UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
(Mark One)
☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(B)
OR 12(G) OF THE SECURITIES EXCHANGE
ACT OF 1934
OR
☐ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended _________________
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF
1934
OR
☒ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT
OF 1934
Date of event requiring this shell company report: June 6, 2024
Commission File Number: 001-42114
BIG TREE CLOUD HOLDINGS LIMITED
(Exact name of Registrant as specified in its charter)
| Not applicable |
|
Cayman Islands |
| (Translation of Registrant’s name into English) |
|
(Jurisdiction of incorporation or organization) |
Room 3303, Building 1
Zhongliang Yunjing Plaza
Heshuikou Community, Matian Street
Guangming District, Shenzhen 518083, China
(Address of Principal Executive Offices)
Mr. Wenquan Zhu, Chief Executive Officer
Room 3303, Building 1
Zhongliang Yunjing Plaza
Heshuikou Community, Matian Street
Guangming District, Shenzhen 518083, China
Tel: +86 755 2759-5623
Email: zhuwenquan@bigtreeclouds.com
(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of each class |
|
Trading Symbol |
|
Name of each exchange on which registered |
| Ordinary shares, par value US$0.0001 |
|
DSY |
|
The Nasdaq Stock Market LLC |
| Warrants to purchase ordinary shares |
|
DSYWW |
|
The Nasdaq Stock Market LLC |
Securities registered or to be registered pursuant
to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of June 12, 2024: 57,080,546
ordinary shares and warrants.
Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
If this report is an annual or transition report, indicate by check
mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes ☐ No ☐
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. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒
No ☐
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer”,
“accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ |
Accelerated filer ☐ |
Non-accelerated filer ☒ |
| |
|
Emerging growth company ☒ |
If an emerging growth company that prepares its financial statements
in accordance with U.S. GAAP, 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.
☐
† The term “new or revised financial accounting standard”
refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark which basis of accounting the registrant has
used to prepare the financial statements included in this filing:
| U.S. GAAP ☒ |
International Financial Reporting Standards as issued by the International
Accounting Standards Board ☐ |
Other ☐ |
If “Other” has been checked in response to the previous
question indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐
Item 18 ☐
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). ☐
If this is an annual report, indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
No ☐
TABLE OF CONTENTS
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This Shell Company Report on Form 20-F (including
information incorporated by reference herein, the “Report”) is being filed by Big Tree Cloud Holdings Limited, an exempted
company incorporated in Cayman Islands. Unless otherwise indicated, “we,” “us,” “our,” “Big
Tree Cloud” and “PubCo,” and similar terminology refer to Big Tree Cloud Holdings Limited and its subsidiaries subsequent
to the Business Combination (defined below). References to “Big Tree Cloud” and “HoldCo” refer to Big Tree Cloud
International Group Limited prior to the consummation of the Business Combination.
This Report contains or may contain forward-looking
statements as defined in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E
of the Securities Exchange Act of 1934 (the “Exchange Act”) that involve significant risks and uncertainties. All statements
other than statements of historical facts are forward-looking statements. These forward-looking statements include information about our
possible or assumed future results of operations or our performance. Words such as “expects,” “intends,” “plans,”
“believes,” “anticipates,” “estimates,” and variations of such words and similar expressions are intended
to identify the forward-looking statements. The risk factors and cautionary language referred to or incorporated by reference in this
Report provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations described
in our forward-looking statements, including among other things, the items identified in the “Risk Factors” section of PubCo’s
registration statement on Form F-4 (File No. 333-277882) initially filed with the Securities and Exchange Commission (the “SEC”)
on March 13, 2024, as amended (the “Form F-4”), which are incorporated herein by reference.
Readers are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the date of this Report. Although we believe that the expectations reflected
in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. These statements
involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties
and contingencies, many of which are beyond our control. Actual results may differ materially from those expressed or implied by such
forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements contained in this Report,
or the documents to which we refer readers in this Report, to reflect any change in our expectations with respect to such statements or
any change in events, conditions or circumstances upon which any statement is based.
EXPLANATORY NOTE
On October 9, 2023, Plutonian Acquisition Corp.,
a Delaware corporation (“Plutonian”) entered into certain Agreement and Plan of Merger (as may be amended, supplemented or
otherwise modified from time to time, the “Merger Agreement”), by and among Big Tree Cloud International Group Limited, an
exempted company incorporated in Cayman Islands (“Holdco”), Big Tree Cloud Holdings Limited, an exempted company incorporated
in Cayman Islands (“PubCo”), Big Tree Cloud Merger Sub I Limited, an exempted company incorporated in Cayman Islands and a
direct wholly-owned subsidiary of PubCo (“Merger Sub 1”), Big Tree Cloud Merger Sub II Inc., a Delaware corporation and a
direct wholly-owned subsidiary of PubCo (“Merger Sub 2”), and Guangdong Dashuyun Investment Holding Group Co., Ltd., a limited
liability company incorporated in the PRC ( “Guangdong Dashuyun”). The Merger Agreement provided for a business combination
which was effected in two steps: (i) Merger Sub 1 will merge with and into Holdco (the “Initial Merger”), and Holdco will
be the surviving corporation of the Initial Merger and a direct wholly owned subsidiary of PubCo, and (2) following confirmation of the
effectiveness of the Initial Merger, Merger Sub 2 will merge with and into Plutonian (the “SPAC Merger”and together with Initial
Merger, the “Business Combination”), and Plutonian will be the surviving corporation of the SPAC Merger and a direct wholly
owned subsidiary of PubCo.
On June 6, 2024, PubCo consummated the Business
Combination pursuant to the terms of the Merger Agreement and HoldCo became a wholly owned subsidiary of PubCo. This Report is being filed
in connection with the Business Combination.
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT
AND ADVISERS
A. Directors and Senior Management
The directors and executive officers upon consummation
of the Business Combination are set forth in the Form F-4 in the section entitled “PubCo’s Directors and Executive Officers
after the Business Combination” and is incorporated herein by reference.
The address of our directors and executive officers
is Room 3303, Building 1, Zhongliang Yunjing Plaza, Heshuikou Community, Matian Street, Guangming District, Shenzhen 518083, PRC.
B. Advisors
Not applicable.
C. Auditors
Friedman LLP (“Friedman”), One
Liberty Plaza, 165 Broadway, 21st Floor, New York, NY 10006, acted as Plutonian Acquisition Corp.’s independent
registered public accountant since March 11, 2021 (inception) through September 1, 2022. Marcum LLP (“Marcum”), 100
Eagle Rock Avenue, East Hanover, NJ 07936, acted as Plutonian Acquisition Corp.’s independent registered public accountant
since September 1, 2022 through June 6, 2024, the date of the Business Combination.
Following the consummation of the Business Combination,
Audit Alliance LLP, 10 Anson Road, #20-16 International Plaza, Singapore 079903, the independent auditor of HoldCo, is being engaged as
the independent auditor of PubCo.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not Applicable.
ITEM 3. KEY INFORMATION
A. Selected Financial Data
The information regarding Big Tree Cloud’s
selected financial information is included in the Form F-4 in the section entitled “Selected Historical Financial Information
of Big Tree Cloud,” which is incorporated herein by reference.
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.
D. Risk Factors
The risk factors associated with PubCo’s
business are described in the Form F-4 in the section entitled “Risk Factors” and are incorporated herein by reference.
ITEM 4. INFORMATION ON THE COMPANY
A. History and Development of the Company
PubCo was formed to serve as a holding company
for Big Tree Cloud and Plutonian after consummation of the Business Combination contemplated by the Merger Agreement. PubCo, a Cayman
Island exempted company, was formed on September 25, 2023. Prior to the Business Combination, PubCo owned no material assets and
did not operate any business. Big Tree Cloud’s principal executive office is located at Room 3303, Building 1, Zhongliang Yunjing
Plaza, Heshuikou Community, Matian Street, Guangming District, Shenzhen 518083, PRC.
On June 6, 2024 the parties consummated the Business
Combination.
B. Business Overview
Following and as a result of the Business Combination,
all of PubCo’s business is conducted through Big Tree Cloud and its subsidiaries. A description of the business of Big Tree Cloud
is included in the Form F-4 in the sections entitled “Big Tree Cloud’s Business” and “Management’s Discussion
and Analysis of Financial Condition and Results of Operations of Big Tree Cloud,” which is incorporated herein by reference.
C. Organizational Structure
Upon consummation of the Business Combination,
Big Tree Cloud became a wholly owned subsidiary of PubCo. A description of the organizational structure of PubCo is included in the Form
F-4 in the section entitled “Summary of the Proxy Statement/Prospectus—Organizational Structure” which is incorporated
herein by reference.
D. Property, Plants and Equipment
Big Tree Cloud owns the property for its principal
executive office, which is located at Room 3303, Building 1, Zhongliang Yunjing Plaza, Heshuikou Community, Matian Street, Guangming District,
Shenzhen 518083, PRC. In addition, Big Tree Cloud leased two production plants in Dongguan, China on leased premises comprising approximately
5,700 square meters and two warehouses in Dongguan, China comprising 2,400 square meters. Such properties are described in the Form F-4
in the section entitled “Big Tree Cloud’s Business ” and are incorporated herein by reference.
ITEM 4A. UNRESOLVED STAFF COMMENTS
None.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
Following the Business Combination,
our business is conducted through Guangdong Dashuyun and its subsidiaries. You should read the following discussion and analysis of Big
Tree Cloud’s financial condition and results of operations in conjunction with the Big Tree Cloud’s combined and consolidated
financial statements, and the related notes included elsewhere in this report. This discussion contains forward-looking statements that
involve risks and uncertainties. Big Tree Cloud’s actual results and the timing of events could differ materially from those anticipated
in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere
in this report.
Overview
Big Tree Cloud is a consumer-oriented,
mission-driven and technology-empowered company devoted to the development, production and sales of personal care products and other consumer
goods. In particular, we are focused on the development and production of feminine pad and other feminine hygiene products. We have achieved
significant growth since our inception in 2020 through our integrated platform which incorporates functionalities for the entire business
cycle including upstream segment for products research and development, midstream segment for production and downstream segment for marketing
and sales. Through this platform, we focus on high-quality product development, deep customer engagement and efficient sales and marketing.
We generate substantially all
of our net revenues from the sale of our products. Our omni-channel, consumer to manufacturing, or C2M, business model, coupled with our
production capabilities, enables us to launch and scale multiple categories of personal care products, which allows us to offer a broad
range of products and address the needs of a large consumer community. In particular, we focus on the production and sales of feminine
hygiene products, including sterilized feminine pads and menstrual pants. Our revenue from the sales of sterilized feminine hygiene products
represented 54.2% and 8.6% of our revenues for the six months ended December 31, 2023 and 2022, respectively. Our revenue from the sales
of sterilized feminine hygiene products represented 23.5% and 60.02% of our revenues for the years ended June 30, 2022 and 2023,
respectively. Based on our understanding of our target consumers’ demand, we selectively introduced additional products, including
earrings, bracelets and pendants under our accessories line of products to address our consumer’s multifaceted demands.
We have experienced substantial
growth since our inception. For the six months ended December 31, 2023, our total revenue increased significantly to US$4.2 million compared
to our revenue for the same period in 2022. For the year ended June 30, 2023, our total revenue increased significantly to US$6.3 million
compared to our revenue for the same period in 2022. In particular, our revenue from feminine hygiene products increased significantly
from US$0.2 million for the six months ended December 31, 2022 to US$2.3 million for the six months ended December 31, 2023. We continue
to rely on the sales of our feminine hygiene products to sustain our business operation. At the same time, we aim to accelerate the development
of our other products to diversify our product offerings to achieve optimal financial performance.
Key Factors Affecting Our Results of Operations
Our results of operations are affected by the following
company-specific factors.
Our ability to expand portfolios of product offerings.
Our results of operations depend
on our ability to provide a broad range of products to meet the varying demands of our diverse consumer base for feminine hygiene products
and personal care products, and thus enhance their appreciation and loyalty to our brand. In order to achieve this goal, we continue to
expand the range of products we offer to our consumers, including a manifold of feminine hygiene products and personal care products.
While we have earned our consumer’s
trust in our products, we strive to strengthen this relationship by continuing to advance our existing products and develop new feminine
hygiene products, as well as develop high-quality personal care products that cater to different consumer profiles and needs. We currently
have seven series of feminine hygiene products under our flagship Big Tree Cloud brand all of which feature our sterilization process
catering to the female population in different age groups and for variety of comfort and needs. While we maintain a relatively mature
portfolio of feminine pad products, we will continue to develop new feminine pad series to increase our product offerings and expand our
customer base. In addition, we also develop other personal care products such as body and oral care products, and other personal care
products leveraging our established relationship with our consumers. We believe having a broad and diverse product portfolio maintains
and broadens our relationship with our loyal consumers, and thus allows us to improve our results of operation and financial performance.
Our ability to grow our brand.
Our brand is integral to the
growth of our business and essential to our ability to engage and stay connected with our consumer base. We believe our brand and the
reputation it carries distinguish us from our competitors. Therefore, our ability to maintain and enhance our brand reputation is essential
to our financial performance. Our brand value also affords us the ability to attract new consumers, and to promote our company value,
commitment to quality product and care for feminine hygiene and personal wellness.
Since our inception, we built
and promoted our brand to our key demographic and customer base, and deepened connection with our consumer community through an omni-channel
approach. We engage our consumers through multiple channels and touchpoints, including our flagship stores on major e-commerce platforms,
our social media presence, commitment to educational and philanthropic activities, our convenience stores and our distributor network.
Through these diverse channels, our brand and value effectively reach our loyal customer, and directly contribute to our growth. We believe
that as our brand continues to grow, it will strengthen our ability to create and capture value across the personal care industry and
the feminine hygiene industry in particular, to increase our competitive advantages among industry participants. We believe that our mission,
quality of products and the value we promote have helped us build our brand into a household name, and as a result, established a large
and highly engaged consumer base. We believe the strength of our brand enables us to continue to grow in the industry in China and seek
opportunity in the global market to achieve optimal financial results.
Our ability to retain and grow our consumer base
Our long-term success also
depends on our ability to retain our existing consumers and attract new consumers to our community, which we hold to the highest regard.
Since our inception, we have been steadfast in terms of reaching our key demographic in second and third tiers cities due to these consumers’
relative lack of access to quality products and product variety. We have been successful in achieving this goal. At the same time, we
recognize that our financial growth relies on our ability to expand our consumer base coverage and in turn, expand the reach of our products.
We design our products to satisfy the needs and preferences of consumers for different age groups and preferences. We strive to enhance
customer experience and brand recognition by delivering high-quality products with advanced designs and technologies to our consumers.
Enhanced consumer satisfaction can drive word-of-mouth referrals and strengthen our brand reputation, which is expected to increase our
sales and expand our consumer base.
At the same time, our large
consumer base and tightknit consumer community have helped us gain insights into the needs and preferences of our existing and prospective
consumers. We believe the innovative features of our feminine pad series that differentiate us from the majority of the products currently
marketed are effected with the contribution from our loyal and involved consumer base. With meaningful inputs from our consumer, we regularly
upgrade our existing products to improve consumer experience by heeding to their suggestions after our consumers gain familiarity with
our products. Our consumers’ input is also a source of inspiration for our new product development. We continue to explore the application
of new materials and production techniques to improve our products’ quality and efficacy. Accordingly, we are able to design more
quality and demanding products to serve consumers of different age groups and with different preferences for menstrual and personal care,
and to ensure we are at the forefront of the market. This positive cycle with our consumers establishes a mutually beneficial relationship
to ensure the improvement of our products and the expansion of our consumer base. And we believe this fundamental element lays the blueprint
for the long term growth of our customer and their continued involvement will contribute to our long term financial performance.
Our ability to effectively manage our costs and expenses.
Our
results of operations are affected by our ability to control our operating costs and expenses and the continued optimization of our supply
chain and warehouse management. For the six months ended December 31, 2023 and 2022, our operating expenses were US$2.3 million
and US$1.4 million, respectively. We operate our own production facilities for
our core products such as our feminine hygiene products, and we have developed an efficient supply chain involving manufacturing, warehousing
and logistics. We leverage our technological and data resources to manage supplier partners, third-party manufacturing partners, logistics
partners and other service partners, and adjust our partners’ operations to maintain optimal inventory levels as well as ensure
smooth product launches. We cooperate with leading manufacturers and logistics companies with strong capabilities, enabling us to shorten
the fulfilment process. We expect the absolute amount of operating expenses to continue increasing as our business operations continue
to grow, but we plan to continue to leverage our proprietary supply chain and warehouse management system to manage our operating costs
and expenses and maintain attractive net profit margins. To accomplish this goal, we also further diversified our distribution channels
to include offline convenience stores in 2023 and plan to continue the expansion of our Big Tree Cloud convenience store network in China.
As of December 31, 2023, we entered into licensing agreements with 89 Big Tree Cloud convenience store licensees to establish our store
presence in twenty cities in China along with our self-operated Big Tree Cloud convenience stores.
Key Components of Results of Operations
Net revenues
We generate our revenues from
sales of our products which include feminine hygiene products, skincare products, accessories and other products. The following table
breaks down our net revenue by product type and as percentages of our net revenues for the periods presented:
| | |
For the Years Ended
June 30, | | |
For the Six Months Ended
December 31, | |
| | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| | |
US$ | | |
% | | |
US$ | | |
% | | |
US$ | | |
% | | |
US$ | | |
% | |
| |
| | |
| | |
| | |
| | |
(Unaudited) | | |
(Unaudited) | |
| Net revenues | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Sales of products (by products) | |
| 6,283,429 | | |
| 99.8 | | |
| 1,940,378 | | |
| 100.0 | | |
| 4,142,708 | | |
| 99.6 | | |
| 2,467,137 | | |
| 100.0 | |
| Feminine hygiene products | |
| 3,787,120 | | |
| 60.2 | | |
| 455,215 | | |
| 23.5 | | |
| 2,251,713 | | |
| 54.2 | | |
| 211,825 | | |
| 8.6 | |
| Body and oral care products | |
| 165,070 | | |
| 2.6 | | |
| 1,198,589 | | |
| 61.8 | | |
| 849,062 | | |
| 20.4 | | |
| 104,367 | | |
| 4.2 | |
| Accessories | |
| 2,304,147 | | |
| 36.6 | | |
| 106,119 | | |
| 5.5 | | |
| 1,013,537 | | |
| 24.4 | | |
| 2,149,624 | | |
| 87.1 | |
| Others | |
| 27,092 | | |
| 0.4 | | |
| 180,455 | | |
| 9.2 | | |
| 28,396 | | |
| 0.6 | | |
| 1,321 | | |
| 0.1 | |
| Licensing Fees | |
| 9,911 | | |
| 0.2 | | |
| — | | |
| — | | |
| 15,349 | | |
| 0.4 | | |
| — | | |
| — | |
| Total | |
| 6,293,340 | | |
| 100.0 | | |
| 1,940,378 | | |
| 100.0 | | |
| 4,158,057 | | |
| 100.0 | | |
| 2,467,137 | | |
| 100.0 | |
Sales of product. We
generate our revenues primarily from sales of our products including feminine hygiene products, body and oral care products, accessories
and other consumer goods. Our feminine hygiene products comprise multiple series of sterilized feminine pad products and menstrual pants
products that cater to different consumer profiles and preferences. Our body and oral care products include shampoo and conditioner, body
wash, facial mask and cream, and other personal care products. Our accessories include earrings, bracelets, pendants and other jewelry
accessories. We expect that net revenues generated from sales of our feminine hygiene products will continue to account for a majority
of our total net revenues in the foreseeable future.
Licensing fees. We
generate revenue from our customers and third-party commercial stores by authorizing them to use our logo, trademark and brand name.
Cost of revenues
Our cost of revenues includes
the cost of purchase of goods for the manufacture of our products and rents and other costs related to our business operation. The following
table breaks down our cost of revenues by amounts and percentages of our net revenues for the periods presented:
| | |
For the Years Ended
June 30, | | |
For the Six MonthsEnded
December 31, | |
| | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| | |
US$ | | |
% | | |
US$ | | |
% | | |
US$ | | |
% | | |
US$ | | |
% | |
| | |
| | |
| | |
| | |
| | |
(Unaudited) | | |
(Unaudited) | |
| Cost of revenues | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Costs of products (by products) | |
| 2,577,198 | | |
| 40.9 | | |
| 821,427 | | |
| 42.3 | | |
| 1,378,127 | | |
| 100.0 | | |
| 662,103 | | |
| 100.0 | |
| Feminine hygiene products | |
| 1,878,378 | | |
| 29.8 | | |
| 274,305 | | |
| 14.1 | | |
| 726,534 | | |
| 52.7 | | |
| 116,333 | | |
| 17.6 | |
| Body and oral care products | |
| 23,422 | | |
| 0.4 | | |
| 420,691 | | |
| 21.7 | | |
| 91,201 | | |
| 6.6 | | |
| 6,408 | | |
| 1.0 | |
| Accessories | |
| 647,032 | | |
| 10.3 | | |
| 74,187 | | |
| 3.8 | | |
| 254,256 | | |
| 18.5 | | |
| 498,681 | | |
| 75.3 | |
| Others | |
| 28,366 | | |
| 0.4 | | |
| 52,244 | | |
| 2.7 | | |
| 306,136 | | |
| 22.2 | | |
| 40,681 | | |
| 6.1 | |
| Rents and other costs | |
| 86,726 | | |
| 1.4 | | |
| 24,828 | | |
| 1.3 | | |
| — | | |
| — | | |
| — | | |
| — | |
| Total cost of
revenues | |
| 2,663,924 | | |
| 42.3 | | |
| 846,255 | | |
| 43.6 | | |
| 1,378,127 | | |
| 100.0 | | |
| 662,103 | | |
| 100.0 | |
Operating expenses
The following table sets forth
our operating expenses and as percentages of our net revenues for the periods presented:
| | |
For the Years Ended
June 30, | | |
For the Six Months Ended
December
31, | |
| | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| | |
US$ | | |
% | | |
US$ | | |
% | | |
US$ | | |
% | | |
US$ | | |
% | |
| | |
| | |
| | |
| | |
| | |
(Unaudited) | | |
(Unaudited) | |
| Operating expenses | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Selling expenses | |
| 758,593 | | |
| 12.1 | | |
| 665,763 | | |
| 34.3 | | |
| 435,245 | | |
| 18.7 | | |
| 50,005 | | |
| 3.6 | |
| General and administrative expenses | |
| 2,199,987 | | |
| 35.0 | | |
| 2,366,445 | | |
| 122.0 | | |
| 1,887,213 | | |
| 81.3 | | |
| 1,355,520 | | |
| 96.4 | |
| Total | |
| 2,958,580 | | |
| 47.0 | | |
| 3,032,208 | | |
| 156.3 | | |
| 2,322,458 | | |
| 100.0 | | |
| 1,405,525 | | |
| 100.0 | |
Selling expenses. Our
selling expenses primarily consist of (i) advertising costs and market promotion expenses, and (ii) staff cost incurred by sales
and marketing personnel. We expect our selling expenses to increase as we increase our sales, introduce new products, and expand marketing
efforts for our products.
General and administrative
expenses. Our general and administrative expenses primarily consist of (i) staff cost; (ii) professional
service fees; (iii) rental and depreciation related to general and administrative personnel, and (iv) other corporate expenses.
We expect our general and administrative expenses to increase in the future as we incur additional expenses related to the anticipated
growth of our business and our operations as a public company after the completion of the Business Combination.
Taxation
Cayman Islands
The Cayman Islands currently
levies no taxes on individuals or corporations based upon profits, income, gains, or appreciation, and there is no taxation in the nature
of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government of the Cayman Islands
except for stamp duties, which may be applicable on instruments executed in, or brought within the jurisdiction of, the Cayman Islands.
In addition, the Cayman Islands does not impose withholding tax on dividend payments.
Hong Kong
Our subsidiary in Hong Kong,
Hongkong Ploutos International Holdings Limited, is subject to an income tax rate of 16.5% on any part of assessable profits over HKD2,000,000
and 8.25% for assessable profits below HKD2,000,000. In addition, payments of dividends from our Hong Kong subsidiary to us are not
subject to any Hong Kong withholding tax. No provision for Hong Kong profits tax was made as we had no estimated assessable
profit that was subject to Hong Kong profits tax during 2022 and 2023.
Mainland China
Under the PRC Enterprise Income
Tax Law (the EIT Law) effective from January 1, 2008, which was most recently amended on December 29, 2018, as well as its implementation
rules effective from January 1, 2008 and amended on April 23, 2019, our mainland China subsidiaries are subject to the statutory
rate of 25%, subject to preferential tax treatments available to qualified enterprises in certain encouraged sectors of the economy.
Pursuant to the relevant regulations
applicable to small and micro businesses, in 2022 and 2023, several of our mainland China subsidiaries enjoyed a preferential tax rate
of 20% with a discount to taxable income. For taxable income less than RMB1 million, and for taxable income over RMB1 million
but less than RMB3 million, 75% of the taxable income could be exempted in tax computation. In order to qualify as a small and micro
business, an entity needs to engage in industries not restricted or prohibited by the state, and it needs to simultaneously meet the following
three conditions: (i) the annual taxable income does not exceed RMB3 million, (ii) the number of employees does not exceed
300, and (iii) the total assets do not exceed RMB50 million. Under the EIT Law, a withholding tax of 10% is also imposed on
dividends declared and paid to non-PRC resident in respect of profits earned by our mainland China subsidiaries from January 1, 2008
onwards.
Pursuant to the EIT Law and
its implementation rules, an enterprise established under the laws of a foreign country or region whose “de facto management
body” is located within the PRC territory is considered a resident enterprise and will generally be subject to the enterprise income
tax at the rate of 25% on its global income. If our holding company in the Cayman Islands or any of our subsidiaries outside of mainland
China were deemed to be a “resident enterprise” under the EIT Law, it would be subject to enterprise income tax on its worldwide
income at a rate of 25%. See “Risk Factors — Risks Related to Doing Business in China — If we are classified
as a mainland China resident enterprise for purposes of income tax in mainland China, such classification could result in unfavorable
tax consequences to us and our non-mainland China shareholders.”
Results of Operations
The following table sets forth
a summary of our consolidated results of operations for the periods presented, both in absolute amount and as percentages of our net
revenues. This information should be read together with our consolidated financial statements and related notes included elsewhere in
this prospectus. The results of operations in any particular period are not necessarily indicative of our future trends.
| | |
For the Six Months Ended
December 31, | | |
For the Year Ended
June 30, | |
| | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| | |
US$ | | |
% | | |
US$ | | |
% | | |
US$ | | |
% | | |
US$ | | |
% | |
| | |
| | |
| | |
| | |
| | |
(Unaudited) | | |
(Unaudited) | |
| Net revenues | |
| 4,158,057 | | |
| 100.0 | | |
| 2,467,137 | | |
| 100.0 | | |
| 6,293,340 | | |
| 100.0 | | |
| 1,940,378 | | |
| 100.0 | |
| Cost of revenues | |
| (1,378,127 | ) | |
| (33.1 | ) | |
| (662,103 | ) | |
| (26.8 | ) | |
| (2,663,924 | ) | |
| (42.3 | ) | |
| (846,255 | ) | |
| (43.6 | ) |
| Gross profit | |
| 2,779,930 | | |
| 66.9 | | |
| 1,805,034 | | |
| 73.2 | | |
| 3,629,416 | | |
| 57.7 | | |
| 1,094,123 | | |
| 56.4 | |
| Operating expenses: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Selling expenses | |
| (435,245 | ) | |
| (10.5 | ) | |
| (50,005 | ) | |
| (2.0 | ) | |
| (758,593 | ) | |
| (12.1 | ) | |
| (665,763 | ) | |
| (34.3 | ) |
| General and administrative expenses | |
| (1,887,213 | ) | |
| (45.4 | ) | |
| (1,355,520 | ) | |
| (54.9 | ) | |
| (2,199,987 | ) | |
| (35.0 | ) | |
| (2,366,445 | ) | |
| (122.0 | ) |
| Total Operating expenses | |
| (2,322,458 | ) | |
| (55.9 | ) | |
| (1,405,525 | ) | |
| (57.0 | ) | |
| (2,958,580 | ) | |
| (47.0 | ) | |
| (3,032,208 | ) | |
| (156.3 | ) |
| Operating profit | |
| 457,472 | | |
| 11.0 | | |
| 399,509 | | |
| 16.2 | | |
| 670,836 | | |
| 10.7 | | |
| (1,938,085 | ) | |
| (99.9 | ) |
| Other income/(expenses), net | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Financial expenses | |
| (20,079 | ) | |
| (0.5 | ) | |
| (1,014 | ) | |
| 0.0 | | |
| (10,615 | ) | |
| (0.2 | ) | |
| (1,785 | ) | |
| (0.1 | ) |
| Financial income | |
| 2,699 | | |
| 0.1 | | |
| 3,176 | | |
| 0.1 | | |
| 9,287 | | |
| 0.1 | | |
| 4,531 | | |
| 0.2 | |
| Income/(Loss) on deregistration of subsidiaries | |
| 62,429 | | |
| 1.5 | | |
| (88,487 | ) | |
| (3.6 | ) | |
| (347,423 | ) | |
| (5.5 | ) | |
| (77,407 | ) | |
| (4.0 | ) |
| Other income/(expenses), net | |
| 33,561 | | |
| 0.8 | | |
| 103 | | |
| - | | |
| (13,754 | ) | |
| (0.2 | ) | |
| (10,090 | ) | |
| (0.5 | ) |
| Total other income/(expenses), net | |
| 78,610 | | |
| 1.9 | | |
| (86,222 | ) | |
| (3.5 | ) | |
| (362,505 | ) | |
| (5.8 | ) | |
| (84,751 | ) | |
| (4.4 | ) |
| Profit before income tax provision | |
| 536,082 | | |
| 12.9 | | |
| 313,287 | | |
| 12.7 | | |
| 308,331 | | |
| 4.9 | | |
| (2,022,836 | ) | |
| (104.2 | ) |
| Income tax benefit/(expense) | |
| 45,302 | | |
| 1.1 | | |
| (51,949 | ) | |
| (2.1 | ) | |
| (28,766 | ) | |
| (0.5 | ) | |
| 130,255 | | |
| 6.7 | |
| Net income | |
| 581,384 | | |
| 14.0 | | |
| 261,338 | | |
| 10.6 | | |
| 279,565 | | |
| 4.4 | | |
| (1,892,581 | ) | |
| (97.5 | ) |
| Other comprehensive income: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Foreign currency translation adjustments | |
| 23,568 | | |
| 0.6 | | |
| 11,762 | | |
| 0.5 | | |
| (144,906 | ) | |
| (2.3 | ) | |
| 126,662 | | |
| 6.5 | |
| Total comprehensive profit | |
| 604,952 | | |
| 14.5 | | |
| 273,100 | | |
| 11.1 | | |
| 134,659 | | |
| 2.1 | | |
| (1,765,919 | ) | |
| (91.0 | ) |
Six Months Ended December 31, 2023 Compared to the Six Months
Ended December 31, 2022
Net Revenue
Our net revenue, which mainly consisted of revenue
from sales of feminine hygiene products, body and oral care products, accessories and others, increased significantly by US$1.7 million,
or 68.54%, from US$2.5 million for the six months ended December 31, 2022 to US$4.2 million for the six months ended December 31, 2023.
Our revenue from the sales of feminine hygiene products increased significantly from US$0.2 million for the six months ended December
31, 2022 to US$2.3 million for the six months ended December 31, 2023, primarily attributed to the increase of sales volume: i) we were
able to introduce various models of products to meet expectations from a wider range of customers as we began our own production in 2023,
and ii) with our increased marketing efforts, we managed to maintain and even increase our market shares as we established brand loyalty
among existing customers. In addition, the average selling price of new feminine hygiene brands introduced in 2023 increased by approximately
30% compared to the average selling price of existing feminine hygiene brands. Our revenue from body and oral care products increased
from US$0.1 million for the six months ended December 31, 2022 to US$0.8 million for the six months ended December 31, 2023, primarily
attributed to the marketing promotion projects launched during the six months ended December 31, 2023, which increased our sales volume.
Our revenue from accessories decreased from US$2.1 million for the six months ended December 31, 2022 to US$1.0 million for the six months
ended December 31, 2023, primarily attributed to the adjustment of our business strategies to focus on the promotion and sales of our
feminine hygiene products.
Cost of revenues
Our cost of revenues increased significantly from
US$0.7 million for the six months ended December 31, 2022 to US$1.4 million for the six months ended December 31, 2023, mainly due to
the increase of product costs, which is aligned with the increase of revenues.
Gross profit and gross margin
As a result of the foregoing,
our gross profit increased significantly from US$1.8 million for the six months ended December 31, 2022 to US$2.8 million for the six
months ended December 31, 2023. Our gross margins were 73.16% for the six months ended December 31, 2022 and 66.86% for the six months
ended December 31, 2023.
Operating expenses
Our selling expenses increased significantly from
US$0.1 million for the six months ended December 31, 2022 to US$0.4 million for the six months ended December 31, 2023, primarily attributed
to the increase in advertising and promotion expenses as we launched more marketing projects and expanded our distribution channels nationwide.
Our general and administrative
expenses increased by 39.22% from US$1.4 million for the six months ended December 31, 2022 to US$1.9 million for the six months ended
December 31, 2023, primarily attributed to the increase of staff, which is aligned with the increase of business.
Operating profit
As a result of the foregoing,
our operating profit increased from US$0.4 million for the six months ended December 31, 2022 to US$0.5 million for the six months ended
December 31, 2023.
Other income/(expenses), net
Our financial expenses increased
from US$1,014 for the six months ended December 31, 2022 to US$20,079 for the six months ended December 31, 2023, primarily attributed
to the increase of bank charges.
Our financial income decreased
from US$3,176 for the six months ended December 31, 2022 to US$2,699 for the six months ended December 31, 2023, primarily attributed
to the decrease of interest income along with the decrease of cash balances.
We generated a loss on deregistration
of subsidiaries of US$88,487 for the six months ended December 31, 2022 and a gain on deregistration of subsidiaries of US$62,429 for
the six months ended December 31, 2023, as we deregistered one inactive subsidiary during the six months ended December 31, 2022 and two
subsidiaries during the six months ended December 31, 2023 for the adjustment of our business strategies and to achieve operating efficiency.
Income tax benefit/(expense)
We recorded income tax expense
of US$51,949 for the six months ended December 31, 2022 and income tax benefit of US$45,302 for the six months ended December 31, 2023,
primarily attributed to the increase of tax credits generated from subsidiaries with losses.
Net income
As a result of the foregoing,
our net income increased by 122.46% from US$0.3 million for the six months ended December 31, 2022 to US$0.6 million for the six months
ended December 31, 2023.
The Year Ended June 30, 2023 Compared to the Year Ended
June 30, 2022
Net Revenue
Our net revenue, which mainly consisted of revenue
from sales of feminine hygiene products, body and oral care products, accessories and others, increased significantly by US$4.3 million,
or 224.34%, from US$2.0 million for the year ended June 30, 2022 to US$6.3 million for the year ended June 30, 2023.
Our revenue from the sales of feminine hygiene products increased significantly from US$0.5 million for the year ended June 30,
2022 to US$3.8 million for the year ended June 30, 2023, primarily attributed to the increase of sales volume: i) as our own
factory began production in 2023, we were able to introduce our new feminine hygiene brands with various models of products, in order
to meet expectations from a wider range of customers and ii) with our increased marketing efforts which extended our market reach into
new regions and cities, we managed to establish brand loyalty among existing customers. In addition, the average selling price of new
feminine hygiene brands introduced in 2023 increases approximately 30% compared to the average selling price of existing feminine hygiene
brands. Our revenue from body and oral care products decreased significantly from US$1.2 million for the year ended June 30,
2022 to US$0.2 million for the year ended June 30, 2023, primarily attributed to the adjustment of our business strategies to
focus on the promotion and sales of our feminine hygiene products. As a result, sales volume of body and oral care products decreased
significantly in 2023. Our revenue from accessories increased significantly from US$0.1 million for the year ended June 30,
2022 to US$2.3 million for the year ended June 30, 2023, primarily attributed to our increased efforts to promote and market
our accessory products including bracelets, earrings and pendants.
Cost of revenues
Our cost of revenues increased significantly by
US$1.8 million, or 214.79%, from US$0.8 million for the year ended June 30, 2022 to US$2.7 million for the year ended
June 30, 2023, mainly due to the increase of product costs, which is aligned with the increase of revenues.
Gross profit and gross margin
As a result of the foregoing, our gross profit increased
significantly from US$1.1 million for the year ended June 30, 2022 to US$3.6 million for the year ended June 30, 2023.
Our gross margins were 56.4% for the year ended June 30, 2022 and 57.7% for the year ended June 30, 2023.
Operating expenses
Our selling expenses increased by 14.3% from US$0.7 million
for the year ended June 30, 2022 to US$0.8 million for the year ended June 30, 2023, primarily attributed to the increase
in advertising and promotion expenses as we expanded our distribution channels nationwide.
Our general and administrative expenses decreased
by 8.3% from US$2.4 million for the year ended June 30, 2022 to US$2.2 million for the year ended June 30, 2023, primarily
attributed to the decrease of rental expenses from US$0.5 million for the year ended June 30, 2022 to US$0.2 million for
the year ended June 30, 2023 as we bought the office space in December 2022.
Operating profit/(loss)
As a result of the foregoing, we generated an operating
loss of US$1.9 million for the year ended June 30, 2022 and an operating profit of US$0.7 million for the year ended June 30,
2023.
Other expenses, net
Our financial expenses increased from US$1,785 for
the year ended June 30, 2022 to US$10,615 for the year ended June 30, 2023, primarily attributed to the increase of bank charges.
Our financial income increased from US$4,531 for
the year ended June 30, 2022 to US$9,287 for the year ended June 30, 2023, primarily attributed to the increase of interest
income along with the increase of cash balances.
Loss on deregistration of subsidiaries increased
from US$77,407 for the year ended June 30, 2022 to US$0.3 million for the year ended June 30, 2023, as we deregistered
one inactive subsidiary during the year ended June 30, 2022 and two inactive subsidiaries during the year ended June 30, 2023 to achieve
operating efficiency.
Income tax benefit/(expense)
We recorded income tax benefit of US$0.1 million
for the year ended June 30, 2022 and income tax expense of US$0.3 million for the year ended June 30, 2023, primarily attributed
to our growth in profits.
Net income/(loss)
As a result of the foregoing, we generated a net
loss of US$1.9 million for the year ended June 30, 2022 and a net income of US$0.3 million for the year ended June 30,
2023.
Liquidity and Capital Resources
The following table sets forth
a summary of our cash flows for the periods presented:
| | |
For the Six Months Ended
December 31, | | |
For the Year Ended
June 30, | |
| | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| | |
US$ | | |
US$ | | |
US$ | | |
US$ | |
| | |
(Unaudited) | | |
| | |
(Unaudited) | | |
(Unaudited) | |
| Selected Consolidated Cash Flows Data: | |
| | |
| | |
| | |
| |
| Net cash provided by operating activities | |
| 231,656 | | |
| 5,438,553 | | |
| 8,808,681 | | |
| (1,908,850 | ) |
| Net cash used in investing activities | |
| (2,119,955 | ) | |
| (2,181,504 | ) | |
| (4,624,237 | ) | |
| (24,218 | ) |
| Net cash used in financing activities | |
| (46,642 | ) | |
| (1,344,215 | ) | |
| (1,212,078 | ) | |
| 925,213 | |
| Effect of foreign currency translation | |
| (134,251 | ) | |
| (7,809 | ) | |
| (144,906 | ) | |
| 126,662 | |
| Net (decrease)/increase in cash and cash equivalents | |
| (2,069,192 | ) | |
| 1,905,025 | | |
| 2,827,460 | | |
| (881,193 | ) |
| Cash and cash equivalents at the beginning of the period | |
| 3,190,995 | | |
| 363,535 | | |
| 363,535 | | |
| 1,244,728 | |
| Cash and cash equivalents at the end of the period | |
| 1,121,803 | | |
| 2,268,560 | | |
| 3,190,995 | | |
| 363,535 | |
Our principal source of liquidity
has been cash generated by our operating activities and the sales of our products. As of December 31, 2023 and June 30, 2023, our cash
and cash equivalents were US$1.1 million and US$3.2 million, respectively. Our cash and cash equivalents primarily consist of cash on
hand and our demand deposits with financial institutions.
We believe that our current
cash and cash equivalents and expected cash provided by this offering will be sufficient to meet our current and anticipated working capital
requirements and capital expenditures for at least the next 12 months. We may, however, need additional cash resources in the future if
we experience changes in business conditions or other developments. We may also need additional cash resources in the future if we identify
and wish to pursue opportunities for investment, acquisition, capital expenditure or similar actions.
As of December 31, 2023 and
June 30, 2023, substantially all of our cash and cash equivalents were held in mainland China and denominated in Renminbi. As of December
31, 2023 and June 30, 2023, substantially all of our short-term investments were held in mainland China and denominated in Renminbi. For
restrictions and limitations on liquidity and capital resources as a result of our corporate structure, see “— Holding
Company Structure.”
In utilizing the trust account
proceeds we expect to receive from this Business Combination and any proceeds in our follow-on offerings after becoming a listed company,
we may make additional capital contributions to our mainland China subsidiaries, establish new mainland China subsidiaries and make capital
contributions to these new mainland China subsidiaries, make loans to our mainland China subsidiaries, or acquire offshore entities with
operations in mainland China in offshore transactions. However, most of these uses are subject to mainland China regulations. See “Risk
Factors — Risks Related to Doing Business in China — Regulations in mainland China of loans to and direct investment in PRC
domestic companies by offshore holding companies and governmental control of currency conversion may delay or prevent us from making loans
to or make additional capital contributions to our mainland China subsidiaries, which could materially and adversely affect our liquidity
and our ability to fund and expand our business.”
Substantially all of our revenues
have been, and we expect will likely to continue to be, denominated in Renminbi. Under existing mainland China foreign exchange regulations,
payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions,
can be made in foreign currencies without prior SAFE approval as long as certain routine procedural requirements are fulfilled. Therefore,
our mainland China subsidiaries are allowed to pay dividends in foreign currencies to us without prior SAFE approval by following certain
routine procedural requirements. However, approval from or registration with competent government authorities is required where the Renminbi
is to be converted into foreign currency and remitted out of mainland China to pay capital expenses such as the repayment of loans denominated
in foreign currencies. The mainland China government may restrict access to foreign currencies for current account transactions in the
future. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency
demands, we may not be able to pay dividends in foreign currencies to our shareholders.
Operating activities
Net cash provided by operating
activities for the six months ended December 31, 2023 was US$0.2 million. The difference between the net income of US$0.6 million, adjusted
for depreciation and amortization expenses of US$0.5 million and operating cash flow was primarily due to a decrease in advance to suppliers
of US$0.7 million attributed to obtaining more bargaining power in negotiating the payment terms with suppliers without paying in advance,
and partially offset by (i) a decrease in contract liabilities of US$0.9 million attributed to product sales to a third-party customer
and (ii) increase in inventories, net of US$0.7 million attributed to the increase of procurement and production.
Net cash provided by operating
activities for the six months ended December 31, 2022 was US$5.4 million. The difference between the net income of US$0.3 million and
operating cash flow was primarily due to (i) an increase in contract liabilities of US$5.6 million due to advances received from customers
for product sales, and partially offset by an increase in prepaid expenses and other current assets, net of US$0.3 million attributed
to the increase for prepaid services.
Net cash provided by operating activities for the
year ended June 30, 2023 was US$8.8 million. The difference between the net income of US$0.3 million, adjusted for depreciation
and amortization expenses of US$0.7 million and operating cash flow was primarily due to (i) an increase in contract liabilities
of US$8.1 million attributed to the increase of advances received from a customer for achieving at least RMB50,000,000 (approximately
US$6.9 million) for the next three years of product sales and (ii) an increase in accounts payables of US$0.7 million
attributed to the increase of product procurement in the second quarter of 2023 compared to the second quarter of 2022, and partially
offset by a decrease in advance to suppliers of US$0.5 million attributed to obtaining more bargaining power in negotiating the payment
terms with suppliers without paying in advance.
Net cash used in operating activities for the year
ended June 30, 2022 was US$1.9 million. The difference between the net loss of US$1.9 million and operating cash flow was
primarily due to (i) an increase in inventories of US$0.2 million due to higher inventory turnover, and partially offset by
a decrease in accounts receivables of US$0.2 million attributed to timely collection of receivables within one month.
Investing activities
Net cash used in investing
activities for the six months ended December 31, 2023 were US$2.1 million, which was primarily due to the increase of purchase of US$1.8
million for the intangible asset of brand. Net cash used in investing activities for the six months ended December 31, 2022 were US$2.2
million, which was due to the increase of purchases of US$2.2 million for office space for headquarter operations.
Net cash used in investing activities for the years
ended June 30, 2022 and 2023 were US$24,218 and US$4.6 million, respectively, which were due to the increase of purchases of
US$4.6 million for office space for headquarter operations.
Financing activities
Net cash used in financing
activities f for the six months ended December 31, 2023 was US$0.05 million, which was primarily attributed to repayment of loans to related
parties of US$1.8 million, and partially offset by the proceed of short-term bank loan of US$1.4 million. Net cash used in financing activities
for the six months ended December 31, 2022 was US$1.3 million, which was attributed to repayment of loans to related parties of US$1.3
million.
Net cash used in financing activities for the year
ended June 30, 2023 was US$1.2 million, which was primarily attributed to repayment of loans to related parties of US$0.9 million
and payments of listing fess of US$0.8 million. Net cash provided by financing activities for the year ended June 30, 2022 was
US$0.9 million, which was primarily attributed to loans received from related parties of US$1.0 million.
Material Cash Requirements
Our material cash requirements
as of December 31, 2023 and any subsequent period primarily include our capital expenditures and contract obligations.
Capital Expenditures
We incurred capital expenditures
of US$0.4 million and US$2.2 million for the six months ended December 31, 2022 and 2023, respectively, and US$0.02 million and US$4.6 million
for the years ended June 30, 2022 and 2023, respectively. Capital expenditures primarily represent capital payment for purposes
of property acquisitions as well as leasehold improvements. We expect to continue to incur similar capital expenditure in the future as
we grow our business. We intend to fund our future capital expenditures with our existing cash balance.
Contractual Obligations
The following table sets forth our contractual obligations
as of December 31, 2023:
| | |
Payment due by Period | |
| | |
Total | | |
Less Than 1 year | | |
1 – 2 Years | | |
2 – 3 Years | | |
3 – 5 Years | | |
Over
5 Years | |
| | |
(US$) | |
| Operating lease commitments | |
| 673,696 | | |
| 196,345 | | |
| 196,373 | | |
| 140,489 | | |
| 140,489 | | |
| - | |
Other than as shown above,
we did not have any significant capital and other commitments, long-term obligations, or guarantees as of December 31, 2023.
Off-Balance Sheet Commitments and Arrangements
We have not entered into any
financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered
into any derivative contracts that are indexed to our shares and classified as shareholders’ equity or that are not reflected in
our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated
entity that serves as credit, liquidity, or market risk support to such entity. We do not have any variable interest in any unconsolidated
entity that provides financing, liquidity, market risk, or credit support to us or engages in leasing, hedging, or product development
services with us.
Holding Company Structure
Pubco will become our holding
company upon the completion of the Business Combination. Pubco has no material operations of its own. We conduct a substantial majority
of our operations through our operating subsidiaries in China. As a result, after the completion of the Business Combination, Pubco’s
ability to pay dividends depends largely upon dividends paid by our subsidiaries including our mainland China subsidiaries. If our existing
mainland China subsidiaries or any newly formed ones incur debt on their own behalf in the future, the instruments governing their debt
may restrict their ability to pay dividends to us. In addition, our mainland China subsidiaries are permitted to pay dividends to us only
out of their accumulated after-tax profits, if any, as determined in accordance with PRC accounting standards and regulations. Under PRC
law, each of our mainland China subsidiaries is required to set aside at least 10% of its after-tax profits each year, if any, to fund
certain statutory reserve funds until such reserve funds reach 50% of its registered capital. In addition, our subsidiaries in China may
allocate a portion of their after-tax profits based on PRC accounting standards to a surplus fund at their discretion. The statutory reserve
funds and the surplus funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of
China is subject to examination by the banks designated by SAFE. Our mainland China subsidiaries have not paid dividends and will
not be able to pay dividends until they generate accumulated profits and meet the requirements for statutory reserve funds.
Inflation
To date, inflation in mainland
China has not materially affected our results of operations. According to the National Bureau of Statistics of China, the year-over-year
percent changes in the consumer price index for 2022 and 2023 were increases of 2.0% and 0.2%. Although we have not been materially affected
by inflation in mainland China in the past, we may be affected if mainland China experiences higher rates of inflation in the future.
Critical Accounting Estimates
An accounting policy is considered
critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time such
estimate is made, and if different accounting estimates that reasonably could have been used, or changes in the accounting estimates that
are reasonably likely to occur periodically, could materially impact the consolidated financial statements.
We prepare our financial statements
in conformity with U.S. GAAP, which requires us to make estimates and assumptions. We continually evaluate these estimates and assumptions
based on the currently available information, our own historical experience and various other assumptions that we believe to be reasonable
under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could
differ from our expectations as a result of changes in our estimates. Some of our accounting policies require a higher degree of judgment
than others in their application and require us to make significant accounting estimates.
The following descriptions
of critical accounting policies, judgments and estimates should be read in conjunction with our consolidated financial statements and
accompanying notes and other disclosures included in this prospectus. When reviewing our financial statements, you should consider (i) our
selection of critical accounting policies, (ii) the judgments and other uncertainties affecting the application of such policies
and (iii) the sensitivity of reported results to changes in conditions and assumptions.
We consider our critical accounting
estimates include (i) revenue recognition; (ii) inventories; and (iii) valuation allowance of deferred tax assets.
Revenue recognition
We recognize revenue pursuant
to ASC 606, Revenue from Contracts with Customers (“ASC 606”). According to ASC 606, revenues from contracts
with customers are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects
the consideration the we expect to be entitled to in exchange for those goods or services, reduced by estimates for return allowances,
promotional discounts, rebates and business tax and Value Added Tax (“VAT”). Consistent with the criteria of this standard,
we follows five steps for our revenue recognition: (i) identify the contract(s) with the customer; (ii) identify the performance
obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations
in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
Our revenues are primarily
derived from (i) product sales and (ii) licensing fees from commercial stores.
Revenue from product sales
Our revenue from product sales
are primarily derived from (i) sales of our products to third party platform distributor customers and wholesale customers; (ii) e-commerce
sales to retail customers through our online stores on third party e-commerce platforms; and (iii) sales to retail customers through
our self-operated offline stores. We recognize revenue from product sales at the point in time control of the products is transferred,
and in the gross amount of consideration to which it expects to be entitled in exchange for the specified goods or services transferred.
For sales through offline channels, revenues are recognized when we satisfy a performance obligation by transferring promised goods to
places designated by customers. For sales through online platforms, revenues are recognized when (i) customers manually confirm their
receipt of the products or (ii) seven days after delivery, whichever is earlier.
We record revenues net of return
allowances, sales incentives, value-added taxes and related surcharges. For sales through offline channels, our sales terms do not provide
a right of return beyond a standard quality policy. For sales through online channels, we offer an unconditional right of return for a
period of seven days upon receipt of products. We estimate sales return on historical results. For the six months ended December
31, 2023, and for years ended June 30, 2023 and 2022, our amount of sales return was insignificant. We may also provide sales incentives
in the forms of discounts to customers. Our revenue are allocated based on the relative standalone selling prices for respective products
and recognized on a net basis after such sales incentives.
Revenue from licensing fees
We enter into licensing agreements
with our customers and third-party commercial stores (collectively, the “Licensees”), to authorize the Licensee to use our
logo, trademark and our brand name of “Big Tree Cloud”. Therefore, the performance obligation is satisfied over time because
the Licensees simultaneously receive and consume the benefits (of utilizing our logo, trademark and brand name) during the authorized
period of two years. Therefore, revenues generated from licensing fees are recognized overtime during the authorized period of two years.
The transaction price contains variable considerations, including prompt incentive payment to the Licensees if a Licensee reaches certain
milestones. We use the “most likely amount” method based on our historical experiences and update our estimated transaction
price at the end of each reporting period to estimate the amount of variable consideration to be included in the transaction.
Inventories
Inventories, net consisting
of finished products available for sales are valued at the lower of cost or net realizable value with cost determined using the weighted
average cost method. Net realizable value is based on estimated selling prices in the ordinary course of business, less reasonably predictable
transportation cost. Write-down is recorded when the future estimated net realizable value is less than cost, which is recorded in cost
of revenues in the consolidated statements of income and comprehensive income.
Inventory write-down is estimated
based on significant management estimates and assumptions used to determine the write-down percentages that are applied to different aging
groups and assess the condition of the merchandise within each category. In determining the write-down percentages on inventories, we
take into considerations of factors, such as the inventories’ aging, historical trends, forecasted demands, expected selling prices
and future promotional events.
US$601 and US$1,228 of inventory
write-down were written off for the six months ended December 31, 2023 and 2022 respectively. US$3,358 and US$1,391 of inventory write-down
were recorded for the years ended June 30, 2023 and 2022 respectively. Inventories, net accounted for 42.1%, 10.0% and 5.2%
of total assets as of December 31, 2023, June 30, 2023 and June 30, 2022, respectively, and thus were regarded material and significant
accounts in our financial statements.
Contract liabilities
Contract liabilities represent
the obligation to transfer goods or services to a customer for which the entity has received consideration from the customer. Contract
liabilities mainly consist of advance product payments from customers. We recognize contract liabilities of US$7.2 million, US$8.2 million
and US$41,048 as of December 31, 2023, June 30, 2023 and June 30, 2022, respectively. The balance as of December 31, 2023, June 30, 2023
and June 30, 2022 were mainly from a third-party customer for product sales. We expect to recognize this balance as revenue within the
next 30 months.
Income taxes
We account for income taxes
under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between
the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the
period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount
expected to be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.
We recorded deferred tax assets balance of US$1.2
million, US$0.4 million and US$0.2 million as of December 31, 2023, June 30, 2023 and June 30, 2022, respectively. Valuation allowance
of deferred tax assets of US$0.6 million and nil for the six months ended December 31, 2023 and 2022, respectively. Valuation allowance
of deferred tax assets of nil and nil for the years ended June 30, 2023 and 2022, respectively.
When we determine and quantify
the valuation allowances, we consider such factors as projected future taxable income, the availability of tax planning strategies, the
historical taxable income and losses in prior years, and future reversals of existing taxable temporary differences. The assumptions
used in determining projected future taxable income require significant judgment. Actual operating results in future years could
differ from our current assumptions, judgements and estimates. Changes in these estimates and assumptions may materially affect the tax
position measurement and financial statement recognition. Above-mentioned assumptions have not changed over the reporting periods.
Property and equipment, net
Property and equipment are
stated at cost less accumulated depreciation and impairment, if any, and depreciated on a straight-line basis over the estimated useful
lives of the assets. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its intended use.
Estimated useful lives are as follows:
| Category |
|
Estimated useful lives |
| Office equipment and computers |
|
5 years |
| Transportation equipment |
|
8 years |
| Building |
|
20 years |
| Leasehold improvements |
|
Shorter of the lease term or the estimated useful life of the assets |
Repair and maintenance costs
are charged to expenses as incurred, whereas the cost of renewals and betterment that extends the useful lives of property and equipment
are capitalized as additions to the related assets. Retirements, sales and disposals of assets are recorded by removing the costs, accumulated
depreciation and impairment with any resulting gain or loss recognized in the consolidated statements of income. Management estimates
the residual value of its office equipment and computers, transportation equipment and office equipment to be 5%.
Internal Control Over Financial Reporting
Prior to the completion of
the Business Combination, we have been a private company with limited accounting personnel and other resources with which to address our
internal control over financial reporting. In connection with the audit of our consolidated financial statements as of and for the six
months ended December 31, 2022 and 2023, we and our independent registered public accounting firm identified two material weakness in
our internal control over financial reporting. As defined in the standards established by the U.S. Public Company Accounting Oversight
Board, a “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting,
such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented
or detected on a timely basis.
The material weakness that
has been identified relates to:
| ● | Our lack of sufficient and competent accounting staff and
resources with appropriate knowledge of generally accepted accounting principles in the United States (“U.S. GAAP”)
and SEC reporting and compliance requirements; and |
| ● | Our lack of robust and formal period-end financial reporting
policies and procedures in place to address complex U.S. GAAP technical accounting and the SEC reporting requirements. |
We have implemented and plan
to implement a number of measures to address the material weakness:
| ● | to address hiring additional qualified accounting and financial
personnel with appropriate knowledge and experience in U.S. GAAP accounting and SEC reporting; and |
| ● | to organize regular training for our accounting staff, especially
related to U.S. GAAP and SEC reporting requirements. |
As a company with less than
US$1.235 billion in revenue for fiscal year of 2023, Pubco will qualify as an “emerging growth company” pursuant to the
JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable
generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the
Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Executive Officers
See “Item 1. Identity of Directors,
Senior Management and Advisers—A. Directors and Senior Management.”
B. Compensation
The executive compensation of PubCo’s executive
officers and directors is described in the Form F-4 in the section entitled “PubCo’s Directors and Executive Officers
after the Business Combination” which information is incorporated herein by reference.
C. Board Practices
See “Item 1. Identity of Directors,
Senior Management and Advisers—A. Directors and Senior Management.”
D. Employees
As of June 30, 2023, Big Tree
Cloud had 75 full-time employees, all of whom are based in China, primarily at its headquarters in Shenzhen, China.
E. Share Ownership
Ownership of PubCo’s shares by its executive
officers and directors upon consummation of the Business Combination is set forth in Item 7.A of this Report.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY
TRANSACTIONS
A. Major Shareholders
The following table sets forth information regarding
the beneficial ownership of our ordinary shares as of the date of this report, 2024 by:
| ● | each person known by us to be the beneficial owner of more than 5% of our outstanding shares; |
| ● | each of our officers and directors; and |
| ● | all our officers and directors as a group. |
The calculations in the table below are based on 57,080,546
ordinary shares issued and outstanding as of the date of this report.
| Name and Address of Beneficial Owner | |
Number of Shares | | |
% of Class | |
| Five Percent or Greater Holders | |
| | |
| |
| PLOUTOS GROUP LIMITED (1) | |
| 50,000,000 | | |
| 87.6 | % |
| Directors and Executive Officers | |
| | | |
| | |
Wenquan Zhu (1) | |
| 50,000,000 | | |
| 87. 6 | % |
| Ting Yan | |
| — | | |
| — | |
| Frank Li | |
| — | | |
| — | |
| Yumao Huang | |
| — | | |
| — | |
| Yanjie Zhu | |
| — | | |
| — | |
| Yifan He | |
| — | | |
| — | |
| Fengxin Zhang | |
| — | | |
| — | |
| All Directors and Executive Officers as a group (8 individuals) | |
| 50,000,000 | | |
| 87. 6 | % |
| (1) | PLOUTOS GROUP LIMITED is a company incorporated under the
laws of the British Virgin Islands. The registered address of PLOUTOS GROUP LIMITED is Unit 8, 3/F., Qwomar Trading Complex, Blackburne
Road, Port Purcell, Road Town, Tortola, British Virgin Islands, VG1110, British Virgin Islands. PLOUTOS GROUP LIMITED is indirectly wholly
owned and controlled by Mr. Wenquan Zhu, the chairman of the board and chief executive officer of Holdco. |
B. Related Party
Transactions — Big Tree Cloud
Our Related Parties
| No. |
|
Name of Related Parties |
|
Relationship |
| 1. |
|
Wenquan Zhu |
|
Controlling shareholder and Chairman of the Group |
| 2. |
|
Big Tree Cloud Network Technology (Shenzhen) Co., Ltd (“Big Tree Cloud Shenzhen”) |
|
An entity controlled by Wenquan Zhu |
| 3. |
|
Shenyang Jingxihui Network Technology Co., Ltd (“Shenyang Jingxihui”) |
|
An entity controlled by Wenquan Zhu |
| 4. |
|
Shenzhen Jingxihui Trading Co., Ltd (“Shenzhen Jingxihui”) |
|
An entity controlled by Wenquan Zhu |
| 5. |
|
Shenzhen Big Tree Rong Trading Co., Ltd (“Shenzhen Big Tree Rong Trading”) |
|
An entity controlled by Wenquan Zhu |
| 6. |
|
Ting Yan |
|
Chief Financial Officer and Director |
1) Transactions with Big
Tree Cloud Shenzhen
For the year ended June 30, 2022, we engaged
Big Tree Cloud Shenzhen for the provision of technical services in relation to our business operations and incurred a total service fee
of US$152,507. We paid this amount in the regular course of business operations. For the year ended June 30, 2023, Big Tree Cloud
Shenzhen provided technical services in the amount of US$572,250, and we periodically paid this amount in the regular course of business
operations, with US$31,965 remain due to Big Tree Cloud Shenzhen as of June 30, 2023. As of December 31, 2023, the total amount was
settled.
For the years ended June 30, 2022 and
2023, we sold certain goods to and made payments on behalf of Big Tree Cloud Shenzhen, and the total amount due from Big Tree Cloud Shenzhen
was US$832,897 as of June 30, 2023.
We and Big Tree Cloud Shenzhen agree to offset the
remaining balance among the parties, and Big Tree Cloud Shenzen paid the remaining balance of US$800,932 as of October 2023.
We rented certain properties to Big Tree Cloud Shenzhen
in 2023 for a monthly payment of RMB11,100. For the six months ended December 31, 2023, we have collected USD8,685 as rental payment.
We purchased certain goods from and sold certain
goods to Big Tree Cloud Shenzhen in 2023, we have made and collected payments in the regular course of business. As of December 31, 2023,
the amount of US$562 remain due from Big Tree Cloud Shenzhen, and we intend to collect these payments in the regular course of business.
2) Transactions with Shenzhen
Jingxihui
For the year ended June 30, 2022, we sold certain
goods to Shenzhen Jingxihui for a total value of US$185,019, and we collected this payment in the regular course of business operations.
For the year ended June 30, 2023, we sold certain goods to Shenzhen Jingxihui for a total value of US$236,605, and we collected these
payments in the regular course of business operations.
For the year ended June 30, 2022, Shenzhen
Jingxihui made payments on our behalf, and as a result, we incurred US$177,239 in accounts payables. We made these payments to Shenzhen
Jingxihui as of June 30, 2023.
3) Transactions with Shenyang
Jingxihui
For the year ended June 30, 2022, we sold certain
goods to Shenyang Jingxihui for a total value of US$185,019, and we collected these payment in the regular course of business operations.
For the year ended June 30, 2022, Shenyang
Jingxihui made payments on our behalf, and as a result, we incurred US$149,041 in accounts payables. We made these payments to Shenyang
Jingxihui as of June 30, 2023.
4) Transactions with Shenzhen
Big Tree Rong Trading
For the year ended June 30, 2022, we sold certain
goods to Shenzhen Big Tree Rong Trading for a total value of US$291,884. We collected the payments due from Shenzhen Big Tree Rong Trading
in the regular course of business operations.
For the year ended June 30, 2022, Big Tree
Rong Trading made payments on our behalf, and as a result, we incurred US$49,299 in accounts payables. We made these payments to Shenzhen
Big Tree Rong as of June 30, 2023.
5) Transactions with Wenquan
Zhu
In 2022, Wenquan Zhu executed and obtained a loan
in the amount of RMB10 million, or approximately US$1.38 million, at an interest rate of 5% per annum on behalf of our Group
from a commercial bank. Due to the commercial bank’s rule, this type of loan may only be issue to an individual rather than a commercial
entity. This loan arrangement also required the pledge of assets as collateral. Therefore, Wenquan Zhu was deemed as the borrower with
the Group’s real property pledged as the collateral asset. The aggregate loan payment was immediately transferred from Wenquan Zhu’s
personal account to the Group’s bank account upon release of the loan by the commercial bank. Under this loan arrangement, Wenquan
Zhu paid the monthly interests on behalf of our Group, and we reimbursed Wenquan Zhu accordingly. This type of loan is common in China
for companies with limited operating history. For the years ended June 30, 2022 and 2023, the amounts due to Wenquan Zhu under
this arrangement were US$1.3 million and US$1.3 million, respectively.
As of December 31, 2023, the loan arrangement was
terminated and the commercial bank has released the security interest in our Group’s assets. The amount of US$5,933 was the remaining
interest payment. We intend to make this payment in June 2024.
6) Transactions with Ting
Yan
For the year ended June 30, 2023, we had US$61,374
due from Ting Yan which mainly represent an interest free loan we made to her. Ting Yan has repaid this loan as of October, 2023.
C. Interests of Experts and Counsel
Not Applicable.
ITEM 8. FINANCIAL INFORMATION
A. Consolidated Statements and Other Financial
Information
See Item 18 of this Report.
B. Significant Changes
Not applicable.
ITEM 9. THE OFFER AND LISTING
A. Offer and Listing Details
Our ordinary shares and warrants are listed on
the Nasdaq Global Market under the symbols “DSY” and “DSYWW,” respectively. Holders of our ordinary shares and
warrants should obtain current market quotations for their securities.
B. Plan of Distribution
Not applicable.
C. Markets
Our ordinary shares and warrants are listed on
the Nasdaq Global Market under the symbols “DSY” and “DSYWW,” respectively.
D. Selling Shareholders
Not applicable.
E. Dilution
Not applicable.
F. Expenses of the Issue
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
A. Share Capital
As of the date of this Report, we are authorized
to issue a maximum of 500,000,000 shares of a par value of US$0.0001 each. As of the date of this Report, 2024, subsequent to closing
of the Business Combination, there were 57,080,546 ordinary shares outstanding. There were also 6,016,125 warrants outstanding,
each exercisable to purchase one ordinary share at a price of $11.50 per full share. Certain of our shareholders are subject to lock-up
as contained in the Form F-4 in the section entitled “Proposal No. 1—The Business Combination Proposal— Additional
Agreements Executed at the Signing of the Merger Agreement— Shareholders Lock-Up Agreement.”
B. Memorandum and Articles of Association
We are an exempted company limited by shares incorporated
under the laws of the Cayman Islands and our affairs are governed by our memorandum and articles of association, as amended and restated
from time to time, and the Companies Act (As Revised) of the Cayman Islands, which we refer to as the “Cayman Companies Act”
below, and the common law of the Cayman Islands.
We incorporate by reference into this Report our
Second Amended and Restated Memorandum and Articles of Association, the form of which was filed as Annex B to our registration statement
on Form F-4 (File No. 333-277882) initially filed with the Securities and Exchange Commission on March 13, 2024, as amended, which
are incorporated herein by reference. Our shareholders adopted our Second Amended and Restated Memorandum and Articles of Association
by a special resolution on May 22, 2024, which became effective on June 6, 2024.
The following are summaries of material provisions
of our Second Amended and Restated Memorandum and Articles of Association and the Cayman Companies Act insofar as they relate to the material
terms of our ordinary shares.
Registered Office
Our registered office is at Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.
Capacity and Power
According to Clause 3 of our Second Amended
and Restated Memorandum of Association, we have full power and authority to carry out any object not prohibited by the Cayman Companies
Act or as the same may be revised from time to time, or any other law of the Cayman Islands.
Board of Directors
See “Item 6. Directors, Senior Management
and Employees.”
Ordinary Shares
The description of our ordinary shares is contained
in the Form F-4 in the section entitled “Description of PubCo’s Securities,” which is incorporated herein by reference.
C. Material Contracts
The description of our Material Contracts is contained
in the Form F-4 in the section entitled “Big Tree Cloud’s Business,” which is incorporated herein by reference.
D. Exchange Controls and Other Limitations Affecting
Security Holders
Under the laws of the Cayman Islands, there are
currently no restrictions on the export or import of capital, including foreign exchange controls or restrictions that affect the remittance
of dividends, interest or other payments to non-resident holders of our ordinary shares.
E. Taxation
The material United States federal income tax consequences
of owning and disposing of our securities following the Business Combination are described in the Form F-4 in the sections entitled
“Material U.S. Federal Income Tax Consequences,” which is incorporated herein by reference.
F. Dividends and Paying Agents
PubCo has no current plans to pay dividends. PubCo
does not currently have a paying agent.
G. Statement by Experts
The financial statements for Plutonian as of December
31, 2022 and 2023, incorporated in this Report on Form 20-F by reference to the Form 10-K filed with the SEC on April 12, 2024 have been
so incorporated in reliance on the report of Marcum LLP, an independent registered public accounting firm, incorporated by reference
herein, given on the authority of such firm as an expert in accounting and auditing. The address of Marcum LLP is 100 Eagle Rock Avenue, East Hanover, NJ 07936.
The financial statements for Big Tree Cloud as
of June 30, 2022 and 2023, incorporated in this Report on Form 20-F by reference to the Registration Statement on Form F-4 (File No.
333-277882) of PubCo initially filed on March 13, 20203 have been so incorporated in reliance on the report of Audit Alliance LLP, an
independent registered public accounting firm, incorporated by reference herein, given on the authority of such firm as an expert in
accounting and auditing. The address of Audit Alliance LLP is 10 Anson Road, #20-16 International Plaza, Singapore 079903.
H. Documents on Display
We are subject to certain of the informational
filing requirements of the Exchange Act. Since we are a “foreign private issuer,” we are exempt from the rules and regulations
under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders
are exempt from the reporting and “short-swing” profit recovery provisions contained in Section 16 of the Exchange Act,
with respect to their purchase and sale of our shares. In addition, we are not required to file reports and financial statements with
the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, we are required
to file with the SEC an Annual Report on Form 20-F containing financial statements audited by an independent accounting firm. We
also furnish to the SEC, on Form 6-K, unaudited financial information after each of our first three fiscal quarters. The SEC also
maintains a website at http://www.sec.gov that contains reports and other information that we file with or furnish electronically with
the SEC.
I. Subsidiary Information
Not applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISKS
Foreign exchange risk
Substantially all of our revenues
and expenses are denominated in Renminbi for the six months ended December 31, 2022 and 2023. We do not believe that we have any
significant direct foreign exchange risk and have not used any derivative financial instruments to hedge exposure to such risk. The value
of the Renminbi against the U.S. dollar and other currencies is affected by changes in international political and economic development
and by the central government’s policies, among other things. In July 2005, the PRC government changed its decades-old policy
of pegging the value of the Renminbi to the U.S. dollar, and the Renminbi appreciated more than 20% against the U.S. dollar
over the following three years. Between July 2008 and June 2010, this appreciation subsided and the exchange rate between
the Renminbi and the U.S. dollar remained within a narrow band. Since June 2010, the Renminbi has fluctuated against the U.S. dollar,
at times significantly and unpredictably. The Renminbi depreciated approximately by 5% against the U.S. dollar in 2018, and further
depreciated by 4% against the U.S. dollar in 2019. Since October 1, 2016, the Renminbi has joined the International Monetary
Fund’s basket of currencies that make up the SDR, along with the U.S. dollar, the Euro, the Japanese yen and the British pound.
With the development of the foreign exchange market and progress towards interest rate liberalization and Renminbi internationalization,
the PRC government may in the future announce further changes to the exchange rate system and there is no guarantee that the RMB will
not appreciate or depreciate significantly in value against the U.S. dollar in the future. It is difficult to predict how market
forces or PRC or U.S. government policy may impact the exchange rate between the Renminbi and the U.S. dollar in the future.
To the extent that we need
to convert U.S. dollars into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would have an
adverse effect on the Renminbi amount we receive from the conversion. Conversely, if we decide to convert Renminbi into U.S. dollars
for the purpose of making payments for dividends on our ordinary shares or for other business purposes, appreciation of the U.S. dollars
against the Renminbi would have a negative effect on the U.S. dollar amounts available to us.
Interest rate risk
We have not been exposed to
material risks due to changes in market interest rates, nor have we used any derivative financial instruments to manage our interest risk
exposure. However, we cannot provide assurance that we will not be exposed to material risks due to changes in market interest rate in
the future.
We may invest in interest-earning
instruments, and investments in both fixed rate and floating rate interest earning instruments carry a degree of interest rate risk. Fixed
rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating rate securities may
produce less income than expected if interest rates fall.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN
EQUITY SECURITIES
Upon closing of the Business
Combination, the warrants of Plutonian convert automatically into warrants of PubCo to purchase PubCo ordinary shares. The following provides
a summary of the material provisions governing the PubCo warrants.
Each redeemable warrant entitles the holder thereof
to purchase one ordinary share at a price of $11.50 per share, subject to adjustment as described in this report. The warrants will become
exercisable on the later of 30 days after the completion of the Business Combination and 12 months from the closing of Plutonian’s
initial public offer. However, no warrants will be exercisable for cash unless we have an effective and current registration statement
covering the issuance of the ordinary shares issuable upon exercise of the warrants and a current prospectus relating to such ordinary
share. Notwithstanding the foregoing, if a registration statement covering the issuance of the ordinary share issuable upon exercise of
the warrants is not effective within 90 days from the closing of our initial business combination, warrant holders may, until such
time as there is an effective registration statement and during any period when we 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. If an
exemption from registration is not available, holders will not be able to exercise their warrants on a cashless basis. In the event that
holders are able to exercise their warrants on a “cashless basis,” each holder would pay the exercise price by surrendering
the warrants in exchange for that number of ordinary shares equal to the quotient obtained by dividing (x) the product of the number of
ordinary shares underlying the warrants, multiplied by the excess of the “fair market value” (defined below) over the exercise
price of the warrants by (y) the fair market value. The “fair market value” for this purpose shall mean the average last reported
sale price of the ordinary shares for the 10 trading days ending on the third trading day prior to the exercise date. The warrants will
expire five years from the closing of the Business Combination at 5:00 p.m., New York City time or earlier upon redemption
or liquidation.
In addition, if (x) Plutonian issues additional
common stock or equity-linked securities for capital raising purposes in connection with the closing of its 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 its board of directors and, in the case of any such issuance to Plutonian’s initial stockholders or their affiliates,
without taking into account any insider shares held by its initial stockholders or such affiliates, as applicable, prior to such issuance)
(the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total
equity proceeds, and interest thereon, available for the funding of its initial business combination (net of redemptions), and (z) the
volume weighted average trading price of its common stock during the 20 trading day period starting on the trading day prior
to the day on which Plutonian consummates its initial business combination (such price, the “Market Price”) is below
$9.20 per share, then the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher
of the Market Price and the Newly Issued Price, and the $18.00 per share redemption trigger price described below will be adjusted (to
the nearest cent) to be equal to 180% of the higher of the Market Price and the Newly Issued Price.
We may redeem the outstanding warrants:
| ● | in whole and not in part; |
| ● | at a price of $0.01 per warrant; |
| ● | upon a minimum of 30 days’ prior written notice
of redemption, which we refer to as the 30-day redemption period; and |
| |
● |
if, and only if, the last reported sale price of our ordinary shares equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders. |
The right to exercise will be forfeited unless
the warrants are exercised prior to the redemption 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 our 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 our redemption call, the redemption will not cause the share price to drop below the exercise price of the warrants.
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not required
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS
OF SECURITY HOLDERS AND USE OF PROCEEDS
Not required
ITEM 15. CONTROLS AND PROCEDURES
Not required
ITEM 16. [RESERVED]
Not required
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Not required
ITEM 16B. CODE OF ETHICS
Not required
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not required
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS
FOR AUDIT COMMITTEES
Not required
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY
THE ISSUER AND AFFILIATED PURCHASERS
None
ITEM 16F. CHANGE IN REGISTRANT’S
CERTIFYING ACCOUNTANT
Following the consummation of the Business Combination,
Audit Alliance LLP, the independent auditor of Big Tree Cloud, is being engaged as the independent auditor of PubCo. In connection with
the Business Combination, Marcum, which was the auditor for Plutonian Acquisition Corp., was informed that it would no longer be our
auditor.
The reports of Marcum on the financial
statements of Plutonian Acquisition Corp. as of December 31, 2022 and December 31, 2023, and for the years ended December 31, 2022
and December 31, 2023 did not contain any adverse opinion or a disclaimer of opinion, nor were such reports qualified or modified as
to uncertainty, audit scope, or accounting principles. Marcum’s audit reports contained an
explanatory paragraph related to the substantial doubt of Plutonian Acquisition Corp.'s ability to continue as a going concern.
During the period from March 11, 2021 (inception)
through December 31, 2023 and through the effective date of the Business Combination (the “Effective Date”), there were no
disagreements with Friedman or Marcum (as applicable) on any matter of accounting principles or practices, financial statement disclosures,
or auditing scope or procedure, which such disagreements, if not resolved to the satisfaction of Friedman or Marcum (as applicable), would
have caused Friedman or Marcum (as applicable) to make reference thereto in its reports on the financial statements of Plutonian Acquisition
Corp. for such periods. During the period from March 11, 2021 (inception) through December 31, 2022 and through the Effective Date, there
were no “reportable events” as that term is described in paragraphs (A) through (D) of Item 16F(a)(1)(v) of
Form 20-F.
During the period from March 11, 2021
(inception) through December 31, 2023 and through the Effective Date, neither Plutonian, nor anyone on its behalf, consulted Marcum
regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the
type of audit opinion that might be rendered with respect to the financial statements of Plutonian and neither a written report was
provided to Plutonian or oral advice was provided that Marcum concluded was an important factor considered by Plutonian in
reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject
of a “disagreement,” as that term is defined in Item 16F(a)(1)(iv) of Form 20-F and the related instructions
to Item 16F of Form 20-F, or a “reportable event,” as that term is described in Item 16F(a)(1)(v) of
Form 20-F.
PubCo provided Marcum with a copy of the disclosure
it is making in this Report and requested that Marcum furnish PubCo with a letter addressed to the U.S. Securities and Exchange Commission
(the “SEC”), pursuant to Item 16F(a)(3) of Form 20-F, stating whether Marcum agrees with the statements made by
PubCo in this Report, and if not, in which respects Marcum does not agree. A copy of Marcum’s letter to the Securities and Exchange
Commission dated June 12, 2024 is attached as Exhibit 15.2 to this Report.
ITEM 16G. CORPORATE GOVERNANCE
Not required.
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
PART III
ITEM 17. FINANCIAL STATEMENTS
See “Item 18. Financial Statements.”
ITEM 18. FINANCIAL STATEMENTS
Big Tree Cloud’s audited consolidated financial
statements as of June 30, 2022 and 2023 and for the years ended June 30, 2022 and 2023 are incorporated
by reference to pages F-1–F-30 in the Form F-4. Big Tree Cloud’s unaudited interim condensed consolidated
financial statements as of June 30, 2023 and December 31, 2023 and for the six months ended December 31, 2022 and 2023 are attached hereto
starting on page F-1 of this Report.
Plutonian’s audited financial statements
as of December 31, 2022 and 2023 are incorporated by reference to Plutonian’s annual report on Form 10-K filed with the SEC on April
12, 2024. Plutonian’s unaudited condensed financial statements as of December 31, 2023 and March 31, 2024 and for the three months
ended March 31, 2023 and 2024 are incorporated by reference to ’s quarterly report on Form 10-Q filed with the SEC on May 31, 2024.
The unaudited pro forma condensed combined
financial statements of PubCo are attached as Exhibit 15.1 to this Report.
ITEM 19. EXHIBITS
| Exhibit No. |
|
Description |
| 1.1 |
|
Second Amended and Restated Memorandum and Articles of Association of PubCo (incorporated by reference to Annex B of PubCo’s registration statement on Form F-4 (File No. 333-277882), filed with the SEC on March 27, 2024) |
| 2.1 |
|
Specimen of Ordinary Share of PubCo (incorporated by reference to Exhibit 4.5 of PubCo’s registration statement on Form F-4 (File No. 333-277882), filed with the SEC on March 27, 2024) |
| 2.2 |
|
Specimen of Warrant of PubCo (incorporated by reference to Exhibit 4.6 of PubCo’s registration statement on Form F-4 (File No. 333-277882), filed with the SEC on March 27, 2024) |
| 2.5 |
|
Warrant Agreement (incorporated by reference to Exhibit 4.2 of Plutonian’s current report on Form 8-K filed with the SEC on November 16, 2022) |
| 2.6* |
|
Supplemental Warrant Agreement dated June 7, 2024 by and among Plutonian, PubCo and Continental Stock Transfer & Trust Company. |
| 4.1 |
|
Agreement and Plan of Merger, dated October 9, 2023 (incorporated by reference to Annex A of PubCo’s registration statement on Form F-4 (File No. 333-277882), filed with the SEC on March 27, 2024) |
| 4.2 |
|
Form of Lock-Up Agreement (incorporated by reference to Annex E of PubCo’s registration statement on Form F-4 (File No. 333-277882), filed with the SEC on March 27, 2024) |
| 4.3 |
|
Form of Registration Rights Agreement (incorporated by reference to Annex F of PubCo’s registration statement on Form F-4 (File No. 333-277882), filed with the SEC on March 27, 2024) |
| 4.4 |
|
Form of Officer Employment Agreement of PubCo (incorporated by reference to Annex F of PubCo’s registration statement on Form F-4 (File No. 333-277882), filed with the SEC on March 27, 2024) |
| 4.5 |
|
Form of Director Letter Agreement of PubCo (incorporated by reference to Annex F of PubCo’s registration statement on Form F-4 (File No. 333-277882), filed with the SEC on March 27, 2024) |
| 4.6 |
|
Form of Director and Officer Indemnification Agreement of PubCo (incorporated by reference to Annex F of PubCo’s registration statement on Form F-4 (File No. 333-277882), filed with the SEC on March 27, 2024) |
| 4.7 |
|
Form Big Tree Cloud Convenience Store License Agreement (English Translation) (incorporated by reference to Annex F of PubCo’s registration statement on Form F-4 (File No. 333-277882), filed with the SEC on March 27, 2024) |
| 4.8 |
|
Product Purchase Agreement dated March 10, 2023 (Distribution Agreement) (English Translation) (incorporated by reference to Annex F of PubCo’s registration statement on Form F-4 (File No. 333-277882), filed with the SEC on March 27, 2024) |
| 4.9 |
|
Technology Development Contract dated January 1, 2024 (English Translation) (incorporated by reference to Annex F of PubCo’s registration statement on Form F-4 (File No. 333-277882), filed with the SEC on March 27, 2024) |
| 8.1* |
|
List of Subsidiaries of PubCo |
| 15.1* |
|
Unaudited pro forma condensed combined financial statements of PubCo. |
| 15.2* |
|
Letter from Marcum LLP |
| 15.3* |
|
Letter from Friedman LLP |
| 15.4* |
|
Consent from Audit Alliance LLP |
| 15.5* |
|
Consent from Marcum LLP |
SIGNATURES
The registrant hereby certifies that it meets all
of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this report on its
behalf.
| |
BIG TREE CLOUD HOLDINGS LIMITED |
| |
|
|
| June 12, 2024 |
By: |
/s/ Wenquan Zhu |
| |
Name: |
Wenquan Zhu |
| |
Title: |
Chairman of the Board of Directors and Chief Executive Officer |
Big Tree Cloud International Group Limited
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
BIG TREE CLOUD INTERNATIONAL GROUP LIMITED
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In U.S. dollars, except for share and per share data, or otherwise note)
| | |
As of, | |
| | |
December 31,
2023 | | |
June 30,
2023 | |
| | |
USD | | |
USD | |
| | |
(Unaudited) | | |
| |
| ASSETS | |
| | |
| |
| Current assets: | |
| | |
| |
| Cash and cash equivalents | |
| 1,121,803 | | |
| 3,190,995 | |
| Advance to suppliers | |
| 47,741 | | |
| 717,748 | |
| Accounts receivables, net | |
| 20,315 | | |
| 211,356 | |
| Prepaid expenses and other current assets, net | |
| 633,093 | | |
| 618,771 | |
| Inventories, net | |
| 1,325,975 | | |
| 626,196 | |
| Amount due from related parties | |
| 562 | | |
| 894,271 | |
| Total current assets | |
| 3,149,489 | | |
| 6,259,337 | |
| | |
| | | |
| | |
| Non-current assets: | |
| | | |
| | |
| Property and equipment, net | |
| 3,977,725 | | |
| 3,982,410 | |
| Intangible asset, net | |
| 79,940 | | |
| 2,509 | |
| Right-of-use assets | |
| 628,532 | | |
| 704,531 | |
| Deferred offering costs | |
| 1,323,686 | | |
| 752,955 | |
| Deferred tax asset | |
| 515,885 | | |
| 381,191 | |
| Total non-current assets | |
| 6,525,768 | | |
| 5,823,596 | |
| TOTAL ASSETS | |
| 9,675,257 | | |
| 12,082,933 | |
| | |
| | | |
| | |
| LIABILITIES AND SHAREHOLDERS’ (DEFICITS)/EQUITY | |
| | | |
| | |
| Current liabilities: | |
| | | |
| | |
| Short-term loan | |
| 1,408,471 | | |
| - | |
| Accounts payables | |
| 733,079 | | |
| 683,424 | |
| Contract liabilities | |
| 3,728,785 | | |
| 3,385,764 | |
| Accrued expenses and other current liabilities | |
| 639,045 | | |
| 661,037 | |
| Lease liabilities | |
| 173,749 | | |
| 174,650 | |
| Amounts due to related parties | |
| 407,208 | | |
| 1,324,178 | |
| Total current liabilities | |
| 7,090,337 | | |
| 6,229,053 | |
| | |
| | | |
| | |
| Non-current liabilities: | |
| | | |
| | |
| Lease liabilities | |
| 450,883 | | |
| 500,262 | |
| Contract liabilities | |
| 3,521,176 | | |
| 4,765,785 | |
| Total non-current liabilities | |
| 3,972,059 | | |
| 5,266,047 | |
| TOTAL LIABILITIES | |
| 11,062,396 | | |
| 11,495,100 | |
| | |
| | | |
| | |
| Shareholders’ (deficits)/equity: | |
| | | |
| | |
| Ordinary shares (par value of US$1 per share; 50,000 ordinary shares authorized, 50,000 ordinary shares issued and outstanding as of December 31, 2023 (unaudited) and June 30, 2023, respectively)* | |
| 50,000 | | |
| 50,000 | |
| Additional paid-in capital | |
| 1,619,428 | | |
| 4,199,352 | |
| Accumulated deficit | |
| (3,398,283 | ) | |
| (3,979,667 | ) |
| Accumulated other comprehensive income | |
| 341,716 | | |
| 318,148 | |
| Total shareholders’ (deficits)/equity | |
| (1,387,139 | ) | |
| 587,833 | |
| | |
| | | |
| | |
| TOTAL LIABILITIES AND SHAREHOLDERS’ (DEFICITS)/EQUITY | |
| 9,675,257 | | |
| 12,082,933 | |
| * | The shares and per share information are presented on a retroactive
basis to reflect the reorganization completed on September 14, 2023. |
The accompanying notes are an integral
part of these unaudited condensed consolidated financial statements.
BIG TREE CLOUD INTERNATIONAL GROUP LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(In U.S. dollars, except for share and per share data, or otherwise noted)
| | |
For the six months ended December 31, | |
| | |
2023 | | |
2022 | |
| | |
USD | | |
USD | |
| | |
(Unaudited) | |
| Net revenue | |
| 4,158,057 | | |
| 2,467,137 | |
| Cost of revenues | |
| (1,378,127 | ) | |
| (662,103 | ) |
| Gross profit | |
| 2,779,930 | | |
| 1,805,034 | |
| | |
| | | |
| | |
| Operating expenses | |
| | | |
| | |
| Selling expenses | |
| (435,245 | ) | |
| (50,005 | ) |
| General and administrative expenses | |
| (1,887,213 | ) | |
| (1,355,520 | ) |
| Total operating expenses | |
| (2,322,458 | ) | |
| (1,405,525 | ) |
| Operating profit | |
| 457,472 | | |
| 399,509 | |
| | |
| | | |
| | |
| Other income/(expenses), net | |
| | | |
| | |
| Financial expenses | |
| (20,079 | ) | |
| (1,014 | ) |
| Financial income | |
| 2,699 | | |
| 3,176 | |
| Income/(loss) on deregistration of subsidiaries | |
| 62,429 | | |
| (88,487 | ) |
| Other expenses, net | |
| 33,561 | | |
| 103 | |
| Total other income/(expenses), net | |
| 78,610 | | |
| (86,222 | ) |
| | |
| | | |
| | |
| Profit before income tax provision | |
| 536,082 | | |
| 313,287 | |
| Income tax benefit/(expense) | |
| 45,302 | | |
| (51,949 | ) |
| Net profit | |
| 581,384 | | |
| 261,338 | |
| | |
| | | |
| | |
| Other Comprehensive Income | |
| | | |
| | |
| Foreign currency translation adjustments | |
| 23,568 | | |
| 11,762 | |
| Total comprehensive income | |
| 604,952 | | |
| 273,100 | |
| | |
| | | |
| | |
| Earnings per share | |
| | | |
| | |
| Basic and diluted | |
| 11.63 | | |
| 5.23 | |
| Weighted average shares used in calculating net profit per share: | |
| | | |
| | |
| Basic and diluted | |
| 50,000 | | |
| 50,000 | |
| * | The shares and per share information are presented on a retroactive
basis to reflect the reorganization completed on September 14, 2023. |
The accompanying notes are an integral
part of these unaudited condensed consolidated financial statements.
BIG TREE CLOUD INTERNATIONAL GROUP LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ (DEFICITS)/EQUITY
(In U.S. dollars, except for share and per share data, or otherwise noted)
| | |
Ordinary shares | | |
Additional paid-in | | |
Accumulated | | |
Accumulated other comprehensive | | |
Total shareholders’ | |
| | |
Shares | | |
Amount | | |
capital | | |
Deficit | | |
income | | |
equity/(deficits) | |
| | |
| | |
USD | | |
USD | | |
USD | | |
USD | | |
USD | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Balance as of June 30, 2022 | |
| 50,000 | | |
| 50,000 | | |
| 4,199,352 | | |
| (4,259,232 | ) | |
| 463,054 | | |
| 453,174 | |
| Net income | |
| - | | |
| - | | |
| - | | |
| 261,338 | | |
| - | | |
| 261,338 | |
| Foreign currency translation | |
| - | | |
| - | | |
| - | | |
| - | | |
| 11,762 | | |
| 11,762 | |
| Balance as of December 31, 2022 | |
| 50,000 | | |
| 50,000 | | |
| 4,199,352 | | |
| (3,997,894 | ) | |
| 474,816 | | |
| 726,274 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance as of June 30, 2023 | |
| 50,000 | | |
| 50,000 | | |
| 4,199,352 | | |
| (3,979,667 | ) | |
| 318,148 | | |
| 587,833 | |
| Net income | |
| - | | |
| - | | |
| - | | |
| 581,384 | | |
| - | | |
| 581,384 | |
| Deemed distribution in connection with purchase of intangible assets | |
| - | | |
| - | | |
| (2,579,924 | ) | |
| - | | |
| - | | |
| (2,579,924 | ) |
| Foreign currency translation | |
| - | | |
| - | | |
| - | | |
| - | | |
| 23,568 | | |
| 23,568 | |
| Balance as of December 31, 2023 | |
| 50,000 | | |
| 50,000 | | |
| 1,619,428 | | |
| (3,398,283 | ) | |
| 341,716 | | |
| (1,387,139 | ) |
| * | The shares and per share information are presented on a retroactive
basis to reflect the reorganization completed on September 14, 2023. |
The accompanying notes are an integral
part of these unaudited condensed consolidated financial statements.
BIG TREE CLOUD INTERNATIONAL GROUP LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. dollars, except for share and per share data, or otherwise noted)
| | |
For the six months ended
December 31, | |
| | |
2023 | | |
2022 | |
| | |
USD | | |
USD | |
| | |
(Unaudited) | |
| Net income | |
| 581,384 | | |
| 261,338 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | |
| | | |
| | |
| Depreciation and amortization | |
| 480,187 | | |
| 29,049 | |
| Write offs of inventory reserve | |
| (601 | ) | |
| (1,228 | ) |
| Loss on disposal of property and equipment | |
| 5,137 | | |
| - | |
| Provision for doubtful accounts | |
| 3,412 | | |
| 11,649 | |
| Deferred tax assets | |
| (134,694 | ) | |
| (24,450 | ) |
| Amortization of right-of-use assets | |
| 89,327 | | |
| 16,061 | |
| Changes in operating assets and liabilities: | |
| | | |
| | |
| Accounts receivables, net | |
| 188,620 | | |
| (47,287 | ) |
| Prepaid expenses and other current assets, net | |
| (14,322 | ) | |
| (334,592 | ) |
| Accounts payables | |
| 49,655 | | |
| 203,283 | |
| Contract liabilities | |
| (901,588 | ) | |
| 5,595,291 | |
| Advance to suppliers | |
| 670,007 | | |
| (301,513 | ) |
| Inventories, net | |
| (699,268 | ) | |
| 26,664 | |
| Accrued expenses and other current liabilities | |
| (21,992 | ) | |
| 19,645 | |
| Lease liabilities | |
| (63,608 | ) | |
| (15,357 | ) |
| Net cash provided by operating activities | |
| 231,656 | | |
| 5,438,553 | |
| | |
| | | |
| | |
| Cash flows from investing activities: | |
| | | |
| | |
| Proceeds on disposal of property and equipment | |
| 63,582 | | |
| - | |
| Purchases of property and equipment | |
| (387,111 | ) | |
| (2,181,504 | ) |
| Purchases of intangible assets | |
| (1,796,426 | ) | |
| - | |
| Net cash used in investing activities | |
| (2,119,955 | ) | |
| (2,181,504 | ) |
| | |
| | | |
| | |
| Cash flows from financing activities: | |
| | | |
| | |
| Payments of listing fees | |
| (570,731 | ) | |
| - | |
| Loans paid to related parties | |
| (1,778,091 | ) | |
| (1,344,215 | ) |
| Loans received from related parties | |
| 893,709 | | |
| - | |
| Proceeds from short-term loans | |
| 1,408,471 | | |
| - | |
| Net cash used in financing activities | |
| (46,642 | ) | |
| (1,344,215 | ) |
| | |
| | | |
| | |
| Effect of Foreign currency translation | |
| (134,251 | ) | |
| (7,809 | ) |
| Net decrease/(increase) in cash and cash equivalents: | |
| (2,069,192 | ) | |
| 1,905,025 | |
| Cash and cash equivalents at beginning of the period | |
| 3,190,995 | | |
| 363,535 | |
| Cash and cash equivalents at end of the period | |
| 1,121,803 | | |
| 2,268,560 | |
| | |
| | | |
| | |
| Supplemental disclosure of cash flow information: | |
| | | |
| | |
| Interest paid | |
| 20,643 | | |
| - | |
The accompanying notes are an integral
part of these unaudited condensed consolidated financial statements.
