AlphaTime Acquisition p(ATMC) - 2024 Q2 - Quarterly Report

Company Overview AlphaTime Acquisition Corp is a Cayman Islands-incorporated SPAC focused on business combinations, with 6.87 million shares outstanding as of August 14, 2024 Company Information AlphaTime Acquisition Corp is a Cayman Islands-incorporated blank check company, also known as a Special Purpose Acquisition Company (SPAC). It is classified as a shell company, an emerging growth company, and a smaller reporting company. The company's purpose is to effect a merger, asset acquisition, or similar business combination with one or more businesses. As of August 14, 2024, it had 6,873,426 ordinary shares issued and outstanding - The registrant is AlphaTime Acquisition Corp, a company incorporated in the Cayman Islands, formed for the purpose of a business combination[1] - The company is identified as a shell company, a non-accelerated filer, a smaller reporting company, and an emerging growth company[3][4] - As of August 14, 2024, there were 6,873,426 ordinary shares, par value $0.0001, issued and outstanding[4] Part I. Financial Information This section provides unaudited condensed financial statements, management's discussion, market risk disclosures, and an assessment of internal controls Item 1. Condensed Financial Statements This section presents the unaudited condensed financial statements for the period ended June 30, 2024. It includes the balance sheet, statements of operations, changes in shareholders' equity, and cash flows, along with detailed notes. The financials reflect the company's status as a pre-business combination SPAC, with its primary asset being the investment held in the Trust Account. Key events covered in the notes include the IPO, the pending merger with HCYC Group, share redemptions, and a going concern warning Condensed Balance Sheets The balance sheet as of June 30, 2024, shows a significant decrease in total assets to $52.6 million from $74.1 million at year-end 2023, primarily due to a reduction in the Investment held in Trust Account following share redemptions. Current liabilities increased, driven by a higher promissory note balance with a related party. The company maintains a significant shareholders' deficit Condensed Balance Sheet Data (Unaudited) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash | $1,473 | $15,054 | | Investment held in Trust Account | $52,553,058 | $74,062,199 | | Total Assets | $52,617,355 | $74,120,305 | | Liabilities & Shareholders' Deficit | | | | Promissory note – related party | $1,042,500 | $690,000 | | Total Liabilities | $4,925,468 | $3,953,907 | | Ordinary shares subject to possible redemption | $52,553,058 | $74,062,199 | | Total Shareholders' Deficit | $(4,861,171) | $(3,895,801) | Unaudited Condensed Statements of Operations For the three and six months ended June 30, 2024, the company reported net income, which was primarily derived from interest earned on the Trust Account. This income was partially offset by formation and operating costs. Compared to the same periods in 2023, net income decreased due to lower interest income (resulting from a smaller trust balance) and an increase in operating expenses Statement of Operations Highlights (Unaudited) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Formation and operating costs | $290,467 | $140,291 | $635,370 | $347,790 | | Income earned on Trust Account | $675,837 | $841,820 | $1,463,005 | $1,574,062 | | Net Income | $385,370 | $701,529 | $827,635 | $1,226,272 | Unaudited Condensed Statements of Cash Flows For the six months ended June 30, 2024, the company experienced a net cash outflow from operating activities. Investing activities generated a significant cash inflow of $23.0 million from withdrawals from the Trust Account for redemptions. This was offset by a near-equal cash outflow in financing activities for the payment of those redemptions. The company also received $352,500 from a promissory note with a related party Cash Flow Summary for Six Months Ended June 30 (Unaudited) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(36,081) | $(264,517) | | Net cash provided by (used in) investing activities | $22,972,146 | $(70,242,000) | | Net cash (used in) provided by financing activities | $(22,949,646) | $70,633,111 | | Net change in cash | $(13,581) | $126,594 | - Key cash movements in H1 2024 include a $23.3 million withdrawal from the Trust Account for share redemptions and proceeds of $352,500 from a related-party promissory note[18] Notes to Unaudited Condensed Financial Statements The notes detail the company's formation as a SPAC, its IPO in January 2023, and its subsequent activities. A key development is the signing of a Merger Agreement with HCYC Group Company Limited on January 5, 2024. The company has extended its business combination deadline and can continue to do so monthly until January 4, 2025, by making deposits into the Trust Account, funded by loans from its Sponsor. Following significant share redemptions in December 2023, which removed $23.3 million, the Trust Account held approximately $52.6 million as of June 30, 2024. Management has expressed substantial doubt about the company's ability to continue as a going concern due to its working capital deficit - On January 5, 2024, the Company entered into an Agreement and Plan of Merger with HCYC Group Company Limited[39] - The company extended its business combination deadline and can make up to ten monthly extensions until January 4, 2025, by depositing $55,000 for each month, funded by non-interest bearing promissory notes from the Sponsor[31][37] - In connection with a shareholder vote on December 28, 2023, 2,160,774 ordinary shares were redeemed, resulting in approximately $23.3 million being removed from the Trust Account[38] - Management has concluded that there is substantial doubt about the Company's ability to continue as a going concern due to its financial condition and need for additional capital[41] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's status as a pre-revenue blank check company focused on identifying a business combination, with a target search in Asia across sectors like fintech, AI, and clean energy. The analysis of operations shows net income driven by interest from the Trust Account, though this income has decreased YoY. The liquidity section highlights a working capital deficit of $2.45 million and reliance on sponsor loans to fund operations and deadline extensions. The report details the merger agreement with HCYC, significant share redemptions, and reiterates the going concern uncertainty - The company is a blank check company with no operations, intending to focus its search for a business combination on rapidly-growing targets in Asia, particularly in fintech, clean energy, biotech, logistics, AI, and cloud industries[98][99] Net Income Comparison | Period | Net Income | | :--- | :--- | | Three months ended June 30, 2024 | $385,370 | | Three months ended June 30, 2023 | $701,529 | | Six months ended June 30, 2024 | $827,635 | | Six months ended June 30, 2023 | $1,226,272 | - As of June 30, 2024, the company had a cash balance of $1,473 and a working capital deficit of $2,446,171. Its liquidity needs are met through loans from its Sponsor[105] - On January 5, 2024, the company entered into a Merger Agreement with HCYC Group Company Limited. The business combination deadline can be extended monthly until January 4, 2025, via extension payments[109][111] Quantitative and Qualitative Disclosures About Market Risk The company, as a smaller reporting company, is not required to provide detailed market risk disclosures. It notes that the funds held in its Trust Account are invested in short-term U.S. government treasury securities, which are believed to have no material exposure to interest rate risk - The company is a smaller reporting company and is not required to provide the information otherwise required under this item[138] - Proceeds held in the Trust Account are invested in U.S. government treasury securities with maturities of 180 days or less, leading to no material exposure to interest rate risk[113] Controls and Procedures Management's evaluation concluded that the company's disclosure controls and procedures were not effective as of June 30, 2024. This is due to a material weakness in internal control over financial reporting, specifically a lack of qualified SEC reporting professionals. Management has outlined its intention to remediate this issue - Management concluded that disclosure controls and procedures were not effective as of June 30, 2024[139] - The ineffectiveness is due to a material weakness in internal control over financial reporting related to the company's lack of qualified SEC reporting professionals[139] - Remediation steps are being implemented, including enhancing the review process and considering hiring additional staff with the necessary experience[139] Part II. Other Information This section covers legal proceedings, risk factors, unregistered equity sales, and a list of exhibits filed with the report Legal Proceedings The company reports that there is no material litigation, arbitration, or other governmental proceeding currently pending against it or its management - To the knowledge of management, there is no material litigation or other proceeding currently pending against the company[143] Risk Factors The company states that there have been no material changes to the risk factors disclosed in its Annual Report on Form 10-K, which was filed with the SEC on April 15, 2024 - There have been no material changes to the risk factors disclosed in the company's Annual Report on Form 10-K filed on April 15, 2024[144] Unregistered Sales of Equity Securities and Use of Proceeds This section outlines the unregistered sales of founder shares and private placement units to the company's Sponsor. It also details the use of proceeds from the IPO and private placements, confirming that net proceeds of $70.2 million were placed in the Trust Account after deducting underwriting fees and offering costs - The Sponsor acquired 1,725,000 founder shares and a total of 409,200 Private Placement Units at $10.00 per unit[144][145] - Total net proceeds of $70,242,000 from the IPO and private placements were placed in the Trust Account[147] Other Information The company reports that there is no other information to disclose under this item - The company reported 'None' for this item[147] Exhibits This section provides an index of the exhibits filed with the Form 10-Q. These include certifications by the Principal Executive Officer and Principal Financial Officer as required by SEC rules, as well as Inline XBRL data files - The report includes certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2) and various Inline XBRL files[149]