 to April 17, 2024. In connection with the shareholders’ vote at the Second Extension Meeting, the holders of 1,695,224 Class A ordinary shares exercised their right to redeem their shares for cash at a redemption price of approximately $10.83 per share, for an aggregate redemption amount of approximately $18,356,419 million. As such, approximately 46.7% of the public shares were redeemed and approximately 53.3% of the public shares remain outstanding.
ITEM 6. [RESERVED]
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with our audited financial statements and the notes related thereto which are included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Special Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors” and elsewhere in this Annual Report on Form 10-K.
Overview
We are a blank check company formed in the British Virgin Islands on April 29, 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”).
Recent Developments
On February 15, 2023, the Company entered into a merger agreement (the “Merger Agreement”) with NewGenIvf Limited, a Cayman Islands exempted company (“NewGen”), certain shareholders of NewGen (the “Principal Shareholders”), A SPAC I Mini Acquisition Corp., a British Virgin Islands business company (the “Purchaser”), and A SPAC I Mini Sub Acquisition Corp., a Cayman Islands exempted company and wholly-owned subsidiary of the Purchaser (the “Merger Sub”), pursuant to which, among other things, (i) the Company will be merged with and into the Purchaser, the separate corporate existence of the Company will cease and the Purchaser will continue as the surviving corporation and (ii) Merger Sub will merge with and into NewGen and NewGen will continue as the surviving company under the laws of the Cayman Islands and become a wholly owned subsidiary of the Purchaser (the “NewGen Business Combination”). Pursuant to the terms of the Merger Agreement, the aggregate consideration to be paid to existing shareholders of NewGen is $50,000,000, which will be paid entirely in stock, comprised of newly issued Class A ordinary shares of the Purchaser at a price of $10.00 per share.
The Merger Agreement contains customary representations, warranties and covenants of the parties thereto. The consummation of the proposed Merger is subject to certain conditions as further described in the Merger Agreement.
Concurrently with the execution of the Merger Agreement, the Company, the Purchaser, NewGen and certain shareholders of NewGen (the “Supporting Shareholders”) entered into a voting and support agreement pursuant to which such Supporting Shareholders agreed, among other things, to vote in favor of the NewGen Business Combination, the adoption of the Merger Agreement and any other matters necessary or reasonably requested by the Purchaser or the Company for consummation of the NewGen Business Combination and the other transactions contemplated by the Merger Agreement.
On June 12, 2023, the Company entered into a First Amendment to Merger Agreement (the “First Amendment”) with NewGen, Principal Shareholders, Purchaser and Merger Sub, to amend the Merger Agreement. Pursuant to the First Amendment, NewGen has agreed to provide non-interest bearing loans in an aggregate principal amount of up to $560,000 (the “Loan”) to the Company to fund any amount that may be required in order to further extend the period of time available for the Company to consummate a business combination and for the Company’s working capital, payment of professional, administrative and operational fees and expenses, and other purposes as mutually agreed by the Company and NewGen. Such loans will only become repayable upon the closing of the Acquisition Merger (as defined in the Merger Agreement). In addition, pursuant to the First Amendment, subject to receipt of at least $140,000 as part of the Loan from NewGen, the Company agreed to waive its termination rights and the right to receive any Break-up Fee (as defined in the Merger Agreement) due to NewGen’s failure to deliver the U.S. GAAP Financials (as defined in the Merger Agreement) by February 28, 2023.
On December 6, 2023, the Company entered into the Second Amendment with NewGenIvf, the Principal Shareholders, Purchaser and Merger Sub, that amended and modified the Merger Agreement to, among other things, (i) reduce the size of Purchaser’s board of directors following the consummation of the Business Combination to five (5) directors, two (2) of whom will be executive directors designated by NewGenIvf and three (3) of whom will be designated by NewGenIvf to serve as independent directors in accordance with Nasdaq requirements, (ii) provide for the conversion of the NewGenIvf shares issued by NewGenIvf following the original date of the Merger Agreement into Purchaser Class A ordinary shares in connection with the NewGen Business Combination, and (iii) remove the condition that Parent shall have in excess of $5,000,000 in net tangible assets immediately after the NewGen Business Combination.
On March 1, 2024, the Company entered into the Third Amendment to Merger Agreement (the “Third Amendment”) with NewGen, PubCo, Merger Sub and the Principal Shareholders. As described in the Third Amendment, the Company shall issue the Commitment Shares for the Initial Tranche to JAK (as defined below).
On March 28, 2024, the Company entered into the Fourth Amendment to Merger Agreement with NewGen, PubCo, Merger Sub and the Principal Shareholders.
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Securities Purchase Agreement
On February 29, 2024, the Company, PubCo, NewGen, the Merger Sub, and certain buyers named therein led by JAK Opportunities VI LLC (collectively, the “Buyers” or “JAK”) entered into a securities purchase agreement (the “Securities Purchase Agreement”), pursuant to which the Company has agreed to issue and sell to the Buyers, in a private placement, an aggregate of up to $3,500,000 principal amount of convertible notes (the “Notes”), consisting of two tranches: (x) an initial tranche (the “Initial Tranche”) of an aggregate principal amount of Notes of up to $1,750,000 and including an original issue discount of up to aggregate $122,500, and (2) subsequent tranches of an aggregate principal amount of Notes of up to $1,750,000 and including an original issue discount of up to aggregate $122,500. The Initial Tranche is expected to occur on the date of the closing of the Business Combination, subject to the terms and conditions set forth in the Securities Purchase Agreement. Concurrently with each issuance of the Notes, the Buyers will receive a certain amount of ordinary shares of the Purchaser (the “Commitment Shares”). The Commitment Shares to be issued at the Initial Tranche will be converted from NewGenIvf ordinary shares issued to JAK in February 2024 and will be equal to 295,000 ordinary shares of the Purchaser, which will be free trading at the closing of the business combination.
The Notes sold in connection with the Securities Purchase Agreement are convertible into the Purchaser’s ordinary shares at an initial conversion price calculated by dividing $1,000,000,000 (“Valuation Cap”) by the number of Purchaser’s Class A Ordinary Shares on a fully diluted basis (the “Conversion Price”). The Notes have an initial maturity date of six (6) months from the issuance date. The Conversion Price is subject to adjustment from time to time for splits, dividends and similar events. The Conversion Price may also be lowered at the Company’s discretion without limitation.
The Notes bear an interest rate of 12.75% per annum, payable on the last day of each quarter, except that upon an event of default, the Notes shall accrue interest at the rate of 17.75% per annum until paid in full. The Notes rank senior to all other existing indebtedness and equity of the Purchaser and are repayable at maturity at 145% of the principal amount. The Notes are prepayable at 175% of the outstanding principal amount, all outstanding and unpaid interest and all other amounts owing under the Notes with at least 30 trading days’ written notice.
The Securities Purchase Agreement contains customary representations, warranties and covenants by, among and for the benefit of the parties, as well as customary indemnification provisions and standstill restrictions for 180 days after each closing of the Notes on the Purchaser’s additional equity or debt capital raising without the consent of the Buyers.
Acknowledgement Agreement
On March 1, 2024, the Company entered into an acknowledgement agreement (the “Acknowledgement Agreement”) with Chardan Capital Markets, LLC (“Chardan”) and NewGen related to the deferred underwriting commission owed to Chardan in connection with the Company’s initial public offering.
Pursuant to the Acknowledgement Agreement, the Company will satisfy the deferred underwriting commission at the closing of the Business Combination with NewGen, by (i) paying One Million U.S. Dollars (US $1,000,000) in cash to Chardan, (ii) issuing 1,500,000 PubCo Ordinary Shares (the “Additional Representative Shares”), and (iii) paying Chardan 30% of the gross proceeds from the post-closing financings of the Company, until the deferred underwriting commission is fully paid within 6 months of the closing. The Acknowledgement Agreement also grants Chardan certain registration rights with respect to the ordinary shares and sole right of first refusal for future financings of the Company for a period of 12 months following the closing of the business combination and other considerations not related to the Company’s business combination with NewGenIvf.
See the Current Reports on for 8-K filed by the Company with the SEC on February 16, 2023, June 13, 2023, December 6, 2023 and March 6, 2024 for additional information.
Extension and Redemptions
On February 13, 2023, at its Extraordinary General Meeting (the “First Extension Meeting”), the Company’s shareholders approved a proposal to amend and restate the Company’s amended and restated memorandum and articles of association (the “First Charter Amendment”) to, among other things, allow the Company to extend the date by which it has to complete a business combination up to eight (8) times for an additional one (1) month each time from February 17, 2023 to October 17, 2023. In connection with the shareholders’ vote at the Extension Meeting, 3,272,305 Class A ordinary shares were tendered for redemption. On February 14, 2023, following the shareholder approval, the Company filed the First Charter Amendment with the British Virgin Islands Registrar of Corporate Affairs.
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On October 9, 2023, at its Extraordinary General Meeting (the “Second Extension Meeting”), the Company’s shareholders (i) approved a proposal to amend and restate the Company’s then current memorandum and articles of association (the “Charter”) to, among other things, allow the Company to extend the date by which it has to complete a business combination up to six (6) times for an additional one (1) month each time from October 17, 2023 to April 17, 2024 by deleting the Charter in its entirety and substituting it with a new amended and restated memorandum and articles of association (the “New Charter”) and (ii) approved a proposal to amend and restate the Company’s then current Charter to remove the net tangible asset requirement from the Charter in order to expand the methods that the Company may employ so as not to become subject to the “penny stock” rules of the Securities and Exchange Commission by deleting the Charter in its entirety and substituting it with the New Charter. In connection with the shareholders’ vote at the Second Extension Meeting, 1,695,224 Class A ordinary shares were tendered for redemption. On October 9, 2023, following the shareholder approval, the Company filed the New Charter with the British Virgin Islands Registrar of Corporate Affairs. On October 11, 2023, the Company made a deposit of $20,000 to the Trust Account and extended the date the Company has to consummate an initial business combination from October 17, 2023 to November 17, 2023. On November 13, 2023, the Company made a deposit of $20,000 to the Trust Account and extended the date the Company has to consummate an initial business combination from November 17, 2023 to December 17, 2023. On December 13, 2023, the Company made a deposit of $20,000 to the Trust Account and extended the date the Company has to consummate an initial business combination from December 17, 2023 to January 17, 2024. On January 15, 2024, February 15, 2024 and March 15, 2024, the Company made a deposit of $20,000 each time to the Trust Account and extended the date the Company has to consummate an initial business combination from January 17, 2024 to April 17, 2024.
On March 4, 2024, the Company completed its special meeting that was originally convened and adjourned on March 1, 2024 (the “Special Meeting”). At the Special Meeting holders of 2,772,905 ordinary shares of the Company were present in person or by proxy, representing 74.41% of the total ordinary shares of the Company outstanding as of January 4, 2024, the record date for the Special Meeting, and constituting a quorum for the transaction of business. At the Special Meeting, the shareholders approved the Reincorporation Merger Proposal, the Acquisition Merger Proposal, the Nasdaq Proposal and the Share Incentive Plan Proposal. The Company plans to close the Business Combination transaction as soon as possible and will continue to accept reversal of redemption requests until closing.
Issuance of Unsecured Promissory Note A
On January 27, 2023, the Company issued an unsecured promissory note in the aggregate principal amount up to $500,000 (the “Promissory Note A”) to A SPAC (Holdings) Acquisition Corp. (the “Sponsor”). Pursuant to the Promissory Note A, the Sponsor agreed to loan to the Company an aggregate amount up to $500,000 payable promptly after the date on which the Company consummates a business combination. In the event that the Company does not consummate a business combination, the Promissory Note A will be terminated. The Promissory Note A is convertible into warrants having the same terms and conditions as the public warrants, at the price of $1.00 per warrant at the option of the Sponsor. The Promissory Note A does not bear interest. The proceeds of the Note A will be used by the Company for working capital purposes.
