UNAUDITED
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
Note
1 – Description of Organization and Business Operations
Organization
and General
Alpha
Star Acquisition Corporation (the “Company”) is a blank check company incorporated in the Cayman Islands on March 11,
2021. The Company was formed for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization
or similar business combination with one or more businesses (“Business Combination”). The Company has selected December 31
as its fiscal year-end.
Although
the Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination, the Company
intends to focus on businesses that have a connection to the Asian market. The Company is an early stage and emerging growth company
and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
The
Company’s sponsor is A-Star Management Corporation, a British Virgin Islands incorporated company (the “Sponsor”).
The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company
will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering (the “IPO”).
The
Company has 9 months from the closing of the IPO (or up to 21 months from the closing of our initial public offering if we extend the
period of time to consummate a business combination) to consummate a Business Combination (the “Combination Period”). If
the Company fails to consummate a Business Combination within the Combination Period, it will trigger its automatic winding up, liquidation
and subsequent dissolution pursuant to the terms of the Company’s amended and restated memorandum and articles of association.
As a result, this has the same effect as if the Company had formally gone through a voluntary liquidation procedure under the Companies
Law. Accordingly, no vote would be required from the Company’s stockholders to commence such a voluntary winding up, liquidation
and subsequent dissolution.
The
Company’s IPO was declared effective on December 13, 2021. On December 15, 2021, the Company consummated the IPO of 11,500,000 units
which includes an additional 1,500,000 units as a result of the underwriters’ fully exercise of the over-allotment, at
$10.00 per Unit, generating gross proceeds of $115,000,000, which is described in Note 3.
Concurrently
with the closing of the IPO, the Company consummated the sale of 330,000 units (the “Private Placement”) at a price
of $10.00 per Private Unit in a private placement to A-Star Management Corporation, generating gross proceeds of $3,300,000, which
is described in Note 4.
On
September 13, 2022, the Company announced that it has entered into a non-binding letter of intent (“LOI”) for a business
combination with Cyclebit Group (the “Cyclebit”). Founded in 2012, Cyclebit is a global payments and SaaS provider. Its core
products include card acquiring, point-of-sale (POS) services and marketplace solutions. Under the terms of the LOI, the Company and
Cyclebit would become a combined entity, with the Cyclebit’s existing equity holders rolling 100% of their equity into the combined
public company. No assurance can be made that the parties will successfully negotiate and enter into a definitive agreement, or that
the proposed transaction will be consummated on the terms or time frame currently contemplated, or at all. Any transaction would be subject
to board an equity holder approval of both companies, regulatory approvals and other customary conditions.
The
Trust Account
As
of December 15, 2021, a total of $115,682,250 of the net proceeds from the IPO and the Private Placement transaction completed with
the Sponsor was deposited in a trust account established for the benefit of the Company’s public stockholders with Wilmington Trust,
National Association acting as trustee. The amount exceeding $115,000,000, $682,254, had been transfer to the Company’s escrow
cash account as its working capital. At March 31, 2023, the Company had working capital deficiencies of $2,907,698, which excludes $120,639,708 of
marketable securities held in the trust account and the liability for deferred underwriting commissions of $2,875,000.
The
funds held in the Trust Account are invested only in United States government treasury bills, bonds or notes having a maturity of 180
days or less, or in money market funds meeting the applicable conditions under Rule 2a-7 promulgated under the Investment Company Act
of 1940 and that invest solely in United States government treasuries. Except with respect to interest earned on the funds held in the
Trust Account that may be released to the Company to pay its income or other tax obligations, the proceeds will not be released from
the Trust Account until the earlier of the completion of a Business Combination or the Company’s liquidation.
Liquidity
and Going Concern
As
of March 31, 2023, the Company had cash $26,694 in its escrow account and working capital deficiencies of $2,907,698, which excludes
$120,639,708 of marketable securities held in the trust account and the liability for deferred underwriting commissions of $2,875,000.
In
order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain
of the Company’s officers and directors may, but are not obligated to, provide the Company related party loans up to $1,500,000.
As of March 31, 2023. The Company had no convertible loan payable balance.
On September 13, 2022, December 31, 2022 and March
13, 2023, the Company issued the first promissory note (the “First Note ”), second promissory note (the “Second
Note”) and third promissory note (“Third Note”) in the principal amount of up to $1,000,000, $1,300,000 and $2,500,000 to
the Sponsor, pursuant to which the Sponsor shall loan to the Company up to $1,000,000, $1,300,000 and $2,500,000 to pay
the extension fee and transaction cost, respectively. For further information regarding the notes reference to Note 5.
If
the Company’s estimate of the costs of identifying a target business, undertaking due diligence and negotiating a Business Combination
are less than the actual amount necessary to do so, the Company may have insufficient funds available to operate our business prior to
our initial Business Combination. Moreover, the Company may need to obtain additional financing either to complete its Business Combination
or because the Company has become obligated to redeem a significant number of its Public Shares upon completion of its Business Combination,
in which case the Company may issue additional securities or incur debt in connection with such Business Combination. In addition, we
have until September 15, 2023 (the “Liquidation Date”) to consummate a business combination.
In
connection with the Company’s assessment of going concern considerations in accordance with Accounting Standards Codification (“ASC”)
205-40, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined
that if the Company is unable to complete a Business Combination by the Liquidation Date, then the Company may cease all operations except
for the purpose of liquidating. The uncertainty surrounding the date for mandatory liquidation and subsequent dissolution raise substantial
doubt about the Company’s ability to continue as a going concern. Management expects to close the Business Combination prior to
the Liquidation Date. If the Company is unable to close the Business Combination or raise additional capital, it may be required to take
additional measures to conserve liquidity, which could include, but not necessarily include or be limited to, curtailing operations,
suspending the pursuit of a potential transaction and reducing overhead expenses. The Company cannot provide any assurance that new financing
will be available to it on commercially acceptable terms or if at all. These conditions raise substantial doubt about the Company’s
ability to continue as a going concern through the Liquidation Date if a Business Combination is not consummated. These financial statements
do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be
necessary should the Company be unable to continue as a going concern.
Note
2 – Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying financial statements of the Company are presented in U.S. dollars in conformity with accounting principles generally accepted
in the United States of America (“GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission
(“SEC”).
These
unaudited financial statements should be read in conjunction with the Company’s audited financial statements and the
notes thereto included in the Annual Report for the year ended December 31, 2022, which are included in Form 10-K filed on March 31,
2023.
Emerging
Growth Company
The
Company is an emerging growth company as defined by Section 2(a) of 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 no
limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
disclosures obligations regarding executive compensation in its periodic reports and proxy statements, and exceptions from the requirements
of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payment 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 an election to opt out is irrevocable. The Company has elected not to opt out
of such extended transition period which means that when a standard is issued or revised, and it has different application dates for
public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies
adopt the new or revised standard. This may make comparison of the Company’s financial statement with another public company which
is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult
or impossible because of the potential differences in accounting standards used.
Use
of Estimates
The
preparation of financial statement in conformity with GAAP requires the Company’s management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statement and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
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.
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 $26,694 and $110,991 cash held in escrow and did not have any cash equivalents as of March 31, 2023 and December
31, 2022, respectively.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution
which, at times may exceed the Federal depository insurance coverage of $250,000. As of March 31, 2023 and December 31, 2022, the Company
had not experienced losses on this account respectively.
Marketable
Securities Held in Trust Account
The
Company’s investments held in the Trust Account are classified as trading securities. Trading securities are presented on the
balance sheet at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of
investments held in Trust Account are included in interest earned and unrealized gain on marketable securities held in Trust Account
in the accompanying statements of operations. The estimated fair values of investments held in Trust Account are determined using
available market information. The Company had $120,639,708 and
$118,228,816 of
marketable securities held in the trust account, and have no claim to withdraw or distribute any funds from the trust account as of
March 31, 2023 and December 31, 2022. In March 22, 2023, the Company withdrew $7,500 to
pay Wilmington Trust $7,500 as
the operating expenses. The Company plans to deposit $7,500 into
the trust account during second quarter of 2023.
During the three months
ended March 31, 2023 and 2022, interest earned from the Trust account amounted to $1,268,393 and $9,386, which $807,326 and $9,386 was
reinvested in the Trust Account, respectively. $461,067 and nil was also recognized as unrealized gain on investments held in the
Trust account during the three months ended March 31, 2023 and 2022, respectively.
