UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(MARK ONE)
For the quarter ended
For the transition period from to
Commission file number:
(Exact Name of Registrant as Specified in Its Charter)
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Securities registered pursuant to Section 12(b) of the Act:
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Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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| Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of August 11, 2023, there were
DISTOKEN ACQUISITION CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2023
TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION
Item 1. Interim Financial Statements
DISTOKEN ACQUISITION CORPORATION
CONDENSED BALANCE SHEETS
| June 30, |
| December 31, | |||
| 2023 |
| 2022 | |||
(Unaudited) | ||||||
ASSETS | ||||||
Current assets | ||||||
Cash | $ | | $ | — | ||
Other receivable | — | | ||||
Prepaid expenses |
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Total current assets |
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Deferred offering costs |
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Cash and marketable securities held in Trust Account | | — | ||||
TOTAL ASSETS | $ | | $ | | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities |
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Accrued expenses | $ | | $ | | ||
Accrued offering costs |
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Advances from Sponsor |
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Promissory note – Sponsor |
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TOTAL LIABILITIES |
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Commitments and contingencies |
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Ordinary shares subject to possible redemption | | — | ||||
SHAREHOLDERS’ EQUITY |
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Preference shares, $ |
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Ordinary shares, $ |
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Additional paid-in capital |
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Retained Earnings (Accumulated Deficit) |
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TOTAL SHAREHOLDERS’ EQUITY |
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | | $ | | ||
(1) |
(2) |
(3) |
The accompanying notes are an integral part of the unaudited condensed financial statements.
1
DISTOKEN ACQUISITION CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
| 2023 | 2022 | 2023 |
| 2022 | |||||||
Operating and formation costs | $ | | $ | | $ | | $ | | ||||
Loss from operations | ( | ( | ( | ( | ||||||||
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Other income: |
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Interest earned on marketable securities held in Trust Account | | — | | — | ||||||||
Unrealized gain on marketable securities held in Trust Account | ( | — | ( | — | ||||||||
Total other income, net | | — | | — | ||||||||
Income (Loss) before provision for income taxes | | ( | | ( | ||||||||
Provision for income taxes | ( | — | ( | — | ||||||||
Net income (loss) | $ | | $ | ( | $ | | $ | ( | ||||
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Basic and diluted weighted average shares outstanding, ordinary shares subject to possible redemption value | | — | | — | ||||||||
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Basic and diluted net income per share, ordinary shares subject to possible redemption value | $ | | $ | — | $ | | $ | — | ||||
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Basic and diluted weighted average shares outstanding, Non-redeemable ordinary shares(1)(2)(3) | | | | | ||||||||
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Basic and diluted net income (loss) per share, Non-redeemable ordinary shares | $ | | $ | | $ | | $ | | ||||
(1) |
(2) |
(3) |
The accompanying notes are an integral part of the unaudited condensed financial statements.
2
DISTOKEN ACQUISITION CORPORATION
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023
| Additional |
| Total | |||||||||||
| Ordinary Shares |
| Paid-in |
| Accumulated |
| Shareholders’ | |||||||
| Shares |
| Amount |
| Capital |
| Deficit |
| Equity | |||||
Balance – December 31, 2022(1)(2)(3) |
| | $ | | $ | | $ | ( | $ | | ||||
Sale of | | | | — | | |||||||||
Fair value of public warrants at issuance |
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Fair value of representative shares |
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Fair value of rights included in public units |
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Fair value of representative warrants | — | — | | — | | |||||||||
Allocated value of transaction costs | — | — | ( | — | ( | |||||||||
Accretion for ordinary shares to redemption amount | — | — | ( | — | ( | |||||||||
Net income |
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Balance – March 31, 2023 | | $ | | $ | | $ | | $ | | |||||
Accretion for ordinary shares to redemption amount | — | — | ( | — | ( | |||||||||
Net income | — | — | — | | | |||||||||
Balance – June 30, 2023 |
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FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022
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Balance – December 31, 2021(1)(2)(3) | | $ | | $ | | $ | ( | $ | | |||||
Net loss | — | — | — | ( | ( | |||||||||
Balance – March 31, 2022(1)(2)(3) | | $ | | $ | | $ | ( | $ | | |||||
Net loss | — |
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Balance – June 30, 2022(1)(2)(3) | | $ | | $ | | $ | ( | $ | | |||||
(1) | At December 31, 2022, includes an aggregate of up to |
(2) | On January 26, 2023, the shareholders of the Company approved, through an ordinary resolution, the redesignation of authorized share capital from |
(3) | On January 30, 2023, the Company effected a share dividend of |
The accompanying notes are an integral part of the unaudited condensed financial statements.
3
DISTOKEN ACQUISITION CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Six Months Ended June 30, | |||||
| 2023 |
| 2022 | |||
Cash Flows from Operating Activities: | ||||||
Net income (loss) | $ | | $ | ( | ||
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
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Interest earned on marketable securities held in Trust Account |
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Unrealized (gain) on marketable securities held in Trust Account |
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Changes in operating assets and liabilities: |
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Other receivable | | — | ||||
Prepaid expenses | ( | ( | ||||
Accounts payable and accrued expenses | | — | ||||
Net cash used in operating activities |
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Cash Flows from Investing Activities: |
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Investment of cash in Trust Account | ( | — | ||||
Net cash used in investing activities | ( | — | ||||
Cash Flows from Financing Activities: |
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Proceeds from sale of Units, net of underwriting discounts paid |
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Proceeds from sale of Private Units | | — | ||||
Proceeds from sale of Representative warrants | | — | ||||
Advances from related party | | | ||||
Repayment of advances from related party |
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Repayment of promissory note – related party |
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Payment of offering costs | ( | ( | ||||
Net cash provided by financing activities |
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Net Change in Cash | | — | ||||
Cash – Beginning of period |
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Cash – End of period | $ | | $ | | ||
Non-Cash investing and financing activities: | ||||||
Offering costs included in accrued offering costs | $ | | $ | | ||
Accretion of Class A ordinary shares to redemption value | $ | | $ | — | ||
The accompanying notes are an integral part of the unaudited condensed financial statements.
4
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
NOTE 1 — DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Distoken Acquisition Corporation (the “Company”) is a blank check company incorporated as a Cayman Islands exempted company on July 1, 2020. The Company was 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”).
As of June 30, 2023, the Company had not commenced any operations. All activity for the period from July 1, 2020 (inception) through June 30, 2023 relates to the Company’s formation, the preparation of the initial public offering (“Initial Public Offering”), which closed on February 17, 2023, as described below, and subsequent to the Initial Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end.
The registration statement for the Company’s Initial Public Offering was declared effective on February 13, 2023. On February 17, 2023, the Company consummated the Initial Public Offering of
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of
Transaction costs amounted to $
Following the closing of the Initial Public Offering on February 17, 2023, an amount of $
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. Nasdaq rules provide that the Business Combination must be with one or more target businesses that together have an aggregate fair market value of at least
The Company will provide its shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The shareholders will be entitled to redeem their shares for a pro rata portion of the amount held in the Trust Account (initially $
5
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2023
(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 Amended and Restated 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 Amended and Restated Memorandum and Articles of Association (i) that would affect the ability of holders of Public Shares to convert 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 has 9 months from the closing of the Initial Public Offering, or until November 17, 2023, to consummate a Business Combination. However, if the Company anticipates that it may not be able to consummate a Business Combination within 9 months, it may, by resolution of the Company’s board of directors if requested by the Sponsor, 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) (the “Combination Period”), subject to the Sponsor depositing additional funds into the Trust Account. Pursuant to the terms of the Company’s Memorandum and Articles of Association and the Trust Agreement to be entered into between the Company and Continental Stock Transfer & Trust Company on the date of the prospectus, in order for the time available to consummate the Initial Business Combination to be extended, the Sponsor or its affiliates or designees, upon
6
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
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 of directors, 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.
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) $
Going Concern Consideration
The Company’s liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the payment of $
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 financial statement is issued as it expects to continue to incur significant costs in pursuit of its acquisition plans. In addition, the Company has until November 17, 2023 to consummate a Business Combination (or August 17, 2024 if the Company extends the period of time to consummate a Business Combination by the full amount of time). It is uncertain that the Company will be able to consummate a Business Combination by this time. If a Business Combination is not consummated by November 17, 2023 (or August 17, 2024 if the Company extends the period of time to consummate a Business Combination 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 an extension not be approved by the shareholders of the Company, and potential subsequent dissolution and the liquidity issue raise substantial doubt about the Company’s ability to continue as a going concern for one year from the date these unaudited condensed 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 17, 2023 (or August 17, 2024 if the Company extends the period of time to consummate a Business Combination by the full amount of time). The Company intends to continue to search for and seek to complete a Business Combination before the mandatory liquidation date.
7
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
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 prospectus for its Initial Public Offering as filed with the SEC on February 15, 2023, as well as the Company’s Current Report on Form 8-K, as filed with the SEC on March 27, 2023 and Annual Report on Form 10-K for the period ended December 31, 2022, as filed with the SEC on April 18, 2023. The interim results for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any future periods.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that 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 unaudited condensed financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of the 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.
8
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
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 $
Cash and Marketable Securities in Trust Account
At June 30, 2023, substantially all of the assets held in the Trust Account were held in U.S. Treasury Bills. The Company accounts for its marketable securities as trading securities under ASC 320, where securities are presented at fair value on the balance sheets and with unrealized gains or losses, if any, presented on the statements of operations. From inception through June 30, 2023, the Company did
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 June 30, 2023, shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheet.
At June 30, 2023, the ordinary shares reflected in the balance sheet are reconciled in the following table:
Gross proceeds |
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Less: |
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Proceeds allocated to Public Warrants |
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Proceeds allocated to Public Rights |
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Ordinary share issuance costs |
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Plus: |
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Remeasurement of carrying value to redemption value |
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Ordinary shares subject to possible redemption, June 30, 2023 |
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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.
9
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
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 $
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. As such, the Company’s tax provision was zero for the period presented.
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 statement 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 balance sheet 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 common shares and whether the instrument holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the instruments are outstanding. 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 shares of Class A ordinary shares is excluded from earnings per share as the redemption value approximates fair value.
10
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
The calculation of diluted 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 June 30, | |||||||||||
2023 | 2022 | |||||||||||
Redeemable |
| Non-redeemable |
| Redeemable |
| Non-redeemable | ||||||
Basic and diluted net income (loss) per ordinary share |
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Numerator: |
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Allocation of net income (loss) |
| $ | | $ | | $ | — | $ | ( | |||
Denominator: |
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Basic and diluted weighted average ordinary share outstanding | | | — | | ||||||||
Basic and diluted net income (loss) per ordinary share | $ | | $ | | $ | — | $ | ( | ||||
| For the Six Months Ended June 30, | |||||||||||
2023 | 2022 | |||||||||||
Redeemable |
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| Redeemable |
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Basic and diluted net income (loss) per ordinary share |
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Numerator: |
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Allocation of net income (loss) |
| $ | | $ | | $ | — | $ | ( | |||
Denominator: |
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Basic and diluted weighted average ordinary share outstanding | | | — | | ||||||||
Basic and diluted net income (loss) per ordinary share | $ | | $ | | $ | — | $ | ( | ||||
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 $
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 balance sheet, primarily due to their short-term nature.
Recently Issued Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
11
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
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
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, through a special resolution 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)
12
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
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
At the closing of the Initial Public Offering on February 17, 2023, a portion of the proceeds from the sale of the Private Units in the amount of $
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 June 30, 2023 and December 31, 2022, there were $
Promissory Note — Sponsor
On July 8, 2020, the Company issued an unsecured promissory note to the Sponsor, pursuant to which the Company may borrow up to an aggregate principal amount of $
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 $
Related Party Extension Loans
As discussed in Note 1, the Company may extend the period of time to consummate a Business Combination up to three times, each by an additional three months (for a total of 18 months to complete a Business Combination). In order to extend the time available for the Company to consummate a Business Combination, the Sponsor or its affiliates or designees must deposit into the Trust Account $
13
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
Company would repay such loaned amounts out of the proceeds of the Trust Account released to the Company. If the Company does not complete a Business Combination, the Company will not repay such loans. The Sponsor and its affiliates or designees are not obligated to fund the Trust Account to extend the time for the Company to complete a Business Combination.
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
Vendor Agreement
On April 30, 2023, the Company entered into an agreement with a vendor for legal and consulting services, pursuant to which the Company agreed to pay the vendor $
14
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
NOTE 7 — SHAREHOLDERS’ EQUITY
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
15
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available.
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
16
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
The following table presents the quantitative information regarding market assumptions used in the representative shares valuation:
| August 23, |
| October 28, |
| |||
2021 | 2021 | ||||||
Market price(1) | $ | | $ | | |||
Risk-free rate(2) |
| | % |
| | % | |
Dividend yield(3) |
| | % |
| | % | |
Volatility(4) |
| | % |
| | % | |
(1) |
| August 23, |
| October 28, | |||
2021 | 2021 | |||||
1.00 shares per Unit |
| $ | |
| $ | |
0.50 warrants per Unit |
|
| |
| | |
0.10 rights per Unit |
|
| |
| | |
Total price per Unit |
| $ | | $ | | |
Offering price per Unit | $ | | $ | | ||
(2) |
(3) |
(4) |
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.
17
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
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 arere-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 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 June 30, 2023, 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 June 30, 2023 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value. The gross holding gains and fair value of held-to-maturity securities at June 30, 2023 are as follows:
18
DISTOKEN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
June 30, | |||||
Description |
| Level |
| 2023 | |
Assets: |
| ||||
Cash and Marketable securities held in Trust Account | 1 | $ | | ||
The following table presents information about the Company’s equity instruments that are measured at fair value at February 17, 2023, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.
| Level |
| February 17, 2023 | ||
Equity: | |||||
Representative Warrants |
| 3 |
| $ | |
Fair Value of Public Rights for ordinary shares subject to redemption allocation |
| 3 |
| $ | |
Fair Value of Public Warrants for ordinary shares subject to redemption allocation |
| 3 |
| $ | |
The Public Warrants were valued using the binomial lattice model incorporating the Cox-Ross-Rubenstein methodology. The private and representative warrants were valued using the Black-Scholes model. The following table presents the quantitative information regarding market assumptions used in the valuation of warrants:
| February 17, |
| ||
| 2023 | |||
Market price of public share | $ | | ||
Risk-free rate |
| | % | |
Dividend yield |
| % | ||
Volatility |
| | % | |
The rights were valued using a scenario analysis. The following table presents the quantitative information regarding market assumptions used in the valuation of the rights. The appraiser determined the value of the Rights based on the value of underlying security:
| February 17, |
| ||
| 2023 | |||
Value in De-SPAC(1) | $ | | ||
Value without De-SPAC(2) | $ | — | ||
Probability(3) |
| | % | |
Fair value of Right to buy one Share(4) | $ | | ||
(1) | As the Founder Share will be converted to an ordinary share at the consummation of a transaction, it is assumed that the value of the Founder Share in the de-SPAC transaction scenario would simply equal the value of the ordinary share in a de-SPAC transaction. |
(2) | The probability is as used in warrant analysis |
(3) | Probability of the consummation of an initial business combination |
(4) | Calculated as the weighted average price |
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, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial statements.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this report (the “Quarterly 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 Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the completion of the proposed Business Combination, the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements, including that the conditions of the Proposed Business Combination are not satisfied. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s Annual Report on Form 10-K and final prospectus for its Initial Public Offering filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated in the Cayman Islands on July 1, 2020 formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or other similar Business Combination with one or more businesses. We intend to effectuate our Business Combination using cash derived from the proceeds of 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.
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 June 30, 2023 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 June 30, 2023, we had net income of $437,354, which consists of interest income on marketable securities held in the Trust Account of $874,662, offset by an unrealized loss on marketable securities held in our Trust Account of $66,297, operating costs of $203,128 and Chinese income tax of $167,883.
For the six months ended June 30, 2023, we had net income of $688,667, which consists of interest income on marketable securities held in the Trust Account of $1,228,725, offset by an unrealized loss on marketable securities held in our Trust Account of $10,436, operating costs of $296,588 and Chinese income tax of $233,034.
20
For the three months ended June 30, 2022, we had a net loss of $463, which consisted of operating costs.
For the six months ended June 30, 2022, we had a net loss of $925, which consisted of operating costs.
Liquidity and Capital Resources
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 six months ended June 30, 2023, cash used in operating activities was $445,629. Net income of $688,667 was affected by interest earned on marketable securities held in the Trust Account of $1,228,725 and unrealized loss on marketable securities held in our Trust Account of $10,436. Changes in operating assets and liabilities provided $83,993 of cash from operating activities.
For the six months ended June 30, 2022, cash used in operating activities was $1,850. Net loss of $925 was affected by the cash used to pay prepaid expenses of $925.
As of June 30, 2023, we had cash and marketable securities held in the Trust Account of $71,598,289 (including $1,218,289 of interest income and unrealized gains) consisting of U.S. Treasury Bills with a maturity of 185 days or less. 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 June 30, 2023, we had cash of $541,496. 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.
We may extend the period of time to consummate a Business Combination up to three times, each by an additional three months (for a total of 18 months to complete a Business Combination). In order to extend the time available for us to consummate a Business Combination, our Sponsor or its affiliates or designees must deposit into the trust account $690,000 ($0.10 per public share), on or prior to the date of the applicable deadline, for each three month extension. Any such payments would be made in the form of a non-interest bearing loan. The terms of the promissory note to be issued in connection with any such loans have not yet been negotiated. If we complete a Business Combination, we would repay such loaned amounts out of the proceeds of the trust account released to us. If we do not complete a business combination, we will not repay such loans. Our Sponsor and its affiliates or designees are not obligated to fund the trust account to extend the time for us to complete a Business Combination.
21
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 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 have until November 17, 2023 to consummate a Business Combination (or August 17, 2024 if we extend the period of time to consummate a Business Combination by the full amount of time). It is uncertain that we will be able to consummate a Business Combination by this time. If a Business Combination is not consummated by November 17, 2023 (or August 17, 2024 if we extend the period of time to consummate a Business Combination by the full amount of time), 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 concern for a reasonable period of time which is considered to be one year from the date of the issuance of the unaudited condensed financial statements. The unaudited condensed 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.
On July 8, 2020, we issued an unsecured promissory note to the Sponsor, pursuant to which we could borrow up to an aggregate principal amount of $150,000. The note is non-interest bearing and was payable on the earlier of (i) September 30, 2022 and (ii) the completion of the initial public offering. In November 2022, the note was amended and the note became payable on the earlier of (i) June 30, 2023 and (ii) the completion of the initial public offering. As of June 30, 2023 and December 31, 2022, there were $0 and $150,000 outstanding under the note, respectively. The promissory note balance of $150,000 was paid on March 28, 2023. Borrowings under the promissory note are no longer available.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of June 30, 2023. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than 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.
22
On April 30, 2023, we entered into an agreement with a vendor for legal and consulting services, pursuant to which we agreed to pay the vendor $500,000 as follows: (i) $200,000 upon the execution of the agreement, (ii) $100,000 upon the execution of a definitive agreement for the Business Combination; and (iii) $200,000 upon submission of the proxy statement for the Business Combination to the SEC. Additionally, if the Business Combination closes, we will make a final additional payment of $850,000. If the Business Combination does not close, we shall not be responsible for any further payments.
Critical Accounting Policies
The preparation of unaudited condensed financial statements and related disclosures in conformity with U. S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:
Redeemable Share Classification
The public shares contain a redemption feature which allows for the redemption of such public shares in connection with our liquidation, or if there is a shareholder vote or tender offer in connection with the initial Business Combination. In accordance with ASC Topic 480-10-S99, “Distinguishing Liabilities from Equity”, we classify public shares subject to redemption outside of permanent equity as the redemption provisions are not solely within our control. 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 Topic 470-20 “Debt with Conversion and Other Options”. We recognize 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, we 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.
We recognize changes in redemption value immediately as they occur and adjusts the carrying value of redeemable shares to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable shares are affected by charges against additional paid in capital and accumulated deficit.
Net Income Per Ordinary Share
Net income per share is computed by dividing net income by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares subject to forfeiture. Weighted average shares were reduced for the effect of an aggregate of 258,000 ordinary shares that are subject to forfeiture if the over-allotment option was not exercised by the underwriter. At June 30, 2023 and 2022, we did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary shares and then share in our earnings. As a result, diluted income per share is the same as basic income per share for the periods presented.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our unaudited condensed financial statements.
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, the ongoing effects of the COVID-19 pandemic, including resurgences and the emergence of new variants, and geopolitical instability, such as the military conflict in Ukraine.
We cannot at this time fully 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.
23
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required for smaller reporting companies.
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.
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 June 30, 2023, due to material weaknesses in our internal control over financial reporting, as defined in the SEC guidelines for public companies. The material weaknesses identified relate to ineffective review 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.
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
There was no change in our internal control over financial reporting that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
24
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 Quarterly Report. However, as of the date of this Quarterly Report, there have been no material changes with respect to those risk factors previously disclosed in our (i) Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023, as filed with the SEC on May 18, 2023, (ii) registration statement for our Initial Public Offering, and (iii) Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on April 18, 2023. 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.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On February 17, 2023, the Company consummated the Initial Public Offering of 6,900,000 units. The Units were sold at an offering price of $10.00 per unit, generating total gross proceeds of $69,000,000. I-Bankers Securities, Inc. and IB Capital LLC acted as joint book-running managers of the Initial Public Offering. The securities in the offering were registered under the Securities Act on registration statement on Form S-1 (No. 333-248822). The Securities and Exchange Commission declared the registration statements effective on February 15, 2023.
Simultaneous with the consummation of the Initial Public Offering, the Sponsor consummated the private placement of an aggregate of 545,000 Private Units at a price of $10.00 per Private Unit, generating total proceeds of $5,450,000. Each Private Unit consists of one Private Share, one right (“Private Right”) and one redeemable warrant (“Private Warrant”). Each Private Right entitles the holder thereof to receive one-tenth (1/10) of one ordinary share upon the consummation of a Business Combination (see Note 7). Each whole Private Warrant will be exercisable for one ordinary share at a price of $11.50 per share, subject to adjustment. The issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
The Private Warrants are identical to the warrants underlying the Units sold in the Initial Public Offering, except that the Private Warrants are not transferable, assignable or salable until after the completion of a Business Combination, subject to certain limited exceptions.
We paid a total of $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 a description of the use of the proceeds generated in our Initial Public Offering, see Part I, Item 2 of this Form 10-Q.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
25
Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
No. |
| Description of Exhibit |
31.1* | ||
31.2* | ||
32.1** | ||
32.2** | ||
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema Document | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | XBRL Taxonomy Extension Labels Linkbase Document | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Filed herewith. |
** | Furnished herewith. |
26
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
DISTOKEN ACQUISITION CORPORATION | ||
| ||
Date: August 11, 2023 | By: | /s/ Jian Zhang |
Name: | Jian Zhang | |
Title: | Chief Executive Officer | |
Date: August 11, 2023 | By: | /s/ Jirong Lyu |
Name: | Jirong Lyu | |
Title: | Chief Financial Officer and Director |
27
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jian Zhang, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Distoken Acquisition Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and |
b) | (Paragraph omitted pursuant to Exchange Act Rules 13a-14(a) and 15d-15(a); |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 11, 2023
| /s/ Jian Zhang |
| Jian Zhang |
| Chief Executive Officer |
| (Principal Executive Officer) |
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jirong Lyu, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Distoken Acquisition Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and |
b) | (Paragraph omitted pursuant to Exchange Act Rules 13a-14(a) and 15d-15(a); |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 11, 2023
| /s/ Jirong Lyu |
| Jirong Lyu |
| Chief Financial Officer and Director |
| (Principal Financial and Accounting Officer) |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Distoken Acquisition Corporation (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2023, as filed with the Securities and Exchange Commission (the “Report”), I, Jian Zhang, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: August 11, 2023
| /s/ Jian Zhang |
| Jian Zhang |
| Chief Executive Officer |
| (Principal Executive Officer) |
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Distoken Acquisition Corporation (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2023, as filed with the Securities and Exchange Commission (the “Report”), I, Jirong Lyu, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: August 11, 2023
| /s/ Jirong Lyu |
| Jirong Lyu |
| Chief Financial Officer and Director |
| (Principal Financial and Accounting Officer) |
CONDENSED BALANCE SHEETS - USD ($) |
Jun. 30, 2023 |
Dec. 31, 2022 |
||||||
|---|---|---|---|---|---|---|---|---|
| Current assets | ||||||||
| Cash | $ 541,496 | $ 0 | ||||||
| Other receivable | 28 | |||||||
| Prepaid expenses | 253,843 | 2,000 | ||||||
| Total current assets | 795,339 | 2,028 | ||||||
| Deferred offering costs | 678,788 | |||||||
| Cash and marketable securities held in Trust Account | 71,598,289 | |||||||
| TOTAL ASSETS | 72,393,628 | 680,816 | ||||||
| Current liabilities | ||||||||
| Accrued expenses | 336,113 | 305 | ||||||
| Accrued offering costs | 70,600 | 297,049 | ||||||
| Advances from Sponsor | 923 | 217,462 | ||||||
| Promissory note - Sponsor | 150,000 | |||||||
| TOTAL LIABILITIES | 407,636 | 664,816 | ||||||
| Commitments and contingencies | ||||||||
| Ordinary shares subject to possible redemption 6,900,000 shares at $10.32 per share redemption value as of June 30, 2023 and none at December 31, 2022 | 71,232,685 | |||||||
| SHAREHOLDERS' EQUITY | ||||||||
| Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding | ||||||||
| Ordinary shares, $0.0001 par value; 220,000,000 shares authorized; 2,548,000 (excluding 6,900,000 shares subject to possible redemption) and 2,003,000 issued and outstanding as of June 30, 2023 and December 31, 2022(1)(2)(3), respectively | [1],[2],[3] | 255 | 200 | |||||
| Additional paid-in capital | 75,613 | 27,028 | ||||||
| Retained Earnings (Accumulated Deficit) | 677,439 | (11,228) | ||||||
| TOTAL SHAREHOLDERS' EQUITY | 753,307 | 16,000 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 72,393,628 | $ 680,816 | ||||||
| ||||||||
CONDENSED BALANCE SHEETS (Parenthetical) |
Jun. 30, 2023
$ / shares
shares
|
Jan. 30, 2023
shares
|
|---|---|---|
| Preference shares, par value, (per share) | $ / shares | $ 0.0001 | |
| Preference shares, shares authorized | 1,000,000 | |
| Preference shares, shares issued | 0 | |
| Preference shares, shares outstanding | 0 | |
| Common stock, par value (per share) | $ / shares | $ 0.0001 | |
| Common stock, shares authorized | 220,000,000 | |
| Common stock, shares issued | 2,548,000 | |
| Common stock, shares outstanding | 2,548,000 | |
| Maximum shares subject to forfeiture | 1,725,000 | |
| Share dividend | 0.2 | |
| Sponsor | ||
| Maximum shares subject to forfeiture | 1,725,000 | |
| Class A subject to possible redemption | ||
| Temporary equity shares authorized | 6,900,000 | |
| Temporary equity redemption price per share | $ / shares | $ 10.32 |
CONDENSED STATEMENTS OF OPERATIONS - USD ($) |
3 Months Ended | 6 Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|||||||
| Operating and formation costs | $ 203,128 | $ 463 | $ 296,588 | $ 925 | ||||||
| Loss from operations | (203,128) | (463) | (296,588) | (925) | ||||||
| Other income: | ||||||||||
| Interest earned on marketable securities held in Trust Account | 874,662 | 1,228,725 | ||||||||
| Unrealized gain on marketable securities held in Trust Account | (66,297) | (10,436) | ||||||||
| Total other income, net | 808,365 | 1,218,289 | ||||||||
| Income (Loss) before provision for income taxes | 605,237 | (463) | 921,701 | (925) | ||||||
| Provision for income taxes | (167,883) | (233,034) | ||||||||
| Net income (loss) | $ 437,354 | $ (463) | $ 688,667 | $ (925) | ||||||
| Class A common stock subject to redemption | ||||||||||
| Other income: | ||||||||||
| Weighted average shares outstanding, basic | 6,900,000 | 5,070,166 | ||||||||
| Weighted average shares outstanding, diluted | 6,900,000 | 5,070,166 | ||||||||
| Basic net income (loss) per share | $ 0.05 | $ 0.09 | ||||||||
| Diluted net income (loss) per share | $ 0.05 | $ 0.09 | ||||||||
| Non-redeemable Class A common stock | ||||||||||
| Other income: | ||||||||||
| Weighted average shares outstanding, basic | [1],[2],[3] | 2,548,000 | 1,745,000 | 2,403,470 | 1,745,000 | |||||
| Weighted average shares outstanding, diluted | [1],[2],[3] | 2,548,000 | 1,745,000 | 2,403,470 | 1,745,000 | |||||
| Basic net income (loss) per share | $ 0.05 | $ 0.00 | $ 0.09 | $ 0.00 | ||||||
| Diluted net income (loss) per share | $ 0.05 | $ 0.00 | $ 0.09 | $ 0.00 | ||||||
| ||||||||||
CONDENSED STATEMENTS OF OPERATIONS (Parenthetical) |
Jan. 30, 2023
shares
|
Jan. 26, 2023
item
|
Dec. 31, 2022
shares
|
|---|---|---|---|
| CONDENSED STATEMENTS OF OPERATIONS | |||
| Maximum shares subject to forfeiture | shares | 1,725,000 | 258,000 | |
| Share dividend | shares | 0.2 | ||
| Number of classes of ordinary shares, redesignation of authorized share capital | item | 2 | ||
| Number classes of ordinary shares redesignated | item | 1 |
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) |
6 Months Ended | |||
|---|---|---|---|---|
|
Jun. 30, 2023
shares
|
Jan. 30, 2023
shares
|
Jan. 26, 2023
item
|
Dec. 31, 2022
shares
|
|
| CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | ||||
| Maximum shares subject to forfeiture | 1,725,000 | 258,000 | ||
| Share dividend | 0.2 | |||
| Number of classes of ordinary shares, redesignation of authorized share capital | item | 2 | |||
| Number classes of ordinary shares redesignated | item | 1 | |||
| Number of shares issued | 545,000 |
CONDENSED STATEMENTS OF CASH FLOWS - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2023 |
Mar. 31, 2023 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Cash Flows from Operating Activities: | ||||
| Net income (loss) | $ 688,667 | $ (925) | ||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||
| Interest earned on marketable securities held in Trust Account | $ (874,662) | (1,228,725) | ||
| Unrealized (gain) on marketable securities held in Trust Account | 66,297 | 10,436 | ||
| Changes in operating assets and liabilities: | ||||
| Other receivable | 28 | |||
| Prepaid expenses | (251,843) | (925) | ||
| Accounts payable and accrued expenses | 335,808 | |||
| Net cash used in operating activities | (445,629) | (1,850) | ||
| Cash Flows from Investing Activities: | ||||
| Investment of cash in Trust Account | (70,380,000) | |||
| Net cash used in investing activities | (70,380,000) | |||
| Cash Flows from Financing Activities: | ||||
| Proceeds from sale of Units, net of underwriting discounts paid | 66,930,000 | |||
| Proceeds from sale of Private Units | 5,450,000 | |||
| Proceeds from sale of Representative warrants | 100 | |||
| Advances from related party | 35,430 | 37,794 | ||
| Repayment of advances from related party | (251,969) | |||
| Repayment of promissory note - related party | (150,000) | |||
| Payment of offering costs | (646,436) | (35,944) | ||
| Net cash provided by financing activities | 71,367,125 | 1,850 | ||
| Net Change in Cash | 541,496 | |||
| Cash - Beginning of period | $ 0 | 0 | 0 | |
| Cash - End of period | 541,496 | 541,496 | 0 | |
| Non-Cash investing and financing activities: | ||||
| Offering costs included in accrued offering costs | 70,600 | $ 53,446 | ||
| Accretion of Class A ordinary shares to redemption value | $ 581,705 | $ 10,072,026 | $ 10,653,731 | |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS |
6 Months Ended |
|---|---|
Jun. 30, 2023 | |
| DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | |
| DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | NOTE 1 — DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS Distoken Acquisition Corporation (the “Company”) is a blank check company incorporated as a Cayman Islands exempted company on July 1, 2020. The Company was 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”). As of June 30, 2023, the Company had not commenced any operations. All activity for the period from July 1, 2020 (inception) through June 30, 2023 relates to the Company’s formation, the preparation of the initial public offering (“Initial Public Offering”), which closed on February 17, 2023, as described below, and subsequent to the Initial Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end. The registration statement for the Company’s Initial Public Offering was declared effective on February 13, 2023. On February 17, 2023, the Company consummated the Initial Public Offering of 6,900,000 units (the “Units” and, with respect to the ordinary shares included in the Units sold, the “Public Shares”), which includes the full exercise by the underwriters of their over-allotment option in the amount of 900,000 Units, at $10.00 per Unit, generating gross proceeds of $69,000,000 which is described in Note 3. Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 545,000 units (the “Private Units”) at a price of $10.00 per Private Unit in a private placement (the “Private Placement”) to the Company’s sponsor, Xiaosen Sponsor LLC (the “Sponsor”), generating gross proceeds of $5,450,000, which is described in Note 4. 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. Following the closing of the Initial Public Offering on February 17, 2023, an amount of $70,380,000 ($10.20 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Units was placed in a trust account (the “Trust Account”) and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 180 days or less, or in any open-ended investment company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds in the Trust Account to the Company’s shareholders, as described below. The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. Nasdaq rules provide that the Business Combination must be with one or more target businesses that together have an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding taxes payable on the income earned on the Trust Account) at the time of the agreement to enter into a Business Combination. The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the issued and outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). There is no assurance that the Company will be able to successfully effect a Business Combination. The Company will provide its shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The shareholders will be entitled to redeem their shares for a pro rata portion of the amount held in the Trust Account (initially $10.20 per share) as of two business days prior to the completion of a Business Combination, including any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations. There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants. The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 upon such completion of a Business Combination and, if the Company seeks shareholder approval, it receives an ordinary resolution under Cayman Islands law approving a Business Combination, which requires the affirmative vote of a majority of the shareholders who attend and vote at a general meeting of the Company. If a shareholder vote is not required and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Memorandum and Articles of Association, conduct the redemptions pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”), and file tender offer documents containing substantially the same information as would be included in a proxy statement with the SEC prior to completing a Business Combination. If the Company seeks shareholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5), the ordinary shares included in the Private Units (the “Private Shares”) and any Public Shares purchased in or after the Initial Public Offering in favor of approving a Business Combination and to waive its redemption rights with respect to any such shares in connection with a shareholder vote to approve a Business Combination or seek to sell any shares to the Company in a tender offer in connection with a Business Combination. Additionally, subject to the immediately succeeding paragraph, each public shareholder may elect to redeem their Public Shares, without voting, and if they do vote, irrespective of whether they vote for or against a proposed Business Combination. 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 Amended and Restated 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 15% or more of the Public Shares without the Company’s prior written consent. 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 Amended and Restated Memorandum and Articles of Association (i) that would affect the ability of holders of Public Shares to convert 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 100% of the Public Shares if the Company does not complete a Business Combination within 9 months from the closing of the Initial Public Offering (or up to 18 months from the closing of the Initial Public Offering if the Company extends the period of time to consummate a Business Combination) or (ii) with respect to any other provision relating to shareholders’ rights or pre-initial business combination activity, unless the Company provides the public shareholders with the opportunity to redeem their Public Shares in conjunction with any such amendment and (c) that the Founder Shares shall not participate in any liquidating distributions upon winding up if a Business Combination is not consummated. However, the Sponsor will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares purchased during or after the Initial Public Offering if the Company fails to complete its Business Combination. The Company has 9 months from the closing of the Initial Public Offering, or until November 17, 2023, to consummate a Business Combination. However, if the Company anticipates that it may not be able to consummate a Business Combination within 9 months, it may, by resolution of the Company’s board of directors if requested by the Sponsor, 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) (the “Combination Period”), subject to the Sponsor depositing additional funds into the Trust Account. Pursuant to the terms of the Company’s Memorandum and Articles of Association and the Trust Agreement to be entered into between the Company and Continental Stock Transfer & Trust Company on the date of the prospectus, in order for the time available to consummate the Initial Business Combination to be extended, the Sponsor or its affiliates or designees, upon five days advance notice prior to the applicable deadline, must deposit into the Trust Account $690,000 ($0.10 per Unit) for each extension, up to an aggregate of $2,070,000 for nine months, on or prior to the date of the applicable deadline. If the Company is unable to complete a Business Combination within 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 of directors, 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. 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) $10.20 per Public Share or (2) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of trust assets, in each case net of the interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriter of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). In the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (other than the Company’s independent auditors), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account. Going Concern Consideration The Company’s liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the payment of $25,000 from the Sponsor issuance of Founder Shares, loan proceeds from the Sponsor of $150,000 under a promissory note and advances from related party. Subsequent to the consummation of the Initial Public Offering, the Company’s liquidity has been satisfied through the net proceeds from the Initial Public Offering and the Private Placement proceeds that are due from the Sponsor. 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 $1,500,000 of such Working Capital Loans may be converted upon completion of a Business Combination into units at a price of $10.00 per unit. Such units would be identical to the Private Units. 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 financial statement is issued as it expects to continue to incur significant costs in pursuit of its acquisition plans. In addition, the Company has until November 17, 2023 to consummate a Business Combination (or August 17, 2024 if the Company extends the period of time to consummate a Business Combination by the full amount of time). It is uncertain that the Company will be able to consummate a Business Combination by this time. If a Business Combination is not consummated by November 17, 2023 (or August 17, 2024 if the Company extends the period of time to consummate a Business Combination 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 an extension not be approved by the shareholders of the Company, and potential subsequent dissolution and the liquidity issue raise substantial doubt about the Company’s ability to continue as a going concern for one year from the date these unaudited condensed 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 17, 2023 (or August 17, 2024 if the Company extends the period of time to consummate a Business Combination by the full amount of time). The Company intends to continue to search for and seek to complete a Business Combination before the mandatory liquidation date. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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 prospectus for its Initial Public Offering as filed with the SEC on February 15, 2023, as well as the Company’s Current Report on Form 8-K, as filed with the SEC on March 27, 2023 and Annual Report on Form 10-K for the period ended December 31, 2022, as filed with the SEC on April 18, 2023. The interim results for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any future periods. Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that 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 unaudited condensed financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Use of Estimates The preparation of the 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 $541,496 and nil in cash as of June 30, 2023 and December 31, 2022, respectively, and no cash equivalents. Cash and Marketable Securities in Trust Account At June 30, 2023, substantially all of the assets held in the Trust Account were held in U.S. Treasury Bills. The Company accounts for its marketable securities as trading securities under ASC 320, where securities are presented at fair value on the balance sheets and with unrealized gains or losses, if any, presented on the statements of operations. From inception through June 30, 2023, the Company did not withdraw any interest earned on the Trust Account. As of December 31, 2022 there were no funds deposited in the Trust Account. 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 June 30, 2023, shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheet. At June 30, 2023, the ordinary shares reflected in the balance sheet are reconciled in the following table:
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 $315,604 and $0 for Chinese Income Tax and VAT and surcharges as of June 30, 2023 and December 31, 2022, respectively. For the three months ended June 30, 2023 and 2022, the Company has an income tax expense of $167,883 and $0, respectively, related to the Chinese Income Tax estimate. For the six months ended June 30, 2023 and 2022, the Company has an income tax expense of $233,034 and $0, respectively, related to the Chinese Income Tax estimate. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. 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. As such, the Company’s tax provision was zero for the period presented. 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 statement 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 balance sheet 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 common shares and whether the instrument holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the instruments are outstanding. 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 shares of Class A ordinary shares is excluded from earnings per share as the redemption value approximates fair value. The calculation of diluted 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 7,617,500 ordinary shares is contingent upon the occurrence of future events. As of June 30, 2023 and 2022, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into ordinary shares and then share in the earnings of the Company. As a result, diluted net income per ordinary share is the same as basic net income per ordinary share for the periods presented. The following table reflects the calculation of basic and diluted net income per ordinary share (in dollars, except per share amounts):
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 balance sheet, primarily due to their short-term nature. Recently Issued Accounting Standards Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements. |
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PUBLIC OFFERING |
6 Months Ended |
|---|---|
Jun. 30, 2023 | |
| PUBLIC OFFERING | |
| PUBLIC OFFERING | NOTE 3 — PUBLIC OFFERING Pursuant to the Initial Public Offering, the Company sold 6,900,000 Units, inclusive of 900,000 Units sold to the underwriters on February 17, 2023 upon the underwriters’ election to fully exercise their over-allotment option, at a purchase price of $10.00 per Unit. Each Unit consists of one Public Share, one right (“Public Right”) and one redeemable warrant (“Public Warrant”). Each Public Right entitles the holder thereof to receive -tenth (1/10) of one ordinary share upon the consummation of a Business Combination (see Note 7). Each Public Warrant entitles the holder to purchase one ordinary share at an exercise price of $11.50 per share (see Note 7). |
PRIVATE PLACEMENT |
6 Months Ended |
|---|---|
Jun. 30, 2023 | |
| PRIVATE PLACEMENT | |
| PRIVATE PLACEMENT | NOTE 4 — PRIVATE PLACEMENT Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 545,000 Private Units at a price of $10.00 per Private Unit, for an aggregate purchase price of $5,450,000 from the Company in a private placement. Each Private Unit consists of one Private Share, one right (“Private Right”) and one redeemable warrant (“Private Warrant”). Each Private Right entitles the holder thereof to receive -tenth (1/10) of one ordinary share upon the consummation of a Business Combination (see Note 7). Each whole Private Warrant will be exercisable for one ordinary share at a price of $11.50 per share, subject to adjustment (see Note 7). 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. |
RELATED PARTY TRANSACTIONS |
6 Months Ended |
|---|---|
Jun. 30, 2023 | |
| RELATED PARTY TRANSACTIONS | |
| RELATED PARTY TRANSACTIONS | NOTE 5 — RELATED PARTY TRANSACTIONS Founder Shares On July 8, 2020, the Sponsor paid $25,000 to cover certain offering costs of the Company in consideration for 1,150,000 ordinary shares (the “Founder Shares”). In August 2021, the Company effected a share dividend of 0.25 shares for each Founder Share outstanding, resulting in the Sponsor holding 1,437,500 Founder Shares. On January 30, 2023, the Company effected a share dividend of 0.2 shares for each ordinary share outstanding, resulting in the Sponsor holding 1,725,000 Founder Shares. All share and per-share amounts have been retroactively restated to reflect the share dividend. The Founder Shares include an aggregate of up to 225,000 shares that were subject to forfeiture by the Sponsor to the extent that the underwriter’s over-allotment was not exercised in full or in part, so that the number of Founder Shares will collectively represent 20% of the Company’s issued and outstanding shares (excluding the Private Shares and the Representative Shares, as defined in Note 6) upon the completion of the Initial Public Offering. On February 17, 2023, the underwriters exercised their over-allotment option in full as part of the initial closing of the Initial Public Offering. As such, there are no shares subject to forfeiture. 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, through a special resolution 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) one year after the completion of a Business Combination or (B) subsequent to a Business Combination, (x) for 50% of the Founder Shares, if the last reported sale price of the ordinary shares equals or exceeds $12.50 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, (y) for 50% of the Founder Shares, if the last reported sale price of the ordinary shares equals or exceeds $12.50 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period after a Business Combination, or (z) the date following the completion of a Business Combination on which the Company completes a liquidation, merger, amalgamation, share exchange, reorganization or other similar transaction that results in all of the Company’s shareholders having the right to exchange their ordinary shares for cash, securities or other property. Administrative Services Agreement The Company entered into an agreement, commencing on February 15, 2023, to pay the Sponsor or its affiliate up to $10,000 per month for office space, administrative and support services. Upon completion of a Business Combination or its liquidation, the Company will cease paying these monthly fees. For the three and six months ended June 30, 2023, the Company incurred and paid $30,000 and $45,000 in fees for these services. For the three and six months ended June 30, 2022, the Company did not incur any such fees for these services. Due from Sponsor At the closing of the Initial Public Offering on February 17, 2023, a portion of the proceeds from the sale of the Private Units in the amount of $2,000,000 was due to the Company to be held outside of the Trust Account for working capital purposes. Such amount was held in escrow by the Sponsor and various offering costs amounting to $628,074 were paid from this account at the time of the Initial Public Offering. An amount of approximately $1.3 million was due from the Sponsor as of February 17, 2023. The outstanding balance was settled and transferred to the Company’s bank account on March 27, 2023. As of June 30, 2023 and December 31, 2022, there was no outstanding balance due from Sponsor. 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 June 30, 2023 and December 31, 2022, there were $923 and $217,462 outstanding balance in advances from Sponsor. Promissory Note — Sponsor On July 8, 2020, the Company issued an unsecured promissory note to the Sponsor, pursuant to which the Company may borrow up to an aggregate principal amount of $150,000. The note is non-interest bearing and was payable on the earlier of (i) September 30, 2022 and (ii) the completion of the Initial Public Offering. In November 2022 the note was amended and the note became payable on the earlier of (i) June 30, 2023 and (ii) the completion of the Initial Public Offering. The outstanding balance of $150,000 was repaid to the Sponsor on March 28, 2023. As of June 30, 2023, there was no outstanding borrowings on the promissory note, and borrowings under the promissory note are no longer available. 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 $1,500,000 of notes may be converted upon completion of a Business Combination into units at a price of $10.00 per unit. Such units would be identical to the Private Units. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. As of June 30, 2023 and December 31, 2022, the Company has no outstanding borrowings under the Working Capital Loans. Related Party Extension Loans As discussed in Note 1, the Company may extend the period of time to consummate a Business Combination up to three times, each by an additional three months (for a total of 18 months to complete a Business Combination). In order to extend the time available for the Company to consummate a Business Combination, the Sponsor or its affiliates or designees must 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. Any such payments would be made in the form of a non-interest bearing loan. The terms of the promissory note to be issued in connection with any such loans have not yet been negotiated. If the Company completes a Business Combination, the Company would repay such loaned amounts out of the proceeds of the Trust Account released to the Company. If the Company does not complete a Business Combination, the Company will not repay such loans. The Sponsor and its affiliates or designees are not obligated to fund the Trust Account to extend the time for the Company to complete a Business Combination. |
COMMITMENTS |
6 Months Ended |
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Jun. 30, 2023 | |
| COMMITMENTS | |
| COMMITMENTS | 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 three demands, excluding short form registration demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period. The Company will bear the expenses incurred in connection with the filing of any such registration statements. Underwriting Agreement The Company granted the underwriters a 45-day option to purchase up to 900,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and commissions. On February 17, 2023, simultaneously with the closing of the Initial Public Offering, the underwriters elected to fully exercise the over-allotment option to purchase an additional 900,000 Units at a price of $10.00 per Unit. The underwriters were also entitled to a cash underwriting discount of $0.30 per Unit, or $2,070,000 in the aggregate, which was paid upon the closing of the Initial Public Offering. 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 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). The Company 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 the Company to the target business with whom the Company completes its initial Business Combination. Vendor Agreement On April 30, 2023, the Company entered into an agreement with a vendor for legal and consulting services, pursuant to which the Company agreed to pay the vendor $500,000 as follows: (i) $200,000 upon the execution of the agreement, (ii) $100,000 upon the execution of a definitive agreement for the Business Combination; and (iii) $200,000 upon submission of the proxy statement for the Business Combination to the SEC. Additionally, if the Business Combination closes, the Company will make a final additional payment of $850,000. If the Business Combination does not close, the Company shall not be responsible for any further payments. On May 4, 2023, the Company paid a $200,000 retainer pursuant to the agreement. As of June 30, 2023, $21,555 has been charged to expense against the retainer amount and $178,445 was recorded as prepaid expenses in the accompanying unaudited condensed balance sheet. |
SHAREHOLDERS' EQUITY |
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| SHAREHOLDERS' EQUITY | NOTE 7 — SHAREHOLDERS’ EQUITY Preference Shares — The Company is authorized to issue 1,000,000 preference shares with a par value of $0.0001. The Company’s board of directors will be authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. The board of directors will be able to, without shareholder approval, issue preferred shares with voting and other rights that could adversely affect the voting power and other rights of the holders of the ordinary shares and could have anti-takeover effects. At June 30, 2023 and December 31, 2022, there were no preference shares issued and outstanding. Ordinary Shares — 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, through a special resolution and, related amendments to the memorandum and articles of association. All share and per-share amounts and descriptions have been retrospectively presented. The Company is authorized to issue 220,000,000 ordinary shares, with a par value of $0.0001 per share. Holders of ordinary shares are entitled to one vote for each share. In August 2021, the Company effected a share dividend of 0.25 shares for each founder share outstanding, resulting in the Sponsor holding 1,437,500 Founder Shares. On January 30, 2023, the Company effected a share dividend of 0.2 shares for each ordinary share outstanding, resulting in the Sponsor holding 1,725,000 Founder Shares. At June 30, 2023, there were 2,548,000 ordinary shares issued and outstanding, which includes 1,725,000 Founders Shares, 545,000 shares in the Private Units, 278,000 Representative Shares, and excluding 6,900,000 ordinary shares subject to possible redemption. At December 31, 2022, there were 2,003,000, shares issued and outstanding, which includes 1,725,000 Founders Shares and 278,000 Representative Shares. As a result of the underwriters’ election to fully exercise their over-allotment option on February 17, 2023, a total of 225,000 Founder Shares and 33,000 representative shares are no longer subject to forfeiture. 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. No additional consideration will be required to be paid by a holder of rights in order to receive its additional shares upon consummation of a Business Combination as the consideration related thereto has been included in the Unit purchase price paid for by investors in the Initial Public Offering. If the Company enters into a definitive agreement for a Business Combination in which the Company will not be the surviving entity, the definitive agreement will provide for the holders of rights to receive the same per share consideration the holders of the ordinary shares will receive in the transaction on an as-converted into ordinary share basis and each holder of a right will be required to affirmatively convert its rights in order to receive share underlying each right (without paying additional consideration). The shares issuable upon exchange of the rights will be freely tradable (except to the extent held by affiliates of the Company). 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 no contractual penalties for failure to deliver securities to the holders of the rights upon consummation of a Business Combination. Additionally, in no event will the Company be required to net cash settle the rights. Accordingly, the rights may expire worthless. Warrants — The Public Warrants will become exercisable 30 days after the completion of a Business Combination. The Public Warrants will expire five years from the completion of a Business Combination or earlier upon redemption or liquidation. 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 60 business days following the consummation of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available. Once the Public Warrants become exercisable, the Company may redeem the Public Warrants for redemption:
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 $9.20 per ordinary share (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors, and in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the completion of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s ordinary shares during the 20 trading day period starting on the trading day prior to the day on which the Company consummates a Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the Public Warrants will be adjusted (to the nearest cent) to be equal to 115% of the greater of the Market Value or the Newly Issued Price, and the $18.00 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 180% of the greater of the Market Value or the Newly Issued Price. 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 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. Representative Shares On July 28, 2020 the Company issued to EarlyBirdCapital and its designees an aggregate of 100,000 ordinary shares for aggregate consideration of $10.00, of which 2,250 were subsequently forfeited in August 2021. In August 2021, the Company also issued to I-Bankers Securities, Inc. and its designees an aggregate of 155,250 ordinary shares at a purchase price of $0.0001 per share, for aggregate consideration of $15.50. On October 28, 2021, the Company issued to EarlyBirdCapital and I-Bankers Securities, Inc. and its designees, 12,132 and 12,868, respectively, ordinary shares at a purchase price of $0.0001 per share, for minimal consideration of $2.50. Of the representative shares, 33,000 are no longer subject to forfeiture due to the underwriters’ exercise of their over-allotment option in full at the Initial Public Offering. Upon issuance, the representative shares were accounted for as deferred offering cost and were charged to shareholders equity upon the Initial Public Offering. The Company estimated the fair value of the 97,750 (net of 2,250 forfeited) representative shares issued on July 28, 2020 to be $2,151 based upon the price of the Founder Shares issued to the Sponsor of $0.022 per share and recorded as deferred offering costs accordingly. The 155,250 representative shares issued on August 23, 2021 and 25,000 representative shares issued on October 28, 2021 had an aggregate fair value using the scenario analysis, of which the stock price input into the founder shares scenario analysis was valued using a binomial lattice, of $1,019,993 ($6.57 per share) and $165,500 ($6.62 per share), respectively, or a total aggregate value of $1,185,493. Accordingly, $1,185,493 were accounted for as offering costs at the closing of the Initial Public Offering. The representative shares are classified as Level 3 at the measurement date due to the use of unobservable inputs including the probability of a business combination, the probability of the initial public offering, and other risk factors. The following table presents the quantitative information regarding market assumptions used in the representative shares valuation:
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 172,500 ordinary shares at a price of $12.00 per share, subject to adjustment. The representative warrants were issued at the closing of the Initial Public Offering for consideration of $100. The Company accounted for the representative warrants as an offering cost of the Initial Public Offering, with a corresponding credit to shareholders’ equity. The representative warrants had an estimated fair value of $12,075 based on the third party valuation using the binomial lattice model of $0.07 per warrant. The Representative Warrants may be exercised for cash or on a cashless basis, at the holder’s option, at any time during the period commencing on the later of the first anniversary of the effective date of the registration statement for the Initial Public Offering and the closing of the Initial Business Combination and terminating on the fifth anniversary of such effectiveness date. Notwithstanding anything to the contrary, neither I-Bankers nor its designees will be permitted to exercise the warrants after the five-year anniversary of the effective date of the registration statement for the Initial Public Offering. The Representative Warrants and such shares to be purchased pursuant to the Representative Warrants have been deemed compensation by FINRA and are therefore subject to a lock-up period of 180 days immediately following the date of the effectiveness of the registration statement for the Initial Public Offering pursuant to FINRA Rule 5110(g)(1). Pursuant to FINRA Rule 5110(g)(1), these securities may not be sold, transferred, assigned, pledged or hypothecated or 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 for the Initial Public Offering except to any underwriter and selected dealer that participated in the Initial Public Offering and their bona fide officers or partners. |
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FAIR VALUE MEASUREMENTS |
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| FAIR VALUE MEASUREMENTS | 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 arere-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 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:
At June 30, 2023, assets held in the Trust Account were comprised of $9,315 in cash and $71,588,974 in U.S. Treasury securities. During the three and six months ended June 30, 2023, the Company did not withdraw any interest income from the Trust Account. The following table presents information about the Company’s assets that are measured at fair value on a recurring basis at June 30, 2023 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value. The gross holding gains and fair value of held-to-maturity securities at June 30, 2023 are as follows:
The following table presents information about the Company’s equity instruments that are measured at fair value at February 17, 2023, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.
The Public Warrants were valued using the binomial lattice model incorporating the Cox-Ross-Rubenstein methodology. The private and representative warrants were valued using the Black-Scholes model. The following table presents the quantitative information regarding market assumptions used in the valuation of warrants:
The rights were valued using a scenario analysis. The following table presents the quantitative information regarding market assumptions used in the valuation of the rights. The appraiser determined the value of the Rights based on the value of underlying security:
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SUBSEQUENT EVENTS |
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| SUBSEQUENT EVENTS | |
| SUBSEQUENT EVENTS | 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, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial statements.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Presentation | 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 prospectus for its Initial Public Offering as filed with the SEC on February 15, 2023, as well as the Company’s Current Report on Form 8-K, as filed with the SEC on March 27, 2023 and Annual Report on Form 10-K for the period ended December 31, 2022, as filed with the SEC on April 18, 2023. The interim results for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any future periods. |
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| Emerging Growth Company | Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that 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 unaudited condensed financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. |
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| Use of Estimates | 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. |
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| Cash and Cash Equivalents | 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 $541,496 and nil in cash as of June 30, 2023 and December 31, 2022, respectively, and no cash equivalents. |
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| Cash and Marketable Securities in Trust Account | Cash and Marketable Securities in Trust Account At June 30, 2023, substantially all of the assets held in the Trust Account were held in U.S. Treasury Bills. The Company accounts for its marketable securities as trading securities under ASC 320, where securities are presented at fair value on the balance sheets and with unrealized gains or losses, if any, presented on the statements of operations. From inception through June 30, 2023, the Company did not withdraw any interest earned on the Trust Account. As of December 31, 2022 there were no funds deposited in the Trust Account. |
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| Redeemable Share Classification | 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 June 30, 2023, shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheet. At June 30, 2023, the ordinary shares reflected in the balance sheet are reconciled in the following table:
|
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| Offering Costs | 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. |
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| Income Taxes | 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 $315,604 and $0 for Chinese Income Tax and VAT and surcharges as of June 30, 2023 and December 31, 2022, respectively. For the three months ended June 30, 2023 and 2022, the Company has an income tax expense of $167,883 and $0, respectively, related to the Chinese Income Tax estimate. For the six months ended June 30, 2023 and 2022, the Company has an income tax expense of $233,034 and $0, respectively, related to the Chinese Income Tax estimate. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. 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. As such, the Company’s tax provision was zero for the period presented. |
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| Derivative Financial Instruments | 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 statement 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 balance sheet 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. |
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| Warrant Instruments | 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 common shares and whether the instrument holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the instruments are outstanding. Upon further review of the warrant agreement, management concluded that the warrants issued pursuant to the warrant agreement qualify for equity accounting treatment. |
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| Net Income per Share | 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 shares of Class A ordinary shares is excluded from earnings per share as the redemption value approximates fair value. The calculation of diluted 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 7,617,500 ordinary shares is contingent upon the occurrence of future events. As of June 30, 2023 and 2022, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into ordinary shares and then share in the earnings of the Company. As a result, diluted net income per ordinary share is the same as basic net income per ordinary share for the periods presented. The following table reflects the calculation of basic and diluted net income per ordinary share (in dollars, except per share amounts):
|
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| Concentration of Credit Risk | 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. |
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| Fair Value of Financial Instruments | 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 balance sheet, primarily due to their short-term nature. |
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| Recently Issued Accounting Standards | Recently Issued Accounting Standards Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements. |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of reconciliation of ordinary shares reflected in balance sheet | At June 30, 2023, the ordinary shares reflected in the balance sheet are reconciled in the following table:
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| Schedule of reconciliation of basic and diluted net loss per common stock | The following table reflects the calculation of basic and diluted net income per ordinary share (in dollars, except per share amounts):
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SHAREHOLDERS' EQUITY (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SHAREHOLDERS' EQUITY | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of quantitative information regarding market assumptions used in representative shares valuation |
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FAIR VALUE MEASUREMENTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FAIR VALUE MEASUREMENTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of assets that are measured at fair value on a recurring basis |
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| Schedule of equity instruments that are measured at fair value |
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| Schedule of quantitative information regarding market assumptions used in the valuation of warrants and rights |
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DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (Details) |
3 Months Ended | 6 Months Ended | |||
|---|---|---|---|---|---|
|
Feb. 17, 2023
USD ($)
$ / shares
shares
|
Mar. 31, 2023
USD ($)
|
Jun. 30, 2023
USD ($)
$ / shares
$ / Options
shares
|
Oct. 28, 2021
$ / shares
|
Aug. 23, 2021
$ / shares
|
|
| ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | |||||
| Sale of Units, net of underwriting discounts (in shares) | shares | 900,000 | ||||
| Price per share | $ / shares | $ 10.00 | $ 10.00 | $ 10.00 | ||
| Gross proceeds | $ 69,000,000 | ||||
| Shares Issued, Price Per Share | $ / shares | $ 10.20 | $ 10.00 | $ 10.00 | ||
| Number of shares issuable per warrant | shares | 1 | ||||
| Price of warrant | $ / shares | $ 10.00 | ||||
| Proceeds from sale of Private Units | $ 5,450,000 | ||||
| Transaction Costs | 4,366,343 | ||||
| Underwriting fees | 2,070,000 | ||||
| Fair value of class A shares issued to underwriters | $ 1,185,493 | ||||
| Condition for future Business Combination use of proceeds percentage | 50 | ||||
| Interest to pay dissolution expenses | $ 50,000 | ||||
| Investments, maximum maturity term | 180 days | ||||
| Period to complete Business Combination | 9 months | ||||
| Maximum period to complete Business Combination | 18 months | ||||
| Number of days advance notice to be provided for extension of the period to complete Business Combination. | 5 days | ||||
| Extension period to complete Business Combination | 3 months | ||||
| Maximum extension period to complete Business Combination | 9 months | ||||
| Working capital deficit | $ 1,500,000 | ||||
| Deposit in trust account | 690,000 | ||||
| Maximum amount to be deposited in Trust Account | $ 2,070,000 | ||||
| Aggregate consideration | $ 5,450,000 | ||||
| Share Price | $ / shares | $ 10.20 | ||||
| Condition for future business combination threshold Percentage Ownership | 100 | ||||
| Condition for future business combination threshold Net Tangible Assets | $ 5,000,001 | ||||
| Private Placement Units | |||||
| ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | |||||
| Number of shares issuable per warrant | shares | 1 | ||||
| Fair value of class A shares issued to underwriters | $ 12,075 | ||||
| Public Warrants | |||||
| ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | |||||
| Number of shares issuable per warrant | shares | 1 | ||||
| Price of warrant | $ / shares | $ 10.20 | ||||
| Initial Public Offering | |||||
| ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | |||||
| Sale of Units, net of underwriting discounts (in shares) | shares | 6,900,000 | ||||
| Price per share | $ / shares | $ 10.00 | ||||
| Gross proceeds | $ 70,380,000 | ||||
| Condition for future Business Combination use of proceeds percentage | 80 | ||||
| Obligation to redeem Public Shares if entity does not complete a Business Combination (as a percent) | 100.00% | ||||
| Per unit amount to be deposited in Trust Account | $ / Options | 0.10 | ||||
| Aggregate consideration | $ 25,000 | ||||
| Due to the Sponsor for certain reimbursable expenses | $ 150,000 | ||||
| Redemption limit percentage without prior consent | 15 | ||||
| Private Placement | |||||
| ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | |||||
| Sale of Units, net of underwriting discounts (in shares) | shares | 545,000 | ||||
| Price per share | $ / shares | $ 10.00 | ||||
| Proceeds from sale of Private Units | $ 5,450,000 | ||||
| Private Placement | Private Placement Units | |||||
| ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | |||||
| Number of shares issuable per warrant | shares | 1 | ||||
| Price of warrant | $ / shares | $ 10.00 | ||||
| Over-allotment option | |||||
| ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | |||||
| Sale of Units, net of underwriting discounts (in shares) | shares | 900,000 | ||||
| Number of shares issuable per warrant | shares | 900,000 | ||||
| Related Party Loans | |||||
| ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | |||||
| Price of warrant | $ / shares | $ 10.00 | ||||
| Other offering costs | $ 1,098,775 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||||
|---|---|---|---|---|---|---|---|
Jun. 30, 2023 |
Mar. 31, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Jan. 30, 2023 |
Dec. 31, 2022 |
|
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||
| Cash | $ 541,496 | $ 541,496 | $ 0 | ||||
| Cash equivalents | 0 | 0 | 0 | ||||
| Withdrawn from trust account | 0 | ||||||
| Federal depository insurance coverage | 250,000 | 250,000 | |||||
| Gross proceeds | 69,000,000 | ||||||
| Proceeds allocated to Public Warrants | (1,104,000) | ||||||
| Proceeds allocated to Public Rights | (3,305,100) | ||||||
| Ordinary share issuance costs | (4,011,946) | ||||||
| Remeasurement of carrying value to redemption value | 581,705 | $ 10,072,026 | 10,653,731 | ||||
| Ordinary shares subject to possible redemption | $ 71,232,685 | $ 71,232,685 | |||||
| Purchase of warrants exercises | 7,617,500 | 7,617,500 | 1,725,000 | ||||
| Provision for income taxes | $ 167,883 | $ 233,034 | |||||
| Chinese Income Tax Resident | |||||||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||
| Unrecognized tax benefits accrued for interest and penalties | 315,604 | 315,604 | $ 0 | ||||
| Provision for income taxes | $ 167,883 | $ 0 | $ 233,034 | $ 0 | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Reconciliation of Net Loss per Common Share (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|||||||
| Redeemable Class A common stock | ||||||||||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||||
| Allocation of net income (loss) | $ 319,405 | $ 467,196 | ||||||||
| Weighted average shares outstanding, basic | 6,900,000 | 5,070,166 | ||||||||
| Weighted average shares outstanding, diluted | 6,900,000 | 5,070,166 | ||||||||
| Net income (loss) per ordinary share, basic | $ 0.05 | $ 0.09 | ||||||||
| Net income (loss) per ordinary share, diluted | $ 0.05 | $ 0.09 | ||||||||
| Non-redeemable Class A common stock | ||||||||||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||||
| Allocation of net income (loss) | $ 117,949 | $ (463) | $ 221,471 | $ (925) | ||||||
| Weighted average shares outstanding, basic | [1],[2],[3] | 2,548,000 | 1,745,000 | 2,403,470 | 1,745,000 | |||||
| Weighted average shares outstanding, diluted | [1],[2],[3] | 2,548,000 | 1,745,000 | 2,403,470 | 1,745,000 | |||||
| Net income (loss) per ordinary share, basic | $ 0.05 | $ 0.00 | $ 0.09 | $ 0.00 | ||||||
| Net income (loss) per ordinary share, diluted | $ 0.05 | $ 0.00 | $ 0.09 | $ 0.00 | ||||||
| ||||||||||
PUBLIC OFFERING (Details) - $ / shares |
6 Months Ended | |||
|---|---|---|---|---|
Feb. 17, 2023 |
Jun. 30, 2023 |
Oct. 28, 2021 |
Aug. 23, 2021 |
|
| INITIAL PUBLIC OFFERING | ||||
| Number of units sold | 900,000 | |||
| Price per share | $ 10.00 | $ 10.00 | $ 10.00 | |
| Number of shares per warrant | 1 | |||
| Public Warrants | ||||
| INITIAL PUBLIC OFFERING | ||||
| Number of shares per warrant | 1 | |||
| Exercise price of warrants | $ 11.50 | |||
| Public Rights | ||||
| INITIAL PUBLIC OFFERING | ||||
| Number of units sold | 0.10 | |||
| Number of shares per warrant | 1 | |||
| Initial Public Offering | ||||
| INITIAL PUBLIC OFFERING | ||||
| Number of units sold | 6,900,000 | |||
| Price per share | $ 10.00 | |||
| Over-allotment option | ||||
| INITIAL PUBLIC OFFERING | ||||
| Number of units sold | 900,000 | |||
| Number of shares per warrant | 900,000 |
PRIVATE PLACEMENT (Details) - USD ($) |
6 Months Ended | |||
|---|---|---|---|---|
Feb. 17, 2023 |
Jun. 30, 2023 |
Oct. 28, 2021 |
Aug. 23, 2021 |
|
| PRIVATE PLACEMENT | ||||
| Number of units sold | 900,000 | |||
| Price per share | $ 10.00 | $ 10.00 | $ 10.00 | |
| Proceeds from sale of Private Units | $ 5,450,000 | |||
| Number of shares per warrant | 1 | |||
| Private Placement Units | ||||
| PRIVATE PLACEMENT | ||||
| Number of shares per warrant | 1 | |||
| Exercise price of warrant | $ 11.50 | |||
| Public Warrants | ||||
| PRIVATE PLACEMENT | ||||
| Number of shares per warrant | 1 | |||
| Exercise price of warrant | $ 11.50 | |||
| Public Rights | ||||
| PRIVATE PLACEMENT | ||||
| Number of units sold | 0.10 | |||
| Number of shares per warrant | 1 | |||
| Private Placement | ||||
| PRIVATE PLACEMENT | ||||
| Number of units sold | 545,000 | |||
| Price per share | $ 10.00 | |||
| Proceeds from sale of Private Units | $ 5,450,000 | |||
| Private Placement | Private Placement Units | ||||
| PRIVATE PLACEMENT | ||||
| Number of shares per warrant | 1 | |||
| Private Placement | Public Warrants | ||||
| PRIVATE PLACEMENT | ||||
| Number of redeemable warrants that each unit consists | 1 | |||
| Private Placement | Public Rights | ||||
| PRIVATE PLACEMENT | ||||
| Number of shares per warrant | 0.10 |
RELATED PARTY TRANSACTIONS - Founder Shares (Details) - USD ($) |
1 Months Ended | 3 Months Ended | 6 Months Ended | |||
|---|---|---|---|---|---|---|
Jan. 30, 2023 |
Jan. 26, 2023 |
Jul. 08, 2020 |
Aug. 31, 2021 |
Mar. 31, 2023 |
Jun. 30, 2023 |
|
| RELATED PARTY TRANSACTIONS | ||||||
| Aggregate consideration | $ 5,450,000 | |||||
| Number of shares issued | 545,000 | |||||
| Founder Shares | ||||||
| RELATED PARTY TRANSACTIONS | ||||||
| Stock price trigger to transfer, assign or sell any shares or warrants of the company, after the completion of the initial business combination (in dollars per share) | $ 12.50 | |||||
| Threshold trading days for transfer, assign or sale of shares or warrants, after the completion of the initial business combination | 20 days | |||||
| Threshold period after the business combination in which the 20 trading days within any 30 trading day period commences | 30 days | |||||
| Founder Shares | Sponsor | ||||||
| RELATED PARTY TRANSACTIONS | ||||||
| Aggregate consideration | $ 25,000 | |||||
| Number of shares issued | 1,725,000 | 1,150,000 | ||||
| Share dividend | 0.2 | 0.25 | ||||
| Aggregate number of shares owned | 1,437,500 | |||||
| Shares subject to forfeiture | 225,000 | |||||
| Threshold period for not to transfer, assign or sell any of their shares or warrants after the completion of a Business Combination | 1 year | |||||
| Percentage of issued and outstanding shares after the Initial Public Offering collectively held by initial stockholders | 20.00% | 50.00% | ||||
| Stock price trigger to transfer, assign or sell any shares or warrants of the company, after the completion of the initial business combination (in dollars per share) | $ 12.50 | |||||
| Threshold trading days for transfer, assign or sale of shares or warrants, after the completion of the initial business combination | 20 days | |||||
| Threshold consecutive trading days for transfer, assign or sale of shares or warrants, after the completion of the initial business combination | 30 days | |||||
| Threshold period after the business combination in which the 20 trading days within any 30 trading day period commences | 150 days |
RELATED PARTY TRANSACTIONS - Additional Information (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|---|
Mar. 28, 2023 |
Feb. 17, 2023 |
Feb. 15, 2023 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
Jul. 08, 2020 |
|
| RELATED PARTY TRANSACTIONS | |||||||||
| Proceeds from sale of Private Units | $ 5,450,000 | ||||||||
| Advances from Sponsor | $ 923 | $ 923 | $ 217,462 | ||||||
| Price of warrant | $ 10.00 | $ 10.00 | |||||||
| Assets held in trust Account | $ 71,598,289 | $ 71,598,289 | |||||||
| Share Price | $ 10.20 | $ 10.20 | |||||||
| Promissory Note with Related Party | Sponsor | |||||||||
| RELATED PARTY TRANSACTIONS | |||||||||
| Borrowing capacity | $ 150,000 | ||||||||
| Outstanding balance repaid to Sponsor | $ 150,000 | ||||||||
| Outstanding balance of related party note | $ 0 | $ 0 | |||||||
| Related Party Loans | |||||||||
| RELATED PARTY TRANSACTIONS | |||||||||
| Loan conversion agreement warrant | $ 1,500,000 | $ 1,500,000 | |||||||
| Price of warrant | $ 10.00 | $ 10.00 | |||||||
| Related Party Loans | Working capital loans warrant | Related Party [Member] | |||||||||
| RELATED PARTY TRANSACTIONS | |||||||||
| Outstanding balance of related party note | $ 0 | $ 0 | |||||||
| Related Party Extension Loans | |||||||||
| RELATED PARTY TRANSACTIONS | |||||||||
| Assets held in trust Account | $ 690,000 | $ 690,000 | |||||||
| Share Price | $ 0.10 | $ 0.10 | |||||||
| Extension period | 3 months | ||||||||
| Aggregate share issued value | $ 2,070,000 | ||||||||
| Administrative Services Agreement | |||||||||
| RELATED PARTY TRANSACTIONS | |||||||||
| Expenses per month | $ 10,000 | ||||||||
| Expenses incurred and paid | $ 30,000 | $ 0 | 45,000 | $ 0 | |||||
| Sponsor | |||||||||
| RELATED PARTY TRANSACTIONS | |||||||||
| Advances from Sponsor | 923 | 923 | 217,462 | ||||||
| Sponsor | Initial Public Offering | |||||||||
| RELATED PARTY TRANSACTIONS | |||||||||
| Proceeds from sale of Private Units | $ 2,000,000 | ||||||||
| Offering costs and other expenses paid by a related party | 628,074 | ||||||||
| Amount due from sponsor | $ 1,300,000 | $ 0 | $ 0 | $ 0 | |||||
COMMITMENTS (Details) |
6 Months Ended | ||||||
|---|---|---|---|---|---|---|---|
|
May 04, 2023
USD ($)
|
Apr. 30, 2023
USD ($)
|
Feb. 17, 2023
$ / shares
shares
|
Jun. 30, 2023
USD ($)
item
$ / shares
shares
|
Dec. 31, 2022
USD ($)
|
Oct. 28, 2021
$ / shares
|
Aug. 23, 2021
$ / shares
|
|
| COMMITMENTS | |||||||
| Maximum number of demands for registration of securities | item | 3 | ||||||
| Number of units sold | shares | 900,000 | ||||||
| Maximum units issuable | shares | 900,000 | ||||||
| Price per share | $ / shares | $ 10.00 | $ 10.00 | $ 10.00 | ||||
| Advisory fees payable as a percentage of gross proceeds of IPO | 4.00% | ||||||
| Advisory fees payable | $ 2,760,000 | ||||||
| Additional Advisory fees payable as a percentage of gross proceeds of IPO, if I-Bankers introduces the Company to the target business | 1.00% | ||||||
| Additional Advisory fees payable, if I-Bankers introduces the Company to the target business | $ 690,000 | ||||||
| Prepaid expenses | 253,843 | $ 2,000 | |||||
| Vendor agreement | |||||||
| COMMITMENTS | |||||||
| Expenses per month | $ 500,000 | ||||||
| Expenses per month upon execution of agreement | 200,000 | ||||||
| Expenses per month upon definitive agreement | 100,000 | ||||||
| Expenses per month upon proxy statement | 200,000 | ||||||
| Additional payment on related party transaction | $ 850,000 | ||||||
| payment to suppliers | $ 200,000 | ||||||
| Amount of expenses charged | 21,555 | ||||||
| Prepaid expenses | $ 178,445 | ||||||
| Initial Public Offering | |||||||
| COMMITMENTS | |||||||
| Number of units sold | shares | 6,900,000 | ||||||
| Price per share | $ / shares | $ 10.00 | ||||||
| Underwriting cash discount per unit | $ / shares | $ 0.30 | ||||||
| Underwriter cash discount | $ 2,070,000 |
SHAREHOLDERS' EQUITY - Preference Shares (Details) - $ / shares |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| SHAREHOLDERS' EQUITY | ||
| Preference shares, shares authorized | 1,000,000 | 1,000,000 |
| Preference shares, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
| Preference shares, shares issued | 0 | 0 |
| Preference shares, shares outstanding | 0 | 0 |
SHAREHOLDERS' EQUITY - Ordinary Shares (Details) |
Jun. 30, 2023
Vote
$ / shares
shares
|
Feb. 17, 2023
shares
|
Jan. 30, 2023
shares
|
Jan. 26, 2023
item
|
Dec. 31, 2022
$ / shares
shares
|
Aug. 31, 2021
shares
|
|---|---|---|---|---|---|---|
| SHAREHOLDERS' EQUITY | ||||||
| Number of classes of ordinary shares, redesignation of authorized share capital | item | 2 | |||||
| Number classes of ordinary shares redesignated | item | 1 | |||||
| Ordinary shares, shares authorized | 220,000,000 | 220,000,000 | ||||
| Ordinary shares, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | ||||
| Ordinary shares, votes per share | Vote | 1 | |||||
| Share dividend | 0.2 | |||||
| Ordinary shares, shares outstanding | 2,548,000 | 2,003,000 | ||||
| Ordinary shares, shares issued | 2,548,000 | 2,003,000 | ||||
| Private Placement | ||||||
| SHAREHOLDERS' EQUITY | ||||||
| Ordinary shares, shares outstanding | 545,000 | |||||
| Representative Shares | ||||||
| SHAREHOLDERS' EQUITY | ||||||
| Ordinary shares, shares outstanding | 278,000 | 278,000 | ||||
| Representative Shares | Over-allotment option | ||||||
| SHAREHOLDERS' EQUITY | ||||||
| Number of shares no longer subject to forfeiture | 33,000 | |||||
| Class A subject to possible redemption | ||||||
| SHAREHOLDERS' EQUITY | ||||||
| Temporary equity shares authorized | 6,900,000 | 0 | ||||
| Founder Shares | ||||||
| SHAREHOLDERS' EQUITY | ||||||
| Share dividend | 0.25 | |||||
| Ordinary shares, shares outstanding | 1,725,000 | 1,725,000 | ||||
| Founder Shares | Over-allotment option | ||||||
| SHAREHOLDERS' EQUITY | ||||||
| Number of shares no longer subject to forfeiture | 225,000 | |||||
| Founder Shares | Sponsor | ||||||
| SHAREHOLDERS' EQUITY | ||||||
| Ordinary shares, shares outstanding | 1,725,000 | 1,437,500 |
SHAREHOLDERS' EQUITY - Rights (Details) |
6 Months Ended |
|---|---|
|
Jun. 30, 2023
USD ($)
shares
| |
| SHAREHOLDERS' EQUITY | |
| Number of ordinary shares for each right | shares | 0.1 |
| Additional consideration required to be paid by a holder of rights in order to receive its additional shares | $ 0 |
| Contractual penalties for failure to deliver securities to the holders of the rights | $ 0 |
SHAREHOLDERS' EQUITY - Warrants (Details) |
6 Months Ended |
|---|---|
|
Jun. 30, 2023
D
$ / shares
| |
| Public Warrants | |
| SHAREHOLDERS' EQUITY | |
| Public Warrants exercisable term after the completion of a Business Combination | 30 days |
| Public Warrants expiration term | 5 years |
| Threshold period for registration statement to be effective after which warrants can be exercised on a cashless basis | 60 days |
| Redemption price per Public Warrant (in dollars per share) | $ 0.01 |
| Minimum threshold written notice period for redemption of Public Warrants | 30 days |
| Share redemption trigger price for redemption of Public Warrants (in dollars per share) | $ 18.00 |
| Threshold trading days for redemption of Public Warrants | 20 days |
| Threshold consecutive trading days for redemption of Public Warrants | D | 30 |
| Threshold number of business days before sending notice of redemption to warrant holders | 3 days |
| Threshold issue price for capital raising purposes in connection with the closing of a Business Combination | $ 9.20 |
| Percentage of aggregate gross proceeds on total equity proceeds | 60.00% |
| Threshold trading days for calculating volume weighted average trading price | 20 days |
| Adjustment of exercise price of Public Warrants based on Market Value or the Newly Issued Price (as a percent) | 115.00% |
| Adjustment of redemption trigger price based on Market Value or the Newly Issued Price (as a percent) | 180.00% |
| Private Warrants | |
| SHAREHOLDERS' EQUITY | |
| Threshold period for not to transfer, assign or sell any of their shares or warrants after the completion of a Business Combination | 30 days |
SHAREHOLDERS' EQUITY - Quantitative Information Regarding Market Assumptions Used in Representative Shares Valuation (Details) - $ / shares |
Oct. 28, 2021 |
Aug. 23, 2021 |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| SHAREHOLDERS' EQUITY | ||||||||||
| Market price | [1] | $ 9.09 | $ 9.06 | |||||||
| Risk-free rate | [2] | 1.22% | 0.83% | |||||||
| Dividend yield | [3] | 0.00% | 0.00% | |||||||
| Volatility | [4] | 12.50% | 14.50% | |||||||
| ||||||||||
SHAREHOLDERS' EQUITY - Reported by Bloomberg on the Valuation Date (Details) - $ / shares |
Jun. 30, 2023 |
Feb. 17, 2023 |
Oct. 28, 2021 |
Aug. 23, 2021 |
|---|---|---|---|---|
| SHAREHOLDERS' EQUITY | ||||
| Total price per Unit | $ 10.00 | $ 10.00 | $ 10.00 | |
| Offering price per Unit | $ 10.20 | 10.00 | 10.00 | |
| 1.00 shares per Unit | ||||
| SHAREHOLDERS' EQUITY | ||||
| Total price per Unit | 9.09 | 9.06 | ||
| 0.50 warrants per Unit | ||||
| SHAREHOLDERS' EQUITY | ||||
| Total price per Unit | 0.25 | 0.29 | ||
| 0.10 rights per Unit | ||||
| SHAREHOLDERS' EQUITY | ||||
| Total price per Unit | $ 0.66 | $ 0.65 |
SHAREHOLDERS' EQUITY - Representative Shares and Representative Warrants (Details) - USD ($) |
1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
|---|---|---|---|---|---|---|---|
Oct. 28, 2021 |
Aug. 23, 2021 |
Jul. 28, 2020 |
Aug. 31, 2021 |
Mar. 31, 2023 |
Jun. 30, 2023 |
Feb. 17, 2023 |
|
| SHAREHOLDERS' EQUITY | |||||||
| Number of shares issued | 545,000 | ||||||
| Aggregate consideration | $ 5,450,000 | ||||||
| Offering price per Unit | $ 10.00 | $ 10.00 | $ 10.20 | ||||
| Fair value per share | $ 10.20 | ||||||
| Representative Shares | |||||||
| SHAREHOLDERS' EQUITY | |||||||
| Aggregate consideration | $ 100 | ||||||
| Estimated fair value | $ 12,075 | ||||||
| Aggregate fair value of shares issued | $ 1,185,493 | ||||||
| Fair value per share | $ 0.07 | ||||||
| Fair value of shares accounted for as offering costs | $ 1,185,493 | ||||||
| Representative Shares | Over-allotment option | |||||||
| SHAREHOLDERS' EQUITY | |||||||
| Number of shares no longer subject to forfeiture | 33,000 | ||||||
| Representative Shares | EarlyBirdCapital and its designees | |||||||
| SHAREHOLDERS' EQUITY | |||||||
| Number of shares issued | 12,132 | 100,000 | |||||
| Aggregate consideration | $ 10.00 | ||||||
| Number of shares forfeited | 2,250 | ||||||
| Offering price per Unit | $ 0.022 | ||||||
| Number of shares issued, net of forfeited shares | 97,750 | ||||||
| Estimated fair value | $ 2,151 | ||||||
| Representative Shares | I-Bankers Securities, Inc. and its designees | |||||||
| SHAREHOLDERS' EQUITY | |||||||
| Number of shares issued | 12,868 | 155,250 | 155,250 | 172,500 | |||
| Aggregate consideration | $ 15.50 | ||||||
| Offering price per Unit | $ 0.0001 | $ 12.00 | |||||
| Aggregate fair value of shares issued | $ 1,019,993 | ||||||
| Fair value per share | $ 6.57 | ||||||
| Representative Shares | EarlyBirdCapital and I-Bankers Securities, Inc. and its designees | |||||||
| SHAREHOLDERS' EQUITY | |||||||
| Number of shares issued | 25,000 | ||||||
| Aggregate consideration | $ 2.50 | ||||||
| Offering price per Unit | $ 0.0001 | ||||||
| Aggregate fair value of shares issued | $ 165,500 | ||||||
| Fair value per share | $ 6.62 |
FAIR VALUE MEASUREMENTS (Details) |
Jun. 30, 2023
USD ($)
|
|---|---|
| FAIR VALUE MEASUREMENTS | |
| Assets held in trust Account | $ 71,598,289 |
| Cash | |
| FAIR VALUE MEASUREMENTS | |
| Assets held in trust Account | 9,315 |
| US Treasury Securities | |
| FAIR VALUE MEASUREMENTS | |
| Assets held in trust Account | $ 71,588,974 |
FAIR VALUE MEASUREMENTS - Schedule of assets that are measured at fair value on a recurring basis (Details) |
Jun. 30, 2023
USD ($)
|
|---|---|
| Assets: | |
| Cash and marketable securities held in Trust Account | $ 71,598,289 |
| Level 1 | |
| Assets: | |
| Cash and marketable securities held in Trust Account | $ 71,598,289 |
FAIR VALUE MEASUREMENTS - Schedule of equity instruments that are measured at fair value (Details) - USD ($) |
3 Months Ended | |
|---|---|---|
Feb. 17, 2023 |
Mar. 31, 2023 |
|
| FAIR VALUE MEASUREMENTS | ||
| Representative Warrants | $ 12,075 | |
| Fair Value of Public Rights for ordinary shares subject to redemption allocation | 3,305,100 | |
| Fair Value of Public Warrants for ordinary shares subject to redemption allocation | $ 1,104,000 | |
| Level 3 | ||
| FAIR VALUE MEASUREMENTS | ||
| Representative Warrants | $ 12,075 | |
| Fair Value of Public Rights for ordinary shares subject to redemption allocation | 3,305,100 | |
| Fair Value of Public Warrants for ordinary shares subject to redemption allocation | $ 1,104,000 |
FAIR VALUE MEASUREMENTS - Schedule of quantitative information regarding market assumptions used in the valuation of warrants and rights (Details) |
Feb. 17, 2023
$ / shares
|
|---|---|
| Market price of public share | |
| FAIR VALUE MEASUREMENTS | |
| Public warrants | 9.56 |
| Risk-free rate | |
| FAIR VALUE MEASUREMENTS | |
| Public warrants | 4.23 |
| Dividend yield | |
| FAIR VALUE MEASUREMENTS | |
| Public warrants | 0.00 |
| Volatility | |
| FAIR VALUE MEASUREMENTS | |
| Public warrants | 4.5 |
| Value in De-SPAC | |
| FAIR VALUE MEASUREMENTS | |
| Public warrants | 9.59 |
| Probability | |
| FAIR VALUE MEASUREMENTS | |
| Public warrants | 50.0 |
| Fair value of Right to buy one Share | |
| FAIR VALUE MEASUREMENTS | |
| Public warrants | 4.79 |