On June 12, 2023, the Company entered into an amendment to the Promissory Note A, pursuant to which the principal amount outstanding under the Promissory Note A shall be payable promptly on demand and, in any event, no later than the date on which the Company terminates or consummates an initial business combination.
Issuance of Unsecured Promissory Note B
On March 13, 2023, the Company issued an unsecured promissory note in the aggregate principal amount of up to $500,000 (the “Promissory Note B”) to the Sponsor. Pursuant to the Promissory Note B, the Sponsor agreed to loan to the Company an aggregate amount of up to $500,000 payable promptly after the date on which the Company consummates a business combination. In the event that the Company does not consummate a business combination, the Promissory Note B will be terminated. The Promissory Note B is convertible into warrants having the same terms and conditions as the public warrants, at the price of $1.00 per warrant, at the option of the Sponsor. The Promissory Note B does not bear interest. The proceeds of the Promissory Note B will be used by the Company to pay various expenses of the Company, including any payment to extend the period of time the Company has to consummate an initial business combination, and for working capital purposes.
On June 12, 2023, the Company entered into an amendment to the Promissory Note B, pursuant to which the principal amount outstanding under the Promissory Note B shall be payable promptly on demand and, in any event, no later than the date on which the Company terminates or consummates an initial business combination.
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Issuance of Unsecured Promissory Note C
On June 12, 2023, the Company issued an unsecured promissory note in the aggregate principal amount of up to $200,000 (the “Promissory Note C”) to the Sponsor. Pursuant to the Promissory Note C, the Sponsor agreed to loan to the Company an aggregate amount of up to $200,000. The Promissory Note C does not bear interest and shall be payable promptly on demand and, in any event, no later than the date on which the Company terminates or consummates an initial business combination. The Promissory Note C is convertible into warrants having the same terms and conditions as the public warrants, at the price of $1.00 per warrant, at the option of the Sponsor.
The proceeds of the Promissory Note C will be used by the Company to pay various expenses of the Company, including any payment to extend the period of time the Company has to consummate an initial business combination, and for working capital purposes.
Issuance of Unsecured Promissory Note D
On March 15, 2024, the Company issued an unsecured promissory note in the aggregate principal amount of up to $300,000 (the “Promissory Note D”) to the Sponsor. Pursuant to the Promissory Note D, the Sponsor agreed to loan to the Company an aggregate amount of up to $300,000. The Promissory Note D does not bear interest and shall be payable promptly on demand and, in any event, no later than the date on which the Company terminates or consummates an initial business combination. The Promissory Note D is convertible into warrants having the same terms and conditions as the public warrants, at the price of $1.00 per warrant, at the option of the Sponsor.
The proceeds of the Promissory Note D will be used by the Company to pay various expenses of the Company, including any payment to extend the period of time the Company has to consummate an initial business combination, and for working capital purposes.
Results of Operations
We have neither engaged in any operations nor generated any operating revenues to date. Our only activities from inception through December 31, 2023 were organizational activities and those necessary to prepare for, and consummate, the IPO, and, since our IPO on February 17, 2022, searching for a target business with which to complete our initial business combination. We do not expect to generate any operating revenues until after the completion of our initial business combination, at the earliest.
We expect to generate non-operating income in the form of interest income on marketable securities held in the Trust Account. We expect to continue to incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with searching for, and completing, a business combination.
For the year ended December 31, 2023, we had a net loss of $690,851, which consisted of loss of $2,521,600 derived from general and administrative expenses, offset by interest earned on marketable securities of $1,830,749.
For the year ended December 31, 2022, we had a net income of $500,650, which consisted of loss of $504,907 derived from general and administrative expenses, offset by interest earned on marketable securities of $1,005,557.
Liquidity and Capital Resources
On February 17, 2022, the Company consummated the IPO of 6,000,000 units (the “Units”). Each Unit consisted of one Class A ordinary share (the “Ordinary Share”), three-fourths (3/4) of one redeemable warrant (the “Warrant”), and one right (the “Right”) to receive one-tenth (1/10) of one Ordinary Share upon the consummation of an initial business combination. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $60,000,000.
On February 17, 2022, simultaneously with the closing of the IPO, the Company consummated the private placement (the “Private Placement”) with A SPAC (Holdings) Acquisition Corp., the Company’s sponsor, of 2,875,000 warrants (the “Private Warrants”) at a price of $1.00 per Private Warrant, generating total proceeds of $2,875,000. The Private Warrants are identical to the public warrants sold in the IPO, except that (i) they may be exercised by the holders for cash or on a cashless basis, (ii) they may be transferred, assigned or sold by the Sponsor to the Permitted Transferees, and (iii) they will not be redeemable by the Company.
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As of February 17, 2022, a total of $60,600,000 ($10.10 per Unit) of the net proceeds from the IPO and the Private Placement were deposited in the Trust Account established for the benefit of the Company’s public shareholders. An audited balance sheet as of February 17, 2022 reflecting receipt of the proceeds upon consummation of the IPO and the sale of the Private Warrants was issued by the Company and filed as an exhibit to a Current Report on Form 8-K dated April 5, 2022.
Subsequently, on February 25, 2022, the underwriters exercised their over-allotment option in full. The closing of the issuance and sale of the additional Units (the “Over-Allotment Option Units”) occurred on March 1, 2022. The total aggregate issuance by the Company of 900,000 Over-Allotment Option Units at a price of $10.00 per unit generated total gross proceeds of $9,000,000. On March 1, 2022, simultaneously with the sale of the Over-Allotment Option Units, the Company consummated the private sale of an additional 270,000 Private Warrants to the Sponsor generating gross proceeds of $270,000.
On March 1, 2022, an additional $9,090,000 ($10.10 per Unit) consisting of the net proceeds from the sale of the Over-Allotment Option Units and the additional Private Warrants were placed in the Trust Account, resulting in a total of $69,690,000 held in the Trust Account.
Following the IPO (including the Over-Allotment Option Units) and the sale of the Private Warrants on February 17, 2022 and March 1, 2022, a total of $69,690,000 was placed in the Trust Account, and we had $1,025,000 of cash held outside of the Trust Account, after payment of costs related to the IPO, and available for working capital purposes. We incurred $4,918,415 in transaction costs, including $1,380,000 of cash underwriting fees, $2,415,000, of deferred underwriting fees, the fair value of the representative shares of $571,448, and $551,967 of other offering costs.
For the years ended December 31, 2023 and 2022, cash used in operating activities was $857,356 and $527,123, respectively.
As of December 31, 2023, we had marketable securities held in the Trust Account of $21,267,535 consisting of money market funds which primarily invest in United States government securities with a maturity of 185 days or less. Interest income on the balance in the Trust Account may be used by us to pay taxes. Through December 31, 2023, we did not withdraw any interest earned on the Trust Account to pay our taxes. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less taxes payable), to complete a business combination and to pay our expenses relating thereto. To the extent that our capital stock or debt is used in whole or in part as a consideration to effect a business combination, the remaining funds held in the Trust Account will be used as working capital to finance the operations of the target business. Such working capital funds could be used in a variety of ways including continuing or expanding the target business’ operations, for strategic acquisitions and for marketing, research and development of existing or new products or services. Such funds could also be used to repay any operating expenses or finders’ fees which we had incurred prior to the completion of our business combination if the funds available to us outside of the Trust Account were insufficient to cover such expenses.
As of December 31, 2023, the Company had cash of $42,224 and a working capital deficit of $2,191,485. In 2023, the Sponsor provided loans to the Company totaling $1,064,861, pursuant to three promissory notes. The loans are non-interest bearing and payable promptly on demand and, in any event, no later than the date on which the Company terminates or consummates an initial business combination. NewGen provided a total of $560,000 loans to the Company pursuant to the First Amendment to the Merger Agreement.
We have until April 17, 2024 to consummate a Business Combination (assuming the Company deposits $20,000 per month pursuant to the New Charter). It is uncertain that the Company will be able to consummate a Business Combination by this time. If a Business Combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution.
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We expect to continue to incur significant professional costs to remain as a publicly traded company and to incur significant transaction costs in pursuit of the consummation of a business combination. 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 these conditions raise substantial doubt about the Company’s ability to continue as a going concern. The management’s plan in addressing this uncertainty is through the Working Capital Loans, as defined below (see Note 5). In addition, if the Company is unable to complete a business combination April 17, 2024 if it exercises its option to extend the date to consummate a business combination), the Company’s board of directors would proceed to commence a voluntary liquidation and thereby a formal dissolution of the Company. There is no assurance that the Company’s plans to consummate a business combination will be successful. As a result, management has determined that such an additional condition also raises substantial doubt about the Company’s ability to continue as a going concern. The financial statement does not include any adjustments that might result from the outcome of this uncertainty.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of December 31, 2023. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non- financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than described below.
Registration Rights
The holders of the founder shares, the private placement warrants (and their underlying securities) and the warrants that may be issued upon conversion of the Working Capital Loans (and their underlying securities) are entitled to registration rights pursuant to a registration rights agreement signed on the effective date of the IPO. The holders of a majority of these securities are entitled to make up to three demands that the Company register such securities. The holders of the majority of the founder shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these ordinary shares are to be released from escrow. The holders of a majority of the private placement warrants and warrants issued in payment of Working Capital Loans made to the Company (or underlying securities) can elect to exercise these registration rights at any time after the Company consummates a business combination. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a business combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
Pursuant to the underwriting agreement entered into on February 14, 2022, the underwriters in the IPO are entitled to a deferred fee of 3.5% of the gross proceeds of the IPO and over-allotment, or $2,415,000. The deferred fee will be payable to the underwriters solely in the event that we complete a business combination from the amounts held in the Trust Account, subject to the terms of the underwriting agreement.
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Critical Accounting Estimates
We prepare our financial statements in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by our management. We have not identified any critical accounting estimates.
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 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) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2024 for the Company and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted ASU 2020-06 on June 1, 2023. Adoption of the ASU did not impact the Company’s financial position, results of operations or cash flows.
In December 2023, the FASB issued Accounting Standards Update 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosure” (“ASU 2023-09”). ASU 2023-09 mostly requires, on an annual basis, disclosure of specific categories in an entity’s effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. The incremental disclosures may be presented on a prospective or retrospective basis. The ASU is effective for fiscal years beginning after December 15, 2024 with early adoption permitted. The Company is currently assessing the impact, if any, that ASU 2023-09 would have on its financial position, results of operations or cash flows.
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 financial statements.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
As a smaller reporting company, we are not required to make disclosures under this Item.
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Item 8. Financial Statements and Supplementary Data
This information appears following Item 15 of this Annual Report on Form 10-K and is included herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Annual Report on Form 10-K, is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our current chief executive officer and chief financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of December 31, 2023, pursuant to Rule 15d-15(e) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of December 31, 2023, our disclosure controls and procedures were effective.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
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Management’s Report on Internal Controls Over Financial Reporting
As required by SEC rules and regulations implementing Section 404 of the Sarbanes-Oxley Act, our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that:
| (1) | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company, |
| (2) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors, and |
| (3) | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect errors or misstatements in our financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of our internal control over financial reporting at December 31, 2023. In making these assessments, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013). Based on our assessments and those criteria, management determined that we maintained effective internal control over financial reporting as of December 31, 2023.
This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm due to our status as an emerging growth company under the JOBS Act.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
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part III
Item 10. Directors, Executive Officers and Corporate Governance.
