UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| (Mark One) | ||
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended
or
|
||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission
File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
| The Stock Market LLC | ||||
| The
| ||||
| The
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Securities registered pursuant to Section 12(g) of the Act: None
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 filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large-accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large-accelerated filer,” “accelerated filer,” “non-accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large-accelerated filer ☐ | Accelerated filer ☐ | |
| Smaller
reporting company | ||
| Emerging
growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
As of November 12, 2024, there were shares of common stock, par value $ per share, of the registrant issued and outstanding (excluding 1,717,663 subject to possible redemption).
BROAD CAPITAL ACQUISITION CORP
TABLE OF CONTENTS
| 2 |
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
BROAD CAPITAL ACQUISITION CORP
BALANCE SHEETS
(UNAUDITED)
September 30, 2024 | December 31, 2023 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total Current Assets | ||||||||
| Cash and Marketable Securities held in trust account | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accrued expenses | $ | $ | ||||||
| Accounts payable | ||||||||
| Franchise tax payable | ||||||||
| Income tax payable | ||||||||
| Extension loans | ||||||||
| Working capital loan | ||||||||
| Excise tax liability | ||||||||
| Total Current Liabilities | ||||||||
| Deferred underwriter commission | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Common Stock subject to possible redemption; shares (at $ per share) as of September 30, 2024 and shares (at $ per share) as of December 31, 2023 | ||||||||
| Stockholders’ Deficit | ||||||||
| Preference Shares, $par value; shares authorized; issued and outstanding as of September 30, 2024 and December 31, 2023 | ||||||||
| Common Stock, $ par value, shares authorized; issued and outstanding (excluding shares and shares subject to possible redemption as of September 30, 2024 and December 31, 2023 respectively) | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited financial statements.
| F-1 |
BROAD CAPITAL ACQUISITION CORP
STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months Ended September 30, 2024 | For the Nine Months Ended September 30, 2024 | For the Three Months Ended September 30, 2023 | For the Nine Months Ended September 30, 2023 | |||||||||||||
| Formation and operating costs | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Franchise tax | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss from Operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Income (Expenses) | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest earned on marketable securities held in trust account | ||||||||||||||||
| Net Loss Before Tax | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding of Common Stock – Basic and diluted | ||||||||||||||||
| Basic and diluted net loss per share of Common Stock | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
The accompanying notes are an integral part of these unaudited financial statements.
| F-2 |
BROAD CAPITAL ACQUISITION CORP
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024
AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023
(UNAUDITED)
| Common Stock | Additional Paid-In | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| Balance – December 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Extension funds attributable to common stock subject to redemption | - | ( | ) | ( | ) | |||||||||||||||
| Remeasurement of common stock subject to redemption | - | |||||||||||||||||||
| Excise tax | - | ( | ) | ( | ) | |||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance – March 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Extension funds attributable to common stock subject to redemption | - | ( | ) | ( | ) | |||||||||||||||
| Remeasurement of common stock subject to redemption | - | ( | ) | ( | ) | |||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance – June 30, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Extension funds attributable to common stock subject to redemption | - | ( | ) | ( | ) | |||||||||||||||
| Remeasurement of common stock subject to redemption | - | ( | ) | ( | ) | |||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance – September 30, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Common Stock | Additional Paid-In |
Accumulated | Total Stockholders’ |
|||||||||||||||||
| Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| Balance – December 31, 2022 | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
| Extension funds attributable to common stock subject to redemption | - | ( |
) | ( |
) | |||||||||||||||
| Remeasurement of common stock subject to redemption | - | ( |
) | ( |
) | |||||||||||||||
| Net loss | - | ( |
) | ( |
) | |||||||||||||||
| Balance – March 31, 2023 | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
| Extension funds attributable to common stock subject to redemption | - | ( |
) | ( |
) | |||||||||||||||
| Remeasurement of common stock subject to redemption | - | ( |
) | ( |
) | |||||||||||||||
| Net income | - | |||||||||||||||||||
| Balance – June 30, 2023 | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
| Extension funds attributable to common stock subject to redemption | - | ( |
( |
|||||||||||||||||
| Remeasurement of common stock subject to redemption | - | ( |
( |
|||||||||||||||||
| Net loss | - | ( |
( |
|||||||||||||||||
| Balance – September 30, 2023 | $ | $ | $ | ( |
$ | ( |
||||||||||||||
The accompanying notes are an integral part of these unaudited financial statements.
| F-3 |
BROAD CAPITAL ACQUISITION CORP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Ended September 30, 2024 | For the Nine Months Ended September 30, 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Interest earned on marketable securities held in Trust Account | ( | ) | ( | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | ||||||||
| Account payables | ||||||||
| Accrued expenses | ||||||||
| Franchise tax payable | ( | ) | ( | ) | ||||
| Income tax payable | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Cash withdrawn from Trust Account in connection with redemption | ||||||||
| Interest withdraws from Trust Account for taxes | ||||||||
| Investment of cash in Trust Account | ( | ) | ( | ) | ||||
| Net cash provided by investing activities | ||||||||
| Cash flows from financing activities: | ||||||||
| Redemption of Common Stock | ( | ) | ( | ) | ||||
| Proceeds from Working capital loan | ||||||||
| Proceeds from Extension loan | ||||||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Net change in cash | ( | ) | ||||||
| Cash at the beginning of the period | ||||||||
| Cash at the end of the period | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Extension Funds attributable to common stock subject to redemption | $ | $ | ||||||
| Remeasurement of Common Stock subject to redemption | $ | $ | ||||||
| Excise tax liability | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited financial statements.
| F-4 |
BROAD CAPITAL ACQUISITION CORP
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS
Broad Capital Acquisition Corp (the “Company”) is a blank check company incorporated in the State of Delaware on April 16, 2021. The Company was 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 or entities (“Business Combination”). The Company is not limited to a particular industry or sector for purposes of consummating a Business Combination.
