UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
For the transition period from to
Commission File No.
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
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Indicate by check mark whether
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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If an emerging growth company,
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Indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes
As of November 30, 2023, there were
EDOC ACQUISITION CORP.
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2023
TABLE OF CONTENTS
i
GLOSSARY OF TERMS
Unless otherwise stated in this Report (as defined below), or the context otherwise requires, references to:
| ● | “AOI Registration Statement” are to the Registration Statement on Form F-4 (File No. 333-274552) filed with the SEC on September 18, 2023; | |
| ● | “ASC” are to the FASB (as defined below) Accounting Standards Codification; |
| ● | “ASU” are to the FASB Accounting Standards Update; |
| ● | “board of directors,” “board” or “directors” are to the board of directors of the Company (as defined below); |
| ● | “Business Combination” are to acquiring, engaging in a share exchange, share reconstruction and amalgamation with, purchasing all or substantially all of the assets of, entering into contractual arrangements with, or engaging in any other similar business combination with one or more businesses or entities; |
| ● | “Class A ordinary shares” are to the Class A ordinary shares of the Company, par value $0.0001 per share; |
| ● | “Class B ordinary shares” are to the Class B ordinary shares of the Company, par value $0.0001 per share; |
| ● | “Companies Law” are to the Companies Law (2020 Revision) of the Cayman Islands as the same may be amended from time to time; |
| ● | “Company,” “our Company,” “we” or “us” are to Edoc Acquisition Corp., a Cayman Islands exempted company; |
| ● | “Combination Period” are to August 12, 2023 (or such earlier date as determined by the board), unless further extended pursuant to our amended and restated memorandum and articles of association, that the Company has to consummate an initial Business Combination; |
| ● | “Continental” are to Continental Stock Transfer & Trust Company, trustee of our trust account (as defined below) and warrant agent of our public warrants (as defined below); |
| ● | “Exchange Act” are to the Securities Exchange Act of 1934, as amended; |
| ● | “FASB” are to the Financial Accounting Standards Board; | |
| ● | “September 2023 Nasdaq Notice” are to the deficiency notice from Nasdaq received by the Company on September 25, 2023; |
| ● | “founder shares” are to the Class B ordinary shares initially purchased by our sponsor (as defined below) in the private placement (as defined below) and the Class A ordinary shares that have or will be issued upon the conversion of the Class B ordinary shares as described herein (for the avoidance of doubt, such Class A ordinary shares will not be “public shares” (as defined below); |
| ● | “GAAP” are to the accounting principles generally accepted in the United States of America; |
| ● | “I-Bankers” are to I-Bankers Securities, Inc., the representative of the underwriters; |
| ● | “initial public offering” or “IPO” are to the initial public offering that was consummated by the Company on November 12, 2020; |
ii
| ● | “initial shareholders” are to holders of our founder shares prior to our initial public offering; |
| ● | “Investment Company Act” are to the Investment Company Act of 1940, as amended; |
| ● | “JOBS Act” are to the Jumpstart Our Business Startups Act of 2012; |
| ● | “Nasdaq” are to the Nasdaq Capital Market; |
| ● | “ordinary shares” are to the Class A ordinary shares and the Class B ordinary shares; |
| ● | “PCAOB” are to the Public Company Accounting Oversight Board (United States); |
| ● | “private placement” are to the private placement of units (as defined below) that occurred simultaneously with the closing of our initial public offering; |
| ● | “public rights” are to the rights sold as part of the units in our initial public offering (whether they were subscribed for in our initial public offering or in the open market); |
| ● | “public shares” are to the Class A ordinary shares sold as part of the units in our initial public offering (whether they were purchased in our initial public offering or thereafter in the open market); |
| ● | “private shares,” “private rights” and “private warrants” are to the Class A ordinary shares, rights and warrants, respectively, included within the private units; |
| ● | “public shareholders” are to the holders of our public shares, including our initial shareholders and team to the extent our initial shareholders and/or members of our management team purchase public shares, provided that each initial shareholder’s and member of our management team’s status as a “public shareholder” will only exist with respect to such public shares; |
| ● | “private units” are to the units held by the initial shareholders and the I-Bankers units, which private placement units are identical to the units sold in our initial public offering, subject to certain limited exceptions as described in the prospectus for our initial public offering; |
| ● | “public warrants” refer to the redeemable warrants sold as part of the units in our initial public offering (whether they were subscribed for in our initial public offering or purchased in the open market); |
| ● | “Registration Statement” are to the Registration Statement on Form S-1 initially filed with the SEC (as defined below) on September 15, 2020, as amended, and declared effective on November 9, 2020 (File No. 333-248819); |
| ● | “Report” are to this Quarterly Report on Form 10-Q for the quarter ended September 30, 2023; |
| ● | “representative’s units” are to the 65,000 units we sold privately to I-Bankers and/or its designees simultaneously with the closing of our initial public offering; |
iii
| ● | “representative’s warrants” are to the warrant to purchase up to 450,000 Class A ordinary shares issued to I-Bankers as part of compensation for services in connection with our initial public offering; |
| ● | “rights” are to the rights which were sold as part of the units in our initial public offering as well as the concurrent private placement and the rights underlying the Working Capital Loans; |
| ● | “Sarbanes-Oxley Act” are to the Sarbanes-Oxley Act of 2002; |
| ● | “SEC” are to the U.S. Securities and Exchange Commission; | |
| ● | “November 2023 Nasdaq Notice” are to the deficiency notice from Nasdaq received by the Company on November 10, 2023; |
| ● | “Securities Act” are to the Securities Act of 1933, as amended; |
| ● | “sponsor” are to American Physicians LLC, a Delaware limited liability company, the sole manager of which is Xiaoping Becky Zhang; |
| ● | “trust account” are to the U.S.-based trust account in which an amount of $91,530,000 ($10.17 per unit) from the net proceeds of the sale of the units in the initial public offering and the private units was placed following the closing of the initial public offering, of which approximately $9,494,965 ($11.40 per unit) remains in the trust account as of September 30, 2023; |
| ● | “units” are to the units sold in our initial public offering, which consist of one Class A ordinary share, one right and one redeemable warrant; |
| ● | “warrant” are to our redeemable warrants, which includes the public warrants as well as the private warrants and warrants underlying units issued upon conversion of working capital loans to the extent they are no longer held by the initial purchasers of the private warrants or members of our management team (or their permitted transferees), in each case after our initial Business Combination; and |
| ● | “Working Capital Loans” are to funds that, in order to finance transaction costs in connection with a Business Combination, the initial shareholders or an affiliate of the initial shareholders or certain of the Company’s directors and officers may, but are not obligated to, loan the Company. |
iv
Item 1. Financial Statements
EDOC ACQUISTION CORP.
CONDENSED BALANCE SHEETS
| September 30, 2023 | December 31, 2022 | |||||||
| (Unaudited) | ||||||||
| Assets: | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Cash and marketable securities held in Trust Account | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities, Class A Ordinary Shares Subject to Possible Redemption, and Shareholders’ Deficit: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Convertible promissory note – related party, at fair value | ||||||||
| Promissory note - related party | ||||||||
| Total current liabilities | ||||||||
| Warrant liability | ||||||||
| Total Liabilities | $ | $ | ||||||
| Commitments and Contingencies (Note 6) | ||||||||
| Shareholders’ Deficit | ||||||||
| Preference shares, $ | ||||||||
| Class A ordinary shares, $ | ||||||||
| Class B ordinary shares, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Shareholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit | $ | $ | ||||||
See accompanying notes to interim condensed financial statements.
1
EDOC ACQUISTION CORP.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Formation and operating costs | $ | $ | $ | $ | ||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest earned on marketable securities held in Trust Account | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Fair value of shares transferred to backstop investors | ( | ) | ( | ) | ||||||||||||
| Change in fair value of convertible promissory note | ( | ) | ||||||||||||||
| Change in fair value of warrants | ( | ) | ||||||||||||||
| Total other income (expense), net | ( | ) | ||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding, redeemable Class A ordinary shares | ||||||||||||||||
| $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Weighted average shares outstanding, non-redeemable Class A and Class B ordinary shares | ||||||||||||||||
| $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
See accompanying notes to interim condensed financial statements.
2
EDOC ACQUISTION CORP.
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
(UNAUDITED)
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023
| Ordinary shares | Additional | Total | ||||||||||||||||||||||||||
| Class A | Class B | Paid-In | Accumulated | Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance—December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Conversion of Class B shares to Class A shares | ( | ) | ( | ) | ||||||||||||||||||||||||
| Remeasurement for ordinary shares to redemption amount | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance—March 31, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Remeasurement for ordinary shares to redemption amount | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance—June 30, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Remeasurement for ordinary shares to redemption amount | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance—September 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022
| Ordinary shares | Additional | Total | ||||||||||||||||||||||||||
| Class A | Class B | Paid-In | Accumulated | Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance—December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Fair value of shares transferred to backstop investors | — | — | ||||||||||||||||||||||||||
| Remeasurement for ordinary shares to redemption amount | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance—March 31, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Fair value of shares transferred to backstop investors | — | — | ||||||||||||||||||||||||||
| Remeasurement for ordinary shares to redemption amount | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance—June 30, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Fair value of shares transferred to backstop investors | — | — | ||||||||||||||||||||||||||
| Remeasurement for ordinary shares to redemption amount | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Promissory note proceeds in excess of fair value | ||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance—September 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
See accompanying notes to interim condensed financial statements.
3
EDOC ACQUISTION CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Nine Months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Interest earned on cash and Treasury securities held in Trust Account | ( | ) | ( | ) | ||||
| Accrued interest on promissory note | ||||||||
| Change in fair value of convertible promissory note | ( | ) | ||||||
| Change in fair value of warrant liability | ( | ) | ( | ) | ||||
| Fair value of shares transferred to backstop investors | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from an Investing Activity: | ||||||||
| Investment of cash into Trust Account | ( | ) | ( | ) | ||||
| Interest deposited in Trust account on Trust extension payment | ( | ) | ||||||
| Cash withdrawn from Trust Account in connection with redemptions | ||||||||
| Net cash provided by an investing activity | ||||||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from promissory note - related party | ||||||||
| Redemption of Class A ordinary shares | ( | ) | ( | ) | ||||
| Proceeds from convertible promissory note - related party | ||||||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Net Change in Cash | ( | ) | ( | ) | ||||
| Cash, beginning of the period | ||||||||
| Cash, end of period | $ | $ | ||||||
| Non-Cash Financing Activity: | ||||||||
| Promissory note proceeds in excess of fair value | $ | $ | ( | ) | ||||
| Remeasurement for ordinary shares to redemption amount | $ | $ | ||||||
See accompanying notes to interim condensed financial statements.
4
EDOC ACQUISTION CORP.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited
NOTE 1. DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS, AND GOING CONCERN
EDOC Acquisition Corp. (“Edoc” or the “Company”) was incorporated in the Cayman Islands on August 20, 2020. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). While the Company may pursue an acquisition opportunity in any industry or geographic region, the Company intends to focus on businesses primarily operating in the healthcare and healthcare provider space in North America and Asia-Pacific.
As of September 30, 2023, the Company had not yet commenced any operations. All activity through September 30, 2023, relates to the Company’s organizational activities, those necessary to prepare for the Initial Public Offering and identifying a target company for the Business Combination. The Company will not generate any operating revenues until after the completion of its initial business combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the IPO.
The Company’s sponsor is American Physicians LLC (the “Sponsor”).
Financing
The registration statement for the Company’s
initial public offering was declared effective on November 9, 2020 (the “Effective Date”). On November 12, 2020, the Company
consummated the initial public offering of
Simultaneously with the closing of the IPO, the
Company consummated the sale of
Transaction costs of the IPO amounted to $
Trust Account
Following the closing of the IPO on November 12,
2020, $
5
EDOC ACQUISTION CORP.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited
On November 9, 2021, the Sponsor requested that
the Company extend the date by which the Company has to consummate a Business Combination from November 12, 2021 to February 12, 2022
(the “First Extension”). The First Extension was the first of up to two three-month extensions permitted under the Company’s
governing documents. On November 10, 2021, $
On February 9, 2022, the Company held an extraordinary
general meeting pursuant to which the Company’s shareholders approved extending the date by which the Company had to complete a
Business Combination from February 12, 2022 to August 12, 2022 (the “Second Extension”). In connection with the approval of
the Second Extension, shareholders elected to redeem an aggregate of
On August 12, 2022, the Company held an extraordinary general meeting pursuant
to which the Company’s shareholders approved extending the date by which the Company had to complete a Business Combination from
August 12, 2022 to February 12, 2023 (the “Third Extension”). In connection with the approval of the extension, shareholders
elected to redeem an aggregate of
On February 9, 2023, the Company held an extraordinary
general meeting in lieu of an annual meeting pursuant to which the Company’s shareholders approved extending the date by which the
Company had to complete a Business Combination from February 12, 2023 to August 12, 2023 (the “Fourth Extension”). In connection
with the approval of the extension, shareholders elected to redeem an aggregate of
On August 10, 2023, the Company held an extraordinary
general meeting of shareholders (the “Fifth Extension Meeting”) to amend the Company’s Amended and restated memorandum
and articles of association (the “Charter Amendment”) to extend the date by which the Company has to consummate an initial
business combination from August 12, 2023 to November 12, 2023 (“the Fifth Extension”). In connection with the Fifth Extension
Meeting, shareholders holding
Business Combination
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the IPO and the sale of Private Warrants, although substantially all of
the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company
will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations having
an aggregate fair market value of at least
6
EDOC ACQUISTION CORP.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited
The Company will provide holders of the Company’s
outstanding shares of Class A ordinary shares, par value $
The ordinary shares subject to redemption will
be recorded at a redemption value and classified as temporary equity upon the completion of the Proposed Public Offering, in accordance
with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case,
the Company will proceed with a Business Combination if the Company has net tangible assets of at least $
Unless further extended, the Company will have
until May 12, 2024, to consummate a Business Combination (the “Combination Period”). However, if the Company is unable to
complete a Business Combination within the Combination Period, the Company will redeem
The Sponsor, officers and directors and Representative (defined in Note 6) have agreed to (i) waive their redemption rights with respect to their founder shares, private shares, and public shares in connection with the completion of the initial Business Combination, (ii) waive their redemption rights with respect to their founder shares, private shares, and public shares in connection with a shareholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation, and (iii) waive their rights to liquidating distributions from the trust account with respect to their founder shares and private shares if the Company fails to complete the initial Business Combination within the Combination Period.
The Company’s Sponsor has agreed that it
will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company,
or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or similar agreement
or Business Combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $
7
EDOC ACQUISTION CORP.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited
Business Combination Agreement
On December 5, 2022, EDOC Acquisition Corp., a Cayman Islands exempted corporation (together with its successors, “Edoc”), entered into a Business Combination Agreement (the “Business Combination Agreement”) with Australian Oilseeds Investments Pty Ltd., an Australian proprietary company (the “AOI”), Australian Oilseeds Holdings Limited, upon execution of a joinder agreement to become party to the Business Combination Agreement (a “Joinder”), a to-be-formed Cayman Islands exempted company (“Pubco”), AOI Merger Sub, upon execution of a Joinder, a to-be-formed Cayman Islands exempted company and a wholly-owned subsidiary of Pubco (“Merger Sub”), American Physicians LLC, a Delaware limited liability company (“Purchaser Representative”), in the capacity as the Purchaser Representative thereunder, Gary Seaton, in his capacity as the representative for the Sellers (as defined below) in accordance with the terms and conditions of the Business Combination Agreement (the “Seller Representative”) and each of the holders of AOI’s outstanding capital shares named on Annex I thereto (the “Primary Sellers”), as amended from time to time to include subsequent parties that execute and deliver to Edoc, Pubco and AOI a Joinder (the “Joining Sellers”), and the holders of AOI’s outstanding capital shares who are bound by the provisions of the Business Combination Agreement pursuant the drag-along rights set forth in AOI’s memorandum and articles of association (the “Drag-Along Sellers”, and collectively with the Joining Sellers, the “Sellers”).
Pursuant to the Business Combination Agreement, subject to the terms and conditions set forth therein, at the closing of the transactions contemplated by the Business Combination Agreement (the “Closing”), (a) Edoc will merge with and into Merger Sub, with Edoc continuing as the surviving entity (the “Merger”), and with holders of Edoc securities receiving substantially identical securities of Pubco, and (b) immediately prior to the Merger, Pubco will acquire all of the issued and outstanding ordinary shares of AOI (the “Purchased Shares”) from the Sellers in exchange for ordinary shares of Pubco, with AOI becoming a wholly-owned subsidiary of Pubco (the “Share Exchange”, and together with the Merger and the other transactions contemplated by the Business Combination Agreement, the “Transactions”).
The total consideration to be paid by Pubco to
the Sellers for the Purchased Shares shall be an aggregate number of Pubco ordinary shares (the “Exchange Shares”) with an
aggregate value (the “Exchange Consideration”) equal to, without duplication,
On March 31, 2023, the Company, AOI, Pubco, Merger
Sub, and the Purchaser Representative entered into that certain First Amendment to the Business Combination Agreement (the “First
Amendment”), pursuant to which the Business Combination Agreement was amended to add, as a closing condition, that upon the closing
of the transactions contemplated by the Business Combination Agreement, the Company shall have cash and cash equivalents, including funds
remaining in the Company’s trust account (after giving effect to the completion and payment of the redemption) and the proceeds
of any PIPE Investment, prior to giving effect to the payment of the Company’s unpaid expenses or liabilities, of at least equal
to $
Securities Purchase Agreement
On August 23, 2023, Pubco executed a Securities Purchase Agreement (the
“Securities Purchase Agreement”) with AOI, Edoc, and Arena Investors, LP, a Delaware limited partnership (the “Purchaser”).
Pursuant to the terms and conditions of the Securities Purchase Agreement, the Purchaser agreed to purchase redeemable debentures (the
“Debentures”) and warrants (the “Warrants”, and together with the Securities Purchase Agreement and the Debentures,
the “Transaction Documents”) of Pubco for the aggregate subscription amount of up to $
| (i) | The first closing amount of $ |
| (ii) | The second closing amount of $ |
8
EDOC ACQUISTION CORP.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited
| (iii) | The third closing amount of $ |
Each Debenture will mature on the date that is
eighteen (18) months (the “Maturity Date”) from the First Closing Date and is convertible at any time at the holder’s
option at a conversion price of
As additional consideration for the purchase of
the Debentures, Pubco will issue to the Purchaser, simultaneously with the issuance of each debenture on the applicable closing date,
a warrant to purchase Pubco Ordinary Shares (such shares, the “Warrant Shares”), whereby each Warrant shall provide the Purchaser
the right to purchase the number of Warrant Shares equal to
Interest shall accrue on the outstanding principal
amount of the Debentures from and including the original issue date at the rate of zero percent (
The Debentures will be secured by (i) a first priority lien on all tangible
and intangible assets owned or acquired by Pubco, (ii) a guarantee by Pubco, and (iii) a guarantee by each of Pubco’s direct and
indirect subsidiaries and will be subordinate to Pubco’s $
Risks and Uncertainties
Management is currently evaluating the impact of the COVID-19 pandemic, the Russia-Ukraine war and the Israeli-Palestinian war on the industry and has concluded that while it is reasonably possible that the virus and the war could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these interim unaudited condensed financial statements. The interim unaudited condensed financial statements do not include any adjustments that might results from the outcome of these uncertainties.
Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard
On September 25, 2023, we received the September 2023 Nasdaq Notice from the staff (the “Staff”) of the Listing Qualifications Department of the Nasdaq Stock Market (“Nasdaq”) notifying us that we are not in compliance with Nasdaq Listing Rule 5550(a)(3) (the “Minimum Public Holders Requirement”), which requires the Company to maintain at least 300 total public holders for continued listing on the Nasdaq Capital Market. The notification received has no immediate effect on the Company’s Nasdaq listing.
In accordance with Nasdaq rules, we had 45 calendar days, or until November 9, 2023, to submit a plan to regain compliance with the Minimum Public Holders Requirement. As of the filing date of this quarterly report on the Form 10-Q, we have not regained compliance with the Minimum Public Holders Requirement. We submitted a compliance plan on November 9, 2023.
9
EDOC ACQUISTION CORP.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited
Going Concern
As of September 30, 2023, the Company had $
On November 10, 2021, the Company issued an interest-bearing
convertible promissory to the Sponsor in the amount of $
On February 13, 2022, the Company issued a non-interest-bearing
convertible promissory note in the principal amount of up to $
On August 25, 2022, the Company issued a non-interest-bearing
promissory note in the aggregate principal amount of up to $
On October 6, 2022, the Company issued a non-interest-bearing
promissory note in the aggregate principal amount of up to $
On November 16, 2022, the Company issued a non-interest-bearing
promissory note in the aggregate amount of up to $
On January 10, 2023, the Company issued a non-interest-bearing
promissory note in the aggregate amount of up to $
On February 14, 2023, the Company issued a non-interest-bearing
promissory note in the aggregate amount of up to $
On April 25, 2023, the Company issued a non-interest-bearing
promissory note in the principal amount of up to $
On June 26, 2023, the Company issued a non-interest-bearing
promissory note in the principal amount of up to $
On August 15, 2023, the Company issued a non-interest-bearing
promissory note in the principal amount of up to $
Until the consummation of a Business Combination, the Company will be using the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring, negotiating and consummating the Business Combination. The Company will need to raise additional capital through loans or additional investments from its Sponsor, shareholders, officers, directors, or third parties. The Company’s Sponsor, officers and directors may, but are not obligated to, loan the Company funds from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs. Accordingly, the Company may not be able to obtain additional financing. If the Company is 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.
In connection with the Company’s assessment of going concern considerations in accordance with the Financial Accounting Standards Board’s (“FASB’s”) Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that if the Company is unable to raise additional funds to alleviate liquidity needs as well as complete a Business Combination by May 12, 2024 then the Company will cease all operations except for the purpose of liquidating. The liquidity condition and the date for mandatory liquidation and subsequent dissolution raise substantial doubt about the Company’s ability to continue as a going concern one year from the date that these financial statements are issued. The Company intends to continue to complete a Business Combination before the mandatory liquidation date. These interim 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 the Company be unable to continue as a going concern.
10
EDOC ACQUISTION CORP.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
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 (“US GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the SEC on January 24, 2023, which contains the audited financial statements and notes thereto.
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 independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging the growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
This may make comparison of the Company’s unaudited condensed financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of cash accounts or mutual fund accounts in a financial institution, which, at times,
may exceed the Federal Depository Insurance Coverage limit of $
Use of Estimates
The preparation of unaudited condensed financial statements in conformity with US 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 during the reporting period and the reported amounts of expenses during the reporting period. One of the more significant accounting estimates included in these unaudited condensed financial statements is the determination of the fair value of the warrant liabilities as well as the fair value of the convertible notes. Such estimates may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates.
11
EDOC ACQUISTION CORP.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
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 had no cash equivalents as of September 30, 2023 and December 31, 2022.
Investment Held in Trust Account
As of September 30, 2023, all of the assets held in the Trust account were held in cash. As of December 31, 2022, substantially all of the assets held in the Trust Account were held in money market funds which are invested primarily in U.S. Treasury securities. When the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the condensed balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities are included in income from investments held in Trust Account in the accompanying condensed statements of operations. The estimated fair values of investments held in the Trust Account are determined using available market information. During the period January 1, 2023 to September 30, 2023 and January 1, 2022 to December 31, 2022, the Company did not withdraw any interest income from the Trust Account to pay its tax obligations.
On November 9, 2021, the Sponsor requested that
the Company extend the date by which the Company has to consummate a Business Combination from November 12, 2021 to February 12, 2022
(the “First Extension”). The First Extension was the first of up to two three-month extensions permitted under the Company’s
governing documents. On November 10, 2021, $
Fair Value Measurements
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the Financial Accounting Standards Board (“FASB”) ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheets.
Convertible Promissory Note
The Company accounts for its convertible promissory note under ASC 815, Derivatives and Hedging (“ASC 815”). Under 815-15-25, the election can be at the inception of a financial instrument to account for the instrument under the fair value option under ASC 825. The Company has made such election for its convertible promissory note. Using fair value option, the convertible promissory note is required to be recorded at its initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the note are recognized as non-cash change in the fair value of the convertible promissory note in the statements of operations. The fair value of the conversion feature of the note was valued utilizing the Monte Carlo model.
12
EDOC ACQUISTION CORP.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited
Derivative warrant liabilities
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued share purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
The Company accounts for its
Offering Costs Associated with IPO
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 incurred through the balance sheet date that are related to the Public Offering
and that were charged to shareholders’ equity upon the completion of the IPO. Accordingly, on December 31, 2020, offering costs
totaling $
Class A Ordinary Shares Subject to Possible Redemption
The Company accounts for its Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ deficit. The Company’s ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events.
On February 9, 2022, the Company held an extraordinary
general meeting pursuant to which the Company’s shareholders approved extending the date by which the Company had to complete a
Business Combination from February 12, 2022 to August 12, 2022. In connection with the approval of the extension, shareholders elected
to redeem an aggregate of
13
EDOC ACQUISTION CORP.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited
| Gross proceeds | $ | |||
| Less: | ||||
| Ordinary share issuance costs | ( | ) | ||
| Plus: | ||||
| Fair value adjustment of carrying value to redemption value | ||||
| Contingently redeemable ordinary shares at December 31, 2021 | $ | |||
| Less: | ||||
| Redemption of | ( | ) | ||
| Redemption of | ( | ) | ||
| Plus: | ||||
| Fair value adjustment of carrying value to redemption value | ||||
| Contingently redeemable ordinary shares at December 31, 2022 | ||||
| Less: | ||||
| Redemption of | ( | ) | ||
| Plus: | ||||
| Fair value adjustment of carrying value to redemption value | ||||
| Contingently redeemable ordinary shares at September 30, 2023 | $ |
Net Loss Per Ordinary Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net loss per ordinary share is computed by dividing the net loss by the weighted average number of ordinary shares outstanding for each of the periods. Accretion associated with the redeemable shares of Class A ordinary shares is excluded from loss per share as the redemption value approximates fair value.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Ordinary shares subject to possible redemption | ||||||||||||||||
| Numerator: | ||||||||||||||||
| Net loss allocable to Class A ordinary shares subject to possible redemption | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Denominator: | ||||||||||||||||
| $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Non-Redeemable Ordinary shares | ||||||||||||||||
| Numerator: | ||||||||||||||||
| Net loss allocable to Non-redeemable Class A and Class B ordinary shares not subject to redemption | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Denominator: | ||||||||||||||||
| $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
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.
14
EDOC ACQUISTION CORP.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s unaudited condensed financial statements 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. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2023 and December 31, 2022. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
There is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman federal income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s interim condensed financial statements. The Company’s management does not expect the total amount of unrecognized tax benefits will materially change over the next twelve months.
Recently Adopted Accounting Standards
In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. As a smaller reporting company, ASU 2020-06 is effective January 1, 2024, for fiscal years beginning after December 15, 2023, and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted ASU 2020-06 on January 1, 2021. Adoption of the ASU did not impact the Company’s financial position, results of operations or cash flows.
The Company’s management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying unaudited condensed financial statements.
NOTE 3. INITIAL PUBLIC OFFERING
Pursuant to the IPO, the Company sold
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the IPO, the
Sponsor and I-Bankers purchased an aggregate of
Each Private Unit is identical to the Units sold
in the IPO, except that warrants that are part of the Private Placement Units (“Private Warrants”) are not redeemable by the
Company so long as they are held by the original holders or their permitted transferees. In addition, for as long as the warrants that
are part of the Private Placement Units are held by I-Bankers or its designees or affiliates, they may not be exercised after
The Company’s Sponsor, officers, and directors
have agreed to (i) waive their redemption rights with respect to their founder shares, private shares, and public shares in connection
with the completion of the Company’s initial Business Combination, (ii) waive their redemption rights with respect to the founder
shares, private shares, and public shares in connection with a shareholder vote to approve an amendment to the Company’s amended
and restated certificate of incorporation (A) to modify the substance or timing of the Company’s obligation to redeem
15
EDOC ACQUISTION CORP.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
In September 2020, the Sponsor subscribed for
Promissory Notes—Related Party
In September 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 $
On August 25, 2022, the Company issued a promissory
note (the “August 2022 Note”) in the aggregate principal amount of up to $
On October 6, 2022, the Company issued a promissory
note in the principal amount of up to $
On November 16, 2022, the Company issued a promissory
note in the principal amount of up to $
On January 10, 2023, the Company issued a promissory
note (the “January 2023 Note”) in the principal amount of up to $
On February 14, 2023, the Company issued a non-interest-bearing
promissory note in the aggregate amount of up to $
16
EDOC ACQUISTION CORP.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited
On April 25, 2023, the Company issued a promissory
note (the “April 2023 Note”) in the principal amount of up to $
On June 26, 2023, the Company issued a promissory
note (the “June 2023 Note”) in the principal amount of up to $
On August 15, 2023, the Company issued a non-interest bearing promissory
note (the “August 2023 Note”) in the principal amount of up to $
Convertible Promissory Notes - Related Party Extension Loans and Working Capital Loans
On November 9, 2021,
On February 13, 2022, the Company issued a promissory
note (the “February 2022 Note”) in the principal amount of up to $
Changes in the estimated fair value of the November 2021 Note and the February 2022 Note were recognized as non-cash change in the fair value of the convertible promissory note in the statements of operations.
Administrative Support Agreement
The Company agreed, for a period commencing on
November 9, 2020, and ending upon completion of the Company’s Business Combination or its liquidation, to pay the Company’s
Sponsor a monthly fee of $
The Sponsor, executive officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on the Company’s behalf such as identifying potential target businesses and performing due diligence on suitable Business Combinations. The Company’s audit committee will review on a quarterly basis expenses incurred and all payments that were made to the Sponsor, officers, directors or their affiliates.
17
EDOC ACQUISTION CORP.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited
NOTE 6. COMMITMENTS AND CONTINGENCIES
Registration Rights
The holders of the founder shares, private placement warrants, and warrants that may be issued upon conversion of Working Capital Loans will have registration rights to require the Company to register a sale of any of its securities held by them pursuant to a registration rights agreement to be signed prior to or on the effective date of the IPO. These holders will be entitled to make up to three demands, excluding short form registration demands, that the Company registers such securities for sale under the Securities Act. In addition, these holders will have “piggy-back” registration rights to include their securities in other registration statements filed by the Company.
Underwriting Agreement
On November 12, 2020, the Company issued to the
underwriter (and/or its designees) (the “Representative”)
The underwriter (and/or its designees) agreed (i) to waive its redemption rights with respect to such shares in connection with the completion of the initial Business Combination and (ii) to waive its rights to liquidating distributions from the Trust Account with respect to such shares if the Company fails to complete its initial Business Combination within the Combination Period.
In addition, the Company issued to the Representative
a warrant (“Representative’s Warrant) to purchase up to
On November 12, 2020, the underwriters were paid
a cash underwriting discount of
Business Combination Marketing Agreement
The Company engaged the Representative as an
advisor in connection with its Business Combination to (i) assist the Company in preparing presentations for each potential Business
Combination; (ii) assist the Company in arranging meetings with its shareholders, including making calls directly to shareholders, to
discuss each potential Business Combination and each potential target’s attributes and providing regular market feedback, including
written status reports, from these meetings and participate in direct interaction with shareholders, in all cases to the extent legally
permissible; (iii) introduce the Company to potential investors to purchase the Company’s securities in connection with each potential
Business Combination; and assist the Company with the preparation of any press releases and filings related to each potential Business
Combination or target. Pursuant to the business combination marketing agreement, the Representative is not obligated to assist the Company
in identifying or evaluating possible acquisition candidates. Pursuant to the Company’s agreement with the Representative, an advisory
fee of
18
EDOC ACQUISTION CORP.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited
Open Market Purchases
Business Combination Agreement
On December 5, 2022, EDOC Acquisition Corp., a Cayman Islands exempted corporation (together with its successors, “Edoc”), entered into a Business Combination Agreement (the “Business Combination Agreement”) with Australian Oilseeds Investments Pty Ltd., an Australian proprietary company (the “AOI”), Australian Oilseeds Holdings Limited, upon execution of a joinder agreement to become party to the Business Combination Agreement (a “Joinder”), a to-be-formed Cayman Islands exempted company (“Pubco”), AOI Merger Sub, upon execution of a Joinder, a to-be-formed Cayman Islands exempted company and a wholly-owned subsidiary of Pubco (“Merger Sub”), American Physicians LLC, a Delaware limited liability company (“Purchaser Representative”), in the capacity as the Purchaser Representative thereunder, Gary Seaton, in his capacity as the representative for the Sellers (as defined below) in accordance with the terms and conditions of the Business Combination Agreement (the “Seller Representative”) and each of the holders of AOI’s outstanding capital shares named on Annex I thereto (the “Primary Sellers”), as amended from time to time to include subsequent parties that execute and deliver to Edoc, Pubco and AOI a Joinder (the “Joining Sellers”), and the holders of AOI’s outstanding capital shares who are bound by the provisions of the Business Combination Agreement pursuant the drag-along rights set forth in AOI’s memorandum and articles of association (the “Drag-Along Sellers”, and collectively with the Joining Sellers, the “Sellers”).