The following table sets forth information about our directors and executive officers:
| Name | Age | Position | ||||
| Claudius Tsang | 47 | Chief Executive Officer, Chief Financial Officer and Chairman | ||||
| Abuzzal Abusaeri | 48 | Independent Director | ||||
| Giang Nguyen Hoang | 37 | Independent Director | ||||
| John Brebeck | 59 | Independent Director | ||||
Below is a summary of the business experience of each our executive officers and directors:
Mr. Claudius Tsang has served as our Chief Executive Officer since April 2021 and Chairman and Chief Financial Officer since July 2021. Mr. Tsang has over 20 years of experience in capital markets, with a strong track record of success in private equity, M&A transactions, and PIPE investments. Since 2022, Mr. Tsang has been the non-executive director of Unity Group Holdings International Limited (SEHK:1539), a publicly listed investment company engages in the leasing and trading of energy saving products in Hong Kong. During his 15-year career at Templeton from 2005 to 2007 and from 2008 to 2020, Mr. Tsang served in various positions, including Co-head of Private Equity (North Asia) at Templeton Asset Management Limited and a Partner of Templeton Private Equity Partners, Partner, Senior Executive Director, and Vice President. Mr. Tsang was responsible for the overall investment, management, and operations activities of Templeton Private Equity Partners in North Asia. His role encompassed overseeing the analysis and evaluation of opportunities for strategic equity investments in Asia. From July 2007 to June 2008, Mr. Tsang joined Lehman Brothers, where he managed private equity projects in Hong Kong, China, Taiwan and the United States. Mr. Tsang served as the Chief Executive Officer and Chairman of Model Performance Acquisition Corp., from March 2021 and July 2021 respectively, until it closed its business combination with MultiMetaVerse Inc. in January 2023. Since November 2022, he has served as the Chief Executive Officer, Chairman and Director of A Paradigm Acquisition Corp. He previously served as the Chief Executive Officer and, since June 2021, became the Chief Financial Officer and, since January 2024, serves as a director of JVSPAC Acquisition Corp. Since February 2024, Mr. Tsang served as a director of International Media Acquisitions Corp. He has served as the Chief Financial Officer of A SPAC II Acquisition Corp since July 2021 and as the Director and Chief Executive Officer of A SPAC (HK) Acquisition Corp since February 2022 and March 2022, respectively. Mr. Tsang served as a director of the CFA Society of Hong Kong from 2013 to 2019. Mr. Tsang obtained a postgraduate certificate in sustainable business from the University of Cambridge in 2023, a Master of Business Administration from the University of Chicago Booth School of Business in 2017, a bachelor’s degree in law from Tsinghua University in 2005, and a bachelor’s degree in engineering from the Chinese University of Hong Kong in 1998. Mr. Tsang is also a CFA charter holder and a Certified ESG Analyst (CESGA) certification holder.
Mr. Abuzzal Abusaeri has served as our director since February 2022. Mr. Abusaeri has almost two decades of experience in mergers and acquisitions, growth strategy formulation, providing mergers and acquisitions and capital market transactions across a range of portfolio companies in diverse industries. Since 2023, Mr. Abusaeri has been providing consulting service to Indonesian companies with regards to fund-raising. From 2016 to 2023, Mr. Abusaeri served as the Head of Corporate Finance with a focus on Mergers and Acquisitions for Global Mediacom, a leading media and entertainment group in Indonesia. During his tenure, Mr. Abusaeri managed sell-side and buy-side M&A investments of the company, advised investments within the venture capital space and led issuance of bonds. His experience entails acquisitions and strategic investments in a number of media and technology companies in emerging markets. From 2009 to 2016, Mr. Abusaeri served as the Vice President of Corporate Finance for Fairways Investment Group, an Indonesian based investment holding company focusing on consumer related companies. Mr. Abusaeri was responsible for managing portfolio companies which included acting as Chief Financial Officer and leading the development of a consumer lending startup, and overseeing the growth strategy and execution of an Indonesian healthcare company. From 2007 to 2009, Mr. Abusaeri served as the Senior Assistant Vice President for Bank Danamon, one of the largest bank of Indonesia with approximately IDR200 trillion asset size in 2020. From 2005 to 2007, Mr. Abusaeri served as the Assistant Vice President for Bank Lippo, currently Bank CIMB Niaga. During his tenure, Mr. Abusaeri led the bank’s business and economic research unit where he conducted a number of research within Indonesia’s consumer and corporate banking industry. From 2004 to 2005, Mr. Abusaeri served as the Research Analyst for McKinsey and Co, where he was part of the firm’s financial institution group practice and part of the team that advised a number of large Indonesian banks. From 2003 to 2004, Mr. Abusaeri served as the Research Analyst for DBS Vickers Securities, a securities and derivatives brokerage firm with international Asian focus in Hong Kong, Indonesia, Thailand, Malaysia, the United States and the United Kingdom. Mr. Abusaeri obtained his Master of Business Administration from the University of Chicago Booth School of Business in 2018, Master of Science in Investment Management from Bayes Business School, University of London in 2002, and bachelor degree of Economics from the Trisakti University in 1998.
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Mr. Giang Nguyen Hoang has served as our director since February 2022. Mr. Giang has over 13 years of experience in capital market, business management, strategic management, entrepreneurship, and risk management. Since 2020, Mr. Giang has served as the Chairman for DNSE Securities JSC, a stock trading and brokerage firm in Vietnam. Since 2018, Mr. Giang has served as the Chairman and Chief Executive Officer for Encapital Fintech JSC, a fintech company in Vietnam providing financial technology solutions for in Vietnam. During his tenure, Mr. Giang was responsible for for setting the vision, direction and strategy for the organization and was responsible for overseeing the growth and expansion of the business. Mr. Giang also serves as a board member of numerous organizations, including TNG Investment and Trading JSC (HNX:TNG), a publicly listed garment manufacturing company in Vietnam (since 2021), and Southern Gas Trading Joint Stock Company (since 2019). From 2008 to 2018, Mr. Giang was a 10-year veteran of VNDIRECT Securities Corporation, a publicly listed brokerage firm in Vietnam, focusing on individual investors through a proprietary online trading platform, where he held various positions including Chief Executive Officer, Risk Management Manager, Manager, and Business Analyst for Research and Development Department. During his tenure, Mr. Giang oversaw the company’s business strategy, operations and compliance matters. Mr. Giang obtained his Master of Business Administration from the University of Chicago Booth School of Business, and his Bachelor of Science and Computer Engineering from University of Nebraska.
Mr. John Brebeck has served as our director since February 2022. He has over 30 years of experience in corporate management, capital market, strategic development, and business operations. Since 2021, Mr. Brebeck has served as the Vice President of Investor Relations for Glass House Brands, a vertically-integrated producer of premium sun-grown cannabis, with a dedicated focus on the California market and building leading, lasting brands to serve consumers across all segments. From 2018 to 2021, Mr. Brebeck served as the Senior Advisor to Quantum International Corp., a research-based capital market solution provider specializing in long-term shareholder value creation, AGM management, capital market and corporate financial solutions. From 2008 to 2022, he also served as the External Director for Dalton Greater China Fund, an equity fund that targeted companies benefiting from China’s growth and that sought to capitalize on inefficiencies in the China equity markets. From 2014 to 2021, Mr. Brebeck served as a board member for Hydroionic Envirotec Company Limited, a technology company working towards zero heavy metal emissions and focusing heavy metal recycling. From 2014 to 2018, Mr. Brebeck served as the Managing Director for Peace Field Limited, a Hong Kong based professional service provider that offers financial, strategic, and operational advisory services for mid-market companies. Prior to 2014, Mr. Brebeck served in numerous positions, including as President of Yuanta Investment Consulting, a wholly-owned subsidiary of Yuanta Financial Holdings, a leading domestic broker in Taiwan, and as research head for The Dalton Greater China Fund and JP Morgan Securities in Taiwan. Mr. Brebeck is a Chartered Financial Analyst. He obtained his Master of Business Administration degree from The University of Chicago Booth School of Business and his Bachelor of Arts in China Regional Studies from Georgetown University.
Number, Terms of Office and Election of Officers and Directors
Our Board of Directors consists of four members. The holder of our outstanding Class B ordinary share will have the right to elect all of our directors prior to consummation of our initial business combination and holders of our Class A ordinary shares, including the public shares, will not have the right to vote on the election of directors during such time. These provisions of our amended and restated memorandum and articles of association may only be amended by a resolution passed by holders of at least a majority of our ordinary shares who are eligible to vote and attend and vote in a general meeting our shareholders. Each of our directors will hold office for a two-year term. Subject to any other special rights applicable to the shareholders, any vacancies on our Board of Directors may be filled by the affirmative vote of a majority of the directors present and voting at the meeting of our board or by the holder of our outstanding Class B ordinary share.
Our officers are elected by the Board of Directors and serve at the discretion of the Board of Directors, rather than for specific terms of office. Our Board of Directors is authorized to appoint persons to the offices set forth in our amended and restated memorandum and articles of association as it deems appropriate. Our amended and restated memorandum and articles of association provide that our officers may consist of a Chairman, Chief Executive Officer, President, Chief Financial Officer, Vice Presidents, Secretary, Assistant Secretaries, Treasurer and such other offices as may be determined by the Board of Directors.
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Director Independence
The Nasdaq listing standards require that a majority of our Board of Directors be independent. An “independent director” is defined generally as a person who has no material relationship with the listed company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company). Our board has determined that each of Mr. Abuzzal Abusaeri, Mr. Giang Nguyen Hoang and Mr. John Brebeck are independent directors under applicable SEC and Nasdaq rules. Our independent directors will have regularly scheduled meetings at which only independent directors are present.
Board Committees
Our Board of Directors has three standing committees: an audit committee, a compensation committee and a nominating committee. Each committee operates under a charter, in the form previously filed with the SEC as exhibits to the Company’s Registration Statement on Form S-1, as amended, adopted in connection with the consummation of the IPO, and has the composition and responsibilities described below. Subject to phase-in rules and a limited exception, Nasdaq rules and Rule 10A-3 of the Exchange Act require that the audit committee of a listed company be comprised solely of independent directors, and Nasdaq rules require that the compensation committee of a listed company be comprised solely of independent directors.
Audit Committee
We have established an audit committee of the Board of Directors. The members of our audit committee are Abuzzal Abusaeri, Giang Nguyen Hoang and John Brebeck. Mr. Abusaeri serves as chairperson of the audit committee.
Each member of the audit committee is financially literate and our Board of Directors has determined that Mr. Abusaeri qualifies as an “audit committee financial expert” as defined in applicable SEC rules.
We have adopted an audit committee charter, which details the principal functions of the audit committee, including:
| ● | the appointment, compensation, retention, replacement, and oversight of the work of the independent auditors and any other independent registered public accounting firm engaged by us; |
| ● | pre-approving all audit and non-audit services to be provided by the independent auditors or any other registered public accounting firm engaged by us, and establishing pre-approval policies and procedures; |
| ● | reviewing and discussing with the independent auditors all relationships the auditors have with us in order to evaluate their continued independence; |
| ● | setting clear hiring policies for employees or former employees of the independent auditors; |
| ● | setting clear policies for audit partner rotation in compliance with applicable laws and regulations; |
| ● | obtaining and reviewing a report, at least annually, from the independent auditors describing (i) the independent auditor’s internal quality-control procedures and (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities, within, the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues; |
| ● | reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction; and |
| ● | reviewing with management, the independent auditors, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities. |
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Compensation Committee
We have established a compensation committee of the Board of Directors. The members of our Compensation Committee are Abuzzal Abusaeri, Giang Nguyen Hoang and John Brebeck. Mr. Abusaeri serves as chairperson of the compensation committee. We have adopted a compensation committee charter, which details the principal functions of the compensation committee, including:
| ● | reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer’s based on such evaluation; |
| ● | reviewing and approving the compensation of all of our other officers; |
| ● | reviewing our executive compensation policies and plans; |
| ● | implementing and administering our incentive compensation equity-based remuneration plans; |
| ● | assisting management in complying with our proxy statement and annual report disclosure requirements; |
| ● | approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees; |
| ● | producing a report on executive compensation to be included in our annual proxy statement; and |
| ● | reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors. |
The charter provides that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required by Nasdaq and the SEC.
