UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the fiscal year ended
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) | (IRS Employer Identification No.) |
(Address of principal executive offices and 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(s) | Name of each exchange on which registered | ||
| The | ||||
| The | ||||
| The | ||||
| The |
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section
232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth 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
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. Yes ☐ No
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of September 28, 2023, there were
BLUE WORLD ACQUISITION CORPORATION
TABLE OF CONTENTS
i
CERTAIN TERMS
References to “Blue World,” the “Company,” “our Company,” “our,” “us” or “we” refer to Blue World Acquisition Corporation, a blank check company incorporated on July 19, 2021 as a Cayman Islands exempted corporation and formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this Annual Report on Form 10-K as our “initial business combination.” References to our “Sponsor” refer to Blue World Holdings Limited. References to “equity-linked securities” are to any securities of the Company which are convertible into, or exchangeable or exercisable for, equity securities of the Company, including any securities issued by the Company which are pledged to secure any obligation of any holder to purchase equity securities of the Company. References to the “SEC” are to the U.S. Securities and Exchange Commission. References to our “initial public offering” refer to our initial public offering, which closed on February 2, 2022 (the “Closing Date”). References to “public shares” are to shares of our Class A ordinary shares sold as part of the units in our initial public offering. References to “public shareholders” are to the holders of our public shares.
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain statements in this Annual Report on Form 10-K (this “Report” or “Annual Report”) may constitute “forward looking statements” for purposes of the federal securities laws. Our forward looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future and the statements under “Item 7. 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. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,”, “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward looking statements, but the absence of these words does not mean that a statement is not forward looking. Forward looking statements in this Annual Report on Form 10-K may include, for example, statements about:
| ● | our ability to select an appropriate target business or businesses; | |
| ● | our ability to complete our initial business combination; | |
| ● | our expectations around the performance of the prospective target business or businesses; | |
| ● | our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination; | |
| ● | our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination; | |
| ● | our potential ability to obtain additional financing to complete our initial business combination; | |
| ● | our pool of prospective target businesses; | |
| ● | the ability of our officers and directors to generate a number of potential acquisition opportunities; | |
| ● | our public securities’ potential liquidity and trading; | |
| ● | the lack of a market for our securities; | |
| ● | the use of proceeds not held in the trust account described below or available to us from interest income on the trust account balance; | |
| ● | the trust account not being subject to claims of third parties; | |
| ● | our financial performance; or | |
| ● | the other risk and uncertainties discussed in “Item 1A. Risk Factors,” elsewhere in this Annual Report on Form 10-K and in our other filings with the SEC. |
The forward looking statements contained in this Annual Report on Form 10-K are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward looking statements. These risks and uncertainties include, but are not limited to, those factors described under “Part I, Item 1A. Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward looking statements. We undertake no obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
ii
PART I
Item 1. Business Overview.
We are a blank check exempted company incorporated in the Cayman Islands on July 19, 2021 with limited liability (meaning our public shareholders have no liability, as shareholders of the Company, for the liabilities of the Company over and above the amount paid for their shares) to serve as a vehicle to effect a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more target businesses (the “Business Combination”). Our efforts to identify a prospective target business will not be limited to a particular industry or geographic location. We intend to utilize cash derived from the proceeds of our initial public offering (the “IPO”), our securities, debt or a combination of cash, securities and debt, in effecting a Business Combination. We have not selected any target business for our initial Business Combination.
Our efforts to identify a prospective target business were primarily in the marine leisure, cruise, marine infrastructure and engineering, general hospitality, travel and tourism, marine services, logistics and supply chain, offshore energy solutions and related industry segments. We are not limited to a particular region for purposes of consummating an initial Business Combination, however, we may focus on targets that, regardless of geographic location of operations or corporate offices, have viable synergies with the Asia Pacific and the U.S. markets for the above industry segments, either physically or virtually. Though our sponsor, Blue World Holdings Limited (the “Sponsor”), is a Hong Kong company, a majority of our management are located outside of China (including Hong Kong and Macau), and we will not undertake our initial Business Combination with any entity that conducts a majority of its business or is headquartered in China (including Hong Kong and Macau).
Even though a majority of our management are located outside China, our Sponsor and some of our officers and directors have signature ties to China. Specifically, our Sponsor is a Hong Kong company located in Hong Kong. Our Chief Executive Officer, Mr. Liang Shi, and our Chief Financial Officer, Mr. Tianyong Yan, who are both directors, are located in China. Mr. Zhenyu Li, one of our independent directors, though located outside China, is a Chinese citizen. Except as mentioned above, the other officer and two directors are all non-Chinese citizens located outside China. As a result, because of such significant ties to China, it may make us a less attractive partner to a non-China-based target company, which may therefore limit the pool of acquisition candidates available to us.
We may also be subject to risks due to uncertainty of the interpretation and the application of the PRC laws and regulations. The PRC government initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. In particular, on February 17, 2023, the Chinese Securities Regulatory Commission (the “CSRC”) issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”) and relevant supporting guidelines (collectively, the “New Administrative Rules Regarding Overseas Listings”), which came into effect on March 31, 2023. According to the New Administrative Rules Regarding Overseas Listings, among other things, a domestic company in the PRC that seeks to offer and list securities in overseas markets shall fulfill the filing procedure with the CSRC as per requirement of the Trial Measures. On February 24, 2023, the CSRC promulgated the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies (the “Confidentiality and Archives Administration Provisions”), which also became effective on March 31, 2023. The Confidentiality and Archives Administration Provisions set out rules, requirements and procedures relating to provision of documents, materials and accounting archives for securities companies, securities service providers, overseas regulators and other entities and individuals in connection with overseas offering and listing, including without limitation to, domestic companies that carry out overseas offering and listing (either in direct or indirect means) and the securities companies and securities service providers (either incorporated domestically or overseas) that undertake relevant businesses shall not leak any state secret and working secret of government agencies, or harm national security and public interest, and a domestic company shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level, if it plans to, either directly or through its overseas listed entity, publicly disclose or provide any documents and materials that contain state secrets or working secrets of government agencies. Since the New Administrative Rules Regarding Overseas Listings and the Confidentiality and Archives Administration Provisions are newly promulgated, and the interpretation and implementation thereof involves uncertainties, we cannot assure that we will be able to complete the relevant filings in a timely manner or fulfil all the regulatory requirements thereunder if we are required to complete such filings, and it is highly uncertain how or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our capability to complete a Business Combination within a prescribed time period, accept foreign investments, and post-combination entity’s ability to conduct its business or list on an U.S. exchange or other foreign exchange. See “Part I – Item 1. – Permission Required from the PRC Authorities for a Business Combination and Relevant PRC Regulations” starting on page 7 of this Annual Report.
1
Though we are not a PRC operating entity, however, we cannot assure you that our conclusion will not be revoked by the Chinese government or there is any change in the PRC laws, regulations or rules in the future would lead different outcome, due to the ties our management and Sponsor have with China. The governing PRC laws and regulations are sometimes vague and uncertain and can change quickly with little advance notice, which may result in a material change in our search for a target business and/or the value of our securities, or cause the value of our securities after we complete our Business Combination to significantly decline or be worthless, or substantially limit or completely hinder the post-combined company’s ability to offer or continue to offer securities to investors. See “Part I – Item 1A. Risk Factors” on page 10 of this Annual Report. The Chinese government may intervene or influence the operations of the PRC operating entities at any time and may exert more control over offerings conducted overseas, which could result in a material change in our operations and/or the value of our securities. In addition, any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless. Changes in China’s economic, political or social conditions, as well as possible interventions and influences of any government policies and actions; as well as uncertainties with respect to the PRC legal system could have a material adverse effect on our operation and the value of our securities. For instance, (i) as the date of this Annual Report, we are not required to obtain any permission from China authorities nor received any objection or restriction from Chinese authorities to list our securities in U.S. exchanges, however, we cannot guarantee that PRC authorities may initiate any change in its law, rules or regulations, or governmental policies that would require permission or scrutiny from relevant PRC authorities for our listing; or any law, regulation, rules and policies will become effective and enforceable while are listing on Nasdaq and seeking a target for the initial Business Combination that could substantially affect our operation and the value of our securities may depreciate quickly even become worthless. See “Part I – Item 1.— Permission Required from the PRC Authorities for a Business Combination and Relevant PRC Regulations” on page 7; and (ii) prior to the consummation of our initial Business Combination, our operation involves searching and identifying suitable targets, conducting due diligence on targets, negotiating and consummating our initial Business Combination. Though we will not undertake our initial Business Combination with any entity that conducts a majority of its business or is headquartered in China (including Hong Kong and Macau), we are subject to risks and uncertainties about future actions of the PRC government or law enforcement to refrain our activities or operation due to the significant ties to China of our Sponsor, officers and directors, which would likely result in a material change in our search for a target business and/or the value of our securities, significantly limit or completely hinder our ability to offer or continue to offer our securities to investors, and cause the value of our securities significantly decline or become worthless. See “Part I – Item 1A. Risk Factors” on page 10 of this Annual Report.
Initial Public Offering and Private Placement
On August 5, 2021, Blue World Holdings Limited (the “Sponsor”) acquired 2,300,000 Class B ordinary shares, par value $0.0001 per share (the “Class B Ordinary Shares”), for an aggregate purchase price of $25,000 (“Founder Shares”).
On February 2, 2022, we consummated the IPO of 9,200,000 units (the “Public Units”), which included 1,200,000 Public Units issued upon the full exercise of the underwriter’s over-allotment option. Each Public Unit consists of one Class A Ordinary Share, $0.0001 par value per share (the “Class A Ordinary Share”), one-half of one redeemable warrant (the “Warrants”), each whole Warrant entitling the holder thereof to purchase one Class A Ordinary Share at an exercise price of $11.50 per share, and one right (the “Right”), each one Right entitling the holder thereof to exchange for one-tenth of one Class A Ordinary Share upon the completion of the initial Business Combination. The Public Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $92.0 million.
On February 2, 2022, simultaneously with the consummation of the IPO, we completed the private sale (the “Private Placement”) of 424,480 units (the “Private Units”) including 378,480 Private Units to the Sponsor and 46,000 Private Units to Maxim Group LLC (“Maxim”), the sole underwriter of the IPO, respectively, at a purchase price of $10.00 per Private Unit, generating gross proceeds to us of approximately $4.2 million.
The proceeds of $92.9 million ($10.10 per Public Unit) in the aggregate from the IPO and the Private Placement, were placed in a trust account (the “Trust Account”) established for the benefit of our public shareholders and the underwriter of the IPO with Continental Stock Transfer & Trust Company (“Continental”) acting as trustee.
Our management has broad discretion with respect to the specific application of the proceeds of the IPO and the Private Placement that are held out of the Trust Account, although substantially all the net proceeds are intended to be applied generally towards consummating a business combination and working capital.
2
We presently have no revenue and have had losses since inception from incurring formation and operating costs. We have relied upon the sale of our securities and loans from the Sponsor and other parties to fund our operations.
On March 11, 2022, we announced that holders of the Company’s Public Units may elect to separately trade the Class A Ordinary Shares, Warrants, and Rights included in its Public Units, commencing on or about March 16, 2022.
The Class A Ordinary Shares, Warrants, and Rights are trading on the Nasdaq Global Market (“Nasdaq”) under the symbols “BWAQ,” “BWAQW,” and “BWAQR,” respectively. Public Units not separated will continue to trade on Nasdaq under the symbol “BWAQU”. Holders of Public Units will need to have their brokers contact the Company’s transfer agent, Continental, in order to separate the holders’ Public Units into Class A Ordinary Shares, Warrants, and Rights.
Proposed Transactions with TOYO Solar
On August 10, 2023, Blue World entered into the Agreement and Plan of Merger (as the same may be amended, restated or supplemented, the “Business Combination Agreement”) with TOYO Co., Ltd, a Cayman Islands exempted company (“PubCo”), TOYOone Limited, a Cayman Islands exempted company (“Merger Sub”), TOPTOYO INVESTMENT PTE. LTD., a Singapore private company limited by shares (“SinCo”), Vietnam Sunergy Cell Company Limited, a Vietnamese company, (the “TOYO Solar”, together with PubCo, Merger Sub and SinCo, the “Group Companies”, or each individually, a “Group Company”), Vietnam Sunergy Joint Stock Company, a Vietnam joint stock company (“VSUN”), and Fuji Solar Co., Ltd, a Japanese company (“Fuji Solar”, together with VSUN, the “Shareholders”, or individually, a “Shareholder”).
TOYO Solar, originating from the Bloomberg NEF Tier 1 listed solar module producer, VSUN, operates out of Phu Tho Province, Vietnam. TOYO Solar’s core operations involve the manufacturing and sales of solar cells.
Pursuant to the Business Combination Agreement, (a) the Group Companies, VSUN and Fuji Solar shall consummate a series of transactions involving the Group Companies, including (A) PubCo acquiring one hundred percent (100%) of the issued and paid-up share capital of SinCo from Fuji Solar in exchange for one (1) ordinary share of PubCo, par value US$0.0001 per share (the “PubCo Ordinary Shares” and such transaction, the “Share Exchange”), and (B) SinCo acquiring one hundred percent (100%) of the issued and outstanding shares of capital stock of TOYO Solar from VSUN at an aggregate consideration of no less than US$50,000,000 (the “SinCo Acquisition,” and together with the Share Exchange, the “Pre-Merger Reorganization”), as a result of which (i) SinCo shall become a wholly-owned subsidiary of PubCo, (ii) TOYO Solar shall become a wholly-owned subsidiary of SinCo; and (iii) immediately prior to the closing of the SinCo Acquisition, Fuji Solar (the “Seller”) shall hold an aggregate of 41,000,000 PubCo Ordinary Shares, representing all issued and outstanding share capital of PubCo, and (b) following the consummation of the Pre-Merger Reorganization, Blue World shall merge with and into Merger Sub, with Merger Sub continuing as the surviving company (the “Merger”), as a result of which, among other things, all of the issued and outstanding securities of Blue World immediately prior to the filing of the plan of merger with respect to the Merger (the “Plan of Merger”) to the Registrar of Companies of the Cayman Islands, or such later time as may be specified in the Plan of Merger (the “Merger Effective Time”) shall no longer be outstanding and shall automatically be cancelled, in exchange for the right of the holders thereof to receive substantially equivalent securities of PubCo, in each case, upon the terms and subject to the conditions set forth in the Business Combination Agreement and in accordance with the provisions of the Companies Act (Revised) of the Cayman Islands and other applicable laws. The Merger, the Pre-Merger Reorganization and each of the other transactions contemplated by the Business Combination Agreement or any of the other relevant transactional documents are collectively referred to as “Transactions.”
In connection with the execution of the Business Combination Agreement, certain additional agreements were entered into or to be entered into pursuant to the Business Combination Agreement, including, among others, the Sponsor Support Agreement, Shareholder Lock-Up and Support Agreement, the Sponsor Lock-Up Agreement the Warrant Assumption Agreement.
3
Extensions, Related Redemptions and Extension Notes
Blue World initially had until February 2, 2023 to consummate an initial business combination. Pursuant to Blue World’s then effective Amended and Restated Memorandum and Articles of Association, if Blue World anticipates that it may not be able to consummate an initial business combination by February 2, 2023, it may elect to extend the period to consummate a business combination up to three times, each by an additional three-month extension, for a total of up to nine months to November 2, 2023, by depositing $920,000 into the Trust Account for each extension. On February 2, 2023, $920,000 was deposited into the Trust Account to extend the period of time to consummate an initial Business Combination for additional three months till May 2, 2023. The extension payment was sourced from the loans provided by the Sponsor as evidenced by an unsecured promissory note in the principal amount of $920,000 issued to the Sponsor.
May 2023 Extension Meeting
On May 2, 2023, Blue World held an extraordinary general meeting (the “May 2023 Meeting”) at which its shareholders approved the adoption of the Second Amended and Restated Memorandum and Articles of Association of Blue World, which provides that Blue World has until May 2, 2023 to complete an initial Business Combination, and may elect to extend the period to consummate an initial Business Combination up to nine times, each by an additional one-month extension, for a total of up to nine months to February 2, 2024 by depositing $0.0295 per public share into the Trust Account for each monthly extension. In connection with the May 2023 Meeting, 2,612,769 Class A Ordinary Shares were rendered for redemption, and approximately $27.41 million was released from the Trust Account to pay such redeeming shareholders.