BIG TREE CLOUD INTERNATIONAL GROUP LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
(In U.S. dollars, except share and per share data)
1. ORGANIZATION AND PRINCIPAL
ACTIVITIES
Big tree cloud international group limited (“DSY”,
or the “Company”) was incorporated by the controlling shareholder, Mr. Wenquan zhu, under the laws of the Cayman Islands
on April 21, 2021.
Bright Connected Limited (“DSY BVI”),
which is 100% owned by the Company, was incorporated in British Virgin Islands (the “BVI”) on April 1, 2021. DSY BVI
is an investment holding company with no operations.
Hongkong Ploutos International Limited (“DSY
HK”), which is 100% owned by the Company through DSY BVI, was incorporated in Hong Kong on July 14, 2023. DSY HK is an
investment holding company with no operations.
Guangdong Big Tree Cloud Investment Holding Group
Co., LTD (“DSY Guangdong”), which was incorporated on June 16, 2020 by the controlling shareholder, Mr. Wenquan
Zhu. DSY Guangdong through its directly and indirectly owned subsidiaries is principally engaged in the manufacturing and sales of personal
care products in the People’s Republic of China (“PRC”).
Reorganization
In anticipation of an initial public offering
of its equity securities, the Company undertook a reorganization (the “Reorganization”). On September 14, 2023, DSY HK
acquired DSY Guangdong from Mr. Wenquan Zhu. Effective on September 14, 2023, the Company completed the reorganization (“Reorganization”)
and became the ultimate holding company of DSY Guangdong and its subsidiaries through DSY HK, which were all controlled by the same shareholders
before and after the Reorganization.
After the Reorganization, DSY and its consolidated
subsidiaries (collectively the “Group”), consists of following major entities:
| Name |
|
Date
of
Incorporation |
|
Percentage of
effective ownership |
|
Principal
Activities |
| Wholly-owned subsidiaries of DSY Guangdong |
|
|
|
|
|
|
| Shenzhen Big Tree Cloud Import and Export Trading Co., Ltd. (“DSY Shenzhen”) |
|
July 02, 2020 |
|
100% |
|
Sale of personal care products |
| Dongguan Big Tree Cloud Daily Necessities Co. Ltd. (“DSY Dongguan”) |
|
July 14, 2022 |
|
100% |
|
Manufacturing personal care products |
| Shenzhen Jingxiyun Trading Co., Ltd. (“Jingxiyun Shenzhen”) |
|
December 20, 2021 |
|
100% |
|
Sale of personal care products |
| Shenzhen Big Tree Cloud Commercial Chain Management Co. Ltd. (“DSY Commercial Shenzhen”) |
|
January 19, 2023 |
|
100% |
|
Sale of personal care products |
| Wholly-owned subsidiaries of DSY Commercial Shenzhen |
|
|
|
|
|
|
| Jiangsu Big Tree Cloud Commercial Chain Management Co., Ltd. (“DSY Commercial Jiangsu”) |
|
February 24, 2023 |
|
100% |
|
Sale of personal care products |
BIG TREE CLOUD INTERNATIONAL GROUP LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
(In U.S. dollars, except share and per share data)
1. ORGANIZATION AND PRINCIPAL ACTIVITIES (cont.)
| Name |
|
Date
of
Incorporation |
|
Percentage of
effective ownership |
|
Principal
Activities |
| Liaoning Big Tree Cloud Commercial Chain Management Co., Ltd. (“DSY Commercial Liaoning”) |
|
February 21, 2023 |
|
100% |
|
Sale of personal care products |
| Jilin Big Tree Cloud Commercial Chain Management Co., Ltd. (“DSY Commercial Jilin”) |
|
March 8, 2023 |
|
100% |
|
Sale of personal care products |
| Sichuan Big Tree Cloud Commercial Chain Management Co., Ltd. (“DSY Commercial Sichuan”) |
|
March 17, 2023 |
|
100% |
|
Sale of personal care products |
2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
(a) Basis of presentation
The accompanying unaudited condensed consolidated
financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US
GAAP”) and are expressed in United States dollars (“USD”).
(b) Principles
of consolidation
The unaudited condensed consolidated financial
statements include the financial statements of the Company and its subsidiaries, which include the BVI-registered entities, Hong Kong-registered
entities and PRC-registered entities directly or indirectly owned by the Company. All transactions and balances among the Company and
its subsidiaries have been eliminated upon consolidation. The results of subsidiaries acquired or disposed of are recorded in the unaudited
condensed consolidated income statements from the effective date of acquisition or up to the effective date of disposal, as appropriate.
A subsidiary is an entity in which (i) the
Company directly or indirectly controls more than 50% of the voting power; or (ii) the Company has the power to appoint or remove
the majority of the members of the board of directors or to cast a majority of votes at the meetings of the board of directors or to govern
the financial and operating policies of the investee pursuant to a statute or under an agreement among the shareholders or equity holders.
(c) Use of
estimates
The preparation of the unaudited condensed
consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the
unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.
The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the
results of which form the basis for making judgments about the carrying values of assets and liabilities. The Company considered the
economic implications of the COVID-19 pandemic on its significant judgments and estimates. Given the impact and other unforeseen
effects on the global economy from the COVID-19 pandemic, these estimates required increased judgment, and actual results could
differ from these estimates.
The preparation of the unaudited condensed consolidated
financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities, related disclosures of contingent assets and liabilities at the balance sheet date, and the reported revenues
and expenses during the reported periods in the unaudited condensed consolidated financial statements and accompanying notes. Significant
accounting estimates include, but not limited to, revenue recognition, the allowance for uncollectable accounts receivables, classification of contract liabilities as current
or non-current, depreciable lives and recoverability of property and equipment, deferred income taxes, uncertain tax position and valuation
allowance for deferred tax assets. Changes in facts and circumstances may result in revised estimates. Actual results could differ from
those estimates, and as such, differences may be material to the unaudited condensed consolidated financial statements.
BIG TREE CLOUD INTERNATIONAL GROUP LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
(In U.S. dollars, except share and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(cont.)
(d) Cash and cash
equivalents
Cash and cash equivalents consist of cash on hand,
the Group’s demand deposit placed with financial institutions, which have original maturities of less than three months and
unrestricted as to withdrawal and use.
(e) Accounts
receivables, net
Accounts receivables, net are stated at the historical
carrying amount net of allowance for uncollectible accounts. The accounts receivable mainly include receivables from platform distributor
customers, and wholesale customers, and are recognized in the period when the Group has delivered goods to its customers and when the
right to consideration is unconditional. The amounts due are stated at their net estimated realizable value. The receivables from platform
distributor customers and wholesale customers are settled in accordance with credit terms mutually agreed.
The Group makes estimates of expected credit losses
for the allowance for credit losses based on assessment of various factors, including historical experience, the age of the accounts receivable
balances, credit quality of certain accounts receivables, current economic conditions, reasonable and supportable forecasts of future
economic conditions and other factors that may affect its ability to collect from the counterparties. Uncollectible accounts receivables
are written off when a settlement is reached for an amount that is less than the outstanding historical balance or when the Group has
determined that is not probable for the balance to be collected.
(f) Inventories,
net
Inventories, net consisting of finished
products available for sales are valued at the lower of cost or net realizable value with cost determined using the weighted average
cost method. Net realizable value is based on estimated selling prices in the ordinary course of business, less reasonably
predictable transportation cost. Write-down is recorded when the future estimated net realizable value is less than cost, which is
recorded in cost of revenues in the unaudited condensed consolidated statements of income and comprehensive income.
Inventory write-down is estimated based on significant
management estimates and assumptions used to determine the write-down percentages that are applied to different aging groups and assess
the condition of the merchandise within each category. In determining the write-down percentages on inventories, the Company takes into
considerations of factors, such as the inventories’ aging, historical trends, forecasted demands, expected selling prices and future
promotional events. $601 and $1,228 of inventory provision were written off for the six months ended December 31, 2023 and 2022, respectively.
(g) Prepaid expenses
and other current assets, net
Prepaid expenses and other current assets mainly
consisted of deposits for online stores and offline shops. The Group makes estimates of expected credit loss for the allowance of other
receivables based on assessment of various factors, including probability of default and loss given default rate of different types of
other receivables in each business, current economic conditions, reasonable and supportable forecasts of future economic conditions and
other factors that may affect its ability to collect from the counterparties. Uncollectible other receivables are written off when a settlement
is reached for an amount that is less than the outstanding balance or when the Group has determined that it is probable the balance will
not be collected.
BIG TREE CLOUD INTERNATIONAL GROUP LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
(In U.S. dollars, except share and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(cont.)
(h) Advance to
suppliers
Advance to suppliers represented prepayments to
suppliers for costs of products. Management reviews its advance to suppliers on a regular basis to determine if the allowance is adequate,
and adjusts the allowance when necessary. Management continues to evaluate the reasonableness of the allowance policy and update it if
necessary.
(i) Related
parties
A related party may be any of the following: a)
an affiliate, which is a party that directly or indirectly controls, is controlled by, or is under common control with another party;
b) a principle owner, owner of record or known beneficial owner of more than 10% of the voting interest of an entity; c) management, which
are persons having responsibility for achieving objectives of the entity and requisite authority to make decision; d) immediate family
of management or principal owners; e) a parent company and its subsidiaries; and f) other parties that have ability to significant influence
the management or operating policies of the entity. The Company discloses all significant related party transactions.
(j) Deferred
offering costs
The Company complies with the requirements of
the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A — “Expenses of
Offering.” Offering costs consist principally of professional and registration fees incurred through the balance sheet date
that are related to the Public Offering and that were charged to shareholders’ equity upon the completion of the Public
Offering. Should the Public Offering prove to be unsuccessful, these deferred costs, as well as additional expenses to be incurred,
will be charged to operations. As of December 31, 2023 and June 30, 2023, the Company capitalized $1,323,686 and $752,955 of
deferred offering costs, respectively.
(k) Property and
equipment, net
Property and equipment are stated at cost less
accumulated depreciation and impairment, if any, and depreciated on a straight-line basis over the estimated useful lives of the assets.
Cost represents the purchase price of the asset and other costs incurred to bring the asset into its intended use. Estimated useful lives
are as follows:
| Category |
|
Estimated
useful lives |
| Office equipment and computers |
|
5 years |
| Transportation equipment |
|
8 years |
| Building |
|
20 years |
| Leasehold improvements |
|
Shorter of the lease term or the estimated useful life of the assets |
Repair and maintenance costs are charged to expenses
as incurred, whereas the cost of renewals and betterment that extends the useful lives of property and equipment are capitalized as additions
to the related assets. Retirements, sales and disposals of assets are recorded by removing the costs, accumulated depreciation and impairment
with any resulting gain or loss recognized in the unaudited condensed consolidated statements of income. Management estimates the residual
value of its office equipment and computers, transportation equipment and office equipment to be 5%.
BIG TREE CLOUD INTERNATIONAL GROUP LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
(In U.S. dollars, except share and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(cont.)
(l) Intangible
assets, net
Indefinite-lived intangible assets are tested
for impairment at least annually and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Indefinite-lived intangible assets are impaired if their estimated fair values are less than
their carrying values.
Finite-lived intangible assets are carried at
cost less accumulated amortization and impairment if any. The finite-lived intangible assets are amortized over their estimated useful
lives, which are the period over which the assets are expected to contribute directly or indirectly to the future cash flows of the Group.
These intangible assets are tested for impairment at the time of a triggering event, if one were to occur. Finite-lived intangible assets
may be impaired when the estimated undiscounted future cash flows generated from the assets are less than their carrying amounts.
The Group may rely on a qualitative assessment
when performing impairment test for its intangible asset. Otherwise, the impairment evaluation is performed at the lowest level of identifiable
cash flows independent of other assets.
The Group’s intangible assets mainly represented
trademark developed and acquired by the Group. Trademark is classified as finite-lived intangible assets and amortized over its useful
life of 7 years.
(m) Lease
The Company adopted ASC 842 on July 1,
2021.
At inception of a contract, the Group assesses
whether a contract is, or contains, a lease. A contract is or contains a lease if it conveys the right to control the use of an identified
asset for a period of time in exchange of a consideration. To assess whether a contract is or contains a lease, the Group assess whether
the contract involves the use of an identified asset, whether it has the right to obtain substantially all the economic benefits from
the use of the asset and whether it has the right to control the use of the asset.
The Group classifies a lease as a financing lease
at lease commencement when the lease meets any one of the criteria:
| a. | The lease transfers ownership of the underlying asset to
the lessee by the end of the lease term. |
| b. | The lease grants the lessee an option to purchase the underlying
asset that the lessee is reasonably certain to exercise. |
| c. | The lease term is for a major part of the remaining economic
life of the underlying asset. |
| d. | The present value of the sum of the lease payments and any
residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all of the
fair value of the underlying asset. |
| e. | The underlying asset is of such a specialized nature that
it is expected to have no alternative use to the Group at the end of the lease term. |
When none of the criteria are met, the Group classifies
a lease as an operating lease.
The right-of-use assets and related lease liabilities
are recognized at the lease commencement date. The Group recognizes operating lease expenses on a straight-line basis over the lease term.
BIG TREE CLOUD INTERNATIONAL GROUP LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
(In U.S. dollars, except share and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(cont.)
Leases with an initial term of 12 months
or less are short-term lease and not recognized as right-of-use assets and lease liabilities on the unaudited condensed consolidated balance
sheet. The Group recognizes lease expense for short-term leases on a straight-line basis over the lease term.
The right-of-use of asset is initially measured
at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement
date, plus any initial direct costs incurred and less any lease incentive received.
Lease liabilities are recognized based on the
present value of the lease payments not yet paid, discounted using the average borrowing rate of the Group’s outstanding loans.
Lease term includes rent holidays and options
to extend or terminate the lease when the Group is reasonably certain that the Group will exercise that option. The lease assets for operating
leases consist of the amount of the measurement of the lease liabilities and any prepaid lease payments. Operating lease expense is recognized
on a straight-line basis over the lease term by adding interest expense determined using the effective interest method to the amortization
of the right-of-use assets. Interest expense is determined using the effective interest method. The Group’s lease agreements do
not contain any material residual value guarantees or material restrictive covenants.
The Group reviews the impairment of its right-of-use
assets consistent with the approach applied for its other long-lived assets. The Group reviews the recoverability of its long-lived assets
when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment
of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax
cash flows of the related operations. The Group has elected to include the carrying amount of lease liabilities in any tested asset group
and include the associated operating lease payments in the undiscounted future pre-tax cash flows.
(l) Impairment
of long-lived assets
The Group reviews its long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events
occur, the Group measures impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash
flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow
is less than the carrying amount of the assets, the Group would recognize an impairment loss, which is the excess of carrying amount over
the fair value of the assets, using the expected future discounted cash flows.
(m) Fair value measurement
The Group applies ASC 820 which defines fair
value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 requires disclosures
to be provided on fair value measurement.
ASC 820 establishes a three-tier fair value
hierarchy, which prioritizes the inputs used in measuring fair value as follows:
| ● | Level 1 |
— |
Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| ● | Level 2 |
— |
Include other inputs that are directly or indirectly observable in the marketplace. |
| ● | Level 3 |
— |
Unobservable inputs which are supported by little or no market activity. |
BIG TREE CLOUD INTERNATIONAL GROUP LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
(In U.S. dollars, except share and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(cont.)
ASC 820 describes three main approaches to
measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The
market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets
or liabilities. The income approach uses valuation techniques to convert future cash flow amounts to a single present value amount. The
measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the
amount that would currently be required to replace an asset.
Financial assets and liabilities of the Group
primarily consisted of cash and cash equivalents, accounts receivable, advance to suppliers, other receivables included in the prepaid
expenses and other current assets, advance from customers, accounts payable, other payables included in accrued expenses and other current
liabilities. As of December 31, 2023 and June 30, 2023, the carrying amounts of financial instruments approximated to their fair
values due to the short-term maturity of these instruments.
The Group’s non-financial assets, such as
property and equipment, would be measured at fair value only if they were determined to be impaired.
(n) Commitments
and contingencies
In the normal course of business, the Group is
subject to commitments and contingencies, including operating lease commitments, legal proceedings and claims arising out of its business
that relate to a wide range of matters, such as government investigations and tax matters. The Group recognizes a liability for such contingency
if it determines that it is probable that a loss will occur and a reasonable estimate of the loss can be made. The Group may consider
many factors in making these assessments on liability for contingencies, including historical and the specific facts and circumstances
of each matter.
(o) Revenue recognition
The Group’s revenues are mainly generated
from 1) product sales, 2) licensing fees from commercial stores.
The Group recognizes revenue pursuant to ASC 606,
Revenue from Contracts with Customers (“ASC 606”). In accordance with ASC 606, revenues from contracts with
customers are recognized when control of the promised goods or services is transferred to the Group’s customers, in an amount that
reflects the consideration the Group expects to be entitled to in exchange for those goods or services, reduced by estimates for return
allowances, promotional discounts, rebates and business tax and Value Added Tax (“VAT”). The recognition of revenues involves
certain management judgments, including estimated lives of virtual items purchased by game players and estimated breakage of game points.
The amount and timing of the Group’s revenues could be different if management made different judgments or utilized different estimates.
To achieve the core principle of this standard, we applied the following five steps:
| 1. | Identification of the contract, or contracts, with the customer; |
| 2. | Identification of the performance obligations in the contract; |
| 3. | Determination of the transaction price; |
| 4. | Allocation of the transaction price to the performance obligations
in the contract; and |
| 5. | Recognition of the revenue when, or as, a performance obligation
is satisfied. |
BIG TREE CLOUD INTERNATIONAL GROUP LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
(In U.S. dollars, except share and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(cont.)
Each of our significant performance obligations
and our application of ASC 606 to our revenue arrangements are discussed in further detail below.
Product sales
The Group’s product sales primarily derived
from (i) sales of the Group’s products to third party platform distributor customers and wholesale customers; (ii) e-commerce
sales to retail customers through the Group’s online stores on third party e-commerce platforms; and iii) sales to retail customers
through the offline stores operated by the Group.
The Group assesses that the Group is acting as
a principal, as the Group obtains control of the specified goods prior to their transfer to the customer, and is responsible for fulfilling
the promise to provide the specified goods.
The revenues are recognized at the point in time
control of the products is transferred, and in the gross amount of consideration to which it expects to be entitled in exchange for the
specified goods or services transferred. For sales through offline channels, revenues are recognized when the Group satisfies a performance
obligation by transferring promised goods to places designated by customers. For sales through online platforms, revenues are recognized
when (i) customers manually confirm their receipt of the products or (ii) seven days after delivery, whichever is earlier.
Shipping and handling activities are considered
fulfillment activities rather than promised services and therefore, they are not considered separate performance obligations.
Revenues are recorded net of return allowances,
sales incentives, value-added taxes and related surcharges. For sales through offline channels, the Group’s sales terms do not provide
a right of return beyond a standard quality policy. For sales through online channels, the Group offers an unconditional right of return
for a period of seven days upon receipt of products. The Group bases its estimates of sales return on historical results. For the
six months ended December 31, 2023 and 2022, the amount of sales return was in significant. The Group may provide sales incentives in
the forms of discounts to customers. Revenue, recognized on a net basis after such sales incentives, are allocated based on the relative
standalone selling prices for respective products.
Payment for online and offline retail customers
are due at the point of sale. Payment terms for distributor customers are generally set at 60 days after the consideration becomes
due and payable.
Licensing fees
The Group enters into licensing agreements with
customers and the third-party commercial stores (the “Licensees”), to authorize the Licensees to use the Group’s
logo, trademark and the brand name of “Big Tree Cloud”. Therefore, the performance obligation is satisfied over time
because the Licensees simultaneously receive and consume the benefits (of utilizing the Group’s logo, trademark and brand
name) during the authorized period of two years. Therefore, revenues generated from licencing fees are recognized overtime
during the authorized period of two years. The transaction price contains variable considerations, including prompt inventive
payment to the Licensees if a Licensee reaches certain milestones. The Group uses the “most likely amount” method based
on historical experiences and updates its estimated transaction price at the end of each reporting period to estimate the amount of
variable consideration to be included in the transaction.
The Group considers itself the principal as it
is responsible for rendering franchising services prior to transfer to the customers and has the pricing latitude; therefore, such revenues
are reported on a gross basis.
BIG TREE CLOUD INTERNATIONAL GROUP LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
(In U.S. dollars, except share and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(cont.)
The following tables disaggregate the Group’s
revenue for the six months ended December 31, 2023 and 2022 :
| | |
For the six months ended
December 31, | |
| | |
2023 | | |
2022 | |
| | |
USD | | |
USD | |
| | |
(Unaudited) | |
| Product Sales (by products) | |
| | |
| |
| Sanitary pads | |
| 2,251,713 | | |
| 211,825 | |
| Personal care products | |
| 849,062 | | |
| 104,367 | |
| Accessories | |
| 1,013,537 | | |
| 2,149,624 | |
| Others | |
| 28,396 | | |
| 1,321 | |
| Franchise Fees | |
| 15,349 | | |
| - | |
| Total | |
| 4,158,057 | | |
| 2,467,137 | |
| | |
For the six months ended
December 31, | |
| | |
2023 | | |
2022 | |
| | |
USD | | |
USD | |
| | |
(Unaudited) | |
| Product Sales (by channels) | |
| | |
| |
| Online | |
| 2,062,202 | | |
| 1,963,537 | |
| Offline | |
| 2,080,506 | | |
| 503,600 | |
| Franchise Fees | |
| 15,349 | | |
| - | |
| Total | |
| 4,158,057 | | |
| 2,467,137 | |
The following table presents revenue classified
by timing of revenue recognition for the six months ended December 31, 2023 and 2022 :
| | |
For the six months ended
December 31, | |
| | |
2023 | | |
2022 | |
| | |
USD | | |
USD | |
| | |
(Unaudited) | |
| Point in time | |
| 4,142,708 | | |
| 2,467,137 | |
| Over time | |
| 15,349 | | |
| - | |
| Total | |
| 4,158,057 | | |
| 2,467,137 | |
Contract liabilities
Contract liabilities represent the obligation
to transfer goods or services to a customer for which the entity has received consideration from the customer. Contract liabilities of
the Group mainly consist of advance product payments from customers. The Group recognizes contract liabilities of $7,249,961 and $8,151,549
as of December 31, 2023 and June 30, 2023, respectively.