Nominating Committee
We have established a nominating committee of the Board of Directors, which consists of Abuzzal Abusaeri, Giang Nguyen Hoang and John Brebeck, each of whom is an independent director under the Nasdaq listing standards. Mr. Abusaeri will serves as chairperson of the nominating committee. The nominating committee is responsible for overseeing the selection of persons to be nominated to serve on our Board of Directors. The nominating committee considers persons identified by its members, management, shareholders, investment bankers and others.
Guidelines for Selecting Director Nominees
The guidelines for selecting nominees, which are specified in the nominating committee charter, generally provide that persons to be nominated:
| ● | should have demonstrated notable or significant achievements in business, education or public service; |
| ● | should possess the requisite intelligence, education and experience to make a significant contribution to the Board of Directors and bring a range of skills, diverse perspectives and backgrounds to its deliberations; and |
| ● | should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the shareholders. |
The nominating committee will consider a number of qualifications relating to management and leadership experience, background and integrity and professionalism in evaluating a person’s candidacy for membership on the Board of Directors. The nominating committee may require certain skills or attributes, such as financial or accounting experience, to meet specific board needs that arise from time to time and will also consider the overall experience and makeup of its members to obtain a broad and diverse mix of board members. The nominating committee does not distinguish among nominees recommended by shareholders and other persons.
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Conflicts of Interest
Under British Virgin Islands law, directors and officers owe the following fiduciary duties:
| ● | duty to act in good faith in what the director or officer believes to be in the best interests of the company as a whole; |
| ● | duty to exercise powers for the purposes for which those powers were conferred and not for a collateral purpose; |
| ● | directors should not improperly fetter the exercise of future discretion; |
| ● | duty to exercise powers fairly as between different classes of shareholders; |
| ● | duty not to put themselves in a position in which there is a conflict between their duty to the company and their personal interests; and |
| ● | duty to exercise independent judgment. |
In addition to the above, directors also owe a duty of care which is not fiduciary in nature. This duty has been defined as a requirement to act as a reasonably diligent person having both the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company and the general knowledge skill and experience which that director has.
As set out above, directors have a duty not to put themselves in a position of conflict and this includes a duty not to engage in self-dealing, or to otherwise benefit as a result of their position. However, in some instances what would otherwise be a breach of this duty can be forgiven and/or authorized in advance by the shareholders provided that there is full disclosure by the directors. This can be done by way of permission granted in the amended and restated memorandum and articles of association or alternatively by shareholder approval at general meetings.
Each of our directors and officers presently has, and in the future any of our directors and our officers may have additional, fiduciary or contractual obligations to other entities pursuant to which such officer or director is or will be required to present acquisition opportunities to such entity. Accordingly, subject to his or her fiduciary duties under British Virgin Islands law, if any of our officers or directors becomes aware of an acquisition opportunity which is suitable for an entity to which he or she has then current fiduciary or contractual obligations, he or she will need to honor his or her fiduciary or contractual obligations to present such acquisition opportunity to such entity, and only present it to us if such entity rejects the opportunity. Our amended and restated memorandum and articles of association provide that, subject to his or her fiduciary duties under British Virgin Islands law, we renounce our interest in any corporate opportunity offered to any officer or director unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue. We do not believe, however, that any fiduciary duties or contractual obligations of our directors or officers would materially undermine our ability to complete our business combination.
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In addition, our sponsor, officers and directors are now, and may in the future, sponsor or participate in the formation of, or become an officer or director of, any other special purpose acquisition companies similar to ours or may pursue other business or investment ventures during the period in which we are seeking an initial business combination. Any such companies, businesses or investments, may present additional conflicts of interest in determining to which entity a particular business opportunity should be presented, in pursuing an initial business target and in allocating their time to devote to our affairs. In particular, our officers and directors, and affiliates of our officers and directors, are currently sponsoring other blank check companies, and may look for an acquisition target in any location, has a window in which it may complete its initial business combination that overlaps the corresponding window we have. However, we do not believe that any such potential conflicts would materially affect our ability to complete our initial business combination, because our management and director team has experience in identifying and executing multiple acquisition opportunities simultaneously. Potential investors should also be aware of the following other potential conflicts of interest:
| ● | None of our officers or directors is required to commit his or her full time to our affairs and, accordingly, may have conflicts of interest in allocating his or her time among various business activities. |
| ● | In the course of their other business activities, our officers and directors may become aware of investment and business opportunities which may be appropriate for presentation to us as well as the other entities with which they are affiliated. Our management may have conflicts of interest in determining to which entity a particular business opportunity should be presented. |
| ● | Our sponsor, officers and directors have agreed to waive their redemption rights with respect to their founder shares and public shares in connection with the consummation of our initial business combination. Additionally, our sponsor, officers and directors have agreed to waive their redemption rights with respect to their founder shares if we fail to consummate our initial business combination within 12 months after the closing of the initial public offering (or October 17, 2023, if we extend the period of time to consummate a business combination). If we do not complete our initial business combination within such applicable time period, the proceeds of the sale of the private placement warrants held in the trust account will be used to fund the redemption of our public shares and warrants and rights will expire worthless. With certain limited exceptions, the founder shares will not be transferable, assignable or salable by our sponsor until the earlier of (1) six months after the completion of our initial business combination and (2) the date on which we consummate a liquidation, merger, share exchange, reorganization, or other similar transaction after our initial business combination that results in all of our shareholders having the right to exchange their ordinary shares for cash, securities or other property. Notwithstanding the foregoing, if the last sale price of our Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share splits, share capitalizations, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing after our initial business combination, the founder shares will be released from the lock-up. With certain limited exceptions, the private placement warrants will not be transferable, assignable or salable by our sponsor. Since our sponsor and officers and directors may directly or indirectly own ordinary shares, warrants and rights, our officers and directors may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. |
| ● | Our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination. |
The conflicts described above may not be resolved in our favor.
We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete our initial business combination with such a company, we, or a committee of independent directors, would obtain an opinion from an independent investment banking firm or another independent firm that commonly renders valuation opinions or an independent accounting firm, that such an initial business combination is fair to our company from a financial point of view.
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In the event that we submit our initial business combination to our public shareholders for a vote, our sponsor, officers and directors have agreed, pursuant to the terms of a letter agreement entered into with us, to vote any founder shares held by them (and their permitted transferees will agree) and any public shares purchased during or after the offering in favor of our initial business combination, to the extent permitted by law.
Accordingly, as a result of multiple business affiliations, our officers and directors may have similar legal obligations relating to presenting business opportunities meeting the above-listed criteria to multiple entities. Below is a table summarizing the entities to which our officers and directors currently have fiduciary duties or contractual obligations:
| Individual | Entity | Entity’s Business | Affiliation | |||
| Claudius Tsang | A Paradigm Acquisition Corp. | SPAC | Chief Executive Officer, Chairman and Director | |||
| Female Entrepreneurs Worldwide | Internet Community | Advisor | ||||
| ACH | Financial Services | Investment Director | ||||
| Beijing ReeChain Technology Limited | Blockchain | Director | ||||
| JVSPAC Acquisition Corp. | SPAC | Chief Financial Officer, and Director | ||||
| A SPAC II Acquisition Corp. | SPAC | Chief Financial Officer | ||||
| A SPAC (HK) Acquisition Corp | SPAC | Chief Executive Officer, Executive Director | ||||
| International Media Acquisition Corp. | SPAC | Director | ||||
| Unity Group Holdings International Limited. | Investment | Non-executive director | ||||
| Abuzzal Abusaeri | Fairways Capital | Investment | VP Corporate Finance & Strategy | |||
| Bank Danamon | Financial Services | Sr AVP Strategic Planning | ||||
| Bank Lippo | Financial Services | AVP | ||||
| McKinsey & Co | Management Consulting | Research Analyst | ||||
| DBS Vickers | Equity Brokerage | Research Analyst | ||||
| Giang Nguyen Hoang | DNSE Securities Joint Stock Company | Securities trading | Chairman | |||
| Encapital Financial Technology Joint Stock Company | Fintech software | Founder Chairman & CEO | ||||
| Encapital Holdings Joint Stock Company | Investment | Founder, Chairman & CEO | ||||
| Southern Gas Trading Joint Stock Company | Gas trading | Member of BOD | ||||
| TNG Investment and Trading Joint Stock Company | Textile | Member of BOD | ||||
| Enpay Payment Joint Stock Company | Payment Medetiary | Chairman | ||||
| John Brebeck | Glass House Brands (CBOE CA: GLAS.A.U & OTCQX: GLASF) | Consumer Packaged Goods | Vice President, Shareholder | |||
| Hydroionic Technologies | Metal Reycling | Shareholder | ||||
| Northwest Biotherapeutics (NWBO) | Biotechnology | Shareholder | ||||
| Gogolook Co. Ltd (6902.TW) | Application Software | Shareholder | ||||
| eCloud Valley (6689.TW) | Cloud Services Provider | Shareholder | ||||
| Bayshore Hospitality | Hospitality | Shareholder | ||||
| Healthy Pecan Farms | Pecan grower | Shareholder | ||||
| Polarean Imaging PLC (POLX.L) | Medical Imaging | Shareholder | ||||
| Remotek | Telecom Power | Shareholder | ||||
| Tesla (NASDAQ: TSLA) | Electric Vehicles | Shareholder | ||||
Xintec (3374.TW) |
Semiconductor |
Shareholder | ||||
Impinj, Inc (PI) |
Communication Equipment |
Shareholder |
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Code of Ethics
We adopted a code of conduct and ethics applicable to our directors, officers and employees in accordance with applicable federal securities laws. The code of ethics codifies the business and ethical principles that govern all aspects of our business.
Limitation on Liability and Indemnification of Officers and Directors
BVI law does not limit the extent to which a company’s articles of association may provide for indemnification of officers and directors, except to the extent any provision providing indemnification may be held by the BVI courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Under our memorandum and articles of association, we indemnify against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection with legal, administrative or investigative proceedings for any person who:
| ● | is or was a party or is threatened to be made a party to any threatened, pending or completed proceedings, whether civil, criminal, administrative or investigative, by reason of the fact that the person is or was our director; or |
| ● | is or was, at our request, serving as a director or officer of, or in any other capacity is or was acting for, another body corporate or a partnership, joint venture, trust or other enterprise. |
These indemnities only apply if the person acted honestly and in good faith with a view to our best interests and, in the case of criminal proceedings, the person had no reasonable cause to believe that his conduct was unlawful.
This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under the foregoing provisions, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, requires our executive officers, directors and persons who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of our shares of common stock and other equity securities. These executive officers, directors, and greater than 10% beneficial owners are required by SEC regulation to furnish us with copies of all Section 16(a) forms filed by such reporting persons.
Based solely on our review of such forms furnished to us and written representations from certain reporting persons, we believe that all filing requirements applicable to our executive officers, directors and greater than 10% beneficial owners were filed in a timely manner.
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Item 11. Executive Compensation.
Employment Agreements
We have not entered into any employment agreements with our executive officers and have not made any agreements to provide benefits upon termination of employment.
Executive Officers and Director Compensation
No executive officer has received any cash compensation for services rendered to us. No compensation of any kind, including finders, consulting or other similar fees, will be paid to any of our existing stockholders, including our directors, or any of their respective affiliates, prior to, or for any services they render in order to effectuate, the consummation of a business combination. However, such individuals will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. There is no limit on the amount of these out-of-pocket expenses and there will be no review of the reasonableness of the expenses by anyone other than our board of directors and audit committee, which includes persons who may seek reimbursement, or a court of competent jurisdiction if such reimbursement is challenged.
Compensation Committee Interlocks and Insider Participation
None of our officers currently serves, or in the past year has served, as a member of the compensation committee of any entity that has one or more officers serving on our board of directors.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth as of March 28, 2024, the number of ordinary shares beneficially owned by (i) each person who is known by us to be the beneficial owner of more than five percent of our issued and outstanding ordinary shares, (ii) each of our officers and directors and (iii) all of our officers and directors as a group. As of March 28, 2024, we had 3,726,471 ordinary shares issued and outstanding. Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all ordinary shares beneficially owned by them.
Ordinary shares which an individual or group has a right to acquire within 60 days pursuant to the exercise or conversion of options, warrants or other similar convertible or derivative securities are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table.
| Name and Address of Beneficial Owner(1) | Number of Ordinary Shares Beneficially Owned(2) | Approximate Percentage of Outstanding Ordinary Shares | ||||||
| Claudius Tsang(3) | 1,725,001 | 46.3 | % | |||||
| Abuzzal Abusaeri | — | — | ||||||
| Giang Nguyen Hoang | — | — | ||||||
| John Brebeck | ||||||||
| All executive officers and directors as a group (4 individuals) | 1,725,001 | 46.3 | % | |||||
| A SPAC (Holdings) Acquisition Corp. | 1,725,001 | 46.3 | % | |||||
| Shaolin Capital Management LLC (4) | 400,033 | 10.7 | % | |||||
| Mizuho Financial Group, Inc.(5) | 260,820 | 7.0 | % | |||||
| Karpus Investment Management(6) | 297,025 | 8.0 | % | |||||
| (1) | Unless otherwise noted, the business address of each of the following entities or individuals is Level 39, Marina Bay Financial Centre, Tower 2, 10 Marina Boulevard, Singapore 018983. |
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| (2) | Excludes shares issuable pursuant to warrants and rights issued in connection with the IPO, as such warrants and rights are not exercisable or convertible, as the case may be, until after the consummation of the Company’s initial business combination. |
| (3) | Consists of shares owned by A SPAC (Holdings) Acquisition Corp., over which Mr. Claudius Tsang has voting and dispositive power. A SPAC (Holdings) Acquisition Corp. also owns one Class B ordinary share. |
| (4) | Based on a Schedule 13G filed by the reporting person on February 13, 2023. The address for the reporting person is 230 NW 24th Street, Suite 603, Miami, FL 33127. |
| (5) | Based on a Schedule 13G filed by the reporting person on February 13, 2024. Mizuho Financial Group, Inc., Mizuho Bank, Ltd. and Mizuho Americas LLC may be deemed to be indirect beneficial owners of said equity securities directly held by Mizuho Securities USA LLC which is their wholly-owned subsidiary. The addresses for the reporting persons are c/o 1–5–5, Otemachi, Chiyoda–ku, Tokyo 100–8176, Japan. |
| (6) | Based on a Schedule 13G/A filed by the reporting person on February 14, 2024. The address for the reporting person is 183 Sully’s Trail, Pittsford, New York 14534. |
Transfers of Founder Shares and Private Warrants
The founder shares, and private warrants, and any Class A ordinary shares issued upon conversion or exercise thereof are each subject to transfer restrictions pursuant to lock-up provisions in a letter agreement with us to be entered into by our sponsor, officers and directors. Those lock-up provisions provide that such securities are not transferable or salable (i) in the case of the founder shares, until the earlier of (A) six months after the completion of our initial business combination or (B) subsequent to our initial business combination, (x) if the last sale price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share splits, share capitalizations, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing after our initial business combination, or (y) the date following the completion of our initial business combination on which we complete a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of our shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property, and (ii) in the case of the private placement warrants at any time, except in each case (a) to our officers or directors, any affiliates or family members of any of our officers or directors, any members of our sponsor, or any affiliates of our sponsor, (b) in the case of an individual, by gift to a member of the individual’s immediate family or to a trust, the beneficiary of which is a member of the individual’s immediate family or an affiliate of such person, or to a charitable organization; (c) in the case of an individual, by virtue of laws of descent and distribution upon death of the individual; (d) in the case of an individual, pursuant to a qualified domestic relations order; (e) in the event of our liquidation prior to our completion of our initial business combination; or (f) by virtue of the laws of the British Virgin Islands or our sponsor’s operating agreement upon dissolution of our sponsor; provided, however, that in the case of clauses (a) through (e) or (f) these permitted transferees must enter into a written agreement agreeing to be bound by these transfer restrictions and by the same agreements entered into by our sponsor with respect to such securities (including provisions relating to voting, the trust account and liquidation distributions).
Registration Rights
The holders of the founder shares, private warrants, shares being issued to the underwriters of the initial public offering, and warrants that may be issued on conversion of working capital loans (and in each case holders of their component securities, as applicable) are entitled to registration rights pursuant to a registration rights agreement requiring us to register such securities for resale (in the case of the founder shares, only after conversion to our Class A ordinary shares). The holders of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion of our initial business combination and rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period, which occurs (i) in the case of the founder shares, on the earlier of (A) six months after the completion of our initial business combination or (B) subsequent to our initial business combination, (x) if the last sale price of Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share splits, share capitalizations, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing after our initial business combination, or (y) the date following the completion of our initial business combination on which we complete a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of our public shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property, and (ii) in the case of the private placement warrants, including the component securities therein, 30 days after the completion of our initial business combination. Notwithstanding the above, the shares to be issued to the underwriters in the initial public offering will be further subject to the limitations on registration requirements imposed by FINRA Rule 5110(g)(8). We will bear the expenses incurred in connection with the filing of any such registration statements.
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Item 13. Certain Relationships and Related Transactions, and Director Independence.
On June 7, 2021, we issued 2,875,000 Class B ordinary shares to our sponsor for an aggregate purchase price of $25,000 or approximately $0.01 per share. On July 19, 2021, 2,874,999 Class B ordinary shares were repurchased and cancelled at an aggregate repurchase price of $25,000 or approximately $0.01 per share, resulting in one Class B ordinary share in issue after the repurchase. On the same day, we issued 2,300,000 Class A ordinary shares to our sponsor for an aggregate purchase price of $25,000, or approximately $0.01 per share. Subsequently, on January 14, 2022, our sponsor surrendered for no consideration and we canceled 575,000 of such Class A ordinary shares, resulting in 1,725,000 Class A ordinary shares remaining outstanding.
Simultaneously with the closing of the IPO, the Company consummated the private placement (“Private Placement”) with the Sponsor of 2,875,000 warrants (the “Private Warrants”) at a price of $1.00 per Private Warrant, generating total proceeds of $2,875,000. On March 1, 2022, simultaneously with the sale of the Over-Allotment Option Units, the Company consummated the private sale of an additional 270,000 Private Warrants to the sponsor generating gross proceeds of $270,000. Each private placement warrant is identical to the warrants sold in the IPO, except with respect to certain registration rights and transfer restrictions. There will be no redemption rights or liquidating distributions from the trust account with respect to the founder shares or private placement warrants. The warrants will expire worthless if we do not consummate a business combination within the time period specified in our amended and restated memorandum and articles of association.
On January 27, 2023, the Company issued an unsecured promissory note in the aggregate principal amount up to $500,000 (the “Second Note”) to A SPAC (Holdings) Acquisition Corp., the Company’s sponsor. Pursuant to the Second Note, the Sponsor agreed to loan to the Company an aggregate amount up to $500,000 payable promptly after the date on which the Company consummates a business combination. In the event that the Company does not consummate a business combination, the Second Note will be terminated. The Second Note is convertible into warrants having the same terms and conditions as the public warrants, at the price of $1.00 per warrant at the option of the Sponsor. The Second Note does not bear interest.
On March 13, 2023, the Company issued an unsecured promissory note in the aggregate principal amount up to $500,000 (the “Second Note”) to A SPAC (Holdings) Acquisition Corp., the Company’s sponsor. Pursuant to the Second Note, the Sponsor agreed to loan to the Company an aggregate amount up to $500,000 payable promptly after the date on which the Company consummates a business combination. In the event that the Company does not consummate a business combination, the Second Note will be terminated. The Second Note is convertible into warrants having the same terms and conditions as the public warrants, at the price of $1.00 per warrant at the option of the Sponsor. The Second Note does not bear interest.
On June 12, 2023, the Company issued an unsecured promissory note in the aggregate principal amount up to $200,000 (the “Third Note”) to A SPAC (Holdings) Acquisition Corp., the Company’s sponsor. Pursuant to the Second Note, the Sponsor agreed to loan to the Company an aggregate amount up to $200,000 payable promptly after the date on which the Company consummates a business combination. In the event that the Company does not consummate a business combination, the Third Note will be terminated. The Third Note is convertible into warrants having the same terms and conditions as the public warrants, at the price of $1.00 per warrant at the option of the Sponsor. The Second Note does not bear interest.
As more fully discussed above, if any of our officers or directors becomes aware of a business combination opportunity that falls within the line of business of any entity to which he or she has then-current fiduciary or contractual obligations, he or she may be required to present such business combination opportunity to such entity prior to presenting such business combination opportunity to us, subject to his or her fiduciary duties under British Virgin Islands law. Our officers and directors currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us.
Other than the foregoing, no compensation of any kind, including any finder’s fee, reimbursement, consulting fee or monies in respect of any payment of a loan, will be paid by us to our sponsor, officers and directors, or any affiliate of our sponsor or officers, prior to, or in connection with any services rendered in order to effectuate, the consummation of an initial business combination (regardless of the type of transaction that it is). However, our sponsor, officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments that were made to our sponsor, officers, directors or our or their affiliates and will determine which expenses and the amount of expenses that will be reimbursed. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf.
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In addition, in order to finance transaction costs in connection with an intended initial business combination, our sponsor or an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete an initial business combination, we would repay such loaned amounts. In the event that the initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment. Up to $1,150,000 of such loans may be convertible into warrants at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants issued to the initial holders, including as to exercise price, exercisability and exercise period. The terms of such loans by our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.
After our initial business combination, members of our management who remain with us may be paid consulting, management or other fees from the combined company with any and all amounts being fully disclosed to our shareholders, to the extent then known, in the tender offer or proxy solicitation materials, as applicable, furnished to our shareholders. It is unlikely the amount of such compensation will be known at the time of distribution of such tender offer materials or at the time of a shareholder meeting held to consider our initial business combination, as applicable, as it will be up to the directors of the post-combination business to determine executive and director compensation.
We have entered into a registration rights agreement with respect to the founder shares, private placement warrants, and warrants that may be issued on conversion of working capital loans (and in each case holders of their component securities, as applicable), which is described under the heading “Registration Rights.”
Related Party Policy
We have adopted a code of ethics requiring us to avoid, wherever possible, all conflicts of interests, except under guidelines or resolutions approved by our Board of Directors (or the appropriate committee of our board) or as disclosed in our public filings with the SEC. Under our code of ethics, conflict of interest situations will include any financial transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) involving the company. The code of ethics is filed as an exhibit to the registration statement of which our IPO prospectus is a part.
In addition, our audit committee, pursuant to a written charter that we have adopted, will be responsible for reviewing and approving related party transactions to the extent that we enter into such transactions. An affirmative vote of a majority of the members of the audit committee present at a meeting at which a quorum is present will be required in order to approve a related party transaction. A majority of the members of the entire audit committee will constitute a quorum. Without a meeting, the unanimous written consent of all of the members of the audit committee will be required to approve a related party transaction. We also require each of our directors and executive officers to complete a directors’ and officers’ questionnaire that elicits information about related party transactions.
These procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director, employee or officer.