Offering
Costs Associated with the Initial Public Offering
The
Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A – “Expenses of Offering”. Offering costs consisted of legal, accounting, and other
costs incurred that were directly related to the Initial Public Offering. Upon completion of the Initial Public Offering, offering costs
were allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared
to total proceeds received. Offering costs allocated to the warrants and Rights were charged to equity. Offering costs allocated to the
ordinary shares were charged against the carrying value of ordinary shares subject to possible redemption upon the completion of the
Initial Public Offering.
Ordinary
Shares Subject to Possible Redemption
The
Company accounts for its ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification
(“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption is
classified as a liability instrument and is measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares
that feature redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain
events not solely within the Company’s control) is classified as temporary equity. At all other times, ordinary shares are classified
as stockholders’ equity. The Company’s ordinary shares feature certain redemption rights that are considered to be outside
of the Company’s control and subject to occurrence of uncertain future events. Accordingly, ordinary shares subject to possible
redemption are presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s
balance sheet.
All
of the 11,500,000 ordinary shares sold as part of the Units in the IPO contain a redemption feature which allows for the redemption
of such Public Shares in connection with the Company’s liquidation, if there is a stockholder vote or tender offer in connection
with the Business Combination and in connection with certain amendments to the Company’s Certificate of Incorporation. Accordingly,
all of the 11,500,000 shares of ordinary shares are presented as temporary equity.
The
Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable ordinary shares
to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable ordinary
shares are affected by charges against additional paid-in capital and accumulated deficit if additional paid in capital equals to
zero. The interest earned by the marketable security held in trust, and the extension fee invest into the marketable security held in
trust, were also recognizes in redemption value against additional paid-in capital and accumulated deficit immediately. The proceeds
on the deposit in the trust account, including interest (which interest shall be net of taxes payable, and less up to $50,000 of interest
to pay dissolution expenses) will be used to fund the redemption of the public shares.
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities approximates the carrying amounts represented in the accompanying balance sheet,
primarily due to the short-term nature.
Net
Income (Loss) per Share
The
Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” In order to determine
the net income (loss) attributable to both the redeemable shares and non-redeemable shares, the Company first considered the undistributed
income (loss) allocable to both the redeemable shares and non-redeemable 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 shares. Any remeasurement of the accretion to
redemption value of the ordinary shares subject to possible redemption was considered to be dividends paid to the public stockholders.
The
calculation of diluted income (loss) per ordinary shares does not consider the effect of the warrants issued in connection with the (i) Initial
Public Offering, (ii) the private placement since the exercise of the warrants is contingent upon the occurrence of future events, and (iii) the effect of the rights to receive 1,690,000 shares.
The warrants are exercisable to purchase 5,915,000 shares of ordinary shares in the aggregate. As of March 31, 2023, the Company
did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into ordinary shares in the earnings of the Company. As a result, diluted net income (loss) per ordinary shares is the same as basic net income (loss)
per ordinary share for the periods presented.
