UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended
Or
For the transition period from to
Commission
File Number
(Exact name of registrant as specified in its charter)
| N/A | ||
(State or Other Jurisdiction of Incorporation) |
(I.R.S. Employer Identification No.) | |
| N/A | ||
| (Address of principal executive offices) | (zip code) |
(Issuer’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbols | Name of Each Exchange on Which Registered | ||
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
As of August 10, 2023, there were ordinary shares, par value $0.0001 issued and outstanding.
TABLE OF CONTENTS
| i |
PART I – FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
ALPHATIME ACQUISITION CORP
CONDENSED BALANCE SHEETS
June 30, 2023 (Unaudited) | December 31, 2022 | |||||||
| Assets: | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Deferred offering costs | ||||||||
| Total current assets | ||||||||
| Cash and investment held in Trust Account | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Shareholders’ Equity/(Deficit): | ||||||||
| Current liabilities: | ||||||||
| Accrued offering costs and expenses | $ | $ | ||||||
| Due to related party | ||||||||
| Total current liabilities | ||||||||
| Deferred underwriting commission | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies (See Note 6) | ||||||||
| Temporary Equity: | ||||||||
| Ordinary shares subject to possible redemption, shares at redemption value of $ per share as of June 30, 2023 | ||||||||
| Shareholders’ Equity/(Deficit): | ||||||||
| Preferred shares, $ par value; shares authorized; issued and outstanding | ||||||||
| Ordinary Shares, $ par value; shares authorized; and shares issued and outstanding at June 30, 2023 and December 31, 2022 respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Shareholders’ Equity/(Deficit) | ( | ) | ||||||
| Total Liabilities and Shareholders’ Equity/(Deficit) | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| F-1 |
ALPHATIME ACQUISITION CORP
CONDENSED STATEMENTS OF OPERATIONS
For the three and six months ended June 30, 2023 and 2022 (Unaudited)
| Three months ended June 30, 2023 | Three months ended June 30, 2022 | Six months ended June 30, 2023 | Six months ended June 30, 2022 | |||||||||||||
| Formation and operating costs | $ | $ | $ | $ | ||||||||||||
| Total Expenses | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Other Income | ||||||||||||||||
| Income earned on Trust Account | $ | $ | $ | $ | ||||||||||||
| Net Income | $ | $ | $ | $ | ||||||||||||
| Weighted average shares outstanding of redeemable ordinary shares | ||||||||||||||||
| Basic and diluted net income per share, redeemable ordinary shares | $ | $ | $ | $ | ||||||||||||
| Weighted average shares outstanding of non-redeemable ordinary shares | ||||||||||||||||
| Basic and diluted net loss per share, non-redeemable ordinary shares | $ | ) | $ | $ | ) | $ | ||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| F-2 |
ALPHATIME ACQUISITION CORP
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY/(DEFICIT)
For the three and six months ended June 30, 2023 and 2022
(Unaudited)
Ordinary Shares | Amount | Additional paid-in capital | Accumulated deficit | Total shareholders’ equity/(deficit) | ||||||||||||||||
| Balance as of December 31, 2021 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Net income | - | |||||||||||||||||||
| Balance as of March 31, 2022 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Net income | - | |||||||||||||||||||
| Balance as of June 30, 2022 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Ordinary Shares | Amount | Additional paid-in capital | Accumulated deficit | Total shareholders’ | ||||||||||||||||
| Balance as of December 31, 2022 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Issuance of ordinary shares through public offering | ||||||||||||||||||||
| Overallotment of ordinary shares | ||||||||||||||||||||
| Issuance of ordinary shares for Private Units | ||||||||||||||||||||
| Overallotment of Private Units | ||||||||||||||||||||
| Sale of Unit Purchase Option | - | |||||||||||||||||||
| Underwriting discount | - | ( | ) | ( | ) | |||||||||||||||
| Deferred underwriting commission | - | ( | ) | ( | ) | |||||||||||||||
| Deduction for other offering costs | - | ( | ) | ( | ) | |||||||||||||||
| Initial measurement of ordinary shares subject to redemption under ASC 480-10-S99 against additional paid-in capital | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Allocation of offering costs to ordinary shares subject to redemption | - | |||||||||||||||||||
| Accretion of carrying value of redeemable shares | - | ( | ) | ( | ) | |||||||||||||||
| Transfer of negative APIC to accumulated deficit | - | ( | ) | |||||||||||||||||
| Subsequent measurement of ordinary shares subject to possible redemption (income earned on trust account) | - | ( | ) | ( | ) | |||||||||||||||
| Net income | ||||||||||||||||||||
| Balance as of March 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Subsequent measurement of ordinary shares subject to possible redemption (income earned on trust account) | - | ( | ( | ) | ||||||||||||||||
| Net income | - | |||||||||||||||||||
| Balance as of June 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| F-3 |
ALPHATIME ACQUISITION CORP
CONDENSED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 2023 and 2022
(Unaudited)
Six months ended June 30, 2023 | Six months ended June 30, 2022 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Income earned on Trust Account | ( | ) | ||||||
| Changes in current assets and liabilities: | ||||||||
| Prepaid expenses | ( | ) | ||||||
| Accrued offering costs and expenses | ||||||||
| Due to related party | ||||||||
| Net cash used in operating activities | $ | ( | ) | $ | ||||
| Cash Flows from Investing Activities: | ||||||||
| Investment held in Trust Account | $ | ( | ) | $ | ||||
| Net cash used in investing activities | $ | ( | ) | $ | ||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from sale of ordinary shares | $ | $ | ||||||
| Proceeds from issuance of Private Units | ||||||||
| Payment of underwriting discount | ( | ) | ||||||
| Proceeds from Unit Purchase Option | ||||||||
| Payment to related party | ( | ) | ||||||
| Payment of offering costs | ( | ) | ||||||
| Net cash provided by financing activities | $ | $ | ||||||
| Net change in cash | $ | $ | ||||||
| Cash—beginning of the period | $ | $ | ||||||
| Cash—end of the period | $ | $ | ||||||
| Supplemental disclosure of noncash financing activities: | ||||||||
| Offering costs included in accrued expenses | $ | $ | ||||||