To further minimize conflicts of interest, we have agreed not to consummate an initial business combination with an entity that is affiliated with any of our sponsor, officers or directors unless we, or a committee of independent directors, have obtained an opinion from an independent investment banking firm or another independent firm that commonly renders valuation opinions for the type of company we are seeking to acquire or an independent accounting firm, that our initial business combination is fair to our company from a financial point of view. Furthermore, no finder’s fees, reimbursements or cash payments will be made to our sponsor, officers or directors, or our or their affiliates, for services rendered to us prior to or in connection with the completion of our initial business combination. However, the following payments will be made to our sponsor, officers or directors, or our or their affiliates, none of which will be made from the proceeds of the initial public offering held in the trust account prior to the completion of our initial business combination:
| ● | Repayment of up to an aggregate of up to $500,000 in loans made to us by our sponsor for working capital purposes; |
| ● | Reimbursement for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination; and |
| ● | Repayment of loans which may be made by our sponsor or an affiliate of our sponsor or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination, the terms of which have not been determined nor have any written agreements been executed with respect thereto. Up to $1,150,000 of such loans may be convertible into warrants, at a price of $1.00 per warrant at the option of the lender; |
Our audit committee will review on a quarterly basis all payments that were made to our sponsor, officers or directors, or our or their affiliates.
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Director Independence
Nasdaq listing standards require that a majority of our board of directors be independent. For a description of the director independence, see above Part III, Item 10 - Directors, Executive Officers and Corporate Governance.
Item 14. Principal Accountant Fees and Services.
On March 10, 2022, the Company dismissed Bernstein & Pinchuk LLP as its independent registered public accounting firm and engaged Marcum Bernstein & Pinchuk LLP as its independent registered public accounting firm. Marcum Bernstein & Pinchuk LLP changed its name to Marcum Asia CPAs LLP (“Marcum Asia”) on September 7, 2022. The engagement of Marcum Asia was approved by the Audit Committee of the Company’s Board of Directors. During the period from March 10, 2022 through December 31, 2023, Marcum Asia has acted as our principal independent registered public accounting firm. The following is a summary of fees paid or to be paid to both firms for services rendered.
Audit Fees. Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements and services that are normally provided by Bernstein & Pinchuk LLP prior to March 10, 2022 and Marcum Asia after March 10, 2022, in connection with regulatory filings. The aggregate fees billed by Bernstein & Pinchuk LLP totaled $26,135 from January 1, 2022 through March 10, 2022. The aggregate fees billed by Marcum Asia since its engagement on March 10, 2022 totaled $97,850 and $108,150 for the year ended December 31, 2023 and 2022, respectively, for professional services rendered for the audit of our annual financial statements and review of the financial information included in our regulatory filings.
Audit-Related Fees. Audit-related fees consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our financial statements and are not reported under “Audit Fees.” We paid Marcum Asia $139,050 and none for audit-related fees for the year ended December 31, 2023 and 2022, respectively.
Tax Fees. We did not pay Bernstein & Pinchuk LLP or Marcum Asia for tax compliance, tax planning and tax advice for the year ended December 31, 2023 and 2022.
All Other Fees. We did not pay Bernstein & Pinchuk LLP or Marcum Asia for any other fees for the year ended December 31, 2023 and 2022.
Pre-Approval Policy
Our audit committee was formed upon the consummation of our Initial Public Offering. As a result, the audit committee did not pre-approve all of the foregoing services, although any services rendered prior to the formation of our audit committee were approved by our board of directors. Since the formation of our audit committee, and on a going-forward basis, the audit committee has and will pre-approve all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the audit).
32
part IV
Item 15. Exhibits, Financial Statement Schedules
(a) The following documents are filed as part of this Annual Report on Form 10-K:
(1) Financial Statements:
(2) Financial Statement Schedules:
None.
(3) Exhibits
We hereby file as part of this Annual Report on Form 10-K the exhibits listed in the attached Exhibit Index. Exhibits which are incorporated herein by reference can be inspected on the SEC website at www.sec.gov.
33
EXHIBIT INDEX
34
35
| * | Filed herewith. |
| ** | Furnished herewith. This certification is being furnished solely to accompany this report pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filings of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. |
Item 16. Form 10-K Summary
Not Applicable.
36
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| A SPAC I ACQUISITION CORP. | ||
| Dated: March 28, 2024 | By: | /s/ Claudius Tsang |
| Name: | Claudius Tsang | |
| Title: | Chief Executive Officer and Chief Financial Officer | |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature | Title | Date | ||
| /s/ Claudius Tsang | Chief Executive Officer and Chief | March 28, 2024 | ||
| Claudius Tsang | Financial Officer | |||
| (Principal Executive
Officer, Principal Accounting and Financial Officer) |
||||
| /s/ Abuzzal Abusaeri | Director | March 28, 2024 | ||
| Abuzzal Abusaeri | ||||
| /s/ John Brebeck | Director | March 28, 2024 | ||
| John Brebeck | ||||
| /s/ Giang Nguyen Hoang | Director | March 28, 2024 | ||
| Giang Nguyen Hoang |
37
A SPAC I ACQUISITION CORP.
INDEX TO FINANCIAL STATEMENTS
| Page(s) | ||
| Report of Independent Registered Public Accounting Firm - Marcum Asia LLP (PCAOB ID: 5395) | F-2 | |
| Financial Statements: | ||
| Balance Sheets | F-3 | |
| Statements of Operations | F-4 | |
| Statements of Changes in Shareholders’ Equity (Deficit) | F-5 | |
| Statements of Cash Flows | F-6 | |
| Notes to Financial Statements | F-7 |
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of A SPAC I Acquisition Corp.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of A SPAC I Acquisition Corp. (the “Company”) as of December 31, 2023 and 2022, the related statements of operations, change in shareholders’ equity (deficit) and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 1 to the financial statements, the Company is a Special Purpose Acquisition Corporation that was formed for the purpose of effecting a merger, stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses on or before April 17, 2024, by depositing into the Trust account a specified amount for each of the one-month extensions through April 17, 2024. On February 15, 2023, the Company entered into an agreement and plan of merger with a business combination target. The plan of merger was approved by the Company’s stockholders on March 4, 2024. However, there is no assurance that the Company will obtain the necessary approvals, satisfy the required closing conditions, or raise the additional capital it needs to fund further business operations prior to April 17, 2024, if at all. The Company also has no approved plan in place to extend the business combination deadline and fund operations for any period of time after April 17, 2024, in the event that it is unable to complete a business combination by that date. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Marcum Asia CPAs llp
We have served as the Company’s auditor since 2021.
March 28, 2024
Firm ID#:
NEW YORK OFFICE • 7 Penn Plaza • Suite 830 • New York, New York • 10001
Phone 646.442.4845 • Fax 646.349.5200 • www.marcumasia.com
F-2
A SPAC I ACQUISITION CORP.
BALANCE SHEETS
| December 31, 2023 | December 31, 2022 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Investments held in Trust Account | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities, Shares Subject to Redemption and Shareholders’ Equity (Deficit) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued offering expenses | $ | $ | ||||||
| Promissory note – related party | ||||||||
| Loan – NewGen | ||||||||
| Total current liabilities | ||||||||
| Deferred underwriting fee payable | ||||||||
| Deferred legal fee payable | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (Note 6) | ||||||||
| Shareholders’ Equity (Deficit) | ||||||||
| Preference shares, par value; | ||||||||
| Class A ordinary shares, par value; | ||||||||
| Class B ordinary shares, par value; | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings (Accumulated deficit) | ( | ) | ||||||
| Total Shareholders’ Equity (Deficit) | ( | ) | ||||||
| Total Liabilities, Shares Subject to Redemption, and Shareholders’ Equity (Deficit) | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
F-3
A SPAC I ACQUISITION CORP.
STATEMENTS OF OPERATIONS
| For the Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| General and administrative expenses | $ | $ | ||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income: | ||||||||
| Interest income | ||||||||
| Income (loss) before income taxes | ( | ) | ||||||
| Income taxes provision | ||||||||
| Net income (loss) | $ | ( | ) | $ | ||||
| ( | ) | ( | ) | |||||
The accompanying notes are an integral part of these financial statements.
F-4
A SPAC I ACQUISITION CORP.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
For the Year Ended December 31, 2023
| Ordinary Shares | Additional | Retained Earnings/ | Total Shareholders’ | |||||||||||||||||||||||||
| Class A | Class B | Paid-in | (Accumulated | Equity | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit) | (Deficit) | ||||||||||||||||||||||
| Balance – Balance, December 31, 2022 | $ | $ | $ | $ | $ | |||||||||||||||||||||||
| Accretion of ordinary shares to redemption value | — | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance – December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
For the Year Ended December 31, 2022
| Ordinary Shares | Additional | (Accumulated Deficit)/ | Total | |||||||||||||||||||||||||
| Class A | Class B | Paid-in | Retained | Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Earnings | Equity | ||||||||||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Sale of public units in initial public offering | ||||||||||||||||||||||||||||
| Sale of private placement warrants | — | — | ||||||||||||||||||||||||||
| Issuance of Representative shares | ||||||||||||||||||||||||||||
| Underwriter commissions | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Offering costs | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Initial measurement of ordinary shares subject to possible redemption | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Accretion of ordinary shares to redemption value | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||
| Balance – December 31, 2022 | $ | $ | $ | $ | $ | |||||||||||||||||||||||
The accompanying notes are an integral part of these financial statements.
F-5
A SPAC I ACQUISITION CORP.
STATEMENTS OF CASH FLOWS
| For the Year Ended December 31, 2023 | For the Year Ended December 31, 2022 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net income (loss) | $ | ( | ) | $ | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Interest earned in trust account | ( | ) | ( | ) | ||||
| Change in operating assets and liabilities: | ||||||||
| Prepaid expenses and other assets | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Deferred legal fee payable | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows From Investing Activities: | ||||||||
| Cash deposited in Trust Account | ( | ) | ||||||
| Cash withdrawn from Trust Account to pay public shareholder redemptions | ||||||||
| Purchase of investment held in Trust Account | ( | ) | ||||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| Cash Flows From Financing Activities: | ||||||||
| Proceeds from sale of public units through public offering | ||||||||
| Proceeds from sale of private placement warrants | ||||||||
| Payment of underwriters’ commissions | ( | ) | ||||||
| Payment of offering costs | ( | ) | ||||||
| Proceeds from issuance of promissory note to related party | — | |||||||
| Payment of related party advances | ( | ) | ||||||
| Payment of promissory note - related party | ( | ) | ||||||
| Proceeds from issuance of promissory note to related party | ||||||||
| Loan from NewGen | ||||||||
| Payment of public shareholder redemptions | ( | ) | ||||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Net change in cash | ( | ) | ||||||
| Cash, beginning of the year | ||||||||
| Cash, end of the year | $ | $ | ||||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||
| Deferred underwriting commission | $ | $ | ||||||
| Initial measurement of ordinary shares subject to possible redemption | $ | $ | ||||||
| Accretion of carrying value to redemption value | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
F-6
A SPAC I ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Note 1 – Description of Organization and Business Operation
A SPAC I Acquisition Corp. (the “Company”) was incorporated in the British Virgin Islands on April 29, 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”).
As of December 31, 2023, the Company had not commenced any operations. All activities for the period from April 29, 2021 (inception) through December 31, 2023, were related to the Company’s formation and the initial public offering (“IPO”) described below and, subsequent to the IPO, identifying a target company for a Business Combination. 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 registration statement for the Company’s
IPO became effective on February 14, 2022. On February 17, 2022, the Company consummated the IPO of
Upon the closing of the IPO on February 17,
2022, $
The Company granted the underwriter a 45-day option
to purchase up to an additional
Offering costs were $
The Company will provide the holders of the outstanding
Class A ordinary shares sold with the Units (the “Public Shares”) sold in the IPO (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 the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company.
