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Item 2. Management’s Discussion and Analysis

2024-11-14 compared with 2024-08-19 · 63 added, 21 removed, 157 unchanged (35% of the section changed)

48 unchanged sentences

In connection with the May Special Meeting, 1,581,733 shares of common stock of the Company were tendered for redemption at a redemption price of approximately $10.78 per share for an aggregate redemption amount of $17,045,763, leaving $20,327,120 in the Trust Account immediately after the redemptions and a tax withdrawal by the Company of $218,857.

Additionally, the Company deposited an extension payment of $50,000 into the Trust Account on each of May 14, 2024, June 13, 2024, July 12, 2024, and August 13, 2024.

Additionally, the Company deposited an extension payment of $50,000 into the Trust Account on each of May 14, 2024, June 13, 2024, July 12, 2024, August 13, 2024, September 10, 2024, and October11, 2024.

Annual Meeting of Stockholders

On November 12, 2024, the Company held an annual meeting of its stockholders (the “Annual Meeting”).

At the Annual Meeting, the Company’s stockholders approved two proposals to amend the Company’s Charter.

The stockholders approved a proposal to amend the Charter to allow the Company to extend the date by which the Company must consummate a business combination from November 14, 2024 to February 14, 2025 (the “Extension Amendment Proposal”).

The stockholders also approved a proposal to amend the Charter to remove the net tangible asset requirement in order to expand the methods that the Company may employ so as not to become subject to the “penny stock” rules of the SEC (the “NTA Requirement Amendment Proposal”, and together with the Extension Amendment Proposal, the “Charter Amendment”).

The Charter Amendment was filed with the Delaware Secretary of State and has an effective date of November 12, 2024.The stockholders also duly elected each of the five (5) existing directors to the Company’s Board of Directors until the next annual meeting of stockholders following this annual meeting or until each such director’s successor is elected and qualified, subject to his earlier death, resignation or removal.

In connection with the votes to approve the Extension Amendment Proposal and NTA Requirement Amendment Proposal, 1,766,469 shares of common stock of the Company were tendered for redemption.

Proposed Business Combination

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(i) by mutual written consent of the Company and OSR Holdings;

(ii) by either the Company or OSR Holdings if the Effective Time shall not have occurred prior to November 14, 2024 subject to certain exemptions;

(ii) by either the Company or OSR Holdings if the Effective Time shall not have occurred prior to November 14, 2024 subject to certain exceptions;

(iii) by either the Company or OSR Holdings if any Governmental Authority, including in the United States or the Republic of Korea, shall have taken action to prevent or prohibit the Business Combination;

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or (vi) by OSR Holdings upon a material breach of any representation, warranty, covenant or agreement on the part of the Company set forth in the A&R BCA.

Subscription Agreement

On October 4, 2024, the Company and Toonon Partners Co., Ltd.

(“Toonon”) entered into a subscription agreement (the “Subscription Agreement”), pursuant to which, among other things, the Company has agreed to issue and sell to Toonon, and Toonon has agreed to subscribe for and purchase, 222,222 shares (the “PIPE Shares”) of Series A Preferred Stock of the Company (the “Series A Preferred Stock”) for $90.00 per share (the “Series A Original Issue Price”) representing an aggregate purchase price of $20,000,000 (the “PIPE Investment”).

Prior to closing of the PIPE Investment, the Company intends to file with the Secretary of State of the State of Delaware a Certificate of Designations (the “Certificate of Designations”) setting forth the rights and preferences of the Series A Preferred Stock, which have been agreed to between the Company and Toonon.

Such rights and preferences include, among others, that (1) dividends will accrue at a rate of 5% per annum of the Series A Original Issue Price (except as otherwise provided for in the Certificate of Designations) to be payable only when, as, and if declared by the board of directors of the Company or as otherwise specifically provided in the Certificate of Designations;

(2) the Series A Preferred Stock is convertible, at the option of the holder thereof, into shares of common stock of the Company (“Common Stock”) in an amount equal to the quotient of (i) the Series A Original Issue Price plus all unpaid accruing dividends as of the date of the conversion and (ii) the then applicable conversion price (as adjusted, the “Conversion Price”).