| Offering costs paid by related party | $ | $ | ||||||
| Offering costs adjusted from prepaid expenses | $ | $ | ||||||
| Offering costs charged to APIC | $ | $ | ||||||
| Offering cost related to fair value of Unit Purchase Option net of proceeds | $ | $ | ||||||
| Allocation of offering costs to ordinary shares subject to redemption | $ | $ | ||||||
| Reclassification of ordinary shares subject to redemption | $ | $ | ||||||
| Remeasurement adjustment on ordinary shares subject to possible redemption | $ | $ | ||||||
| Subsequent measurement of ordinary shares subject to possible redemption (income earned on trust account) | $ | $ | ||||||
| Deferred underwriting commission charged to APIC | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| F-4 |
ALPHATIME ACQUISITION CORP
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Note 1 – Description of Organization, Business Operations and Going Concern
AlphaTime
Acquisition Corp (the “Company”) was incorporated in Cayman Islands on
As on June 30, 2023 and 2022, the Company had not commenced any operations. All activities for the period from September 15, 2021 (inception) through June 30, 2023, relate to the Company’s formation and the Initial Public Offering (“IPO”) described below. The Company will not generate any operating revenues until the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end.
The
Company’s sponsor is Alphamade Holding LP, a Delaware limited partnership (the “Sponsor”). The registration statement
for the Company’s IPO was declared effective on December 30, 2022 (the “Effective Date”). On January 4, 2023, the Company
consummated the IPO of units (the “Units”). Each Unit consists of one ordinary share of the Company, par value
$ per share (the “Ordinary Shares”), one redeemable warrant (the “Warrants”) and one right (the “Rights”),
with each Right entitling the holder thereof to receive one-tenth of one Ordinary Share upon the completion of an initial Business Combination,
subject to adjustment. The Units were sold at a price of $ per Unit, generating gross proceeds to the Company of $
Simultaneously
with the closing of the IPO, the Company completed the sale of private units to the Sponsor (the “Private Units”)
at a purchase price of $ per Private Unit, generating gross proceeds to the Company of $
Following
the closing of the IPO and the sale of over-allotment units, an aggregate of $
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO and the sale
of Private Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business
Combination. The stock exchange listing rules require that the Business Combination must be with one or more operating businesses or
assets with a fair market value equal to at least
| F-5 |
The Company will provide the holders of the outstanding Public Shares (the “Public Shareholders”) with the opportunity to redeem all or a portion of their Public Shares either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer in connection with the Business Combination. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer, will be made by the Company. The Public Shareholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $ per Public Share, plus any pro rata interest then in the Trust Account, net of taxes payable). The Public Shares subject to redemption will be recorded at a redemption value and classified as temporary equity upon the completion of the IPO in accordance with the Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.”
The
Company will not redeem Public Shares in an amount that would cause its net tangible assets to be less than $
Notwithstanding the foregoing, if the Company seeks shareholder approval of the Business Combination and the Company does not conduct redemptions pursuant to the tender offer rules, a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the Public Shares without the Company’s prior written consent.
The Sponsor has agreed (a) to waive its redemption rights with respect to any Founder Shares and Public Shares held by it in connection with the completion of a Business Combination and (b) not to propose an amendment to the Amended and Restated Memorandum and Articles of Association (i) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the Company’s initial business combination or to redeem 100% of the Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or (ii) with respect to any other provision relating to shareholders’ rights or pre-initial business combination activity, unless the Company provides the Public Shareholders with the opportunity to redeem their Public Shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the Trust account and not previously released to pay taxes, divided by the number of then issued and outstanding Public Shares.
| F-6 |
In order to protect the amounts held in the Trust Account, the Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below the lesser of (1) $ per Public Share and (2) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $ per Public Share, due to reductions in the value of trust assets, in each case net of the interest that may be withdrawn to pay taxes. This liability will not apply to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and as to any claims under the Company’s indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). In the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (other than the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Liquidity
As
on June 30, 2023, the Company had a cash balance of $
Accordingly,
the accompanying unaudited condensed financial statements has been prepared in conformity with U.S. GAAP, which contemplates continuation
of the Company as a going concern and the realization of assets and the satisfaction of liabilities in the normal course of business.
The financial statement does not include any adjustments that might result from the outcome of this uncertainty. Further, the Company
has incurred and expects to continue to incur significant costs in pursuit of its acquisition plans. On January 4, 2023, the Company
consummated its IPO and private placement which generated gross proceeds of $
| F-7 |
Risks and Uncertainties
Management is currently evaluating the impact of the risk of bank failure and has concluded that while it is reasonably possible that the bank failure could have a negative effect on the Company’s financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Further, the Company doesn’t have any bank accounts which are associated with failure risk but will keep monitoring any such effects that might impact the company’s financial position.