The balance as of December 31, 2023 mainly from
a third-party customer for product sales. Pursuant to the contract, the customer has made a prepayment of RMB50 million (approximately
USD 7.04 million) to the Group. If the customer fails to achieve sales within 36 months, no refund will be provided for any remaining
balance. According to the sales plan agreed with the customer, the management established a reasonable basis for projecting anticipated
revenue schedules that are expected to be earned. As of December 31, 2023, the outstanding balance has been classified as current
liabilities and non-current liabilities, with amounts of $3,728,785 and $3,521,176, respectively.
BIG TREE CLOUD INTERNATIONAL GROUP LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
(In U.S. dollars, except share and per share data)
2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
(p) Cost
of revenues
Cost
of revenues consists primarily of (i) purchase of goods, and (ii) rents and other costs related to the business operation.
(q) Selling
expenses
Selling
and marketing expenses mainly consist of (i) advertising costs and market promotion expenses, and (ii) staff cost incurred
by sales and marketing personnel.
(r) General
and administrative expenses
General
and administrative expenses mainly consist of (i) staff cost; (ii) professional service fees; (iii) rental and depreciation related
to general and administrative personnel, and (iv) other corporate expenses.
(s) Financial
(expense) income, net
Financial
(expense) income, net mainly consists of (i) interest income and expense, (ii) foreign exchange gain or loss, and (iii) bank
charges.
(t) Employee
benefits
According
to the regulations of the PRC, full-time eligible employees of the Group in the PRC are entitled to various government statutory employee
benefit plans, including medical insurance, maternity insurance, workplace injury insurance, unemployment insurance and pension benefits
through a PRC government-mandated multi-employer defined contribution plan. The Group is required to make contributions to the plan and
accrues these benefits based on certain percentages of the qualified employees’ salaries. The Group has no further commitments
beyond its required contribution. Employee social benefits included as cost of revenues and expenses in the unaudited condensed consolidated
statements of operations and comprehensive income amounted to $41,235 and $10,318 for the six months ended December 31, 2023
and 2022, respectively.
(u) Income
taxes
The
Group accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the unaudited condensed consolidated financial statement carrying amounts of existing assets and
liabilities and their respective tax bases.
Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred
tax assets to the amount expected to be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing
authorities.
The
provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold
for unaudited condensed consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken)
in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of
current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related
disclosures. The Group’s operating subsidiaries in PRC are subject to examination by the relevant tax authorities. According to
the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment
of taxes is due to computational errors made by the taxpayer or the withholding agent. In the case of transfer pricing issues, the statute
of limitation is ten years. There is no statute of limitation in the case of tax evasion. Penalties and interest incurred related
to underpayment of income tax are classified as income tax expense in the period incurred.
BIG TREE CLOUD INTERNATIONAL GROUP LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
(In U.S. dollars, except share and per share data)
2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
The
Group did not accrue any liability, interest or penalties related to uncertain tax positions in its provision for income taxes line
of its unaudited condensed consolidated statements of operations and comprehensive income for the six months ended December 31,
2023 and 2022, respectively. The Group expects that its assessment regarding unrecognized tax positions will change over the next 12 months
and it incurred loss for the six months ended December 31, 2022 while making profits for the six months ended December 31,
2023.
(v) Value
added tax (“VAT”)
The
Group is subject to VAT and related surcharges on revenue generated from sales of products, facilitation services and platform services.
The Group records revenue net of VAT. This VAT may be offset by qualified input VAT paid by the Group to suppliers. Net VAT balance
between input VAT and output VAT is recorded in the line item of other current assets on the unaudited condensed consolidated balance
sheets.
The
VAT rate is 13% for taxpayers selling consumer products, and 16% prior to April 1, 2019. For revenue generated from services, the
VAT rate is 6% depending on whether the entity is a general tax payer, and related surcharges on revenue generated from providing services.
Entities that are VAT general taxpayers are allowed to offset qualified input VAT, paid to suppliers against their output VAT liabilities.
(w) Foreign
currency transactions and translations
The
functional and reporting currency of the Company is the United States Dollar (“USD”). The Company’s operating
subsidiaries in China and Hong Kong use their respective currencies Renminbi (“RMB”) and Hong Kong Dollar (“HKD”)
as their functional currencies.
The
results of operations and the unaudited condensed consolidated statements of cash flows denominated in foreign currency are translated
at the average rate of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance
sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency
is translated at the historical rate of exchange at the time of capital contribution. Because cash flows are translated based on the
average translation rate, amounts related to assets and liabilities reported on the unaudited condensed consolidated statements of cash
flows will not necessarily agree with changes in the corresponding balances on the unaudited condensed consolidated balance sheets. Translation
adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated
other comprehensive income included in unaudited condensed consolidated statements of changes in shareholders’ equity/(deficits).
Gains and losses from foreign currency transactions are included in the results of operations.
The
following table outlines the currency exchange rates that were used in creating the unaudited condensed consolidated financial statements:
| | |
As of | |
| | |
December 31, 2023 | | |
June 30, 2023 | |
| Balance sheet items, except for equity accounts | |
| 7.0999 | | |
| 7.2513 | |
| | |
For the Six Months Ended
December 31 | |
| | |
2023 | | |
2022 | |
| Items in the unaudited condensed consolidated statements of operations and comprehensive income, and statements of cash flows | |
| 7.2347 | | |
| 6.9789 |
|
BIG TREE CLOUD INTERNATIONAL GROUP LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
(In U.S. dollars, except share and per share data)
2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
No
representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation.
(x) Earnings
per share
Earnings
per share (“EPS”) is computed by dividing net income by the weighted average number of ordinary shares outstanding. Diluted
EPS presents the dilutive effect on a per share basis of the potential ordinary shares (e.g., convertible securities, options and warrants)
as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have
an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of
diluted EPS. For the six months ended December 31, 2023 and 2022, there were no dilutive shares.
(y) Segment
reporting
The
Group uses the management approach in determining its operating segments. The Group’s chief operating decision maker (“CODM”)
identified as the Group’s Chief Executive Officer, relies upon the unaudited condensed consolidated results of operations as a
whole when making decisions about allocating resources and assessing the performance of the Group. As a result of the assessment made
by CODM, the Group has only one reportable segment. The Group does not distinguish between markets or segments for the purpose of internal
reporting. As the Group’s long-lived assets are substantially located in the PRC, no geographical segments are presented.
(z) Recent
accounting pronouncements
The
Group is an “emerging growth company” (“EGC”) as defined in the Jumpstart Our Business Startups Act of 2012
(the “JOBS Act”). Under the JOBS Act, EGC can delay adopting new or revised accounting standards issued subsequent to the
enactment of the JOBS Act until such time as those standards apply to private companies.
In
December 2019, the FASB issued ASU No. 2019-12, Income Taxes (’‘ASU 2019-12’’), which
simplifies the accounting for income taxes by removing exceptions and simplifies the accounting for income taxes regarding franchise
tax, good will, separate financial statements, enacted change in tax laws or rates and employee stock ownership plans. ASU 2019-12 will
be effective for the Group for annual reporting periods beginning January 1, 2022 and interim periods within fiscal years beginning
January 1, 2023. The Group in the process of evaluating the impacts the standards will have on its unaudited condensed consolidated
financial statements.
In
December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities,
on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid
disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.
The Company is currently evaluating the impact of adopting ASU 2023-09.
Other
accounting standards that have been issued by FASB that do not require adoption until a future date are not expected to have a material
impact on the unaudited condensed consolidated financial statements upon adoption. The Group does not discuss recent pronouncements that
are not anticipated to have an impact on or are unrelated to its unaudited condensed consolidated financial condition, results of operations,
cash flows or disclosures.
3. ACCOUNTS
RECEIVABLES, NET
Accounts
receivables, net consisted of the following:
| | |
As of | |
| | |
December 31,
2023 | | |
June 30,
2023 | |
| | |
USD | | |
USD | |
| | |
(Unaudited) | | |
| |
| Accounts receivable | |
| 29,178 | | |
| 217,798 | |
| Allowance for doubtful accounts | |
| (8,863 | ) | |
| (6,442 | ) |
| | |
| 20,315 | | |
| 211,356 | |
BIG TREE CLOUD INTERNATIONAL GROUP LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
(In U.S. dollars, except share and per share data)
3. ACCOUNTS
RECEIVABLES, NET (cont.)
| | |
As of | |
| | |
December 31,
2023 | | |
June 30,
2023 | |
| | |
USD | | |
USD | |
| | |
(Unaudited) | | |
| |
| Balance at beginning of the period/year presented | |
| (6,442 | ) | |
| (1,112 | ) |
| Allowance provided during the period/year | |
| (7,159 | ) | |
| (5,500 | ) |
| Bad debt reversal | |
| 3,747 | | |
| - | |
| Foreign currency translation adjustment | |
| 991 | | |
| 170 | |
| Balance at end of the period/year presented | |
| (8,863 | ) | |
| (6,442 | ) |
The
Group recorded provision of allowance for doubtful accounts of $3,412 and $11,649 for the six months ended December 31, 2023 and
2022, respectively.
4. INVENTORIES,
NET
Inventories,
net consisted of the following:
| | |
As of | |
| | |
December 31, 2023 | | |
June
30,
2023 | |
| | |
USD | | |
USD | |
| | |
(Unaudited) | | |
| |
| Inventories consisted of the following: | |
| | |
| |
| Raw materials | |
| 565,488 | | |
| 323,387 | |
| Finished goods | |
| 561,723 | | |
| 288,057 | |
| Others | |
| 203,002 | | |
| 19,501 | |
| Total | |
| 1,330,213 | | |
| 630,945 | |
| Inventory write-down | |
| (4,238 | ) | |
| (4,749 | ) |
| Inventories, net | |
| 1,325,975 | | |
| 626,196 | |
| | |
As of | |
| | |
December 31,
2023 | | |
June 30,
2023 | |
| | |
USD | | |
USD | |
| | |
(Unaudited) | | |
| |
| Balance at beginning of the period/year presented | |
| (4,749 | ) | |
| (1,391 | ) |
| Write-offs/(write-down) during the period/year | |
| 601 | | |
| (3,613 | ) |
| Foreign currency translation adjustment | |
| (90 | ) | |
| 255 | |
| Balance at end of the period/year presented | |
| (4,238 | ) | |
| (4,749 | ) |
The
Group wrote off inventory provision of $601 and $1,228 for the six months ended December 31, 2023 and 2022, respectively.
5. PREPAID
EXPENSES AND OTHER CURRENT ASSETS, NET
Prepaid
expenses and other current assets consist of the following:
| | |
As of | |
| | |
December 31,
2023 | | |
June 30,
2023 | |
| | |
USD | | |
USD | |
| | |
(Unaudited) | | |
| |
| Value added tax recoverable | |
| 436,520 | | |
| 213,557 | |
| Payment on behalf of employees | |
| 1,247 | | |
| 90,101 | |
| Deposits | |
| 177,129 | | |
| 281,268 | |
| Others | |
| 18,197 | | |
| 33,845 | |
| Prepaid expenses and other current assets, net | |
| 633,093 | | |
| 618,771 | |
BIG TREE CLOUD INTERNATIONAL GROUP LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
(In U.S. dollars, except share and per share data)
6. PROPERTY
AND EQUIPMENT, NET
Property
and equipment, net, consisted of the following:
| | |
As of | |
| | |
December 31,
2023 | | |
June 30,
2023 | |
| | |
USD | | |
USD | |
| | |
(Unaudited) | | |
| |
| Office equipment and computers | |
| 1,140,803 | | |
| 1,041,840 | |
| Transportation equipment | |
| 352,625 | | |
| 340,160 | |
| Building | |
| 2,733,844 | | |
| 2,676,764 | |
| Leasehold improvements | |
| 1,038,313 | | |
| 711,614 | |
| Total | |
| 5,265,585 | | |
| 4,770,378 | |
| Less: accumulated depreciation | |
| (1,287,860 | ) | |
| (787,968 | ) |
| Property and equipment, net | |
| 3,977,725 | | |
| 3,982,410 | |
For
the six months ended December 31, 2023 and 2022, depreciation expense was $479,995 and $29,049, respectively. The accumulated
depreciation transferred out from property and equipment was $5,908, and currency translation difference was $25,805 for the six months
ended December 31, 2023.
Loss
from disposal of plant and equipment was $5,137 and nil for the six months ended December 31, 2023 and 2022, respectively.
As
of December 31, 2023, the building, owned by the Group, for which the carrying value was $2,855,140, was pledged as collateral to secure
a long-term loan of Mr. Wenquan Zhu dated May 8, 2023, from Industrial and Commercial Bank of China. Such loan was later lent
to the Group by Mr. Wenquan Zhu as related-party loan (Note 14).
7.
INTANGIBLE ASSETS, NET
Intangible
assets, net, consisted of the following:
| | |
As of | |
| | |
December 31,
2023 | | |
June 30,
2023 | |
| | |
USD | | |
USD | |
| | |
(Unaudited) | | |
| |
| Trademark | |
| 80,225 | | |
| 2,602 | |
| Less: accumulated amortization | |
| (285 | ) | |
| (93 | ) |
| Intangible asset, net | |
| 79,940 | | |
| 2,509 | |
For
the six months ended December 31, 2023 and 2022, amortization expense amounted to $192 and $nil, respectively.
Future
estimated amortization expense of intangible assets is as follows:
| Year | |
Amount | |
| 2024 | |
| 11,461 | |
| 2025 | |
| 11,461 | |
| 2026 | |
| 11,461 | |
| 2027 | |
| 11,461 | |
| 2028 | |
| 11,461 | |
| Thereafter | |
| 22,635 | |
| Total | |
| 79,940 | |
BIG TREE CLOUD INTERNATIONAL GROUP LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
(In U.S. dollars, except share and per share data)
8. LEASE
Effective
on July 1, 2022, the Group adopted Topic 842. At the inception of a contract, the Group determines if the arrangement is, or
contains, a lease. The leases of the Group mainly consisted of office leasing and studio leasing.
Supplemental
balance sheet information related to operating lease was as follows:
| | |
As of | |
| | |
December 31,
2023 | | |
June 30,
2023 | |
| | |
USD | | |
USD | |
| | |
(Unaudited) | | |
| |
| Right-of-use assets | |
| 628,532 | | |
| 704,531 | |
| | |
| | | |
| | |
| Lease liabilities | |
| 173,749 | | |
| 174,650 | |
| Lease liabilities - non-current | |
| 450,883 | | |
| 500,262 | |
| Total Lease liabilities | |
| 624,632 | | |
| 674,912 | |
The
weighted average remaining lease terms and discount rates for the operating lease as of December 31, 2023 were as follows:
| Remaining lease term and discount rate: | |
| |
| Weighted average remaining lease term (years) | |
| 3.62 | |
| | |
| | |
| Weighted average discount rate | |
| 4.23 | % |
For
the six months ended December 31, 2023 and 2022, the lease expenses was $89,327 and $16,061, respectively.
The
following is a schedule of future minimum payments under the Group’s operating leases as of December 31, 2023:
| | |
Amount | |
| | |
USD | |
| 2024 | |
| 196,345 | |
| 2025 | |
| 196,373 | |
| 2026 | |
| 140,489 | |
| Thereafter | |
| 140,489 | |
| Total lease payments | |
| 673,696 | |
| Less: imputed interest | |
| (49,064 | ) |
| Present value of lease liabilities | |
| 624,632 | |
9. ACCRUED
EXPENSES AND OTHER CURRENT LIABILITIES
Accrued
expenses and other current liabilities consisted of the following:
| | |
As of | |
| | |
December 31,
2023 | | |
June 30,
2023 | |
| | |
USD | | |
USD | |
| | |
(Unaudited) | | |
| |
| Other taxes payable | |
| 427,021 | | |
| 154,482 | |
| Accrued payroll and employee benefits | |
| 163,161 | | |
| 116,694 | |
| Deposits | |
| 14,671 | | |
| 365,722 | |
| Others | |
| 34,192 | | |
| 24,139 | |
| Total accrued expenses and other current liabilities | |
| 639,045 | | |
| 661,037 | |
BIG TREE CLOUD INTERNATIONAL GROUP LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
(In U.S. dollars, except share and per share data)
10. ORDINARY
SHARES
The
authorized number of ordinary shares of the Company is 50,000 shares with par value of $1 each. On April 21, 2021, the Company issued
an aggregate of 50,000 ordinary shares at a price of $1 per share, pro-rata to the shareholders of the Company as of such date.
11. RESTRICTED
NET ASSETS
A
significant portion of the Group’s operations are conducted through its PRC (excluding Hong Kong) subsidiaries, the Company’s
ability to pay dividends is primarily dependent on receiving distributions of funds from subsidiaries. Relevant PRC statutory laws and
regulations permit payments of dividends by subsidiaries only out of their retained earnings, if any, as determined in accordance with
PRC accounting standards and regulations, and after it has met the PRC requirements for appropriation to statutory reserves. The Group
is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve,
based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”).
Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax net income determined in accordance
with PRC GAAP until the reserve is equal to 50% of the entity’s registered capital. Appropriations to the surplus reserve are made
at the discretion of the Board of Shareholders. Paid-in capital of subsidiaries included in the Company’s consolidated net assets
are also non-distributable for dividend purposes.
As
a result of these PRC laws and regulations, the Company’s PRC subsidiaries are restricted in their ability to transfer a portion
of their net assets to the Company. As of December 31, 2023 and June 30, 2023, net assets restricted in the aggregate, which include
paid-in capital and additional paid-in capital the Company’s subsidiaries, that are included in the Company’s consolidated
net assets were approximately $6,929,675 and $4,249,352, respectively.
12. TAXATION
Cayman
Islands
The
Company is incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, the Company is not subject to income or
capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the Cayman Islands.
Hong Kong
According
to Tax (Amendment) (No. 3) Ordinance 2018 published by Hong Kong government, form April 1, 2018, under the two-tiered profits
tax rates regime, the profits tax rate for the first HKD2 million of assessable profits will be lowered to 8.25% (half of the rate
specified in Schedule 8 to the Inland Revenue Ordinance (IRO)) for corporations. MTV HK was not subject to Hong Kong profit
tax for any period presented as it did not have assessable profit during the periods presented.
PRC
Generally,
the Group’s WFOE, which are considered PRC resident enterprises under PRC tax law, are subject to enterprise income tax on their
worldwide taxable income as determined under PRC tax laws and accounting standards at a rate of 25%.
In
January 2019, the State Administration of Taxation announced that from January 1, 2019 to December 31, 2021, small and
low-profit enterprises can enjoy a 20% corporate income tax rate on 25% of their taxable income amount for the proportion of taxable
income not exceeding RMB1 million; and a 20% corporate income tax on 50% of their taxable income amount of more than RMB1 million
but not exceeding RMB3 million. The State Administration of Taxation further announced that from January 1, 2021 to December 31,
2022, for the portion of taxable income not exceeding RMB1 million, the amount of taxable income can be halved from 25% to 12.5%,
and the corporate income tax will be levied at 20%, for small and low-profit enterprises, and from January 1, 2022 to December 31,
2024, small and low-profit enterprises can enjoy a 20% corporate income tax rate on 25% of the taxable income amount for the portion
of taxable income more than RMB1 million but not exceeding RMB3 million.
BIG TREE CLOUD INTERNATIONAL GROUP LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
(In U.S. dollars, except share and per share data)
12. TAXATION (cont.)
The
income tax benefit/(expense) consists of the following components:
| | |
For the six months ended
December 31, | |
| | |
2023 | | |
2022 | |
| | |
USD | | |
USD | |
| | |
(Unaudited) | |
| Current income tax expense | |
| (78,905 | ) | |
| (81,629 | ) |
| Deferred income tax benefit | |
| 124,207 | | |
| 29,680 | |
| Total income tax benefit/(expense) | |
| 45,302 | | |
| (51,949 | ) |
A
reconciliation between the Group’s actual provision for income taxes and the provision at the PRC, mainland statutory rate is as
follows:
| | |
For the six months ended
December 31, | |
| | |
2023 | | |
2022 | |
| | |
(Unaudited) | |
| Income before income tax expense | |
| 536,082 | | |
| 313,287 | |
| Computed income tax expense with statutory tax rate | |
| (134,021 | ) | |
| (78,322 | ) |
| Tax effect of non-deductible items | |
| 130,770 | | |
| (1,514 | ) |
| Changes in valuation allowance | |
| - | | |
| (38 | ) |
| Write-off of net loss carried forward* | |
| (72,566 | ) | |
| - | |
| Effect of preferential tax rate | |
| 121,119 | | |
| 27,925 | |
| Income tax (expense)/benefit | |
| 45,302 | | |
| (51,949 | ) |
| * | Net
loss generated by subsidiaries being disposed for the six months ended December 31, 2023 was written off. |
As
of December 31, 2023 and June 30, 2023, the significant components of the deferred tax assets are summarized below:
| | |
As of | |
| | |
December 31, 2023 | | |
June 30, 2023 | |
| | |
(Unaudited) | | |
| |
| Deferred tax assets: | |
| | |
| |
| Net operating loss carried forward | |
| 1,159,720 | | |
| 379,456 | |
| Allowance for doubtful accounts | |
| 1,146 | | |
| 1,735 | |
| Total deferred tax assets | |
| 1,160,866 | | |
| 381,191 | |
| Valuation allowance | |
| (644,981 | ) | |
| - | |
| Deferred tax assets, net of valuation allowance | |
| 515,885 | | |
| 381,191 | |
As
of December 31, 2023, the Group had net operating loss carryforwards of approximately $4,477,321, respectively, which arose from
the Group’s subsidiaries. As of December 31, 2023 and June 30, 2023, deferred tax assets from the net operating loss carryforwards
amounted to $1,159,720 and $379,456, respectively.
As
of December 31, 2023, net operating loss carryforwards will expire, if unused, in the following amounts:
| 2026 | |
| 56,405 | |
| 2027 | |
| 871,389 | |
| 2028 | |
| 1,737,477 | |
| 2029 | |
| 1,182,058 | |
| 2030 | |
| 629,992 | |
| Total | |
| 4,477,321 | |
BIG TREE CLOUD INTERNATIONAL GROUP LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
(In U.S. dollars, except share and per share data)
13. NET
PROFIT PER SHARE
The
following table sets forth the basic and diluted net profit per share computation and provides a reconciliation of the numerator and
denominator for the periods presented:
| | |
For the six months ended
December 31, | |
| | |
2023 | | |
2022 | |
| Numerator: | |
| | |
| |
| Net income attributable to Big Tree Cloud International Group Limited | |
| 581,384 | | |
| 261,338 | |
| Numerator for basic and diluted net profit per share calculation | |
| 581,384 | | |
| 261,338 | |
| | |
| | | |
| | |
| Denominator: | |
| | | |
| | |
| Weighted average number of ordinary shares | |
| 50,000 | | |
| 50,000 | |
| Denominator for basic and diluted net profit per share calculation | |
| 11.63 | | |
| 5.23 | |
| | |
| | | |
| | |
| Net income per ordinary share | |
| | | |
| | |
| – Basic and diluted | |
| 11.63 | | |
| 5.23 | |
14. RELATED
PARTY TRANSACTIONS
Related
parties
The
following is a list of related parties which the Group has transactions with:
| No. |
|
Name of Related Parties |
|
Relationship |
| 1 |
|
Wenquan Zhu |
|
Controlling shareholder and chairman of the Group |
| 2 |
|
Big Tree Cloud Network Technology (Shenzhen) Co., LTD |
|
The shareholder and the shareholder of the parent company shall be the same actual controller |
| 3 |
|
Shenyang Jingxihui Network Technology Co., LTD |
|
The shareholder and the shareholder of the parent company shall be the same actual controller |
| 4 |
|
Shenzhen Jingxihui Trading Co., LTD |
|
The shareholder and the shareholder of the parent company shall be the same actual controller |
| 5 |
|
Shenzhen Big Tree Rong Trading Co., LTD |
|
The shareholder and the shareholder of the parent company shall be the same actual controller |
| 6 |
|
Ting, Yan |
|
Chief Financial Officer and Director |
| 7 |
|
Daidi, Lin |
|
Legal representative of subsidiary |
Amounts
due from related parties
Amounts
due from related parties consisted of the following for the years indicated:
| | |
As of | |
| | |
December 31,
2023 | | |
June 30,
2023 | |
| | |
USD | | |
USD | |
| | |
(Unaudited) | | |
| |
| Big Tree Cloud Network Technology (Shenzhen) Co., LTD | |
| 562 | | |
| 792,464 | |
| Shenzhen Jingxihui Trading Co., LTD | |
| - | | |
| 40,433 | |
| Ting, Yan | |
| - | | |
| 61,374 | |
| Total | |
| 562 | | |
| 894,271 | |
BIG TREE CLOUD INTERNATIONAL GROUP LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
(In U.S. dollars, except share and per share data)
14. RELATED
PARTY TRANSACTIONS (cont.)
The
loans were lent to the above related parties with no collateral, zero interest, and payable upon request.
On
October 21, 2023, Ting, Yan fully repaid all the loans to the Group, and Big Tree Cloud Network Technology (Shenzhen) Co., LTD settled
its outstanding loans to the Group on October 26, 2023. As of the date of issuance of the unaudited condensed consolidated financial
statements, the balance due from Big Tree Cloud Network Technology (Shenzhen) Co., LTD was nil.
Amounts
due to related parties
Amount
due to related parties consisted of the following for the years indicated:
| | |
| |
As of | |
| | |
Nature | |
December 31,
2023 | | |
June 30,
2023 | |
| | |
| |
USD | | |
USD | |
| | |
| |
(Unaudited) | | |
| |
| Wenquan Zhu* | |
Payable for interests | |
| 5,933 | | |
| 1,283,901 | |
| Big Tree Cloud Network Technology (Shenzhen) Co., LTD | |
Payable for procurement of goods | |
| - | | |
| 40,277 | |
| Big Tree Cloud Network Technology (Shenzhen) Co., LTD | |
Payments received on behalf of the Group | |
| 401,275 | | |
| - | |
| Total | |
| |
| 407,208 | | |
| 1,324,178 | |
| * | Mr. Wenquan
Zhu entered into a long-term loan agreement for operating purposes with Industrial and Commercial Bank of China on May 8, 2023,
of which was pledged with the building owned by the Group (Note 6). Mr. Wenquan Zhu later lent the loan to the Group as a related-party
loan. On August 9, 2023 and October 24, 2023, the Group has repaid the principle to Mr. Wenquan Zhu to settle the related-party
loan. |
Related
party transactions
| | |
For the six months ended
December 31, | |
| | |
2023 | | |
2022 | |
| | |
USD | | |
USD | |
| | |
(Unaudited) | |
| Purchase of goods | |
| | |
| |
| Big Tree Cloud Network Technology (Shenzhen) Co., LTD | |
| 706 | | |
| 11,931 | |
| Sales of goods | |
| | | |
| | |
| Big Tree Cloud Network Technology (Shenzhen) Co., LTD | |
| 63,083 | | |
| 193,565 | |
| Rental income | |
| | | |
| | |
| Big Tree Cloud Network Technology (Shenzhen) Co., LTD | |
| 8,685 | | |
| - | |
| Interest expense | |
| | | |
| | |
| Wenquan, Zhu | |
| 14,769 | | |
| - | |
15. LOSS
FROM DEREGISTRATION OF SUBSIDIARIES
For
the six months ended December 31, 2023 and 2022, the Group ceased operations for several subsidiaries through the deregistration
procedures of local governmental and corporate service institutions. Those subsidiaries had little business operations for years.
As a result, the Group recognized income from deregistration of those subsidiaries of $62,429 and loss from deregistration of $88,487
in aggregate for the six months ended December 31, 2023 and 2022, respectively.
BIG TREE CLOUD INTERNATIONAL GROUP LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
(In U.S. dollars, except share and per share data)
16. CONCENTRATION
OF RISKS
Financial
instruments that potentially expose the Group to concentrations of credit risk consist primarily of accounts receivable. The Group conducts
credit evaluations of its customers, and generally does not require collateral or other security from them. The Group evaluates its collection
experience and long outstanding balances to determine the need for an allowance for doubtful accounts. The Group conducts periodic reviews
of the financial condition and payment practices of its customers to minimize collection risk on accounts receivable.
There
is no single customer who represents 10% or more of the Group’s total revenues.
The
following table sets forth a summary of single customers who represent 10% or more of the Group’s total account receivables:
| | |
As of | |
| | |
December
31,
2023 | | |
June
30,
2023 | |
| | |
Amount | | |
% | | |
Amount | | |
% | |
| | |
USD | | |
| | |
USD | | |
| |
| Customer A | |
| - | | |
| - | | |
| 111,360 | | |
| 51 | % |
| Customer B | |
| 22,752 | | |
| 78 | % | |
| - | | |
| - | |
| Customer C | |
| 3,574 | | |
| 12 | % | |
| - | | |
| - | |
The
following table sets forth a summary of single suppliers who represent 10% or more of the Group’s total purchases:
| | |
For the Six Months Ended December 31, | |
| | |
2023 | | |
2022 | |
| | |
Amount | | |
% | | |
Amount | | |
% | |
| | |
USD | | |
| | |
USD | | |
| |
| Supplier A | |
| 325,538 | | |
| 14 | % | |
| 386,076 | | |
| 10 | % |
| Supplier B | |
| 238,337 | | |
| 10 | % | |
| * | | |
| * | |
| Supplier C | |
| - | | |
| - | | |
| 501,512 | | |
| 13 | % |
| Supplier D | |
| * | | |
| * | | |
| 498,896 | | |
| 13 | % |
The
following table sets forth a summary of single suppliers who represent 10% or more of the Group’s total account payables:
| | |
As of | |
| | |
December 31, 2023 | | |
June 30, 2023 | |
| | |
Amount | | |
% | | |
Amount | | |
% | |
| | |
USD | | |
| | |
USD | | |
| |
| Supplier E | |
| 234,627 | | |
| 32 | % | |
| - | | |
| - | % |
| Supplier B | |
| * | | |
| * | | |
| 150,236 | | |
| 22 | % |
| Supplier D | |
| - | | |
| - | | |
| 180,480 | | |
| 26 | % |
The
following table sets forth a summary of single customers who represent 10% or more of the Group’s total advance to suppliers:
| | |
As of | |
| | |
December 31, 2023 | | |
June 30, 2023 | |
| | |
Amount | | |
% | | |
Amount | | |
% | |
| | |
USD | | |
| | |
USD | | |
| |
| Supplier F | |
| 31,940 | | |
| 66 | % | |
| * | | |
| * | |
| Supplier G | |
| 7,042 | | |
| 15 | % | |
| * | | |
| * | |
| * | represent
percentage less than 10% |
BIG TREE CLOUD INTERNATIONAL GROUP LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
(In U.S. dollars, except share and per share data)
17. COMMITMENTS
AND CONTINGENCIES
Lease
Commitments
As
of December 31, 2023, there is no operating lease commitments that are short-term lease commitments, nor leases that not have not
yet commenced but that created significant rights and obligations for the Company, which are not included in right-of-use assets and
lease liabilities.
Non-cancellable
operating leases
The
following table sets forth our contractual obligations as of December 31, 2023:
| Payment due by December 31, | |
Amount | |
| | |
| USD | |
| 2024 | |
| 196,345 | |
| 2025 | |
| 196,373 | |
| 2026 | |
| 140,489 | |
| Thereafter | |
| 140,489 | |
| Total | |
| 673,696 | |
Contingencies
In
the ordinary course of business, the Group may be subject to legal proceedings regarding contractual and employment relationships and
a variety of other matters. The Group records contingent liabilities resulting from such claims, when a loss is assessed to be probable
and the amount of the loss is reasonably estimable. In the opinion of management, there were no pending or threatened claims and litigation
as of December 31,2023 and through the issuance date of these unaudited condensed consolidated financial statements.
18. SUBSEQUENT
EVENTS
The
Group has evaluated events from the six months ended December 31, 2023 through May 31, 2024. On May 10, 2024, the Company borrowed a
3-year long-term loan from its shareholder, Mr. Wenquan Zhu, for a total of RMB13,000,000 (approximately $1.83 million), which has been
received as of May 28, 2024.
Exhibit 2.6
SUPPLEMENTAL WARRANT AGREEMENT
THIS SUPPLEMENTAL WARRANT
AGREEMENT (this “Agreement”), is made and entered effective as of June 6, 2024, by and among Plutonian Acquisition
Corp., a Delaware corporation (the “Company”), Big Tree Cloud Holdings Limited, a Cayman Islands company (“PubCo”)
and Continental Stock Transfer & Trust Company, a New York corporation, as warrant agent (the “Warrant Agent”).
WHEREAS, the Company entered
into that certain Warrant Agreement, dated November 9, 2022 (the “Warrant Agreement”), with the Warrant Agent
pursuant to which the Warrant Agent agreed to act on behalf of the Company in connection with the issuance, registration, transfer, exchange,
redemption and exercise of up to 5,750,000 warrants (the “Public Warrants”)
underlying units issued in the Company’s initial public offering (the “IPO”), and up to 266,125
warrants (the “Private Warrants,” together with the Public Warrants, the “Warrants”)
underlying units issued in a private placement consummated simultaneously with the IPO (the “Private Placement”);
WHEREAS, the IPO and the Private
Placement were consummated on November 15, 2022;
WHEREAS, the Company has entered
into a merger agreement, dated as of October 9, 2023 (as may be amended, supplemented or otherwise modified from time to time, the
“Merger Agreement”), with PubCo, Big Tree Cloud International Group Limited, a Cayman Islands exempted
company (“HoldCo”), Big Tree Cloud Merger Sub I Limited, an exempted company incorporated in Cayman Islands
(“Merger Sub 1”), Big Tree Cloud Merger Sub II Inc., a Delaware corporation (“Merger Sub 2”)
and Guangdong Dashuyun Investment Holding Group Co., Ltd., a limited liability company incorporated in the PRC;
WHEREAS, pursuant to the Merger
Agreement, (i) Merger Sub 1 will merge with and into the HoldCo whereby the separate existence of Merger Sub 1 will cease and HoldCo
will be the surviving corporation and become a wholly owned subsidiary of PubCo, and (ii) Merger Sub 2 will merge with and into the
Company, the separate existence of Merger Sub 2 will cease and the Company will be the surviving corporation and a direct wholly owned
subsidiary of PubCo (the “Business Combination”); and as a result of the Business Combination, holders of ordinary
shares of HoldCo and the Company will become holders of ordinary shares of PubCo (the “PubCo Ordinary Shares”);
WHEREAS, upon consummation
of the Business Combination, as provided in Section 4.5 of the Warrant Agreement, the Warrants will no longer be exercisable
for ordinary shares of the Company but instead will be exercisable (subject to the terms of the Warrant Agreement as amended hereby) for
PubCo Ordinary Shares;
WHEREAS, in connection with
the Business Combination, the Company desires to assign all of its right, title and interest in the Warrant Agreement to PubCo and PubCo
wishes to accept such assignment;
WHEREAS, Section 9.8
of the Warrant Agreement states, among other things, that the Warrant Agreement and any Warrant certificate may be amended by the parties
by executing a supplemental warrant agreement, without the consent of any of the Warrant Holders, for the purpose of evidencing the succession
of another corporation to the Company and the assumption by any such successor of the covenants of the Company contained in the Warrant
Agreement and the Warrants;
WHEREAS, the Company has rights,
duties, covenants and other obligations under the Warrant Agreement (the “Obligations”), which continue
after the Business Combination, and PubCo has agreed to assume the Obligations in connection with the Business Combination;
NOW, THEREFORE, for good and
valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and PubCo agree as follows:
| 1. | Assumption
of the Obligations. As of the date hereof, PubCo hereby assumes all of the Obligations under the Warrant Agreement. |
| 2. | Amendments
to the Warrant Agreement. The Warrant Agreement is hereby amended as follows: |
| a) | In
the context of the Obligations to be assumed, any reference to “the Company” in the Warrant Agreement (including all Exhibits
thereto) shall mean “Big Tree Cloud Holdings Limited,” all references to “Shares” (including all Exhibits thereto)
shall mean “Ordinary Shares of Big Tree Cloud Holdings Limited,” and all references to “Stockholders” (including
all Exhibits thereto) shall mean “Shareholders of Big Tree Cloud Holdings Limited;” |
| b) | Section 2.5
“Detachability of Public Warrants” shall be deleted in its entirety as it is no longer in force and effect; except
that the term “Representative” which was defined in Section 2.4 as “EF Hutton, as representative of the underwriters,”
shall continue to be defined as such throughout the Warrant Agreement; |
| c) | Section 7.3
is hereby deleted and replaced in its entirety as follows: “Issuance of Ordinary Shares. Big Tree Cloud Holdings Limited
shall at all times reserve and ensure that the number of Ordinary Shares that will be sufficient to permit the exercise in full of all
outstanding Warrants issued pursuant to this Warrant Agreement are available for issuance.”; and |
| d) | Section 9.2
is hereby amended in part to change the delivery of notices and a copy of notices to: |
Big Tree Cloud Holdings Limited
Room 3303, Building 1, Zhongliang Yunjing Plaza
Heshuikou Community, Matian Street, Guangming District
Shenzhen 518083, PRC
Attn: Ting Yan
Email: yanting@bigtreeclouds.com
with a copy (which shall not constitute notice) to:
Pillsbury Winthrop Shaw Pittman LLP
Suite 1115, Bund Center, 222 Yan An Road East
Shanghai, 200002, China
Attention: Jia Yan
Email: jia.yan@pillsburylaw.com
And
Wilson Sonsini Goodrich & Rosati
Suite 1509, 15/F, Jardine House
1 Connaught Place, Central
Hong Kong
Attn: Weiheng Chen
Email: wchen@wsgr.com
| 3. | No
Other Amendments. Except for the amendments expressly set forth in this Agreement, the Warrant Agreement shall remain unchanged and
in full force and effect. |
| 4. | Entire
Agreement. The Warrant Agreement (as amended by this Agreement), sets forth the entire agreement of the parties hereto with respect
to the subject matter hereof and thereof, and there are no restrictions, promises, representations, warranties, covenants or undertakings
with respect to the subject matter hereof or thereof, other than those expressly set forth in the Warrant Agreement (as amended by this
Agreement). The Warrant Agreement (as amended by this Agreement) supersedes all prior and contemporaneous understandings and agreements
related thereto (whether written or oral), all of which are merged herein. |
| a) | The
Company and PubCo agree to execute such reasonable further instruments or perform such reasonable acts which are or may become reasonably
necessary to carry out the intent of this Agreement. |
| b) | This
Agreement shall be governed by and construed under the laws of the State of New York without regard to its conflict of laws principles. |
| c) | This
Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument. |
[The balance of this page is intentionally left
blank.]
IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date first above written.
| |
PLUTONIAN ACQUISITION CORP. |
| |
|
| |
By: |
/s/ Wei Kwang Ng |
| |
Name: |
Wei Kwang Ng |
| |
Title: |
Chief Executive Officer |
| |
|
| |
BIG TREE CLOUD HOLDINGS LIMITED |
| |
|
| |
By: |
/s/ Wenquan Zhu |
| |
Name: |
Wenquan Zhu |
| |
Title: |
Chairman and Chief Executive Officer |
| |
|
| |
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Warrant Agent |
| |
|
| |
By: |
/s/ Ana Gois |
| |
Name: |
Ana Gois |
| |
Title: |
Vice President |
4
Exhibit 8.1
List of Subsidiaries of Big Tree Cloud Holdings
Limited
|
Name of Subsidiary |
|
Jurisdiction of Organization |
| Big Tree Cloud International Group Limited |
|
the Cayman Islands |
| Plutonian Acquisition Corp. |
|
Delaware |
| BRIGHT CONNECTED LIMITED |
|
the British Virgin Islands |
| HONGKONG PLOUTOS INTERNATIONAL HOLDINGS LIMITED |
|
Hong Kong |
| Guangdong Dashuyun Investment Holding Group Co., Ltd. |
|
the People’s Republic of China |
| Dongguan Dashuyun Daily Products Co., Ltd. |
|
the People’s Republic of China |
| Shenzhen Dashuyun Commercial Chain Management Co., Ltd. |
|
the People’s Republic of China |
| Shenzhen Dashuyun Import and Export Trading Co., Ltd. |
|
the People’s Republic of China |
| Shenzhen Surprise Cloud Trading Co., Ltd. |
|
the People’s Republic of China |
Exhibit 15.1
UNAUDITED
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Introduction
The unaudited pro forma combined balance sheet as
of December 31, 2023 gives pro forma effect to the Transactions as if they had been consummated as of that date. The unaudited pro forma
combined statements of operations for the six months ended December 31, 2023 and for the twelve months ended June 30, 2023 gives pro forma
effect to the Transactions as if they had occurred as of the beginning of the earliest period presented. The pro forma financial information
is presented based on Holdco’s financial statements as of and for the year ended June 30, 2023, as the business combination will
be treated as a reverse merger. Holdco has been determined to be the “acquiror” with its most recent fiscal year of June 30,
2023. See “Accounting for the Transactions”.
This information should be read together with Holdco’s and Plutonian’s
audited financial statements and related notes, “Holdco’s Management’s Discussion and Analysis of Financial Condition
and Results of Operations,” “Plutonian’s Management’s Discussion and Analysis of Financial Condition and Results
of Operations”.
The unaudited pro forma combined balance sheet as
of December 31, 2023 has been prepared using the following:
| ● | Holdco’s historical consolidated balance sheet as of December
31, 2023, and |
| ● | Plutonian’s historical balance sheet as of December 31, 2023. |
The unaudited pro forma combined statements of operations
for the six months ended December 31, 2023 has been prepared using the following:
| ● | Holdco’s historical consolidated statements of operations for
the six months ended December 31, 2023, and |
| ● | Plutonian’s historical statements of operations for the year
ended December 31, 2023 and for the six months ended June 30, 2023. |
The unaudited pro forma combined statements of operations
for the twelve months ended June 30, 2023 has been prepared using the following:
| ● | Holdco’s historical consolidated statements of operations for
the year ended June 30, 2023, and |
| ● | Plutonian’s historical statements of operations for
the year ended December 31, 2022 and for the nine months ended September 30, 2023 and 2022. |
Description of the Transactions
On October 9, 2023, Plutonian, PubCo, Holdco,
Merger Sub 1 and Merger Sub 2 entered into the Merger Agreement.
Pursuant to the Merger Agreement, subject to the
terms and conditions set forth therein, at the Closing, (i) Merger Sub 1 will merge with and into the Holdco (the “Initial
Merger”) whereby the separate existence of Merger Sub 1 will cease and Holdco will be the surviving corporation of the Initial Merger
and become a wholly owned subsidiary of PubCo, and (ii) following the Initial Merger Effective Time, Merger Sub 2 will merge with
and into SPAC (the “SPAC Merger”, and together with the Initial Merger, the “Mergers”), the separate existence
of Merger Sub 2 will cease and SPAC will be the surviving corporation of the SPAC Merger and a direct wholly owned subsidiary of PubCo.
As a result of the Mergers, among other things,
(i) each outstanding share in Holdco shall automatically be cancelled, and in exchange for the right to receive newly issued ordinary
shares in PubCo (“PubCo Ordinary Shares”) at the Holdco Exchange Ratio; (ii) each outstanding SPAC Unit will be automatically
detached; (iii) each unredeemed outstanding share of SPAC Common Stock will be cancelled in exchange for the right to receive one
PubCo Ordinary Share, (iv) each outstanding SPAC Rights will be cancelled and cease to exist in exchange for the right to receive
one-sixth (1/6) PubCo Ordinary Share, and (v) each outstanding SPAC Warrant will be cancelled in exchange for the right to receive
one PubCo Warrant. Each outstanding PubCo Ordinary Share will have a value at the time of the Closing of US$10.00.
In addition, following the Closing, PubCo will issue
a one-time issuance of 20,000,000 PubCo Ordinary Shares (the “Earnout Shares”) to the Holdco’s shareholders who
hold Holdco’s shares as of immediately prior to the Initial Merger Effective Time on a pro rata basis upon the occurrence of the
Earn-out Event.
The following summarizes the unaudited number of
PubCo Ordinary Shares outstanding at the time of Closing:
| | |
Shares outstanding | |
| | |
Ownership in
shares | | |
Ownership% | |
| Plutonian ordinary shareholders held by public shareholders1 | |
| 1,025,067 | | |
| 1.8 | % |
| Plutonian ordinary shareholders held by founders and underwriters2 | |
| 1,805,479 | | |
| 3.2 | % |
| Shares issued to Holdco | |
| 50,000,000 | | |
| 87.6 | % |
| Shares issued to financial advisors | |
| 4,250,000 | | |
| 7.4 | % |
| Total shares | |
| 57,080,546 | | |
| 100.0 | % |
| (1) | Including Plutonian ordinary shares outstanding upon Closing of 66,734 shares (after considering actual redemption of 3,172,908 shares
in May 2024) and Plutonian ordinary shares converted from rights of 958,333 shares. |
| (2) | Including Plutonian ordinary shares outstanding upon Closing of 1,437,500 shares, 266,125 shares and 57,500 shares held by the Initial
Stockholders, the Sponsors and the underwriters respectively, and Plutonian ordinary shares converted from rights to the Sponsors of 44,354
shares. |
Accounting for the Transactions
The Transactions will be accounted for as a reverse
merger in accordance with U.S. GAAP. Under this method of accounting, Plutonian will be treated as the “acquired”
company for financial reporting purposes. This determination was primarily based on Holdco shareholders expecting to have a majority of
the voting power of the combined company, Holdco comprising the ongoing operations of the combined entity, Holdco comprising a majority
of the governing body of the combined company, and Holdco’s senior management comprising the senior management of the combined company.
Accordingly, for accounting purposes, the Transactions will be treated as the equivalent of Holdco issuing share for the net assets of
Plutonian, accompanied by a recapitalization. The net assets of Plutonian will be stated at historical cost, with no goodwill or other
intangible assets recorded. Operations prior to the Transactions will be those of Holdco.
Basis of Pro Forma Presentation
The historical financial information has been adjusted
to give pro forma effect to events that depict the accounting for the transaction (“Transaction Accounting Adjustments”).
The pro forma financial information does not give effect to any anticipated synergies and dis-synergies identified by management (“Management’s
Adjustments”) in the business combination. The unaudited pro forma condensed combined financial statements were prepared in accordance
with Article 11 of Regulation S-X as amended by the final rule, SEC Release No. 33-10786 “Amendments to Financial Disclosures about
Acquired and Disposed Business.”
Management has made significant estimates and assumptions
in its determination of the pro forma adjustments. As the unaudited pro forma combined financial information has been prepared
based on these preliminary estimates and assumptions, the final amounts recorded may differ materially from the information presented.
The unaudited pro forma adjustments reflecting the consummation
of the Business Combination are based on information available as of June 12, 2024 and certain assumptions and methodologies that management
believes are reasonable under the circumstances. The unaudited pro forma adjustments, which are described in the accompanying notes,
may be revised as additional information becomes available and is evaluated. Therefore, the actual adjustments may materially differ from
the pro forma adjustments. Management considers this basis of presentation to be reasonable under the circumstances.
The unaudited pro forma combined financial information
is for illustrative purposes only. The financial results may have been different had the companies always been combined. The unaudited
pro forma combined financial information should not be relied on as being indicative of the historical results that would have been achieved
had the companies always been combined or the future results that the combined company will experience. Holdco and Plutonian have not
had any historical relationship prior to the Transactions. Accordingly, no pro forma adjustments were required to eliminate activities
between the companies before the consummation of the Business Combination.
There is no historical activity with respect to
Pubco, First Merger Sub and Second Merger Sub accordingly, no adjustments were required with respect to these entities in the pro forma
combined financial statements.
Included in the shares outstanding and weighted
average shares outstanding as presented in the pro forma combined financial statements are approximately 50,000,000 Ordinary Shares
of Pubco to be issued to the Holdco Shareholders, such amount calculated using Fully-Diluted Holdco Shares, times Holdco Exchange
Ratio. Fully-Diluted Holdco Shares (i) issued and outstanding Holdco Shares immediately prior to the Initial Merger Effective
Time determined on an as-converted basis; plus (b) the number of Holdco Share issuable upon the exercise conversion or other
exchange of outstanding convertible notes, warrants, options or other rights to acquire Holdco Shares, as applicable, issued and outstanding
immediately prior to the Initial Merger Effective Time. Holdco Exchange Ratio represents the quotient obtained by dividing the Price per
Holdco Share by US$10 (ten dollars). Price per Holdco Share means the quotient, expressed as a dollar number, obtained by dividing US$500,000,000
by the Fully-Diluted Holdco Shares.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF DECEMBER 31 2023
| | |
| | |
| | |
| | |
Actual redemption | |
| | |
(A) | | |
(B) | | |
Subsequent | | |
Pro Forma | | |
Pro Forma | |
| |
PLUTONIAN | | |
DSY | | |
financing | | |
Adjustments
| | |
Balance Sheet | |
| ASSETS | |
| | |
| | |
| | |
| | |
| |
| Current assets | |
| | |
| | |
| | |
| | |
| |
| Cash and cash equivalents | |
$ | 425,852 | | |
$ | 1,121,803 | | |
| 350,000 | | |
$ | 737,375 | (1) | |
$ | 68,221 | |
| | |
| - | | |
| - | | |
| - | | |
| (500,000 | )(2) | |
| - | |
| | |
| - | | |
| - | | |
| - | | |
| (706,809 | )(3) | |
| - | |
| | |
| - | | |
| - | | |
| - | | |
| (1,150,000 | )(6) | |
| - | |
| | |
| | | |
| | | |
| | | |
| (210,000 | )(7) | |
| | |
| Advance to suppliers | |
| - | | |
| 47,741 | | |
| - | | |
| - | | |
| 47,741 | |
| Accounts receivables, net | |
| - | | |
| 20,315 | | |
| - | | |
| - | | |
| 20,315 | |
| Prepaid expenses and other current assets | |
| 89,472 | | |
| 843,093 | | |
| - | | |
| 210,000 | (7) | |
| 512,565 | |
| | |
| | | |
| | | |
| | | |
| (630,000 | )(7) | |
| | |
| Inventories, net | |
| - | | |
| 1,325,975 | | |
| - | | |
| -- | | |
| 1,325,975 | |
| Amounts due from related parties | |
| - | | |
| 562 | | |
| - | | |
| -- | | |
| 562 | |
| Total Current Assets | |
| 515,324 | | |
| 3,359,489 | | |
| 350,000 | | |
| (2,249,434 | ) | |
| 1,975,379 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Non-current assets: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Investment held in Trust Account | |
| 34,959,697 | | |
| - | | |
| 420,000 | | |
| 416,617 | (1) | |
| - | |
| | |
| | | |
| | | |
| | | |
| (35,058,939 | )(1) | |
| | |
| | |
| | | |
| | | |
| | | |
| (737,375 | )(1) | |
| | |
| Property and equipment, net | |
| - | | |
| 3,977,725 | | |
| - | | |
| - | | |
| 3,977,725 | |
| Intangible asset, net | |
| | | |
| 79,940 | | |
| | | |
| | | |
| 79,940 | |
| Operating lease right-of-use asset, net | |
| | | |
| 628,532 | | |
| | | |
| | | |
| 628,532 | |
| Deferred offering costs | |
| | | |
| 1,323,686 | | |
| | | |
| (1,323,686 | )(3) | |
| - | |
| Deferred tax asset | |
| | | |
| 515,885 | | |
| | | |
| | | |
| 515,885 | |
| Total Non-current Assets | |
| 34,959,697 | | |
| 6,525,768 | | |
| 420,000 | | |
| (36,703,383 | ) | |
| 5,202,082 | |
| Total Assets | |
| 35,475,021 | | |
| 9,885,257 | | |
| 770,000 | | |
| (38,952,817 | ) | |
| 7,177,461 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| LIABILITIES | |
| | | |
| | | |
| | | |
| | | |
| | |
| Current liabilities | |
| | | |
| | | |
| | | |
| | | |
| | |
| Short-term loan | |
| - | | |
| 1,408,471 | | |
| - | | |
| - | | |
| 1,408,471 | |
| Accounts payable | |
| - | | |
| 733,079 | | |
| - | | |
| - | | |
| 733,079 | |
| Contract liabilities, current | |
| - | | |
| 3,728,785 | | |
| - | | |
| - | | |
| 3,728,785 | |
| Promissory note – related party | |
| 800,000 | | |
| - | | |
| 350,000 | | |
| (1,150,000 | )(6) | |
| - | |
| Promissory note – Big Tree Cloud | |
| 210,000 | | |
| - | | |
| 420,000 | | |
| (630,000 | )(7) | |
| - | |
| Loans from a third party | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| Accrued expenses and other current liabilities | |
| 196,487 | | |
| 639,045 | | |
| - | | |
| 600,000 | (3) | |
| 1,435,532 | |
| Lease liabilities, current | |
| - | | |
| 173,749 | | |
| | | |
| - | | |
| 173,749 | |
| Amounts due to related parties | |
| - | | |
| 617,208 | | |
| | | |
| - | | |
| 617,208 | |
| Franchise tax payable | |
| 42,800 | | |
| - | | |
| | | |
| - | | |
| 42,800 | |
| Income tax payable | |
| 505,120 | | |
| - | | |
| | | |
| - | | |
| 505,120 | |
| Excise tax payable | |
| 262,449 | | |
| - | | |
| | | |
| - | | |
| 262,449 | |
| Total Current Liabilities | |
| 2,016,856 | | |
| 7,300,337 | | |
| 770,000 | | |
| (1,180,000 | ) | |
| 8,907,193 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Lease liabilities, non current | |
| - | | |
| 450,883 | | |
| - | | |
| - | | |
| 450,883 | |
| Deferred underwriting fee payable | |
| 2,012,500 | | |
| - | | |
| - | | |
| (500,000 | )(2) | |
| 1,512,500 | |
| Contract liabilities, non current | |
| - | | |
| 3,521,176 | | |
| - | | |
| - | | |
| 3,521,176 | |
| Total Liabilities | |
| 4,029,356 | | |
| 11,272,396 | | |
| 770,000 | | |
| (1,680,000 | ) | |
| 14,391,752 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Commitments and Contingencies | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Common stock subject to possible redemption, $0.0001 par value; 15,000,000 shares authorized; 3,239,642 shares and 5,750,000 shares issued and outstanding as of December 31, 2023 and 2022, respectively, at redemption value | |
| 34,790,696 | | |
| - | | |
| - | | |
| 416,617 | (1) | |
| - | |
| | |
| | | |
| | | |
| | | |
| (35,058,939 | )(1) | |
| | |
| | |
| | | |
| | | |
| | | |
| (148,374 | )(4) | |
| | |
| SHAREHOLDERS’ DEFICIT | |
| | | |
| | | |
| | | |
| | | |
| | |
| Ordinary Shares | |
| 176 | | |
| 50,000 | | |
| - | | |
| (44,468 | )(5) | |
| 5,708 | |
| Additional paid in capital | |
| - | | |
| 1,619,428 | | |
| - | | |
| (2,608,301 | )(3) | |
| - | |
| | |
| - | | |
| - | | |
| - | | |
| 148,374 | (4) | |
| - | |
| | |
| - | | |
| - | | |
| - | | |
| (3,300,739 | )(5) | |
| - | |
| | |
| - | | |
| - | | |
| - | | |
| 4,141,238 | (8) | |
| - | |
| Accumulated deficit | |
| (3,345,207 | ) | |
| (3,398,283 | ) | |
| - | | |
| 3,345,207 | (5) | |
| (7,561,715 | ) |
| | |
| - | | |
| - | | |
| - | | |
| (4,141,238 | )(8) | |
| - | |
| | |
| - | | |
| - | | |
| - | | |
| (22,194 | )(3) | |
| - | |
| Accumulated other comprehensive loss | |
| - | | |
| 341,716 | | |
| - | | |
| - | | |
| 341,716 | |
| Total Shareholders’ Deficit | |
| (3,345,031 | ) | |
| (1,387,139 | ) | |
| - | | |
| (2,482,121 | ) | |
| (7,214,291 | ) |
| Total liabilities, ordinary shares subject to possible redemption and shareholders’ deficit | |
| 35,475,021 | | |
| 9,885,257 | | |
| 770,000 | | |
| (38,952,817 | ) | |
| 7,177,461 | |
Unaudited Pro Forma Combined Balance Sheet Adjustments
The pro forma adjustment to the unaudited combined
pro forma balance sheet consists of the following:
| (A) | Derived from the audited balance sheet of Plutonian as of
December 31, 2023. |
| (B) | Derived from the unaudited balance sheet of Holdco as of December
31, 2023. |
| (1) | Reflects the release of cash from investment held in the Trust
Account upon Closing, including trust account balance of US$34,959,697 as of December 31, 2023, interest income US$416,617 earned from
January 2024 to May 2024, promissory note from Holdco of US$420,000, and partially offset by payments of actual redemption of 3,172,908
shares at the consideration of US$35,058,939 in May 2024. |
| (2) | Reflects the settlement of US$0.5 million out of US$2 million
deferred underwriting commission incurred during the Plutonian IPO due upon Closing. |
| (3) | Reflects future cash payment of US$0.7 million and accrued
expenses balance of US$0.6 million upon consummation of Business Combination and reduction of deferred offering costs of US$1.3 million
which was reflected on Holdco’s historical balance sheet. Future cash payments include transaction costs of US$0.6 million and
US$0.7 million to be paid by Holdco and Plutonian, respectively, in relation to the Business Combination and Private Placement, including
advisory, banking, printing, legal and accounting services. As part of the Business Combination, US$2.6 million will offset to additional-paid-in
capital. |
| (4) | Reflects the reclassification of Plutonian shares subject
to possible redemption to permanent equity. Under the actual redemption in May 2024, 3,172,908 shares were redeemed for aggregate redemption
payment of US$35,058,939. |
| (5) | Reflects 1) recapitalization of Holdco through issuance of
Plutonian shares and eliminate Plutonian historical accumulated earnings; 2) the contribution of all the share capital in Holdco to Plutonian;
3) the total weighted average post-combination PubCo shares outstanding of 57,080,546 shares upon Closing, including 4,250,000 shares
issued to two financial advisors. One of which financial advisors is entitled to receive, at the election of Holdco, US$22,500,000 or
2,250,000 PubCo ordinary shares upon closing. Holdco intends to settle in shares. |
| (6) | The US$350,000 of subsequent sponsor loan dated March 19, 2024
was included in this adjustment. The adjustment reflects subsequent settlement of promissory notes, including US$150,000 on June 20,
2023, US$210,000 on August 8, 2023, US$140,000 on September 14, 2023, US$300,000 on December 27, 2023 and US$350,000 on
March 19, 2024, upon the completion of the business combination. The Sponsor may elect to convert the promissory notes into Plutonian’s
shares or to require cash settlement on the earlier of: 1) the date on which Plutonian consummates an initial business combination, or
2) the date Plutonian liquidates if a business combination is not consummated. It is assumed to be settled in cash. |
| (7) | Reflects the payment of two subsequent promissory loans (US$210,000
per loan) dated January 31, 2024 and May 15, 2024 from Holdco. The receipt of the loan proceeds has been reflected on adjustment (1). |
On November 9, 2023, January 31, 2024, and May 15, 2024, Plutonian
issued three promissory notes of US$630,000 in aggregate to Holdco in order to deposit into the trust account and extend the business
combination period from November 15, 2023 to August 15, 2024. Holdco has the option to convert the promissory note into Plutonian’s
shares or to request cash settlement by either: 1) upon consummation of an initial business combination, or 2) termination of the Merger
Agreement as per its terms, or 3) August 15, 2024. It is assumed to be settled in cash.
Adjustment (7) also reflects the elimination
of both promissory note payable on Plutonian and prepaid expenses and other current assets on Holdco upon the consummation of the Business
Combination.
| (8) | Reflects the reclassification of additional paid-in capital
and accumulated deficit to avoid negative balance of additional paid-in capital. |
| (9) | The unaudited pro forma balance sheet does not reflect the contingent
liabilities to pay an aggregate of 20,000,000 additional PubCo Ordinary Shares as earnout consideration, after the Closing, upon the occurrence
of contingent events (there are no less than 200 department stores, grocery stores, pharmacies, supermarkets and other retail stores or
vendors, each with a gross floor area of no less than 500 square meters, engaged in selling the personal care products or other consumer
goods), because the performance condition cannot be reliably estimated as of June 12, 2024. |
UNAUDITED PRO FORMA COMBINED STATEMENT
OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2023
| | |
| | |
| | |
Actual redemption | |
| | |
| | |
| | |
| | |
Pro Forma | |
| | |
(A) | | |
(B) | | |
Pro Forma | | |
Income | |
| | |
PLUTONIAN | | |
DSY | | |
Adjustments | | |
Statement | |
| Revenues | |
$ | - | | |
$ | 4,158,057 | | |
$ | - | | |
$ | 4,158,057 | |
| Formation and operating costs | |
| - | | |
| (1,378,127 | ) | |
| - | | |
| (1,378,127 | ) |
| Franchise tax | |
| (18,700 | ) | |
| | | |
| | | |
| (18,700 | ) |
| General and administrative expenses | |
| (787,818 | ) | |
| (1,887,213 | ) | |
| - | | |
| (2,675,031 | ) |
| Selling expenses | |
| - | | |
| (435,245 | ) | |
| - | | |
| (435,245 | ) |
| Total operating (losses)/income | |
| (806,518 | ) | |
| 457,472 | | |
| - | | |
| (349,046 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Other income/(expense): | |
| | | |
| | | |
| | | |
| | |
| Other income, net | |
| - | | |
| 33,561 | | |
| - | | |
| 33,561 | |
| Financial expense | |
| - | | |
| (20,079 | ) | |
| - | | |
| (20,079 | ) |
| Financial income | |
| - | | |
| 2,699 | | |
| - | | |
| 2,699 | |
| Interest earned on investment held in Trust Account | |
| 1,116,335 | | |
| - | | |
| (1,116,335 | )(1) | |
| - | |
| Gain on deregistration of subsidiaries | |
| | | |
| 62,429 | | |
| | | |
| 62,429 | |
| | |
| | | |
| | | |
| | | |
| | |
| Total other income, net | |
| 1,116,335 | | |
| 78,610 | | |
| (1,116,335 | ) | |
| 78,610 | |
| | |
| | | |
| | | |
| | | |
| | |
| Income before provision for income taxes | |
| 309,817 | | |
| 536,082 | | |
| (1,116,335 | ) | |
| (270,436 | ) |
| Income tax (expense)/benefit | |
| (230,505 | ) | |
| 45,302 | | |
| - | | |
| (185,203 | ) |
| Net income | |
| 79,312 | | |
| 581,384 | | |
| (1,116,335 | ) | |
| (455,639 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Weighted average shares outstanding of ordinary shares | |
| - | | |
| 50,000 | | |
| 57,030,546 | (2) | |
| 57,080,546 | |
| Weighted average shares outstanding of redeemable ordinary shares | |
| 3,771,728 | | |
| | | |
| (3,771,728 | ) | |
| - | |
| Basic and diluted net income/(loss) per ordinary share | |
$ | 0.21 | | |
| 11.63 | | |
| - | | |
$ | (0.01 | ) |
| Weighted average shares outstanding of non-redeemable ordinary shares | |
| 1,761,125 | | |
| | | |
| | | |
| | |
| Basic and diluted net loss per ordinary share | |
$ | (0.40 | ) | |
| | | |
| | | |
| | |
Notes and adjustment to Unaudited Pro Forma Condensed combined Statement
of Operations
The notes and pro forma adjustments to the unaudited
condensed combined pro forma statements of operations consist of the following:
| (A) | Derived from Plutonian’s unaudited statement of operations
for the six months ended June 30, 2023, and audited consolidated statement of operations for the year ended December 31, 2023. |
| (B) | Derived from Holdco’s unaudited statement of operations
for the six months ended December 31, 2023. |
| (1) | Represents an adjustment to reverse interest income related
to cash and investment held in Trust Account. |
| (2) | The calculation of weighted average shares outstanding for
basic and diluted net income/(loss) per share assumes that the Business Combination occurred as of the earliest period presented. In
addition, as the Business Combination is being reflected as if it had occurred on this date, the calculation of weighted average shares
outstanding for basic and diluted net income/(loss) per share assumes that the shares have been outstanding for the entire period presented.
This calculation is retroactively adjusted to eliminate the number of shares redeemed in the Business Combinations for the entire period. |
UNAUDITED PRO FORMA COMBINED STATEMENT
OF OPERATIONS
FOR THE TWELVE MONTHS ENDED JUNE 30, 2023
| | |
| | |
| | |
Actual redemption | |
| | |
| | |
| | |
| | |
Pro Forma | |
| | |
(A) | | |
(B) | | |
Pro Forma | | |
Income | |
| | |
PLUTONIAN | | |
DSY | | |
Adjustments | | |
Statement | |
| Revenues | |
$ | - | | |
$ | 6,293,340 | | |
$ | - | | |
$ | 6,293,340 | |
| Formation and operating costs | |
| - | | |
| (2,663,924 | ) | |
| - | | |
| (2,663,924 | ) |
| Franchise tax | |
| (40,388 | ) | |
| | | |
| | | |
| (40,388 | ) |
| General and administrative expenses | |
| (607,007 | ) | |
| (2,199,987 | ) | |
| (800,000 | )(3) | |
| (3,606,994 | ) |
| Selling expenses | |
| - | | |
| (758,593 | ) | |
| - | | |
| (758,593 | ) |
| Total operating (losses)/income | |
| (647,395 | ) | |
| 670,836 | | |
| (800,000 | ) | |
| (776,559 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Other income/(expense): | |
| | | |
| | | |
| | | |
| | |
| Other expenses | |
| - | | |
| (13,754 | ) | |
| - | | |
| (13,754 | ) |
| Financial income/(expense), net | |
| - | | |
| (1,328 | ) | |
| - | | |
| (1,328 | ) |
| Interest earned on investment held in Trust Account | |
| 2,261,884 | | |
| - | | |
| (2,261,884 | )(1) | |
| - | |
| Loss on deregistration of subsidiaries | |
| | | |
| (347,423 | ) | |
| | | |
| (347,423 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Total other income/(expense), net | |
| 2,261,884 | | |
| (362,505 | ) | |
| (2,261,884 | ) | |
| (362,505 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Income before provision for income taxes | |
| 1,614,489 | | |
| 308,331 | | |
| (3,061,884 | ) | |
| (1,139,064 | ) |
| Income tax expense | |
| (466,466 | ) | |
| (28,766 | ) | |
| - | | |
| (495,232 | ) |
| Net income | |
| 1,148,023 | | |
| 279,565 | | |
| (3,061,884 | ) | |
| (1,634,296 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Weighted average shares outstanding of ordinary shares | |
| - | | |
| 50,000 | | |
| 57,030,546 | (2) | |
| 57,080,546 | |
| Weighted average shares outstanding of redeemable ordinary shares | |
| 3,624,357 | | |
| | | |
| (3,624,357 | ) | |
| - | |
| Basic and diluted net income/(loss) per ordinary share | |
$ | 0.61 | | |
| 5.59 | | |
| - | | |
$ | (0.03 | ) |
| Weighted average shares outstanding of non-redeemable ordinary shares | |
| 1,761,125 | | |
| | | |
| | | |
| | |
| Basic and diluted net income per ordinary share | |
$ | 0.61 | | |
| | | |
| | | |
| | |
Notes and adjustment to Unaudited Pro Forma Condensed combined Statement
of Operations
The notes and pro forma adjustments to the unaudited
condensed combined pro forma statements of operations consist of the following:
| (A) | Derived from Plutonian’s unaudited statement of operations
for the nine months ended September 30, 2023 and 2022, and audited statement of operations for the year ended December 31,
2022. |
| (B) | Derived from Holdco’s audited statement of operations
for the year ended June 30, 2023. |
| (1) | Represents an adjustment to reverse interest income related
to cash and investment held in Trust Account. |
| (2) | The calculation of weighted average shares outstanding for
basic and diluted net income/(loss) per share assumes that the Business Combination occurred as of the earliest period presented. In
addition, as the Business Combination is being reflected as if it had occurred on this date, the calculation of weighted average shares
outstanding for basic and diluted net income/(loss) per share assumes that the shares have been outstanding for the entire period presented.
This calculation is retroactively adjusted to eliminate the number of shares redeemed in the Business Combinations for the entire period. |
| (3) | To reflect Plutonian’s transaction costs to be incurred
of US$0.8 million. |
7
Exhibit 15.2
June 12, 2024
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Commissioners:
We have read the statements made by Big Tree Cloud
Holdings Limited under Item 16F of Big Tree Cloud Holdings Limited’s Form 20-F dated June
12, 2024. We agree with the statements concerning our Firm in such 20-F; we are not in a position to agree or disagree with other statements
of Big Tree Cloud Holding Limited contained therein.
Very truly yours,
/s/ Marcum llp
Marcum llp
Exhibit 15.3
June 12, 2024
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Commissioners:
We have read the statements made by Big Tree Cloud
Holdings Limited under Item 16F of Big Tree Cloud Holdings Limited’s Form 20-F dated June 12, 2024. We agree with the statements
concerning our Firm in such 20-F; we are not in a position to agree or disagree with other statements of Big Tree Cloud Holding Limited
contained therein.
Very truly yours,
/s/ Friedman llp
Friedman llp
Exhibit 15.4
 |
AUDIT ALLIANCE
LLP® |
 |
| |
A
Top 18 Audit Firm |
|
| |
10 Anson Road, #20-16 International Plaza, Singapore 079903. |
UEN:
T12LL1223B GST Reg No: M90367663E Tel: (65) 6227 5428
Website:
www.allianceaudit.com
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in
this Shell Company Report on Form 20-F of Big Tree Cloud Holdings Ltd of our report dated November 22,2023 relating to the financial
statements of Big Tree Cloud International Group Limited., which appears in the Registration Statement on Form F-4 (File No. 333-277882).
/s/ Audit Alliance LLP
June 12, 2024
Exhibit 15.5
Independent
Registered Public Accounting Firm’s Consent
We consent to the incorporation by reference in
this Shell Company Report of Big Tree Cloud Holdings Limited on Form 20-F
of our report dated April 12, 2024, which includes an explanatory paragraph as to Plutonian
Acquisition Corp.’s ability to continue as a going concern, with respect to our audits of the financial statement of Plutonian
Acquisition Corp. as of December 31, 2023 and 2022 and for the years ended December 31, 2023 and 2022 appearing in the Annual Report
on Form 10-K of Plutonian Acquisition Corp. for the year ended December
31, 2023. We also consent to the reference to our firm under the heading “Experts” in the Shell Company Report on Form 20-F.
/s/ Marcum llp
Marcum llp
East Hanover, NJ
June 12, 2024
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