As a result of May 2023 Meeting, upon the shareholders’ approval, on May 2, 2023, Blue World and Continental entered into the amendment to the Investment Management Trust Agreement originally dated January 31, 2022 (the “Trust Agreement”). On May 2, 2023, the Sponsor deposited $194,324 into the Trust Account to extend the period that Blue World must complete an initial Business Combination from May 2, 2023 to June 2, 2023, which was evidenced by an unsecure promissory note issued by Blue World to the Sponsor. On June 2, 2023, the Sponsor deposited $194,324 into the Trust Account to extend the period that Blue World must complete an initial Business Combination from June 2, 2023 to July 2, 2023, which was evidenced by an unsecure promissory note issued by Blue World to the Sponsor.
June 2023 Extension Meeting
On June 30, 2023, Blue World held an extraordinary general meeting (the “June 2023 Meeting”) at which the Blue World shareholders approved the adoption of the Third Amended and Restated Memorandum and Articles of Association of Bule World, which provides that Blue World has until July 2, 2023 to complete a business combination, and may elect to extend the period to consummate a business combination up to nine times, each by an additional one-month extension, for a total of up to nine months to April 2, 2024, by depositing $60,000 each month to the Trust Account. As a result of June 30 Meeting, upon the shareholders’ approval, on June 30, 2023, Blue World and Continental entered into the amendment to the Trust Agreement. In connection with the June 2023 Meeting, 2,749,465 Class A Ordinary Shares were rendered for redemption, and approximately $29.31 million was released from the Trust Account to pay such redeeming shareholders.
On June 30, 2023, $60,000 was deposited into the Trust Account to extend the period that Blue World must complete an initial Business Combination from July 2, 2023 to August 2, 2023. On July 31, 2023, another $60,000 was deposited into the Trust Account for Public Shareholders, which enabled Blue World to extend the period of time it has to consummate its initial business combination by one month from August 2, 2023 to September 2, 2023. On September 1, 2023, another $60,000 was deposited into the Trust Account for Public Shareholders, which enabled Blue World to extend the period of time it has to consummate its initial business combination by one month from September 2, 2023 to October 2, 2023. On September 27, 2023, another $60,000 was deposited into the Trust Account for Public Shareholders, which enabled Blue World to extend the period of time it has to consummate its initial business combination by one month from October 2, 2023 to November 2, 2023.
As of the date of this Annual Report, an aggregate of $1,548,648 had been deposited into the Trust Account for the extensions (the “Extension Payments”), for all of which Blue World issued 7 unsecure promissory notes to the Sponsor, respectively (the “Extension Notes”).
At the June 2023 Meeting, among the other proposals, the shareholders of Blue World also approved the release of the funds held in the escrow account (the “Escrow Account”) pursuant to the D&O Reserve Fund Escrow Agreement, dated January 31, 2022 (the “D&O Indemnity Escrow Agreement”), by and between Blue World and Continental Stock Transfer & Trust Company, as escrow agent, on July 2, 2023 or such a later date immediately following the purchase of an alternative D&O insurance. Upon the approval, Blue World secured an alternative D&O insurance, effective on July 1, 2023. On July 4, 2023, a total of $500,000 funds held in the Escrow Account was released to Blue World, a portion of which was used to purchase the alternative D&O insurance.
4
Outstanding Promissory Notes and Working Capital Loans
As of the date of this Annual Report, we have outstanding loans from the Sponsor in the aggregated amount of $520,000 for working capital purpose, which include (i) an unsecured promissory note dated November 30, 2022 in the amount of $400,000 to the Sponsor (the “November 2022 Note”), and (ii) an unsecured promissory note dated July 31, 2023 in the amount of $120,000 to the Sponsor (the “July 2023 Note,” together with the November 2022 Note, collectively, the “Sponsor Notes”).
Effecting a Business Combination
We will either (1) seek shareholder approval of our initial Business Combination at a meeting called for such purpose at which public shareholders may seek to redeem their public shares, regardless of whether they vote for or against the proposed Business Combination, into their pro rata share of the aggregate amount then on deposit in the Trust Account (net of taxes payable) or (2) provide our public shareholders with the opportunity to sell their public shares to us by means of a tender offer (and thereby avoid the need for a shareholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the Trust Account (net of taxes payable), in each case subject to the limitations described herein. Notwithstanding the foregoing, our initial shareholders, including the Sponsor, officers and directors and Maxim have agreed not to redeem the founder shares, private shares, the representative shares held by them into their pro rata share of the aggregate amount then on deposit in the Trust Account. The decision as to whether we will seek shareholder approval of our proposed Business Combination or allow shareholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek shareholder approval. If we so choose and we are legally permitted to do so, we will have the flexibility to avoid a shareholder vote and allow our shareholders to sell their shares pursuant to the tender offer rules of the Securities and Exchange Commission, or SEC. In that case, we will file tender offer documents with the SEC which will contain substantially the same financial and other information about the initial Business Combination as is required under the SEC’s proxy rules. We will consummate our initial Business Combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek shareholder approval, a majority of the issued and outstanding ordinary shares voted are voted in favor of the Business Combination.
We shall not undertake our initial Business Combination with any entity that conducts a majority of its business or is headquartered in China (including Hong Kong and Macau). TOYO Solar operates in Vietnam and does not conduct a majority of its business nor is headquartered in China (including Hong Kong and Macau)
We currently have until November 2, 2023 to consummate our initial Business Combination. However, if we anticipate that we may not be able to consummate our initial Business Combination by November 2, 2023, we may, but are not obligated to, extend the period of time to consummate a Business Combination by an additional one month each time (for a total of up to April 2, 2024 to complete a Business Combination). Pursuant to the terms of our amended and restated memorandum and articles of association and the Trust Agreement, in order to extend the time available for us to consummate our initial Business Combination, our sponsor or their affiliates or designees, upon five days advance notice prior to the applicable deadline, must deposit into the Trust Account for each one-month extension, $60,000, on or prior to the date of the applicable deadline. Our public shareholders will not be afforded an opportunity to vote on the extensions as described above or redeem their shares in connection with such extensions. The sponsor will receive a non-interest bearing, unsecured promissory note equal to the amount of any such deposit that will not be repaid in the event that we are unable to close a Business Combination unless there are funds available outside the Trust Account to do so. Such extension notes would either be paid upon consummation of our initial Business Combination, or, at the lender’s discretion, converted upon consummation of our Business Combination into additional private units at a price of $10.00 per unit. Our shareholders have approved the issuance of the private units upon conversion of such extension notes, to the extent the holder wishes to so convert such extension notes at the time of the consummation of our initial Business Combination. In the event that we receive notice from our Sponsor five days prior to the applicable deadline of their intent to effect an extension, we intend to issue a press release announcing such intention at least three days prior to the applicable deadline. In addition, we intend to issue a press release the day after the applicable deadline announcing whether or not the funds had been timely deposited. Our Sponsor and its affiliates or designees are not obligated to fund the Trust Account to extend the time for us to complete our initial Business Combination. To the extent that some, but not all, of our founders, decide to extend the period of time to consummate our initial Business Combination, such sponsor (or its affiliates or designees) may deposit the entire amount required. If we are unable to consummate our initial Business Combination within such time period, we will, as promptly as possible but not more than ten business days thereafter, redeem 100% of our outstanding public shares for a pro rata portion of the funds held in the Trust Account, including a pro rata portion of any interest earned on the funds held in the Trust Account and not previously released to us or necessary to pay our taxes, and then seek to liquidate and dissolve. However, we may not be able to distribute such amounts as a result of claims of creditors which may take priority over the claims of our public shareholders. In the event of our liquidation and subsequent dissolution, the public warrants and public rights will expire and will be worthless.
5
If we are unable to consummate our initial Business Combination within this time period, we will liquidate the Trust Account, distribute the proceeds held therein to our public shareholders and wind up the company. If we are forced to liquidate, we anticipate that we would distribute to our public shareholders the amount in the Trust Account calculated as of the date that is two days prior to the distribution date (including any accrued interest). Prior to such distribution, we would be required to assess all claims that may be potentially brought against us by our creditors for amounts they are actually owed and make provision for such amounts, as creditors take priority over our public shareholders with respect to amounts that are owed to them. We cannot assure you that we will properly assess all claims that may be potentially brought against us. As such, our shareholders could potentially be liable for any claims of creditors to the extent of distributions received by them as an unlawful payment in the event we enter an insolvent liquidation.
Pursuant to the Nasdaq listing rules, our initial Business Combination must be with a target business or businesses whose collective fair market value is at least equal to 80% of the balance in the Trust Account (excluding any deferred underwriting discounts and commissions and taxes payable on the income earned on the Trust Account) at the time of the execution of a definitive agreement for such Business Combination, although this may entail simultaneous acquisitions of several target businesses. The fair market value of the target will be determined by our board of directors based upon one or more standards generally accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). Our board of directors will have broad discretion in choosing the standard used to establish the fair market value of any prospective target business. The target business or businesses that we acquire may have a collective fair market value substantially in excess of 80% of the Trust Account balance. We will not be required to comply with the 80% fair market value requirement if we are delisted from Nasdaq.
We are not required to obtain an opinion from an unaffiliated third party that the target business we select has a fair market value in excess of at least 80% of the balance of the Trust Account unless our board of directors cannot make such determination on its own. We are also not required to obtain an opinion from an unaffiliated third party indicating that the price we are paying is fair to our shareholders from a financial point of view unless the target is affiliated with our officers, directors, initial shareholders or their affiliates.
We currently anticipate structuring our initial Business Combination to acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial Business Combination where we merge directly with the target business or where we acquire less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or shareholders or for other reasons, but we will only complete such Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our shareholders prior to the Business Combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the Business Combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we could acquire a 100% controlling interest in the target; however, as a result of the issuance of a substantial number of new shares, our shareholders immediately prior to our initial Business Combination could own less than a majority of our issued and outstanding shares subsequent to our initial Business Combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, only the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% fair market value test.
6
Permission Required from the PRC Authorities for a Business Combination and Relevant PRC Regulations
We are a blank check company incorporated in Cayman Islands with no operations or subsidiaries in China. Currently our company does not own or control any equity interest in any PRC company or operate any business in China. The China Securities Regulatory Commission (the “CSRC”) has not issued any definitive rule or interpretation concerning whether listing of our securities are subject to the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the “M&A Rules”), and we believe that we are not required to obtain any licenses or approvals, under applicable PRC laws and regulations, for our listing on Nasdaq and seeking a target for the initial Business Combination. Further, according to the Measures for Cybersecurity Review, which was promulgated on December 28, 2021 and became effective on February 15, 2022, online platform operators holding more than one million users/users’ individual information shall be subject to cybersecurity review before listing abroad. As we are a blank check company and are not involved in the collection of personal data of at least 1 million users or implicate cybersecurity and we will not undertake our initial business combination with any entity that conducts a majority of its business or is headquartered in China (including Hong Kong and Macau), we do not believe that we are or the post-combination entity will be a “network platform operator(s)”, or subject to the cybersecurity review of the Cyberspace Administration of China (the “CAC”). As of the date hereof, we have not received any inquiry, notice, warning, sanction or any regulatory objection to our listing from any relevant PRC authorities.
Further, we do not consider ourselves a China-based issuer, in particular, as specified in the Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, and five supporting guidelines promulgated by the CSRC on February 17, 2023, which became effective on March 31, 2023. According to the Trial Administration Measures, an issuer is a “domestic [Chinese] company” if the issuer meets both of the following conditions and thus, subject to the requirements for domestic [Chinese] companies seeking to offer or list securities overseas, both directly and indirectly, thereunder: (i) any of the total assets, net assets, revenues or profits of the domestic operating entities of the issuer in the most recent accounting year accounts for more than 50% of the corresponding figure in the issuer’s audited consolidated financial statements for the same period; and (ii) its major operational activities are carried out in China or its main places of business are located in China, or the senior managers in charge of operation and management of the issuer are mostly Chinese citizens or are domiciled in China. We are a blank check company incorporated in Cayman Islands with no operation of our own except searching for a non-China-based target for our initial Business Combination. Furthermore, we do not own or control any equity interest in any PRC company or operate any business in China, and during the fiscal year ended June 30, 2023, we do not have 50% or more of our total assets, net assets, revenues or profits located or generated in China.
As of the date of this report, no transfers, dividends, or distributions have been made by us. We have not adopted or maintained any other cash management policies and procedures and need to comply with applicable law or regulations with respect to transfer of funds, dividends and distributions, if any. Given that we are not a China-based issuer or expect to be a China-based issuer upon the consummation of our initial Business Combination, we are not subject to or will become subject to the foreign exchange control rules of the PRC.
However, applicable laws, regulations, or interpretations of PRC may change, and the relevant PRC government agencies could reach a different conclusion. There is also possibility that we may not be able to obtain or maintain such approval or that we inadvertently concluded that such approval was not required. If prior approval was required while we inadvertently concluded that such approval was not required or if applicable laws and regulations or the interpretation of such were modified to require us to obtain the approval in the future, we may face regulatory actions or other sanctions from relevant Chinese regulatory authorities. These authorities may take actions that could have a material adverse effect upon our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our securities. In addition, any changes in PRC law, regulations, or interpretations may severely affect our operations. Further, if we are required by the Trial Measures to file with the CSRC, we cannot assure you that we will be able to complete such filings in a timely manner, or even at all. The CSRC or other Chinese regulatory agencies may also take actions requiring us, or making it advisable for us, be subject to other severe consequences, which would materially affect the interest of the investors. To that extent, we may not be able to conduct the process of searching for a potential target company. Any failure of us to fully comply with new regulatory requirements may significantly limit or completely hinder our ability to continue to offer the securities, causing significant disruption to our business operations, severely damage our reputation, materially and adversely affect our financial condition and results of operations and cause the securities to significantly decline in value or become worthless.
7
Recent PCAOB Developments
We are a blank check company incorporated in Cayman Islands with our office located in the United States. We have no operations or subsidiaries in China and will not undertake our initial business combination with any entity that conducts a majority of its business or is headquartered in China (including Hong Kong and Macau). Our auditor, Marcum Asia CPAs LLP (formerly Marcum Bernstein & Pinchuk LLP) (“Marcum Asia”), headquartered in New York City, is an independent registered public accounting firm registered with the United States Public Company Accounting Oversight Board (“PCAOB”) and is subject to laws in the United States pursuant to which PCAOB conducts regular inspections to assess Marcum Asia’s compliance with applicable professional standards. The PCAOB currently has access to inspect the working papers of our auditor. Our auditor is not headquartered in mainland China or Hong Kong and was not identified in any report as a firm subject to the PCAOB’s determination.
We are not allowed to pursue a business combination with a China-based target, however, we may be subject to Holding Foreign Companies Accountable Act, as amended by the Consolidated Appropriations Act, 2023 (the “HFCAA”) and related regulations if we pursue an opportunity with a foreign company. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (“AHFCAA”), which, if signed into law, would amend the HFCAA and require the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three consecutive years. On December 29, 2022, the Consolidated Appropriations Act was signed into law by President Biden. The Consolidated Appropriations Act contained, among other things, an identical provision to the AHFCAA, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two years. If our securities are unable to be listed on another securities exchange by then, such a delisting would substantially impair your ability to sell or purchase our securities when you wish to do so, and the risk and uncertainty associated with a potential delisting would have a negative impact on the price of our securities. For instance, the HFCAA would restrict our ability to consummate a business combination with a target business unless that business met certain standards of the PCAOB and would require delisting of a company from U.S. national securities exchanges if the PCAOB is unable to inspect its public accounting firm for two consecutive years. The HFCAA also requires public companies to disclose, among other things, whether they are owned or controlled by a foreign government, specifically, those based in China. We may not be able to consummate a business combination with a favored target business due to these laws.
The documentation we may be required to submit to the SEC proving certain beneficial ownership requirements and establishing that we are not owned or controlled by a foreign government in the event that we use a foreign public accounting firm not subject to inspection by the PCAOB or where the PCAOB is unable to completely inspect or investigate our accounting practices or financial statements because of a position taken by an authority in the foreign jurisdiction could be onerous and time consuming to prepare. The HFCAA mandates the SEC to identify issuers of SEC-registered securities whose audited financial reports are prepared by an accounting firm that the PCAOB is unable to inspect due to restrictions imposed by an authority in the foreign jurisdiction where the audits are performed. If such identified issuer’s auditor cannot be inspected by the PCAOB for two consecutive years, the trading of such issuer’s securities on any U.S. national securities exchanges, as well as any over-the-counter trading in the U.S., will be prohibited.