The initial Conversion Price is $9.00 resulting in each share of Series A Preferred Stock being convertible into 10 shares of Company common stock.

Beginning on the one-year anniversary of the original issue date (the “Original Issue Date”), the Company has the option, in its sole discretion, to redeem all or a portion of the then outstanding shares of Series A Preferred Stock, for an amount equal to the Series A Original Issue Price plus all unpaid accruing dividends as of the date of the redemption;

provided, that, for purposes of calculating the accruing dividends in the event of a redemption, dividends will have been deemed to have accrued at a rate of 7.0% per annum of the Series A Original Issue Price (the “Redemption Price”).

Beginning on the three-year anniversary of the Original Issue Date, any holder of Series A Preferred Stock may demand that the Company redeem all or a portion of such holder’s Series A Preferred Stock in an amount equal to the Redemption Price.

Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Subscription Agreement.

The proceeds of the PIPE Investment will be used by the Company for working capital and general corporate purposes following the closing of the Business Combination.

The Subscription Agreement contains customary representations and warranties of the Company and Toonon, and customary conditions to closing, including (i) the consummation of the Business Combination and (ii) certification by an officer of the Company that the Certificate of Designations has been filed with the Secretary of State of the State of Delaware and is in full force and effect.

Additionally, pursuant to the Subscription Agreement, the Company and Toonon will enter into a registration rights agreement prior to the closing of the PIPE Investment, pursuant to which, among other things, the Company will be obligated to (i) file a registration statement to register the common stock issuable upon conversion of the PIPE Shares as soon as practicable following the receipt of written demand from Toonon, and (ii) use its commercially reasonable efforts to effect such registration, subject to certain exceptions.

The PIPE Shares to be sold in connection with the PIPE Investment will be exempt from registration pursuant to Regulation S under the U.S.

Securities Act of 1933, as amended.

Nasdaq Listing Rules Compliance

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The notice is only a notification of deficiency, not of imminent delisting, and has no current effect on the listing or trading of the Company’s securities on the Nasdaq Capital Market.

The Company submitted a plan to regain compliance with the Minimum Public Holders Rule to Nasdaq on April 1, 2024.

On April 17, 2024, the Company received written notice from Nasdaq indicating that the staff of Nasdaq determined, based on its review of the Company’s compliance plan, to grant the Company an extension of time to regain compliance with the Minimum Public Holders Requirement.

The terms of the extension are as follows:

on or before August 13, 2024, the Company must file with Nasdaq documentation from its transfer agent, or an independent source, demonstrating that its common stock has a minimum of 300 public holders.

In the event the Company does not satisfy the terms, the Nasdaq staff will provide written notification that the Company’s securities will be delisted.

At that time, the Company may appeal the Nasdaq staff’s determination to a Listing Qualifications Panel.

On April 1, 2024, the Company submitted to Nasdaq a plan to regain compliance with the Minimum Public Holders Requirement and, on April 17, 2024, the staff of Nasdaq approved the plan and granted the Company an extension until August 13, 2024 to demonstrate compliance with the Minimum Public Holders Requirement (the “Compliance Period”).

On August 20, 2024, the Company received written notice (the “Second Notice”) from Nasdaq stating that the Company has not regained compliance with the Minimum Public Holders Requirement within the Compliance Period.

In accordance with the Second Notice, the Company timely requested a hearing before the Hearings Panel (the “Panel”), which automatically stayed any suspension or delisting action of the Company’s securities, and the hearing was held on October 1, 2024.

On October 4, 2024, the Panel granted the Company’s request for continued listing on the Nasdaq, subject to the requirement that on or before February 17, 2025, the Company shall demonstrate compliance with Listing Rule 5505, and that during the exception period, the Company shall provide prompt notification of any significant events that occur during this time that may affect the Company’s compliance with Nasdaq requirements.

Recent Promissory Notes

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The Sponsor Notes do not bear interest and are payable in full on the earlier of (i) December 31, 2024 or (ii) the date on which the Company consummates an initial business combination.