Pursuant to the Business Combination Agreement, subject to the terms and conditions set forth therein, at the closing of the transactions contemplated by the Business Combination Agreement (the “Closing”), (a) Edoc will merge with and into Merger Sub, with Edoc continuing as the surviving entity (the “Merger”), and with holders of Edoc securities receiving substantially identical securities of Pubco, and (b) immediately prior to the Merger, Pubco will acquire all of the issued and outstanding ordinary shares of AOI (the “Purchased Shares”) from the Sellers in exchange for ordinary shares of Pubco, with AOI becoming a wholly-owned subsidiary of Pubco (the “Share Exchange”, and together with the Merger and the other transactions contemplated by the Business Combination Agreement, the “Transactions”).
On March 31, 2023, the Company, AOI, Pubco, Merger
Sub, and the Purchaser Representative entered into that certain First Amendment to the Business Combination Agreement (the “First
Amendment”), pursuant to which the Business Combination Agreement was amended to add, as a closing condition, that upon the closing
of the transactions contemplated by the Business Combination Agreement, the Company shall have cash and cash equivalents, including fund
remaining in the Company’s trust account (after giving effect to the completion and payment of the redemption) and the proceeds
of any PIPE Investment, prior to giving effect to the payment of the Company’s unpaid expenses or liabilities, of at least equal
to $
19
EDOC ACQUISTION CORP.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited
Securities Purchase Agreement
On August 23, 2023, Pubco executed a Securities Purchase Agreement (the
“Securities Purchase Agreement”) with AOI, Edoc, and Arena Investors, LP, a Delaware limited partnership (the “Purchaser”).
Pursuant to the terms and conditions of the Securities Purchase Agreement, the Purchaser agreed to purchase redeemable debentures (the
“Debentures”) and warrants (the “Warrants”, and together with the Securities Purchase Agreement and the Debentures,
the “Transaction Documents”) of Pubco for the aggregate subscription amount of up to $
| (iv) | The first closing amount of $ |
| (v) | The second closing amount of $ |
| (vi) | The third closing amount of $ |
Each Debenture will mature on the date that is
eighteen (18) months (the “Maturity Date”) from the First Closing Date and is convertible at any time at the holder’s
option at a conversion price of
As additional consideration for the purchase of
the Debentures, Pubco will issue to the Purchaser, simultaneously with the issuance of each debenture on the applicable closing date,
a warrant to purchase Pubco Ordinary Shares (such shares, the “Warrant Shares”), whereby each Warrant shall provide the Purchaser
the right to purchase the number of Warrant Shares equal to
Interest shall accrue on the outstanding principal
amount of the Debentures from and including the original issue date at the rate of zero percent (
The Debentures will be secured by (i) a first
priority lien on all tangible and intangible assets owned or acquired by Pubco, (ii) a guarantee by Pubco, and (iii) a guarantee by each
of Pubco’ direct and indirect subsidiaries and will be subordinate to Pubco’s $
20
EDOC ACQUISTION CORP.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited
NOTE 7. WARRANTS AND RIGHTS
Warrants — Each whole warrant
entitles the holder to purchase one share of the Company’s Class A ordinary shares at a price of $
The warrants will become exercisable on the later
of
In no event will the Company be required to net cash settle any warrant. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
The Company will not be obligated to deliver any Class A ordinary shares pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the Class A ordinary shares underlying the warrants is then effective and a prospectus is current. No warrant will be exercisable, and the Company will not be obligated to issue Class A ordinary shares upon exercise of a warrant unless Class A ordinary shares issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants. In no event will the Company be required to net cash settle any warrant. In the event that a registration statement is not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely for the share of Class A ordinary shares underlying such unit.
The Company may call the warrants for redemption
(excluding the private warrants, and any outstanding Representative’s Warrants, and any warrants underlying units issued to the
Sponsor, initial shareholders, officers, directors or their affiliates in payment of Working Capital Loans made to the Company), in whole
and not in part, at a price of $
| ● | at any time while the warrants are exercisable, | |
| ● | upon not less than 30 days’ prior written notice of redemption to each warrant holder, | |
| ● | if, and only if, the reported last sale price of the Class A ordinary shares equals or exceeds $ | |
| ● | if, and only if, there is a current registration statement in effect with respect to the issuance of the Class A ordinary shares underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day until the date of redemption. |
21
EDOC ACQUISTION CORP.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited
If the Company calls the warrants for redemption as described above, the management will have the option to require any holder that wishes to exercise its warrant to do so on a “cashless basis.” If the management takes advantage of this option, all holders of warrants would pay the exercise price by surrendering their warrants for that number of shares of Class A ordinary shares equal to the quotient obtained by dividing (x) the product of the number of shares of Class A ordinary shares underlying the warrants, multiplied by the excess of the “fair market value” (defined below) over the exercise price of the warrants by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of the Class A ordinary shares for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants.
Rights — Except in cases where the Company is not the surviving company in a Business Combination, each holder of a right will automatically receive one-tenth (1/10) of a share of Class A ordinary shares upon consummation of the initial Business Combination, even if the holder of a right converted all shares held by him, her or it in connection with the initial Business Combination or an amendment to the Company’s memorandum and articles of association with respect to its pre-business combination activities. In the event that the Company will not be the surviving company upon completion of the initial Business Combination, each holder of a right will be required to affirmatively convert his, her or its rights in order to receive the one-tenth (1/10) of a share of Class A ordinary shares underlying each right upon consummation of the Business Combination. No additional consideration will be required to be paid by a holder of rights in order to receive his, her or its additional share of Class A ordinary shares upon consummation of an initial Business Combination. 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 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 share of Class A ordinary shares will receive in the transaction on an as-converted into Class A ordinary shares basis.
The Company will not issue fractional shares in connection with an exchange of rights. Fractional shares will either be rounded down to the nearest whole share or otherwise addressed in accordance with the applicable provisions of the Cayman Islands law. As a result, the holders of the rights must hold rights in multiples of 10 in order to receive shares for all of the holders’ rights upon closing of a Business Combination. If the Company is unable to complete an initial Business Combination within the required time 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 an initial Business Combination. Additionally, in no event will the Company be required to net cash settle the rights. Accordingly, the rights may expire worthless.
NOTE 8. SHAREHOLDERS’ DEFICIT
Preferred Shares — The Company
is authorized to issue a total of
Class A Ordinary Shares —
The Company is authorized to issue a total of
Class B Ordinary Shares —
The Company is authorized to issue a total of
22
EDOC ACQUISTION CORP.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited
The Class B ordinary share will automatically
convert into the Company’s Class A ordinary shares at the time of its initial Business Combination on a one-for-one basis, subject
to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further adjustment as
provided herein. In the case that additional Class A ordinary shares, or equity-linked securities, are issued or deemed issued in excess
of the amounts offered in the IPO and related to the closing of the initial Business Combination, the ratio at which the Class B ordinary
share shall convert into Class A ordinary shares will be adjusted (unless the holders of a majority of the outstanding Class B ordinary
shares agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of Class A ordinary shares
issuable upon conversion of the Class B ordinary share will equal, in the aggregate, on an as-converted basis,
Holders of the Class A ordinary shares and the holder of the Class B ordinary share will vote together as a single class on all matters submitted to a vote of the Company’s shareholders, with each share of ordinary shares entitling the holder to one vote.
NOTE 9. FAIR VALUE MEASUREMENTS
Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 820 “Fair Value Measurements and Disclosures” (“ASC 820”) defines fair value, the methods used to measure fair value and the expanded disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between the buyer and the seller at the measurement date. In determining fair value, the valuation techniques consistent with the market approach, income approach and cost approach shall be used to measure fair value. ASC 820 establishes a fair value hierarchy for inputs, which represent the assumptions used by the buyer and seller in pricing the asset or liability. These inputs are further defined as observable and unobservable inputs. Observable inputs are those that buyer and seller would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the inputs that the buyer and seller would use in pricing the asset or liability developed based on the best information available in the circumstances.
The fair value hierarchy is categorized into three levels based on the inputs as follows:
Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment.
Level 2 – Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets and liabilities, or (iv) inputs that are derived principally from or corroborated by market through correlation or other means.
Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
The fair value of the Company’s certain assets and liabilities, which qualify as financial instruments under ASC 820, approximates the carrying amounts represented in the balance sheets as of September 30, 2023 and December 31, 2022. The fair values of cash and cash equivalents, prepaid assets, accounts payable and accrued expenses are estimated to approximate the carrying values as of September 30, 2023 and December 31, 2022, due to the short maturities of such instruments.
23
EDOC ACQUISTION CORP.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited
| Description: | Level | September 30, 2023 | Level | December 31, 2022 | ||||||||||
| Assets: | ||||||||||||||
| U.S. Money Market Funds Held in Trust Account | 1 | $ | 1 | $ | ||||||||||
| Liabilities: | ||||||||||||||
| Warrant liability—Private Warrants | 3 | 3 | ||||||||||||
| Warrant liability—Representative’s Warrants | 3 | 3 | ||||||||||||
| Convertible Promissory Notes | 3 | 3 | ||||||||||||
Investment Held in Trust Account
As of September 30, 2023 and December 31, 2022,
investments in the Company’s Trust Account consisted of $
There were no transfers between Levels 1, 2 or 3 during the period ended September 30, 2023 and December 31, 2022. Level 1 instruments include investments in money markets and Treasury securities. The Company uses inputs such as actual trade data, benchmark yields, quoted market prices from dealers or brokers, and other similar sources to determine the fair value of its investments.
Warrant Liability
The Private Warrants and Representative’s Warrants are accounted for as liabilities pursuant to ASC 815-40 and are measured at fair value as of each reporting period. Changes in the fair value of the Warrants are recorded in the statements of operations each period.
The Private Warrants and Representative’s Warrants were valued using a Montel Carlo simulation model, which is considered to be a Level 3 fair value measurement. Inherent in an options pricing model are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its ordinary shares based on historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero.
There were no transfers between Levels 1, 2 or 3 during the period ended September 30, 2023 and December 31, 2022.
24
EDOC ACQUISTION CORP.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited
| September 30, 2023 | December 31, 2022 | |||||||
| Exercise price | $ | $ | ||||||
| Share price | $ | $ | ||||||
| Volatility | % | |||||||
| Expected life | ||||||||
| Risk-free rate | % | % | ||||||
| Dividend yield | % | % | ||||||
| Private Warrants | Representative’s Warrants | Warrant Liability | ||||||||||
| Fair value as of December 31, 2022 | $ | $ | $ | |||||||||
| Change in fair value (1) | ( | ) | ( | ) | ( | ) | ||||||
| Fair value as of March 31, 2023 | $ | $ | $ | |||||||||
| Change in fair value (1) | ( | ) | ( | ) | ||||||||
| Fair value as of June 30, 2023 | $ | $ | $ | |||||||||
| Change in fair value (1) | ||||||||||||
| Fair value as of September 30, 2023 | $ | $ | $ | |||||||||
| (1) |
Convertible Promissory Notes
| September 30, 2023 | December 31, 2022 | |||||||
| Risk-free interest rate | % | % | ||||||
| Time to Expiration (in years) | ||||||||
| Expected volatility | % | % | ||||||
| Dividend yield | % | % | ||||||
| Stock Price | $ | $ | ||||||
| Probability of transaction | % | % | ||||||
25
EDOC ACQUISTION CORP.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited
| Fair value as of December 31, 2021 | $ | |||
| Proceeds received through Convertible Promissory Note | ||||
| Interest accrued | ||||
| Proceeds in excess of fair value | ( | ) | ||
| Change in fair value | ( | ) | ||
| Fair value as of December 31, 2022 | ||||
| Interest accrued at | ||||
| Change in fair value | ||||
| Fair value as of March 31, 2023 | $ | |||
| Interest accrued at | ||||
| Change in fair value | ||||
| Fair value as of June 30, 2023 | $ | |||
| Interest accrued at | ||||
| Change in fair value | ( | ) | ||
| Fair value as of September 30, 2023 | $ |
There were no transfers in or out of Level 3 from other levels in the fair value hierarchy during the period ended September 30, 2023 for the Convertible Promissory Note.