On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA. An identified issuer will be required to comply with these rules if the SEC identifies it as having a “non-inspection” year under a process to be subsequently established by the SEC.
On November 5, 2021, the SEC approved the PCAOB’s Rule 6100, Board Determinations Under the HFCAA. Rule 6100 provides a framework for the PCAOB to use when determining, as contemplated under the HFCAA, whether it is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.
On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCAA. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions.
8
Future developments in respect of increased U.S. regulatory access to audit information are uncertain, as the legislative developments are subject to the legislative process and the regulatory developments are subject to the rule-making process and other administrative procedures.
Other developments in U.S. laws and regulatory environment, including but not limited to executive orders such as Executive Order (E.O.) 13959, “Addressing the Threat from Securities Investments That Finance Communist Chinese Military Companies,” may further restrict our ability to complete a business combination with certain China-based businesses.
Enforceability of Civil Liability
Our Chief Executive Officer and one Chief Financial Officer, who are both directors, are located in China. Our Chief Operating Officer and one director are located in Singapore. We have one director located in the United States and another one director located in Canada. Our Sponsor is a company incorporated in Hong Kong. Further, there is uncertainty if any officers and directors of the post-combination entity will be located outside the Unites States. As a result, it may be difficult, or in some cases not possible, for investors in the United States to enforce their legal rights, to effect service of process upon those officers and directors (prior to or after the Business Combination) located outside the United States, to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties on them under United States securities laws.
In particular, the PRC does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the United States and many other countries and regions, and you may have to incur substantial costs and contribute significant time to enforce civil liabilities and criminal penalties in reliance on legal remedies under PRC laws. Therefore, recognition and enforcement in the PRC of judgment of United States courts in relation to any matter not subject to a binding arbitration provision may be difficult or impossible.
There is also substantial doubt as to the enforceability in Canada against him in original actions or in actions for enforcement of judgments of U.S. courts, of liabilities based solely upon the civil liability provisions of the U.S. federal securities laws. Additionally, a judgment of a U.S. court predicated solely upon civil liability under such laws would probably be enforceable in Canada if the United States court in which the judgment was obtained has a basis for jurisdiction in the matter that was recognized by a Canadian court for such purposes; however, there is substantial doubt whether an original action could be brought successfully in Canada predicated solely upon such civil liabilities.
In addition, it is possible that the courts in Singapore may not (i) recognize and enforce judgments of courts in the United States, based upon the civil liability provisions of the securities laws of the United States or any state or territory of the United States (ii) enter judgments in original actions brought in the Singapore courts based solely on the civil liability provisions of these securities laws. An in personam final and conclusive judgment in the federal or state courts of the United States under which a fixed or ascertainable sum of money is payable may generally be enforced as a debt in the Singapore courts under the common law as long as it is established that the Singapore courts have jurisdiction over the judgment debtor. Additionally, the court where the judgment was obtained must have had international jurisdiction over the party sought to be bound in the local proceedings. However, the Singapore courts are unlikely to enforce a foreign judgment if (a) the foreign judgment is inconsistent with a prior local judgment that is binding on the same parties; (b) the enforcement of the foreign judgment would contravene the public policy of Singapore; (c) the proceedings in which the foreign judgment was obtained were contrary to principles of natural justice; (d) the foreign judgment was obtained by fraud or (e) the enforcement of the foreign judgment amounts to the direct or indirect enforcement of a foreign penal, revenue or other public law.
9
In particular, the Singapore courts may potentially not allow the enforcement of any foreign judgment for a sum payable in respect of taxes, fines, penalties or other similar charges, including the judgments of courts in the United States based upon the civil liability provisions of the securities laws of the United States or any state or territory of the United States. In respect of civil liability provisions of the United States federal and state securities law which permit punitive damages against us and our directors or executive officers, we are unaware of any decision by the Singapore courts which has considered the specific issue of whether a judgment of a United States court based on such civil liability provisions of the securities laws of the United States or any state or territory of the United States is enforceable in Singapore.
Facilities
Our executive offices are located at 244 Fifth Avenue, Suite B-88, New York, NY 10001 and our telephone number is (646) 998-9582. The cost for this space is provided to us by our Sponsor, as part of the $10,000 per month payment we make to it for office space and related services. We consider our current office space adequate for our current operations.
Employees
We currently have three officers. These individuals are not obligated to devote any specific number of hours to our matters but they intend to devote as much of their time as they deem necessary to our affairs until we have completed our initial Business Combination. The amount of time they will devote in any time period will vary based on whether a target business has been selected for our initial Business Combination and the stage of the initial Business Combination process we are in. We do not intend to have any full time employees prior to the completion of our initial Business Combination.
Item 1A. Risk Factors.
As a smaller reporting company, we are not required to include risk factors in this Annual Report. However, in addition to any risk factors disclosed in our registration statement on Form S-1 (File No.: 333-261585), which became effective on January 31, 2022, in our last Annual Report on Form 10-K, initially filed on September 16, 2022, and as amended on April 7, 2023 and May 11, 2023.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
We do not own any real estate or other physical properties materially important to our operations. We maintain our principal executive offices are located at 244 Fifth Avenue, Suite B-88, New York, NY 10001 , and our telephone number is (646) 998-9582.
Item 3. Legal Proceedings.
We are not currently a party to any material litigation or other legal proceedings brought against us. We are also not aware of any legal proceeding, investigation or claim, or other legal exposure that has a more than remote possibility of having a material adverse effect on our business, financial condition or results of operations.
Item 4. Mine Safety Disclosures.
Not applicable.
10
PART II
Item 5. Market Information.
Our Public Units, Class A Ordinary Shares, Warrants, and Rights are each traded on The Nasdaq Global Market (“Nasdaq”) under the symbols “BWAQU,” “BWAQ” “BWAQW,” and “BWAQR,” respectively.
Holders
As of the date hereof, we had 3 holders of record of our units, 3 holders of record of our separately traded Class A Ordinary Shares, 3 holders of our Class B Ordinary Shares, 1 holder of record of our separately traded Warrants, and 1 holder of record of our separately traded Rights. The number of record holders was determined from the records of our transfer agent.
Dividends
We have not paid any cash dividends on our ordinary shares to date and do not intend to pay cash dividends prior to the completion of our initial business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of our initial business combination. The payment of any cash dividends subsequent to our initial business combination will be within the discretion of our board of directors at such time. In addition, our board of directors is not currently contemplating and does not anticipate declaring any share dividends in the foreseeable future. Further, if we incur any indebtedness in connection with our initial business combination, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.
Securities Authorized for Issuance Under Equity Compensation Plans
None.
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Offerings
On August 5, 2021, the Sponsor acquired 2,300,000 Class B Ordinary Shares for an aggregate purchase price of $25,000. The issuance of such Founder Shares to the Sponsor was made pursuant to the exemption from registration under Section 4(a)(2) of the Securities Act.
On February 2, 2022, we consummated the IPO of 9,200,000 Public Units at a price of $10.00 per Public Unit, generating gross proceeds of $92,000,000. Maxim acted as the sole underwriter of the IPO. The securities sold in the IPO were sold pursuant to a registration statement on Form S-1 (File No.: 333-261585). The registration statement became effective on January 31, 2022.
Substantially concurrently with the closing of the IPO, we completed the Private Placement of 424,480 Private Units including 378,480 Private Units to the Sponsor and 46,000 Private Units to Maxim, respectively, at a purchase price of $10.00 per Private Unit,, generating gross proceeds to the Company of $4,244,800 . The Private Units are identical to the Public Units sold in the IPO, except that the holders of the Private Units have agreed not to transfer, assign or sell any of the Private Units and the underlying securities (except to certain permitted transferees) until the completion of the Company’s initial Business Combination. The issuance of the Private Units was made pursuant to the exemption from registration under Section 4(a)(2) of the Securities Act.
Substantially concurrently with the closing of the IPO, we also issued 40,000 shares of Class A Ordinary Shares (the “Representative Shares”) to Maxim as part of representative compensation. The Representative Shares are identical to the public shares except that Maxim has agreed not to transfer, assign or sell any such Representative Shares until the completion of the Company’s initial Business Combination. The issuance of the Representative Shares was made pursuant to the exemption from registration under Section 4(a)(2) of the Securities Act.
A total of $92,920,000, comprised of $92,000,000 of the proceeds from the IPO (which amount includes $3,220,000 of the underwriter’s deferred underwriting fee pursuant to the Underwriting Agreement), and $920,000 of the proceeds from the sale of the Private Units, were placed in a U.S.-based Trust Account maintained by Continental Stock, acting as trustee. We paid a total of $1,840,000 in underwriting discounts and commissions and $551,390 for other offering cost.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
Item 6. Reserved.
11
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
References to the “Company”, “us”, “our”, or “we” refer to Blue World Acquisition Corporation. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited financial statements and related notes herein.
The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with our audited financial statements and the notes related thereto which are included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Special Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors” and elsewhere in this Annual Report on Form 10-K.
Overview
We are a blank check exempted company incorporated in the Cayman Islands on July 19, 2021 with limited liability (meaning our public shareholders have no liability, as shareholders of the Company, for the liabilities of the Company over and above the amount paid for their shares) to serve as a vehicle to effect a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more target businesses (the “Business Combination”). Our efforts to identify a prospective target business will not be limited to a particular industry or geographic location. We intend to utilize cash derived from the proceeds of our initial public offering (the “IPO”), our securities, debt or a combination of cash, securities and debt, in effecting a business combination.
We presently have no revenue, have had losses since inception from incurring formation and operating costs and have had no operations other than identifying and evaluating suitable acquisition transaction candidates. We have relied upon the working capital available to us following the consummation of the IPO and the Private Placement (as defined below) to fund our operations, as well as the funds loaned by the Sponsor (as defined below), our officers, directors or their affiliates.
On February 2, 2022, we consummated the IPO of 9,200,000 units (the “Units”), which included 1,200,000 Units issued upon the full exercise of the underwriter’s over-allotment option. Each Unit consists of one Class A ordinary share, $0.0001 par value per share (the “Class A Ordinary Share”), one-half of one redeemable warrant (the “Warrants”), each whole Warrant entitling the holder thereof to purchase one Class A Ordinary Share at an exercise price of $11.50 per share, and one right (the “Right”), each one Right entitling the holder thereof to exchange for one-tenth of one Class A Ordinary Share upon the completion of our initial Business Combination. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $92,000,000.
On February 2, 2022, simultaneously with the consummation of the IPO, we completed the private sale (the “Private Placement”) of 424,480 units (the “Private Units”) including 378,480 Private Units to our sponsor, Blue World Holdings Limited (the “Sponsor”), and 46,000 Private Units to Maxim Group LLC (“Maxim”), the sole underwriter of the IPO, respectively, at a purchase price of $10.00 per Private Unit, generating gross proceeds to us of $4,244,800.
The proceeds of $ 92,920,000 ($10.10 per Unit) in the aggregate from the IPO and the Private Placement, were placed in a trust account (the “Trust Account”) established for the benefit of our public shareholders and the underwriter of the IPO with Continental Stock Transfer & Trust Company acting as trustee.
Our management has broad discretion with respect to the specific application of the net proceeds of IPO and the Private Placements, although substantially all of the net proceeds are intended to be applied generally towards consummating a Business Combination.
12
Recent Development
We initially had until February 2, 2023 to consummate our initial Business Combination. Upon the notice of the Sponsor, we extended the period of time to consummate a Business Combination for additional three months till May 2, 2023 (the “First Extension”) and deposited $920,000 into the Trust Account in connection with this First Extension sourced from the loans provided by the Sponsor as evidenced by the Extension Note (as defined below). However, if we anticipate that we may not be able to consummate our initial Business Combination by May 2, 2023, we may, but are not obligated to, further extend the period of time to consummate a Business Combination another two times by an additional three months each time by depositing $920,000 into the Trust Account for each extension and may have until November 2, 2023 to consummate our initial Business Combination.
On May 2, 2023, the Company held a special meeting of shareholders (the “May 2023 Meeting”) at which the shareholders approved the adoption of the second amended and restated memorandum and articles of association of the Company, which provides that the Company has until May 2, 2023 to complete a Business Combination, and may elect to extend the period to consummate a Business Combination up to nine times, each by an additional one-month extension (the “Monthly Extension”), for a total of up to nine months to February 2, 2024 by depositing $0.0295 per public share into the Trust Account for each Monthly Extension. As a result of the May 2023 Meeting, upon the shareholders’ approval, on May 2, 2023, the Company and Continental Stock Transfer & Trust Company, as the trustee of the Trust Account, entered into the amendment to the Investment Management Trust Agreement dated January 31, 2022. In connection with the May 2023 Meeting, 2,612,769 Class A Ordinary Shares were rendered for redemption and approximately $27.4 million was released from the Trust Account to pay such redeeming stockholders.
On May 2, 2023, a total of $194,324 was deposited into the Trust Account for the public shareholders, representing $0.0295 per remaining public share, which enables the Company to extend the period of time it has to consummate its initial business combination by one month from May 2, 2023 to June 2, 2023.
On June 2, 2023, a total of $194,324 was deposited into the Trust Account for the public shareholders, representing $0.0295 per remaining public share, which enables the Company to extend the period of time it has to consummate its initial business combination by one month from June 2, 2023 to July 2, 2023.
On June 30, 2023, the Company held an extraordinary general meeting (the “June 2023 Meeting”), where the shareholders of the Company approved the adoption of the Third Amended and Restated Memorandum and Articles of Association of Bule World, which provides that the Company has until July 2, 2023 to complete a business combination, and may elect to extend the period to consummate a Business Combination up to nine times, each by an additional one-month extension, for a total of up to nine months to April 2, 2024, by depositing $60,000 each month to the Trust Account. As a result of June 2023 Meeting, upon the shareholders’ approval, on June 30, 2023, the Company and Continental Stock Transfer & Trust Company, as the trustee of the Trust Account entered into the amendment to the Trust Agreement. In connection with the June 2023 Meeting, 2,749,465 Class A Ordinary Shares were rendered for redemption, and approximately $29.3 million was released from the Trust Account to pay such redeeming shareholders.
On June 30, 2023, a total of $60,000 of the Monthly Extension Payment was deposited into the Trust Account for the public shareholders, which enables the Company to extend the period of time it has to consummate its initial business combination by one month from July 2, 2023 to August 2, 2023.
On July 31, 2023, a total of $60,000 of the Monthly Extension Payment was deposited into the Trust Account for the public shareholders, which enables the Company to extend the period of time it has to consummate its initial business combination by one month from August 2, 2023 to September 2, 2023.
On September 1, 2023, a total of $60,000 of the Monthly Extension Payment was deposited into the Trust Account for the public shareholders, which enables the Company to extend the period of time it has to consummate its initial business combination by one month from September 2, 2023 to October 2, 2023.
On September 27, 2023, a total of $60,000 of the Monthly Extension Payment was deposited into the Trust Account for the public shareholders, which enables the Company to extend the period of time it has to consummate its initial business combination by one month from October 2, 2023 to November 2, 2023.
At the June 2023 Meeting, among the other proposals, the shareholders of the Company also approved the release of the funds held in the Escrow Account pursuant to the D&O Indemnity Escrow Agreement, by and between the Company and Continental Stock Transfer & Trust Company, as escrow agent, on July 2, 2023 or such a later date immediately following the purchase of an alternative D&O insurance. Upon the approval of the shareholders of the Company to release the funds held in the Escrow Account pursuant to the D&O Indemnity Escrow Agreement, the Company secured an alternative D&O insurance, effective on July 1, 2023. On July 4, 2023, a total of $500,000 funds held in the Escrow Account was released to Blue World, a portion of which was used to purchase the alternative D&O insurance.
13
Merger Agreement
On August 10, 2023, the Company entered into an Agreement and Plan of Merger (as the same may be amended, restated or supplemented, the “Merger Agreement”) with TOYO Co., Ltd, a Cayman Islands exempted company (“PubCo”), TOYOone Limited, a Cayman Islands exempted company (“Merger Sub”), TOPTOYO INVESTMENT PTE. LTD., a Singapore private company limited by shares (“SinCo”), Vietnam Sunergy Cell Company Limited, a Vietnamese company, (the “Company”, together with PubCo, Merger Sub and SinCo, the “Group Companies”, or each individually, a “Group Company”), Vietnam Sunergy Joint Stock Company, a Vietnam joint stock company (“VSUN”), and Fuji Solar Co., Ltd, a Japanese company (“Fuji Solar”, together with VSUN, the “Shareholders”, or individually, a “Shareholder”).
Pursuant to the Merger Agreement, (a) the Group Companies, VSUN and Fuji Solar shall consummate a series of transactions involving the Group Companies, including (A) PubCo acquiring one hundred percent (100%) of the issued and paid-up share capital of SinCo from Fuji Solar in exchange for one (1) ordinary share of PubCo, par value US$0.0001 per share (the “PubCo Ordinary Shares” and such transaction, the “Share Exchange”), and (B) SinCo acquiring one hundred percent (100%) of the issued and outstanding shares of capital stock of the Company from VSUN at an aggregate consideration of no less than US$50,000,000 (the “SinCo Acquisition,” and together with the Share Exchange, the “Pre-Merger Reorganization”), as a result of which (i) SinCo shall become a wholly-owned subsidiary of PubCo, (ii) the Company shall become a wholly-owned subsidiary of SinCo; and (iii) immediately prior to the closing of the SinCo Acquisition, Fuji Solar (the “Seller”) shall hold an aggregate of 41,000,000 PubCo Ordinary Shares, representing all issued and outstanding share capital of PubCo, and (b) following the consummation of the Pre-Merger Reorganization, BWAQ shall merge with and into Merger Sub, with Merger Sub continuing as the surviving company (the “Merger”), as a result of which, among other things, all of the issued and outstanding securities of BWAQ immediately prior to the filing of the plan of merger with respect to the Merger (the “Plan of Merger”) to the Registrar of Companies of the Cayman Islands, or such later time as may be specified in the Plan of Merger (the “Merger Effective Time”) shall no longer be outstanding and shall automatically be cancelled, in exchange for the right of the holders thereof to receive substantially equivalent securities of PubCo, in each case, upon the terms and subject to the conditions set forth in the Merger Agreement and in accordance with the provisions of the Companies Act (Revised) of the Cayman Islands and other applicable laws.
Results of Operations
We have neither engaged in any operations nor generated any operating revenues to date. Our only activities from inception through June 30, 2023 were organizational activities and those necessary to prepare for the IPO, described below. We do not expect to generate any operating revenues until after the completion of our initial Business Combination. We expect to generate non-operating income in the form of interest income on marketable securities held after the IPO. We expect that we will incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with searching for, and completing, a Business Combination.
For the year ended June 30, 2023, we had a net income of $2,181,905, which mainly consisted of dividend earned on investment held in the Trust Account of $3,169,667 and interest income of $9 offset by formation and operations costs of $987,771.
For the period from July 19, 2021 (inception) through June 30, 2022, we had a net loss of $246,892, which consists of formation and operating costs of $230,926 and share-based compensation expense of $150,379, offset by dividend earned on marketable securities held in the Trust Account of $134,401 and interest income of $12.
Liquidity and Capital Resources
As of June 30, 2023, we had cash outside the Trust Account of $746 available for working capital needs. All remaining cash is held in the Trust Account and 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 the ordinary shares. As of June 30, 2023, none of the amount on deposit in the Trust Account was available to be withdrawn as described above.
For the year ended June 30, 2023, net cash used in operating activities was $778,975 resulted from non-cash dividend earned on investment held in Trust Account of $3,169,667 and increase in prepaid expenses of $1,916, and offset by net income of $2,181,905, increase in accounts payable and accrued expenses of $167,199, and increase in due to related parties of $43,504.
For the period from July 19, 2021 (inception) through June 30, 2022, net cash used in operating activities was $182,126 resulted from net loss of $246,892, non-cash dividend earned on investment held in Trust Account of $134,401, and increase in prepaid expenses of $33,946, and offset by share-based compensation expense of $150,379, increase in accounts payable and accrued expenses of $62,734, and increase in due to related parties of $20,000.
14
For the year ended June 30, 2023, net cash provided by investing activities was $26,037,507 resulted from the withdrawals of investment held in Trust Account of $1,368,648 offset by the purchases of investment held in Trust Account of $27,406,155.
For the period from July 19, 2021 (inception) through June 30, 2022, net cash used in investing activities was $92,920,000 resulted from the purchases of investment held in Trust Account.
For the year ended June 30, 2023, net cash used in financing activities was $25,534,070 resulted from the redemption of Class A Ordinary Shares of $27,406,155 offset by the proceeds from issuance of promissory notes to a related party of $1,872,085.
For the period from July 19, 2021 (inception) through June 30, 2022, net cash provided by financing activities was $93,378,410 resulted from proceeds from sale of Public Units through the IPO, net of underwriters’ discount of $90,160,000, proceeds from sale of Private Units of $4,244,800, proceeds from issuance of promissory notes to a related party of $287,547, offset by repayments of promissory note to a related party of $287,547, payments of offering costs of $526,390 and deposits made to an Escrow Account of $500,000.
Promissory Notes - Related Party
On November 30, 2022, the Company issued an unsecured promissory note (the “Sponsor Note 1”) in the principal amount of $400,000 to the Sponsor. The proceeds of the Sponsor Note 1 was used as general working capital purposes.
On January 31, 2023, the Company issued an unsecured promissory note (the “Extension Note 1”) in the principal amount of $920,000 to the Sponsor. The proceeds of the Extension Note 1 was deposited into the Company’s Trust Account for the public shareholders, which enables the Company to extend the period of time it has to consummate its initial Business Combination by three months from February 2, 2023 to May 2, 2023.
On May 2, 2023, the Company issued an unsecured promissory note (the “Extension Note 2”) in the principal amount of $194,324 to the Sponsor. The proceeds of the Extension Note 2 was deposited into the Company’s Trust Account for the public shareholders, which enables the Company to extend the period of time it has to consummate its initial Business Combination from May 2, 2023 to June 2, 2023.
On June 2, 2023, the Company issued an unsecured promissory note (the “Extension Note 3”) in the principal amount of $194,324 to the Sponsor. The proceeds of the Extension Note 3 was deposited into the Company’s Trust Account for the public shareholders, which enables the Company to extend the period of time it has to consummate its initial Business Combination from June 2, 2023 to July 2, 2023.
On June 30, 2023, the Company issued an unsecured promissory note (the “Extension Note 4”) in the principal amount of $60,000 to the Sponsor. The proceeds of the Extension Note 4 was deposited into the Company’s Trust Account for the public shareholders, which enables the Company to extend the period of time it has to consummate its initial Business Combination from July 2, 2023 to August 2, 2023.
On July 31, 2023, the Company issued an unsecured promissory note (the “Extension Note 5”) in the principal amount of $60,000 to the Sponsor. The proceeds of the Extension Note 5 was deposited into the Company’s Trust Account for the public shareholders, which enables the Company to extend the period of time it has to consummate its initial Business Combination from August 2, 2023 to September 2, 2023.
On July 31, 2023, the Company issued an unsecured promissory note (the “Sponsor Note 2,” together with the Sponsor Note 1, collectively, the “Sponsor Notes”) in the principal amount of $120,000 to the Sponsor. The proceeds of the Sponsor Note 2, which may be drawn down from time to time until the Company consummates its initial business combination, will be used as general working capital purposes. As of June 30, 2023, the Company has drawn down $103,437 prior to the issuance of the Sponsor Note 2 on July 31, 2023.
On September 1, 2023, the Company issued an unsecured promissory note (the “Extension Note 6”) in the principal amount of $60,000 to the Sponsor. The proceeds of the Extension Note 6 was deposited into the Company’s Trust Account for the public shareholders, which enables the Company to extend the period of time it has to consummate its initial Business Combination from September 2, 2023 to October 2, 2023.
On September 28, 2023, the Company issued an unsecured promissory note (the “Extension Note 7,” together with Extension Note 1, 2, 3, 4, 5 and 6, collectively, the “Extension Notes”) in the principal amount of $60,000 to the Sponsor. The proceeds of the Extension Note 7 was deposited into the Company’s Trust Account for the public shareholders, which enables the Company to extend the period of time it has to consummate its initial Business Combination from October 2, 2023 to November 2, 2023.
The Extension Notes together with the Sponsor Notes (collectively refer herein as “Promissory Notes”) issued to the Sponsor have the same payment and conversion term as discussed below.
The Promissory Notes bear no interest and are payable in full upon the earlier to occur of (i) the consummation of the Business Combination or (ii) the date of expiry of the term of the Company (the “Maturity Date”). The following shall constitute an event of default: (i) a failure to pay the principal within five business days of the Maturity Date; (ii) the commencement of a voluntary or involuntary bankruptcy action, (iii) the breach of the Company’s obligations thereunder; (iv) any cross defaults; (v) an enforcement proceedings against the Company; and (vi) any unlawfulness and invalidity in connection with the performance of the obligations thereunder, in which case the Promissory Notes may be accelerated.
The payee of the Promissory Notes, the Sponsor, has the right, but not the obligation, to convert the Promissory Notes, in whole or in part, respectively, into private units (the “Conversion Units”) of the Company, each consisting of one Class A Ordinary Share, one-half of one warrant, and one right to receive one-tenth (1/10) of one Class A Ordinary Share upon the consummation of a Business Combination, as described in the prospectus of the Company (File Number 333-261585), by providing the Company with written notice of the intention to convert at least two business days prior to the closing of the Business Combination. The number of Conversion Units to be received by the Sponsor in connection with such conversion shall be an amount determined by dividing (x) the sum of the outstanding principal amount payable to such Payee by (y) $10.00.
15
Until consummation of the Business Combination, we will be using the funds not held in the Trust Account, and any additional funding that may be loaned to us by the Sponsor, for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business Combination.
If our estimates of the costs of undertaking in-depth due diligence and negotiating Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to the Business Combination and will need to raise additional capital. In this event, our officers, directors or their affiliates may, but are not obligated to, loan us funds as may be required. If we consummate an initial Business Combination, we would repay such loaned amounts out of the proceeds of the Trust Account released to us upon consummation of the Business Combination, or, at the lender’s discretion, such loans may be convertible into units of the post Business Combination entity at a price of $10.00 per unit.
Moreover, we may need to obtain additional financing either to consummate our initial Business Combination or because we become obligated to redeem a significant number of our Public Shares upon consummation of our initial Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only consummate such financing simultaneously with the consummation of our initial Business Combination. Following our initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
As of June 30, 2023 and 2022, the Company had borrowings of $1,872,085 and $0 under the Promissory Notes, respectively.
Due to Related Parties
From time to time, Mr. Liang Shi, the Company’s Director, Chief Executive Officer, Secretary and Chairman, would incur travel costs to search for targets. As of June 30, 2023, due to Mr. Liang Shi amounted to $3,504.
Administrative Services Agreement
The Company is obligated, commencing from the effective date of the Initial Public Offering to pay the Sponsor, a monthly fee of $10,000 for general and administrative services. This agreement was signed by the Company and the Sponsor on January 31, 2022 and it will terminate upon completion of the Company’s Business Combination or the liquidation of the Trust Account to public shareholders. The Company has recognized operating costs under the Administrative Services Agreement in the amount of $120,000 and $50,000 for the year ended June 30, 2023 and for the period from July 19, 2021 (inception) through June 30, 2022, respectively. As of June 30, 2023 and 2022, the Company had $60,000 and $20,000, respectively, accrued under the Administrative Services Agreement due to the Sponsor.
Off-Balance Sheet Financing Arraignments
We have no obligations, assets or liabilities that would be considered off-balance sheet arrangements as of June 30, 2023. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
As of June 30, 2023, we do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities.
We are obligated to pay Maxim a deferred underwriters’ discount equal to 3.5% of the gross proceeds of the IPO and the underwriter’s full exercise of the over-allotment. The deferred underwriter’s discount of $3,220,000 will become payable to Maxim from the amounts held in the Trust Account solely in the event that we complete a Business Combination.
The founder shares, the Class A Ordinary Shares included in the Private Units, and any Class A Ordinary Shares that may be issued upon conversion of working capital loans (and any underlying securities) will be entitled to registration rights pursuant to a registration and shareholder rights agreement entered into in connection with the IPO. The holders of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion of the initial Business Combination. We will bear the expenses incurred in connection with the filing of any such registration statements.
16
Critical Accounting Policies, Judgments and Estimates
Use of estimates
In preparing the financial statements in conformity with U.S. GAAP, management makes 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 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, Actual results may differ from these estimates.
Investments held in Trust Account
As of June 30, 2023, the assets held in the Trust Account were held in money market funds, which are invested in U.S. Treasury securities.
We classify our U.S. Treasury and equivalent securities as held-to-maturity in accordance with ASC Topic 320 “Investments — Debt and Equity Securities.” Held-to-maturity securities are those securities which we have the ability and intent to hold until maturity. Held-to-maturity treasury securities are recorded at amortized cost on the accompanying balance sheet and adjusted for the amortization or accretion of premiums or discounts.
Convertible Promissory Note
We account for our convertible promissory notes as debt (liability) on the balance sheet based on an assessment of the embedded conversion feature (see Note 5 — Related Party Transactions) and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). The assessment considers the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity.
Class A ordinary shares subject to possible redemption
We account for our ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption 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’ equity.
Warrants
We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity” (“ASC 480”), and ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and 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 warrant issuance 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, the warrants are required to be recorded as a component of equity at the time of issuance. As our warrants meet all of the criteria for equity classification, so we will classify each warrant as its own equity.
17
Fair Value of Financial Instruments
The fair value of our assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet, primarily due to its short-term nature.
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). Our financial instruments are classified as either Level 1, Level 2 or Level 3. 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. |
Income Taxes
Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis.
Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Our management determined that the Cayman Islands is our major tax jurisdiction. We recognize accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense.
We are considered to be an exempted Cayman Islands company, and are presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States.
Net Income (Loss) per Share
We have two classes of shares, which are referred to as redeemable ordinary shares and non-redeemable ordinary shares. Earnings and losses are shared pro rata between the two classes of shares.
18
Recent Accounting Pronouncements
In August 2020, the FASB issued a new standard (ASU 2020-06) to reduce the complexity of accounting for convertible debt and other equity-linked instruments. For certain convertible debt instruments with a cash conversion feature, the changes are a trade-off between simplifications in the accounting model (no separation of an “equity” component to impute a market interest rate, and simpler analysis of embedded equity features) and a potentially adverse impact to diluted earnings per share by requiring the use of the if-converted method. The new standard will also impact other financial instruments commonly issued by both public and private companies. For example, the separation model for beneficial conversion features is eliminated simplifying the analysis for issuers of convertible debt and convertible preferred stock. Also, certain specific requirements to achieve equity classification and/or qualify for the derivative scope exception for contracts indexed to an entity’s own equity are removed, enabling more freestanding instruments and embedded features to avoid mark-to-market accounting. The new standard is effective for companies that are SEC filers (except for smaller reporting companies) for fiscal years beginning after December 15, 2021 and interim periods within that year, and two years later for other companies. Companies can early adopt the standard at the start of a fiscal year beginning after December 15, 2020. The standard can either be adopted on a modified retrospective or a full retrospective basis. The adoption of ASU 2020-06 on July 1, 2022 did not have a material effect on our financial statements.
Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on our financial statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
As of June 30, 2023, we were not subject to any market or interest rate risk. Following the consummation of our IPO, the net proceeds of our IPO, including amounts in 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 8. Financial Statements and Supplementary Data.
This information appears following Item 15 of this Form 10-K and is incorporated herein by reference.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.
Item 9A. 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 and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2023. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were effective.
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.
19
Management’s Annual Report on Internal Control over Financial Reporting
As required by SEC rules and regulations implementing Section 404 of the Sarbanes-Oxley Act, our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that:
| (1) | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company, |
| (2) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors, and |
| (3) | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect errors or misstatements in our financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of our internal control over financial reporting at June 30, 2023. In making these assessments, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013). Based on our assessments and those criteria, management determined that we maintained effective internal control over financial reporting as of June 30, 2022.