In the event that the Company does not consummate a business combination on or prior to the time provided in the Company’s Amended and Restated Certificate of Incorporation (as subject to extension), the Sponsor agrees to forgive the principal balance of the Sponsor Notes, except to the extent of any funds remaining outside of the Company’s trust account.

In the event that the Company does not consummate a business combination on or prior to the time provided in the Company’s Charter (as subject to extension), the Sponsor agrees to forgive the principal balance of the Sponsor Notes, except to the extent of any funds remaining outside of the Company’s trust account.

The following events constitute an event of default under the Sponsor Notes:

(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.

On October 10, 2024, the Company issued an unsecured promissory note to Jun Chul Whang, a member of the Company’s Board (the “Second JCW Promissory Note”) in the principal amount of $40,000 to Mr.

Whang for its receipt of $40,000 to fund working capital and other expenses of the Company.

The Second JCW Promissory Note is non-interest bearing and is payable in full on the earlier of (i) November 9, 2024, (ii) at such time the

Company raises additional working capital funds, or (iii) the date on which the Company consummates an initial business combination.

In the event that the Company does not consummate an initial business combination on or prior to the time provided in the Charter, as amended, Mr.

Whang agrees to forgive the principal balance of the Second JCW Promissory Note, except to the extent of any funds remaining outside of the Company’s trust account, if any;

On October 16, 2024, the Company issued an unsecured promissory note to Duksung Co., LTD.

(“Duksung”) in the principal amount of $800,000 (the “Duksung Promissory Note”).

The Duksung Promissory Note bears interest at a simple rate of 5% per annum;

provided, however, solely for purposes of prepayment pursuant to a redemption of the Duksung Promissory Note, interest shall be deemed to have accrued at a simple rate of 7% per annum, and, unless earlier converted or redeemed, is payable in full on October 15, 2025 (the “Duksung Promissory Note Maturity Date”).

In the event of, and simultaneously with the closing of a Qualified PIPE Financing (as defined in the Duksung Promissory Note), the Duksung Promissory Note automatically converts into Company common stock in an amount equal to the quotient (rounded to the nearest whole share) obtained by dividing (a) the outstanding principal amount and unpaid accrued interest under the Duksung Promissory Note by (b) eight dollars and ten cents ($8.10) (the “Conversion”).

The Conversion shall constitute satisfaction in full of the obligations of the Company under the Duksung Promissory Note.

In the event a Qualified PIPE Financing does not occur on or before March 31, 2025 (the “PIPE Outside Date”), the Company may prepay the Duksung Promissory Note, in whole or in part, at any time after the PIPE Outside Date.

The amount to be paid pursuant to any such prepayment shall include the outstanding principal amount plus accrued and unpaid interest calculated at a simple rate of 7% from the issuance date.

On October 25, 2024, OSR Holdings Co., Ltd.

issued a promissory note to the Company in the aggregate principal amount of $300,000 (the “OSR Promissory Note”) to fund working capital and other expenses of OSR Holdings.

The OSR Holdings Promissory Note bears interest at a rate of three and ninety-six hundredths’ percent (3.96%) per annum and shall be compounded semi-annually.

The OSR Promissory Note is payable on October 25, 2025 (the “OSR Promissory Note Maturity Date”) and all accrued interest shall be payable on the Maturity Date.

The following events constitute an event of default under the OSR Promissory Note:

(i) a failure to pay the outstanding balance due within five (5) business days of the OSR Promissory Note Maturity Date and (ii) the commencement of a voluntary or involuntary bankruptcy action.

Results of Operations

Our entire activity since inception through June 30, 2024 related to our formation and IPO, and subsequent to the IPO, related to identifying a target company for an initial business combination.

Our entire activity since inception through September 30, 2024 related to our formation and IPO, and subsequent to the IPO, related to identifying a target company for an initial business combination.

We do not expect to generate any operating revenues until after the completion of an initial business combination.

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We will incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with searching for, and completing, an initial business combination.

For the three months ended June 30, 2024, we had a net loss of $97,295 which consisted of general and administrative expenses of $475,544 and provision for income taxes of $87,256, offset by income from investments held in the Trust Account of $465,505.

For the three months ended June 30, 2023, we had net income of $301,464 which consisted of income from investments held in the Trust Account of $810,302, offset by general and administrative expenses of $280,273 and provision for income taxes of $228,565.

For the six months ended June 30, 2024, we had a net loss of $157,725 which consisted of general and administrative expenses of $926,325 and provision for income taxes of $177,729, offset by income from investments held in the Trust Account of $946,329.

For the six months ended June 30, 2023, we had net income of $411,769, which consisted of income from investments held in the Trust Account of $1,228,030, offset by general and administrative expenses of $558,375 and provision for income taxes of $257,886.

For the three months ended September 30, 2024, we had a net loss of $230,961 which consisted of general and administrative expenses of $454,132 and provision for income taxes of $46,033, offset by income from investments held in the Trust Account of $269,204.

For the three months ended September 30, 2023, we had net income of $78,183, which consisted of income from investments held in the Trust Account of $618,499, offset by general and administrative expenses of $410,431 and provision for income taxes of $129,885.

For the nine months ended September 30, 2024, we had a net loss of $388,686 which consisted of general and administrative expenses of $1,380,457 and provision for income taxes of $223,762, offset by income from investments held in the Trust Account of $1,215,533.

For the nine months ended September 30, 2023, we had net income of $489,952, which consisted of income from investments held in the Trust Account of $1,846,529, offset by general and administrative expenses of $968,806 and provision for income taxes of $387,771.

Liquidity and Capital Resources

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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 June 30, 2024, the Company had $119,116 in its operating bank account and a working capital deficit of $3,251,300.

As of September 30, 2024, the Company had $12,236 in its operating bank account and a working capital deficit of $3,901,465.

The Company’s liquidity needs prior to the consummation of our IPO had been satisfied through proceeds from advances from related party and from the issuance of common stock.

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Loans made by Chardan or any of its related persons, if any, will not be convertible into any of our securities and Chardan and its related persons will have no recourse with respect to their ability to convert their loans into any of our securities.

Based on the foregoing and the limited amount of working capital that the Company received into the operating account from the private placement, management believes that the Company will not have sufficient working capital to meet its working capital needs through the earlier of the consummation of an initial business combination or 21 months from the IPO (subject to extension by approval of the Company’s stockholders).

Based on the foregoing and the limited amount of working capital that the Company received into the operating account from the private placement, management believes that the Company will not have sufficient working capital to meet its working capital needs through the earlier of the consummation of an initial business combination or February 14, 2025 (subject to extension by approval of the Company’s stockholders).

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Over this time period, the Company will be using the remaining funds held outside of the Trust Account 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 initial business combination.

and structuring, negotiating and consummating the initial business combination.

Further needs for operating capital beyond the Company’s current operating cash balance may need to be funded through loans from the Company’s Sponsor, officers and directors and their affiliates.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

If the Company is unable to complete a Business Combination by November 14, 2024 (subject to extension by approval of the Company’s stockholders), the Company will cease all operations except for the purpose of liquidating.

If the Company is unable to complete a Business Combination by February 14, 2025 (subject to extension by approval of the Company’s stockholders), the Company will cease all operations except for the purpose of liquidating.

This date for mandatory liquidation and subsequent dissolution combined with uncertainty as to whether the Company has sufficient liquidity to fund operations through the liquidation date or thereafter should a deferral occur raises substantial doubt about the Company’s ability to continue as a going concern.

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Off-Balance Sheet Arrangements

We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements as of June 30, 2024.

We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements as of September 30, 2024.

We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.

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The deferred fee will be waived by Chardan in the event that we do not complete an initial business combination, subject to the terms of the underwriting agreement.

Also, we have incurred deferred legal fees payable upon consummation of our initial business combination of approximately $864,813 as of June 30, 2024.

These fees will only become due and payable upon the consummation of a business combination.

Also, we have incurred deferred legal fees payable upon consummation of our initial business combination of approximately $1,068,261 as of September 30, 2024.

These fees only become due and payable upon the consummation of a business combination.

The holders of the founder shares, equity participation shares, placement units, and units that may be issued upon conversion of 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.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis