UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
Or
☐ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission File Number: 001-41112
Blue Ocean Acquisition Corp
(Exact name of registrant as specified in its charter)
Cayman Islands | | 98-1593951 |
(State or other jurisdiction of
incorporation or organization) | | (I.R.S. Employer
Identification No.) |
2 Wisconsin Circle, 7th Floor Chevy Chase, MD 20815 | | 20815 |
(Address of principal executive offices) | | (Zip Code) |
(240) 235-5049
(Registrant’s telephone number, including
area code)
(Former name, former address and former fiscal
year, if changed since last report)
Securities registered pursuant to Section 12(b)
of the Act:
Title of Each Class: | | Trading Symbol(s) | | Name of Each Exchange on Which Registered: |
Units, each consisting of one Class A ordinary share and one-half of one redeemable warrant to purchase one Class A ordinary share | | BOCNU | | The NASDAQ Stock Market LLC |
| | | | |
Class A ordinary share, par value $0.0001 per share | | BOCN | | The NASDAQ Stock Market LLC |
| | | | |
Redeemable warrants, each exercisable for one Class A ordinary share at an exercise price of $11.50 per share, subject to adjustment | | BOCNW | | The NASDAQ Stock Market LLC |
Securities registered pursuant to Section 12(g)
of the Act: None
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. 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, 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 | ☐ |
Non-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). Yes ☒
No ☐
As of May 13, 2024, there were 6,157,215 Class
A ordinary shares and 4,743,750 Class B ordinary shares of the registrant issued and outstanding.
BLUE OCEAN ACQUISITION CORP.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2024
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Interim Financial Statements
BLUE OCEAN ACQUISITION CORP
CONDENSED BALANCE SHEETS
| |
March 31, 2024 | | |
December 31, 2023 | |
| |
(Unaudited) | | |
| |
Assets | |
| | |
| |
Current Assets: | |
| | |
| |
Cash | |
$ | 38,609 | | |
$ | 61,977 | |
Prepaid expenses and other assets | |
| 158,747 | | |
| 66,214 | |
Total current assets | |
| 197,356 | | |
| 128,191 | |
Non-current assets | |
| | | |
| | |
Cash held in trust account | |
| 68,271,419 | | |
| 67,214,745 | |
Total assets | |
$ | 68,468,775 | | |
$ | 67,342,936 | |
Liabilities and Shareholders’ Deficit | |
| | | |
| | |
Current Liabilities: | |
| | | |
| | |
Accounts payable and accrued expenses | |
$ | 3,631,709 | | |
$ | 2,857,214 | |
Accounts payable – Related Party | |
| 260,000 | | |
| 230,000 | |
Promissory note, convertible – Related Party | |
| 1,428,463 | | |
| 1,095,833 | |
Promissory note | |
| 249,906 | | |
| 149,946 | |
Total current liabilities | |
| 5,570,078 | | |
| 4,332,993 | |
Accrued offering costs, non-current | |
| 806,823 | | |
| 806,823 | |
Warrant liabilities | |
| 359,280 | | |
| 374,250 | |
Deferred underwriting fee payable | |
| 6,641,250 | | |
| 6,641,250 | |
Total liabilities | |
| 13,377,431 | | |
| 12,155,316 | |
Commitments | |
| | | |
| | |
Class A ordinary shares subject to possible redemption; 6,157,215 shares issued and outstanding at redemption value of $11.09 and $10.92 as of March 31, 2024 and December 31, 2023, respectively | |
| 68,271,419 | | |
| 67,214,745 | |
Shareholders’ Deficit: | |
| | | |
| | |
Preferred shares, $0.0001 par value; 1,000,000 shares authorized; none outstanding | |
| — | | |
| — | |
Class A ordinary shares, $0.0001 Par Value; 200,000,000 shares authorized; no shares issued or outstanding (excluding 6,157,215 shares subject to possible redemption) | |
| — | | |
| — | |
Class B ordinary shares, $0.0001 Par Value; 20,000,000 shares authorized; 4,743,750 shares issued and outstanding at March 31, 2024 and December 31, 2023 | |
| 474 | | |
| 474 | |
Additional paid-in capital | |
| — | | |
| — | |
Accumulated deficit | |
| (13,180,549 | ) | |
| (12,027,599 | ) |
Total shareholders’ deficit | |
| (13,180,075 | ) | |
| (12,027,125 | ) |
Total Liabilities and Shareholders’ Deficit | |
$ | 68,468,775 | | |
$ | 67,342,936 | |
The accompanying notes are an integral part
of the unaudited condensed financial statements.
BLUE OCEAN ACQUISITION CORP
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
| |
For The Three Months Ended March 31, | |
| |
2024 | | |
2023 | |
General and administrative expenses | |
$ | 985,290 | | |
$ | 308,404 | |
Loss from operations | |
| (985,290 | ) | |
| (308,404 | ) |
| |
| | | |
| | |
Other income (expense): | |
| | | |
| | |
Interest earned on cash and marketable securities held in Trust Account | |
| 876,674 | | |
| 2,138,122 | |
Unrealized loss on marketable securities held in Trust Account | |
| — | | |
| 92,492 | |
Change in fair value of warrant liabilities | |
| 14,970 | | |
| (282,559 | ) |
Interest expense | |
| (2,630 | ) | |
| — | |
Net (loss) income | |
$ | (96,276 | ) | |
$ | 1,639,651 | |
Weighted average shares outstanding of Class A redeemable ordinary shares | |
| 6,175,215 | | |
| 18,975,000 | |
Basic and diluted net (loss) income per ordinary share, Class A redeemable ordinary shares | |
$ | (0.01 | ) | |
$ | 0.07 | |
Weighted average shares outstanding of Class B ordinary shares non-redeemable shares | |
| 4,743,750 | | |
| 4,743,750 | |
Basic and diluted net (loss) income per ordinary share, Class B ordinary shares non-redeemable shares | |
$ | (0.01 | ) | |
$ | 0.07 | |
The accompanying notes are an integral part
of the unaudited condensed financial statements.
BLUE OCEAN ACQUISITION CORP
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN
SHAREHOLDERS’ DEFICIT
FOR THE THREE MONTHS ENDED MARCH 31, 2024
|
|
Class B Ordinary
shares |
|
|
Additional
Paid in |
|
|
Accumulated |
|
|
Total
Shareholders’ |
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Deficit |
|
Balance - December 31, 2023 |
|
|
4,743,750 |
|
|
$ |
474 |
|
|
$ |
— |
|
|
$ |
(12,027,599 |
) |
|
$ |
(12,027,125 |
) |
Accretion of Class A ordinary shares to redemption value |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,056,674 |
) |
|
|
(1,056,674 |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(96,276 |
) |
|
|
(96,276 |
) |
Balance – March 31, 2024 |
|
|
4,743,750 |
|
|
$ |
474 |
|
|
$ |
— |
|
|
$ |
(13,180,549 |
) |
|
$ |
(13,180,075 |
) |
BLUE OCEAN ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENT OF CHANGES IN
SHAREHOLDERS’ DEFICIT
FOR THE THREE MONTHS ENDED MARCH 31,
2023
| |
Class B Ordinary shares | | |
Additional Paid in | | |
Accumulated | | |
Total Shareholders’ | |
| |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Deficit | |
Balance – December 31, 2022 | |
| 4,743,750 | | |
$ | 474 | | |
$ | — | | |
$ | (8,675,042 | ) | |
$ | (8,674,568 | ) |
Accretion of Class A ordinary shares to redemption value | |
| | | |
| | | |
| | | |
| (2,230,614 | ) | |
| (2,230,614 | ) |
Net income | |
| — | | |
| — | | |
| — | | |
| 1,639,651 | | |
| 1,639,651 | |
Balance – March 31, 2023 | |
| 4,743,750 | | |
$ | 474 | | |
$ | — | | |
$ | (9,266,005 | ) | |
$ | (9,265,531 | ) |
The accompanying notes are an integral part
of the unaudited condensed financial statements.
BLUE OCEAN ACQUISITION CORP
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
| |
For The Three Months Ended March 31, | |
| |
2024 | | |
2023 | |
Cash Flow from Operating Activities: | |
| | |
| |
Net (loss) income | |
$ | (96,276 | ) | |
$ | 1,639,651 | |
Adjustments to reconcile net (loss) income to net cash used in operating
activities: | |
| | | |
| | |
Interest earned on cash and marketable securities held in Trust Account | |
| (876,674 | ) | |
| (2,138,122 | ) |
Unrealized gain on marketable securities held in Trust Account | |
| — | | |
| (92,492 | ) |
Change in fair value of warrant liabilities | |
| (14,970 | ) | |
| 282,559 | |
Interest expense | |
| 2,630 | | |
| — | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Prepaid expenses and other current assets | |
| (92,533 | ) | |
| 276 | |
Accounts payable and accrued expenses, current | |
| 774,495 | | |
| 13,613 | |
Accounts Payable – Related Party | |
| 30,000 | | |
| 30,000 | |
Net cash used in operating activities | |
| (273,328 | ) | |
| (264,515 | ) |
Cash flows from investing activities: | |
| | | |
| | |
Cash deposited in Trust Account | |
| (180,000 | ) | |
| — | |
Cash flows used in investing activities | |
| (180,000 | ) | |
| — | |
Cash flows from financing activities: | |
| | | |
| | |
Proceeds from convertible promissory note payable | |
| 330,000 | | |
| — | |
Proceeds from promissory note payable | |
| 99,960 | | |
| — | |
Net cash provided by financing activities | |
| 429,960 | | |
| — | |
Net change in cash | |
| (23,368 | ) | |
| (264,515 | ) |
Cash at the beginning of the period | |
| 61,977 | | |
| 627,628 | |
Cash at the end of the period | |
$ | 38,609 | | |
$ | 363,113 | |
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | |
| | | |
| | |
Deferred underwriting fee payable | |
$ | — | | |
$ | 6,641,250 | |
Accretion of ordinary shares subject to redemption | |
$ | 1,056,674 | | |
$ | 2,230,614 | |
The accompanying notes are an integral part
of the unaudited condensed financial statements.
BLUE OCEAN ACQUISITION CORP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS
OPERATIONS
Blue Ocean Acquisition Corp
(the “Company”) is a blank check company incorporated in the Cayman Islands on March 26, 2021. The Company was formed for
the purpose of effectuating a merger, capital share exchange, asset acquisition, share purchase, reorganization or other similar business
combination with one or more businesses (the “Business Combination”). The Company is an early stage and emerging growth company
and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
On June 6, 2023, the Company
entered into an agreement and plan of merger (the “Merger Agreement”) with The News Lens Co., Ltd., a Cayman Islands exempted
company (“TNL”), and TNL Mediagene, a Cayman Islands exempted company and wholly owned subsidiary of TNL (“Merger Sub”).
On the terms and subject to the conditions set forth in the Merger Agreement, the parties thereto will enter into a business combination
transaction pursuant to which, among other things, Merger Sub will merge with and into the Company, with the Company surviving the Merger
as a wholly owned subsidiary of TNL (the “Merger”).
As of March 31, 2024, the
Company had not yet commenced any operations. All activity through March 31, 2024, relates to the Company’s formation and the initial
public offering (the “Public Offering”) which is described below, and subsequent to the Public Offering, identifying a target
for a Business Combination, including the negotiation of the Merger Agreement. The Company will not generate any operating revenues until
after the completion of its initial Business Combination, at the earliest. The Company has selected December 31 as its fiscal year end.