The Public Shareholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account
(initially anticipated to be $
F-7
A SPAC I ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
All of the Public Shares contain a redemption feature which allows for the redemption of such Public Shares in connection with the Company’s liquidation, if there is a shareholder vote or tender offer in connection with the Company’s Business Combination and in connection with certain amendments to the Company’s amended and restated memorandum and articles of association (the “Charter”). Redemptions of the Company’s Public Shares may be subject to the satisfaction of conditions, including minimum cash conditions, pursuant to an agreement relating to the Company’s Business Combination. If the Company seeks shareholder approval of the Business Combination, the Company will proceed with a Business Combination if a majority of the shares voted are voted in favor of the Business Combination, or such other vote as required by law or stock exchange rule. If a shareholder vote is not required by applicable law or stock exchange listing requirements and the Company does not decide to hold a shareholder vote for business or other reasons, the Company will, pursuant to its Charter, conduct the redemptions pursuant to the tender offer rules of the Securities Exchange Commission (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 applicable law or stock exchange listing requirements, or the Company decides to obtain shareholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks shareholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 4) and any Public Shares purchased during or after the IPO in favor of approving a Business Combination. Additionally, each Public shareholder may elect to redeem their Public Shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction.
The Company’s sponsor, officers and directors
(the “Initial Shareholder”) have agreed not to propose an amendment to the Charter that would affect the substance or timing
of the Company’s obligation to redeem
If the Company is unable to complete a Business
Combination by April 17, 2024 if the Company extends the period of time to consummate a Business Combination (the “Combination Period”),
the Company 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 the Company to pay its franchise and income taxes (less up to $
F-8
A SPAC I ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
The Initial Shareholders have agreed to waive
their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination
Period. However, if the Initial Shareholders should acquire Public Shares in or after the IPO, they will be entitled to liquidating distributions
from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination
Period. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution
(including Trust Account assets) will be only $
Extension Meetings
On February 13, 2023, at its Extraordinary General
Meeting (the “First Extension Meeting”), the Company’s shareholders approved a proposal to amend and restate the Company’s
Charter to, among other things, allow the Company to extend the date by which it has to complete a Business Combination up to eight (8)
times for an additional one (1) month each time from February 17, 2023 to October 17, 2023. In connection with the shareholders’
vote at the First Extension Meeting,
On October 9, 2023, at its Extraordinary General
Meeting (the “Second Extension Meeting”), the Company’s shareholders (i) approved a proposal to amend and restate the
Company’s then current Charter to, among other things, allow the Company to extend the date by which it has to complete a business
combination up to six (6) times for an additional one (1) month each time from October 17, 2023 to April 17, 2024 by deleting the Charter
in its entirety and substituting it with a new amended and restated memorandum and articles of association (the “New Charter”)
and (ii) approved a proposal to amend and restate the Company’s then current Charter to remove the net tangible asset requirement
from the Charter in order to expand the methods that the Company may employ so as not to become subject to the “penny stock”
rules of the Securities and Exchange Commission by deleting the Charter in its entirety and substituting it with the New Charter. In connection
with the shareholders’ vote at the Second Extension Meeting,
Merger Agreement
On February 15, 2023, the Company entered into
a merger agreement (the “Merger Agreement”) with NewGenIvf Limited, a Cayman Islands exempted company (“NewGen”),
certain shareholders of NewGen (the “Principal Shareholders”), A SPAC I Mini Acquisition Corp., a British Virgin Islands business
company (the “Purchaser”), and A SPAC I Mini Sub Acquisition Corp., a Cayman Islands exempted company and wholly-owned subsidiary
of the Purchaser (the “Merger Sub”), pursuant to which, among other things, (i) the Company will be merged with and into the
Purchaser, the separate corporate existence of the Company will cease and the Purchaser will continue as the surviving corporation and
(ii) Merger Sub will merge with and into NewGen and NewGen will continue as the surviving company under the laws of the Cayman Islands
and become a wholly owned subsidiary of the Purchaser (the “NewGen Business Combination”). Pursuant to the terms of the Merger
Agreement, the aggregate consideration to be paid to existing shareholders of NewGen is $
Concurrently with the execution of the Merger Agreement, the Company, the Purchaser, NewGen and certain shareholders of NewGen (the “Supporting Shareholders”) entered into a voting and support agreement pursuant to which such Supporting Shareholders have agreed, among other things, to vote in favor of the NewGen Business Combination, the adoption of the Merger Agreement and any other matters necessary or reasonably requested by the Company, the Purchaser or the Company for consummation of the NewGen Business Combination and the other transactions contemplated by the Merger Agreement.
F-9
A SPAC I ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
On June 12, 2023, the parties to the Merger Agreement
entered into a First Amendment to Merger Agreement (the “First Amendment”), pursuant to which NewGen agreed to provide non-interest
bearing loans in an aggregate principal amount of up to $
On December 6, 2023, the Company entered into
the Second Amendment with NewGenIvf, the Principal Shareholders, Purchaser and Merger Sub, that amended and modified the Merger Agreement
to, among other things, (i) reduce the size of Purchaser’s board of directors following the consummation of the Business Combination
to five (5) directors, two (2) of whom will be executive directors designated by NewGenIvf and three (3) of whom will be designated by
NewGenIvf to serve as independent directors in accordance with Nasdaq requirements, (ii) provide for the conversion of the NewGenIvf shares
issued by NewGenIvf following the original date of the Merger Agreement into Purchaser Class A ordinary shares in connection with the
NewGen Business Combination, and (iii) remove the condition that Parent shall have in excess of $
Promissory Notes
On January 27, 2023 and March 13, 2023, the Company
issued two unsecured promissory notes in the aggregate principal amount of up to $
On June 12, 2023, the Company entered into amendments to the two Promissory Notes (Promissory Note A and Promissory Note B, respectively) issued on January 27, 2023 and March 13, 2023 (the “Promissory Note Amendments”) with the Sponsor. Pursuant to the Promissory Note Amendments, the principal amounts outstanding under the Promissory Note A and Promissory Note B shall be payable promptly on demand and, in any event, no later than the date on which the Company terminates or consummates an initial business combination.
On June 12, 2023, the Company issued an unsecured
promissory note in the aggregate amount up to $
F-10
A SPAC I ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Going Concern Consideration
As of December 31, 2023, the Company had cash
of $
The Company has until April 17, 2024 to consummate
a Business Combination (assuming the Company deposits $
The Company expects to continue to incur significant professional costs to remain as a publicly traded company and to incur significant transaction costs in pursuit of the consummation of a Business Combination. The Company may need to obtain additional financing either to complete its Business Combination or because it becomes obligated to redeem a significant number of public shares upon consummation of its Business Combination, in which case, subject to compliance with applicable securities laws, the Company may issue additional securities or incur debt prior to or in connection with such Business Combination If the Company is unable to complete its Business Combination because it does not have sufficient funds available, it will be forced to cease operations and liquidate the Trust Account.
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 these conditions raise substantial doubt about the Company’s ability to continue as a going concern. In addition, if the Company is unable to complete a Business Combination within the Combination Period, the Company’s board of directors would proceed to commence a voluntary liquidation and thereby a formal dissolution of the Company. There is no assurance that the Company’s plans to consummate a Business Combination will be successful within the Combination Period. As a result, management has determined that the date for liquidation and subsequent dissolution as well as liquidity concerns raise substantial doubt about the Company’s ability to continue as a going concern. The financial statement does not include any adjustments that might result from the outcome of this uncertainty.
Risks and Uncertainties
The Company continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that COVID-19 could have a negative effect on the Company’s search for a target company for a Business Combination, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Additionally, 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 and the impact of armed conflict in Israel and the Gaza Strip commenced in October 2023, 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.
F-11
A SPAC I ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation
The accompanying audited financial statements are presented in U.S. Dollars and in conformity the U.S. GAAP and pursuant to the rules and regulations of the SEC. Accordingly, they include all of the information and footnotes required by the U.S. GAAP. In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentation have been included.
Emerging Growth Company
The Company is an “emerging growth company” as defined in Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are required to comply with the new or revised financial accounting standards. The JOBS Act provides that 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 financial statements with another public company that is neither an emerging growth company nor an emerging growth company that 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 financial statements in conformity with U.S. GAAP requires the Company’s 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 financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
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 had $
Investments Held in Trust Account
As of December 31, 2023 and 2022, $
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Corporation limit. As of December 31, 2023 and 2022, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet, primarily due to their short-term nature.
F-12
A SPAC I ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Class A Ordinary Shares Subject to Possible Redemption
The Company accounts for its Class A ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption (if any) 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 subject to the occurrence of uncertain future events and considered to be outside of the Company’s control. If it is probable that the equity instrument will become redeemable, the Company has the option to either (i) accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument or (ii) recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. The accretion or remeasurement will be treated as a deemed dividend (i.e., a reduction to retained earnings, or in absence of retained earnings, additional paid-in capital).
In March 2022, the Company revisited its application of ASC 480-10-S99 on the Company’s financial statements and determined that a change in accounting method for redeemable shares is necessary. Subsequently in March 2022, the Company changed its accounting method to accrete the changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument. The Company complies with accounting and disclosure requirements of ASC 250 “Accounting Changes and Error Corrections” which requires that an entity may voluntarily change an accounting principle only if it justifies the use of an allowable alternative accounting principle on the basis that it is preferable and meets criteria such as authoritative support, rationality and industry practice. The Company believes that the change in accounting principle is preferable as it meets all three criteria. First, the accretion method is one of the two accounting methods supported by ASC 480-10-S99. Second, justification for the change is rational in terms of presenting financial position and results of operations. When evaluating a change in accounting methods, the Company considered several factors such as: 1) conformity with broad concept of accounting (i.e., more accurate reflection of permanent and temporary equity) and 2) suitability in light of business circumstances, plans and policies (i.e., compliance with Nasdaq listing requirements and the Company’s amended and restated memorandum and articles of association). Finally, the accretion method is adopted by other similarly situated SPACs (i.e., smaller sized SPACs listed on The Nasdaq Capital Market).
ASC 250-10-50-1 through 250-10-50-3 require that a change in accounting principle made in an interim period be reported by retrospective application, both to the prior years, as well as to the interim periods within the fiscal year that the accounting change was adopted. The Company does not qualify for the restatement of financial statements since it initially elected an allowable accounting method (full redemption) for the accounting of redeemable shares in the Form 8-K Audited Balance Sheet as of February 17, 2022 which was filed on March 4, 2022; as such, there is no error to be restated on. On April 5, 2022, the Company filed Form 8-K Pro Forma Balance Sheet as of February 17, 2022 reflecting the change in accounting method. In addition, the change of accounting principle does not have any impact on the previously issued financial statements.
The Company has adopted the accretion method starting its first quarter ending March 31, 2022 and recognizes changes in redemption value in additional paid-in capital (or accumulated deficit in the absence of additional paid-in capital) over an expected 12-month period leading up to a Business Combination. The change to the accretion method does not have any impact on the Company’s Statements of Operations or Cash Flows. The Company’s Class A ordinary shares subject to possible redemption were fully accreted to redemption value on February 28, 2023.
Net Income (Loss) per Share
The Company complies with accounting and disclosure requirements of FASB ASC 260, Earnings Per Share. The condensed statements of operations include a presentation of income (loss) per redeemable share and income (loss) per non-redeemable share following the two-class method of income per share. In order to determine the net income (loss) attributable to both the redeemable shares and non-redeemable shares, the Company first considered the undistributed income (loss) allocable to both the redeemable shares and non-redeemable shares and the undistributed income (loss) is calculated using the total net loss less any dividends paid. The Company then allocated the undistributed income (loss) ratably based on the weighted average number of shares outstanding between the redeemable and non-redeemable shares. Any remeasurement of the accretion to redemption value of the common shares subject to possible redemption was considered to be dividends paid to the public shareholders. As of December 31, 2023 and 2022, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary shares and then share in the earnings of the Company. As a result, diluted loss per share is the same as basic loss per share for the period presented.