On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.
Note 2 - Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC.
The accompanying unaudited condensed financial statements as of June 30, 2023, have been prepared in accordance with U.S. GAAP for interim financial information and Article 8 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentation have been included. Operating results for the three and six months ended June 30, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023, or any future period.
Emerging Growth Company Status
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statement with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of financial statement in conformity with US GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of expenses during the reporting period. Accordingly, the actual results could differ significantly from those estimates.
| F-8 |
Cash and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company had
Concentration of Credit Risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution
which, at times may exceed the Federal depository insurance coverage of $
Offering Costs
The
offering costs were $
Investment Held in Trust Account
The Company’s portfolio of investment held in the Trust Account is mainly comprised of investments in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. Gains and losses resulting from the change in fair value of these securities is included in income earned on Trust Account in the accompanying condensed statements of operations. The estimated fair values of investment held in the Trust Account are determined using available market information.
Income earned on these investments will be fully reinvested into the investment held in Trust Account and therefore considered as an adjustment to reconcile net income (loss) to net cash used in operating activities in the condensed statements of cash flows. Such income reinvested will be used to redeem all or a portion of the ordinary shares upon the completion of business combination.
The Company complies with the accounting and disclosure requirements of FASB ASC 260, Earnings Per Share. In order to determine the net income (loss) attributable to both the redeemable shares and non-redeemable shares, the Company first considered the undistributed income (loss) allocable to both the redeemable shares and non-redeemable shares and the undistributed income (loss) is calculated using the total net loss less any dividends paid. The Company then allocated the undistributed income (loss) ratably based on the weighted average number of shares outstanding between the redeemable and non-redeemable shares. Any remeasurement of the accretion to redemption value of the ordinary shares subject to possible redemption was considered to be dividends paid to the public shareholders. As of June 30, 2023, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary shares and then share in the earnings of the Company. As a result, diluted income/(loss) per share is the same as basic income/(loss) per share for the period presented.
| F-9 |
The net income/(loss) per share presented in the condensed statements of operations is based on the following:
| Three Months ended June 30, 2023 | Three Months ended June 30, 2022 | Six months ended June 30,2023 | Six months ended June 30,2022 | |||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Income earned on Trust Account | ( | ) | ( | ) | ||||||||||||
| Accretion of carrying value to redemption value | ( | ) | ||||||||||||||
| Net loss including accretion of equity into redemption value | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Three months ended June 30, 2023 | Six months ended June 30, 2023 | Three months ended June 30, 2022 | Six months ended June 30, 2022 | |||||||||||||||||||||
| Redeemable | Non-Redeemable | Redeemable | Non-Redeemable | Non-Redeemable | Non-Redeemable | |||||||||||||||||||
| Particulars | Shares | Shares | Shares | Shares | Shares | Shares | ||||||||||||||||||
| Basic and diluted net income/(loss) per share: | ||||||||||||||||||||||||
| Numerators: | ||||||||||||||||||||||||
| Allocation of net loss including accretion of temporary equity | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Income earned on Trust Account | ||||||||||||||||||||||||
| Accretion of temporary equity to redemption value | ||||||||||||||||||||||||
| Allocation of net income/(loss) | ( | ) | ( | ) | ||||||||||||||||||||
| Denominators: | ||||||||||||||||||||||||
| Weighted-average shares outstanding | ||||||||||||||||||||||||
| Basic and diluted net income/(loss) per share | ) | ) | ||||||||||||||||||||||
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying condensed balance sheets, primarily due to their short-term nature.
Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) ASC 480 “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, whether they meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. As the Company’s warrants meet all the criteria for equity classification, both public and private warrants are classified in shareholders’ equity/(deficit).
| F-10 |
The Company accounts for its ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption (if any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s ordinary shares features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, as of June 30, 2023, ordinary shares subject to possible redemption are presented at redemption value of $ per share (plus any income earned on Trust Account) as temporary equity, outside of the shareholders’ equity section of the Company’s condensed balance sheets. The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable ordinary shares to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable ordinary shares are affected by charges against additional paid in capital and accumulated deficit. The Company allocates gross proceeds between the Public Shares, Public Warrants and Public Rights based on the relative fair values of the Public Shares, Public Warrants and Public Rights.
| Gross proceeds | $ | |||
| Less: | ||||
| Proceeds allocated to Public Rights | ) | |||
| Proceeds allocated to Public Warrants | ) | |||
| Allocation of offering costs related to redeemable shares | ) | |||
| Plus: | ||||
| Accretion of carrying value to redemption value | ||||
| Subsequent measurement of ordinary shares subject to possible redemption (income earned on trust account) | ||||
| Ordinary shares subject to possible redemption | $ |
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements 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 that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC
740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions
taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be
sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits
as income tax expense. There were no unrecognized tax benefits and
Income earned from U.S. debt obligations held by the Trust Account is intended to qualify for the portfolio income exemption or otherwise be exempt from U.S. withholding taxes. Furthermore, shareholders of the Company’s shares may be subject to tax in their respective jurisdictions based on applicable law, for instance, United States persons may be subject to tax on amounts deemed received depending on whether the Company is a passive foreign investment company and whether U.S. persons have made any applicable tax elections permitted under applicable law. The provision for income taxes was deemed to be immaterial for the period from September 15, 2021 (inception) through June 30, 2023.
| F-11 |
There is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s unaudited condensed financial statements.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
Note 3 – Initial Public Offering
On January 4, 2023, the Company sold Units, at a purchase price of $ per Unit. On January 9, 2023, the Company issued an additional Units, at a purchase price of $ per unit, in connection with the over-allotment option. Each Unit consists of one Ordinary Share, one Warrant and one Right, with each Right entitling the holder thereof to receive one-tenth of one Ordinary Share upon the completion of an initial business combination, subject to adjustment.