The
net income (loss) per share presented in the statement of operations is based on the following:
| Schedule
of statement of operations | |
| | | |
| | |
| | |
For the
Three Months Ended
March 31,
2023 | | |
For the
Three Months Ended
March 31,
2022 | |
| Net
income (loss) | |
$ | 1,147,084 | | |
$ | (179,479 | ) |
| Remeasurement
to redemption value – interest income earned | |
| (1,268,393 | ) | |
| - | |
| Remeasurement
to redemption value – extension fee | |
| (1,149,999 | ) | |
| - | |
| Net income (Loss) | |
$ | (1,271,308 | ) | |
$ | (179,479 | ) |
| Schedule of basic and diluted net income (loss) per share | |
| | | |
| | | |
| | | |
| | |
| | |
For the
Three Months Ended
March 31,
2023
(Unaudited) | | |
For the
Three Months Ended
March 31,
2022
(Unaudited) | |
| | |
Non-
redeemable
shares | | |
Redeemable
shares | | |
Non-
redeemable
shares | | |
Redeemable
shares | |
| Basic and Diluted net income (loss) per share: | |
| | | |
| | | |
| | | |
| | |
| Numerators: | |
| | | |
| | | |
| | | |
| | |
| Allocation of net losses | |
$ | (277,085 | ) | |
$ | (994,223 | ) | |
$ | (39,118 | ) | |
$ | (140,361 | ) |
| Accretion of extension fee | |
| - | | |
| 1,149,999 | | |
| - | | |
| - | |
| Accretion of temporary equity- interest income earned | |
| - | | |
| 1,268,393 | | |
| - | | |
| - | |
| Allocation of net income (loss) | |
$ | (277,085 | ) | |
$ | 1,424,169 | | |
$ | (39,118 | ) | |
$ | (140,361 | ) |
| Denominators: | |
| | | |
| | | |
| | | |
| | |
| Weighted-average shares outstanding | |
| 3,205,000 | | |
| 11,500,000 | | |
| 3,205,000 | | |
| 11,500,000 | |
| Basic and diluted net income (loss) per share | |
$ | (0.09 | ) | |
$ | 0.12 | | |
$ | (0.01 | ) | |
$ | (0,01 | ) |
Income
Taxes
The
Company accounts for income taxes under ASC 740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax
assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities
and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation
allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC
740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes
a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected
to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination
by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim
period, disclosure and transition. The Company has identified the Cayman Islands as its only “major” tax jurisdiction, as
defined. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring
recognition in the Company’s financial statement. The Company believes that its income tax positions
and deductions would be sustained on audit and does not anticipate any adjustments that would result in material changes to its financial
position. The Company’s policy for recording interest and penalties associated with audits is to record such items as a component
of income tax expense.
On
August 16, 2022, the U.S. Government enacted legislation commonly referred to as the Inflation Reduction Act. The main provisions of
the Inflation Reduction Act (the “IR Act”) that we anticipate may impact us is a 1% excise tax on share repurchases. Any
redemption or other repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise,
may be subject to the excise tax. Because there is possibility that the Company may acquire a U.S. domestic corporation or engage in
a transaction in which a domestic corporation becomes parent or affiliate to the Company and the Company may become a “covered
corporation” as a listed Company in Nasdaq. The management team has evaluated the IR Act as of March 31, 2023 and does not believe
it would have a material effect on the Company, and will continue to evaluate its impact.
The
provision for income taxes was deemed to be immaterial for three months ended March 31, 2023 and for the three months ended March 31,
2022.
Warrants
The
Company evaluates the Public and Private Warrants as either equity-classified or liability-classified instruments based on
an assessment of the warrants’ specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“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, among other
conditions for equity classification. Pursuant to such evaluation, both Public and Private Warrants are classified in stockholders’
equity.
Recently
Issued Accounting Standards
In
August 2020, the 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”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates
the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies
the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard
also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s
own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method
for all convertible instruments. ASU 2020-06 is effective for the fiscal years beginning after December 15, 2023, and interim periods
within those fiscal year for smaller reporting companies. As of March 31, 2023, management does not believe that any recently effective,
accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.
Note
3 – Initial Public Offering
On
December 15, 2021, the Company consummated the initial public offering and sale of 11,500,000 units (including the issuance
of 1,500,000 units as a result of the underwriters’ fully exercise of the over-allotment) at a price of $10.00 per
Unit, generating gross proceeds of $115,000,000. Each Unit consists of one ordinary share, one redeemable warrant (each a “Warrant”,
and, collectively, the “Warrants”), and one right to receive one-seventh (1/7) of an ordinary share upon the consummation
of a Business Combination. Each two redeemable warrants entitle the holder thereof to purchase one ordinary share, and each seven rights
entitle the holder thereof to receive one ordinary share at the closing of a Business Combination. No fractional shares were issued upon
separation of the Units, and only whole Warrants will trade.