This Annual Report on Form 10-K does not include an attestation report of internal controls from our independent registered public accounting firm due to our status as an emerging growth company under the JOBS Act.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
None.
20
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Officers, Directors and Director Nominees
Our officers and directors are as follows:
| Name | Age | Position | ||
| Liang Shi | 45 | Director, Chief Executive Officer, Secretary and Chairman | ||
| Tianyong Yan | 45 | Chief Financial Officer and Director | ||
| Weixiong (Jeff) Cheong | 42 | Chief Operating Officer | ||
| Alfred “Trey” Hickey | 60 | Independent Director | ||
| Buhdy Sin Swee Bok | 51 | Independent Director | ||
| Zhenyu Li | 29 | Independent Director |
Mr. Liang Shi is our Chief Executive Officer, Chairman of the board of directors, and Secretary. Mr. Shi has over 14 years’ experience in investment management leadership. Since January 2017, Mr. Shi has served as a Partner at Zenin, an investment fund focusing on growth capital investments in emerging sectors in China, where he oversees the fund’s daily business operations. Zenin provides extensive strategic and operational assistance to its highly selective investment portfolio of companies. From March 2007 to December 2016, Mr. Shi served as the China President at Barron Partners Fund, where he was in charge of managing the fund’s investment portfolio in Asia and completed over 50 investments for the fund. From February 2006 to February 2007, Mr. Shi worked as a senior consultant at IBM Global Services (formerly PWC consulting). Mr. Shi received his Bachelor’s degree in Finance from Shanghai Jiaotong University in 2001. We believe Mr. Shi qualifies as our executive director and Chairman of the board because of his asset management experience and past successful investments.
Mr. Tianyong Yan is our Chief Financial Officer and director. Mr. Yan has over 20 years of corporate finance experience. Since January 2016, Mr. Yan has served as a general manager at Shanghai Green Storm Asset Management Ltd., a company focusing on asset management. From August 2010 to July 2011, Mr. Yan served as a Vice President of finance at Standard Chartered Bank (China), where he focused on financial reporting and other finance related projects such as markets, planning, commodities and derivatives. From August 2011 to July 2014, Mr. Yan served as a Vice President of finance at JP Morgan China, where he led tax planning practices over the greater China JP Morgan business including, but not limited to, commodity related financing, commercial banking and derivatives. Mr. Yan received his MBA degree from University of Virginia in 2010 and his Bachelor’s degree in Finance from Shanghai Jiao Tong University in 2001. Mr. Yan is a China CPA and chartered CFA. We believe Mr. Yan qualifies as our executive director because of his extensive corporate finance experience.
Mr. Weixiong (Jeff) Cheong is our Chief Operating Officer. Mr. Cheong has over 15 years of experience in private and public capital markets. Since July 2022, Mr. Cheong has served as the chief operating officer of Prime Number Acquisition I Corp., a Delaware special acquisition corporation company (Nasdaq: PNAC). Since November 2015, Mr. Cheong has served as a director at Fortune Asia Long Short Fund, an investment fund. Since November 2011, Mr. Cheong has served as a director at Longfor Pte Ltd., a real estate developer in Singapore. Since August 2009, Mr. Cheong has served as the chief executive officer at Sinjia Land Ltd. (SGX: 5HH), a property development and hospitality management company. From April 2014 to May 2020, Mr. Cheong served as the chairman at CapAllianz Holdings Ltd (former name CWX Global Ltd) (SGX: 594), a company focusing on investment and oil exploration business. Mr. Cheong received a Master’s degree of business administration at Singapore Management University in June 2017. He also has passed the exam of Capital Markets and Financial Advisory Services (“CMFAS”) in Module 1 (December 2003), Module 4A (Rules and Regulations for Advising on Corporate Finance, June 2005), Module 5 (Rules And Regulations for Financial Advisory Services, January 2004), Module 6 (January 2004), and Module 8 (Collective Investment Schemes, February 2004). Mr. Cheong completed the program of Executive Skills for Board Members in Challenging Times in 2011 and obtained SMU-SID Executive Certificates in Directorship in 2012 at Singapore Management University.
Mr. Alfred “Trey” Hickey serves as our independent director. Mr. Hickey has more than 20 years of experience at leading tourism companies, specializing in the cruise industry. Since 2020, Mr. Hickey has served as the Managing Partner at Global Distribution Solutions Pte. Ltd., the parent company of Discover River Cruises, a boutique river cruise company operating in Europe’s Danube and Rhine Rivers. From February 2000 to June 2020, Mr. Hickey managed approximately $4 billion in international sales as Senior Vice President at Princess Cruises, Cunard Line, Seabourn and Carnival PLC. Mr. Hickey also served as Carnival Corp’s Chief Representative Officer in China, President of Carnival Corp Japan, and served on the boards of Carnival Corp Taiwan, the Pacific Asia Travel Association and the Asia Cruise Association. Mr. Hickey received a Bachelor’s degree in Economics from Warnborough University in 1987, a Bachelor’s degree in Economics from University of Rhode Island in 1988, and a Bachelor’s degree in Asian Studies from Seinan Gakuin University in 1988. We believe Mr. Hickey qualifies as our independent director because of his management experience and knowledge in the cruise industry.
21
Mr. Buhdy Sin Swee Bok serves as our independent director. Over the past 25 years Mr. Bok has assumed various leadership positions in the travel and tourism industry with a wide range of sectors including cruise, airlines and attractions in Asia. Since September 2018, Mr. Bok has served as the Managing Director at Mount Faber Leisure Group Pte. Ltd., a reputable attraction company in Singapore, managing its overall operations. From October 2017 to September 2018, Mr. Bok served as the Chief Commercial Officer of NokScoot Airlines, a Thailand-based airline, where he oversaw the company’s commercial operations including sales and marketing, revenue and yield management, reservations, and operation of overseas offices. From May 2017 to September 2017, Mr. Bok served as the President of Carnival Asia at Carnival Corporation & PLC, overseeing the group’s operations in Asia. From October 2015 to April 2017, Mr. Bok served as the President of Costa Group Asia at Costa Crociere S.p.A., a wholly owned subsidiary of Carnival Corp & PLC, in charge of the Italian-brand’s operations in Asia Pacific and China. Mr. Bok received a Bachelor’s degree in Accountancy from Singapore Nanyang Technological University in 1996, a Bachelor’s degree in Law from the University of London in 1999, and an MBA degree from Duke University’s Fuqua School of Business in 2003. We believe Mr. Bok qualifies as our independent director because of his management experience and knowledge in the travel industry.
Mr. Zhenyu Li serves as our independent director. Mr. Li has over 20 years of experience in telecom communication technology industry. Mr. Li has been a self-employed investor actively investing in technologies, media and telecom since July 2017. From March 2016 to July 2017, Mr. Li served as a general manager of Le Canada Ltd. From August 2007 to March 2016, Mr. Li served as the Chief Executive Officer at Sinotel Technologies Ltd, a company providing a wide range of wireless telecommunication applications and solutions. From May 2003 to August 2007, Mr. Li served as the Chief Technology Officer at Sinotel Technologies Ltd, in charge of technology and product designing. From December 2001 to May 2003, Mr. Li served as a technology director at the Beijing office of RTI International, a US company specialized in the research, development and service of CDMA technologies for commercial clients worldwide. Mr. Li received a Bachelor’s degree in Automation from Tianjin University of Technology and Education in 1996.
Number and Terms of Office of Officers and Directors
Our board of directors consists of five members. Prior to our initial Business Combination, holders of our Founder Shares will have the right to appoint all of our directors and remove members of the board of directors for any reason, and holders of our public shares will not have the right to vote on the appointment of directors during such time. These provisions of our amended and restated memorandum and articles of association may only be amended by a special resolution passed by a majority of at least two thirds of shareholders attending and voting in a general meeting. Our board of directors is divided into three classes, with only one class of directors being elected in each year, and with each class (except for those directors appointed prior to our first annual meeting of shareholders) serving a three-year term: Class I, with a term expiring at the 2023 annual general meeting — Mr. Buhdy Sin Swee Bok; Class II, with a term expiring at the 2024 annual general meeting — Messrs. Alfred J. Hickey and Zhenyu Li; and Class III, with a term expiring at the 2025 annual general meeting — Messrs. Liang Shi and Tianyong Yan. Prior to the completion of an initial business combination, any vacancies on our board of directors may be filled by the affirmative vote of a majority of the directors present and voting at the meeting of our board of directors or by a majority of the holders of our founder shares. After completion of the business combination, subject to any other special rights applicable to the shareholders, any vacancies on our board of directors may be filled by the affirmative vote of a majority of the directors present and voting at the meeting of our board of directors or by a majority of the holders of our ordinary shares.
Our officers are appointed by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. Our board of directors will be authorized to appoint persons to the offices as set forth in our amended and restated memorandum and articles of association as it deems appropriate. Our amended and restated memorandum and articles of association provides that our officers may consist of a Chairman, a Chief Executive Officer, a President, a Chief Operating Officer, a Chief Financial Officer, Vice Presidents, a Secretary, Assistant Secretaries, a Treasurer and such other offices as may be determined by the board of directors.
Committees of the Board of Directors
Our board of directors currently has two standing committees: an audit committee and a compensation committee. Because we are a “controlled company” under applicable Nasdaq rules, we do not have a nominating and governance committee. Subject to phase-in rules and a limited exception, the rules of NASDAQ and Rule 10A-3 of the Exchange Act require that the audit committee of a listed company be comprised solely of independent directors, and the rules of NASDAQ require that the compensation committee of a listed company be comprised solely of independent directors.
22
Audit Committee
Messrs. Zhenyu Li, Alfred “Trey” Hickey and Buhdy Sin Swee Bok currently serve as members of our audit committee. Under Nasdaq listing standards and applicable SEC rules, we are required to have three members of the audit committee, all of whom must be independent, subject to the certain phase-in provisions. Our board of directors has determined that each of Messrs. Zhenyu Li, Alfred “Trey” Hickey and Buhdy Sin Swee Bok meet the independent director standard under Nasdaq listing standards and under Rule 10A-3(b)(1) of the Exchange Act.
Mr. Buhdy Sin Swee Bok serves as the Chairman of the audit committee. Each member of the audit committee meets the financial literacy requirements of Nasdaq, and our board of directors has determined that Mr. Buhdy Sin Swee Bok qualifies as an “audit committee financial expert” as defined in applicable SEC rules.
The audit committee’s duties, which are specified in our Audit Committee Charter, include, but are not limited to:
| ● | reviewing and discussing with management and the independent auditor the annual audited financial statements, and recommending to the board whether the audited financial statements should be included in our Form 10-K; |
| ● | discussing with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of our financial statements; |
| ● | discussing with management major risk assessment and risk management policies; |
| ● | monitoring the independence of the independent auditor; |
| ● | verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law; |
| ● | reviewing and approving all related-party transactions; |
| ● | inquiring and discussing with management our compliance with applicable laws and regulations; |
| ● | pre-approving all audit services and permitted non-audit services to be performed by our independent auditor, including the fees and terms of the services to be performed; |
| ● | appointing or replacing the independent auditor; |
| ● | determining the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work; |
| ● | establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies; and |
| ● | approving reimbursement of expenses incurred by our management team in identifying potential target businesses. |
The audit committee is governed by a charter that complies with the rules of Nasdaq.
23
Compensation Committee
We have established a compensation committee of the board of directors, which consists of Messrs. Zhenyu Li, Alfred “Trey” Hickey and Buhdy Sin Swee Bok, each of whom is an independent director under Nasdaq’s listing standards. Mr. Alfred “Trey” Hickey is the Chairperson of the compensation committee. The compensation committee’s duties, which are specified in our Compensation Committee Charter, include, but are not limited to:
| ● | reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer’s based on such evaluation; |
| ● | reviewing and approving the compensation of all of our other executive officers; |
| ● | reviewing our executive compensation policies and plans; |
| ● | implementing and administering our incentive compensation equity-based remuneration plans; |
| ● | assisting management in complying with our proxy statement and annual report disclosure requirements; |
| ● | approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our executive officers and employees; |
| ● | if required, producing a report on executive compensation to be included in our annual proxy statement; and |
| ● | reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors. |
Notwithstanding the foregoing, as indicated above, no compensation of any kind, including finders, consulting or other similar fees, will be paid to any of our existing shareholders, including our directors or any of their respective affiliates, prior to, or for any services they render in order to effectuate, the consummation of a business combination. Accordingly, it is likely that prior to the consummation of an initial business combination, the compensation committee will only be responsible for the review and recommendation of any compensation arrangements to be entered into in connection with such initial business combination.
Director Nominations
We do not have a standing nominating committee. In accordance with Rule 5605(e)(2) of the NASDAQ Rules, a majority of the independent directors may recommend a director nominee for selection by the board of directors. The board of directors believes that the independent directors can satisfactorily carry out the responsibility of properly selecting or approving director nominees without the formation of a standing nominating committee. As there is no standing nominating committee, we do not have a nominating committee charter in place.
The board of directors will also consider director candidates recommended for nomination by our shareholders during such times as they are seeking proposed nominees to stand for election at the next annual general meeting of shareholders (or, if applicable, a special meeting of shareholders). Our shareholders that wish to nominate a director for election to our board of directors should follow the procedures set forth in our amended and restated memorandum and articles of association.
We have not formally established any specific, minimum qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying and evaluating nominees for director, our board of directors considers educational background, diversity of professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our shareholders.
24
Code of Ethics
We have adopted a code of ethics and business conduct (the “Code of Ethics”) applicable to our directors, officers and employees. You are able to review these documents by accessing our public filings at the SEC’s web site at www.sec.gov. In addition, a copy of the Code of Ethics will be provided without charge upon request from us. We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K.
Item 11. Executive Compensation.
None of our officers or directors has received any cash compensation for services rendered to us, except that (i) the Sponsor has transferred our independent directors, Alfred “Trey” Hickey and Buhdy Sin Swee Bok, each 10,000 Founder Shares upon the closing of the IPO; and (ii) subject to the consent of the target entity, we have agreed to issue each of Alfred “Trey” Hickey and Buhdy Sin Swee Bok 20,000 Class A Ordinary Shares and Zhenyu Li 30,000 Class A Ordinary Shares in connection with our Business Combination, respectively, and in the event that we cannot obtain consent from the target company for such issuance, our Sponsor has agreed to transfer each of Alfred “Trey” Hickey and Buhdy Sin Swee Bok 20,000 Founder Shares and Zhenyu Li 30,000 Founder Shares upon the closing of the Business Combination, respectively; provided that in either case the independent directors remain with us until the closing of a Business Combination. Other than as set forth elsewhere, no compensation of any kind, including finder’s and consulting fees, will be paid to our founders, existing officers, directors and advisors, or any of their respective affiliates, for services rendered prior to or in connection with the completion of our initial Business Combination although we may consider cash or other compensation to officers or advisors we may hire subsequent to the IPO to be paid either prior to or in connection with our initial Business Combination. In addition, our officers, directors and advisors, or any of their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments that were made to our founders, officers, directors or advisors, or our or their affiliates, including the extension loan and extension convertible notes.
After the completion of our initial Business Combination, directors or members of our management team who remain with us may be paid consulting or management fees from the combined company. All of these fees will be fully disclosed to shareholders, to the extent then known, in the tender offer materials or proxy solicitation materials furnished to our shareholders in connection with a proposed business combination. We have not established any limit on the amount of such fees that may be paid by the combined company to our directors or members of management. It is unlikely the amount of such compensation will be known at the time of the proposed business combination, because the directors of the post-combination business will be responsible for determining officer and director compensation. Any compensation to be paid to our officers will be determined, or recommended to the board of directors for determination, either by a compensation committee constituted solely by independent directors or by a majority of the independent directors on our board of directors.
Following a Business Combination, to the extent we deem it necessary, we may seek to recruit additional managers to supplement the incumbent management team of the target business. We cannot assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.
The following table sets forth information regarding the beneficial ownership of our ordinary as of the date hereof by:
| ● | each person known by us to be the beneficial owner of more than 5% of our outstanding ordinary shares; | |
| ● | each of our officers and directors; and | |
| ● | all of our officers and directors as a group. |
Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all ordinary shares beneficially owned by them.