The registration statement
for the Company’s Public Offering was declared effective on December 6, 2021 (the “Effective Date”). On December 7,
2021, the Company consummated the Public Offering of 16,500,000 units (the “Units” and, with respect to the shares of Class
A ordinary shares included in the Units offered, the “Public Shares”), generating gross proceeds of $165,000,000 which is
described in Note 3. Each Unit consists of one Class A ordinary share of the Company and one-half of one redeemable warrant (the “Public
Warrants”). On December 9, 2021, the underwriters fully exercised the over-allotment option and purchased 2,475,000 units (the “Over-Allotment
Option Units”) at a price of $10.00 per Over-Allotment Option Unit, generating gross proceeds of $24,750,000.
Simultaneously with the closing
of the Public Offering, the Company consummated the sale of 8,235,000 warrants (the “Private Placement Warrants”) at a price
of $1.00 per Private Placement Warrant that closed in a private placement to Blue Ocean Sponsor LLC (the “Sponsor”) and Apollo
SPAC Fund I, L.P. (“Apollo” or “Anchor Investor”) simultaneously with the closing of the Public Offering (see
Note 4). On December 9, 2021, the Company consummated the sale of additional 990,000 Private Placement Warrants (the “Additional
Private Placement Warrants”) with the Sponsor at a price of $1.00 per Private Placement Warrant, generating total proceeds of $990,000.
Transaction costs amounted
to $12,517,335, consisting of $3,795,000 in cash underwriting fees, $6,641,250 of deferred underwriting fees, $1,248,100 of offering costs
related to the fair value of the Founder Shares sold to Anchor Investor, and $832,985 of other offering costs.
Following the closing of the
Public Offering, the sale of the Private Placement Warrants, the sale of the Over-Allotment Option Units and the sale of the Additional
Private Placement Shares, an amount of $193,545,000 ($10.20 per Public Unit) was placed in a trust account (the “Trust Account”),
located in the United States and until November 2023, was invested only in U.S. government securities, within the meaning set forth in
Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185
days or less or in a money market fund meeting certain conditions of Rule 2a-7 of the Investment Company Act, which invests only in direct
U.S. government treasury obligations, as determined by the Company, until the earlier of: (i) the completion of a Business Combination
and (ii) the distribution of the funds held in the Trust Account, as described below.
On August 29, 2023, shareholders
of the Company held an extraordinary general meeting of shareholders (the “Extraordinary General Meeting”) in lieu of the
2023 annual general meeting of the shareholders of the Company. At the Extraordinary General Meeting, the Company’s shareholders
approved the proposal to amend the Company’s Amended and Restated Memorandum and Articles of Association to give the Company the
right to extend the date by which it has to consummate a business combination from September 7, 2023 to June 7, 2024, by depositing into
the Trust Account $60,000 for each of the nine subsequent one-month extensions. In connection therewith the shareholders of record were
provided the opportunity to exercise their redemption rights (the “Extension Amendment”). Holders of 12,817,785 shares
of Class A ordinary shareholders exercised their right to redemption at a per share redemption price of approximately $10.67. On September
5, 2023, a total of $136,786,445 in redemption payments were made in connection with this redemption. Following the redemption, the
Company had a total of 6,157,215 shares of Class A ordinary shares outstanding.
On January 24, 2024, the SEC
issued final rules (the “SPAC Rules”) relating to, among other things, disclosures in business combination transactions between
special purpose acquisition companies (“SPACs”) such as us and private operating companies; the condensed financial statement
requirements applicable to transactions involving shell companies; and the use of projections by SPACs in SEC filings in connection with
proposed business combination transactions. In connection with the issuance of the SPAC Rules, the SEC also issued guidance (the “SPAC
Guidance”) regarding the potential liability of certain participants in proposed business combination transactions and the extent
to which SPACs could become subject to regulation under the Investment Company Act of 1940, as amended (“Investment Company Act”)
based on certain facts and circumstances such as duration, asset composition, sources of income, business purpose and activities of the
SPAC and its management team in furtherance of such goals.
To mitigate the risk of us
being deemed to be an unregistered investment company (including under the subjective test of Section 3(a)(1)(A) of the Investment Company
Act) and thus subject to regulation under the Investment Company Act, in November 2023, the Company instructed Continental Stock Transfer
& Trust Company, the trustee with respect to the Trust Account, to liquidate the U.S. government treasury obligations or money market
funds held in the Trust Account and thereafter deposited the cash from the liquidation of the trust assets into an interest-bearing demand
deposit account until the earlier of the consummation of the initial Business Combination or the Company’s liquidation, with Continental
Stock Transfer & Trust Company continuing to act as trustee. As a result, following such liquidation, we would receive minimal interest,
if any, on the funds held in the trust account, which would reduce the dollar amount our public shareholders would receive upon any redemption
or liquidation of the Company.
The Company’s management
has broad discretion with respect to the specific application of the net proceeds of the Public Offering and the sale of the Private Placement
Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.
NASDAQ rules provide that the Business Combination must be with one or more target businesses that together have a fair market value equal
to at least 80% of the balance in the Trust Account (less any deferred underwriting commissions and taxes payable on interest earned on
the Trust Account) at the time of the signing a definitive agreement to enter a Business Combination. The Company will only complete a
Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding voting securities of the
target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company
under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business Combination.
The Company will provide its
holders of the outstanding Public Shares (the “public shareholders”) with the opportunity to redeem all or a portion of their
Public Shares upon the completion of a Business Combination 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 a proposed Business Combination, the Company may seek shareholder
approval of a Business Combination at a meeting called for such purpose at which shareholders may seek to redeem their shares, regardless
of whether they vote for or against a Business Combination. Subject to the condition of the Merger Agreement, the Company will proceed
with a Business Combination only if the TNL has net tangible assets of at least $5,000,001 immediately after the Effective Time, as determined
by the Merger Agreement, upon such consummation of a Business Combination and, if the Company seeks shareholder approval, a majority of
the outstanding shares voted are voted in favor of the Business Combination.
Notwithstanding the foregoing,
if the Company seeks shareholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules,
the Company’s Memorandum and Articles of Association provides that, 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 seeking redemption rights with respect to
15% or more of the Public Shares without the Company’s prior written consent.
The public shareholders will
be entitled to redeem their shares for a pro rata portion of the amount then in the Trust Account (initially $10.20 per share, plus any
pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations).
The per-share amount to be distributed to shareholders who redeem their shares will not be reduced by the deferred underwriting commissions
the Company will pay to the underwriter (as discussed in Note 7). There will be no redemption rights upon the completion of a Business
Combination with respect to the Company’s warrants. These shares of Class A ordinary shares are recorded at a redemption value and
classified as temporary equity in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) Topic 480 “Distinguishing Liabilities from Equity” (“ASC 480”).
If a shareholder vote is not
required and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to
its Memorandum and Articles of Association, offer such redemption pursuant to the tender offer rules of the Securities and Exchange Commission
(the “SEC”), and file tender offer documents containing substantially the same information as would be included in a proxy
statement with the SEC prior to completing a Business Combination.
The Company’s Sponsor
and Apollo have agreed (a) to vote their Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Public
Offering in favor of a Business Combination, (b) not to propose an amendment to the Company’s Memorandum and Articles of Association
with respect to the Company’s pre-Business Combination activities prior to the consummation of a Business Combination unless the
Company provides dissenting Public Shareholders with the opportunity to redeem their Public Shares in conjunction with any such amendment;
(c) not to redeem any shares (including the Founder Shares) into the right to receive cash from the Trust Account in connection with a
shareholder vote to approve a Business Combination (or to sell any shares in a tender offer in connection with a Business Combination
if the Company does not seek shareholder approval in connection therewith) or a vote to amend the provisions of the Amended and Restated
Memorandum and Articles of Association relating to shareholders’ rights of pre-Business Combination activity; and (d) that the Founder
Shares shall not participate in any liquidating distributions upon winding up if a Business Combination is not consummated. However, the
Sponsor and Apollo will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares purchased during
or after the Public Offering if the Company fails to complete its Business Combination.
If the Company is unable to
complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding
up, (ii) as promptly as reasonably possible but no more than ten business days thereafter, redeem the Public Shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the
Trust Account and not previously released to us to pay taxes (less up to $100,000 of interest to pay dissolution expenses), divided by
the number of then outstanding Public Shares, which redemption will completely extinguish Public Shareholders’ rights as shareholders
(including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of the remaining shareholders and the Company’s board of directors,
proceed to commence a voluntary liquidation and thereby a formal dissolution of the Company, subject in each case to its obligations under
Cayman Islands law to provide for claims of creditors and the requirements of applicable law.
The underwriter has agreed
to waive its rights to the deferred underwriting commission held in the Trust Account in the event the Company does not complete a Business
Combination within the Combination Period and, in such event, such amounts will be included with the funds held in the Trust Account that
will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value
of the assets remaining available for distribution will be less than the Public Offering price per Unit ($10.00).
The Sponsor and Apollo have
agreed to waive their rights to liquidating distributions from the Trust Account with respect to the Founder Shares and Private Placement
Warrants it will receive if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor,
Apollo or any of their respective affiliates acquire Public Shares, such Public Shares will be entitled to liquidating distributions from
the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed
to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not
complete a Business Combination within the Combination Period, and in such event, such amounts will be included with the other funds held
in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible
that the per share value of the assets remaining available for distribution will be less than the Public Offering price per Unit ($10.00).
In order to protect the amounts
held in the trust, the Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services
rendered or products sold to the Company, or a prospective target business with which the Company has entered into a written letter of
intent, confidentiality or similar agreement or Business Combination agreement, reduce the amount of funds in the Trust Account to below
the lesser of (i) $10.20 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the day of liquidation
of the Trust Account, if less than $10.20 per share due to reductions in the value of the trust assets, less taxes payable, provided that
such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights
to monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s
indemnity of the underwriter of Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as
amended (the “Securities Act”). However, the Company has not asked the Sponsor to reserve for such indemnification obligations,
nor has the Company independently verified whether the Sponsor has sufficient funds to satisfy their indemnity obligations and believe
that the Sponsor’s only assets are securities of the Company. Therefore, the Company cannot assure its shareholders that the Sponsor
would be able to satisfy those obligations. None of the Company’s officers or directors will indemnify the Company for claims by
third parties including, without limitation, claims by vendors and prospective target businesses. 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, 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.
Business Combination
On June 6, 2023, the Company
entered into an agreement and plan of merger (the “Merger Agreement”) with The News Lens Co., Ltd., a Cayman Islands exempted
company (“TNL”), and TNL Mediagene, a Cayman Islands exempted company and wholly owned subsidiary of TNL (“Merger Sub”).
On the terms and subject to the conditions set forth in the Merger Agreement, the parties thereto will enter into a business combination
transaction pursuant to which, among other things, Merger Sub will merge with and into the Company, with the Company surviving the Merger
as a wholly owned subsidiary of TNL (the “Merger”).
At the closing of the Transactions
(the “Closing”), by virtue of the Merger, the outstanding shares and warrants will be canceled and converted into the right
to receive equivalent shares and warrants of TNL, and TNL is expected to be the publicly traded company with its ordinary shares and warrants
listed on The Nasdaq Stock Market LLC (“Nasdaq”).
The Merger Agreement and related
agreements are further described in the Form 8-K filed by the Company on June 6, 2023.
Liquidity, Capital Resources and Going Concern
As of March 31, 2024, and
December 31, 2023, the Company had approximately $38,609 and $61,977 in its operating bank account, respectively, and working capital
deficiency of approximately $5,372,722 as of March 31, 2024.
The Company’s liquidity
needs to date have been satisfied through a payment of $25,000 from the Sponsor to purchase the Founder Shares, the loan from the Sponsor
under the Note (as defined in Note 4), and the proceeds from the consummation of the Private Placement not held in the Trust Account of
$2.2 million. The Company repaid the Note in full on December 6, 2021. In addition, in order to finance transaction costs in connection
with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may,
but are not obligated to, provide the Company Working Capital Loans (as defined in Note 5). As of March 31, 2024 and December 31, 2023,
there were no amounts outstanding under any Working Capital Loans.
On June 20, 2023, the Company
entered into a Promissory Note (as defined in Note 5) with the Sponsor pursuant to which the Sponsor agreed to loan the Company up to
an aggregate principal amount of up to $1,500,000. The Promissory Note is payable on the earlier of the date on which the Company consummates
a Business Combination or June 7, 2024. Upon the consummation of the Business Combination, the Sponsor will have the option, but not the
obligation, to convert the entire principal balance of the Promissory Note, in whole or in part, into private placement warrants of the
post-business combination entity at a price of $1.00 per warrant. The terms of such private placement warrants (if issued) will be identical
to the terms of the private placement warrants issued by the Company in connection with the IPO. The Promissory Note is subject to customary
events of default, the occurrence of any of which automatically triggers the unpaid principal and interest balance of the Promissory Note
and all other sums payable with regard to the Sponsor Note becoming immediately due and payable. As of March 31, 2024 and December 31,
2023, the outstanding principal balance under the Note amounted to an aggregate of $1,410,000 and 1,080,000, respectively.
On August 3, 2023, the Company
issued an unsecured promissory note to TNL with a principal amount equal to $400,000 (the “TNL Working Capital Note”).
The TNL Working Capital Note is a non-interest bearing, unsecured promissory note that will not be repaid in the event that the Merger
agreement is terminated prior to the Business Combination. The TNL Working Capital Note will be paid on the date on which the Company
consummates the transactions contemplated by the Merger Agreement. The TNL Working Capital Notes is subject to events of default, the
occurrence of any of which automatically triggers the unpaid principal and interest balance of the Promissory Note and all other sums
payable with regard to the Sponsor Note becoming immediately due and payable. As of March 31, 2024 and December 31, 2023, the outstanding
principal balance under the Note amounted to an aggregate of $249,906 and $149,946, respectively.
On April 5, 2024, the Company
entered into a promissory note with the Sponsor pursuant to which the Sponsor agreed to loan the Company a principal amount equal to $750,000
(the “Sponsor Promissory Note”). The Sponsor Promissory Note is a non-interest bearing, unsecured promissory note which may
be drawn down by the Company from time to time to be used for costs and expenses related to the Company’s initial merger, share
exchange, asset acquisition, share purchase, reorganization or similar business combination involving the Company and one or more businesses
or entities. Pursuant to the terms of the Sponsor Promissory Note, if the Business Combination is not consummated, the Sponsor Promissory
Note will be repaid solely to the extent that the Company has funds available to it outside of its Trust Account, and that all other amounts
will be contributed to capital, forfeited, eliminated or otherwise forgiven or eliminated. The Sponsor Promissory Note is subject to events
of default, the occurrence of any of which automatically triggers the unpaid principal of the Sponsor Promissory Note and all other sums
payable with regard to the Sponsor Note becoming immediately due and payable. As of March 31, 2024, there was no amount outstanding balance
under the Sponsor Promissory Note.
In accordance with the Extension
Amendment, on January 2, 2024, February 2, 2024, March 1, 2024, April 1, 2024 and May 1, 2024, the Company deposited $60,000 into
the Trust Account in order to effect additional one month extensions, which extended the deadline to June 7, 2024 to consummate the Business
Combination.
Over this time period, the Company will be using these funds for paying existing accounts payable, identifying and evaluating prospective
initial 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 Business Combination.
In connection with the Company’s
assessment of going concern considerations in accordance with the authoritative guidance in FASB Accounting Standards Update (“ASU”)
2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” The Company has until
June 7, 2024, to consummate a Business Combination. It is uncertain that the Company will be able to consummate a Business Combination
by the specified period. If a Business Combination is not consummated by June 7, 2024, and the Company decides not to extend the period
of time to consummate a Business Combination, there will be a mandatory liquidation and subsequent dissolution.
The Company’s evaluation
of its liquidity condition and the date for mandatory liquidation and subsequent dissolution raise substantial doubt about the Company’s
ability to continue as a going concern one year from the date that these condensed financial statements are issued. These condensed financial
statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that
might be necessary should the Company be unable to continue as a going concern.
Risks and Uncertainties
Management is currently evaluating
the impact of rising interest rates, inflation, the Russia-Ukraine war and the conflict in Israel and Palestine on the industry and has
concluded that while it is reasonably possible that any of these 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
unaudited condensed financial statements. The unaudited condensed financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Inflation Reduction Act of 2022
On August 16, 2022, the Inflation
Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a 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. Because we may acquire a domestic corporation or engage in
a transaction in which a domestic corporation becomes our parent or our affiliate and our securities trade on US stock exchange, we may
become a “covered corporation” within the meaning of the IR Act. 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. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited
condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of
America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation
S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP
have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do
not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations,
or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting
of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows
for the periods presented.
The accompanying unaudited
condensed financial statements should be read in conjunction with the Company’s Current Report on Form 10-K, as filed with the SEC
on March 21, 2024. The interim results for the three months ended March 31, 2024 are not necessarily indicative of the results to
be expected for the year ending December 31, 2024 or for any future interim periods.
Emerging Growth Company
The Company is an “emerging
growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012
(the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable
to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the
independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations
regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding
advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1)
of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until
private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class
of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS
Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging
growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period,
which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company,
as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
This may make comparison of the Company’s financial statements with another public company, which is neither an emerging growth
company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of
the potential differences in accounting standards used.
Use of Estimates
The preparation of financial
statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably
possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements,
which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly,
the actual results could differ significantly from those estimates.
Concentration of Credit Risk
Financial instruments that
potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times,
may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on this account and management
believes the Company is not exposed to significant risks on such account.
Cash Held in Trust Account
At March 31, 2024 and December
31, 2023, all of the assets held in the Trust Account were held in a demand deposit account. Prior to November 2023, the Trust Account
was invested in marketable securities and money market funds.
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 $38,609
and $61,977 in cash held in its operating account as of March 31, 2024 and December 31, 2023, respectively. The Company did not have any
cash equivalents as of March 31, 2024 and December 31, 2023.
Income Taxes
The Company complies with
the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach
to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between
the financial statements and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted
tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC Topic 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, if any, as income tax
expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of March 31, 2024 and December 31,
2023. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation
from its position.
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 financial statements. The Company’s management
does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Fair Value of Financial Instruments
The fair value of the Company’s
assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,”
(“ASC 820”) approximates the carrying amounts represented in the condensed balance sheets, primarily due to their short-term
nature.
Fair Value Measurements
The Company follows the guidance
in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial
assets and liabilities that are re-measured and reported at fair value at least annually.
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. |
In some circumstances, the
inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair
value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the
fair value measurement.
Derivative Financial Instruments
The Company evaluates its
financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance
with ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). For derivative financial instruments that are accounted
for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each
reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments,
including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative
liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of
the instrument could be required within 12 months of the balance sheet date.
Warrant Liabilities
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 ASC 480 and ASC 815. The assessment considers whether the warrants are freestanding financial instruments, meet
the definition of a liability, and whether the warrants meet all of the requirements for equity classification, including whether the
warrants are indexed to the Company’s own ordinary shares, 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 additional paid-in
capital 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 at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the
estimated fair value of the warrants are recognized as a non-cash gain or loss on the statement of operations.
The Company evaluated the
Public Warrants (as defined in Note 7) and the Private Placement Warrants (collectively, the “Warrants”) in accordance with
ASC 815, and concluded that a provision in the warrant agreement, dated December 2, 2021 (the “Warrant Agreement”) related
to certain tender or exchange offers precludes the Warrants from being accounted for as components of equity. As the Warrants meet the
definition of a derivative as contemplated in ASC 815, the Warrants are recorded as derivative liabilities on the condensed balance sheets
and measured at fair value at inception (on the date of the IPO) and at each reporting date in accordance with ASC 820 with changes in
fair value recognized in the condensed statement of operations in the period of change.
Offering Costs Associated with the Public Offering
The Company complies with
the requirements of ASC 340-10-S99-1, SEC Staff Accounting bulletin Topic 5A – “Expenses of Offering”, and SEC Staff
Accounting bulletin Topic 5T – “Accounting for Expenses or Liabilities Paid by Principal Stockholder(s)”. Offering costs
consist principally of professional and registration fees incurred through the balance sheet date that are related to the IPO. Offering
costs directly attributable to the issuance of an equity contract to be classified in equity are recorded as a reduction of equity. Offering
costs for equity contracts that are classified as assets and liabilities are expensed immediately. The Company incurred offering costs
amounting to $12,517,335 as a result of the Public Offering (consisting of $3,795,000 of underwriting fees, $6,641,250 of deferred underwriting
fees, $1,248,100 for the excess fair value of Founder Shares attributable to the Anchor Investor, and $832,985 of other offering costs).
The Company recorded $10,788,729 of offering costs as a reduction of equity in connection with the Class A ordinary shares included in
the Units. The Company immediately expensed $480,506 of offering costs in connection with the Warrants that were classified as liabilities.
Class A Shares Subject to Possible Redemption
The Company accounts for its
Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC 480. Ordinary shares subject to mandatory
redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including
ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence
of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, ordinary shares
are classified as shareholders’ equity. The Company’s Class A ordinary shares feature certain redemption rights that are considered
to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, Class A ordinary shares
subject to possible redemption is presented as temporary equity, outside of the shareholders’ deficit section of the Company’s
condensed balance sheets.
As of March 31, 2024 and December 31, 2023, the amount of Class A ordinary
shares reflected on the balance sheet are reconciled in the following table:
Class A ordinary shares subject to possible redemption as of December 31, 2022 | |
$ | 196,226,283 | |
Plus | |
| | |
Adjust carrying value to initial redemption value | |
| 7,774,907 | |
Less | |
| | |
Shares redeemed in September 2023 | |
| (136,786,445 | ) |
Class A ordinary shares subject to possible redemption as of December 31, 2023 | |
$ | 67,214,745 | |
Plus | |
| | |
Adjust carrying value to initial redemption value | |
| 1,056,674 | |
Class A ordinary shares subject to possible redemption as of March 31, 2024 | |
$ | 68,271,419 | |
Net (Loss) Income Per Ordinary Share
Basic (loss) income per ordinary
share is computed by dividing net (loss) income applicable to ordinary shareholders by the weighted average number of ordinary shares
outstanding during the period. Consistent with ASC 480, ordinary shares subject to possible redemption, as well as their pro rata share
of undistributed trust earnings consistent with the two-class method, have been excluded from the calculation of (loss) income per ordinary
share for the three months ended March 31, 2024. Such shares, if redeemed, only participate in their pro rata share of trust earnings.
Diluted (loss) income per share includes the incremental number of ordinary shares to be issued to settle warrants, as calculated for
the three months ended March 31, 2024. The Company did not have any dilutive warrants, securities or other contracts that could potentially
be exercised or converted into ordinary shares. As a result, diluted (loss) income per ordinary share is the same as basic (loss) income
per ordinary share for all periods presented.
A reconciliation of net (loss) income per ordinary
share is as follows:
| |
For the Three Months ended March 31, 2024 | | |
For the Three Months ended March 31, 2023 | |
| |
Class A | | |
Class B | | |
Class A | | |
Class B | |
EPS | |
| | |
| | |
| | |
| |
Numerator: Net (Loss) Income | |
| | |
| | |
| | |
| |
Allocation of net (loss) income | |
$ | (54,380 | ) | |
$ | (41,896 | ) | |
$ | 1,311,721 | | |
$ | 327,930 | |
Denominator: Weighted Average share | |
| | | |
| | | |
| | | |
| | |
Basic and diluted weighted average shares outstanding | |
| 6,157,215 | | |
| 4,743,750 | | |
| 18,975,000 | | |
| 4,743,750 | |
Basic and diluted net (loss) income per ordinary share | |
$ | (0.01 | ) | |
$ | (0.01 | ) | |
$ | 0.07 | | |
$ | 0.07 | |
Stock Compensation Expense
The Company accounts for stock-based
compensation expense in accordance with ASC 718, “Compensation - Stock Compensation” (“ASC 718”). Under ASC 718,
stock-based compensation associated with equity-classified awards is measured at fair value upon the grant date and recognized over the
requisite service period. To the extent a stock-based award is subject to a performance condition, the amount of expense recorded in a
given period, if any, reflects an assessment of the probability of achieving such performance condition, with compensation recognized
once the event is deemed probable to occur. Forfeitures are recognized as incurred. The Company has not recognized any stock-based compensation
expense during the three months ended March 31, 2024, and the period from inception to December 31, 2023.
Accounting Standards Recently Implemented
In August 2020, the FASB issued
ASU No. 2020-06 Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in
Entity’s Own Equity (Subtopic 815–40) (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for certain financial
instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity.
The ASU is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in GAAP. The ASU’s amendments
are effective for smaller reporting companies for fiscal years beginning after December 15, 2023, and interim periods within those fiscal
years. The Company adopted ASU 2020-06 on January 1, 2024. The adoption of ASU 2020-06
did not have a material impact on the Company’s unaudited condensed financial statements and disclosures.
Recently Issued Accounting Standards
Management does not believe
that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the
Company’s financial statements.
NOTE 3. PUBLIC OFFERING
Pursuant to the Public Offering,
the Company sold 16,500,000 Units at $10.00 per Unit. On December 9, 2021, the underwriters fully exercised the over-allotment option
and purchased 2,475,000 Units at a price of $10.00 per Unit, generating gross proceeds of $24,750,000. Each Unit consists of one
Class A ordinary share, $0.0001 par value, and one-half of one redeemable warrant. Each whole Public Warrant entitles the holder to purchase
one Class A ordinary share at an exercise price of $11.50 per whole share (see Note 7).
An Anchor Investor unaffiliated
with any member of our management team purchased an aggregate of 1,895,602 of the Units sold in the Public Offering. These Units purchased
by Apollo in this offering are not subject to any agreements restricting their transfer. Further, Apollo purchased 175,000 founder shares
at $0.0058 per share.
The Company considers the
excess fair value of the Founder Shares issued to the Anchor Investor above the purchase price as offering costs and will reduce the gross
proceeds by this amount. The Company has valued the excess fair value over consideration of the founder shares offered to the Anchor Investor
at $1,248,100. The excess of the fair value over consideration of the Founder Shares was determined to be an offering cost in accordance
with Staff Accounting Bulletin Topic 5A and 5T and were allocated to shareholders’ equity and expenses upon the completion of the
Public Offering.
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing
of Public Offering, the Sponsor and Anchor Investor purchased an aggregate of 8,235,000 Private Placement Warrants at a price of $1.00
per warrant. On December 9, 2021, the Company consummated the sale of additional 990,000 Private Placement Warrants with the Sponsor
at a price of $1.00 per Private Placement Warrant, generating total proceeds of $990,000.
Each Private Placement Warrant
is identical to the warrants offered in the Public Offering, except there is no redemption rights or liquidating distributions from the
trust account with respect to Private Placement Warrants, which will expire worthless if we do not consummate a Business Combination within
the Combination Period. A portion of the proceeds from the sale of the Private Placement Warrants were added to the net proceeds from
the Public Offering held in the Trust Account.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On March 26, 2021, the Company
issued an aggregate of 4,312,500 shares of Class B ordinary shares (the “Founder Shares”) to the Sponsor for an aggregate
purchase price of $25,000. On December 2, 2021, the Company effected a share capitalization of an additional 431,250 Class B ordinary
shares, resulting in an aggregate of 4,743,750 Class B ordinary shares outstanding. All share and per-share amounts have been retroactively
restated to reflect the share capitalization.
The Sponsor and Anchor Investor
have agreed not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) one year after the completion
of a Business Combination or (B) subsequent to our initial Business Combination (x) if the last reported sale price of our Class A ordinary
shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations,
recapitalizations and other similar transactions) for any 20 trading days within any 30-trading day period commencing at least 150 days
after our initial Business Combination or (y) the date on which we complete a liquidation, merger, share exchange, reorganization or other
similar transaction that results in all of our Public Shareholders having the right to exchange their ordinary shares for cash, securities
or other property.
The Anchor Investor has not
been granted any shareholder or other rights in addition to those afforded to the Company’s other public shareholders. Further,
the Anchor Investor is not required to (i) hold any Units, Class A ordinary shares or warrants purchased in the Public Offering or thereafter
for any amount of time, (ii) vote any Class A ordinary shares they may own at the applicable time in favor of the Business Combination
or (iii) refrain from exercising their right to redeem their public shares at the time of the Business Combination. The Anchor Investor
has the same rights to the funds held in the Trust Account with respect to the Class A ordinary shares underlying the Units they purchased
in the Public Offering as the rights afforded to the Company’s other public shareholders.
Related Party Loans
In order to finance transaction
costs in connection with a Business Combination, the Company’s Sponsor, an affiliate of the Sponsor, or the Company’s officers
and directors may, but are not obligated to, loan the Company funds as may be required (the “Working Capital Loans”). Such
Working Capital Loans would be evidenced by promissory notes. The notes would either be repaid upon consummation of a Business Combination,
without interest, or, at the lender’s discretion, up to $1,500,000 of notes may be converted upon consummation of a Business Combination
into warrants at a price of $1.00 per warrant. The warrants will be identical to the Private Placement Warrants. In the event that a Business
Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans
but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. There are no Working Capital Loans outstanding
as of March 31, 2024 and December 31, 2023.
Promissory Note – Related Party
On June 20, 2023, the Company
issued an unsecured promissory note (the “Note”) to the Sponsor for borrowings from time to time of up to an aggregate of
$1,500,000 which may be drawn by the Company to finance costs incurred in connection with a potential initial business combination
and for working capital purposes and/or to finance monthly deposits into the Trust Account for each public share that is not redeemed
in connection with the extension of the Company’s termination date from September 7, 2023 to June 7, 2024. The Note is interest
bearing and is payable on the earlier of (i) June 7, 2024; (ii) the date on which the Company consummates a Business Combination or (iii)
the Company liquidates the Trust Account upon the failure to consummate an initial business combination within the requisite time period.
Upon consummation of the Company’s initial business combination, the Note may be converted, at the Sponsor’s discretion, into
private placement warrants at a price of $1.00 per warrant. The warrants will be identical to the Private Placement Warrants. As of March
31, 2024 and December 31, 2023, the outstanding principal balance under the Note amounted to an aggregate of $1,410,000 and 1,080,000,
respectively.
Sponsor Promissory Note
On April 5, 2024, the Company
entered into a promissory note with the Sponsor pursuant to which the Sponsor agreed to loan the Company a principal amount equal to $750,000
(the “Sponsor Promissory Note”). The Sponsor Promissory Note is a non-interest bearing, unsecured promissory note which may
be drawn down by the Company from time to time to be used for costs and expenses related to the Company’s initial merger, share
exchange, asset acquisition, share purchase, reorganization or similar business combination involving the Company and one or more businesses
or entities. Pursuant to the terms of the Sponsor Promissory Note, if the Business Combination is not consummated, the Sponsor Promissory
Note will be repaid solely to the extent that the Company has funds available to it outside of its Trust Account, and that all other amounts
will be contributed to capital, forfeited, eliminated or otherwise forgiven or eliminated. The Sponsor Promissory Note is subject to events
of default, the occurrence of any of which automatically triggers the unpaid principal of the Sponsor Promissory Note and all other sums
payable with regard to the Sponsor Note becoming immediately due and payable. As of March 31, 2024, there was no amount outstanding principal
balance under the Sponsor Promissory Note.
Administrative Support Agreement
On December 2, 2021, the Company
entered into an administrative support agreement pursuant to which, until the Company’s initial business combination or liquidation,
the Company may reimburse an affiliate of the Sponsor up to an amount of $10,000 per month for office space and secretarial and administrative
support (the “Administrative Support Agreement”). As of March 31, 2024 and December 31, 2023, there have been $30,000 and
$120,000 in charges incurred, respectively.
Consulting Agreements
The Company and Mr. Leggett entered into a consulting
agreement on October 11, 2022, as amended July 31, 2023 (the “Leggett Consulting Agreement”). Under the Leggett Consulting
Agreement, Mr. Leggett is entitled to $20,000 per month for certain services Mr. Leggett provides to the Company and its affiliates. Mr.
Leggett is separately entitled under the Leggett Consulting Agreement to a success bonus of $250,000 to be paid within 10 business days
of the close of the business combination, subject to a reduction by $17,500 for each month in which the Company pays Mr. Leggett a consulting
service fee under the Leggett Consulting Agreement. The Company and Mr. Lasov entered into a consulting agreement on November 22, 2022,
as amended July 31, 2023 (the “Lasov Consulting Agreement”). Under the Lasov Consulting Agreement, Mr. Lasov is entitled to
$32,500 per month for certain services Mr. Lasov provides to the Company and its affiliates. Mr. Lasov is separately entitled under the
Lasov Consulting Agreement to a success bonus of $150,000 to be paid within 10 business days of the close of the business combination,
subject to a reduction by the amount of each consulting service fee paid to Mr. Lasov by the Company under the Lasov Consulting Agreement.
Mr. Lasov has agreed that as of February 1, 2024, he will not be invoicing the Company for services performed under the Lasov Consulting
Agreement with the Company. Mr. Leggett has agreed that as of April 1, 2024, he will reduce his monthly service fee under the Leggett
Consulting Agreement to $5,000.
NOTE 6. COMMITMENTS AND CONTINGENCIES
Registration Rights
The holders of the Founder
Shares, Private Placement Warrants and any warrants that may be issued upon conversion of the Working Capital Loans (and in each case
holders of their component securities, as applicable) are entitled to registration rights pursuant to the Registration Rights Agreement,
effective December 2, 2021, which requires the Company to register such securities for resale (in the case of the Founder Shares, only
after conversion to our Class A ordinary shares). The holders of the majority of these securities are entitled to make up to three demands,
excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back”
registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination and rights
to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. The Company will bear the
expenses incurred in connection with the filing of any such registration statements.
Underwriter’s Agreement
The Company paid a cash underwriting
discount of 2.00% of the gross proceeds of the Public Offering, or $3,795,000 due to the exercise of the over-allotment option in full.
In addition, the underwriter is entitled to a deferred fee of three and a half percent (3.50%) of the gross proceeds of the Public Offering,
or $6,641,250. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event
that the Company completes a Business Combination, subject to the terms of the underwriting agreement. The underwriter has reimbursed
the Company for $550,000 for offering expenses. The reimbursement of these costs has been accounted for as a reduction to offering costs
of the Public Offering.
NOTE 7. WARRANTS
The Company accounted for
the 18,712,500 warrants issued in connection with the Public Offering (the 9,487,500 Public Warrants and the 9,225,000 Private Placement
Warrants) in accordance with the guidance contained in ASC 815. Such guidance provides that because the warrants do not meet the criteria
for equity treatment thereunder, each warrant much be recorded as a liability. Accordingly, the Company has classified each warrant as
a liability at its fair value. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement,
the warrant liability will be adjusted to fair value, with the change in fair value recognized in the Company’s statement of operations.
Warrants- Public
Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants.
The Public Warrants will become exercisable 30 days after the consummation of a Business Combination. The Public Warrants will expire
five years from the consummation of a Business Combination or earlier upon redemption or liquidation.
The Company will not be obligated
to deliver any Class A ordinary shares pursuant to the exercise of a Public Warrant and will have no obligation to settle such Public
Warrant exercise unless a registration statement under the Securities Act covering the issuance of the Class A ordinary shares issuable
upon exercise of the Public Warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying
its obligations with respect to registration. No Public Warrant will be exercisable for cash or on a cashless basis, and the Company will
not be obligated to issue any shares to holders seeking to exercise their Public Warrants, unless the issuance of the shares upon such
exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration
is available.
The Company has agreed that
as soon as practicable, but in no event later than 15 business days, after the closing of a Business Combination, it will use its best
efforts to file with the SEC a registration statement registering the issuance, under the Securities Act, of the Class A ordinary shares
issuable upon exercise of the Public Warrants. The Company will use its best efforts to file with the SEC a registration statement covering
the shares of Class A ordinary shares issuable upon exercise of the warrants, to cause such registration statement to become effective
and to maintain a current prospectus relating to those shares of Class A ordinary shares until the warrants expire or are redeemed, as
specified in the Warrant Agreement. If a registration statement covering the shares of Class A ordinary shares issuable upon exercise
of the warrants is not effective by the 60th business day after the closing of a Business Combination, warrant holders may, until such
time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective
registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or
another exemption.
Redemption of warrants
when the price per Class A ordinary share equals or exceeds $18.00.
Once the warrants become exercisable,
the Company may redeem the Warrants for redemption:
| ● | in whole and not in part; |
| ● | at a price of $0.01 per Public
Warrant; |
| ● | upon not less than 30 days’
prior written notice of redemption to each warrant holder and |
| ● | if, and only if, the reported
last sale price of the Class A ordinary shares equals or exceeds $18.00 per share (as adjusted for adjustments to the number of shares
issuable upon exercise or the exercise price of a warrant as described) for any 20 trading days within a 30-trading day period ending
three business days before the Company sends the notice of redemption to the warrant holders. |
The Company will not redeem
the warrants as described above unless an effective registration statement under the Securities Act covering the issuance of the Class
A ordinary shares issuable upon exercise of the warrants is then effective and a current prospectus relating to those Class A ordinary
shares is available throughout the 30-day redemption period. If and when the warrants become redeemable by us, the Company may exercise
its redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state
securities laws.
Redemption of warrants
when the price per Class A ordinary share equals or exceeds $10.00.
Once the Warrants become exercisable,
the Company may redeem the Warrants for redemption:
| ● | in whole and not in part; |
| ● | at $0.10 per warrant upon a
minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless
basis prior to redemption and receive that number of shares determined by reference to the table based on the redemption date and the
“fair market value” of our Class A ordinary shares; |
| ● | if, and only if, the Reference
Value (as defined above under “Redemption of warrants when the price per Class A ordinary share equals or exceeds $18.00”)
equals or exceeds $10.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price
of a warrant); and |
| ● | if the Reference Value is less
than $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant),
the Private Placement Warrants must also concurrently be called for redemption on the same terms as the outstanding Public Warrants,
as described above. |
If and when the Public Warrants
become redeemable by the Company, the Company may not exercise its redemption right if the issuance of shares of ordinary shares upon
exercise of the warrants is not exempt from registration or qualification under applicable state blue sky laws or the Company is unable
to effect such registration or qualification.
The exercise price and number
of shares of Class A ordinary shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the
event of a share dividend, or recapitalization, reorganization, merger or consolidation. Additionally, in no event will the Company be
required to net cash settle the Public Warrants. If the Company is unable to complete a Business Combination within the Combination Period
and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to
their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect
to such warrants. Accordingly, the warrants may expire worthless. If the Company calls the Public Warrants for redemption, management
will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described
in the Warrant Agreement. The exercise price and number of shares of ordinary shares issuable upon exercise of the Public Warrants may
be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization,
merger or consolidation. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates
the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they
receive any distribution from the Company’s assets held outside of the Trust Account with respect to such warrants. Accordingly,
the warrants may expire worthless.
In addition, if (x) the Company
issues additional shares of Class A ordinary shares 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 of Class A ordinary shares
(with such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case
of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor 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 the Company’s initial Business Combination
on the date of the consummation of such initial Business Combination (net of redemptions), and (z) the volume weighted average trading
price of the Company’s ordinary shares during the 20 trading day period starting on the trading day prior to the day on which the
Company consummates its initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise
price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued
Price and the $18.00 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 180% of
the greater of the Market Value and the Newly Issued Price.
The Private Placement Warrants
are identical to the Public Warrants included in the Units sold in the Public Offering, except that the Private Placement Warrants and
the shares of ordinary shares issuable upon the exercise of the Private Placement Warrants are not transferable, assignable or salable
until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement
Warrants are exercisable on a cashless basis and are non-redeemable so long as they are held by the initial purchasers or their permitted
transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the
Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
NOTE 8. SHAREHOLDERS’ DEFICIT
Preferred Shares-The
Company is authorized to issue 1,000,000 shares of $0.0001 par value preferred shares. On March 31, 2024 and December 31, 2023, there
were no preferred shares issued or outstanding.
Class A Ordinary shares-The
Company is authorized to issue up to 200,000,000 shares of Class A, $0.0001 par value ordinary shares. Holders of the Company’s
ordinary shares are entitled to one vote for each share.
Class B Ordinary shares-The
Company is authorized to issue up to 20,000,000 shares of Class B, $0.0001 par value ordinary shares. Holders of the Company’s ordinary
shares are entitled to one vote for each share. On December 2, 2021, the Company effected a share capitalization of an additional 431,250
Class B ordinary shares, resulting in an aggregate of 4,743,750 Class B ordinary shares outstanding, after giving effect to the repurchase
by the Sponsor of 25,000 Class B ordinary shares from Dale Mathias upon her resignation from the Board. All share and per-share amounts
have been retroactively restated to reflect the share capitalization.
Holders of Class A ordinary
shares and Class B ordinary shares will vote together as a single class on all other matters submitted to a vote of shareholders, except
as required by law; provided that only holders of Class B ordinary shares have the right to vote for the election of directors prior to
the Company’s initial Business Combination.
The shares of Class B ordinary
shares will automatically convert into Class A ordinary shares at the time of our initial Business Combination, or earlier at the option
of the holder, on a one-for-one basis, subject to adjustment for share sub-divisions, share dividends, rights issuances, consolidations,
reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional Class
A ordinary shares, or equity-linked securities, are issued or deemed issued in excess of the amounts issued in this offering and related
to the closing of our initial Business Combination, the ratio at which the Class B ordinary shares will convert into Class A ordinary
shares will be adjusted (unless the holders of a majority of the issued and outstanding Class B ordinary shares agree to waive such anti-dilution
adjustment with respect to any such issuance or deemed issuance) so that the number of Class A ordinary shares issuable upon conversion
of all Class B ordinary shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of all ordinary shares issued and
outstanding upon the completion of this offering plus all Class A ordinary shares and equity-linked securities issued or deemed issued
in connection with our initial Business Combination, excluding any shares or equity-linked securities issued, or to be issued, to any
seller in our initial Business Combination. The term “equity-linked securities” refers to any debt or equity securities that
are convertible, exercisable or exchangeable for our Class A ordinary shares issued in a financing transaction in connection with our
initial business combination, including but not limited to a private placement of equity or debt.
Pursuant to and concurrently
with the Public Offering, the Company sold 18,975,000 Units. In connection with Extraordinary General Meeting, the shareholders of record
were provided the opportunity to exercise their redemption rights. Holders of 12,817,785 shares of Class A ordinary shareholders
exercised their right to redemption. Following the redemption, the Company had a total of 6,157,215 shares of Class A ordinary
shares outstanding.
At March 31, 2024 and December
31, 2023, there were no Class A ordinary shares issued and outstanding, excluding 6,157,215 of Class A ordinary shares subject to possible
redemption (see Note 2), and 4,743,750 of Class B ordinary shares issued and outstanding.
NOTE 9. FAIR VALUE MEASUREMENTS
The following table presents
information about the Company’s assets and liabilities that are measured at fair value on a recurring basis on March 31, 2024 and
December 31, 2023, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
| |
March 31, 2024 | | |
Quoted Prices in Active Markets (Level 1) | | |
Significant Other Observable Inputs (Level 2) | | |
Significant Other Unobservable Inputs (Level 3) | |
Assets: | |
| | |
| | |
| | |
| |
Cash held in Trust Account | |
$ | 68,271,419 | | |
$ | 68,271,419 | | |
$ | — | | |
$ | — | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Warrant liabilities – Public Warrants | |
$ | 182,160 | | |
$ | — | | |
$ | 182,160 | | |
$ | — | |
Warrant liabilities – Private Placement Warrants | |
$ | 177,120 | | |
$ | — | | |
$ | — | | |
$ | 177,120 | |
| |
December 31, 2023 | | |
Quoted Prices in Active Markets (Level 1) | | |
Significant Other Observable Inputs (Level 2) | | |
Significant Other Unobservable Inputs (Level 3) | |
Assets: | |
| | |
| | |
| | |
| |
Cash held in Trust Account | |
$ | 67,214,745 | | |
$ | 67,214,745 | | |
$ | — | | |
$ | — | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Warrant liabilities – Public Warrants | |
$ | 189,750 | | |
$ | — | | |
$ | 189,750 | | |
$ | — | |
Warrant liabilities – Private Placement Warrants | |
$ | 184,500 | | |
$ | — | | |
$ | — | | |
$ | 184,500 | |
The Warrants are accounted
for as liabilities in accordance with ASC 815 and are presented within warrant liabilities on the condensed balance sheets. The warrant
liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair
value of warrant liabilities in the condensed statements of operations. Transfers to/from Levels 1, 2 and 3 are recognized at the beginning
of the reporting period in which a change in valuation technique or methodology occurs.
The Company established the initial fair value for the warrant liabilities on December 7, 2021, the date of the Company’s Public
Offering, using a Binomial Lattice-based model for the Public Warrants, and a Black-Scholes option pricing model for the Private Placement
Warrants. The Private Placement Warrants and Public Warrants were classified as Level 3 at the initial measurement date due to the use
of unobservable inputs. The estimated fair value of Public Warrants was transferred from a Level 3 measurement to a Level 1 measurement
when the Public Warrants were separately listed and traded in an active market in January 2022.
As of December 31, 2022, the estimated fair value of Public Warrants was transferred from a Level 1 measurement to a Level 2 measurement
when the Public Warrants were considered to no longer have an active market.
The Private Placement Warrants
were valued using a Black-Scholes option pricing model, which is considered to be a Level 3 fair value measurement. The key inputs into
the Black-Scholes option pricing model for the Private Placement Warrants were as follows as of March 31, 2024:
Input | |
March 31, 2024 | | |
December 31, 2023 | |
Risk-free interest rate | |
| — | | |
| — | |
Expected term (years) | |
| 4.50 | | |
| 4.78 | |
Expected volatility | |
| — | | |
| — | |
Exercise price | |
$ | 11.50 | | |
$ | 11.50 | |
Fair value of Class A ordinary shares | |
$ | 11.05 | | |
$ | 10.28 | |
The Company’s use of
the Black-Scholes option pricing model required the use of subjective assumptions:
|
● |
The risk-free interest rate assumption was based on the U.S. Treasury Constant Maturity rate for the expected term of the warrants. |
|
● |
The expected term was determined utilizing a probability weighted term input to be consistent with the stock price and volatility inputs which are reflective of the probability of successful merger. |
|
● |
The expected volatility assumption was based on the implied volatility solved by calibrating the warrant value output from a Binomial Lattice based model to the publicly observed, traded price on each valuation date. An increase in the expected volatility, in isolation, would result in an increase in the fair value measurement of the warrant liabilities and vice versa. |
|
● |
The fair value of one Class A ordinary share is the publicly-traded stock price. |
The following table presents
the changes in the fair value of the Company’s Level 3 financial instruments that are measured at fair value:
Fair value as of December 31, 2022 | |
$ | 691,875 | |
Change in fair value | |
| 139,298 | |
Fair value as of March 31, 2023 | |
$ | 831,173 | |
Change in fair value | |
| (433,575 | ) |
Fair value as of June 30, 2023 | |
$ | 397,598 | |
Change in fair value | |
| 119,925 | |
Fair value as of September 30, 2023 | |
$ | 517,523 | |
Change in fair value | |
| (333,023 | ) |
Fair value as of December 31, 2023 | |
$ | 184,500 | |
Change in fair value | |
| (7,380 | ) |
Fair value as of March 31, 2024 | |
$ | 177,120 | |
NOTE 10. SUBSEQUENT EVENTS
Management of the Company
evaluated events that have occurred after the balance sheet date through the date the financial statements were issued. Based upon this
review, management did not identify any recognized or unrecognized subsequent events that would have required adjustment or disclosure
in the financial statements.
In accordance with the Extension
Amendment, on April 1, 2024 and May 1, 2024, the Company deposited $60,000 into the Trust Account in order to effect additional one
month extensions, which extended the deadline to June 7, 2024 to consummate the Business Combination.
As noted in Note 5 above,
Mr. Leggett has agreed that as of April 1, 2024 he will reduce his monthly service fee under the Leggett Consulting Agreement to $5,000.
On April 5, 2024 the Company
entered into a promissory note with the Sponsor pursuant to which the Sponsor agreed to loan the Company a principal amount equal to $750,000
(the “Sponsor Promissory Note”). The Sponsor Promissory Note is a non-interest bearing, unsecured promissory note which may
be drawn down by the Company from time to time to be used for costs and expenses related to the Company’s initial merger, share
exchange, asset acquisition, share purchase, reorganization or similar business combination involving the Company and one or more businesses
or entities.
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
References in this report
(the “Quarterly Report’) to “we,” “us” or the “Company” refer to Blue Ocean Acquisition
Corp. References to our “management” or our “management team” refer to our officers and directors, and references
to the “Sponsor” refer to Blue Ocean Sponsor LLC. The following discussion and analysis of the Company’s financial condition
and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this
Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that
involve risks and uncertainties. Our actual results may differ significantly from the results, expectations and plans discussed in these
forward-looking statements. See “Special Note Concerning Forward-Looking Statements.”
Special Note Regarding Forward-Looking Statements
This Quarterly Report, including,
without limitation, statements under the heading “Management’s Discussion and Analysis of Financial Condition and Results
of Operations,” includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Exchange Act of 1934. Our forward-looking statements include, but are not limited to, statements regarding our or our management
team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections,
forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements.
The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,”
“intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,”
“project,” “should,” “would” and similar expressions may identify forward-looking statements, but
the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements contained in this Quarterly
Report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be
no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a
number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance
to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include,
but are not limited to, those factors described under the heading “Risk Factors” of the Company’s Annual Report on Form
10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 21, 2024 and under the heading “Item
1A. Risk Factors” of this Quarterly Report. Should one or more of these risks or uncertainties materialize, or should any of our
assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We
undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise,
except as may be required under applicable securities laws.
Overview
We are a blank check company
incorporated as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase,
reorganization or similar business combination with one or more businesses or entities.
On June 6, 2023, we entered
into an agreement and plan of merger (the “Merger Agreement”) with The News Lens Co., Ltd., a Cayman Islands exempted company
(“TNL”), and TNL Mediagene, a Cayman Islands exempted company and wholly owned subsidiary of TNL (“Merger Sub”).
On the terms and subject to the conditions set forth in the Merger Agreement, the parties thereto will enter into a business combination
transaction (the “Business Combination” and together with the other transactions contemplated by the Merger Agreement, the
“Transactions”), pursuant to which, among other things, Merger Sub will merge with and into us, with us surviving the Merger
as a wholly owned subsidiary of TNL (the “Merger”).
At the closing of the Transactions
(the “Closing”), by virtue of the Merger, our outstanding shares and warrants will be canceled and converted into the right
to receive equivalent shares and warrants of TNL, and TNL is expected to be the publicly traded company with its ordinary shares and warrants
listed on The Nasdaq Stock Market LLC (“Nasdaq”).
We intend to effectuate our
initial Business Combination using cash from the proceeds of the Public Offering, the sale of the Private Placement Warrants and the Additional
Private Placement Warrants, our capital shares, debt or a combination of cash, shares and debt. The Company is an “emerging growth
company”, and as such, the Company is subject to all risks associated with emerging growth companies.
On
August 29, 2023, shareholders of the Company held an extraordinary general meeting of shareholders (the “Extraordinary General Meeting”)
in lieu of the 2023 annual general meeting of the shareholders of the Company. At the Extraordinary General Meeting, the Company’s
shareholders approved the proposal to amend the Company’s Amended and Restated Memorandum and Articles of Association to give the
Company the right to extend the date by which it has to consummate a business combination from September 7, 2023 to June 7, 2024, by depositing
into the Trust Account $60,000 for each of the nine subsequent one-month extensions. In connection therewith the shareholders of record
were provided the opportunity to exercise their redemption rights (the “Extension Amendment”). Holders of 12,817,785 shares
of Class A ordinary shareholders exercised their right to redemption at a per share redemption price of approximately $10.67. On September
5, 2023, a total of $136,786,445 in redemption payments were made in connection with this redemption. Following the redemption, the
Company had a total of 6,157,215 shares of Class A ordinary shares outstanding
As of March 31, 2024 and December
31, 2023, we had cash of approximately $38,609 and $61,977 respectively. As of March 31, 2024 and December 31, 2023 we had a working capital
deficit of approximately $5,372,722 and $4,204,802, respectively. We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to raise capital or to complete a business combination will be successful.
Results of Operations
We did not commence operations
until after the closing of our Public Offering in December 2021, and as of March 31, 2024, we have not engaged in any significant operations
nor generated any operating revenues to date. We will not generate any operating revenues until after completion of our initial Business
Combination. We will generate non-operating income in the form of interest income on cash and cash equivalents. There has been no significant
change in our financial or trading position and no material adverse change has occurred since the date of our audited financial statements.
We have incurred and expect to continue 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
March 31, 2024, we had net loss of $96,276 which was impacted by the change in fair value of warrant liability of $14,970, interest earned
on cash held in trust account of $876,674 offset by interest expense of $2,630 and a loss from operations of $985,290.
For the three months ended
March 31, 2023, we had net income of $1,639,651 which was impacted by interest earned on marketable securities held in the trust account
of $2,138,122, change in fair value of warrant liability of $282,559, unrealized gain on marketable securities held in the trust account
of $92,492, and a loss from operations of $308,404.
Liquidity and Capital Resources
On December 7, 2021, we consummated
our Public Offering of 16,500,000 Units and the Private Placement of an aggregate of 8,235,000 private placement warrants, generating
gross proceeds of $173,235,000. On December 9, 2021, the Underwriter exercised in full the option granted to them by the Company to purchase
up to 2,475,000 additional Units to cover over-allotments, and we issued an additional 990,000 Private Placement Warrants in the Additional
Private Placement, generating total gross proceeds of $25,245,000.
Following our Public Offering,
the exercise of the over-allotment option and the sale of the Private Placement Warrants, a total of $193,545,000 was placed in the Trust
Account. We incurred $12,517,335 in transaction costs, including $3,795,000 in cash underwriting fees, $6,641,250 of deferred underwriting
fees, $1,248,100 of offering costs related to the fair value of the Founder Shares sold to Anchor Investor, and $832,985 of other offering
costs.
For the three months
ended March 31, 2024, cash used in operating activities was $273,328. Net loss of $96,276 was impacted by interest earned on cash
held in the Trust Account of $876,674, change in fair value of warrant liability of $14,970, interest expense of $2,630 and changes
in operating assets and liabilities, $711,962.
As of Mach 31, 2024, and December
31, 2023, we had investments of $68,271,419 and $67,214,745 held in the Trust Account, respectively. 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 taxes paid and deferred
underwriting commissions) to complete our initial Business Combination. We may withdraw interest to pay taxes.
In connection with Extraordinary
General Meeting, the shareholders of record were provided the opportunity to exercise their redemption rights. Holders of 12,817,785 shares
of Class A ordinary shareholders exercised their right to redemption, subsequently a total of $136,786,445 in redemption payments
were made in connection with this redemption from the Trust Account. During the three months ended March 31, 2024 and the year ended December
31, 2023, we did not withdraw any other interest earned on the Trust Account. To the extent that our capital stock 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 March 31, 2024 and December
31, 2023, we had cash of $38,609 and $61,977 outside of the Trust Account, respectively. We intend to use the 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 our initial Business Combination.
In addition, in order to fund
working capital deficiencies or finance transaction costs in connection with an intended initial Business Combination, our sponsor or
an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required.
If we complete our initial Business Combination, we would repay such loaned amounts out of the proceeds of the Trust Account released
to us. Otherwise, such loans may be repaid only out of funds held outside the Trust Account. 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 to repay such loaned amounts. Up to $1,500,000 of such loans may be convertible into warrants of
the post-business combination company, at a price of $1.00 per warrant at the option of the lender.
On June 20, 2023, the Company
entered into a Promissory Note (as defined in Note 5) with the Sponsor pursuant to which the Sponsor agreed to loan the Company up to
an aggregate principal amount of up to $1,500,000. The Promissory Note is payable on the earlier of the date on which the Company consummates
a Business Combination or June 7, 2024. Upon the consummation of the Business Combination, the Sponsor will have the option, but not the
obligation, to convert the entire principal balance of the Promissory Note, in whole or in part, into private placement warrants of the
post-business combination entity at a price of $1.00 per warrant. The terms of such private placement warrants (if issued) will be identical
to the terms of the private placement warrants issued by the Company in connection with the IPO. The Promissory Note is subject to customary
events of default, the occurrence of any of which automatically triggers the unpaid principal and interest balance of the Promissory Note
and all other sums payable with regard to the Sponsor Note becoming immediately due and payable. As of March 31, 2024 and December 31,
2023 the outstanding principal balance under the Note amounted to an aggregate of $1,410,000 and $1,080,000, respectively.
On August 3, 2023, the Company
issued an unsecured promissory note to TNL with a principal amount equal to $400,000 (the “TNL Working Capital Note”).