The Financing
As of September 30, 2024, the Company had not commenced any operations. All activity from April 16, 2021 (inception) through September 30, 2024, relates to the Company’s formation, the Initial Public Offering (as defined below), and its pursuit of an initial 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 Initial Public Offering. The Company has selected December 31 as its fiscal year end. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
The
Company’s sponsor is Broad Capital LLC, a Delaware limited liability company (the “Sponsor”). The registration statement
for the Company’s Initial Public Offering was declared effective on January 10, 2022. On January 13, 2022, the Company closed its
Initial Public Offering of units (the “Units” and, with respect to the shares of common stock included in the
Units being offered, the “Public Shares”), at $ per Unit, generating gross proceeds of $
Simultaneously
with the consummation of the closing of the Initial Public Offering, the Company consummated the private placement of an aggregate of
units (the “Placement Units”) to the Sponsor at a price of $ per Placement Unit, generating total gross proceeds
of $
On
February 9, 2022, the underwriters partially exercised the over-allotment option and purchased an additional Units, generating
gross proceeds of $
Following
the closing of the Initial Public Offering on January 13, 2022, an amount of $
| F-5 |
Trust Account
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering
and the sale of Placement Units, 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 with one or more operating businesses or assets with a fair market value equal
to at least
Upon the closing of the Initial Public Offering, management has agreed that an amount equal to at least $ per Unit sold in the Initial Public Offering, including proceeds of the Placement Units, will be held in a trust account (“Trust Account”), located in the United States and invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting certain conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds held in the Trust Account, as described below.
Redemption Option
The Company will provide the holders of the outstanding Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares either (i) in connection with a stockholders meeting called to approve the Business Combination or (ii) by means of a tender offer in connection with the Business Combination. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer, will be made by the Company. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $ per Public Share, plus any pro rata interest then in the Trust Account, net of taxes payable). The Public Shares subject to redemption will be recorded at a redemption value and classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity”.
The
Company will not redeem Public Shares in an amount that would cause its net tangible assets to be less than $
| F-6 |
Stockholder Approval
If, however, stockholder approval of the transaction is required by applicable law or stock exchange listing requirements, or the Company decides to obtain stockholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Insider shares (as defined in Note 5) and any Public Shares purchased during or after the Public Offering in favor of approving a Business Combination. Additionally, each Public Stockholder may elect to redeem their Public Shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction.
Notwithstanding the foregoing, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Certificate of Incorporation will provide that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 20% of the Public Shares, without the prior consent of the Company.
The holders of the Insider Shares have agreed (a) to waive their redemption rights with respect to the Insider Shares and Public Shares held by them in connection with the completion of a Business Combination and (b) not to propose an amendment to the Certificate of Incorporation (i) to modify the substance or timing of the Company’s obligation to allow redemptions in connection with a Business Combination or to redeem % of its Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or (ii) with respect to any other provision relating to stockholders’ rights or pre-business combination activity, unless the Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.
Openmarkets Merger Agreement
On January 18, 2023, the Company entered into an Agreement and Plan of Merger and Business Combination Agreement (the “Openmarkets Merger Agreement” or “BCA”) with Openmarkets Group Pty Ltd., an Australian proprietary limited company (“Openmarkets” or the “Target”), BMYG OMG Pty Ltd., an Australian proprietary limited company and Broad Capital LLC, solely as the Company’s sponsor (collectively, the “Parties”). Pursuant to the Openmarkets Merger Agreement, prior to the closing (the “Closing”) of the contemplated transactions (collectively, the “Business Combination”), the Parties will cause the Company to move its domicile from the State of Delaware to Australia by merging a to-be-formed Delaware corporation (“Merger Sub”), which shall be wholly-owned by a to-be-formed Australian corporation (the “Purchaser”) with and into the Company, with the Company continuing as the surviving entity and a wholly-owned subsidiary of the Purchaser (the “Redomestication Merger”).
