美國
證券和交易委員會
華盛頓特區 20549
表格
(標記一個)
截至季度結束日期的財務報告
過渡期從 到
委託文件號碼：
（按其章程規定的確切註冊人名稱）
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（註冊地點或其他管轄區） | （稅務識別號卡號僱主 識別號碼) |
（主要執行辦公室的地址） |
AGAE
根據證券法第12(b)條註冊的證券：
每個類別的名稱 |
| 交易 |
| 註冊每個交易所的名稱 |
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| 該 | ||
|
| 該 | ||
|
| 該 |
請在檢查標記處註明註冊人（1）是否已在證券交易法第13或15（d）條所規定的過去12個月（或註冊人需要提交此類報告的較短期間）內提交了所有必須提交的報告，並且（2）自過去90天以來一直受到此類提交要求的限制。
請勾選此項表示註冊人是否在過去的12個月（或者註冊人要求提交此類文件的更短期間）內已經提交了規定於S-t法規第405條（本章第232.405條）的互動式數據文件。
請在交易所法規120億.2條中查看「大型加速文件提交者」、「加速文件提交者」、「較小的報告公司」和「新興成長公司」的定義，並勾選適用的選項。
大型加速文件申報人 |
| ☐ |
| 加速文件申報人 |
| ☐ |
| ☒ |
| 更小的報告公司 |
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| 新興成長公司 |
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如果是新興成長型企業，請勾選是否選擇不使用按照《證券交易法》第13(a)條規定的新或修訂財務會計準則的過渡期。
根據交易所法規定的規則120億.2定義，用勾選框表示註冊人是否爲空殼公司。是
截止到2024年11月19日，
第一部分 - 財務信息
項目1. 財務報表
DISTOKEN收購公司
簡明資產負債表
| 9月30日, |
| 12月31日 | |||
| 2024 |
| 2023 | |||
(未經審計) | ||||||
資產 | ||||||
流動資產 | ||||||
現金 | $ | | $ | | ||
待贊助商支付款 | — | | ||||
預付費用 |
| |
| | ||
總流動資產 |
| |
| | ||
235,933,496 |
| |
| | ||
資產總計 | $ | | $ | | ||
負債和股東權益赤字 | ||||||
流動負債 |
|
| ||||
應付賬款和應計費用 | $ | | $ | | ||
應計發行費用 | — | | ||||
應付中國稅款 |
| |
| | ||
來自贊助商的預付款 | | | ||||
| |
| — | |||
擴展說明 – 贊助商 |
| |
| | ||
負債合計 |
| |
| | ||
承諾和 contingencies |
|
| ||||
普通股可能面臨贖回， | | | ||||
優先股，授權股數爲$0，未發行和未持有 |
|
| ||||
A類普通股，授權股數爲5億股 |
|
| ||||
普通股，$ |
| |
| | ||
追加實收資本 |
| — |
| — | ||
累積赤字 |
| ( |
| ( | ||
TOTAL SHAREHOLDERS’ DEFICIT |
| ( |
| ( | ||
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT | $ | | $ | | ||
所附註釋是未經審計的簡明財務報表的組成部分。
1
DISTOKEN收購公司
捷凱收購公司二期有限公司
(未經審計)
| 三個月結束 | 截至九個月 | ||||||||||
| 9月30日, | 9月30日, | ||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
經營和形成成本 | $ | | $ | | $ | | $ | | ||||
營業損失 | ( | ( | ( | ( | ||||||||
其他收入： | ||||||||||||
在信託帳戶中持有的投資所賺取的利息 | | | | | ||||||||
在帳戶中持有的投資的未實現損失 | — | | — | | ||||||||
總其他收入 | | | | | ||||||||
稅前收益 | | | | | ||||||||
所得稅準備金 | ( | ( | ( | ( | ||||||||
淨利潤 | $ | | $ | | $ | | $ | | ||||
基本和稀釋加權平均發行的股份，贖回普通股 | | | | | ||||||||
每股普通股基本和稀釋淨利潤，可贖回普通股 | $ | | $ | | $ | | $ | | ||||
基本和攤薄加權平均流通股，非可贖回普通股 | | | | | ||||||||
每股基本和稀釋淨利潤，非可贖回普通股 | $ | | $ | | $ | | $ | | ||||
所附註釋是未經審計的簡明財務報表的組成部分。
2
DISTOKEN收購公司
股東權益變動表簡表
(未經審計)
2024年9月30日止三個月和九個月末
| 額外的 |
| 總計 | |||||||||||
| 普通股份 |
| 實收股本 |
| 累計 |
| 股東的 | |||||||
| 股份 |
| 金額 |
| 資本 |
| 虧損 |
| 虧損 | |||||
| | $ | | $ | — | $ | ( | $ | ( | |||||
普通股份增值至贖回金額 | — | — | — | ( | ( | |||||||||
淨利潤 | — | — | — | | | |||||||||
2024年3月31日的餘額 | | | — | ( | ( | |||||||||
普通股份溢價計入贖回金額 | — | — | — | ( | ( | |||||||||
淨虧損 | — | — | — | ( | ( | |||||||||
2024年6月30日餘額 | | | — | ( | ( | |||||||||
普通股份的增值額達贖回金額 | — | — | — | ( | ( | |||||||||
淨利潤 | — | — | — | | | |||||||||
餘額 - 2024年9月30日 | | $ | | $ | — | $ | ( | $ | ( | |||||
3
截至2023年9月30日的三個月和九個月
| 額外的 |
| 總計 | |||||||||||
| 普通股份 |
| 實收股本 |
| 累計 |
| 股東的 | |||||||
| 股份 |
| 金額 |
| 資本 |
| 虧損 |
| 股權 | |||||
2022年12月31日的結餘(1)(2)(3) |
| | $ | | $ | | $ | ( | $ | | ||||
定向增發 | | | | — | | |||||||||
公開warrants發行時的公允價值 |
| — |
| — |
| |
| — |
| | ||||
代表股份的公平價值 |
| — |
| — |
| |
| — |
| | ||||
公開發行單位中包含的權益的公允價值 |
| — |
| — |
| |
| — |
| | ||||
代表warrants的公平價值 | — | — | | — | | |||||||||
交易成本分配值 | — | — | ( | — | ( | |||||||||
Accretion for ordinary shares to redemption amount | — | — | ( | — | ( | |||||||||
淨利潤 |
| — |
| — |
| — |
| |
| | ||||
截至2023年3月31日的餘額 | | | | | | |||||||||
普通股份應計至贖回金額 | — | — | ( | — | ( | |||||||||
淨利潤 | — | — | — | | | |||||||||
2023年6月30日的結餘 | | $ | | $ | | $ | | $ | | |||||
Accretion for ordinary shares to redemption amount | — | — | ( | ( | ( | |||||||||
淨利潤 | — | — | — | | | |||||||||
資產負債表 - 2023年9月30日 | | $ | | $ | — | $ | | $ | | |||||
(1) |
(2) |
(3) |
所附註釋是未經審計的簡明財務報表的組成部分。
4
DISTOKEN收購公司
精簡現金流量表
(未經審計)
| 截至九月三十日的九個月 | |||||
| 9月30日, | |||||
| 2024 |
| 2023 | |||
經營活動產生的現金流量： | ||||||
淨利潤 | $ | | $ | | ||
調整淨利潤以獲得運營活動使用的淨現金流量: |
|
| ||||
在信託帳戶中持有的投資所賺取的利息 |
| ( |
| ( | ||
持有信託帳戶中的投資的未實現收益 |
| — |
| ( | ||
運營資產和負債的變化： |
|
| ||||
其他應收款 | — | | ||||
預付費用 | | ( | ||||
應付賬款和應計費用 | | | ||||
中國應交稅款 | | — | ||||
用於經營活動的淨現金 |
| ( |
| ( | ||
投資活動現金流量: |
|
|
|
| ||
以trust帳戶中的現金進行投資 | — | ( | ||||
現金存入信託帳戶用於延期付款 | ( | — | ||||
投資活動中使用的淨現金 | ( | ( | ||||
籌資活動產生的現金流量： |
|
| ||||
出售份額所得款項，扣除承銷折扣 |
| — |
| | ||
私募單位售出所得 | — | | ||||
代表warrants出售所得 | — | | ||||
來自關聯方的墊款 | — | | ||||
來自關聯方的墊款償還 |
| — |
| ( | ||
償還本票 - 贊助商 |
| — |
| ( | ||
支付發行費用 | ( | ( | ||||
贊助商所得可賺取的款項 | | — | ||||
贊助商應得款項 | | — | ||||
延期票據收益 - 贊助方 | | — | ||||
融資活動提供的淨現金 |
| |
| | ||
現金淨增加額 | ( | | ||||
現金-期初餘額 |
|
| — | |||
現金-期末餘額 | $ | $ | ||||
非現金投資和融資活動： | ||||||
發行成本包括應計發行成本 | $ | — | $ | | ||
將A類普通股歸集到贖回價格 | $ | | $ | | ||
所附註釋是未經審計的簡明財務報表的組成部分。
5
備註1— 組織和業務操作描述
Distoken Acquisition Corporation（「公司」）是一家在2020年7月1日註冊爲開曼群島豁免公司的空殼公司。該公司成立的目的是爲了與一個或多個業務或實體進行合併、股票交換、資產收購、股票購買、資本重組、重組或類似的業務組合（「業務組合」）。
截至2024年9月30日，公司尚未開始任何運營。從2020年7月1日（成立）到2024年9月30日的所有活動與公司的成立有關，以及如下面所述的首次公開募股（「首次公開募股」），該募股於2023年2月17日結束，首次公開募股之後，確定一家目標公司進行業務合併。公司將在完成業務合併之前不會產生任何營業收入。公司以利息收入和首次公開募股所得的未實現收益的形式產生非營運收入。公司選擇12月31日作爲其財務年末。
公司的首次公開募股的註冊聲明於2023年2月13日生效。2023年2月17日，公司完成了首次公開募股，
隨着首次公開發行的結束，公司以每美元9.2美分的價格完成了對9,540,000份認股權證(「私募認股權證」)的出售，向贊助方(直接或間接所有者)的私募認股權證持有人進行私募，募集了總額達9,540,000美元的募資，詳見備註4。
交易成本爲
在2023年2月17日首次公開募股（IPO）結束後，$
公司的管理層在首次公開募股及定向增發單位的銷售淨收益的具體使用上享有廣泛的裁量權，儘管所有淨收益主要意在普遍應用於完成業務合併。納斯達克規則規定，業務合併必須與一個或多個目標業務進行，這些目標業務的總公允市場價值至少爲
公司將爲股東提供機會，以在完成業務合併後贖回全部或部分公共股票，贖回方式包括（i）與爲批准業務合併而召開的股東會議相關，或（ii）通過要約收購。是否尋求股東對業務合併的批准或進行要約收購的決定將由公司自行決定，完全由其自由裁量權所控。股東有權按比例贖回其在信託帳戶中持有的金額（最初爲$
6
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(UNAUDITED)
The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $
Notwithstanding the foregoing, if the Company seeks shareholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Company’s Memorandum and Articles of Association provides that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to
The Sponsor has agreed (a) to waive its redemption rights with respect to any Founder Shares, Private Shares and Public Shares held by it in connection with the completion of a Business Combination (and not seek to sell its shares to the Company in any tender offer the Company undertakes in connection with a Business Combination) and (b) not to propose an amendment to the Memorandum and Articles of Association (i) that would affect the ability of holders of Public Shares to redeem or sell their shares to the Company in connection with a Business Combination or to modify the substance or timing of the Company’s obligation to redeem
The Company initially had 9 months from the closing of the Initial Public Offering, or until November 17, 2023, to consummate a Business Combination. However, if the Company anticipated that it would not be able to consummate a Business Combination within 9 months, it was originally permitted, by resolution of the Company’s board of directors (the “Board”) if requested by the Sponsor, to extend the period of time to consummate a Business Combination up to three times, each by an additional three months (for a total of up to 18 months), subject to the Sponsor depositing additional funds into the Trust Account (the “Original Extension”). Pursuant to the terms of the Memorandum and Articles of Association and the Trust Agreement entered into between the Company and Continental Stock Transfer & Trust Company on the date of the prospectus for the Initial Public Offering, in order for the time available to consummate the Initial Business Combination to be extended, the Sponsor or its affiliates or designees, upon
7
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(UNAUDITED)
On November 10, 2023, the Company held an extraordinary general meeting (the “2023 Extension Meeting”), at which the Company’s shareholders approved, as a special resolution, an amendment to the Company’s Memorandum and Articles of Association to amend the terms of the Original Extension and to give the Board the right to extend the date by which the Company has to consummate a Business Combination (such date, the “Termination Date”) from November 17, 2023 on a monthly basis up to twelve (12) times until November 18, 2024, or such earlier date as determined by the Board (the “2023 Extension Amendment”). In connection with the 2023 Extension Amendment, shareholders holding
On November 10, 2023, the Company issued a promissory note (the “2023 Extension Note”) in the aggregate principal amount of up to $
As of September 30, 2024, the Sponsor made a total of $
On July 29, 2024, the Company advanced $
On August 21, 2024, the Company deposited $
On September 22, 2024, the Company deposited $
On October 30, 2024, the Company deposited $
The Company plans on extending the time to complete an initial business combination by one month from November 18, 2024 to December 18, 2024 by depositing the $
8
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(UNAUDITED)
The Sponsor has agreed that it will be liable to the Company, if and to the extent any claims by a third party (other than the Company’s independent auditors) for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $
On November 14, 2024, the Company held an extraordinary general meeting in lieu of annual general meeting of shareholders (the “2024 Extension Meeting”), at which the Company’s shareholders approved, as a special resolution, an amendment to the Company’s Memorandum and Articles of Association to give the Board the right to extend the date by which the Company has to consummate a Business Combination from November 18, 2024 on a monthly basis up to twelve (12) times until November 18, 2025, or such earlier date as determined by the Board (the “2024 Extension Amendment”). In connection with the 2024 Extension Amendment, shareholders holding
If the Company is unable to complete a Business Combination by November 18, 2025 (or such earlier date as determined by the Board), as extended by the 2024 Extension Amendment (such period, the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than 10 business days thereafter, redeem
On November 14, 2024, the Company issued a promissory note (the “2024 Extension Note”) in the aggregate principal amount of up to $
Going Concern Consideration
The Company’s liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the payment of $
9
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(UNAUDITED)
In order to fund working capital deficiencies or 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, it would repay such loaned amounts at that time. Up to $
In connection with the Company’s assessment of going concern considerations in accordance with the authoritative guidance in Financial Accounting Standard Board (“FASB”) Accounting Standards Update (“ASU”) Topic 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that the Company currently lacks the liquidity it needs to sustain operations for a reasonable period of time, which is considered to be at least one year from the date that the unaudited condensed financial statements are issued as it expects to continue to incur significant costs in pursuit of its acquisition plans. In addition, the Company may extend the time to consummate a Business Combination on a monthly basis from November 18, 2024 until November 18, 2025, as determined by the Board. It is uncertain that the Company will be able to consummate a Business Combination during this time period. If a Business Combination is not consummated by November 18, 2025 (if extended by the full amount of time), there will be a mandatory liquidation and subsequent dissolution.
Management has determined that mandatory liquidation, should a Business Combination not occur, and potential subsequent dissolution and the liquidity condition raise substantial doubt about the Company’s ability to continue as a going concern for one year from the date these financial statements are issued. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after November 18, 2025. The Company intends to complete a Business Combination before the mandatory liquidation date.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 17, 2024, as amended on September 23, 2024. The interim results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any future periods.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
10
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(UNAUDITED)
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 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 which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of the financial statements in conformity with 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.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly 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 has $
Investments in Trust Account
At September 30, 2024 and December 31, 2023, the assets held in the Trust Account were held in money market funds which are invested primarily in U.S. government securities. The Company accounts for its investments as trading securities under ASC 320 (Investments—Debt and Equity Securities), where securities are presented at fair value on the condensed balance sheets. Gains and losses resulting from the change in fair value of investments held in the Trust Account are included in interest earned on investments held in Trust Account in the condensed statements of operations.
Redeemable Share Classification
The Public Shares contain a redemption feature which allows for the redemption of such Public Shares in connection with the Company’s liquidation, or if there is a shareholder vote or tender offer in connection with the Company’s initial Business Combination. In accordance with ASC 480-10-S99, the Company classifies Public Shares subject to redemption outside of permanent equity as the redemption provisions are not solely within the control of the Company. The Public Shares sold as part of the Units in the Initial Public Offering were issued with other freestanding instruments (i.e., Public Warrants and Public Rights) and as such, the initial carrying value of Public Shares classified as temporary equity are the allocated proceeds determined in accordance with ASC 470-20. The Company recognizes changes in redemption value immediately as it occurs and will adjust the carrying value of redeemable shares to equal the redemption value at the end of each reporting period. Immediately upon the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption amount value. The change in the carrying value of redeemable shares will result in charges against additional paid-in capital and accumulated deficit. Accordingly, at September 30, 2024 and December 31, 2023, shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ equity section of the Company’s condensed balance sheets.
11
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(UNAUDITED)
At September 30, 2024 and December 31, 2023, the ordinary shares reflected in the condensed balance sheets are reconciled in the following table:
Gross proceeds |
| $ | |
Less: |
|
|
|
Proceeds allocated to Public Warrants |
|
| ( |
Proceeds allocated to Public Rights | ( | ||
Ordinary share issuance costs | ( | ||
Redemption of ordinary shares | ( | ||
Plus: |
| ||
Remeasurement of carrying value to redemption value |
|
| |
Ordinary shares subject to possible redemption, December 31, 2023 |
|
| |
Plus: |
|
| |
Remeasurement of carrying value to redemption value |
|
| |
Ordinary shares subject to possible redemption, September 30, 2024 |
| $ | |
Ordinary shares subject to possible redemption of $
Offering Costs
The Company complies with the requirements of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A — “Expenses of Offering”. Offering costs consist principally of professional and registration fees, cash underwriting discount, fair value of representative shares, and fair value of representative warrants incurred through the balance sheet date that are related to the Initial Public Offering. Offering costs were allocated to the separable financial instruments issued in the Initial Public Offering based on relative fair value basis, compared to total proceeds received. Offering costs allocated to the Public Shares were charged to temporary equity and offering costs allocated to Public Warrants (as defined in Note 3) were charged to shareholders’ equity upon the completion of the Initial Public Offering.
Income Taxes
The Company accounts for income taxes under ASC 740, “Income Taxes” (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statement and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position 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. The Company has determined there is a possibility it will be considered a Chinese Income Tax Resident for which it will owe taxes to the Chinese government. As such, the Company has accrued $
12
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(UNAUDITED)
The Company is considered an exempted Cayman Islands Company and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with FASB ASC Topic 815, “Derivatives and Hedging”. Derivative instruments are initially recorded at fair value on the grant date and re-valued at each reporting date, with changes in the fair value reported in the condensed statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative assets and liabilities are classified in the condensed balance sheets as current or non-current based on whether or not net-cash settlement or conversion of the instruments could be required within 12 months of the balance sheet date.
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 the warrant issuance and as of each subsequent quarterly period end date while the instruments are outstanding. Upon further review of the warrant agreement, management concluded that the warrants issued pursuant to the warrant agreement qualify for equity accounting treatment.
Net Income Per Share
The Company complies with accounting and disclosure requirements of Financial Accounting Standards Board (“FASB”) ASC Topic 260, “Earnings Per Share”. Net income per ordinary share is computed by dividing net income by the weighted average number of ordinary shares outstanding for the period. Accretion associated with the redeemable ordinary shares is excluded from earnings per share as the redemption value approximates fair value.
The calculation of diluted net income per share does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering, and (ii) the private placement since the exercise of the warrants to purchase
The following table reflects the calculation of basic and diluted net income per ordinary share (in dollars, except per share amounts):
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||
Non- | Non- | Non- | Non- | |||||||||||||||||||||
| Redeemable |
| redeemable |
| Redeemable |
| redeemable |
| Redeemable |
| redeemable |
| Redeemable |
| redeemable | |||||||||
Basic and diluted net income per ordinary share |
| |||||||||||||||||||||||
Numerator: |
| |||||||||||||||||||||||
Allocation of net income |
| $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||
Denominator: |
| |||||||||||||||||||||||
Basic and diluted weighted average shares outstanding | | | | | | | | | ||||||||||||||||
Basic and diluted net income per ordinary share | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
13
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(UNAUDITED)
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution which, at times may exceed the Federal Deposit Insurance Corporation coverage limit of $250,000. The Company has not experienced losses on this account.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying condensed balance sheets, primarily due to their short-term nature.
Recently Issued Accounting Standards
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company’s management does not believe the adoption of ASU 2023-09 will have a material impact on its financial statements and disclosures.
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
NOTE 3 — PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company sold
NOTE 4 — PRIVATE PLACEMENT
Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of
The proceeds from the sale of the Private Units were added to the net proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Units held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Units and all underlying securities will expire worthless.
14
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(UNAUDITED)
NOTE 5 — RELATED PARTY TRANSACTIONS
Founder Shares
On July 8, 2020, the Sponsor paid $
On January 26, 2023, the shareholders of the Company approved, through an ordinary resolution, the redesignation of authorized share capital from two classes of ordinary shares (Class A and Class B) to one class of ordinary shares and related amendments to the memorandum and articles of association. All share and per-share amounts and descriptions have been retrospectively presented.
The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier of (A)
Administrative Services Agreement
The Company entered into an agreement, commencing on February 15, 2023, to pay the Sponsor or its affiliate up to $
Due from Sponsor
Through March 31, 2024, the Company advanced an aggregate amount of $
15
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(UNAUDITED)
Advances from Sponsor
The advances from Sponsor represents the amounts paid by the Sponsor on behalf of the Company in excess of the limit that can be drawn against the promissory note. As of September 30, 2024 and December 31, 2023, there was $
Promissory Note — Sponsor
On July 8, 2020, the Company issued an unsecured promissory note to the Sponsor, pursuant to which the Company was able to borrow up to an aggregate principal amount of $
On February 26, 2024, the Company issued an unsecured promissory note (the “2024 Note”) in the aggregate principal amount of up to $
Related Party 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. Such Working Capital Loans would be evidenced by promissory notes. The notes may be repaid upon completion of a Business Combination, without interest, or, at the lender’s discretion, up to $
Extension Note - Sponsor
As discussed in Note 1, on November 10, 2023, the Company issued the 2023 Extension Note in the aggregate principal amount of up to $
16
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(UNAUDITED)
NOTE 6 — COMMITMENTS
Registration Rights
Pursuant to a registration rights agreement entered into on February 15, 2023, the holders of the Founder Shares, Representative Shares, Private Units and any units that may be issued on conversion of the Working Capital Loans (and any securities underlying the Private Units or units issued upon conversion of Working Capital Loans) will be entitled to registration rights pursuant to a registration rights agreement. The holders of these securities will be entitled to make up to
Underwriting Agreement
The Company granted the underwriters a 45-day option to purchase up to
The underwriters were also entitled to a cash underwriting discount of $
Business Combination Marketing Agreement
The Company has engaged I-Bankers Securities, Inc. (“I-Bankers”), the representative of the underwriters in the Initial Public Offering, as an advisor in connection with its Business Combination to assist in holding meetings with the Company shareholders to discuss the potential Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing its securities in connection with its initial Business Combination and assist with press releases and public filings in connection with the Business Combination. The Company will pay I-Bankers a cash fee for such services upon the consummation of its initial business combination in an amount equal to
Business Combination Agreement
On May 17, 2024, the Company entered into a Business Combination Agreement (the “Business Combination Agreement”) with Youlife Group Inc., a Cayman Islands exempted company (“Pubco”), the Sponsor, Youlife I Limited, a Cayman Islands exempted company and a wholly-owned subsidiary of Pubco (“First Merger Sub”), Youlife II Limited, a Cayman Islands exempted company and a wholly-owned subsidiary of Pubco (“Second Merger Sub”), and Youlife International Holdings Inc., a Cayman Islands exempted company (“Youlife”). Pursuant to the Business Combination Agreement, subject to the terms and conditions set forth therein, at the closing of the transactions contemplated by the Business Combination Agreement (the “Youlife Business Combination”), (a) First Merger Sub will merge with and into Youlife (the “First Merger”), with Youlife surviving the First Merger as a wholly-owned subsidiary of Pubco and the outstanding shares of Youlife being converted into the right to receive shares of Pubco; and (b) Second Merger Sub will merge with and into the Company, with the Company surviving the Second Merger as a wholly-owned subsidiary of Pubco and the outstanding securities of the Company being converted into the right to receive substantially equivalent securities of Pubco.
On November 13, 2024, the Company, Pubco, the Sponsor, First Merger Sub, Second Merger Sub and Youlife entered into the first amendment to the Business Combination Agreement (the “BCA Amendment”), to, among other things, (i) adopt an American depository share facility, (ii) revise the scope and terms of certain lock-up provisions applicable to the Sponsor and Youlife shareholders, and (iii)
17
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(UNAUDITED)
clarify certain matters related to the dual-class share structure of Pubco following the closing (the “Closing”) of the Youlife Business Combination. Under the new American depository share facility, at the Closing, Pubco will issue its ordinary shares in the form of American depository shares (“Pubco ADSs”) to the Company and Youlife shareholders holding registered shares, which Pubco ADSs will be listed on the Nasdaq Capital Market in lieu of Pubco ordinary shares, and the warrants to be issued by Pubco will be exercisable for Pubco ADSs. Upon becoming registered shares, Pubco ordinary shares will be exchangeable for Pubco ADSs.
Lock-Up Agreements
Simultaneously with the execution of the Business Combination Agreement, Pubco, the Company and Youlife entered into lock-up agreements (the “Lock-Up Agreements”) with the Sponsor and with certain shareholders of Youlife. The Lock-Up Agreements provide for a lock-up period commencing on the closing date and ending on the 12-month anniversary of the closing date and with respect to
Shareholder Support Agreements
Simultaneously with the execution of the Business Combination Agreement, the Company, Youlife and certain shareholders of Youlife entered into a Shareholder Support Agreement (the “Shareholder Support Agreement”), pursuant to which, among other things, the shareholders of Youlife have agreed (a) to support the adoption of the Business Combination Agreement and the approval of the Youlife Business Combination, subject to certain customary conditions, and (b) not to transfer any of their subject shares (or enter into any arrangement with respect thereto), subject to certain customary conditions.
Non-Competition and Non-Solicitation Agreements
Simultaneously with the execution of the Business Combination Agreement, certain Youlife shareholders entered into non-competition and non-solicitation agreements (the “Non-Competition and Non-Solicitation Agreements”) in favor of Pubco, Youlife and the Company. Under the Non-Competition and Non-Solicitation Agreements, certain Youlife shareholders agreed not to compete with Pubco during the three-year period following the closing and, during such three-year restricted period, not to solicit employees or customers of Pubco. The Non-Competition and Non-Solicitation Agreement also contains customary confidentiality and non-disparagement provisions.
Vendor Agreement
On March 5, 2024, the Company entered into an agreement with a vendor for legal and consulting services, rendering the previous agreement with the same vendor entered into in 2023 void. The agreement provides that the Company will pay the vendor $
18
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(UNAUDITED)
NOTE 7 — SHAREHOLDERS’ DEFICIT
Preference Shares — The Company is authorized to issue
Ordinary Shares — On January 26, 2023, the shareholders of the Company approved, through an ordinary resolution, the redesignation of authorized share capital from
The Company is authorized to issue
Rights — Each holder of a right will receive (1/10) of one ordinary share upon consummation of a Business Combination, even if the holder of such right redeemed all shares held by it in connection with a Business Combination. No fractional shares will be issued upon exchange of the rights.
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 rights will not receive any of such funds with respect to their rights, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such rights, and the rights will expire worthless. Further, there are
Warrants — The Public Warrants will become exercisable
No warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the ordinary shares issuable upon exercise of the warrants and a current prospectus relating to such ordinary shares. Notwithstanding the foregoing, if a registration statement covering the ordinary shares issuable upon exercise of the Public Warrants is not effective within
19
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(UNAUDITED)
Once the Public Warrants become exercisable, the Company may redeem the Public Warrants for redemption:
| ● | in whole and not in part; |
| ● | at a price of $ |
| ● | upon not less than |
| ● | if, and only if, the reported last sale price of the ordinary shares equals or exceeds $ |
| ● | if, and only if, there is a current registration statement in effect with respect to the ordinary shares underlying such warrants. |
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 ordinary shares issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Public Rights or Public 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 Public Warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Rights and Public Warrants may expire worthless.
In addition, if (x) the Company issues additional 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 are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Warrants and the ordinary shares issuable upon the exercise of the Private Warrants will not be transferable, assignable or salable until
Representative Shares
On July 28, 2020 the Company issued to EarlyBirdCapital and its designees an aggregate of
20
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(UNAUDITED)
into the founder shares scenario analysis was valued using a binomial lattice, of $
The holders of the representative shares have agreed not to transfer, assign or sell any such shares until the completion of a Business Combination. In addition, the holders have agreed (i) to waive conversion rights (or right to participate in any tender offer) with respect to such shares in connection with the completion of a Business Combination and (ii) to waive their rights to liquidating distributions from the Trust Account with respect to such shares if the Company fails to complete a Business Combination within the Combination Period.
The representative shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following the effective date of the registration statement related to the Initial Public Offering pursuant to Rule 5110(g)(1) of the FINRA Manual. Pursuant to FINRA Rule 5110(g)(1), these securities will not be sold during the Initial Public Offering, or sold, transferred, assigned, pledged, or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period of 180 days immediately following the effective date of the registration statement related to the Initial Public Offering or commencement of sales of the Initial Public Offering, except to any underwriter and selected dealer participating in the Initial Public Offering and their bona fide officers or partners.
Representative Warrants
In addition, the Company entered into a separate warrant agreement with I-Banker Securities, Inc. (referred as “I-Bankers”, the “Representative” of the Underwriters) to issue Representative Warrants exercisable to purchase
NOTE 8 — FAIR VALUE MEASUREMENTS
The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
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
21
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(UNAUDITED)
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. |
At September 30, 2024, assets held in the Trust Account were comprised of $
The following table presents information about the Company’s assets that are measured at fair value on a recurring basis at September 30, 2024 and December 31, 2023 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
September 30, | December 31, | |||||||
| Level |
| 2024 |
| 2023 | |||
Assets: |
| |||||||
Investments held in Trust Account | 1 | $ | | $ | | |||
NOTE 9 — SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed financial statements were issued. Based upon this review, except as set forth below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial statements.
On October 30, 2024, the Company deposited $
On November 13, 2024, the Company, Pubco, the Sponsor, First Merger Sub, Second Merger Sub and Youlife entered into the BCA Amendment, to, among other things, (i) adopt an American depository share facility, (ii) revise the scope and terms of certain lock-up provisions applicable to the Sponsor and Youlife shareholders, and (iii) clarify certain matters related to the dual-class share structure of Pubco following the Closing of the Youlife Business Combination. Under the new American depository share facility, at the Closing, Pubco will issue its ordinary shares in the form of Pubco ADSs to the Company and Youlife shareholders holding registered shares, which Pubco ADSs will be listed on the Nasdaq Capital Market in lieu of Pubco ordinary shares, and the warrants to be issued by Pubco will be exercisable for Pubco ADSs. Upon becoming registered shares, Pubco ordinary shares will be exchangeable for Pubco ADSs.
22
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(UNAUDITED)
On November 14, 2024, the Company held the 2024 Extension Meeting, at which the Company’s shareholders approved, as a special resolution, an amendment to the Company’s Memorandum and Articles of Association to give the Board the right to extend the date by which the Company has to consummate a Business Combination from November 18, 2024 on a monthly basis up to twelve (12) times until November 18, 2025, or such earlier date as determined by the Board (the “2024 Extension Amendment”). In connection with the 2024 Extension Amendment, shareholders holding
On November 14, 2024, the Company issued the 2024 Extension Note in the aggregate principal amount of up to $
23
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this report (the “ Report”) to “we,” “us” or the “Company” refer to Distoken Acquisition Corporation. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Xiaosen Sponsor LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this Report including, without limitation, statements under this Item regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. When used in this Report, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or our management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto included in this Report under “Item 1. Financial Statements”.
Overview
We are a blank check company incorporated in the Cayman Islands on July 1, 2020 formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities (“Business Combination”). We intend to effectuate our Business Combination using cash derived from the proceeds of the Company’s initial Public Offering (the “Initial Public Offering”) and the sale of the Private Units, our shares, debt or a combination of cash, shares and debt.
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.
The SEC has adopted new rules and regulations relating to special purpose acquisition companies (“SPACs”), which became effective on July 1, 2024 (the “2024 SPAC Rules”). The 2024 SPAC Rules require, among other matters, (i) additional disclosures relating to SPAC sponsors and related persons; (ii) additional disclosures relating to SPAC Business Combination transactions; (iii) additional disclosures relating to dilution and to conflicts of interest involving sponsors and their affiliates in both SPAC initial public offerings and Business Combination transactions; (iv) additional disclosures regarding projections included in SEC filings in connection with proposed Business Combination transactions; and (v) the requirement that both the SPAC and its target company be co-registrants for Business Combination registration statements. In addition, the SEC’s adopting release provided guidance describing circumstances in which a SPAC could become subject to regulation under the Investment Company Act of 1940, as amended (the “Investment Company Act”), including its duration, asset composition, business purpose, and the activities of the SPAC and its management team in furtherance of such goals. The 2024 SPAC Rules may materially affect our ability to negotiate and complete our initial Business Combination and may increase the costs and time related thereto.
24
Extension of Our Combination Period
We initially had until November 17, 2023, 9 months from the closing of our Initial Public Offering, to consummate our initial Business Combination. However, if the Company anticipated that it would not be able to consummate a Business Combination within 9 months, it was originally permitted, by resolution of the Company’s board of directors (the “Board”) if requested by the sponsor (the “Sponsor”), to extend the period of time to consummate a Business Combination up to three times, each by an additional three months (for a total of up to 18 months), subject to the Sponsor depositing additional funds into the Company’s trust account (the “Trust Account”) (the “Paid Extension”). Pursuant to the terms of our amended and restated memorandum and articles of association and the trust agreement entered into between us and Continental, in order for the time available to consummate our initial Business Combination to be extended, the Sponsor or its affiliates or designees, upon five days advance notice prior to the applicable deadline, would have been required to deposit into the trust account $690,000 ($0.10 per unit) for each three month extension, up to an aggregate of $2,070,000 for nine months, on or prior to the date of the applicable deadline.
On November 10, 2023, we held an extraordinary general meeting (the “2023 Extension Meeting”), at which our shareholders approved the 2023 Extension Amendment to amend the terms of the Paid Extension and to give the Board the right to extend the date by which we have to consummate a Business Combination from November 17, 2023 on a monthly basis up to twelve (12) times until November 18, 2024, or such earlier date as determined by the Board. In connection with the 2023 Extension Amendment, shareholders holding 3,018,308 ordinary shares exercised their right to redeem such shares for a pro rata portion of the trust account. As a result, an aggregate amount of $31.9 million (approximately $10.57 per share) was removed from the trust account to pay such holders.
On November 10, 2023, in connection with the 2023 Extension Amendment, we issued the 2023 Extension Note in the aggregate principal amount of up to $360,000 to the Sponsor, pursuant to which the 2023 Extension Funds will be deposited into the Trust Account in monthly installments for the benefit of each public share that was not redeemed in connection with the 2023 Extension Amendment. The Sponsor has agreed to pay $30,000 per month (or approximately $0.01 per public share not redeemed) that we decide to take to complete our initial Business Combination for each calendar month until November 18, 2024, or portion thereof, that is needed to complete our initial Business Combination, for up to an aggregate of $360,000. The 2023 Extension Note bears no interest and is repayable in full upon the earlier of (a) the date of the consummation of our initial Business Combination, and (b) the date of our liquidation. As of September 30, 2024 and December 31, 2023, there were $330,000 and $60,000, respectively, outstanding borrowings under the 2023 Extension Note.
As of September 30, 2024, the Sponsor made a total of $330,000 of extension deposits into the Trust Account to extend the time the Company has to complete an initial Business Combination to October 18, 2024.
On July 29, 2024, the Company advanced $12,000 from the Company’s operating account into the Trust Account on the Sponsor’s behalf as a partial extension deposit. On August 6, 2024, the Chief Executive Officer advanced $18,000 to the Company to fully pay the required monthly extension deposit into the Trust Account and to extend the time the Company has to complete an initial Business Combination to August 18, 2024.
On August 21, 2024, the Company deposited $30,000 of the amounts received from the Sponsor into the Trust Account to extend the time the Company has to complete an initial Business Combination to September 18, 2024.
On September 22, 2024, the Company deposited $30,000 of the amounts received from the Sponsor into the Trust Account to extend the time the Company has to complete an initial Business Combination to October 18, 2024.
On October 30, 2024, the Company deposited $30,000 of the amounts received from the Sponsor into the Trust Account to extend the time the Company has to complete an initial Business Combination to November 18, 2024.
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On November 14, 2024, the Company held an extraordinary general meeting in lieu of annual general meeting of shareholders (the “2024 Extension Meeting”), at which the Company’s shareholders approved, as a special resolution, an amendment to the Company’s Memorandum and Articles of Association to give the Board the right to extend the date by which the Company has to consummate a Business Combination from November 18, 2024 on a monthly basis up to twelve (12) times until November 18, 2025, or such earlier date as determined by the Board (the “2024 Extension Amendment”). In connection with the 2024 Extension Amendment, shareholders holding 3,229,522 ordinary shares exercised their right to redeem such shares for a pro rata portion of the Trust Account (the “2024 Extension Redemption”). As a result of the 2024 Extension Redemption, an aggregate amount of $36.3 million (approximately $11.24 per share) was removed from the Trust Account to pay such holders.
On November 14, 2024, the Company issued a promissory note (the “2024 Extension Note”) in the aggregate principal amount of up to $360,000 to the Sponsor (the “2024 Extension Funds”), pursuant to which the 2024 Extension Funds will be deposited into the Trust Account in monthly installments for the benefit of each Public Share that was not redeemed in connection with the 2024 Extension Amendment. The Sponsor has agreed to pay $30,000 per month (or approximately $0.046 per Public Share not redeemed) that the Company decides to take to complete an initial Business Combination for each calendar month until November 18, 2025, or portion thereof, that is needed to complete an initial Business Combination, for up to an aggregate of $360,000. The 2024 Extension Note bears no interest and is repayable in full upon the earlier of (a) the date of the consummation of the initial Business Combination, and (b) the date of the liquidation of the Company.
If the Company is unable to complete a Business Combination by November 18, 2025 (or such earlier date as determined by the Board), as extended by the 2024 Extension Amendment (such period, the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than 10 business days thereafter, redeem 100% of the outstanding 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 (less up to $50,000 of interest to pay dissolution expenses and which interest shall be net of taxes payable), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the Company’s Board, dissolve and liquidate, subject (in each case) to its obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
Youlife Business Combination
On May 17, 2024, the Company entered into a Business Combination Agreement (the “Business Combination Agreement”) with Youlife Group Inc., a Cayman Islands exempted company (“Pubco”), the Sponsor, Youlife I Limited, a Cayman Islands exempted company and a wholly-owned subsidiary of Pubco (“First Merger Sub”), Youlife II Limited, a Cayman Islands exempted company and a wholly-owned subsidiary of Pubco (“Second Merger Sub”), and Youlife International Holdings Inc., a Cayman Islands exempted company (“Youlife”). Pursuant to the Business Combination Agreement, subject to the terms and conditions set forth therein, at the closing of the transactions contemplated by the Business Combination Agreement (the “Youlife Business Combination”), (a) First Merger Sub will merge with and into Youlife (the “First Merger”), with Youlife surviving the First Merger as a wholly-owned subsidiary of Pubco and the outstanding shares of Youlife being converted into the right to receive shares of Pubco; and (b) Second Merger Sub will merge with and into the Company, with the Company surviving the Second Merger as a wholly-owned subsidiary of Pubco and the outstanding securities of the Company being converted into the right to receive substantially equivalent securities of Pubco.
On November 13, 2024, the Company, Pubco, the Sponsor, First Merger Sub, Second Merger Sub and Youlife entered into the first amendment to the Business Combination Agreement (the “BCA Amendment”), to, among other things, (i) adopt an American depository share facility, (ii) revise the scope and terms of certain lock-up provisions applicable to the Sponsor and Youlife shareholders, and (iii) clarify certain matters related to the dual-class share structure of Pubco following the closing (the “Closing”) of the Youlife Business Combination. Under the new American depository share facility, at the Closing, Pubco will issue its ordinary shares in the form of American depository shares (“Pubco ADSs”) to the Company and Youlife shareholders holding registered shares, which Pubco ADSs will be listed on the Nasdaq Capital Market in lieu of Pubco ordinary shares, and the warrants to be issued by Pubco will be exercisable for Pubco ADSs. Upon becoming registered shares, Pubco ordinary shares will be exchangeable for Pubco ADSs.
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Lock-Up Agreements
Simultaneously with the execution of the Business Combination Agreement, Pubco, the Company and Youlife entered into lock-up agreements (the “Lock-Up Agreements”) with the Sponsor and with certain shareholders of Youlife. The Lock-Up Agreements provide for a lock-up period commencing on the closing date and ending on the 12-month anniversary of the closing date and with respect to 50% of such shares, on the date on which the last reported sales price of the Class A ordinary shares of Pubco equals or exceeds $12.50 per share for any 20 trading days within any 30-trading day period commencing at least 150 days after the closing.
Shareholder Support Agreements
Simultaneously with the execution of the Business Combination Agreement, the Company, Youlife and certain shareholders of Youlife entered into a Shareholder Support Agreement (the “Shareholder Support Agreement”), pursuant to which, among other things, the shareholders of Youlife have agreed (a) to support the adoption of the Business Combination Agreement and the approval of the Youlife Business Combination, subject to certain customary conditions, and (b) not to transfer any of their subject shares (or enter into any arrangement with respect thereto), subject to certain customary conditions.
Non-Competition and Non-Solicitation Agreements
Simultaneously with the execution of the Business Combination Agreement, certain Youlife shareholders entered into non-competition and non-solicitation agreements (the “Non-Competition and Non-Solicitation Agreements”) in favor of Pubco, Youlife and the Company. Under the Non-Competition and Non-Solicitation Agreements, certain Youlife shareholders agreed not to compete with Pubco during the three-year period following the closing and, during such three-year restricted period, not to solicit employees or customers of Pubco. The Non-Competition and Non-Solicitation Agreement also contains customary confidentiality and non-disparagement provisions.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities from July 1, 2020 (inception) through September 30, 2024 were organizational activities, those necessary to prepare for the Initial Public Offering, described below, and identifying a target company for a business combination. We do not expect to generate any operating revenues until after the completion of our business combination. We generate non-operating income in the form of interest income on marketable securities held in the trust account. We 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.
For the three months ended September 30, 2024, we had net income of $195,738, which consists of interest income on marketable securities held in the Trust Account of $555,371, offset by operating costs of $326,185 and Chinese income tax of $33,448.
For the nine months ended September 30, 2024, we had net income of $100,345, which consists of interest income on marketable securities held in the Trust Account of $1,644,669, offset by operating costs of $1,510,876 and Chinese income tax of $33,448.
For the three months ended September 30, 2023, we had net income of $391,367, which consists of interest income on marketable securities held in the Trust Account of $914,783 and an unrealized gain on marketable securities held in our Trust Account of $26,564, offset by operating costs of $428,379 and Chinese income tax of $121,601.
For the nine months ended September 30, 2023, we had net income of $1,080,034, which consists of interest income on marketable securities held in the Trust Account of $2,143,508 and an unrealized gain on marketable securities held in our Trust Account of $16,128, offset by operating costs of $724,967 and Chinese income tax of $354,635.
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Factors That May Adversely Affect our Results of Operations
Our results of operations and our ability to complete an initial Business Combination may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. Our business could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, public health considerations, and geopolitical instability, such as the military conflicts in Ukraine and the Middle East. We cannot at this time predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our business and our ability to complete an initial Business Combination.
Liquidity, Capital Resources, and Going Concern
On February 17, 2023, we completed our initial public offering of 6,900,000 units, at $10.00 per unit, generating gross proceeds of $69,000,000. Simultaneously with the closing of our initial public offering, we completed the sale of 545,000 private units at a price of $10.00 per private unit in the private placement to the sponsor, generating gross proceeds of $5,450,000.
Following the initial public offering, the full exercise of the over-allotment option and the sale of the private units, a total of $70,380,000 was placed in the trust account. Transaction costs amounted to $4,366,343 consisting of $2,070,000 of cash underwriting discount, $1,185,493 fair value of representative shares, $12,075 fair value of representative warrants, and $1,098,775 of other offering costs.
For the nine months ended September 30, 2024, net loss of $100,345 is reduced by the effect of interest earned on investments held in the Trust Account of $1,644,669 and increased by the changes in operating assets and liabilities of $948,548, arriving at the net cash used in operating activities was $595,776.
For the nine months ended September 30, 2023, cash used in operating activities was $637,824. Net income of $1,080,034 was affected by interest earned on marketable securities held in the Trust Account of $2,143,508 and unrealized gain on marketable securities held in our Trust Account of $16,128. Changes in operating assets and liabilities provided $441,778 of cash from operating activities.
On November 10, 2023, we held the 2023 Extension Meeting, at which our shareholders approved the 2023 Extension Amendment to amend the terms of the Paid Extension and to give the Board the right to extend the date by which we have to consummate a Business combination from November 17, 2023 on a monthly basis up to twelve (12) times until November 18, 2024, or such earlier date as determined by the Board. In connection with the 2023 Extension Amendment, shareholders holding 3,018,308 ordinary shares exercised their right to redeem such shares for a pro rata portion of the Trust Account. As a result, an aggregate amount of $31.9 million (approximately $10.57 per share) was removed from the trust account to pay such holders.
On November 10, 2023, in connection with the 2023 Extension Amendment, we issued the 2023 Extension Note in the aggregate principal amount of up to $360,000 to the sponsor, pursuant to which the Extension Funds will be deposited into the trust account in monthly installments for the benefit of each public share that was not redeemed in connection with the 2023 Extension Amendment. The sponsor has agreed to pay $30,000 per month (or approximately $0.01 per public share not redeemed) that we decide to take to complete our initial business combination for each calendar month until November 18, 2024, or portion thereof, that is needed to complete our initial business combination, for up to an aggregate of $360,000. The 2023 Extension Note bears no interest and is repayable in full upon the earlier of (a) the date of the consummation of our initial business combination, and (b) the date of our liquidation. As of September 30, 2024, there was $330,000 outstanding borrowings under the 2023 Extension Note.
On February 26, 2024, we issued an unsecured promissory note in the aggregate principal amount of up to $1,000,000 to the sponsor, for our working capital needs. The 2024 Note does not bear interest and matures upon the earlier of the consummation of an initial Business Combination or the date of liquidation. As of September 30, 2024, total borrowings under this note amounted to $519,888.
On November 14, 2024, the Company held the 2024 Extension Meeting, at which the Company’s shareholders approved, as a special resolution, an amendment to the Company’s Memorandum and Articles of Association to give the Board the right to extend the date by which the Company has to consummate a Business Combination from November 18, 2024 on a monthly basis up to twelve (12) times until November 18, 2025, or such earlier date as determined by the Board (the “2024 Extension Amendment”). In connection with the 2024 Extension Amendment, shareholders holding 3,229,522 ordinary shares exercised their right to redeem such shares for a pro rata
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portion of the Trust Account. As a result of the 2024 Extension Redemption, an aggregate amount of $36.3 million (approximately $11.24 per share) was removed from the Trust Account to pay such holders.
On November 14, 2024, the Company issued the 2024 Extension Note in the aggregate principal amount of up to $360,000 to the Sponsor, pursuant to which the 2024 Extension Funds will be deposited into the Trust Account in monthly installments for the benefit of each Public Share that was not redeemed in connection with the 2024 Extension Amendment. The Sponsor has agreed to pay $30,000 per month (or approximately $0.046 per Public Share not redeemed) that the Company decides to take to complete an initial Business Combination for each calendar month until November 18, 2025, or portion thereof, that is needed to complete an initial Business Combination, for up to an aggregate of $360,000. The 2024 Extension Note bears no interest and is repayable in full upon the earlier of (a) the date of the consummation of the initial Business Combination, and (b) the date of the liquidation of the Company.
As of September 30, 2024, we had investments held in the Trust Account of $43,355,649 (including $3,432,390 of interest income) consisting of money market funds which are invested primarily in U.S. government securities. We may withdraw interest from the Trust Account to pay taxes, if any. 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 income taxes payable), to complete our business combination. To the extent that our share capital or debt is used, in whole or in part, as consideration to complete our business combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
As of September 30, 2024, we had cash of $10,598. We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a business combination.
In order to finance transaction costs in connection with a business combination, our sponsor or an affiliate of our sponsor or certain of our directors and officers may, but are not obligated to (except as described below), loan us Working Capital Loans as may be required. If we complete a business combination, we would repay such loaned amounts. In the event that a business combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such Working Capital Loans but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such Working Capital Loans may be convertible into units of the post-business combination entity at a price of $10.00 per unit at the option of the lender. The units would be identical to the private units. The terms of such Working Capital Loans by our officers and directors, if any, have not been determined and no written agreements exist with respect to such Working Capital Loans. The Working Capital Loans would be repaid upon consummation of a business combination, without interest.
If our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to complete our business combination or because we become obligated to redeem a significant number of our public shares (the “Public Shares”) upon completion of our business combination, in which case we may issue additional securities or incur debt in connection with such business combination.
We may need to raise additional capital through loans or additional investments from our sponsor, shareholders, officers, directors, or third parties. Our officers, directors and our sponsor may, but are not obligated to, loan us funds as may be required. Accordingly, we may not be able to obtain additional financing. If we are unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. We cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. In addition, we may extend the amount of time to consummate a business combination from November 18, 2024 until November 18, 2025, as extended by the 2024 Extension Amendment. It is uncertain that we will be able to consummate a business combination by this time. We plan on extending the time to complete an initial business combination by one month from November 18, 2024 to December 18, 2024 by depositing the $30,000 monthly extension payment into the Trust Account on or before November 26, 2024. If a business combination is not consummated by a liquidation deadline there will be a mandatory liquidation and subsequent dissolution.
We have determined that mandatory liquidation, should a business combination not occur, and an extension not be approved by our shareholders, and potential subsequent dissolution and the liquidity issue raise substantial doubt about our ability to continue as a going
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concern for a reasonable period of time which is considered to be one year from the date of the issuance of the financial statements. The financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should we be unable to continue as a going concern.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of September 30, 2024. 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 an agreement to pay our sponsor or its affiliate up to a monthly fee of $10,000 for office space, administrative and support services. We began incurring these fees on February 15, 2023 and will continue to incur these fees monthly until the earlier of the completion of the business combination and our liquidation.
We have engaged I-Bankers, representative of the underwriters in the initial public offering, as an advisor to assist in holding meetings with our shareholders to discuss any potential business combination and the target business’ attributes, introduce us to potential investors that are interested in purchasing our securities in connection with our initial business combination and assist with press releases and public filings in connection with the business combination. We will pay I-Bankers a cash fee for such services upon the consummation of our initial business combination in an amount equal to 4.0%, or $2,760,000 in the aggregate, of the gross proceeds of the initial public offering (exclusive of any applicable finders’ fees which might become payable). We will also pay I-Bankers a cash fee in an amount equal to 1.0%, or $690,000 in the aggregate, of the gross proceeds of the initial public offering if it introduces us to the target business with whom the Company completes its initial business combination.
On March 5, 2024, we entered into an agreement with a vendor for legal and consulting services, rendering the previous agreement with the same vendor entered into in 2023 void. The agreement provides that we will pay the vendor $500,000 as follows: (i) $200,000 already paid on May 4, 2023 based on the previous agreement, which was carried forward to the current agreement, (ii) $50,000 by no later than March 15, 2024; (iii) $100,000 upon execution of the business combination agreement, or the merger agreement, as the case may be; and (iv) $150,000 upon submission of the S-4/F-4 proxy to the SEC. Additionally, if the Business Combination closes, we will make a final additional payment of $950,000. If the Business Combination does not close, we shall not be responsible for any further payments.
Critical Accounting Estimates
Management’s discussion and analysis of our results of operations and liquidity and capital resources are based on our financial information. Our financial statements have been prepared in accordance with U.S. GAAP. Certain of our accounting estimates require that management apply significant judgments in defining the appropriate assumptions integral to financial estimates. On an ongoing basis, management reviews the accounting assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with U.S. GAAP. Judgments are based on historical experience, terms of existing contracts, industry trends and information available from outside sources, as appropriate. However, by their nature, judgments are subject to an inherent degree of uncertainty, and, therefore, actual results could differ from our estimates. We have identified the following critical accounting estimates:
Investments in Trust Account
Assets held in the Trust Account were held in money market funds which are invested primarily in U.S. government securities. We accounted for the investments as trading securities under FASB ASC Topic 320, “Investments—Debt and Equity Securities”, where securities are presented at fair value on the condensed balance sheets. Gains and losses resulting from the change in fair value of investments held in the Trust Account are included in interest earned on investments held in Trust Account in the condensed statements of operations. As of September 30, 2024 and December 31, 2023, the fair value of investments held in the Trust Account amounts to $43,355,649 and $41,440,980, respectively.
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Derivative Financial Instruments
We evaluate financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). Derivative instruments are initially recorded at fair value on the grant date and re-valued at each reporting date, with changes in the fair value reported in the condensed statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative assets and liabilities are classified in the condensed balance sheets as current or non-current based on whether or not net-cash settlement or conversion of the instruments could be required within 12 months of the balance sheet date.
We accounted for Rights as equity-classified instruments based on an assessment of the Rights’ specific terms and applicable authoritative guidance in FASB ASC Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC 815. The assessment considered whether the Rights were freestanding financial instruments pursuant to ASC 480, met the definition of a liability pursuant to ASC 480, and whether the Rights met all the requirements for equity classification under ASC 815, including whether the Rights were indexed to the Company’s own shares, among other conditions for the equity classification. The fair value of public rights at issuance amounted to $3,305,100.
Warrant Instruments
We account 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. 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 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 the warrant issuance and as of each subsequent quarterly period end date while the instruments are outstanding. Upon further review of the warrant agreement, management concluded that the warrants issued pursuant to the warrant agreement qualify for equity accounting treatment. The fair value of public warrants at issuance amounted to $1,104,000, while the fair value of representative warrants at issuance amounted to $12,075.
Recent Accounting Standards
In December 2023, the FASB issued ASU Topic 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. Our management does not believe the adoption of ASU 2023-09 will have a material impact on our financial statements and disclosures.
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer (together, the “Certifying Officers”), or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
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Under the supervision and with the participation of our management, including our Certifying Officers, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the foregoing, our Certifying Officers concluded that our disclosure controls and procedures were not effective as of September 30, 2024 due to:
| (i) | material weaknesses previously identified related to ineffective review of controls over the financial statement preparation process including the valuation of complex financial instruments and recording of accrued expenses, including income taxes and including proper cut off procedures. |
| (ii) | material weakness in internal controls related to ineffective review of controls over the financial statement preparation process including the error in recording of excise tax payable and failure to record amounts due from the Sponsor and the 2023 Extension Note payable to Sponsor. |
| (iii) | material weakness in internal controls related to the compliance with the terms of the extension payment to extend the time we have to complete an initial business combination. |
In light of these material weaknesses, we have enhanced our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements including making greater use of third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects. We believe our efforts will enhance our controls relating to accounting for complex financial transactions, but we can offer no assurance that our controls will not require additional review and modification in the future as industry accounting practice may evolve over time.
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.
Changes in Internal Control over Financial Reporting
Other than as discussed above, there have been no changes to our internal control over financial reporting during the quarterly period ended September 30, 2024 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
To the knowledge of our management team, there is no litigation currently pending or contemplated against us, any of our officers or directors in their capacity as such or against any of our property.
Item 1A. Risk Factors
As a smaller reporting company under Rule 12b-2 of the Exchange Act, we are not required to include risk factors in this Report. However, as of the date of this Report, other than as set forth below, there have been no material changes with respect to those risk factors previously disclosed in our (i) Quarterly Reports on Form 10-Q for the quarterly periods ended June 30, 2024, September 30, 2023 and March 31, 2023, respectively, as filed with the SEC on August 16, 2024, November 14, 2023 and May 18, 2023, respectively, (ii) registration statement for our Initial Public Offering, (iii) Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 17, 2024; and (iv) definitive proxy statement, as filed with the SEC on October 31, 2024. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risks could arise that may also affect our business or ability to consummate an initial Business Combination. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.
Our public shareholders’ exercise of redemption rights with respect to a large number of Public Shares in the Extension Meeting may affect our ability to complete an initial Business Combination in the most desirable manner that will optimize the capital structure of the combined company, or at all.
Over the past two years, the redemption rate of shares held by public shareholders of SPACs at the time of a shareholders meeting that approves an amendment to the charter of the SPAC or the initial Business Combination of the SPAC has been very high, thereby increasing the likelihood that we, too, may be subject to significant redemptions that may affect our ability to complete an initial Business Combination.
In connection with the 2024 Extension Meeting, 3,229,522 Public Shares were redeemed at a price per Public Share of approximately $11.24, thereby reducing the number of outstanding Public Shares from 3,881,692 to 652,170, and reducing the total amount held in the Trust Account to approximately $7.3 million (as of November 19, 2024).
Due to the high rates of redemptions of Public Shares in connection with shareholder votes to approve extensions or Business Combinations of SPACs, we may need to rely upon significant PIPE or other outside financing to provide cash to our post- Business Combination company. Obtaining financing in connection with initial Business Combinations of SPACs has in recent times been very difficult, with many financings available only on terms that are onerous to the surviving company of the Business Combination. The failure to secure additional financing on reasonable terms could have a material adverse effect on the continued development or growth of the target business. None of the Sponsor or our other shareholders is required to provide any financing to us in connection with or after our initial Business Combination. Raising additional third-party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels or on onerous terms. The above considerations may limit our ability to complete a Business Combination in the most desirable manner that will optimize the capital structure of the combined company, or at all. If we are unable to complete an initial Business Combination, our Public Shareholders may only receive approximately $11.24 per Public Share on the liquidation of our Trust Account, as of November 14, 2024, and our Warrants and Rights will expire worthless. In certain circumstances, our Public Shareholders may receive less than $11.24 per share upon the redemption of their Public Shares.
For risks related to Youlife and the Business Combination with Youlife, please see the registration statement on Form F-4 to be filed by Pubco once available.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
None
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收益用途
關於我們首次公開募股及相關定向增發所得款項用途的描述，請參見截至2022年12月31日的財政年度的10-K年度報告的第二部分，第5項，已於2023年4月18日向SEC提交。首次公開募股和定向增發的預計用途沒有重大變化，詳細信息見首次公開募股的註冊聲明。我們的信託帳戶中的具體投資可能會不時更改。
發行人及關聯購買方購買股票
2024年11月14日，我們召開了2024年延期會議，會議上我們的股東以特別決議的方式批准了2024年延期修正案，該修正案將我們必須完成業務組合的日期從2024年11月18日延長到每月最多12次，直至2025年11月18日，或董事會確定的較早日期。與2024年延期修正案相關的股東持有3,229,522股普通股行使其權利，從信託帳戶按比例贖回這些股份。由於2024年延期贖回，我們共支付了大約3630萬現金（每股約11.24美元）給這些贖回的股東。
在報告所涵蓋的季度期間，我們或其關聯方沒有回購我們的股權證券。
項目3. 面對高級證券的違約情況
無。
項目4.礦山安全披露
不適用。
項目5.其他信息
交易安排
在截至2024年9月30日的季度期間，我們的董事或高管（根據《交易所法》規定的第16a-1(f)條定義）均未出現。
其他信息
無。
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項目6.附件
下列展品作爲本季度10-Q表格中的一部分提交或被納入參考。
No. |
| 陳述展品 |
31.1* | 根據2002年Sarbanes-Oxley法案第302條文規定採取的證券交易法規第13a-14（a）規則下首席執行官的認證 | |
31.2* | 根據2002年Sarbanes-Oxley法案第302條文規定採取的證券交易法規第13a-14（a）規則下首席財務官的認證 | |
32.1** | ||
32.2** | ||
Inline XBRL實例文檔 | XBRL實例文檔 | |
Inline XBRL擴展架構文檔 | XBRL分類擴展架構文檔 | |
Inline XBRL擴展計算關係文檔 | XBRL分類擴展計算鏈接庫文檔 | |
Inline XBRL擴展定義關係文檔 | XBRL分類擴展定義鏈接庫文檔 | |
Inline XBRL擴展標籤關係文檔 | XBRL分類擴展標籤鏈接基礎文件 | |
Inline XBRL擴展表示關係文檔 | XBRL分類擴展演示鏈接庫文檔 | |
104* | 封面頁互動日期文件（作爲內嵌XBRL文檔幷包含在附件101中） |
* | 隨此提交。 |
** | 隨附。 |
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