The
warrants will become exercisable at $
Following
the closing of the IPO and the sale of over-allotment units, an aggregate of $
Note 4 - Private Placement
Simultaneously
with the closing of the IPO, the Sponsor purchased an aggregate of Private Units at a price of $ per Private Unit, for an
aggregate purchase price of $
Note 5 - Related Party Transactions
On
September 28, 2021, the Sponsor received of the Company’s Class B ordinary shares in exchange for $
| F-12 |
On January 8, 2022, the board of directors of the Company and the Sponsor, as sole shareholder of the Company, approved, through a special resolution, the following share capital changes (see Note 7):
(a) Each of the authorized but unissued Class A ordinary shares were cancelled and re-designated as the ordinary shares of $ par value each;
(b) Each of the Class B ordinary shares in issue were repurchased in consideration for the issuance of ordinary shares of $ par value each; and
(c) Upon completion of the above steps, the authorized but unissued Class B ordinary shares were cancelled.
On
January 8, 2022, the Company issued an additional ordinary shares to the Sponsor for no additional consideration, resulting in
the Sponsor holding an aggregate of ordinary shares (the “Founder Shares”). The issuance was considered as a bonus
share issuance, in substance a recapitalization transaction, which was recorded and presented retroactively. The Founder Shares include
an aggregate of up to ordinary shares subject to forfeiture to the extent that the underwriters’ over-allotment is not
exercised in full or in part (refer Note 7). On January 6, 2023, the underwriters notified the Company that it is exercising the over-allotment
option with respect to the additional Units, which was subsequently closed on January 9, 2023, generating gross proceeds to the
Company of $
On
January 3, 2023, the Founder Shares and Private Units were placed into an escrow account maintained by American Stock Transfer &
Trust Company acting as escrow agent.
Promissory Note — Related Party
On
September 30, 2021, the Sponsor issued an unsecured promissory note to the Company (the “Promissory Note”), pursuant to which
the Company may borrow up to an aggregate principal amount of $
Due to Related Party
The
Sponsor paid certain formation, operating or deferred offering costs on behalf of the Company. These amounts are due on demand and non-interest
bearing. As of June 30, 2023 and December 31, 2022, due to related party amounted to $
| F-13 |
Advisory Services Agreement
The Company engaged TenX Global Capital LP (“TenX”), a related party to the Company, as an advisor in connection with the IPO and business combination, to assist in hiring consultants and other services providers in connection with our IPO and the business combination, assist in the preparation of financial statements and other relevant services to commence trading including filing the necessary documents as part of the transaction. Further, TenX will assist in preparing the Company for investor presentations, conferences for due diligence, deal structuring and term negotiations.
During
the period from September 15, 2021 (inception) through June 30, 2023, a cash fee of $
Administration fee
Commencing
on the effective date of the registration statement, an affiliate of the Sponsor shall be allowed to charge the Company an allocable
share of its overhead, up to $
Note 6 - Commitments and Contingencies
Registration Rights
The holders of the Founder Shares, Private Units, securities underlying the Unit Purchase Option (“UPO”), and Units that may be issued upon conversion of Working Capital Loans (and any ordinary shares issuable upon the exercise of the Private Units) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of IPO requiring the Company to register such securities for resale. The holders of these securities will be entitled to make up to three demands, excluding short form registration demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to completion of a business combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that the Company will not be required to effect or permit any registration or cause any registration statement to become effective until the securities covered thereby are released from their lock-up restrictions. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriters had a 45-day option beginning January 4, 2023, to purchase up to an additional units to cover over-allotments, if any, at the IPO price less the underwriting discounts and commissions. On January 6, 2023, and effective January 9, 2023, the underwriters exercised their over-allotment option in full and purchased an additional units at $ per unit.
On
January 4, 2023, the Company paid a fixed underwriting discount of $
Unit Purchase Option
On December 30, 2022, we sold to the underwriters, for $, Units exercisable, in whole or in part, at $ per unit (or 115% of the Market Value), commencing on the consummation of our initial business combination, and expires five years from the effective date of our IPO.
| F-14 |
Note 7 - Shareholders’ Equity
Preferred Shares - The Company is authorized to issue shares of preferred shares with a par value of $ per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of June 30, 2023, and December 31, 2022, there were preferred shares issued or outstanding.
Ordinary Shares
The
Company was authorized to issue Class A ordinary shares with a par value of $ per share and Class B ordinary
shares with a par value of $ per share.
On
September 28, 2021, the Sponsor received of the Company’s Class B ordinary shares in exchange for $
On January 8, 2022, the board of directors of the Company and the Sponsor, as sole shareholder of the Company, approved, through a special resolution, the following share capital changes:
(a) Each of the authorized but unissued Class A ordinary shares were cancelled and re-designated as the ordinary shares of $ par value each;
(b) Each of the Class B ordinary shares in issue were repurchased in consideration for the issuance of ordinary shares of $ par value each; and
(c) Upon completion of the above steps, the authorized but unissued Class B ordinary shares were cancelled.