As a result of the Redomestication Merger, (i) each issued and outstanding share of the Company’s common stock, par value $per share (the “Company Common Stock”), will convert into the right to receive one share of common stock the Purchaser (the “Purchaser Shares”); (ii) each of the Company’s units (the “Company Units”), comprised of one share of Company Common Stock and one right to receive one-tenth of one share of Company Common Stock upon the Closing (each a “Company Right”), shall convert into the right to receive one unit of the Purchaser, comprised of one Purchaser Share and one right to receive one-tenth of one Purchaser Share upon the Closing (each a “Purchaser Right”); and (iii) each Company Right shall be converted into the right to receive one Purchaser Right.
| F-7 |
Following the Redomestication Merger, the Company will liquidate and all assets of the Company shall be transferred to the Purchaser and all liabilities of the Company are, or shall be, assumed by the Purchaser (the “Liquidation”). The Company is required to cause all of its contracts to be assigned to and assumed by the Purchaser. Additionally, pursuant to the original Agreement and Plan of Merger and Business Combination Agreement, following the Redomestication Merger and the Liquidation, the Stockholder will contribute all of the issued and outstanding shares of common stock of the Target to the Purchaser in exchange for Purchaser Shares (the “Exchange Consideration”). However, on August 4, 2023, the Company, the Target, the Seller, the Indemnified Party Representative, and the Purchaser entered into that certain BCA Amendment No. 1 (the “Amendment”) to (i) decrease the number of Purchaser Shares to be issued to the Seller as consideration at the Closing from to due to an updated valuation of the Target; (ii) amend certain schedules to the BCA to reflect the updated valuation of the Target; (iii) make clarifying changes to certain representations and conditions to the Closing; and (iv) extend the Outside Date (as defined in the BCA) from June 30, 2023 to January 1, 2024. The Amendment was made effective as of August 1, 2023.
Effective January 9, 2024, the Company, OMG, the Seller, the Indemnified Representative, and the Purchaser entered into that certain BCA Amendment No. 2 (the “BCA Amendment No. 2”) to (i) clarify that although the parties would continue to seek additional financing, the Purchaser would not be required to have any minimum amount of net tangible assets at Closing; (ii) clarify that at Closing, the Purchaser shall have become listed on any tier of the Nasdaq exchange; and (iii) extend the Outside Date (as defined in the BCA) from January 1, 2024 to April 30, 2024.
On March 22, 2024, the Company, OMG, the Seller, the Indemnified Party Representative, and the Purchaser entered into that certain BCA Amendment No. 3 (the “BCA Amendment No. 3”) to (i) decrease the number of Purchaser Shares to be issued to the Seller as consideration at the Closing from to due to an updated valuation of OMG; (ii) amend certain schedules to the BCA to reflect the updated valuation of OMG; (iii) increase the number of Purchaser Shares to be issued to the Seller in connection with the Earnout from to due to an updated valuation of OMG; (iv) update the Earnout Period to cover a period of three years commencing on June 30, 2024; and (v) provide that, in general, material new business opportunities must be reasonably expected to meet certain gross profit and EBITDA metrics. The BCA Amendment No. 3 was made effective as of March 8, 2024.
On April 29, 2024, the Company, OMG, the Seller, the Indemnified Party Representative, and the Purchaser entered into that certain BCA Amendment No. 4 to (i) decrease the number of Purchaser Shares to be issued to the Seller as consideration at the Closing from to ; (ii) clarify certain definitions to the BCA; and (iii) increase the number of Purchaser Shares to be issued to the Seller in connection with the Earnout by up to if the Purchaser achieved certain revenue milestones during the first year following the Closing. The BCA Amendment No. 4 was made effective as of April 25, 2024.
Effective August 8, 2024, the Company, OMG, the Seller, the Indemnified Party Representative, and the Purchaser entered into that certain BCA Amendment No. 5 to (i) increase the number of Purchaser Shares to be issued to the Seller as consideration at the Closing from to ; (ii) clarify certain definitions to the Business Combination Agreement; (iii) decrease the number of Purchaser Shares to be issued to the Seller in connection with the Earnout such that the Seller could earn up to Purchaser Shares if the Purchaser achieved certain revenue milestones during the first year following the Closing; all other terms of the Earnout (as defined below) remained unchanged.
On October 11, 2024, the Company, OMG, the Seller, the Indemnified Party Representative, and the Purchaser entered into that certain BCA Amendment No. 6 to (i) decrease the number of Purchaser Shares to be issued to the Seller as consideration at the Closing from to ; (ii) clarify certain definitions to the BCA; (iii) increase the number of Purchaser Shares to be issued to the Seller in connection with the Earnout such that the Seller could earn up to Purchaser Shares if the Purchaser achieved certain revenue milestones during the first year following the Closing; (iv) restructure the Earnout such that Purchaser Shares subject to the Earnout are to be issued to the Seller at the Closing rather than deposited with the Escrow Agent; and (v) update the Earnout Period to cover a period of three years commencing on January 1, 2025. The BCA Amendment No. 6 was made effective as of October 11, 2024.
The Purchaser Shares shall have a deemed value of $ per share for the purposes of all calculations and adjustments under the BCA, with such Exchange Consideration subject to adjustment based on the Target’s net indebtedness, working capital, and indemnification obligations following the Closing as detailed in the BCA (the “Acquisition Contribution and Exchange”).