F-13
A SPAC I ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
| For the Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Net income (loss) | $ | ( | ) | $ | ||||
| Accretion of ordinary shares to redemption value | ( | ) | ( | ) | ||||
| Net loss including accretion of ordinary shares to redemption value | $ | ( | ) | $ | ( | ) | ||
| For the Year Ended December 31, 2023 | For the Year Ended December 31, 2022 | |||||||||||||||
| Redeemable Class A shares | Non- redeemable Class A and Class B shares | Class A Redeemable shares | Non- redeemable Class A and Class B shares | |||||||||||||
| Basic and diluted net income (loss) per ordinary share | ||||||||||||||||
| Numerator: | ||||||||||||||||
| Allocation of net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Accretion of ordinary shares subject to possible redemption to redemption value | ||||||||||||||||
| Allocation of net income (loss) | ( | ) | ( | ) | ||||||||||||
| Denominator: | ||||||||||||||||
| $ | $ | ( | ) | $ | $ | ( | ) | |||||||||
Warrant Instruments
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the instruments’ specific terms and applicable authoritative guidance in ASC 480 and ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the instruments are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the instruments meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to the Company’s own ordinary shares and whether the instrument holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the instruments are outstanding. As discussed in Note 7, the Company determined that upon further review of the warrant agreement, management concluded that the Public Warrants and Private Warrants issued pursuant to the warrant agreement qualify for equity accounting treatment.
Convertible Promissory Note
The Company accounts for its convertible promissory notes as debt (liability) on the balance sheet based on an assessment of the embedded conversion feature (see Note 4 — Related Party Transactions) and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 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) (“ASU 2020-06”). The assessment considers the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity.
Income Taxes
The Company complies with the accounting and reporting requirements of ASC 740, “Income Taxes,” (“ASC 740”) which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
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. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2023. The Company’s management determined that the British Virgin Islands is the Company’s only major tax jurisdiction. The Company is not currently 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 by the Government of the British Virgin Islands. In accordance with British Virgin Islands 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.
F-14
A SPAC I ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 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) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2024 for the Company and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted ASU 2020-06 on June 1, 2023. Adoption of the ASU did not impact the Company’s financial position, results of operations or cash flows.
In December 2023, the FASB issued Accounting Standards Update 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosure” (“ASU 2023-09”). ASU 2023-09 mostly requires, on an annual basis, disclosure of specific categories in an entity’s effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. The incremental disclosures may be presented on a prospective or retrospective basis. The ASU is effective for fiscal years beginning after December 15, 2024 with early adoption permitted. The Company is currently assessing the impact, if any, that ASU 2023-09 would have on its financial position, results of operations or cash flows.
The Company’s management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.
Note 3 – Initial Public Offering
Pursuant to the IPO on February 17, 2022
and the full exercise of the over-allotment option on February 25, 2022, the Company sold
All of the
| Gross proceeds from IPO | $ | |||
| Less: | ||||
| Proceeds allocated to Public Warrants and Public Rights | ( | ) | ||
| Class A ordinary shares issuance cost | ( | ) | ||
| Plus: | ||||
| Accretion of ordinary shares subject to possible redemption to redemption value | ||||
| Class A Ordinary shares subject to possible redemption - December 31, 2022 | ||||
| Plus: | ||||
| Accretion of ordinary shares subject to possible redemption to redemption value | ||||
| Less: | ||||
| Payment to redeemed shareholders | ( | ) | ||
| Class A Ordinary shares subject to possible redemption- December 31, 2023 | $ |
F-15
A SPAC I ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Note 4 – Related Party Transactions
Founder Shares
On June 7, 2021, the Sponsor purchased
The Initial Shareholders have agreed, subject
to limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) six months
after the completion of the initial Business Combination or (B) subsequent to the initial Business Combination, (x) if the last
sale price of the Class A ordinary shares equals or exceeds $
Promissory Notes - Related Party
On September 4, 2021, the Sponsor agreed
to loan the Company an aggregate of up to $
On January 27, 2023 and March 13, 2023, the Company
issued two unsecured Promissory Notes (Promissory Note A and Promissory Note B, respectively), in the aggregate amount up to $
On June 12, 2023, the Company entered into the Promissory Note Amendments with the Sponsor. Pursuant to the Promissory Note Amendments, the principal amounts outstanding under the Promissory Notes shall be payable promptly on demand and, in any event, no later than the date on which the Company terminates or consummates an initial Business Combination.
As of December 31, 2023, $
On June 12, 2023, the Company issued an unsecured
promissory note in the aggregate amount up to $
Working Capital Loans
In order to finance transaction costs in connection
with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may,
but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a
Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company.
Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination
does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds
held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital
Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either
be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $
F-16
A SPAC I ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Note 5 – Private Placement Warrants
Simultaneously with the closing of the IPO and
the over-allotment, the Sponsor purchased an aggregate of
Note 6 – Commitments & Contingencies
Registration Rights
The holders of the Founder Shares, the Private Warrants, and any warrants that may be issued in payment of Working Capital Loans (and all underlying securities) are entitled to registration rights pursuant to a registration rights agreement requiring the Company to register such securities for resale. The holders of a majority of these securities are entitled to make up to three demands that the Company register such securities. The holders of the majority of the Founders Shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these ordinary shares are to be released from escrow. The holders of a majority of the Private Warrants and securities issued in payment of Working Capital Loans can elect to exercise these registration rights at any time commencing on the date that the Company consummates a Business Combination. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination. Notwithstanding the foregoing, the underwriters in the IPO may not exercise their demand and “piggy-back” registration rights after five (5) and seven (7) years, respectively, after the effective date of the IPO and may not exercise its demand rights on more than one occasion. The registration rights agreement does not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted Chardan Capital Markets, LLC
(“Chardan”), the representative of the underwriters in the IPO a
The underwriters were paid a cash underwriting
discount of $
Representative’s Ordinary Shares
The Company issued to Chardan and/or its designees,
an aggregate of
Deferred Legal Fees
The Company engaged a legal counsel firm for legal
advisory services, and the legal counsel agreed to defer their fees which will become payable in the event that the Company completes
a Business Combination. As of December 31, 2023 the Company had deferred legal fees of approximately $
Note 7 – Shareholders’ Equity
Recapitalization
On July 19, 2021,
F-17
A SPAC I ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Preference shares—The Company
is authorized to issue
Class A Ordinary shares—The
Company is authorized to issue
Class B Ordinary shares—The
Company is authorized to issue
Warrants—As of December 31,
2023 and 2022, there were
Redemption of warrants when the price per ordinary
shares equals or exceeds $
Once the Warrants become exercisable, the Company may redeem the outstanding warrants (except as described herein with respect to the Private Warrants):
| ● | in whole and not in part; |
| ● | at a price of $ |
| ● | upon a minimum of days’ prior written notice of redemption, which the Company refers to as the “30-day redemption period”; and |
| ● | if, and only if, the last reported sale price (the “closing price”) of our ordinary shares equals or exceeds $ |
The Company will not redeem the Warrants as described above unless an effective registration statement under the Securities Act covering the ordinary shares issuable upon exercise of the warrants is effective and a current prospectus relating to those ordinary shares is available throughout the 30-day redemption period.
No fractional Class A ordinary shares will be issued upon redemption. If, upon redemption, a holder would be entitled to receive a fractional interest in a share, the Company will round down to the nearest whole number of the number of Class A ordinary shares to be issued to the holder.
F-18
A SPAC I ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.
The exercise price and number of Class A ordinary shares issuable on exercise of the warrants may be adjusted in certain circumstances including in the event of a share splits, share capitalization, share dividends, reorganizations, recapitalizations and the like. However, the Warrants will not be adjusted for issuances of Class A ordinary shares at a price below their respective exercise prices. Additionally, in no event will the Company be required to net cash settle the Warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the Warrants may expire worthless.
In addition, if the Company issues additional
Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination
at an issue price or effective issue price of less than $
The Private Warrants will be identical to the Public Warrants underlying the Units being sold in the IPO, except that the Private Warrants (i) will not be redeemable by the Company, (ii) may be transferred, assigned or sold by the Sponsor to the Permitted Transferees and (iii) may be exercised by the holders on a cashless basis.
Rights— As of December 31,
2023 and 2022, there were
The Company will not issue fractional shares in connection with an exchange of Public Rights. Fractional shares will either be rounded down to the nearest whole share or otherwise addressed in accordance with the applicable provisions of the British Virgin Islands General Corporation Law. As a result, the holders of the Public Rights must hold rights in multiples of 10 in order to receive shares for all of the holders’ rights upon closing of a Business Combination. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Public Rights will not receive any of such funds with respect to their Public Rights, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Rights, and the Public Rights will expire worthless. Further, there are no contractual penalties for failure to deliver securities to the holders of the Public Rights upon consummation of a Business Combination. Additionally, in no event will the Company be required to net cash settle the rights. Accordingly, the rights may expire worthless.
F-19
A SPAC I ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Note 8 – Fair Value Measurements
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
| Level 1: | Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. |
| Level 2: | Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. |
| Level 3: | Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. |
| Quoted Prices in | Significant Other | Significant Other | ||||||||||||||
| December 31, | Active Markets | Observable Inputs | Unobservable Inputs | |||||||||||||
| 2023 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
| Assets | ||||||||||||||||
| Marketable securities held in trust account | $ | $ | ||||||||||||||
| February 2, | ||||||||
| 2022 | Level | |||||||
| Equity instrument: | ||||||||
| Representative shares | $ | 3 | ||||||
The Company used several models (i.e., Monte Carlo,
PWERM and Finnerty) to value the Representative Shares granted to Chardan. The key inputs were (i) risk-free rate of
Note 9 – NewGen Loan
On June 12, 2023, the parties to the Merger Agreement
entered into a First Amendment to Merger Agreement, pursuant to which NewGen agreed to provide non-interest bearing loans in an aggregate
principal amount of up to $
Note 10 – Subsequent Events
In accordance with ASC 855, “Subsequent Events”, the Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statement was issued. Based on this review, as further disclosed in the footnotes and except as disclosed below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statement.
F-20
A SPAC I ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
On January 15, 2024, February 15, 2024 and March 15, 2024, the Company
made a deposit of $
On January 16, 2024 and March 4, 2024, the Company
drew down $
On March 15, 2024, the Company issued an
unsecured promissory note in the aggregate amount up to $
On March 1, 2024, the Company entered into the Third Amendment to Merger Agreement (the “Third Amendment to Merger Agreement”) with NewGen, PubCo, Merger Sub and the Principal Shareholders. As described in the Third Amendment to Merger Agreement, the Company shall issue the Commitment Shares for the Initial Tranche to JAK.
On March 4, 2024, the Company completed its special meeting that was
originally convened and adjourned on March 1, 2024 (the “Special Meeting”). At the Special Meeting holders of
On March 28, 2024, the Company entered into the Fourth Amendment to Merger Agreement with NewGen, PubCo, Merger Sub and the Principal Shareholders.
Securities Purchase Agreement
On February 29, 2024, the Company, PubCo, NewGen, the Merger Sub, and
certain buyers named therein led by JAK Opportunities VI LLC (collectively, the “Buyers” or “JAK”) entered into
a securities purchase agreement (the “Securities Purchase Agreement”), pursuant to which the Company has agreed to issue and
sell to the Buyers, in a private placement, an aggregate of up to $
The Notes sold in connection with the Securities
Purchase Agreement are convertible into the Purchaser’s ordinary shares at an initial conversion price calculated by dividing $
The Notes bear an interest rate of
The Securities Purchase Agreement contains customary representations, warranties and covenants by, among and for the benefit of the parties, as well as customary indemnification provisions and standstill restrictions for 180 days after each closing of the Notes on the Purchaser’s additional equity or debt capital raising without the consent of the Buyers.
Acknowledgement Agreement
On March 1, 2024, the Company entered into an acknowledgement agreement (the “Acknowledgement Agreement”) with Chardan Capital Markets, LLC (“Chardan”) and NewGen related to the deferred underwriting commission owed to Chardan in connection with the Company’s initial public offering.
Pursuant to the Acknowledgement Agreement, the Company will satisfy
the deferred underwriting commission at the closing of the Business Combination with NewGen, by (i) paying One Million U.S. Dollars (US
$
F-21