As
an effect of the above, the Company is authorized to issue ordinary shares with a par value of $ per share.
On January 8, 2022, the Company issued an additional ordinary shares to the Sponsor as fully paid bonus shares for no additional consideration. The issuance was considered as a bonus share issuance, in substance a recapitalization transaction, which was recorded and presented retroactively.
On
January 4, 2023, the Company consummated the IPO of units at a price of $ per Unit, generating gross proceeds to the Company
of $
On
January 6, 2023, the underwriters notified the Company that it is exercising the over-allotment option with respect to the additional
Units, which was subsequently closed on January 9, 2023, generating gross proceeds to the Company of $
| F-15 |
Simultaneously,
an amount of $
Note 8 – Fair Value Measurements
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
Level 1: Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2: Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
Level 3: Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
The following table presents information about the Company’s assets that are measured at fair value on a recurring basis at June 30, 2023 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.
| Quoted | Significant | Significant | ||||||||||||||
| Prices in | Other | Other | ||||||||||||||
| As of | Active | Observable | Unobservable | |||||||||||||
| June 30, | Markets | Inputs | Inputs | |||||||||||||
| 2023 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
| Assets: | ||||||||||||||||
| Investment held in Trust Account | $ | $ | $ | | $ | |||||||||||
As
of June 30, 2023, the balance of investment held in Trust Account was $
Note 9 - Subsequent Events
The Company has evaluated subsequent events through August 14, 2023, which was the date these unaudited condensed financial statements were available for issuance and determined that there were no significant unrecognized events through that date.
| F-16 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References to the “Company,” “our,” “us” or “we” refer to AlphaTime Acquisition Corp. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes related thereto. Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors.
Overview
We are a blank check company incorporated on September 15, 2021 (“inception”) as a Cayman Islands exempted company and formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. We have generated no revenues to date, and we do not expect that we will generate operating revenues at the earliest until we consummate our initial business combination. We have not selected any specific business combination target and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly, with any business combination target with respect to an initial business combination with us.
While we may pursue an acquisition or a business combination target in any business or industry, we intend to focus our search on a rapidly-growing and large-scaled target, including but not limited to, targets in the following space: fintech, alternative and clean energy, biotech, logistics, industrial software, artificial intelligence (“AI”) and cloud industry, that can benefit from the expertise and capabilities of our management team. Our efforts in identifying prospective target businesses will not be limited to a particular geographic region, although we intend to focus on businesses in Asia.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception to June 30, 2023, have been organizational activities and those necessary to consummate the Initial Public Offering (“IPO”), described below. Following our IPO, we will not generate any operating revenues until the completion of our initial business combination. We will generate non-operating income in the form of interest income after the IPO. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the three months ended June 30, 2023, we had a net income of $701,529, which consists of loss of $140,291 derived from formation and operating costs offset by income earned on Trust Account of $841,820.
For the six months ended June 30, 2023, we had a net income of $1,226,272 which consists of loss of $347,790 derived from formation and operating costs offset by income earned on Trust Account of $1,574,062.
For the three and six months ended June 30, 2022, we had no income/(loss).
Liquidity and Capital Resources
On January 4, 2023, we consummated our IPO of 6,000,000 units (the “Units”), at $10.00 per Unit, generating gross proceeds of $60,000,000. Simultaneously with the closing of our IPO, we consummated the sale of 370,500 Private Placement Units at a price of $10.00 per Private Placement Unit in a private placement to the Sponsor, generating total gross proceeds of $3,705,000.
On January 6, 2023, and effective January 9, 2023, the underwriters in our IPO purchased an additional 900,000 Units to exercise its over-allotment option in full at a purchase price of $10.00 per Unit, generating gross proceeds of $9,000,000. Simultaneously with the closing of the full exercise of the over-allotment option, we completed the private sale of an aggregate of 38,700 Private Placement Units, at a purchase price of $10.00 per Private Placement Unit, generating gross proceeds of $387,000. Transaction costs amounted to $4,892,699 consisting of $1,612,500 of underwriting discount, $2,415,000 of deferred underwriting commission and $865,199 of other offering costs.
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Following the closing of our IPO and the sale of over-allotment units, an aggregate of $70,242,000 ($10.18 per Unit) from the net proceeds and the sale of the Private Placement Units was held in a Trust Account (“Trust Account”). As of June 30, 2023, we had marketable securities held in the Trust Account of $71,816,062 consisting of securities held in a treasury trust fund that invests in United States government treasury bills, bonds or notes with a maturity of 180 days or less. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less amounts released to us for taxes payable and deferred underwriting commissions) to complete our initial business combination. We may withdraw interest to pay taxes, if any. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the Trust Account. We expect the interest income earned on the amount in the Trust Account (if any) will be sufficient to pay our taxes. Through June 30, 2023, we did not withdraw any income earned on the Trust Account to pay our taxes. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our initial business combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
As of June 30, 2023, we had cash balance of $126,594 and a working capital surplus of approximately $50,490. Until the consummation of our IPO, our liquidity needs were satisfied through a capital contribution from our Sponsor of $25,000 to purchase the founder shares, and up to $300,000 in loans available from our Sponsor under an unsecured promissory note. As of December 31, 2022, there were no borrowings outstanding under the promissory note and the promissory note then expired. Subsequent to the consummation of the IPO, the Company expects that it will need additional capital to satisfy its liquidity needs beyond the net proceeds from the consummation of the IPO and the proceeds held outside of the Trust Account for paying existing accounts payable, identifying and evaluating prospective business combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Initial Business Combination. Although certain of the Company’s initial shareholders, officers and directors or their affiliates have committed to loan the Company funds from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, there is no guarantee that the Company will receive such funds.
The Company will use funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a business combination. In addition, we could use a portion of the funds not being placed in trust to pay commitment fees for financing, fees to consultants to assist us with our search for a target business or as a down payment or to fund a “no-shop” provision (a provision designed to keep target businesses from “shopping” around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into an agreement where we paid for the right to receive exclusivity from a target business, the amount that would be used as a down payment or to fund a “no-shop” provision would be determined based on the terms of the specific business combination and the amount of our available funds at the time. Our forfeiture of such funds (whether as a result of our breach or otherwise) could result in our not having sufficient funds to continue searching for, or conducting due diligence with respect to, prospective target businesses.
In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our founders or an affiliate of our founders may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay such loaned amounts. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment. Up to $300,000 of such loans may be convertible into working capital units, at a price of $10.00 per unit at the option of the lender. The working capital units would be identical to the private units, each consisting of one ordinary share, one private warrant and one right with the same exercise price, exercisability and exercise period, subject to similar limited restrictions as compared to the units sold in our IPO. The terms of such loans by our founders or their affiliates, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our founders or an affiliate of our founders as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account, but in the event that we seek loans from any third parties, we will obtain a waiver against any and all rights to seek access to funds in our trust account.
| 2 |
Accordingly, the accompanying unaudited condensed financial statements have been prepared in conformity with U.S. GAAP, which contemplates continuation of the Company as a going concern and the realization of assets and the satisfaction of liabilities in the normal course of business. The financial statement does not include any adjustments that might result from the outcome of this uncertainty. Further, we have incurred and expect to continue to incur significant costs in pursuit of our financing and acquisition plans. Management plans to address this uncertainty during period leading up to the Initial Business Combination. The Company cannot provide any assurance that its plans to raise capital or to consummate an Initial Business Combination will be successful. Based on the foregoing, management believes that the Company lacks the financial resources it needs to sustain operations for a reasonable period of time. Moreover, management’s plans to consummate the initial business combination may not be successful. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.
Quantitative and Qualitative Disclosures About Market Risk
The net proceeds of the IPO and the sale of the Private Placement Units held in the Trust Account will be invested in U.S. government treasury bills with a maturity of 180 days or less or in money market funds investing solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.
Related Party Transactions
On September 28, 2021, our Sponsor received 1,437,500 of the Company’s Class B ordinary shares in exchange for $25,000 paid for deferred offering costs borne by our Sponsor.
On January 8, 2022, the board of directors of the Company and our Sponsor, as sole shareholder of the Company, approved, through a special resolution, the following share capital changes:
| (a) | Each of the authorized but unissued 200,000,000 Class A ordinary shares were cancelled and re-designated as ordinary shares of $0.0001 par value each; | |
| (b) | Each of the 1,437,500 Class B ordinary shares in issue were repurchased in consideration for the issuance of 1,437,500 ordinary shares of $0.0001 par value each; and | |
| (c) | Upon completion of the above steps, the authorized but unissued 20,000,000 Class B ordinary shares were cancelled. |
On January 8, 2022, the Company issued an additional 287,500 ordinary shares to our Sponsor for no additional consideration, resulting in our Sponsor holding an aggregate of 1,725,000 ordinary shares (the founder shares). The issuance was considered as a bonus share issuance, in substance a recapitalization transaction, which was recorded and presented retroactively. The founder shares include an aggregate of up to 225,000 ordinary shares subject to forfeiture to the extent that the underwriters’ over-allotment is not exercised in full or in part.
Prior to the initial investment in the Company of $25,000 by our Sponsor, the Company had no assets, tangible or intangible. The number of founder shares issued was determined based on the expectation that such founder shares would represent 20% of the outstanding shares upon completion of the IPO (excluding the private shares and shares underlying the UPO). The per share purchase price of the founder shares was determined by dividing the amount of cash contributed to the Company by the aggregate number of founder shares issued. If we increase or decrease the size of the IPO we will effect a share dividend or a share contribution back to capital or other appropriate mechanism, as applicable, with respect to our ordinary shares immediately prior to the consummation of the offering in such amount as to maintain the ownership of our initial shareholders at 20% of the issued and outstanding ordinary shares (excluding the private shares and shares underlying the UPO) upon the consummation of the IPO.
Our founders and advisors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments that were made to our founders, advisors or our or their affiliates and will determine which expenses and the amount of expenses that will be reimbursed. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf.
| 3 |
On September 30, 2021, our sponsor agreed to loan us up to $300,000 to be used for a portion of the expenses of the IPO. This loan is non-interest bearing, unsecure and is due at the earlier of (1) December 31, 2022, and (2) the consummation of the IPO. On December 31, 2022, there were no amounts outstanding, and the Promissory Notes had then expired.
In addition, in order to finance transaction costs in connection with an intended initial business combination, our founders or an affiliate of our founders may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we will repay such loaned amounts. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $300,000 of such loans may be convertible into working capital units, at a price of $10.00 per unit at the option of the lender. Such working capital units would be identical to the private units sold in the private placement. The terms of such loans by our founders or their affiliates, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our founders or an affiliate of our founders as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account, but in the event that we seek loans from any third parties, we will obtain a waiver against any and all rights to seek access to funds in our trust account.
Private Placement Units
On January 4, 2023, simultaneously with the closing of our IPO, we consummated the sale of 370,500 Private Placement Units at a price of $10.00 per Private Placement Unit in a private placement to the Sponsor, generating total gross proceeds of $3,705,000.
On January 6, 2023, and effective January 9, 2023, the underwriters in our IPO purchased an additional 900,000 Units to exercise its over-allotment option in full at a purchase price of $10.00 per Unit, generating gross proceeds of $9,000,000. Simultaneously with the closing of the full exercise of the over-allotment option, we completed the private sale of an aggregate of 38,700 Private Placement Units, at a purchase price of $10.00 per Private Placement Unit, generating gross proceeds of $387,000.
Our Sponsor will be permitted to transfer the private units held by them to certain permitted transferees, including our officers and directors and other persons or entities affiliated with or related to it or them, but the transferees receiving such securities will be subject to the same agreements with respect to such securities as the founders. Otherwise, these private units (and underlying securities) will be subject to certain transfer restrictions, subject to certain limited exceptions, as described under “Principal Shareholders — Restrictions on Transfers of Founder Shares and Private Units.”
Pursuant to a registration rights agreement we will enter into with our founders on or prior to the closing of the IPO, we may be required to register certain securities for sale under the Securities Act. Our founders and holders of private units issued upon conversion of working capital loans, if any, are entitled under the registration rights agreement to make up to three demands that we register certain of our securities held by them for sale under the Securities Act and to have the securities covered thereby registered for resale pursuant to Rule 415 under the Securities Act. In addition, these holders have the right to include their securities in other registration statements filed by us. We will bear the costs and expenses of filing any such registration statements. See the section of this Form 10-K entitled “Certain Relationships and Related Party Transactions.
Due to Related Party
The Sponsor paid certain formation, operating or deferred offering costs on behalf of the Company. These amounts are due on demand and non-interest bearing. As of June 30, 2023 and December 31, 2022, the amount due to the related party was $8 and $380,566, respectively.
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Administration fee
Commencing on the effective date of the registration statement, an affiliate of the Sponsor shall be allowed to charge the Company an allocable share of its overhead, up to $10,000 per month up to the close of the initial business combination, to compensate it for the Company’s use of its offices, utilities and personnel. An administration fee of $30,000 and $60,000 was recorded and paid for the three months and six months ended June 30, 2023.
Other Contractual Obligations
Underwriting Agreement
We granted the underwriters a 45-day option from the date of IPO to purchase up to 900,000 additional Units to cover over-allotments, if any, at the IPO price less the underwriting discounts and commissions. The underwriters exercised the over-allotment option in full effective January 9, 2023. Simultaneously, on January 4, 2023, an amount of $352,350 due to related party was converted into over-allotment of Private Placement, and the underwriter deposited additional $34,650 on behalf of Sponsor for 17,325 Founder Shares for $2.00 per share which was sold by the Sponsor to underwriters. The Company paid a cash underwriting commission of $0.125 per Unit for 900,000 additional Units and the underwriters will be entitled to a deferred commission of $0.35 per Unit, an aggregate of $2,415,000, which will be paid from the funds held in the Trust Account upon completion of the initial business combination.
Concurrent with the closing of the IPO, our Sponsor, at the option of the Company, sold to the underwriter or its designees 115,500 Founder Shares for a purchase price of $2.00 per share and an aggregate purchase price of $231,000.
We have agreed to sell to the underwriters, for $100.00, an option to purchase up to a total of 58,000 Units exercisable, in whole or in part, at $11.50 per unit (or 115% of the Market Value), commencing on the consummation of our initial business combination, and expires five years from the effective date of the IPO. The option and the 58,000 Units, as well as the 58,000 ordinary shares, the warrants to purchase 58,000 ordinary shares that may be issued upon exercise of the option and the rights to purchase 5,800 ordinary shares upon the completion of an initial business combination, have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following the effective date of the registration statement or the commencement of sales in the IPO pursuant to Rule 5110(e)(1) of FINRA’s Rules, during which time the option may not be sold, transferred, assigned, pledged or hypothecated, or be subject of any hedging, short sale, derivative or put or call transaction that would result in the economic disposition of the securities, except as permitted under FINRA Rule 5110(e)(2).
Advisory Services Agreement
The Company engaged TenX Global Capital LP (“TenX”), a related party to the Company, as an advisor in connection with the IPO and the initial business combination, to assist in hiring consultants and other services providers in connection with the IPO and the initial business combination, assist in the preparation of financial statements and other relevant services to commence trading including filing the necessary documents as part of the transaction. Further, TenX will assist in preparing the Company for investor presentations, conferences for due diligence, deal structuring and term negotiations.
During the period from September 15, 2021 (inception) through June 30, 2023, a cash fee of $200,000 has been incurred as deferred offering costs for these services of which $160,000 has been paid by the Sponsor through December 31, 2022, and additional $40,000 was paid subsequently through six months ended June 30, 2023.
Off-Balance Sheet Arrangements; Commitments and Contractual Obligations
As of June 30, 2023, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified below critical accounting policies.
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Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s ordinary shares features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, ordinary shares subject to possible redemption is presented at redemption of $10.18 per share (plus any income earned Trust Account) as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheet. The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable ordinary shares to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable ordinary shares are affected by charges against additional paid in capital or accumulated deficit if additional paid in capital equals to zero.
Net Income (Loss) per Share
The Company complies with accounting and disclosure requirements of FASB ASC 260, Earnings Per Share. The unaudited condensed statements of operations include a presentation of income (loss) per redeemable share and income (loss) per non-redeemable share following the two-class method of income (loss) per share. In order to determine the net income (loss) attributable to both the redeemable shares and non-redeemable shares, the Company first considered the undistributed income (loss) allocable to both the redeemable shares and non-redeemable shares and the undistributed income (loss) is calculated using the total net loss less any dividends paid. The Company then allocated the undistributed income (loss) ratably based on the weighted average number of shares outstanding between the redeemable and non-redeemable shares. Any remeasurement of the accretion to redemption value of the ordinary shares subject to possible redemption was considered to be dividends paid to the public shareholders.
Deferred Offering Costs
Deferred offering costs consist of underwriting, legal, accounting, and other expenses incurred through the balance sheet date that are directly related to our IPO and that were charged to shareholders’ equity upon the completion of our IPO on January 4, 2023. As of June 30, 2023 and December 31, 2022, there were $0 and $584,518 offering costs.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We are not currently required to certify and report on our internal controls as defined by Section 404 of the Sarbanes-Oxley Act. Only in the event that we are deemed to be a large accelerated filer or an accelerated filer will we be required to comply with the independent registered public accounting firm attestation requirement. Further, for as long as we remain an emerging growth company as defined in the JOBS Act, we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirement.
As of June 30, 2023, we have not completed an assessment, nor have our auditors tested our systems, of internal controls. We expect to assess the internal controls of our target business or businesses prior to the completion of our initial business combination and, if necessary, to implement and test additional controls as we may determine are necessary in order to state that we maintain an effective system of internal controls. A target business may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding the adequacy of internal controls.
Management’s Report on Internal Controls Over Financial Reporting
This Quarterly Report on Form 10-Q does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
To the knowledge of our management, there is no material litigation, arbitration, bankruptcy, receivership, governmental proceeding or other proceeding currently pending against us or any members of our management team in their capacity as such.
Item 1A. Risk Factors
As of the date of this Report, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K filed with the SEC on March 24, 2023.
Item 2. Unregistered Sales of Equity Securities
Unregistered Sales of Equity Securities
On September 28, 2021, our Sponsor acquired 1,437,500 founder shares for an aggregate purchase price of $25,000. On January 8, 2022, our Sponsor acquired an additional 287,500 founder shares for no additional consideration, resulting in our Sponsor holding an aggregate of 1,725,000 founder shares. Concurrent with the closing of the Initial Public Offering, our Sponsor sold to Chardan or its designees 132,825 of these founder shares at a purchase price of $2.00 per share and an aggregate purchase price of $265,650.
Simultaneously with the closing of the IPO, pursuant to the Private Placement Unit Purchase Agreement, the Company completed the private sale of 370,500 units (the “Private Placement Units”) to the Sponsor at a purchase price of $10.00 per Private Placement Unit, generating gross proceeds to the Company of $3,705,000. The Private Placement Units are identical to the Units sold in the IPO. No underwriting discounts or commissions were paid with respect to such sale. The issuance of the Private Placement Units was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended. No underwriting discounts or commissions were paid with respect to such sale. The issuance of the Private Placement Units was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended. On January 9, 2023, simultaneously with the sale of the over-allotment Units, the Company consummated the private sale of an additional 38,700 Private Placement Units, generating additional gross proceeds of $387,000.
Use of Proceeds
On January 4, 2023, the Company consummated the initial public offering of 6,000,000 Units (the “Units” and, with respect to the Ordinary shares included in the Units sold, the “Public Shares”), including 900,000 Units that were issued pursuant to the underwriters’ exercise of their over-allotment option in full on January 9, 2023, at $10.00 per Unit, generating gross proceeds of $69,000,000.
Simultaneously with the closing of the initial public offering, we consummated the sale of 370,500 Private Placement Units at a price of $10.00 per warrant, generating gross proceeds of $3,705,000. On January 9, 2023, simultaneously with the sale of the over-allotment Units, the Company consummated the private sale of an additional 38,700 Private Units, generating additional gross proceeds of $387,000.
Transaction costs related to the issuances described above amounted to $4,892,699 consisting of $1,612,500 of underwriting fees, $2,415,000 of deferred underwriting fees and $865,199 of other offering costs. After deducting the underwriting discounts and commissions and offering expenses, the total net proceeds from the initial public offering and the sale of the Private Placement Warrants $70,242,000 (or $10.18 per share sold in the initial public offering) was placed in the Trust Account.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits
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EXHIBIT INDEX
| Exhibit Number | Description | |
| 31.1* | Certification of Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a). | |
| 31.2* | Certification of Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a). | |
| 32.1** | Certification of Principal Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350. | |
| 32.2** | Certification of Principal Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350. | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema | |
| 101.CAL | Inline XBRL Taxonomy Calculation Linkbase | |
| 101.LAB | Inline XBRL Taxonomy Label Linkbase | |
| 101.PRE | Inline XBRL Definition Linkbase Document | |
| 101.DEF | Inline XBRL Definition Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
*Filed herewith.
**Furnished herewith.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.
August 11, 2023
| ALPHATIME ACQUISITION CORP | ||
| By: | /s/ Dajiang Guo | |
| Dajiang Guo | ||
| Chief Executive Officer (Principal Executive Officer) | ||
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