Adjustments to the Estimated Closing Exchange Consideration shall be made from Purchaser Shares placed in escrow pursuant to the Escrow Agreement (as defined below) (the “Adjustment Escrow Shares”), which Escrow Shares shall be released to either the Purchaser or the Seller based on the nature of the adjustment to the Estimated Closing Exchange Consideration. Additionally, in the event OMG’s net working capital at the Closing (the “Net Working Capital”) exceeds OMG’s pre-Closing estimated net working capital (the “Estimated Net Working Capital”), the Seller will receive additional Purchaser Shares in an amount equal to the difference between the Net Working Capital and the Estimated Net Working Capital (the “Adjustment Exchange Consideration”). Further, in addition to the Adjustment Escrow Shares and the Adjustment Exchange Consideration, up to of the Purchaser Shares delivered at the Closing are subject to forfeiture based on certain performance benchmarks following the Closing as detailed in the Business Combination Agreement (the “Earnout”).
Charter Amendment and Termination Date
On January 13, 2022, the “Company consummated its initial public offering (the “Offering”). In connection therewith, the Company entered into an Investment Management Trust Agreement, dated January 10, 2022 (the “Trust Agreement”), by and between the Company and Continental Stock Transfer & Trust Company, as trustee (“Continental”). The form of the Trust Agreement was initially filed as an exhibit to the Company’s Registration Statement on Form S-1 (File No. 333-258943) for the Offering.
Pursuant to the Offering and the Trust Agreement, the Company had 12 months from the closing of the Offering to consummate its initial business combination, which expired on January 13, 2023 (the “Termination Date”). Prior to that, on January 10, 2023, the Company held a virtual special meeting of its stockholders, pursuant to due notice (the “January 2023 Stockholders Meeting”). At the January 2023 Stockholders Meeting, the Company’s stockholders entitled to vote cast their votes and approved a proposal to amend the Trust Agreement to extend the Termination Date for an additional nine one (1) month extensions until October 13, 2023 (the “First Trust Amendment”) by depositing into the Trust Account an additional $ per share for each one-month until October 13, 2023 unless the Closing of the Company’s initial business combination shall have occurred.
At
January 2023 Stockholders Meeting, the Company’s stockholders holding Public
Shares of common stock exercised their right to redeem their shares for cash at an approximate price of $per share of the funds
in the Trust Account. As a result, approximately $
| F-8 |
Also
at the January 2023 Stockholders Meeting, the Company’s stockholders approved the First Amendment to the Amended and Restated Certificate
of Incorporation of the Company (the “Charter Amendment”) to extend the Termination Date as amended in the amended Trust
Agreement to extend the date by which the Company (i) may consummate a merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or similar business combination involving the Company and one or more businesses, which we refer to as a “business
combination,” (ii) cease its operations if it fails to complete such business combination, and (iii) redeem or repurchase 100%
of the Company’s common stock included as part of the units sold in the Company’s initial public offering (provided the Company
funds the monthly extension payments to the Trust Account) unless extended, the Company will (a) cease all operations except for the
purpose of winding up, (b) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares,
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned
on the funds held in the Trust Account and not previously released to pay taxes (less up to $
On
June 9, 2023, the Company held an additional Special Meeting of Stockholders (the “June 2023 Stockholders Meeting”). At the
June 2023 Stockholders Meeting, the Company’s stockholders approved an amendment to the Company’s Charter (a) to extend the
Termination Date again by which the Company has to consummate a business combination from October 13, 2023 by up to three (3) one-month
extensions to January 13, 2024 (the “Extended Termination Date”) and (b) to decrease the monthly extension fee from $
per share for each Public Share outstanding after giving effect to redemptions (in the aggregate, the “Monthly Extension Loan”)
to, in the aggregate, the “Adjusted Monthly Extension Loan,” as defined above, commencing on June 13, 2023. As amended, the
required payment for each monthly extension period shall constitute the deposit by Broad Capital LLC (or its affiliates or permitted
designees) into the Trust Account of $
The
Company also amended the Company’s Trust Agreement dated as of January 10, 2022, as amended on January 10, 2023, by and between
the Company and Continental Stock Transfer & Trust Company, allowing the Company reduce the amount of the Monthly Extension Loan
to $
At
the June 2023 Stockholders Meeting, the Company’s stockholders holding Public Shares of common stock exercised their
right to redeem their shares for cash at an approximate price of $ per share of the funds in the Trust Account. As a result, approximately
$
Thereafter,
the Company was required to deposit into the Trust Account $
On
January 8, 2024, the Company held a Special Meeting of Stockholders (the “Meeting”). At the Meeting, the Company’s
stockholders approved an amendment to the Company’s Charter, as amended on January 11, 2023 and June 12, 2023 (the “Extension
Amendment Proposal”), (a) to extend the date by which the Company have to consummate a business combination from January 13,
2024 (the “Termination Date”) by up to twelve (12) one-month extensions to January 13, 2025 (the “Extended
Date”) and (b) to decrease the monthly extension fee from $
The
Company also amended the Company’s investment management trust agreement (the “Trust Agreement”), dated as of
January 10, 2022, as amended on January 10, 2023 and June 12, 2023, by and between the Company and Continental Stock Transfer & Trust
Company, allowing the Company to reduce the amount of the Monthly Extension Loan to $
| F-9 |
On
January 8, 2024, stockholders holding shares of common stock exercised their right to redeem their shares for cash at an approximate
price of $ per share of the funds in the Trust Account. As a result, approximately $
The
holders of the Insider Shares have agreed to waive their liquidation rights with respect to the Insider shares if the Company fails to
complete a Business Combination within the Combination Period. However, if the holders of Insider shares acquire Public Shares in or
after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company
fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred
underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within
the Combination Period, and, in such event, such amounts will be included with the other funds held in the Trust Account that will be
available to fund the redemption of the Public Shares.
Liquidity and Capital Resources
As
of September 30, 2024 and December 31, 2023, the Company had $
| F-10 |
The
Company’s liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the payment of $
Going Concern Consideration
The Company expects to incur significant costs in pursuit of its financing and acquisition plans. In connection with the Company’s assessment of going concern considerations in accordance with 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 unsuccessful in consummating an initial business combination within the prescribed period of time from the closing of the Initial Public Offering, the requirement that the Company cease all operations, redeem the Public Shares and thereafter liquidate and dissolve raises substantial doubt about the ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Management has determined that the Company has funds that are sufficient to fund the working capital needs of the Company until the consummation of an initial business combination or the winding up of the Company as stipulated in the Company’s amended and restated memorandum of association. The accompanying financial statement has been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, as set forth by the Financial Accounting Standards Board (“FASB”), and pursuant to the rules and regulations of the SEC. The unaudited interim financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, as filed with the SEC on March 14, 2024. In the opinion of management, the unaudited financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. The interim results for the nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected through December 31, 2024 or for any future periods.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
| F-11 |
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company had
Marketable Securities Held in Trust Account
As
of September 30, 2024 and December 31, 2023, substantially all of the assets held in the Trust Account were held in government securities
(United States Treasury Bills). As of September 30, 2024 and December 31, 2023, the balance in the Trust Account was $
Deferred offering costs
Deferred offering costs consist of underwriting, legal, accounting, and other expenses incurred through the balance sheet date that are directly related to the Proposed Offering and that will be charged to stockholders’ equity upon the completion of the Proposed Offering. Should the Proposed Offering have proved to be unsuccessful, these deferred costs, as well as additional expenses incurred, would have been charged to operations.
Franchise Tax
Delaware,
where the Company is incorporated, imposes a franchise tax that applies to most business entities that are formed or qualified to do
business, or which are otherwise doing business, in Delaware. Delaware franchise tax is based on authorized shares or on assumed par
and non-par capital, whichever yields a lower result. Under the authorized shares method, each share is taxed at a graduated rate based
on the number of authorized shares. During the nine months ended September 30, 2024 and 2023 the company incurred $
Income Taxes
The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
| F-12 |
ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statements’ recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2024 and December 31, 2023. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
The
effective tax rate for the nine months ended September 30, 2024 and 2023 is
The
income tax provision for the nine months ended September 30, 2024 and 2023 are $
Inflation Reduction Act of 2022
On
August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for,
among other things, a new U.S. federal
Any redemption or other repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax. Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote or otherwise would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury. In addition, because the excise tax would be payable by the Company and not by the redeeming holders, the mechanics of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business Combination and in the Company’s ability to complete a Business Combination.
At
this time, it has been determined that the IR Act tax provisions would have an impact to the Company’s fiscal 2023 and 2024 tax
provision as there were redemptions by the public stockholders in 2023 and 2024; as a result, the Company recorded $
Class A Common Stock Subject to Redemption
All
of the Class A common stocks sold as part of the Units in the Initial Public Offering contain a redemption feature which allows for the
redemption of such Public Shares in connection with the Company’s liquidation, if there is a stockholder vote or tender offer in
connection with the Business Combination and in connection with certain amendments to the Company’s amended and restated certificate
of incorporation. In accordance with ASC 480, conditionally redeemable Class A common stocks (including Class A common stocks 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. Ordinary liquidation events, which involve the income
and liquidation of all of the entity’s equity instruments, are excluded from the provisions of ASC 480. Although the Company did
not specify a maximum redemption threshold, its charter provides that currently, the Company will not redeem Public Shares in an amount
that would cause its net tangible assets to be less than $
| F-13 |
As of September 30, 2024 and December 31, 2023, and shares of Class A Common Stock remain outstanding and are subject to possible redemption, respectively.
The Company complies with accounting and disclosure requirements of ASC Topic 260, “Earnings Per Share.” Net loss per share is computed by dividing net loss by the weighted average number of common stock outstanding during the period, excluding common stock subject to forfeiture. For the nine months ended September 30, 2024 and September 30, 2023, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company. As a result, diluted loss per share is the same as basic loss per share for the periods presented.
Concentration of Credit Risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution
which, at times may exceed the Federal depository insurance coverage of $
Fair Value of Financial Instruments
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
| ● | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; | |
| ● | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and | |
| ● | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
The following table presents information about the Company’s financial assets that are measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023:
| Level | September 30, 2024 | December 31, 2023 | ||||||||||
| Assets: | ||||||||||||
| Cash and marketable securities held in trust account | 1 | $ | $ | |||||||||
| F-14 |
Recent Accounting Standards
The Company’s management does not believe that any recently issued, but not yet effective, accounting standards updates, if currently adopted, would have a material effect on the accompanying financial statement.
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, close of the Initial Public Offering, and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 3. INITIAL PUBLIC OFFERING
On
January 13, 2022, the Company closed its Initial Public Offering of Units at $per Unit, generating gross proceeds of
$
As
of January 13, 2022, the Company closed its Initial Public Offering and incurred transaction costs of approximately $
On
February 9, 2022, the Underwriters partially exercised the over-allotment option and on February 10, 2022, purchased an additional
Units from the Company (the “Over-Allotment Units”), generating gross proceeds of $
NOTE 4. PRIVATE PLACEMENT
Simultaneously
with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of Placement Units at a price of $ per
Placement Unit ($
The proceeds from the sale of the Placement Units were added to the net proceeds from the Initial Public Offering held in the Trust Account. The Placement Units are identical to the Units sold in the Initial Public Offering. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Placement Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Placement Units will expire worthless.
Simultaneously
with the closing of the Over-Allotment, the Company completed the private sale of an additional placement units at a purchase price
of $ per placement unit, to the Company’s sponsor, Broad Capital LLC, generating additional gross proceeds to the Company
of $
In
connection with the closing and sale of the Over-Allotment Units and the additional placement units (together, the “Over-Allotment
Closing”), a total of $
NOTE 5. RELATED PARTY TRANSACTIONS
Insider shares
On
May 7, 2021, the Sponsor purchased insider shares for an aggregate purchase price of $
| F-15 |
On May 25, 2021, the Sponsor transferred insider shares of Common Stock among our four independent directors, leaving insider shares held by our Sponsor.
Due to the over-allotment option being partially exercised by the underwriter on February 10, 2022 (see note 6), the Sponsor forfeited insider shares. As of September 30, 2024 and December 31, 2023, there were insider shares issued and outstanding and no further insider shares are subject to forfeiture.
Promissory Note – Related Party
On
April 16, 2021, the Sponsor issued an unsecured promissory note to the Company, pursuant to which the Company may borrow up to an aggregate
principal amount of $
Working Capital Loans
In
order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain
of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working
Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes may be repaid upon completion of
a Business Combination, with interest, or, at the lender’s discretion, up to $
Extension Loan
On
January 11, 2023, the Company approved the First Amendment to the Amended and Restated Certificate of Incorporation of the Company (the
“Charter Amendment”) and approved the proposal to amend the Company’s Trust Agreement with Continental. The Charter
Amendment allows the Company to extend the Termination Date by up to nine (9) one-month extensions to October 13, 2023 provided that
the Sponsor (or its affiliates or permitted designees) will deposit into the Trust Account an additional $
| F-16 |
No compensation of any kind, including any finder’s fee, reimbursement, consulting fee or monies in respect of any payment of a loan, will be paid by us to our sponsor, officers or directors or any affiliate of our sponsor, officers or directors prior to, or in connection with any services rendered in order to effectuate, the consummation of an initial business combination (regardless of the type of transaction that it is). However, these individuals will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments that were made to our sponsor, officers, directors or our or their affiliates and will determine which expenses and the amount of expenses that will be reimbursed. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf.
Administrative Services Arrangement
Commencing
on the date the Units were first listed on the Nasdaq, the Company agreed to pay the Sponsor $
NOTE 6. COMMITMENTS AND CONTINGENCIES
Registration Rights
The holders of the insider shares and Placement Units that may be issued upon conversion of Working Capital Loans (and any shares of Common Stock issuable upon the exercise of the Placement Units or units issued upon conversion of the Working Capital Loans and upon conversion of the Insider shares) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of Initial Public Offering requiring the Company to register such securities for resale. The holders of these securities will be entitled to make up to three demands, excluding short form registration demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to completion of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that the Company will not be required to effect or permit any registration or cause any registration statement to become effective until the securities covered thereby are released from their lock-up restrictions. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
On
February 9, 2022, the Underwriters partially exercised the over-allotment option and on February 10, 2022, purchased an additional
Units from the Company (the “Over-Allotment Units”), generating gross proceeds of $
The
underwriters were entitled to a cash underwriting discount of $ per Unit, or $
On
February 10, 2022, the underwriters purchased an additional Option Units pursuant to the exercise of the over-allotment option.
The Option Units were sold at an offering price of $ per Unit, generating additional gross proceeds to the Company of $
| F-17 |
NOTE 7. STOCKHOLDERS’ DEFICIT
Common
Stock — Our Certificate of Incorporation authorizes the Company to issue shares of common stock with a par
value of $per share.
Preferred Shares — The Company is authorized to issue shares of preferred stock with a par value of $ per share with such designation, rights and preferences as may be determined from time to time by the Company’s Board of Directors. On September 30, 2024 and December 31, 2023, there were preferred shares issued or outstanding.
Rights
—
The Company will not issue fractional shares in connection with an exchange of Public Rights. Fractional shares will either be rounded down to the nearest whole share or otherwise addressed in accordance with the applicable provisions of the Delaware General Corporation Law. As a result, the holders of the Public Rights must hold rights in multiples of 10 in order to receive shares for all of the holders’ rights upon closing of a Business Combination.
NOTE 8. SUBSEQUENT EVENTS
On October 11, 2024, the Company, OMG, the Seller, the Indemnified Party Representative, and the Purchaser entered into that certain BCA Amendment No. 6 to (i) decrease the number of Purchaser Shares to be issued to the Seller as consideration at the Closing from to ; (ii) clarify certain definitions to the BCA; (iii) increase the number of Purchaser Shares to be issued to the Seller in connection with the Earnout such that the Seller could earn up to Purchaser Shares if the Purchaser achieved certain revenue milestones during the first year following the Closing; (iv) restructure the Earnout such that Purchaser Shares subject to the Earnout are to be issued to the Seller at the Closing rather than deposited with the Escrow Agent; and (v) update the Earnout Period to cover a period of three years commencing on January 1, 2025. The BCA Amendment No. 6 was made effective as of October 11, 2024.
| F-18 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Broad Capital Acquisition Corp. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Broad Capital, LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements other than statements of historical fact included in this Form 10-Q including statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s Annual Report on Form 10-K for the year ending December 31, 2023 filed with the SEC on March 14, 2024. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
| 3 |
Overview
We are a blank check company formed under the laws of the State of Delaware on April 16, 2021, for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar Business Combination with one or more businesses. We intend to effectuate our Business Combination using cash from the proceeds of the IPO and the sale of the private placement, our capital stock, debt or a combination of cash, stock and debt.
All activity through September 30, 2024, relates to our formation and preparation of our IPO, which closed on January 11, 2022, and our search for an initial Business Combination and our pursuit of approval of the Business Combination pursuant to the Openmarkets Merger Agreement. 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.
In our IPO, we completed the sale of 10,000,000 units that consisted of one share of common stock, par value $0.000001 per share and one right, with each right entitling the holder thereof to receive one-tenth (1/10) of a share of common stock upon consummation of our Business Combination. Simultaneously with the closing of our IPO, we closed a private placement of an aggregate of 446,358 units at a price of $10.00 per private placement unit, generating total gross proceeds of $4,463,580. On February 9, 2022, the underwriters partially exercised the Over-Allotment Option and purchased an additional 159,069 Units generating $1,590,690, and the Company completed the private sale of 4,772 private units generating $47,720 for a total of $4,511,300 from the placement units. In connection with the closing and sale of the Over-Allotment Units and the additional private placement units, $1,606,597 in proceeds from the Over-Allotment Closing (including $31,814 of the Underwriters’ deferred discount) was placed in a U.S.-based trust account maintained by Continental Stock Transfer & Trust Company, acting as trustee.
As of September 30, 2024, we had marketable securities held in the Trust account for the benefit of the Company’s public stockholders of $20,160,402 (including $712,832 of interest earned during the nine months ended September 30, 2024). The trust fund account is invested in interest-bearing U.S. government securities and the income earned on those investments is also for the benefit of our public stockholders.
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.
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, 2024, we had a net loss of $108,671 consisting of formation and operating costs of $178,995 and franchise tax of $40,000 and income tax of $36,586 and interest expenses of $67,308 offset by interest earned on marketable securities held in Trust of $214,218. For the nine months ended September 30, 2024, we had a net loss of $1,025,807 consisting of formation and operating costs of $1,303,310 and franchise tax of $120,000 and income tax of $124,495 and interest expenses of $190,834 offset by interest earned on marketable securities held in Trust of $712,832.
By comparison, for the three months ended September 30, 2023, we had a net loss of $185,725 consisting of formation and operating costs of $612,607, franchise taxes of $50,000, income taxes of $123,182 and interest expenses of $36,516, adjusted by interest income earned on marketable securities held in trust account in the amount of $636,580. For the nine months ended September 30, 2023, we had a net loss of $497,939 consisting of formation and operating costs of $1,939,085, franchise taxes of $179,206, income taxes of $400,849 and interest expenses of $66,809, adjusted by interest income earned on marketable securities held in trust account in the amount of $2,088,010.
| 4 |
Recent Developments
As previously reported by the Company on its Current Report on Form 8-K filed on January 24, 2023, on January 18, 2023, the Company entered into a definitive Agreement and Plan of Merger and Business Combination Agreement, as amended by BCA Amendment No. 1 dated August 1, 2023 and BCA Amendment No. 2 effective January 9, 2024 (the “Openmarkets Merger Agreement” or “BCA”) with Openmarkets Group Pty Ltd, an Australian proprietary limited company (the “Target”), BMYG OMG Pty Ltd, an Australian proprietary limited company and Broad Capital LLC, solely in its capacity as the Company’s sponsor.
Pursuant to the Openmarkets Merger Agreement, prior to the closing (the “Closing”) of the contemplated transactions (collectively, the “Business Combination”), the Parties will cause the Company to move its domicile from the State of Delaware to Australia by merging a to-be-formed Delaware corporation (“Merger Sub”), which shall be wholly-owned by a to-be-formed Australian corporation (the “Purchaser”) with and into the Company, with the Company continuing as the surviving entity and a wholly-owned subsidiary of the Purchaser (the “Redomestication Merger”).
As a result of the Redomestication Merger, (i) each issued and outstanding share of the Company’s common stock, par value $0.000001 per share (the “Company Common Stock”), will convert into the right to receive one share of common stock of the Purchaser (the “Purchaser Shares”); (ii) each of the Company’s units (the “Company Units”), comprised of one share of Company Common Stock and one right to receive one-tenth of one share of Company Common Stock upon the Closing (each a “Company Right”), shall convert into the right to receive one unit of the Purchaser, comprised of one Purchaser Share and one right to receive one-tenth of one Purchaser Share upon the Closing (each a “Purchaser Right”); and (iii) each Company Right shall be converted into the right to receive one Purchaser Right. For more information on the Openmarkets Merger and the Openmarkets Merger Agreement, see “Item 1. Business” and please refer to our Current Report on Form 8-K, filed with the SEC on January 18, 2023.
Liquidity and Capital Resources
As of September 30, 2024, the Company had $30,680 of cash in its operating bank account.
The Company’s liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the payment of $25,000 from the Sponsor to cover for certain offering costs on the Company’s behalf in exchange for issuance of the insider shares (as defined in Note 4). Following the Initial Public Offering of the Company on January 13, 2022, a total of $133,533 under the promissory note was repaid on January 19, 2022, and the Company’s liquidity has been satisfied through the net proceeds from the consummation of the Initial Public Offering and the Private Placement held outside of the Trust Account. In addition, to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, provide the Company Working Capital Loans (as defined in Note 5). As of September 30, 2024, there was $1,088,861 outstanding under the Working Capital Loan. By comparison, as of December 31, 2023, there was $754,748 under Working Capital Loan.
Pursuant to the January 2023 Stockholder Meeting, the June 2023 Stockholder Meeting and January 2024 Stockholder Meeting, each to extend the Termination Date and to provide for the payment of extension payments to the Trust Account, monthly extension loan advances (the “Extension Loan”) have occurred on the Company’s behalf to fund the required payment by the Sponsor or its affiliate or designee into the Trust Account in exchange for a non-interest bearing, unsecured promissory note payable upon consummation of a business combination. As of September 30, 2024, there was $3,323,628 outstanding under the Extension Loan and as of December 31, 2023, there was $2,903,628 outstanding under the Extension Loan.
Based on the foregoing, management believes that the Company expects to continue to incur significant costs in pursuit of the consummation of a Business Combination. The Company’s liquidity needs prior to the consummation of the Initial Public Offering had been satisfied through proceeds from notes payable and from the issuance of common stock. However, the $30,680 in cash might not be sufficient to allow the Company to operate for at least the next 12 months from the issuance of the financial statements. Additionally, the combination period is less than one year from the date of the issuance of the financial statements. As a result, there is substantial doubt that the Company can sustain operations for a period of at least one-year from the issuance date of these financial statements.
| 5 |
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 needed. 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.
Going Concern Consideration
The Company expects to incur significant costs in pursuit of its financing and acquisition plans. In connection with the Company’s assessment of going concern considerations in accordance with 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 unsuccessful in consummating an initial business combination within the prescribed period of time from the closing of the Initial Public Offering, the requirement that the Company cease all operations, redeem the Public Shares and thereafter liquidate and dissolve raises substantial doubt about the ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Management has determined that the Company has funds that are sufficient to fund the working capital needs of the Company until the consummation of an initial business combination or the winding up of the Company as stipulated in the Company’s amended and restated memorandum of association. The accompanying financial statement has been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern.
Contractual obligations
As of September 30, 2024, we do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay an affiliate of our Sponsor a monthly fee of $10,000 for office space, utilities and administrative support provided to the Company and deferred underwriting commission payable to the underwriter. We began incurring these fees on January 13, 2022 and will continue to incur these fees monthly until the earlier of the completion of the initial Business Combination and the Company’s liquidation.
For the nine months ended September 30, 2024, the Company incurred $90,000 in fees related to this services by the Sponsor. By comparison, for the nine months ended September 30, 2023, $90,000 of expense was recorded and included in formation and operating costs in the statement of operations.
The underwriter is entitled to deferred commissions of $3,555,674 from the Units sold in the Initial Public Offering. The deferred commissions will become payable to the underwriter from the amounts held in the Trust Account solely if we complete a Business Combination, subject to the terms of the underwriting agreement.
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Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America 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 financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have not identified any critical accounting policies.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on our condensed financial statements.
JOBS Act
The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We will qualify as an “emerging growth company” and under the JOBS Act will be 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 financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
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 auditor’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 auditor’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 IPO or until we are no longer an “emerging growth company,” whichever is earlier.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of September 30, 2024, we were not subject to any market or interest rate risk. Following the consummation of our initial public offering, the net proceeds received into the Trust Account, have been invested in U.S. government treasury bills, notes or bonds with a maturity of 185 days or less or in certain money market funds that invest solely in U.S. treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure controls and procedures are controls and other procedures that are 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 our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
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Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended September 30, 2024, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this report, our disclosure controls and procedures were not effective at a reasonable assurance level and, accordingly, provided reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
Changes in Internal Control over Financial Reporting
During the most recently completed fiscal quarter ended September 30, 2024, there was no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K covering the period from January 1, 2023 through December 31, 2023 filed with the SEC, except we may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.
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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
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Broad Capital Acquisition Corp | ||
| Date: November 12, 2024 | By: | /s/ Johann Tse |
| Johann Tse | ||
| Chief Executive Officer | ||
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