Note
4 – Private Placement
Concurrently
with the consummation of the IPO, A-Star Management Corporation, the Sponsor, purchased an aggregate of 330,000 units at a
price of $10.00 per Private Unit for an aggregate purchase price of $3,300,000 in a private placement. The Private Units are
identical to the public Units except with respect to certain registration rights and transfer restrictions. The proceeds from the Private
Units were added to the proceeds from the IPO to be held in the Trust Account. If the Company does not complete a Business Combination
within the Combination Period, the proceeds from the sale of the Private Units will be used to fund the redemption of the Public Shares
(subject to the requirements of applicable law), and the Private Units and all underlying securities will expire worthless.
Note
5 – Related Party Transactions
Founder
Shares
On
March 11, 2021, the Company issued one ordinary share to the Sponsor for no consideration. On April 6, 2021, the Company cancelled
the one share for no consideration and the Sponsor purchased ordinary shares for an aggregate price of $25,000.
The 2,875,000 founder
shares (for purposes hereof referred to as the “Founder Shares”) include an aggregate of up to 375,000 shares subject
to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment is not exercised in full or in part, so that the
Sponsor will collectively own 20% of the Company’s issued and outstanding shares after the Proposed Offering. On December 15, 2021,
the underwriters exercised the over-allotment option in full, so there are no Founder Shares subject to forfeiture as of March 31, 2023.
The
Sponsor and each Insider agrees that it, he or she shall not (a) Transfer 50% of their Founder Shares until the earlier of (A) six
months after the consummation of the Company’s initial Business Combination or (B) the date on which the closing price of
the Ordinary Shares equals or exceeds $12.50 per share (as adjusted for share splits, share capitalizations, rights issuances, subdivisions,
reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing after the Company’s
initial Business Combination or (b) Transfer the remaining 50% of their Founder Shares until six months after the date of the consummation
of the Company’s initial Business Combination, or earlier in either case, if subsequent to the Company’s initial Business
Combination the Company completes a liquidation, merger, share exchange, reorganization or other similar transaction that results in
all of the Company’s stockholders having the right to exchange their Ordinary Shares for cash, securities or other property (the
“Founder Shares Lock-up Period”).
Administrative
Services Agreement
The
Company entered into an administrative services agreement, commencing on December 13, 2021, through the earlier of the
Company’s consummation of a Business Combination or its liquidation, to pay to the Sponsor a total of $ per
month for office space, secretarial and administrative services provided to members of the Company’s management team. For each
of the three months ended March 31, 2023 and 2022, the Company incurred $30,000
in0
fees for these services. 0
Sponsor
Promissory Note — Related Party
On
March 26, 2021, the Company issued an unsecured promissory note to the Sponsor, pursuant to which the Company may borrow up to an
aggregate principal amount of $ (the “Promissory Note”). The Promissory Note is non-interest bearing and payable
on the earlier of (i) December 31, 2021 or (ii) the consummation of the IPO. The loan repaid as $ allotted
to the payment of offering expense as of the IPO date.
In
addition, in order to finance transaction costs in connection with an intended initial business combination, our sponsor or an affiliate
of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete
an initial business combination, we would repay such loaned amounts. In the event that the initial business combination does not close,
we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust
account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into units at a price of $10.00 per unit
(which, for example, would result in the holders being issued 150,000 ordinary shares, 150,000 rights and 150,000 warrants to purchase
75,000 shares if $1,500,000 of notes were so converted) at the option of the lender. The units would be identical to the placement units
issued to the initial holder. The terms of such loans by our officers and directors, if any, have not been determined and no written
agreements exist with respect to such loans. We do not expect to seek loans from parties other than our sponsor or an affiliate of our
sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek
access to funds in our trust account. The convertible loans from Sponsor balances were nil as of March 31, 2023 and December 31, 2022.
On September 13, 2022 and December
31, 2022, the Company issued the first promissory note (the “First Note”) and second promissory note (the “Second Note”)
in the principal amount of up to $ and $ to the Sponsor, pursuant to which the Sponsor shall loan to the Company
up to $1,000,000 and $1,300,000 to pay the extension fee and transaction cost, respectively. The First Notes bears no interest and are repayable in full upon the earlier of (a) September 15, 2023 or (b) the date of
the consummation of the Company’s initial business combination. The Second Note bears no interest and are repayable in full upon
the earlier of (a) December 31, 2023 or (b) the date of the consummation of the Company’s initial business combination. The Notes
have no conversion feature, and no collateral. The issuance of the Notes were made pursuant to the exemption from registration contained
in Section 4(a)(2) of the Securities Act of 1933, as amended. The Sponsor waives any and all right, title, interest or claim of any
kind in or to any distribution of or from the trust account, and agrees not to seek resources, reimbursement, payment or satisfaction
for any claim against the trust account for any reason whatsoever.
On
March 13, 2023, the Company issued a promissory note (the “Third Note”) in the principal amount of up to $ to
the Sponsor, pursuant to which the Sponsor shall loan to the Company up to $2,500,000 to pay the extension fee and transaction cost.
The Note bears no interest and are repayable in full upon the earlier of (a) December 31, 2023 or (b) the date of the consummation
of the Company’s initial business combination.
Starting from September 13, 2022, the Company requested to draw the funds of $383,333 and
deposited it into the trust account monthly to extend the period of time the Company has to consummate a business combination. The $383,333 extension
fee represents approximately $0.033 per public share.
Sponsor
promissory note balances were 2,683,331 and 1,533,332 as of March 31, 2023 and December 31, 2022 respectively.
Due to related parties
On March 31, 2023 and December 31, 2022,
the Company have amount due to Sponsor with $140,000 and nil0, respectively. Such amount due to related party is related to the Sponsor
paid operating expenses on behalf of the Company.
On March 31, 2023 and December
31, 2022, the Company owed to the director in the amounts of $22,674
and $21,697,
respectively, which is related to the reimbursement of the operating expenses.
Note
6 – Commitments and Contingencies
Risks
and Uncertainties
Management
continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could
have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific
impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
In February 2022, the Russian Federation and
Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States,
have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions
on the world economy is not determinable as of the date of these unaudited condensed financial statements. The specific impact
on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these unaudited
condensed financial statements. The management will continuously evaluate the effect to the Company.
Underwriters
Agreement
The
Company granted the underwriters, a 45-day option to purchase up to 1,500,000 Units (over and above the 10,000,000 units referred to
above) solely to cover over-allotments at $10.00 per Unit. On December 15, 2021, the underwriters exercised the over-allotment option
in full to purchase 1,500,000 Units at a purchase price of $10.00 per Unit.
On
December 15, 2021, the Company paid a cash underwriting commission of 2.0% of the gross proceeds of the IPO, or $2,300,000.
The
underwriters are entitled to a deferred underwriting commission of 2.5% of the gross proceeds of the IPO, or $2,875,000, which will
be paid from the funds held in the Trust Account upon completion of the Company’s initial Business Combination subject to the terms
of the underwriting agreement. The Company has the deferred underwriting commissions $2,875,000 and $2,875,000 as current liabilities
as of March 31, 2023 and December 31, 2022, respectively.
Registration
Rights
The
holders of the Founder Shares will be entitled to registration rights pursuant to a registration rights agreement to be signed prior
to or on the effective date of the IPO. The holders of these securities are entitled to make up to three demands, excluding short form
demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights
with respect to registration statements filed subsequent to the consummation of a Business Combination and rights to require the Company
to register for resale such securities pursuant to Rule 415 under the Securities Act. The Company will bear the expenses incurred
in connection with the filing of any such registration statements.
Note
7 – Stockholders’ Deficit
Ordinary
Shares
The
Company is authorized to issue 50,000,000 ordinary shares, with a par value of $0.001 per share. Holders of the ordinary
shares are entitled to one vote for each ordinary share. At March 31, 2023 and December 31, 2022, there were 3,205,000 ordinary
shares issued and outstanding, excluding 11,500,000 shares subject to possible redemption.
Public
Warrants
Pursuant
to the Initial Public Offering, the Company sold 11,500,000 Units at a price of $10.00 per Unit for a total of $115,000,000.
The total amount of ordinary shares subject to possible redemption is 11,500,000. Each Unit consists of one ordinary share, one
right to acquire one-seventh (1/7) of an ordinary share, and one redeemable warrant (“Public Warrant”) to purchase one-half
of one ordinary share at a price of $11.50 per share, subject to adjustment. As of March 31, 2023 and December 31, 2022, the Company
had 11,500,000 and 11,500,000 public warrants outstanding, respectively.
Each
warrant entitles the holder to purchase one-half ordinary share at a price of $11.50 per share commencing 30 days after the completion
of its initial business combination and expiring five years from after the completion of an initial business combination. No fractional
warrant will be issued and only whole warrants will trade. The Company may redeem the warrants at a price of $0.01 per warrant upon
30 days’ notice, only in the event that the last sale price of the ordinary shares is at least $18.00 per share for any 20 trading
days within a 30-trading day period ending on the third day prior to the date on which notice of redemption is given, provided there
is an effective registration statement and current prospectus in effect with respect to the ordinary shares underlying such warrants
during the 30 day redemption period. If a registration statement is not effective within 60 days following the consummation
of a business combination, warrant holders may, until such time as there is an effective registration statement and during any period
when the Company shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to
an available exemption from registration under the Securities Act.
In
addition, if (a) the Company issues additional ordinary shares or equity-linked securities for capital raising purposes in connection
with the closing of the initial Business Combination at an issue price or effective issue price of less than $9.20 per share (with
such issue price or effective issue price to be determined in good faith by our board of directors), (b) the aggregate gross proceeds
from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our
initial business combination, and (c) the volume weighted average trading price of the ordinary shares during the 20 trading
day period starting on the trading day prior to the day on which the Company consummates the initial Business Combination (such price,
the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent)
to be equal to 115% of the Market Value, and the last sales price of the ordinary shares that triggers the Company’s right
to redeem the Warrants will be adjusted (to the nearest cent) to be equal to 180% of the Market Value.
Private
warrants
The
private warrants have terms and provisions that are identical to those of the warrants being sold as part of the units in this offering.
As of March 31, 2023 and December 31, 2022, the Company had 330,000 and 330,000 private warrants outstanding, respectively.
Rights
Except
in cases where the Company is not the surviving Company in a business combination, the holders of the rights will automatically receive 1/7 of
a share of ordinary shares upon consummation of the Company’s initial business combination. In the event the Company will not be
the surviving company upon completion of the initial business combination, each holder of a right will be required to affirmatively convert
his, her or its rights in order to receive the 1/7 of a share underlying each right upon consummation of the business combination. As
of March 31, 2023, no rights had been converted into shares.
Note
8 – Fair Value Measurements
The
Company complies with ASC 820, “Fair Value Measurements”, for its financial assets and liabilities that are re-measured and
reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair
value at least annually. ASC 820 determines fair value to be the price that would be received to sell an asset or would be paid to transfer
a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date.
The
following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used
in order to value the assets and liabilities:
Level
1: Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which
transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level
2: Observable inputs other than Level inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or
liabilities and quoted prices for identical assets or liabilities in markets that are not active.
Level
3: Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
At
March 31, 2023 and December 31, 2022, assets held in the trust account were entirely comprised of marketable securities.
The
following table presents information about the Company’s assets that are measured at fair value on a recurring basis at March 31,
2023 and December 31, 2022 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair
value.
| Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | |
| | | |
| | | |
| | |
| Assets March 31, 2023 | |
Quoted Prices in
Active Markets
(Level 1) | | |
Significant Other
Observable Inputs
(Level 2) | | |
Significant Other
Unobservable Inputs
(Level 3) | |
| Marketable Securities held in Trust Account | |
$ | 120,639,708 | | |
$ | - | | |
$ | - | |
| Assets December 31, 2022 | |
Quoted Prices in
Active Markets
(Level 1) | | |
Significant Other
Observable Inputs
(Level 2) | | |
Significant Other
Unobservable Inputs
(Level 3) | |
| Marketable Securities held in Trust Account | |
$ | 118,228,816 | | |
$ | - | | |
$ | - | |
Note
9 – Subsequent Events
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date the financial statements
was available to be issued. Based upon the review, the Company did not identify any subsequent events that would have required adjustment
or disclosure in the financial statement other than the following:
On April 10, 2023 and May 12, 2023, the Company drew down $383,333
and $383,333 from the Third Note in purpose to pay the extension fee for April and May, respectively.
In April
2023, the Sponsor paid a total of $32,766 operating expenses on behalf of the Company. The payment by the Sponsor was not considered
as drawdown of the Third Note.