25
The beneficial ownership of our ordinary shares is based on an aggregate of 11,964,480 ordinary shares issued and outstanding as of the date hereof, consisting of (i) 4,302,246 Class A Ordinary Shares, (ii)2,300,000 Class B Ordinary Shares and (iii) the record of beneficial ownership as indicated in the statements filed with the SEC pursuant section 13(d) or 13(g) as of the date of this proxy statement. On all matters to be voted upon, except for the election or removal of directors of the board prior to the initial Business Combination, holders of the Class A Ordinary Shares and Class B Ordinary Shares vote together as a single class. Currently, all of the Class B Ordinary Shares are convertible into Class A Ordinary Shares on a one-for-one basis..
| Number of Ordinary Shares |
Percentage of Outstanding | |||||||
| Name and Address of Beneficial Owner (1) | Beneficially Owned (2) |
Ordinary Shares |
||||||
| Officers and Directors | ||||||||
| Liang Shi | — | — | ||||||
| Tianyong Yan | — | — | ||||||
| Weixiong (Jeff) Cheong | — | — | ||||||
| Alfred “Trey” Hickey | 10,000 | * | ||||||
| Buhdy Sin Swee Bok | 10,000 | * | ||||||
| Zhenyu Li | — | — | ||||||
| All officers and directors as a group (6 individuals) | 20,000 | * | ||||||
| 5% Holders | ||||||||
| Blue World Holdings Limited(2) (3) | 2,658,480 | 40.27 | % | |||||
| Hudson Bay Capital Management LP(4) | 875,000 | 13.25 | % | |||||
| Sander Gerber(4) | 875,000 | 13.25 | % | |||||
| Shaolin Capital Management LLC(5) | 694,413 | 10.52 | % | |||||
| Saba Capital Management, L.P.(6) | 845,025 | 12.80 | % | |||||
| Saba Capital Management GP, LLC(6) | 845,025 | 12.80 | % | |||||
| Boaz R. Weinstein(6) | 845,025 | 12.80 | % | |||||
| Glazer Capital, LLC(7) | 866,787 | 13.13 | % | |||||
| Paul J. Glazer(7) | 866,787 | 13.13 | % | |||||
| * | Less than one percent |
| (1) | Unless otherwise noted, the business address of each of the following is c/o Blue World Acquisition Corporation, 244 Fifth Avenue, Suite B-88, New York, NY 10001. |
| (2) | Shares include Founder Shares, or Class B Ordinary Shares, that will automatically convert into Class A Ordinary Shares concurrently with or immediately following the consummation of our initial Business Combination on a one-for-one basis, subject to certain adjustment. |
| (3) | Blue World Holdings Limited, a Hong Kong private company limited by shares, is the record holder of the insider shares reported herein. Our Sponsor is governed by a board of managers consisting of five members, Liang Shi, Fubin Shi, Hongyang Wang, Jianyong Xie, and Cunli Cheng. Each member has one vote, and the approval of a majority of the board is required to approve an action of our Sponsor. Under the so-called “rule of three,” if voting and dispositive decisions regarding an entity’s securities are made by three or more individuals, and a voting or dispositive decision requires the approval of a majority of those individuals, then none of the individuals is deemed a beneficial owner of the entity’s securities. Based upon the foregoing analysis, no director of our Sponsor exercises voting or dispositive control over any of the securities held by our Sponsor, even those in which he or she directly holds a pecuniary interest. Accordingly, none of them will be deemed to have or share beneficial ownership of such shares. |
| (4) | According to a Schedule 13G filed on February 7, 2023, on behalf of Hudson Bay Capital Management LP and Sander Gerber. The business address of each of these shareholders is 28 Havemeyer Place, 2nd Floor, Greenwich, CT 06830. |
| (5) | According to a Schedule 13G filed on February 14, 2023, on behalf of Shaolin Capital Management LLC. The business address of each of these shareholders is 230 NW 24th Street, Suite 603, Miami, FL 33127. |
| (6) | According to a Schedule 13G filed on February 14, 2023, on behalf of Saba Capital Management, L.P., Saba Capital Management GP, LLC, and Mr. Boaz R. Weinstein. The business address of each of these shareholders is 405 Lexington Avenue, 58th Floor, New York, New York 10174. |
| (7) | According to a Schedule 13G filed on February 14, 2023, on behalf of Glazer Capital, LLC and Paul J. Glazer. The business address of each of these shareholders is 250 West 55th Street, Suite 30A, New York, New York 10019. |
26
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Founder Shares
On August 5, 2021, the Sponsor acquired 2,300,000 Founder Shares for an aggregate purchase price of $25,000.
As of June 30, 2023, there were 2,300,000 Founder Shares issued and outstanding. The aggregate capital contribution was $25,000, or approximately $0.01 per share.
Simultaneously with the effectiveness of the registration statement and closing of the IPO (including the full exercise of over-allotment option), the Sponsor transferred 10,000 Founder Shares to each of Messrs. Alfred “Trey” Hickey and Buhdy Sin Swee Bok at the same price originally paid by the Sponsor for such shares, pursuant to a certain securities transfer agreement (the “Securities Transfer Agreement”) dated January 31, 2022 among the Company, the transferees and the Sponsor.
Private Units
On February 2, 2022, simultaneously with the consummation of the IPO, the Company completed the Private Placement of 424,480 Private Units including 378,480 Private Units to the Sponsor and 46,000 Private Units to Maxim, respectively, at a purchase price of $10.00 per Private Unit.
Promissory Note — Related Party
On August 5, 2021, the Sponsor has agreed to loan the Company up to an aggregate amount of $500,000 to be used, in part, for transaction costs incurred in connection with the IPO (the “Promissory Note”). For the period from July 19, 2021 (inception) through February 2, 2022, the date of the completion of the IPO, the Sponsor loaned the Company in the amount of $287,547. On February 7, 2022, the related party promissory note was repaid in full.
In order to meet the Company’s working capital needs following the consummation of the Initial Public Offering, the Sponsor, officers and directors or their affiliates 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 (the “Working Capital Loans”). Each loan would be evidenced by a promissory note. The notes would either be paid upon consummation of the Company initial Business Combination, without interest, or, at the lender’s discretion, the notes may be converted upon consummation of the Company’s Business Combination into private units at a price of $10.00 per unit. If the Company does not complete a Business Combination, the loans would be repaid out of funds not held in the Trust Account, and only to the extent available.
On November 30, 2022, the Company issued an unsecured promissory note (the “Sponsor Note 1”) in the principal amount of $400,000 to the Sponsor. The proceeds of the Sponsor Note 1 was used as general working capital purposes.
On January 31, 2023, the Company issued an unsecured promissory note (the “Extension Note 1”) in the principal amount of $920,000 to the Sponsor. The proceeds of the Extension Note 1 was deposited into the Company’s Trust Account for the public shareholders, which enables the Company to extend the period of time it has to consummate its initial Business Combination by three months from February 2, 2023 to May 2, 2023.
On May 2, 2023, the Company issued an unsecured promissory note (the “Extension Note 2”) in the principal amount of $194,324 to the Sponsor. The proceeds of the Extension Note 2 was deposited into the Company’s Trust Account for the public shareholders, which enables the Company to extend the period of time it has to consummate its initial Business Combination from May 2, 2023 to June 2, 2023.
On June 2, 2023, the Company issued an unsecured promissory note (the “Extension Note 3”) in the principal amount of $194,324 to the Sponsor. The proceeds of the Extension Note 3 was deposited into the Company’s Trust Account for the public shareholders, which enables the Company to extend the period of time it has to consummate its initial Business Combination from June 2, 2023 to July 2, 2023.
On June 30, 2023, the Company issued an unsecured promissory note (the “Extension Note 4” together with Extension Note 1, 2, and 3, collectively, the “Extension Notes”) in the principal amount of $60,000 to the Sponsor. The proceeds of the Extension Note 4 was deposited into the Company’s Trust Account for the public shareholders, which enables the Company to extend the period of time it has to consummate its initial Business Combination from July 2, 2023 to August 2, 2023.
On July 31, 2023, the Company issued an unsecured promissory note (the “Extension Note 5”) in the principal amount of $60,000 to the Sponsor. The proceeds of the Extension Note 5 was deposited into the Company’s Trust Account for the public shareholders, which enables the Company to extend the period of time it has to consummate its initial Business Combination from August 2, 2023 to September 2, 2023.
On July 31, 2023, the Company issued an unsecured promissory note (the “Sponsor Note 2,” together with the Sponsor Note 1, collectively, the “Sponsor Notes”) in the principal amount of $120,000 to the Sponsor. The proceeds of the Sponsor Note 2, which may be drawn down from time to time until the Company consummates its initial business combination, will be used as general working capital purposes. As of June 30, 2023, the Company has drawn down $103,437 prior to the issuance of the Sponsor Note 2 on July 31, 2023.
On September 1, 2023, the Company issued an unsecured promissory note (the “Extension Note 6”) in the principal amount of $60,000 to the Sponsor. The proceeds of the Extension Note 6 was deposited into the Company’s Trust Account for the public shareholders, which enables the Company to extend the period of time it has to consummate its initial Business Combination from September 2, 2023 to October 2, 2023.
27
On September 28, 2023, the Company issued an unsecured promissory note (the “Extension Note 7,” together with Extension Note 1, 2, 3, 4, 5 and 6, collectively, the “Extension Notes”) in the principal amount of $60,000 to the Sponsor. The proceeds of the Extension Note 7 was deposited into the Company’s Trust Account for the public shareholders, which enables the Company to extend the period of time it has to consummate its initial Business Combination from October 2, 2023 to November 2, 2023.
The Extension Notes together with the Sponsor Notes (collectively refer herein as “Promissory Notes”) issued to the Sponsor have the same payment and conversion term as discussed below.
The Promissory Notes bear no interest and is payable in full upon the earlier to occur of (i) the consummation of the Business Combination or (ii) the date of expiry of the term of the Company (the “Maturity Date”). The following shall constitute an event of default: (i) a failure to pay the principal within five business days of the Maturity Date; (ii) the commencement of a voluntary or involuntary bankruptcy action, (iii) the breach of the Company’s obligations thereunder; (iv) any cross defaults; (v) an enforcement proceedings against the Company; and (vi) any unlawfulness and invalidity in connection with the performance of the obligations thereunder, in which case the Promissory Notes may be accelerated.
The payee of the Promissory Notes, the Sponsor, has the right, but not the obligation, to convert the Promissory Notes, in whole or in part, respectively, into private units (the “Conversion Units”) of the Company, each consisting of one Class A Ordinary Share, one-half of one warrant, and one right to receive one-tenth (1/10) of one Class A Ordinary Share upon the consummation of a Business Combination, as described in the prospectus of the Company (File Number 333-261585), by providing the Company with written notice of the intention to convert at least two business days prior to the closing of the Business Combination. The number of Conversion Units to be received by the Sponsor in connection with such conversion shall be an amount determined by dividing (x) the sum of the outstanding principal amount payable to such Payee by (y) $10.00.
As of June 30, 2023, the Company had borrowings of $1,872,085 under the Promissory Notes.
Due to Related Parties
From time to time, Mr. Liang Shi, the Company’s Director, Chief Executive Officer, Secretary and Chairman, would incur travel costs to search for targets. As of June 30, 2023, due to Mr. Liang Shi amounted to $3,504.
Administrative Services Agreement
The Company is obligated, commencing from the effective date of the IPO to pay the Sponsor, a monthly fee of $10,000 for general and administrative services pursuant to a certain administrative services agreement (the “Administrative Services Agreement”). This Administrative Services Agreement was signed by the Company and the Sponsor on January 31, 2022 and it will terminate upon completion of the Company’s Business Combination or the liquidation of the Trust Account to public shareholders. The Company has recognized operating costs under the Administrative Services Agreement in the amount of $120,000 and $50,000 for the year ended June 30, 2023 and for the period from July 19, 2021 (inception) through June 30, 2022, respectively. As of June 30, 2023 and 2022, the Company had $60,000 and $20,000 accrued under the Administrative Services Agreement due to the Sponsor, respectively.
Policy for Approval of Related Party Transactions
We have not yet adopted a formal policy for the review, approval or ratification of related party transactions. Accordingly, the transactions discussed above were not reviewed, approved or ratified in accordance with any such policy.
We have adopted a code of ethics requiring us to avoid, wherever possible, all conflicts of interests, except under guidelines or resolutions approved by our board of directors (or the appropriate committee of our board) or as disclosed in our public filings with the SEC. Under our code of ethics, conflict of interest situations will include any financial transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) involving the company.
In addition, our audit committee, pursuant to a written charter will be responsible for reviewing and approving related party transactions to the extent that we enter into such transactions. An affirmative vote of a majority of the members of the audit committee present at a meeting at which a quorum is present will be required in order to approve a related party transaction. A majority of the members of the entire audit committee will constitute a quorum. Without a meeting, the unanimous written consent of all of the members of the audit committee will be required to approve a related party transaction. We have adopted the audit committee charter. We also require each of our directors and executive officers to complete a directors’ and officers’ questionnaire that elicits information about related party transactions.
These procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director, employee or officer.
28
To further minimize conflicts of interest, we have agreed not to consummate an initial Business Combination with an entity that is affiliated with any of our founders unless we, or a committee of independent directors, have obtained an opinion from an independent investment banking firm which is a member of FINRA, or another independent firm that commonly renders valuation opinions for the type of company we are seeking to acquire, or an independent accounting firm that our initial business combination is fair to our company from a financial point of view. Furthermore, other than the $10,000 per month fee, no finder’s fees, reimbursements or cash payments will be made to our founders, existing officers, directors or advisors, or our or their affiliates, for services rendered to us prior to or in connection with the completion of our initial business combination although we may consider cash or other compensation to officers or advisors we may hire subsequent to the IPO to be paid either prior to or in connection with our initial Business Combination. In addition, the following payments will be made to our founders or their affiliates, none of which will be made from the proceeds of the IPO held in the Trust Account prior to the completion of our initial Business Combination:
| ● | payment of $10,000 per month to our Sponsor, for use of office, utilities, personnel and related services, subject to deferral as described herein; |
| ● | reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on our behalf, such as identifying and investigating possible business targets and Business Combinations; |
| ● | repayment at the closing of our initial Business Combination of loans which may be made by our founders or an affiliate of our founders to finance transaction costs in connection with an intended initial business combination, the terms of which have not been determined nor have any written agreements been executed with respect thereto. Such loans may be convertible into working capital units, at a price of $10.00 per unit at the option of the lender. Such working capital units are identical to the Private Units sold in the Private Placement; and |
| ● | repayment at the closing of our initial Business Combination of loans which have been made by our Sponsor, its affiliates or designees in connection with our extensions of the time periods to complete an initial Business Combination , which may be convertible into working capital units, at a price of $10.00 per unit, such working capital units are identical to the Private Units sold in the Private Placement. |
Our audit committee will review on a quarterly basis all payments that were made to our founders or their affiliates, including the extension loan and extension convertible notes.
Director Independence
Nasdaq listing standards require that a majority of our board of directors be independent. An “independent director” is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. Our board of directors has determined that each of Messrs. Zhenyu Li, Alfred “Trey” Hickey and Buhdy Sin Swee Bok are “independent directors” as defined in the Nasdaq listing standards and applicable SEC rules. Our independent directors will have regularly scheduled meetings at which only independent directors are present.
Item 14. Principal Accounting Fees and Services.
The following is a summary of fees paid or to be paid to Marcum Asia CPAs LLP (formerly Marcum Bernstein & Pinchuk LLP) (“MarcumAsia”), for services rendered.
Audit Fees. Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements and services that are normally provided by MarcumAsia in connection with regulatory filings. The aggregate fees billed by MarcumAsia for professional services rendered for the audit of our annual financial statements, review of the financial information included in our Forms 10-Q for the respective periods and other required filings with the SEC for the years ended June 30, 2023 and 2022 totaled $82,400 and $15,450, respectively. The above amounts include interim procedures and audit fees, as well as attendance at audit committee meetings.
Audit-Related Fees. Audit-related services consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our financial statements and are not reported under “Audit Fees.” We did not pay MarcumAsia for professional services rendered for audit related fees for the period ended June 30, 2023.
Tax Fees. We did not pay MarcumAsia for tax planning and tax advice for the years ended June 30, 2023 and 2022.
All Other Fees. We did not pay MarcumAsia for other services for the years ended June 30, 2023 and 2022.
29
PART IV
Item 15. Exhibits, Financial Statement Schedules.
1. The following documents are filed as part of this Annual Report:
Financial Statements: See “Item 8. Financial Statements and Supplementary Data” herein and “Index to Financial Statements” and financial statements incorporated by reference therein commencing below.
2. Exhibits: The following exhibits are filed as part of, or incorporated by reference into, this Annual Report on Form 10-K.
30
31
| * | Furnished herewith |
| + | Schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Registration S-K. The Registrant hereby agrees to furnish a copy of any omitted schedules to the Commission upon request. |
Item 16. Form 10-K Summary.
None.
32
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.
| BLUE WORLD ACQUISITION CORPORATION | ||
| Date: September 28, 2023 | ||
| By: | /s/ Liang Shi | |
| Liang Shi | ||
| Chief Executive Officer, Chairman and Secretary | ||
| (Principal Executive Officer) | ||
| By: | /s/ Tianyong Yan | |
| Tianyong Yan | ||
| Chief Financial Officer | ||
| (Principal Financial Officer and Accounting Officer) | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Name | Position | Date | ||
| /s/ Liang Shi | Chief Executive Officer, Chairman and Secretary | September 28, 2023 | ||
| Liang Shi | (Principle Executive Officer) | |||
| /s/ Tianyong Yan | Chief Financial Officer | September 28, 2023 | ||
| Tianyong Yan | (Principal Accounting and Financial Officer) | |||
| /s/ Weixiong (Jeff) Cheong | Chief Operating Officer | September 28, 2023 | ||
| Weixiong (Jeff) Cheong | ||||
/s/ Buhdy Sin Swee Bok |
Director | September 28, 2023 | ||
| Buhdy Sin Swee Bok | ||||
/s/ Alfred “Trey” Hickey |
Director | September 28, 2023 | ||
| Alfred “Trey” Hickey | ||||
/s/ Zhenyu Li |
Director | September 28, 2023 | ||
| Zhenyu Li |
33
BLUE WORLD ACQUISITION CORPORATION
INDEX TO FINANCIAL STATEMENTS
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Blue World Acquisition Corporation
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Blue World Acquisition Corporation (the “Company”) as of June 30, 2023 and 2022, the related statements of operations, change in shareholders’ deficit and cash flows for the year ended June 30, 2023 and for the period from July 19, 2021 (Inception) through June 30, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2023 and 2022, and the results of its operations and its cash flows for the year ended June 30, 2023 and for the period from July 19, 2021 (Inception) through June 30, 2022 in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the company’s liquidation date is less than one year from the date of the financial statements is issued. This condition raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Marcum Asia CPAs llp
We have served as the Company’s auditor since 2021.
September 28, 2023
Firm ID#:
NEW YORK OFFICE • 7 Penn Plaza • Suite 830 • New York, New York • 10001
Phone 646.442.4845 • Fax 646.349.5200 • www.marcumasia.com
F-2
BLUE WORLD ACQUISITION CORPORATION
BALANCE SHEETS
| June 30, 2023 | June 30, 2022 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total Current Assets | ||||||||
| Investment held in Trust Account | ||||||||
| Cash held in Escrow Account | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities, Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Due to related parties | ||||||||
| Promissory notes - related party | ||||||||
| Total Current Liabilities | ||||||||
| Deferred underwriting discounts and commissions | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (Note 7) | ||||||||
| Class A ordinary shares subject to possible redemption, | ||||||||
| Shareholders’ Deficit: | ||||||||
| Preference shares, $ | ||||||||
| Class A ordinary shares, $ | ||||||||
| Class B ordinary shares, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Shareholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities, Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
F-3
BLUE WORLD ACQUISITION CORPORATION
STATEMENTS OF OPERATIONS
| For the Period from July 19, 2021 | ||||||||
| For the Year Ended | (inception) through | |||||||
| June 30, 2023 | June 30, 2022 | |||||||
| Formation and operating costs | $ | $ | ||||||
| Share-based compensation expense | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income: | ||||||||
| Dividend earned on investment held in Trust Account | ||||||||
| Interest income | ||||||||
| Total other income | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| $ | $ | ( | ) | |||||
| $ | $ | ( | ) | |||||
The accompanying notes are an integral part of these financial statements.
F-4
BLUE WORLD ACQUISITION CORPORATION
STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
| Ordinary Shares | Additional | Total | ||||||||||||||||||||||||||
| Class A | Class B | Paid-in | Accumulated | Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance as of July 19, 2021 (inception) | $ | $ | $ | $ | $ | |||||||||||||||||||||||
| Founder shares issued to initial shareholder | ||||||||||||||||||||||||||||
| Fair value of public rights and warrants, net of allocated offering costs | - | - | ||||||||||||||||||||||||||
| Sale of private placement units | ||||||||||||||||||||||||||||
| Issuance of representative shares | ||||||||||||||||||||||||||||
| Share-based compensation expense | - | - | ||||||||||||||||||||||||||
| Remeasurement of Class A ordinary shares subject to possible redemption | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of June 30, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Remeasurement of Class A ordinary shares subject to possible redemption | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||
| Balance as of June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
The accompanying notes are an integral part of these financial statements.
F-5
BLUE WORLD ACQUISITION CORPORATION
STATEMENTS OF CASH FLOWS
| For the Period from July 19, 2021 | ||||||||
| For the Year Ended | (inception) through | |||||||
| June 30, 2023 | June 30, 2022 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Share-based compensation expense | ||||||||
| Dividend earned on investment held in Trust Account | ( | ) | ( | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ||||||||
| Due to related parties | ||||||||
| Net Cash Used in Operating Activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Purchases of investment held in Trust Account | ( | ) | ( | ) | ||||
| Withdrawals of investment held in Trust Account | ||||||||
| Net Cash Provided by (Used in) Investing Activities | ( | ) | ||||||
| Cash Flows from Financing Activities: | ||||||||
| Redemption of Class A ordinary shares | ( | ) | — | |||||
| Proceeds from sale of public units through public offerings, net of underwriters’ discount | ||||||||
| Proceeds from sale of private placement units | ||||||||
| Proceeds from issuance of promissory notes to related party | ||||||||
| Repayment of promissory note to related party | ( | ) | ||||||
| Payment of offering costs | ( | ) | ||||||
| Deposits made to Escrow Account | ( | ) | ||||||
| Net Cash (Used in) Provided by Financing Activities | ( | ) | ||||||
| Net Change in Cash | ( | ) | ||||||
| Cash, beginning of year | ||||||||
| Cash, end of year | $ | $ | ||||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||
| Offering costs paid by Sponsor in exchange for issuance of Class B ordinary shares | $ | $ | ||||||
| Deferred underwriter’s discount | $ | $ | ||||||
| Issuance of representative shares | $ | $ | ||||||
| Remeasurement of Class A ordinary shares subject to possible redemption | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
F-6
BLUE WORLD ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1 — ORGANIZATION, BUSINESS OPERATIONS, AND GOING CONCERN
Blue World Acquisition Corporation (the “Company”) is a blank check exempted company incorporated on July 19, 2021, under the laws of the Cayman Islands for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities (“Business Combination”). 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 is subject to all risks associated with emerging growth companies (See Note 2). The Company’s efforts to identify a prospective target business will primarily in the marine leisure, cruise, marine infrastructure and engineering, general hospitality, travel and tourism, marine services, logistics and supply chain, offshore energy solutions and related industry segments. The Company is not limited to a particular region for purposes of consummating an initial Business Combination, however, the Company may focus on targets that, regardless of geographic location of operations or corporate offices, have viable synergies with the Asia Pacific and the U.S. markets for the above industry segments, either physically or virtually. The Company will not undertake its initial Business Combination with any entity that conducts a majority of its business or is headquartered in China (including Hong Kong and Macau).
As of June 30, 2023, the Company had not commenced any operations. For the period from July 19, 2021 (inception) through June 30, 2023, the Company’s efforts have been limited to organizational activities as well as activities related to its initial public offering (the “Initial Public Offering”) as described below. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of dividend/interest income from the proceeds derived from the Initial Public Offering. The Company has selected June 30 as its fiscal year end.
The registration statement for the Company’s
Initial Public Offering became effective on January 31, 2022. On February 2, 2022, the Company consummated the Initial Public Offering
of
Simultaneously with the closing of the Initial
Public Offering, the Company completed the private sale of
The Company also issued
F-7
BLUE WORLD ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
Transaction costs amounted to $
Following the closing of the Initial Public Offering
and the issuance and the sale of Private Units on February 2, 2022, $
The Company will provide its public shareholders
with the opportunity to redeem all or a portion of their public shares upon the completion of an initial Business Combination at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation
of its initial Business Combination, including interest earned on the funds held in the Trust Account and not previously released to the
Company to pay its taxes, divided by the number of then outstanding public shares, subject to certain limitations. The amount in the Trust
Account is initially anticipated to be $
The Company will proceed with a Business Combination
if the Company has net tangible assets of at least $
The Company’s founders and Maxim (the “Initial
Shareholders”) have agreed (a) to vote their Founder Shares (as defined below), the Class A Ordinary Shares included in
the Private Units (the “Private Shares”), the Representative Shares and any Class A Ordinary Shares included in the Public
Units (the “Public Shares”) purchased during or after the Initial Public Offering in favor of a Business Combination, (b) not
to propose, or vote in favor of, an amendment to the Company’s Amended and Restated Memorandum and Articles of Association that
would stop the public shareholders from redeeming or selling their shares to the Company in connection with a Business Combination or
affect the substance or timing of the Company’s obligation to redeem
F-8
BLUE WORLD ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
The Company initially had until February 2, 2023
to complete an initial Business Combination. However, if the Company anticipates that it may not be able to consummate a Business Combination
by February 2, 2023, the Company may, but is not obligated to, extend the period of time to consummate a Business Combination three times
by an additional three months each time (for a total of up to November 2, 2023 to complete a Business Combination). In order to extend
the time available for the Company to consummate a Business Combination, the Sponsor or its affiliates or designees must deposit into
the Trust Account $
On May 2, 2023, the Company held an extraordinary
general meeting (the “May 2023 Meeting”) at which its shareholders approved the adoption of the Second Amended and Restated
Memorandum and Articles of Association of the Company, which provides that the Company has until May 2, 2023 to complete an initial Business
Combination, and may elect to extend the period to consummate an initial Business Combination up to nine times, each by an additional
one-month extension, for a total of up to nine months to February 2, 2024 by depositing $
On June 2, 2023, a total of $
On June 30, 2023, the Company held an extraordinary
general meeting (the “June 2023 Meeting”), where the shareholders of the Company approved the adoption of the Third Amended
and Restated Memorandum and Articles of Association of the Company, which provides that the Company has until July 2, 2023 to complete
a Business Combination, and may elect to extend the period to consummate a Business Combination up to nine times, each by an additional
one-month extension, for a total of up to nine months to April 2, 2024, by depositing $
On June 30, 2023, a total of $
On July 31, 2023, a total of $
On September 1, 2023, a total of $
On September 27, 2023, a total of $
If the Company is unable to complete a Business
Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as
promptly as reasonably possible but no more than ten business days thereafter, redeem
F-9
BLUE WORLD ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
Redemptions
On May 2, 2023, the Company held an
extraordinary general meeting (the “May 2023 Meeting”) at which its shareholders approved the adoption of the Second
Amended and Restated Memorandum and Articles of Association of the Company, which provides that the Company has until May 2, 2023 to complete
an initial Business Combination, and may elect to extend the period to consummate an initial Business Combination up to nine times, each
by an additional one-month extension, for a total of up to nine months to February 2, 2024 by depositing $
On June 30, 2023, the Company held an
extraordinary general meeting (the “June 2023 Meeting”) at which the Company’s shareholders approved the adoption of
the Third Amended and Restated Memorandum and Articles of Association of the Company, which provides that the Company has until July 2,
2023 to complete a business combination, and may elect to extend the period to consummate a Business Combination up to nine times, each
by an additional one-month extension, for a total of up to nine months to April 2, 2024, by depositing $
Merger Agreement
On August 10, 2023, the Company entered into an Agreement and Plan of Merger (as the same may be amended, restated or supplemented, the “Merger Agreement”) with TOYO Co., Ltd, a Cayman Islands exempted company (“PubCo”), TOYOone Limited, a Cayman Islands exempted company (“Merger Sub”), TOPTOYO INVESTMENT PTE. LTD., a Singapore private company limited by shares (“SinCo”), Vietnam Sunergy Cell Company Limited, a Vietnamese company, (the “Company”, together with PubCo, Merger Sub and SinCo, the “Group Companies”, or each individually, a “Group Company”), Vietnam Sunergy Joint Stock Company, a Vietnam joint stock company (“VSUN”), and Fuji Solar Co., Ltd, a Japanese company (“Fuji Solar”, together with VSUN, the “Shareholders”, or individually, a “Shareholder”).
Pursuant to the Merger
Agreement, (a) the Group Companies, VSUN and Fuji Solar shall consummate a series of transactions involving the Group Companies, including
(A) PubCo acquiring one hundred percent (
F-10
BLUE WORLD ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
Liquidity and Going Concern
As of June 30, 2023, the Company had cash of $
Risks and Uncertainties
As a result of the military action commenced in February 2022 by the Russian Federation and Belarus in the country of Ukraine and related economic sanctions, the Company’s ability to consummate a Business Combination, or the operations of a target business with which the Company ultimately consummates a Business Combination, may be materially and adversely affected. In addition, the Company’s ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted by these events, including as a result of increased market volatility, or decreased market liquidity in third-party financing being unavailable on terms acceptable to the Company or at all. The impact of this action and related sanctions on the world economy and the specific impact on the Company’s financial position, results of operations and/or ability to consummate a Business Combination are not yet determinable. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES
| ● | Basis of presentation |
These accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).
| ● | Emerging growth company status |
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by 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 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.
F-11
BLUE WORLD ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
| ● | Use of estimates |
In preparing these financial statements in conformity with U.S. GAAP, management makes 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 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, actual results may differ from these 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 $
| ● | Investment held in Trust Account |
As of June 30, 2023 and 2022, the assets held
in the Trust Account include $
The Company classifies its U.S. Treasury and equivalent securities as held-to-maturity in accordance with ASC Topic 320 “Investments — Debt and Equity Securities.” Held-to-maturity securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities are recorded at amortized cost on the accompanying balance sheet and adjusted for the amortization or accretion of premiums or discounts.
| ● | Cash held in Escrow Account |
The Company has entered into a certain escrow
agreement with Continental Stock Transfer & Trust Company who acts as the escrow agent pursuant to which the Company agreed to deposit
the aggregated amount of $
As of June 30, 2023 and 2022, the Company had
$
F-12
BLUE WORLD ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
| ● | Net income (loss) per ordinary share |
The Company complies with accounting and disclosure
requirements of FASB ASC 260, Earnings Per Share. The Company has two classes of shares, which are referred to as redeemable shares and
non-redeemable shares. Earnings and losses are shared pro rata between the two classes of shares. In order to determine the net loss attributable
to both the redeemable shares and non-redeemable shares, the Company first considered the undistributed income (loss) allocable to both
the redeemable ordinary shares and non-redeemable ordinary shares and the undistributed income (loss) is calculated using the total net
income (loss) less any dividends paid. The Company then allocated the undistributed income (loss) ratably based on the weighted average
number of shares outstanding between the redeemable and non-redeemable ordinary shares.
| For the Year Ended | For the Period from July 19, 2021 (inception) through | |||||||||||||||
| June 30, 2023 | June 30, 2022 | |||||||||||||||
| Redeemable Class A Ordinary Shares | Non-Redeemable Class A and Class B Ordinary Shares | Redeemable Class A Ordinary Shares | Non-Redeemable Class A and Class B Ordinary Shares | |||||||||||||
| Basic and diluted net income (loss) per share: | ||||||||||||||||
| Numerators: | ||||||||||||||||
| Allocation of net income (loss) | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
| Denominators: | ||||||||||||||||
| Weighted-average shares outstanding | ||||||||||||||||
| $ | $ | $ | ( | ) | $ | ( | ) | |||||||||
| ● | Class A ordinary shares subject to possible redemption |
The Company accounts for its ordinary shares subject to possible redemption
in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory
redemption (if any) are classified as a liability instrument and measured at fair value. Conditionally redeemable ordinary shares (including
ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence
of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, ordinary shares
are classified as shareholders’ equity. The Company’s Class A Ordinary Shares feature certain redemption rights that
are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly,
F-13
BLUE WORLD ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of Class A Ordinary Shares to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable Class A Ordinary Shares are affected by charges against additional paid in capital and accumulated deficit.
| Gross proceeds | $ | |||
| Less: | ||||
| Proceeds allocated to Public Warrants and Public Rights | ( | ) | ||
| Offering costs of Public Shares | ( | ) | ||
| Plus: | ||||
| Initial measurement adjustment on redeemable ordinary shares | ||||
| Re-measurement adjustment on redeemable ordinary shares | ||||
| Class A ordinary shares subject to possible redemption, June 30, 2022 | ||||
| Less: | ||||
| Redemptions of Class A ordinary shares | ( | ) | ||
| Plus: | ||||
| Re-measurement adjustment on redeemable ordinary shares | ||||
| Class A ordinary shares subject to possible redemption, June 30, 2023 | $ |
| ● | Share-based compensation expense |
The Company accounts for share-based compensation
expense in accordance with ASC 718, “Compensation - Stock Compensation” (“ASC 718”). Under ASC 718, share-based
compensation associated with equity-classified awards is measured at fair value upon the grant date and recognized over the requisite
service period. To the extent a share-based award is subject to a performance condition, the amount of expense recorded in a given period,
if any, reflects an assessment of the probability of achieving such performance condition, with compensation recognized once the event
is deemed probable to occur. Forfeitures are recognized as incurred (see Note 5 for more discussion about the details). For the year ended
June 30, 2023, the Company did not recognize any share-based compensation expense. The Company has recognized share-based compensation
expense in the amount of $
| ● | Warrants |
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance. The Company determined that upon further review of the warrant agreements, the Company concluded that its warrants qualify for equity accounting treatment.