The TNL Working Capital Note is a non-interest bearing, unsecured promissory note that will not be repaid in the event that the Merger
agreement is terminated prior to the Business Combination. The TNL Working Capital Note will be paid on the date on which the Company
consummates the transactions contemplated by the Merger Agreement. The following shall constitute an event of default under the TNL Working
Capital Note: (i) a failure to pay the principal within five business days of the maturity date and (ii) the commencement of a voluntary
or involuntary bankruptcy action. As of March 31, 2024 and December 31, 2023 the outstanding principal balance under the TNL Working Capital
Note amounted to an aggregate of $249,906 and $149,946, respectively.
On April 5, 2024, the Company
entered into a promissory note with the Sponsor pursuant to which the Sponsor agreed to loan the Company a principal amount equal to $750,000
(the “Sponsor Promissory Note”). The Sponsor Promissory Note is a non-interest bearing, unsecured promissory note which may
be drawn down by the Company from time to time to be used for costs and expenses related to the Company’s initial merger, share
exchange, asset acquisition, share purchase, reorganization or similar business combination involving the Company and one or more businesses
or entities. Pursuant to the terms of the Sponsor Promissory Note, if the Business Combination is not consummated, the Sponsor Promissory
Note will be repaid solely to the extent that the Company has funds available to it outside of its Trust Account, and that all other amounts
will be contributed to capital, forfeited, eliminated or otherwise forgiven or eliminated. The Sponsor Promissory Note is subject to events
of default, the occurrence of any of which automatically triggers the unpaid principal of the Sponsor Promissory Note and all other sums
payable with regard to the Sponsor Note becoming immediately due and payable. As of March 31, 2024, there was no amount outstanding under
the Sponsor Promissory Note.
Over this time period, the Company will be using these funds for paying existing accounts payable, identifying and evaluating prospective
initial 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 Business Combination.
In connection with the Company’s
assessment of going concern considerations in accordance with the authoritative guidance in FASB ASU 2014-15, “Disclosures of Uncertainties
about an Entity’s Ability to Continue as a Going Concern.” The Company has until June 7, 2024, to consummate a Business Combination.
It is uncertain that the Company will be able to consummate a Business Combination by the specified period. If a Business Combination
is not consummated by June 7, 2024 and the Company decides not to extend the period of time to consummate a Business Combination, there
will be a mandatory liquidation and subsequent dissolution.
The Company’s evaluation
of its liquidity condition and the date for mandatory liquidation and subsequent dissolution raise substantial doubt about the Company’s
ability to continue as a going concern one year from the date that these condensed financial statements are issued. These condensed financial
statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that
might be necessary should the Company be unable to continue as a going concern.
Off-Balance Sheet Financing Arrangements
As of March 31, 2024, we did
not have any obligations, assets or liabilities that would be considered 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.
Contractual Obligations
Administrative Support Agreement
The Company has an
Administrative Support Agreement pursuant to which the Company may reimburse an affiliate of the Sponsor up to an amount of $10,000
per month for office space and secretarial and administrative support.
Registration Rights
The holders of the Founder
Shares, Private Placement Warrants and any warrants that may be issued upon conversion of the Working Capital Loans (and in each case
holders of their component securities, as applicable) are entitled to registration rights pursuant to a registration rights agreement
effective December 2, 2021, which requires the Company to register such securities for resale (in the case of the Founder Shares, only
after conversion to our Class A ordinary shares). The holders of the majority of these securities are entitled to make up to three demands,
excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back”
registration rights with respect to registration statements filed subsequent to the consummation of a business combination and rights
to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. The Company will bear the
expenses incurred in connection with the filing of any such registration statements.
Underwriter’s Agreement
The Company paid a cash underwriting
discount of 2.00% of the gross proceeds of the Public Offering, or $3,795,000 due to the exercise of the over-allotment option in full.
In addition, the underwriter will be entitled to a deferred fee of three and a half percent (3.50%) of the gross proceeds of the Public
Offering, or $6,641,250. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in
the event that the Company completes a business combination, subject to the terms of the underwriting agreement. The underwriter has reimbursed
the Company for $550,000 for offering expenses. The reimbursement of these costs has been accounted for as a reduction to offering costs
of the Public Offering.
Consulting Agreements
The Company and Mr. Leggett
entered into a consulting agreement on October 11, 2022, as amended July 31, 2023 (the “Leggett Consulting Agreement”). Under
the Leggett Consulting Agreement, Mr. Leggett is entitled to $20,000 per month for certain services Mr. Leggett provides to the Company
and its affiliates. Mr. Leggett is separately entitled under the Leggett Consulting Agreement to a success bonus of $250,000 to be paid
within 10 business days of the close of the business combination, subject to a reduction by $17,500 for each month in which the Company
pays Mr. Leggett a consulting service fee under the Leggett Consulting Agreement. The Company and Mr. Lasov entered into a consulting
agreement on November 22, 2022, as amended July 31, 2023 (the “Lasov Consulting Agreement”). Under the Lasov Consulting Agreement,
Mr. Lasov is entitled to $32,500 per month for certain services Mr. Lasov provides to the Company and its affiliates. Mr. Lasov is separately
entitled under the Lasov Consulting Agreement to a success bonus of $150,000 to be paid within 10 business days of the close of the business
combination, subject to a reduction by the amount of each consulting service fee paid to Mr. Lasov by the Company under the Lasov Consulting
Agreement. Mr. Lasov has agreed that as of February 1, 2024, he will not be invoicing the Company for services performed under the Lasov
Consulting Agreement with the Company. Mr. Leggett has agreed that as of April 1, 2024, he will reduce his monthly service fee under the
Leggett Consulting Agreement to $5,000.
Critical Accounting Policies and Estimates
This management’s discussion
and analysis of our financial condition and results of operations is based on our unaudited financial statements, which have been prepared
in accordance with GAAP. The preparation of our unaudited financial statements requires us to make estimates and judgments that affect
the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our unaudited
financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to fair value of financial
instruments and accrued expenses. We base our estimates on historical experience, known trends and events and various other factors that
we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different
assumptions or conditions.
Warrant Liabilities
The Company accounts for the
Warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the Warrants
and the applicable authoritative guidance in ASC 480 and ASC 815. The assessment considers whether they are freestanding financial instruments
pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and 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 holders of the Warrants
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 issuance of the
Warrants 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, such warrants are required to be recorded as a component of additional paid-in capital
at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, such warrants are
required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated
fair value of liability-classified warrants are recognized as a non-cash gain or loss on the statement of operations.
Class A Ordinary Shares Subject to Possible Redemption
Class A ordinary shares subject
to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class
A ordinary shares (including Class A ordinary shares that feature redemption rights that are either within the control of the holder or
subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary
equity. At all other times, Class A ordinary shares are classified as shareholders’ equity. Our Class A ordinary shares feature
certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly,
at March 31, 2024 and December 31, 2023, 6,175,215 shares of Class A ordinary shares subject to possible redemption are presented as temporary
equity, respectively, outside of the shareholders’ deficit section of the Company’s condensed balance sheets.
Net (Loss) Income Per Ordinary Share
Basic (loss) income per ordinary
share is computed by dividing net (loss) income applicable to ordinary shareholders by the weighted average number of ordinary shares
outstanding during the period. Consistent with ASC 480, ordinary shares subject to possible redemption, as well as their pro rata share
of undistributed trust earnings consistent with the two-class method, have been excluded from the calculation of (loss) income per ordinary
share for the three month period ended March 31, 2024 and 2023. Such shares, if redeemed, only participate in their pro rata share of
trust earnings. Diluted (loss) income per share includes the incremental number of ordinary shares to be issued to settle warrants, as
calculated using the treasury method. For the period from December 31, 2023 to March 31, 2024, the Company did not have any dilutive warrants,
securities or other contracts that could potentially, be exercised or converted into ordinary shares. As a result, diluted (loss) income
per ordinary share is the same as basic (loss) income per ordinary share for all periods presented.
Recently Adopted Accounting Standard
In August 2020 the FASB issued
ASU No. 2020-06 Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in
Entity’s Own Equity (Subtopic 815–40) (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for certain financial
instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity.
The ASU is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in GAAP. The ASU’s amendments
are effective for smaller reporting companies for fiscal years beginning after December 15, 2023, and interim periods within those fiscal
years. The Company adopted ASU 2020-06 on January 1, 2024. The adoption of ASU 2020-06 did not have a material impact on the Company’s unaudited condensed financial statements and disclosures.
Recently Issued Accounting Standards
Management does not believe
that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the
Company’s financial statements.
JOBS Act
On April 5, 2012, the JOBS
Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying
public companies. 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 to irrevocably
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 will adopt the new or revised standard at the time public companies adopt the new or revised standard.
This may make comparison of our financial statements with another emerging growth company that has not opted out of using the extended
transition period difficult or impossible because of the potential differences in accountant standards used.
Additionally, we are in the
process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain
conditions set forth in the JOBS Act, if, as an “emerging growth company”, we choose to rely on such exemptions we may not
be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial
reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public
companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by
the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing
additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive
compensation related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive
Officer’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion
of our Public Offering or until we are no longer an “emerging growth company,” whichever is earlier.
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
Under the supervision and
with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we carried out an evaluation
of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e)
under the Exchange Act. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of the
end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were not effective due to the
material weakness in our internal control over financial reporting described below.
As previously disclosed in
our Annual Report on Form 10-K, that was filed with the SEC on March 21, 2024, our management identified a material weakness in our internal
control over financial reporting due to the fact that we did not have the necessary business processes and related internal controls formally
designed and implemented related to accrued expenses and accounts payable. As a result, we performed additional analysis as deemed necessary
to ensure that our consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles including
implementing the remediation activities as described below. Accordingly, management believes that the consolidated financial statements
included in this Form 10-Q present fairly in all material respects our financial position, results of operations, and cash flows
for the period presented.
Disclosure controls and procedures
are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized,
and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated
to our management, including our principal executive officer and principal financial officer or persons performing similar functions,
as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial
Reporting
Historical Remediation Activities
As previously disclosed in
Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, management identified material weaknesses in internal
control over financial reporting related to accrued expenses and accounts payable.
The Company has performed
the following remediation activities to confirm its accounts payable obligations:
| ● | We confirmed that no member of management or advisor providing
services to the Company has unsubmitted or unreimbursed expenses or fees, and |
| ● | we confirmed that the Company was current with its payables
to its service providers. |
We are committed to ensuring
that our internal controls are designed and operating effectively. Management believes the efforts taken to date and the planned remediation
will improve the effectiveness of our internal control over financial reporting. While these remediation efforts are ongoing, the controls
must also be operating effectively for a sufficient period of time and be tested by management in order to consider them remediated and
conclude that the controls are operating effectively to address the risks of material misstatement.
Changes in Internal Controls Over Financial
Reporting
Except for the steps taken
as part of the remediation activities described above, there have been no changes in our internal controls over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended March 31, 2024, that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
We are not a party to any
material legal proceedings and no material legal proceedings have been threatened by us or, to the best of our knowledge, against us.
Item 1A. Risk Factors.
Factors that could cause our
business, prospects, results of operations or financial condition to differ materially from the descriptions provided in this report include
the risk factors described in our Annual Report on Form 10-K, filed with the SEC on March 21, 2024. In addition, the following risk factor
could also have such an effect.
A 1% U.S. federal excise tax may decrease
the value of our securities following an initial business combination, or hinder our ability to consummate an initial business combination.