NOTE 10. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the interim unaudited condensed financial statements were issued. Based upon this review, other than stated below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the interim unaudited condensed financial statements.
On October 18, 2023, the Company paid an extension
payment of $
On November 6, 2023, the Company held an extraordinary
general meeting in lieu of an annual meeting (the “Sixth Extension Meeting”) to amend the Company’s Amended and restated
memorandum and articles of association (the “Charter Amendment”) to extend the date by which the Company has to consummate
an initial business combination from November 12, 2023 to May 12, 2024 (“the Sixth Extension”). In connection with the Sixth
Extension Meeting, shareholders holding
On November 8, 2023, the Company issued a promissory
note in the aggregate amount of up to $
November 2023 Nasdaq Notice
On November 10, 2023, we received the Second Nasdaq Notice from the Staff indicating that the Company failed to comply with Nasdaq IM-5101-2, which requires that a special purpose acquisition company must complete one or more business combinations within 36 months of the effectiveness of its IPO registration statement.
Additionally, as stated above, on September 25, 2023, Nasdaq notified the Company that it did not comply with the Minimum Public Holders Requirement. As of the filing date of this quarterly report on the Form 10-Q, we have not regained compliance with the Minimum Public Holders Requirement. Pursuant to the November 2023 Nasdaq Notice, this deficiency serves as an additional basis for delisting the Company’s securities from Nasdaq.
Pursuant to the November 2023 Nasdaq Notice, unless the Company timely requests a hearing before the Panel, the Company’s securities would be subject to suspension and delisting from The Nasdaq Capital Market at the opening of business on November 21, 2023, and a Form 25-NSE will be filed with the Securities and Exchange Commission, which will remove the Company’s securities from listing and registration on Nasdaq. We submitted a hearing request before the Nasdaq Hearings Panel (the “Panel”) on November 17, 2023, and a hearing has been scheduled for February 22, 2024.
On November 28, 2023, the
Company issued a promissory note in the principal amount of up to $
26
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this Report including, without limitation, statements under this “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward- looking statements. When used in this Report, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or our management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of our management, as well as assumptions made by, and information currently available our management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto included in this Report under “Item 1 Financial Statements”. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Overview
We are a blank check company incorporated on August 20, 2020 as a Cayman Islands corporation and formed for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation with, purchasing all or substantially all of the assets of, entering into contractual arrangements with, or engaging in any other similar Business Combination with one or more businesses (a “Business Combination”). We consummated our initial public offering on November 12, 2020 and are currently in the process of locating suitable targets for our Business Combination. We intend to use the cash proceeds from our Public Offering and the Private Placement described below as well as additional issuances, if any, of our capital shares, debt or a combination of cash, shares and debt to complete the Business Combination.
We expect to incur significant costs in the pursuit of our initial Business Combination. We cannot assure you that our plans to raise capital or to complete our initial Business Combination will be successful.
We completed the sale of 9,000,000 units (the “Units” and, with respect to the shares of ordinary shares included in the Units being offered, the “Public Shares”) at $10.00 per Unit on November 12, 2020. Simultaneous with the closing of the Public Offering, we completed the sale of 479,000 private units at a price of $10.00 per unit in a private placement. Of the 479,000 private units, 65,000 units, or the “representative units” were purchased by I-Banker (and/or its designees).
In addition, our sponsor agreed, pursuant to a letter agreement to purchase up to 3,750,000 of our rights in the open market at a market price not to exceed $0.20 per right. I-Bankers also agreed to purchase up to 1,250,000 of our rights in the open market at a market price not to exceed $0.20 per right.
27
On November 9, 2021, our board of directors approved the first extension of the date by which we have to consummate a Business Combination from November 12, 2021, to February 12, 2022. In connection with the extension, the Sponsor deposited into the Trust Account $0.10 for each of the 9,000,000 shares issued in the Public Offering, for a total of $900,000. We issued the Sponsor an interest bearing unsecured promissory note in the principal amount of $900,000 which is payable by us upon the earlier of the consummation of the Business Combination or our liquidation on or before February 12, 2023 (unless such date is extended by our board of directors). Simple interest will accrue on the unpaid principal balance of the Note at the rate of 4% per annum based on 365 days a year. The Note may be repaid in cash or convertible into units consisting of one ordinary share, one right exchangeable into one-tenth of one ordinary share, and one warrant exercisable for one-half of one ordinary share at $11.50 per share equal to (x) the portion of the principal amount of and accrued interest under the Note being converted divided by (y) $10.00 rounded up to the nearest whole number of units.
On February 9, 2022, we held an extraordinary general meeting pursuant to which our shareholders approved extending the date by which the Company had to complete a business combination from February 12, 2022 to August 12, 2022. In connection with the approval of the extension, shareholders elected to redeem an aggregate of 6,326,758 Ordinary Shares. As a result, an aggregate of $64,996,858 (or approximately ($10.27 per share) was released from the Trust Account to pay such shareholders.
On August 12, 2022, the Company held an extraordinary general meeting pursuant to which the Company’s shareholders approved extending the date by which the Company has to complete a business combination from August 12, 2022 to February 12, 2023. In connection with the approval of the extension, shareholders elected to redeem an aggregate of 646,617 Ordinary Shares. As a result, an aggregate of $6,660,150 (or approximately $10.30 per share) was released from the Trust Account to pay such shareholders. In connection with the extension, the Sponsor deposited into the Trust Account approximately $0.10 for each of the 2,026,625 shares issued in the Public Offering, for a total of $202,460, and intends to deposit approximately $0.15 for each such share for a total of $303,994 (plus any applicable interest) during the week of January 23, 2023. On August 25, 2022, the Company issued a non-interest-bearing promissory note (the “August 2022 Note”) in the aggregate principal amount of up to $202,460 to the Sponsor. The principal amount of the August 2022 Note may be drawn down in three equal amounts and the balance of the August 2022 Note is payable by the Company on the earlier of the consummation of the Business Combination or the date of the liquidation of the Company. As of September 30, 2023, $202,460 was outstanding under the August 2022 Note.
On October 6, 2022, the Company issued a non-interest-bearing promissory note (the “October 2022 Note”) in the principal amount of up to $500,000 to the Sponsor. The principal balance of the October 2022 Note is payable by the Company on the earlier of the consummation of the Business Combination or the date of the liquidation of the Company. As of September 30, 2023, $500,000 was outstanding under the October 2022 Note.
28
On November 16, 2022, the Company issued a non-interest-bearing promissory note (the “November 2022 Note”) in the principal amount of up to $303,994 to our Sponsor, pursuant to which such funds would be deposited into the trust account for each Public Share that was not redeemed in connection with the Company’s termination date from August 12, 2022 to February 12, 2023. The principal amount of the November 2022 Note may be drawn down in three equal amounts and the balance of the November 2022 Note is payable by the Company on the earlier of the consummation of the Business Combination or the date of the liquidation of the Company. As of September 30, 2023, there was $303,994 outstanding under the November 2022 Note.
On January 10, 2023, the Company issued a non-interest-bearing promissory note (the “January 2023 Note”) in the aggregate amount of up to $450,000 to the Sponsor. The principal amount of the January 2023 Note is payable by the Company on the earlier of the consummation of the Business Combination or the date of the liquidation of the Company. As of September 30, 2023, $276,006 was drawn on the note.
On February 9, 2023, we held an extraordinary general meeting in lieu of an annual meeting pursuant to which our shareholders approved extending the date by which the Company had to complete a business combination from February 12, 2023 to August 12, 2023. In connection with the approval of the extension, shareholders elected to redeem an aggregate of 1,172,247 Ordinary Shares. As a result, an aggregate of $12,554,008 (or approximately ($10.71 per share) was released from the Trust Account to pay such shareholders.
On February 14, 2023, the Company issued a non-interest-bearing promissory note (the “February 2023 Note”) in the aggregate amount of up to $256,313 to the Sponsor. The principal amount of the February 2023 Note is payable by the Company on the earlier of the consummation of the Business Combination or the date of the liquidation of the Company. As of September 30, 2023, $213,595 was drawn on the note.
On April 25, 2023, the Company issued a non-interest-bearing promissory note (the “April 2023 Note”) in the principal amount of up to $175,000 to the Sponsor for working capital purposes. The Note bears no interest and is due and payable upon the earlier to occur of (i) the date on which the Company consummates its initial business combination and (ii) the date that the winding up of the Company is effective. As of September 30, 2023 there was $175,000 outstanding on the April 2023 Note.
On June 26, 2023, the Company issued a non-interest-bearing promissory note (the “June 2023 Note”) in the principal amount of up to $250,000 to the Sponsor for working capital purposes. The Note bears no interest and is due and payable upon the earlier to occur of (i) the date on which the Company consummates its initial business combination and (ii) the date that the winding up of the Company is effective. As of September 30, 2023 there was $145,000 outstanding on the June 2023 Note.
On August 10, 2023, the Company held an extraordinary general meeting of shareholders (the “Fifth Extension Meeting”) to amend the Company’s Amended and restated memorandum and articles of association (the “Charter Amendment”) to extend the date by which the Company has to consummate an initial business combination from August 12, 2023 to November 12, 2023 (“the Fifth Extension”). In connection with the Fifth Extension Meeting, shareholders holding 21,501 shares of the Company’s ordinary shares exercised their right to redeem such shares. As a result, an aggregate of $241,574 (or approximately $11.23 per shares) was released from the Trust Account to pay such shareholders. In connection with the Fifth Extension, an aggregate of $83,288 (approximately $0.10 per remaining share) was added to the Trust Account as of September 30, 2023. As of October 20, 2023, an aggregate of $124,932 (or approximately $0.15 per share) was added to the Trust Account in connection with the Fifth Extension.
On August 15, 2023, the Company issued a non-interest bearing promissory note (the “August 2023 Note”) in the principal amount of up to $124,932 to the Sponsor pursuant to which the Extension Funds will be deposited into the Company’s Trust Account for each unredeemed Class A ordinary share of the Company that was not redeemed in connection with the extension of the Company’s termination date from August 12, 2023 to May 12, 2024. The Note bears no interest and is due and payable upon the earlier to occur of (i) the date on which the Company consummates its initial business combination and (ii) the date that the winding up of the Company is effective As of September 30, 2023, $83,288 was drawn on the note. As of November 15, 2023, $124,932 was drawn on the note.
On November 6, 2023, the Company held an extraordinary general meeting in lieu of an annual meeting (the “Sixth Extension Meeting”) to amend the Company’s Amended and restated memorandum and articles of association (the “Charter Amendment”) to extend the date by which the Company has to consummate an initial business combination from November 12, 2023 to May 12, 2024 (“the Sixth Extension”). In connection with the Sixth Extension Meeting, shareholders holding 16,670 shares of the Company’s ordinary shares exercised their right to redeem such shares. As a result, an aggregate of $191,551 (or approximately $11.49 per shares) was released from the Trust Account to pay such shareholders.
As of September 30, 2023, we had cash held in the Trust account for the benefit of the Company’s public shareholders of $9,494,965 (including $400,033 of interest earned since the IPO, net of $271,468 of interest paid for share redemptions). The trust fund account is invested in interest-bearing demand deposit account and the income earned on in the account is also for the benefit of our public shareholders.
29
Our management has broad discretion with respect to the specific application of the net proceeds of IPO and the Private Placement, although substantially all of the net proceeds are intended to be applied generally towards consummating a business combination.
September 2023 Nasdaq Notice
On September 25, 2023, we received the September 2023 Nasdaq Notice from the staff (the “Staff”) of the Listing Qualifications Department of the Nasdaq Stock Market (“Nasdaq”) notifying us that we are not in compliance with Nasdaq Listing Rule 5550(a)(3) (the “Minimum Public Holders Requirement”), which requires the Company to maintain at least 300 total public holders for continued listing on the Nasdaq Capital Market.
In accordance with Nasdaq rules, we had 45 calendar days, or until November 9, 2023, to submit a plan to regain compliance with the Minimum Public Holders Requirement. As of the filing date of this quarterly report on the Form 10-Q, we have not regained compliance with the Minimum Public Holders Requirement. We submitted a compliance plan on November 9, 2023.
November 2023 Nasdaq Notice
On November 10, 2023, we received the November 2023 Nasdaq Notice from the Staff indicating that the Company failed to comply with Nasdaq IM-5101-2, which requires that a special purpose acquisition company must complete one or more business combinations within 36 months of the effectiveness of its IPO registration statement.
Additionally, as stated above, on September 25, 2023, Nasdaq notified the Company that it did not comply with the Minimum Public Holders Requirement. As of the filing date of this quarterly report on the Form 10-Q, we have not regained compliance with the Minimum Public Holders Requirement. Pursuant to the November 2023 Nasdaq Notice, this deficiency serves as an additional basis for delisting the Company’s securities from Nasdaq.
Pursuant to the November 2023 Nasdaq Notice, unless the Company timely requests a hearing before the Panel, the Company’s securities would be subject to suspension and delisting from The Nasdaq Capital Market at the opening of business on November 21, 2023, and a Form 25-NSE will be filed with the Securities and Exchange Commission, which will remove the Company’s securities from listing and registration on Nasdaq. We submitted a hearing request before the Nasdaq Hearings Panel (the “Panel”) on November 17, 2023, and a hearing has been scheduled for February 22, 2024.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational activities, those necessary to prepare for our Initial Public Offering and identifying a target company for our initial Business Combination. We do not expect to generate any operating revenues until after completion of our initial Business Combination. We generate non-operating income in the form of interest income on cash and cash equivalents 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 expenses as we conduct due diligence on prospective Business Combination candidates.
For the three months ended September 30, 2023, we had a net loss of $252,471 consisting of formation and operating costs of $352,511, accrued interest on promissory note of $9,074 and change in fair value in warrant liabilities of $7,664 offset by a change in fair value in convertible promissory note of $23,969 and interest earned on marketable securities held in Trust Account of $92,809.
For the nine months ended September 30, 2023, we had a net loss of $958,754 consisting of formation and operating costs of $1,160,969, accrued interest on promissory note of $26,926, change in fair value of promissory note of $106,710, offset by change in the fair value of warrant liabilities of $8,887 and interest earned on marketable securities held in Trust Account of $326,964.
For the three months ended September 30, 2022, we had a net loss of $230,123 consisting of formation and operating costs of $334,462, accrued interest on promissory note of $9,074, transaction cost of shares to be transferred to backstop investors of $783,966, offset by change in fair value in warrant liabilities of $4,161, change in fair value in convertible promissory note of $791,881 and interest earned on marketable securities held in Trust Account of $101,337.
For the nine months ended September 30, 2022, we had a net loss of $6,645,020 consisting of formation and operating costs of $1,995,508, accrued interest on promissory note of $27,028, transaction cost of shares transferred to backstop investors of $5,739,976, offset by change in fair value in warrant liabilities of $188,194, change in fair value in convertible promissory note of $792,773 and interest earned on marketable securities held in Trust Account of $136,525.
30
Proposed Business Combination
On December 5, 2022, EDOC Acquisition Corp., a Cayman Islands exempted corporation (together with its successors, “Edoc”), entered into a Business Combination Agreement (the “Business Combination Agreement”) with Australian Oilseeds Investments Pty Ltd., an Australian proprietary company (the “AOI”), Australian Oilseeds Holdings Limited, upon execution of a joinder agreement to become party to the Business Combination Agreement (a “Joinder”), a to-be-formed Cayman Islands exempted company (“Pubco”), AOI Merger Sub, upon execution of a Joinder, a to-be-formed Cayman Islands exempted company and a wholly-owned subsidiary of Pubco (“Merger Sub”), American Physicians LLC, a Delaware limited liability company (“Purchaser Representative”), in the capacity as the Purchaser Representative thereunder, Gary Seaton, in his capacity as the representative for the Sellers (as defined below) in accordance with the terms and conditions of the Business Combination Agreement (the “Seller Representative”) and each of the holders of AOI’s outstanding capital shares named on Annex I thereto (the “Primary Sellers”), as amended from time to time to include subsequent parties that execute and deliver to Edoc, Pubco and AOI a Joinder (the “Joining Sellers”), and the holders of AOI’s outstanding capital shares who are bound by the provisions of the Business Combination Agreement pursuant the drag-along rights set forth in AOI’s memorandum and articles of association (the “Drag-Along Sellers”, and collectively with the Joining Sellers, the “Sellers”).
Pursuant to the Business Combination Agreement, subject to the terms and conditions set forth therein, at the closing of the transactions contemplated by the Business Combination Agreement (the “Closing”), (a) Edoc will merge with and into Merger Sub, with Edoc continuing as the surviving entity (the “Merger”), and with holders of Edoc securities receiving substantially identical securities of Pubco, and (b) immediately prior to the Merger, Pubco will acquire all of the issued and outstanding ordinary shares of AOI (the “Purchased Shares”) from the Sellers in exchange for ordinary shares of Pubco, with AOI becoming a wholly-owned subsidiary of Pubco (the “Share Exchange”, and together with the Merger and the other transactions contemplated by the Business Combination Agreement, the “Transactions”).
The total consideration to be paid by Pubco to the Sellers for the Purchased Shares shall be an aggregate number of Pubco ordinary shares (the “Exchange Shares”) with an aggregate value (the “Exchange Consideration”) equal to, without duplication, (i) $190,000,000, plus (or minus if negative) (ii) AOI’s net working capital less a target net working capital of $4,000,000, minus (iii) the aggregate amount of any outstanding indebtedness, net of cash and cash equivalents, of AOI and its subsidiaries, and minus (iv) the amount of any unpaid transaction expenses of AOI, with each Pubco ordinary share to be issued to the Sellers valued at $10.00.
On March 31, 2023, the Company, AOI, Pubco, Merger Sub, and the Purchaser Representative entered into that certain First Amendment to the Business Combination Agreement (the “First Amendment”), pursuant to which the Business Combination Agreement was amended to add, as a closing condition, that upon the closing of the transactions contemplated by the Business Combination Agreement, the Company shall have cash and cash equivalents, including fund remaining in the Company’s trust account (after giving effect to the completion and payment of the redemption) and the proceeds of any PIPE Investment, prior to giving effect to the payment of the Company’s unpaid expenses or liabilities, of at least equal to $10,000,000.
Securities Purchase Agreement
On August 23, 2023, Pubco executed a Securities Purchase Agreement (the “Securities Purchase Agreement”) with AOI, Edoc, and Arena Investors, LP, a Delaware limited partnership (the “Purchaser”). Pursuant to the terms and conditions of the Securities Purchase Agreement, the Purchaser agreed to purchase redeemable debentures (the “Debentures”) and warrants (the “Warrants”, and together with the Securities Purchase Agreement and the Debentures, the “Transaction Documents”) of Pubco for the aggregate subscription amount of up to $7,000,000, at and after the closing of the business combination between Edoc, AOI, and Pubco. The Securities Purchase Agreement contemplates funding of the investment (the “Investment” or the “PIPE”) across three tranches:
| (vii) | The first closing amount of $2,000,000 will be invested upon the Closing of the Business Combination, which will be the first closing date of the Investment (the “First Closing Date”), in exchange for a Debenture to be issued by Pubco for the principal amount of $2,222,222, reflecting that such Debenture is to be issued with a 10% original issue discount to the face amount thereof; |
| (viii) | The second closing amount of $2,500,000 will be invested on the 60th trading day following the First Registration Statement Effectiveness Date filed by Pubco after the closing of the Business Combination, which will be the second closing date of the Investment (the “Second Closing Date”), in exchange for a Debenture to be issued by Pubco for the principal amount of $2,777,777, reflecting that such Debenture is to be issued with a 10% original issue discount to the face amount thereof provided that all conditions to the Purchaser’s obligation set forth in Section 3.2(a) of the Securities Purchase Agreement and Pubco’s obligation set forth in Section 3.2(b) have been satisfied or waived on or prior to the Second Closing Date and the respective obligations to consummate the Second Closing shall be contingent on the satisfaction of the following additional considerations, unless the parties mutually agree to waive any such condition: (1) the 30-Day VWAP of Pubco’s ordinary shares (the “Pubco Ordinary Shares”) as of the last trading day immediately preceding the 60th calendar day following the First Registration Effectiveness Date is greater than $3.00 per share, and (2) the median daily turnover of the Pubco Ordinary Shares on Pubco’s principal trading market for the thirty (30) consecutive trading period ended as of the last trading day immediately preceding the 60th calendar day following the First Registration Statement Effectiveness Date is greater than $200,000; and |
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| (ix) | The third closing amount of $2,500,000 will be invested on the 60th trading day following the Second Registration Statement Effectiveness Date filed by Pubco, which will be the third closing date of the Investment (the “Third Closing Date”), in exchange for a Debenture to be issued by Pubco for the principal amount of $2,777,777, reflecting that such Debenture is to be issued with a 10% original issue discount to the face amount thereof provided that all conditions to the PIPE Investor’s obligations set forth in Section 3.3(a) of the Securities Purchase Agreement and Pubco’s obligation set forth in Section 3.3(b) have been satisfied or waived on or prior to the Third Closing Date and the respective obligations to consummate the Third Closing shall be contingent on the satisfaction of the following additional conditions, unless the Parties mutually agree to waive any such condition: (1) the 30-Day VWAP of Pubco’s ordinary shares (the “Pubco Ordinary Shares”) as of the last trading day immediately preceding the 60th calendar day following the Second Registration Effectiveness Date is greater than $3.00 per share, and (2) the median daily turnover of the Pubco Ordinary Shares on Pubco’s principal trading market for the thirty (30) consecutive trading period ended as of the last trading day immediately preceding the 60th calendar day following the Second Registration Statement Effectiveness Date is greater than $200,000. |
Each Debenture will mature on the date that is eighteen (18) months (the “Maturity Date”) from the First Closing Date and is convertible at any time at the holder’s option at a conversion price of 92.5% of the average of the three (3) lowest daily VWAP of the Pubco Ordinary Shares for the ten (10) consecutive Trading Day period ending on such Conversion Date, subject to adjustment and certain floor prices for each tranche of the Debenture (the “Conversion Price”).
As additional consideration for the purchase of the Debentures, Pubco will issue to the Purchaser, simultaneously with the issuance of each debenture on the applicable closing date, a warrant to purchase Pubco Ordinary Shares (such shares, the “Warrant Shares”), whereby each Warrant shall provide the Purchaser the right to purchase the number of Warrant Shares equal to 25% of the total principal amount of the related Debenture purchased by the Purchase on the applicable closing date at an initial exercise price of the Conversion Price, subject to adjustment upon the occurrence of certain events as set forth in the Warrant. The Warrants are exercisable for a period of five years and will be subject to cashless exercise if the applicable registration statements are not declared effective within 6 months of Pubco’s initial drawdown.
Interest shall accrue on the outstanding principal amount of the Debentures from and including the original issue date at the rate of zero percent (0%) per annum, or upon the occurrence and during the continuance of an event of default, two percent (2%). In addition, if at any time after the Maturity Date any portion of the Debentures remains outstanding, the Purchaser may elect to convert all or any portion of the amount outstanding under the Debentures into Pubco Ordinary Shares at the Conversion Price.
The Debentures will be secured by (i) a first priority lien on all tangible and intangible assets owned or acquired by Pubco, (ii) a guarantee by Pubco, and (iii) a guarantee by each of Pubco’ direct and indirect subsidiaries and will be subordinate to Pubco’s $14 million note provided by the Commonwealth Bank of Australia.
Liquidity and Capital Resources
As of September 30, 2023, we had cash outside the Trust Account of $11,812 available for working capital needs. All remaining cash held in the Trust Account is generally unavailable for our use, prior to an initial Business Combination, and is restricted for use either in a Business Combination or to redeem ordinary shares. As of September 30, 2023 and December 31, 2022, none of the amount in the Trust Account was available to be withdrawn as described above.
For the nine months ended September 30, 2023, cash used in operating activities was $554,368. Net loss of $958,754 was affected by accrued interest on promissory note of $26,926, change in fair value in warrant liabilities of $8,887, change in fair value in convertible promissory note of $106,710 and interest earned on marketable securities held in Trust Account of $326,964. Changes in operating assets and liabilities provided $606,601 of cash for operating activities.
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For the nine months ended September 30, 2022, cash used in operating activities was $969,912. Net loss of $6,645,020 was affected by accrued interest on promissory note of $27,028, transaction cost of shares transferred to backstop investors of $5,739,976, change in fair value in warrant liabilities of $188,194, change in fair value in convertible promissory note of $792,773 and interest earned on marketable securities held in Trust Account of $136,525. Changes in operating assets and liabilities provided $1,025,596 of cash for operating activities.
Through September 30, 2023, our liquidity needs were satisfied through receipt of $25,000 from the sale of the founder shares, the remaining net proceeds from the IPO and the sale of private units, and the Convertible Promissory Notes drawn from the Sponsor.
Until the consummation of a Business Combination, the Company will be using the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring, negotiating and consummating the Business Combination. The Company will need to raise additional capital through loans or additional investments from its Sponsor, shareholders, officers, directors, or third parties. The Company’s Sponsor, officers and directors may, but are not obligated to, loan the Company funds from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs. Accordingly, the Company may not be able to obtain additional financing. If the Company is 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.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern one year from the date that these financial statements are issued. We intend to continue to complete a Business Combination before the mandatory liquidation date. These 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 the Company be unable to continue as a going concern.
On November 10, 2021, the Company issued an interest-bearing convertible promissory note (the “November 2021 Note”) to the Sponsor in the amount of $900,000, which is payable by the Company upon the earlier of the consummation of the Business Combination or the liquidation of the Company on or before February 12, 2022 (unless such date is extended by the Company’s board of directors). The November 2021 Note may be repaid in cash or convertible into units consisting of one ordinary share, one right exchangeable into one-tenth of one ordinary share, and one warrant exercisable for one-half of one ordinary share at $11.50 per share equal to (x) the portion of the principal amount of and accrued interest under the note being converted divided by (y) $10.00 rounded up to the nearest whole number of units. As of September 30, 2023, $900,000 was outstanding on the November 2021 Note and the fair value of the note, including accrued interest of $58,981, was $928,028.
On February 13, 2022, the Company issued a non-interest-bearing convertible promissory note (the “February 2022 Note”) in the principal amount of up to $750,000 to the Sponsor and is due and payable upon the earlier to occur of (i) the date on which the Company consummates its initial Business Combination and (ii) the date that the winding up of the Company is effective. Up to $600,000 of the unpaid principal amount of the February 2022 Note may be converted into units of the Company, each unit consisting of one ordinary share, one right exchangeable into one-tenth of one ordinary share, and one warrant exercisable for one-half of one ordinary share. As of September 30, 2023, $750,000 was outstanding on the February 2022 Note and the fair value of the note was $718,020.
On August 25, 2022, the Company issued a non-interest-bearing promissory note (the “August 2022 Note”) in the aggregate principal amount of up to $202,460 to the Sponsor. The principal amount of the August 2022 Note may be drawn down in three equal amounts and the balance of the August 2022 Note is payable by the Company on the earlier of the consummation of the Business Combination or the date of the liquidation of the Company. As of September 30, 2023, $202,460 was outstanding under the August 2022 Note.
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On October 6, 2022, the Company issued a non-interest-bearing promissory note (the “October 2022 Note”) in the principal amount of up to $500,000 to the Sponsor. The principal balance of the October 2022 Note is payable by the Company on the earlier of the consummation of the Business Combination or the date of the liquidation of the Company. As of September 30, 2023, $500,000 was outstanding under the October 2022 Note.
On November 16, 2022, the Company issued a non-interest-bearing promissory note (the “November 2022 Note”) in the principal amount of up to $303,994 to our Sponsor, pursuant to which such funds would be deposited into the trust account for each Public Share that was not redeemed in connection with the extension of the Company’s termination date from August 12, 2022 to February 12, 2023. The principal amount of the November 2022 Note may be drawn down in three equal amounts and the balance of the November 2022 Note is payable by the Company on the earlier of the consummation of the Business Combination or the date of the liquidation of the Company. As of September 30, 2023, there was $303,994 was outstanding under the November 2022 Note.
On January 5, 2023, the Company instructed Continental to liquidate the investments held in the trust account and instead to hold the funds in the trust account in an interest-bearing demand deposit account at Morgan Stanley, with Continental continuing to act as trustee, until the earlier of the consummation of the Business Combination or our liquidation. As a result, following the liquidation of investments in the trust account, the remaining proceeds from the initial public offering and private placement are no longer invested in U.S. government securities or money market funds.
On January 10, 2023, the Company issued a non-interest-bearing promissory note (the “January 2023 Note”) in the aggregate amount of up to $450,000 to the Sponsor. The principal amount of the January 2023 Note is payable by the Company on the earlier of the consummation of the Business Combination or the date of the liquidation of the Company. As of September 30, 2023, $276,006 was drawn on the note.
On February 14, 2023, the Company issued a non-interest-bearing promissory note (the “February 2023 Note”) in the aggregate amount of up to $256,313 to the Sponsor, pursuant to which the funds will be deposited into the trust account for each Public Share that was not redeemed in connection with the extension of the Company’s termination date from February 12, 2022 to August 12, 2023. The principal amount of the February 2023 Note is payable by the Company on the earlier of the consummation of the Business Combination or the date of the liquidation of the Company. As of September 30, 2023, $213,595 was drawn on the note.
On April 25, 2023, the Company issued a non-interest-bearing promissory note (the “April 2023 Note”) in the principal amount of up to $175,000 to the Sponsor. The April 2023 Note was issued in connection with advances the Sponsor may make in the future to the Company for working capital expenses. The April 2023 Note bears no interest and is due on the earlier of the consummation of the Business Combination or the date of the liquidation of the Company. As of September 30, 2023, $175,000 was drawn on the note.
On June 26, 2023, the Company issued a promissory note (the “June 2023 Note”) in the principal amount of up to $250,000 to the Sponsor for working capital purposes. The Note bears no interest and is due and payable upon the earlier to occur of (i) the date on which the Company consummates its initial business combination and (ii) the date that the winding up of the Company is effective. As of September 30, 2023 there was $145,000 outstanding on the note.
On August 15, 2023, the Company issued a non-interest bearing promissory note (the “August 2023 Note”) in the principal amount of up to $124,932 to the Sponsor pursuant to which the Extension Funds will be deposited into the Company’s Trust Account for each unredeemed Class A ordinary share of the Company that was not redeemed in connection with the extension of the Company’s termination date from August 12, 2023 to May 12, 2024. The Note bears no interest and is due and payable upon the earlier to occur of (i) the date on which the Company consummates its initial business combination and (ii) the date that the winding up of the Company is effective. As of September 30, 2023, $83,288 was drawn on the note.
On November 8, 2023, the Company issued a non-interest bearing promissory note (the “November 2023 Note”) in the aggregate principal amount of up to $122,431.05 to the Sponsor pursuant to which the Extension Funds will be deposited into the Company’s Trust Account for each unredeemed Class A ordinary share of the Company that was not redeemed in connection with the extension of the Company’s termination date from November 12, 2023 to May 12, 2024. The Note bears no interest and is due and payable upon the earlier of the consummation of the Business Combination or the date of the liquidation of the Company. As of November 15, $124,932 was drawn on the note.
On November 28, 2023, we issued a promissory note in the principal amount of up to $250,000 to our sponsor. This note was issued in connection with advances our sponsor may make in the future to us for working capital expenses. This note bears no interest and is due and payable upon the earlier to occur of (i) the date on which the Company consummates its initial business combination and (ii) the date that the winding up of the Company is effective.
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Off-Balance Sheet Financing Arrangements
As of September 30, 2023, we did not have any off-balance sheet arrangements. 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
As of September 30, 2023, we did not have any long-term debt, capital or operating lease obligations.
We entered into an administrative support agreement (“Administrative Support Agreement”) pursuant to which agreed to pay our sponsor for office space and secretarial and administrative services provided to members of our management team, in an amount not to exceed $10,000 per month. Effective March 31, 2021, we entered into a termination agreement with our sponsor (the “Termination Agreement”) to terminate the Administrative Support Agreement (and any accrued obligations pursuant thereto). Since our initial public offering, we have not made any payments under the Administrative Support Agreement and have paid for services rendered and expenses advanced by our sponsor on an as-needed basis.
Critical Accounting Policies
The preparation of interim condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States 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 interim condensed financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We identified the following as its critical accounting policies:
We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15.
We account for the Public Warrants, Private Warrants, Rights and Representative Warrants (as defined in Note 5, 6 and 8) collectively (“Warrants”), as either equity or liability-classified instruments based on an assessment of the specific terms of the Warrants and the applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the Warrants meet all of the requirements for equity classification under ASC 815, including whether the Warrants are indexed to our own ordinary shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of our control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of issuance of the Warrants and as of each subsequent quarterly period end date while the Warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, such warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, such warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of liability-classified warrants are recognized as a non-cash gain or loss on the statements of operations.
We account for the Private Warrants, Rights and Representative’s Warrants in accordance with ASC 815-40 under which the Warrants and FPAs do not meet the criteria for equity classification and must be recorded as liabilities. The fair value of the Private Warrants, Rights and Representative’s Warrants has been estimated using the Monte Carlo simulation model.
We evaluated the Public Warrants in accordance with ASC 815-40, “Derivatives and Hedging — Contracts in Entity’s Own Equity,” and concluded that they met the criteria for equity classification and are required to be recorded as part a component of additional paid-in capital at the time of issuance.
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Convertible Promissory Notes
We account for the convertible promissory notes under ASC 815, Derivatives and Hedging (“ASC 815”). Under 815-15-25, the election can be at the inception of a financial instrument to account for the instrument under the fair value option under ASC 825. We made such election for the convertible promissory notes. Using fair value option, the convertible promissory note is required to be recorded at its initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the note are recognized as non-cash change in the fair value of the convertible promissory note in the statements of operations. The fair value of the conversion feature of the notes were valued utilizing the Monte Carlo model.
Class A Ordinary Shares Subject to Possible Redemption
We account for the Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ deficit. Our ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events.
On February 9, 2022, we held an extraordinary general meeting pursuant to which our shareholders approved extending the date by which we had to complete a Business Combination from February 12, 2022 to August 12, 2022. In connection with the approval of the extension, shareholders elected to redeem an aggregate of 6,326,758 Ordinary Shares. As a result, an aggregate of $64,996,858 (or approximately ($10.27 per share) was released from the Trust Account to pay such shareholders. On August 12, 2022, the Company held an extraordinary general meeting pursuant to which the Company’s shareholders approved extending the date by which the Company has to complete a Business Combination from August 12, 2022 to February 12, 2023. In connection with the approval of the extension, shareholders elected to redeem an aggregate of 646,617 Ordinary Shares. As a result, an aggregate of $6,660,150 (or approximately $10.30 per shares) was released from the Trust Account to pay such shareholders. On February 9, 2023, the Company held an extraordinary general meeting in lieu of an annual meeting pursuant to which the Company’s shareholders approved extending the date by which the Company had to complete a Business Combination from February 12, 2023 to August 12, 2023. In connection with the approval of the extension, shareholders elected to redeem an aggregate of 1,172,247 Class A ordinary shares. As a result, an aggregate of $12,554,008 (or approximately $10.71 per share) was released from the Trust Account to pay such shareholders. On August 10, 2023, the Company held an extraordinary general meeting of shareholders to which the Company’s shareholders approved extending the date by which the Company has to consummate an initial business combination from August 12, 2023 to November 12, 2023. In connection with the approval of the extension, shareholders holding 21,501 shares of the Company’s ordinary shares exercised their right to redeem such shares. As a result, an aggregate of $241,574 (or approximately $11.23 per shares) was released from the Trust Account to pay such shareholders. Accordingly, as of September 30, 2023 and December 31, 2022, 832,877 and 2,026,625 shares of Class A ordinary shares subject to possible redemption, respectively, are presented at redemption value as temporary equity, outside of the shareholders’ deficit section of our balance sheets.
Net Loss Per Ordinary Share
We comply with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net loss per ordinary share is computed by dividing the net loss by the weighted average number of ordinary shares outstanding for each of the periods. 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 contractual formula utilized to calculate the redemption amount approximates fair value. Changes in fair value are not considered a dividend of the purposes of the numerator in the earnings per share calculation. The calculation of diluted loss per ordinary share does not consider the effect of the warrants and rights issued in connection with the IPO since the exercise of the warrants and rights are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive. The warrants and rights are exercisable for 6,137,400 shares of Class A ordinary shares in the aggregate.
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Recent Accounting Standards
In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. As a smaller reporting company, ASU 2020-06 is effective January 1, 2024 for fiscal years beginning after December 15, 2023 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. We adopted ASU 2020-06 on January 1, 2021. Adoption of the ASU did not impact the Company’s financial position, results of operations or cash flows.
Our management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying interim condensed financial statements.
JOBS Act
The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” under the JOBS Act and are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our interim condensed financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an independent registered public accounting firm’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the independent registered public accounting firm’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our offering or until we are no longer an “emerging growth company,” whichever is earlier.
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 conflicts in Ukraine and the Middle East. 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.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
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 current 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 the end of the quarterly period ended September 30, 2023, due to a material weakness in evaluating complex accounting issues as well as the Company’s controls over reconciliations during the financial statement close and disclosure review process.
In light of this material weakness, we have enhanced our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements including making greater use of third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects. We believe our efforts will enhance our controls relating to accounting for complex financial transactions, but we can offer no assurance that our controls will not require additional review and modification in the future as industry accounting practice may evolve over time.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in Internal Control over Financial Reporting
Other than as discussed above, there have been no changes to our internal control over financial reporting during the quarter ended September 30, 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
To the knowledge of our management team, there is no litigation currently pending or contemplated against us, any of our officers or directors in their capacity as such or against any of our property.
Item 1A. Risk Factors.
As a smaller reporting company under Rule 12b-2 of the Exchange Act, we are not required to include risk factors in this Report. As of the date of this Report, other than as set forth below, there have been no material changes with respect to those risk factors previously disclosed in our (i) Registration Statement, (ii) Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on January 24, 2023, (iii) Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, as filed with the SEC on August 8, 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.
For risks related to the AOI and the Business Combination, please see the AOI Registration Statement.
There is substantial doubt about our ability to continue as a “going concern.”
In connection with our assessment of going concern considerations under applicable accounting standards, Management has determined that our possible need for additional financing to enable us to negotiate and complete our initial Business Combination, as well as the deadline by which we may be required to liquidate our Trust Account, raises substantial doubt about our ability to continue as a going concern through approximately one year from the date the unaudited condensed financial statements included in this Report under “Item 1. Financial Statements” were issued.
We have received the First Nasdaq Notice and the Second Nasdaq Notice. If we cannot regain compliance, our securities will be subject to delisting and the liquidity and the trading price of our securities could be adversely affected.
On September 25, 2023, we received the September 2023 Nasdaq Notice from the staff (the “Staff”) of the Listing Qualifications Department of the Nasdaq Stock Market (“Nasdaq”) notifying us that we are not in compliance with Nasdaq Listing Rule 5550(a)(3) (the “Minimum Public Holders Requirement”), which requires the Company to maintain at least 300 total public holders for continued listing on the Nasdaq Capital Market.
In accordance with Nasdaq rules, we had 45 calendar days, or until November 9, 2023, to submit a plan to regain compliance with the Minimum Public Holders Requirement. As of the filing date of this quarterly report on the Form 10-Q, we have not regained compliance with the Minimum Public Holders Requirement. We submitted a compliance plan on November 9, 2023.
On November 10, 2023, we received the November 2023 Nasdaq Notice from the Staff indicating that the Company failed to comply with Nasdaq IM-5101-2, which requires that a special purpose acquisition company must complete one or more business combinations within 36 months of the effectiveness of its IPO registration statement.
Additionally, as stated above, on September 25, 2023, Nasdaq notified the Company that it did not comply with the Minimum Public Holders Requirement. As of the filing date of this quarterly report on the Form 10-Q, we have not regained compliance with the Minimum Public Holders Requirement. Pursuant to the November 2023 Nasdaq Notice, this deficiency serves as an additional basis for delisting the Company’s securities from Nasdaq.
Pursuant to the November 2023 Nasdaq Notice, unless the Company timely requests a hearing before the Panel, the Company’s securities would be subject to suspension and delisting from The Nasdaq Capital Market at the opening of business on November 21, 2023, and a Form 25-NSE will be filed with the Securities and Exchange Commission, which will remove the Company’s securities from listing and registration on Nasdaq. We submitted a hearing request before the Nasdaq Hearings Panel (the “Panel”) on November 17, 2023, and a hearing has been scheduled for February 22, 2024.
If Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
| ● | a limited availability of market quotations for our securities; |
| ● | reduced liquidity for our securities; |
| ● | a determination that our Class A Common Stock is a “penny stock” which will require brokers trading in our Class A Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; |
| ● | a limited amount of news and analyst coverage; |
| ● | a decreased ability to issue additional securities or obtain additional financing in the future; and |
| ● | being subject to regulation in each state in which we offer our securities, including in connection with our initial Business Combination. |
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None. For a description of the use of proceeds generated in our initial public offering and private placement, see Part II, Item 2 of the Company’s Annual Report on Form 10-K for the year ended 2020, as filed with the SEC on May 25, 2021. There has been no material change in the planned use of proceeds from the Company’s initial public offering and private placement as described in the Registration Statement.
At the Fifth Extension Meeting, our shareholders approved the Charter Amendment to extend the date by which the Company has to consummate an initial business combination from August 12, 2023 to November 12, 2023. In connection with the shareholder vote to approve the Charter Amendment, shareholders holding 21,501 shares of the Company’s ordinary shares exercised their right to redeem such shares, resulting in a reduction of $241,574 (or approximately $11.23 per shares) in the amount held in the Trust Account.
At the Sixth Extension Meeting, our shareholders approved the Charter Amendment to extend the date by which the Company has to consummate an initial business combination from November 12, 2023 to May 12, 2024. In connection with the shareholder vote to approve the Charter Amendment, shareholders holding 16,670 shares of the Company’s ordinary shares exercised their right to redeem such shares, resulting in a reduction of $191,551 (or approximately $11.49 per shares) in the amount held in the Trust Account.
The following table contains monthly information about the repurchases of our equity securities for the three months ended September 30, 2023:
| (d) | ||||||||||||||||
| Maximum | ||||||||||||||||
| (c) Total | number (or | |||||||||||||||
| number of | approximate | |||||||||||||||
| shares (or | dollar value) | |||||||||||||||
| units) | of shares (or | |||||||||||||||
| purchased as | units) that | |||||||||||||||
| (a) Total | part of | may yet be | ||||||||||||||
| number of | (b) Average | publicly | purchased | |||||||||||||
| shares (or | price paid | announced | under the | |||||||||||||
| units) | per share (or | plans or | plans or | |||||||||||||
| Period | purchased | unit) | programs | programs | ||||||||||||
| July 1 - July 31, 2023 | - | - | - | - | ||||||||||||
| August 1 - August 31, 2023 | 21,501 | $ | 11.23 | - | - | |||||||||||
| September 1 - September 30, 2023 | - | $ | - | - | - | |||||||||||
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
None.
Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
| * | Filed herewith. |
| ** | Furnished. |
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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.
| EDOC ACQUISITION CORP. | ||
| Date: December 1, 2023 | By: | /s/ Kevin Chen |
| Name: | Kevin Chen | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
| Date: December 1, 2023 | By: | /s/ Bob Ai |
| Name: | Bob Ai | |
| Title: | Chief Financial Officer | |
| (Principal Accounting and Financial Officer) | ||
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