F-14
BLUE WORLD ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
| ● | Convertible Promissory Note |
The Company accounts for its convertible promissory notes as debt (liability) on the balance sheet based on an assessment of the embedded conversion feature (see Note 5 — Related Party Transactions) and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). The assessment considers the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity.
| ● | Income taxes |
Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis.
Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. The Company’s management determined that the Cayman Islands is the Company’s major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of June 30, 2023 and 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.
The Company’s tax provision is
The Company is considered to be an exempted Cayman Islands company, and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States.
| ● | Concentration of Credit Risk |
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal
Depository Insurance Coverage of $
F-15
BLUE WORLD ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
| ● | Fair value of financial instrument |
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet, primarily due to its short-term nature.
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). The Company’s financial instruments are classified as either Level 1, Level 2 or Level 3. 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. |
| ● | Recent accounting pronouncements |
In August 2020, the FASB issued a new standard (ASU 2020-06) to reduce the complexity of accounting for convertible debt and other equity-linked instruments. For certain convertible debt instruments with a cash conversion feature, the changes are a trade-off between simplifications in the accounting model (no separation of an “equity” component to impute a market interest rate, and simpler analysis of embedded equity features) and a potentially adverse impact to diluted earnings per share by requiring the use of the if-converted method. The new standard will also impact other financial instruments commonly issued by both public and private companies. For example, the separation model for beneficial conversion features is eliminated simplifying the analysis for issuers of convertible debt and convertible preferred stock. Also, certain specific requirements to achieve equity classification and/or qualify for the derivative scope exception for contracts indexed to an entity’s own equity are removed, enabling more freestanding instruments and embedded features to avoid mark-to-market accounting. The new standard is effective for companies that are SEC filers (except for smaller reporting companies) for fiscal years beginning after December 15, 2021 and interim periods within that year, and two years later for other companies. Companies can early adopt the standard at the start of a fiscal year beginning after December 15, 2020. The standard can either be adopted on a modified retrospective or a full retrospective basis. The adoption of ASU 2020-06 on July 1, 2022 did not have a material effect on the Company’s financial statements.
Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.
F-16
BLUE WORLD ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 3 — INITIAL PUBLIC OFFERING
On February 2, 2022, the Company consummated the
Initial Public Offering of
NOTE 4 — PRIVATE PLACEMENT
Simultaneously with the closing of the Initial
Public Offering, the Company completed the private sale of
NOTE 5 — RELATED PARTY TRANSACTIONS
Founder Shares
On August 5, 2021, the Sponsor acquired
As of June 30, 2023 and 2022, there were
Simultaneously with the effectiveness of the registration
statement and closing of the Initial Public Offering (including the full exercise of over-allotment option), the Sponsor transferred
The transfer of the Founders Shares to the Company’s
independent directors, as described above, is within the scope of FASB ASC Topic 718, “Compensation-Stock Compensation” (“ASC
718”). Under ASC 718, share-based compensation associated with equity-classified awards is measured at fair value upon the grant
date. The Company used a Finnerty put model that values the Founder Shares granted to the directors. The key inputs into the Finnerty
put model were (i) risk- free interest rate of
Due to Related Parties
From time to time, Mr. Liang Shi, the Company’s
Director, Chief Executive Officer, Secretary and Chairman, would incur travel costs to search for targets. As of June 30, 2023, due to
Mr. Liang Shi amounted to $
F-17
BLUE WORLD ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
Promissory Notes — Related Party
On August 5, 2021, the Sponsor has agreed
to loan the Company up to an aggregate amount of $
On November 30, 2022, the Company issued an unsecured
promissory note (the “Sponsor Note 1”) in the principal amount of $
On January 31, 2023, the Company issued an unsecured
promissory note (the “Extension Note 1”) in the principal amount of $
On May 2, 2023, the Company issued an unsecured
promissory note (the “Extension Note 2”) in the principal amount of $
On June 2, 2023, the Company issued an unsecured
promissory note (the “Extension Note 3”) in the principal amount of $
On June 30, 2023, the Company issued an unsecured
promissory note (the “Extension Note 4” together with Extension Note 1, 2, and 3, collectively, the “Extension Notes”)
in the principal amount of $
On July 31, 2023, the Company issued an unsecured
promissory note (the “Sponsor Note 2,” together with the Sponsor Note 1, collectively, the “Sponsor Notes”) in
the principal amount of $
The Extension Notes together with the Sponsor Notes (collectively refer herein as “Promissory Notes”) issued to the Sponsor have the same payment and conversion term as discussed below.
F-18
BLUE WORLD ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
The Promissory Notes bear no interest and is payable in full upon the earlier to occur of (i) the consummation of the Business Combination or (ii) the date of expiry of the term of the Company (the “Maturity Date”). The following shall constitute an event of default: (i) a failure to pay the principal within five business days of the Maturity Date; (ii) the commencement of a voluntary or involuntary bankruptcy action, (iii) the breach of the Company’s obligations thereunder; (iv) any cross defaults; (v) an enforcement proceedings against the Company; and (vi) any unlawfulness and invalidity in connection with the performance of the obligations thereunder, in which case the Promissory Notes may be accelerated.
The payee of the Promissory Notes, the Sponsor,
has the right, but not the obligation, to convert the Promissory Notes, in whole or in part, respectively, into private units (the “Conversion
Units”) of the Company, each consisting of one Class A Ordinary Share, one-half of one warrant, and one right to receive one-tenth
(1/10) of one Class A Ordinary Share upon the consummation of a Business Combination, as described in the prospectus of the Company (File
Number 333-261585), by providing the Company with written notice of the intention to convert at least two business days prior to the closing
of the Business Combination. The number of Conversion Units to be received by the Sponsor in connection with such conversion shall be
an amount determined by dividing (x) the sum of the outstanding principal amount payable to such Payee by (y) $
In order to meet the Company’s working capital needs following
the consummation of the Initial Public Offering, the Sponsor, officers and directors or their affiliates 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 (the “Working
Capital Loans”). Each loan would be evidenced by a promissory note.
As of June 30, 2023 and 2022, the Company had
borrowings of $
Administrative Services Agreement
The Company is obligated, commencing from the
effective date of the Initial Public Offering to pay the Sponsor, a monthly fee of $
NOTE 6 — SHAREHOLDERS’ EQUITY
Preference Shares — The Company
is authorized to issue
Class A Ordinary Shares — The
Company is authorized to issue
F-19
BLUE WORLD ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
Class B Ordinary Shares — The
Company is authorized to issue
Rights
As of June 30, 2023 and 2022, there were
The Company will not issue fractional shares in connection with an exchange of Public Rights. Fractional shares will either be rounded down to the nearest whole share or otherwise addressed in accordance with the applicable provisions of the Companies Act and any other applicable. As a result, the holders of the Public Rights must hold rights in multiples of 10 in order to receive shares for all of the holders’ rights upon closing of a Business Combination. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Public Rights will not receive any of such funds with respect to their Public Rights, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Rights, and the Public Rights will expire worthless. Further, there are no contractual penalties for failure to deliver securities to the holders of the Public Rights upon consummation of a Business Combination. Additionally, in no event will the Company be required to net cash settle the rights. Accordingly, the rights may expire worthless.
Redeemable Warrants
As of June 30, 2023 and 2022, there were
F-20
BLUE WORLD ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
The Company may call the warrants for redemption (excluding the private warrants), in whole and not in part, at a price of $0.01 per warrant:
| ● | 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 $16.50 per share (as adjusted for share dividends, share splits, share aggregation, extraordinary dividends, reorganizations, recapitalizations and the like), for any 20 trading days within any 30-trading day period commencing after the warrant become exercisable and ending one the third trading day prior to the date on which notice of redemption is given to warrant holders (the “Force-Call Provision”), and |
| ● | if, and only if, there is a current registration statement in effect with respect to the Class A Ordinary Shares underlying such warrants at the time of redemption and for the entire 30-days trading period referred to above and continuing each day thereafter until the date of redemption. |
The right to exercise will be forfeited unless the warrants are exercised prior to the date specified in the notice of redemption. On and after the redemption date, a record holder of a warrant will have no further rights except to receive the redemption price for such holder’s warrant upon surrender of such warrant.
The redemption criteria for the Company’s warrants have been established at a price which is intended to provide warrant holders a reasonable premium to the initial exercise price and provide a sufficient differential between the then-prevailing share price and the warrant exercise price so that if the share price declines as a result of the Company’s redemption call, the redemption will not cause the share price to drop below the exercise price of the warrants.
If the Company call the warrants for redemption as described above, its management will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering the whole warrants for that number of Class A Ordinary Shares equal to the quotient obtained by dividing (x) the product of the number of Class A Ordinary Shares underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of the Class 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.
Whether the Company will exercise its option to require all holders to exercise their warrants on a “cashless basis” will depend on a variety of factors including the price of its Class A Ordinary Shares at the time the warrants are called for redemption, its cash needs at such time and concerns regarding dilutive share issuances.
F-21
BLUE WORLD ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price, by certified or official bank check payable to the Company, for the number of warrants being exercised. The warrant holders do not have the rights or privileges of holders of Class A Ordinary Shares and any voting rights until they exercise their warrants and receive Class A Ordinary Shares. After the issuance of Class A Ordinary Shares upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by shareholders.
The Private Warrants have terms and provisions that are identical to those of the Public Warrants being sold as part of the Public Units in the Initial Public Offering except that the Private Warrants will be entitled to registration rights. The Private Warrants (including the Class A Ordinary Shares issuable upon exercise of the Private Warrants) will not be transferable, assignable or saleable until the completion of the Company’s initial Business Combination except to permitted transferees, subject to certain exceptions.
NOTE 7 — COMMITMENTS AND CONTINGENCIES
Registration Rights
The holders of the Founder Shares issued and outstanding on the date of the Company’s prospectus, as well as the holders of the Private Units (and all underlying securities) and any securities its initial shareholders, officers, directors or their affiliates may be issued in payment of working capital loans made to the Company, will be entitled to registration rights pursuant to an agreement to be signed prior to or on the effective date of the Initial Public Offering. The holders of the majority of the Founder Shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these ordinary shares are to be released from escrow. The holders of a majority of the Private Units (and underlying securities) and securities issued in payment of Working Capital Loans (or underlying securities) or extension loans can elect to exercise these registration rights at any time after the Company consummates a Business Combination. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Representative will be entitled to a deferred
fee of
Representative Shares
The Company issued
The Representative Shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following the date of the effectiveness of the registration statement of which this prospectus forms a part pursuant to FINRA Rule 5110 (e)(1). Pursuant to FINRA Rule 5110(e)(1), these securities will not be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period of 180 days immediately following the effective date of the registration statement of which this prospectus forms a part, nor may they be sold, transferred, assigned, pledged or hypothecated for a period of 180 days immediately following January 31, 2022, the effective date of the Company’s registration statement except to any underwriter and selected dealer participating in the offering and their officers, partners, registered persons or affiliates.
F-22
BLUE WORLD ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
Right of First Refusal
Subject to certain conditions, the Company granted
Maxim, for a period of 12 months after the date of the consummation of its Business Combination, a right of first refusal to act
as book running manager with at least
NOTE 8 — FAIR VALUE MEASUREMENTS
As of June 30, 2023 and 2022, investment securities
in the Company’s Trust Account consisted of a treasury securities fund in the amount of $
| June 30, 2023 | Carrying Value | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | ||||||||||||
| Assets: | ||||||||||||||||
| Investments held in Trust Account – Money Market Funds | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| June 30, 2022 | Carrying Value | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | ||||||||||||
| Assets: | ||||||||||||||||
| Investments held in Trust Account – Money Market Funds | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Level | February 2, 2022 | |||||||
| Equity instrument: | ||||||||
| Representative shares | 3 | $ | ||||||
The Company used a Finnerty put model that values
the Representative Shares granted to Maxim Group LLC. The key inputs into the Finnerty put model were (i) risk- free interest rate of
F-23
BLUE WORLD ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 9 — SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that these financial statements were issued. Except as discussed below, the Company did not identify any other subsequent events that would have required adjustment or disclosure in the financial statements.
Escrow Account
At the June 2023 Meeting,
among the other proposals, the shareholders of the Company also approved the release of the funds held in the Escrow Account pursuant
to the D&O Reserve Fund Escrow Agreement, dated January 31, 2022 (the “D&O Indemnity Escrow Agreement”), by and between
the Company and Continental Stock Transfer & Trust Company, as escrow agent, on July 2, 2023 or such a later date immediately following
the purchase of an alternative D&O insurance. Upon the approval, the Company secured an alternative D&O insurance, effective on
July 1, 2023. On July 4, 2023, a total of $
Extension Notes
On
July 31, 2023, the Company issued an unsecured promissory note (the “Extension Note 5”) in the principal amount of $
On
September 1, 2023, the Company issued an unsecured promissory note (the “Extension Note 6”) in the principal amount of $
On September 28, 2023, the Company issued an unsecured promissory note
(the “Extension Note 7”) in the principal amount of $
Redemptions
On June 30, 2023, the Company held the
June 2023 Meeting at which the Company’s shareholders approved the adoption of the Third Amended and Restated Memorandum
and Articles of Association of the Company, which provides that the Company has until July 2, 2023 to complete a Business Combination,
and may elect to extend the period to consummate a Business Combination up to nine times, each by an additional one-month extension,
for a total of up to nine months to April 2, 2024, by depositing $
Merger Agreement
On August 10, 2023, the Company entered into an Agreement and Plan of Merger (as the same may be amended, restated or supplemented, the “Merger Agreement”) with TOYO Co., Ltd, a Cayman Islands exempted company (“PubCo”), TOYOone Limited, a Cayman Islands exempted company (“Merger Sub”), TOPTOYO INVESTMENT PTE. LTD., a Singapore private company limited by shares (“SinCo”), Vietnam Sunergy Cell Company Limited, a Vietnamese company, (the “Company”, together with PubCo, Merger Sub and SinCo, the “Group Companies”, or each individually, a “Group Company”), Vietnam Sunergy Joint Stock Company, a Vietnam joint stock company (“VSUN”), and Fuji Solar Co., Ltd, a Japanese company (“Fuji Solar”, together with VSUN, the “Shareholders”, or individually, a “Shareholder”).
Pursuant to the Merger
Agreement, (a) the Group Companies, VSUN and Fuji Solar shall consummate a series of transactions involving the Group Companies, including
(A) PubCo acquiring one hundred percent (
F-24