Pursuant to the Inflation Reduction Act of 2022
(the “IR Act”), commencing in 2023, a 1% U.S. federal excise tax is imposed on certain repurchases (including redemptions)
of stock by publicly traded domestic (i.e., U.S.) corporations and certain domestic subsidiaries of publicly traded foreign corporations.
The excise tax is imposed on the repurchasing corporation and not on its shareholders. The amount of the excise tax is equal to 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. Although we are a Cayman Islands company, the excise tax may apply in connection with redemptions or other
repurchases that occur in connection with an initial business combination that involves our combination with a U.S. entity and/or our
domestication as a U.S. corporation (a “Redemption Event”). In addition, because the excise tax would be payable by us and
not by the redeeming holders, the mechanics of any required payment of the excise tax remains to be determined. Any excise tax payable
by us in connection with a Redemption Event may cause a reduction in the cash available to us to complete an initial business combination
and could affect our ability to complete an initial business combination.
The SEC has recently issued final rules
to regulate special purpose acquisition companies. Certain of the procedures that we, a potential business combination target, or others
may determine to undertake in connection with such proposals may increase our costs and the time needed to complete our initial business
combination and may constrain the circumstances under which we could complete a business combination.
On January 24, 2024,
the SEC issued final rules (the “SPAC Rules”) relating to, among other things, disclosures in business combination transactions
between special purpose acquisition companies (“SPACs”) such as us and private operating companies; the condensed financial
statement requirements applicable to transactions involving shell companies; and the use of projections by SPACs in SEC filings in connection
with proposed business combination transactions. The SPAC Rules will become effective 125 days after their publication in the Federal
Register. In connection with the issuance of the SPAC Rules, the SEC also issued guidance (the “SPAC Guidance”) regarding
the potential liability of certain participants in proposed business combination transactions and the extent to which SPACs could become
subject to regulation under the Investment Company Act of 1940, as amended (“Investment Company Act”) based on certain
facts and circumstances such as duration, asset composition, sources of income, business purpose and activities of the SPAC and its management
team in furtherance of such goals.
Certain of the procedures
that we, a potential business combination target, or others may determine to undertake in connection with the SPAC Rules, or pursuant
to the SEC’s views expressed in the SPAC Guidance, may increase the costs and the time required to consummate a business combination,
and may constrain the circumstances under which we could complete a business combination.
If we were deemed to be an investment company
for purposes of the Investment Company Act, we may be forced to abandon our efforts to complete an initial business combination and instead
be required to liquidate and dissolve the Company.
As described above, the SPAC
Guidance relates to, among other things, the circumstances in which SPACs such as us could potentially be subject to the Investment Company
Act and the regulations thereunder. Whether a SPAC is an investment company will be a question of facts and circumstances under the subjective
test of Section 3(a)(1)(A) of the Investment Company Act. A specific duration period of a SPAC is not the sole determinant, but one
of the long-standing factors to consider in determination of a SPAC’s status under the Investment Company Act. A SPAC could be deemed
as an investment company at any stage of its operation. The determination of a SPAC’s status as an investment company includes analysis
of a SPAC’s activities, depending upon the facts and circumstances, including but not limited to, the nature of SPAC assets and
income, the activities of a SPAC’s officers, directors and employees, the duration of a SPAC, the manner a SPAC holding itself out
to investors, and the merging with an investment company.
It is possible that a claim
could be made that we have been operating as an unregistered investment company, including under the subjective test of Section 3(a)(1)(A) of
the Investment Company Act, based on the current views of the SEC. If we were deemed to be an investment company for purposes of
the Investment Company Act, we might be forced to abandon our efforts to complete an initial business combination and instead be required
to liquidate the Company. If we are required to liquidate the Company, our investors would not be able to realize the benefits of owning
shares in a successor operating business, including the potential appreciation in the value of our shares and warrants following such
a transaction, and our warrants would expire worthless.
In an effort to mitigate the
risk that we may be deemed to have been operating as an unregistered investment company under the Investment Company Act, we instructed
Continental Stock Transfer & Trust Company, the trustee with respect to the Trust Account, to liquidate the U.S. government
securities held in the Trust Account in November 2023 and to thereafter hold all funds in the Trust Account in an interest bearing
demand deposit account until the earlier of the consummation of our Business Combination or our liquidation. There can be no assurance
that this action will foreclose a judicial or regulatory finding, or an allegation, that the Company is an investment company.
Termination of the Transactions could negatively impact Blue
Ocean.
If the Transactions are not completed for any
reason, including as a result of our shareholders declining to approve the proposals required to effect the Transactions, our ongoing
business may be adversely impacted and, without realizing any of the anticipated benefits of completing the Transactions, we would be
subject to a number of risks, including the following:
| ● | we may experience negative reactions from the financial markets,
including negative impacts on our share price (including to the extent that the current market price reflects a market assumption that
the Transactions will be completed); |
| ● | we will have incurred substantial expenses and will be required
to pay certain costs relating to the Transactions, whether or not the Transactions are completed; and |
| ● | since the Merger Agreement restricts the conduct of our businesses
prior to completion of the Merger, we may not be able to take certain actions during the pendency of the Merger that would benefit us
as an independent company, and the opportunity to take such actions may no longer be available. |
If the Transactions are terminated and our board
of directors seeks another business combination target, our shareholders cannot be certain that we will be able to find another acquisition
target that would constitute a business combination or that such other business combination will be completed.
The Transactions may be more difficult,
costly, or time-consuming than expected, and we may not realize the anticipated benefits of the Transactions.
To realize the anticipated
benefits from the Transactions, we must successfully integrate and combine our business with that of TNL Mediagene. If we are not able
to successfully achieve these objectives, the anticipated benefits of the Transactions may not be realized fully or at all or may take
longer to realize than expected. In addition, the actual benefits of the Transactions could be less than anticipated, and integration
may result in additional unforeseen expenses. In addition, we and TNL Mediagene have operated and, until the completion of the Transactions,
must continue to operate, independently. It is possible that the integration process could result in the loss of one or more key employees,
the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures, and policies that adversely
affect each company’s ability to achieve the anticipated benefits of the Transactions. Integration efforts between the companies
may also divert management attention and resources. These integration matters could have an adverse effect on the Company during this
transition period and for an undetermined period after completion of the Transactions.
Item 2. Unregistered Sales of Equity Securities.
None.
Item 3. Default Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
The following exhibits are
filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
EXHIBIT INDEX
Exhibit No. |
|
Description of Exhibit |
3.4 |
|
Amended and Restated Memorandum and Articles of Association (3) |
2.1 |
|
Agreement and Plan of Merger, dated as of June 6, 2023, among The News Lens Co., Ltd., TNL Mediagene and Blue Ocean Acquisition Corp (5) |
4.1 |
|
Specimen Unit Certificate (2) |
4.2 |
|
Specimen Ordinary Share Certificate (2) |
4.3 |
|
Specimen Warrant Certificate (2) |
4.4 |
|
Warrant Agreement, dated December 2, 2021, among the Registrant and Continental Stock Transfer & Trust Company, as warrant agent (3) |
10.1 |
|
Letter Agreement dated December 2, 2021, among the Registrant, Blue Ocean Sponsor LLC, Apollo SPAC Fund I, L.P., and the Registrant’s officers and directors (3) |
10.3 |
|
Investment Management Trust Agreement dated December 2, 2021, between the Registrant and Continental Stock Transfer & Trust Company, as trustee (3) |
10.4 |
|
Registration Rights Agreement, dated December 2, 2021, among the Registrant, Blue Ocean Sponsor LLC and certain other security holders named therein (3) |
10.6 |
|
Private Placement Warrants Purchase Agreement, dated December 2, 2021, between the Registrant and Blue Ocean Sponsor LLC (3) |
10.7 |
|
Form of Indemnity Agreement, dated December 2, 2021, between the Company and each officer and/or director (3) |
10.8 |
|
Securities Subscription Agreement, dated as of April 6, 2021, between the Registrant and Blue Ocean Sponsor LLC (1) |
10.9 |
|
Securities Subscription Agreement, dated as of October 28, 2021, by and among the Registrant, Blue Ocean Sponsor LLC and Apollo SPAC Fund I, L.P. (1) |
10.10 |
|
Administrative Support Agreement, dated December 2, 2021, between the Registrant and Blue Ocean Sponsor LLC (3) |
10.11 |
|
Consulting Agreement, dated as of October 11, 2022, between the Registrant and Richard Leggett (4) |
10.12 |
|
Promissory Note, dated as of June 20, 2023, between the Company and the Sponsor. (6) |
10.13 |
|
Promissory Note, dated August 3, 2023 issued by Blue Ocean Acquisition Corp to The News Lens Co., Ltd. (7) |
10.14 |
|
Amendment to Consulting Agreement between Blue Ocean Acquisition Corp and Richard Leggett, dated July 31, 2023 (7) |
10.15 |
|
Amendment to Consulting Agreement between Blue Ocean Acquisition Corp and Matt Lasov, dated July 31, 2023 (7) |
10.16 |
|
Promissory Note, dated as of April 5, 2024, between the Company and the Sponsor (8) |
31.1** |
|
Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002. |
31.2** |
|
Certification of Chief Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1** |
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
32.2** |
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
101.INS* |
|
Inline XBRL Instance Document |
101.CAL* |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.SCH* |
|
Inline XBRL Taxonomy Extension Schema Document |
101.DEF* |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB* |
|
Inline XBRL Taxonomy Extension Labels Linkbase Document |
101.PRE* |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104* |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* |
Filed herewith |
** |
Furnished herewith |
(1) |
Incorporated by reference to Registration Statement on Form S-1 filed with the Securities & Exchange Commission on November 9, 2021. |
(2) |
Incorporated by reference to Registration Statement on Form S-1 filed with the Securities & Exchange Commission on November 19, 2021. |
(3) |
Incorporated by reference to Current Report on Form 8-K filed with the Securities & Exchange Commission on December 8, 2021. |
(4) |
Incorporated by reference to Current Report on Form 8-K filed with the Securities & Exchange Commission on October 14, 2022. |
(5) |
Incorporated by reference to Current Report on Form 8-K filed with the Securities & Exchange Commission on June 6, 2023. |
(6) |
Incorporated by reference to Current Report on Form 8-K filed with the Securities & Exchange Commission on July 19, 2023. |
(7) |
Incorporated by reference to Current Report on Form 8-K filed with the Securities & Exchange Commission on August 4, 2023. |
(8) |
Incorporated by reference to Current Report on Form 8-K filed with the Securities & Exchange Commission on April 11, 2024. |
PART III - SIGNATURES
Pursuant to the requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Date: May 13, 2024 |
BLUE OCEAN ACQUISITION CORP |
|
|
|
By: |
/s/ Richard Leggett |
|
Name: |
Richard Leggett |
|
Title: |
Chief Executive Officer |
|
|
(Principal Executive Officer) |
|
|
|
|
By: |
/s/ Matt Lasov |
|
Name: |
Matt Lasov |
|
Title: |
Chief Financial Officer |
|
|
(Principal Financial and Accounting Officer) |
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In connection with the Quarterly
Report on Form 10-Q of Blue Ocean Acquisition Corp (the “Company”), as filed with the Securities and Exchange Commission on
the date hereof (the “Report”), I, Richard Leggett, Chief Executive Officer of the Company, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
In connection with the Quarterly
Report on Form 10-Q of Blue Ocean Acquisition Corp (the “Company”), as filed with the Securities and Exchange Commission on
the date hereof (the “Report”), I, Matt Lasov, Chief Financial Officer of the Company, pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: