DigiAsia Corp.(FAAS) - 2023 Q2 - Quarterly Report

PART I Item 1. Interim Financial Statements (Unaudited) This section presents StoneBridge Acquisition Corporation's unaudited condensed financial statements for Q2 2023, including balance sheets, operations, equity changes, and cash flows Condensed Balance Sheets As of June 30, 2023, total assets decreased to $32.9 million from $206.2 million, primarily due to trust account redemptions, while liabilities increased to $12.9 million, resulting in a $12.8 million shareholders' deficit Condensed Balance Sheet Data (Unaudited) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Assets | $32,917,420 | $206,195,454 | | Cash | $71,974 | $93,344 | | Investments held in Trust Account | $32,821,231 | $205,927,087 | | Total Liabilities | $12,927,912 | $11,346,469 | | Note Payable - related party | $2,250,000 | $1,000,000 | | Deferred underwriting fee payable | $9,000,000 | $9,000,000 | | Total Shareholders' Deficit | ($12,831,723) | ($11,078,102) | Unaudited Condensed Statements of Operations Net income for Q2 2023 decreased to $1.03 million from $4.25 million in Q2 2022, mainly due to a smaller gain from warrant liability fair value changes Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | General and administrative expenses | $431,762 | $147,001 | $854,907 | $472,850 | | Change in fair value of warrant liability | $1,080,000 | $4,120,000 | $0 | $7,572,000 | | Dividend income Trust Account | $384,040 | $272,777 | $1,280,035 | $293,118 | | Net Income | $1,032,816 | $4,245,886 | $426,414 | $7,392,393 | | Basic and diluted net income per share, Class A | $0.14 | $0.17 | $0.18 | $0.30 | Unaudited Condensed Statements of Changes in Shareholders' Deficit The total shareholders' deficit increased to $12.8 million by June 30, 2023, driven by net losses, share remeasurements, and Sponsor extension payments Changes in Shareholders' Deficit for the Six Months Ended June 30, 2023 | Description | Amount | | :--- | :--- | | Balance, December 31, 2022 | $(11,078,102) | | Net Loss (Q1 2023) | $(606,402) | | Remeasurement for Class A shares | $(895,995) | | Extension payment paid by Sponsor | $(450,000) | | Net Income (Q2 2023) | $1,032,816 | | Remeasurement for Class A shares | $(384,040) | | Extension payment paid by Sponsor | $(450,000) | | Balance, June 30, 2023 | ($12,831,723) | Unaudited Condensed Statements of Cash Flows Operating activities provided $0.88 million in cash for H1 2023, while investing activities provided $174.4 million and financing activities used $175.3 million, resulting in a net cash decrease Condensed Statements of Cash Flows (Unaudited) | Cash Flow Activity | For the six months ended June 30, 2023 | For the six months ended June 30, 2022 | | :--- | :--- | :--- | | Net cash flows provided by (used in) operating activities | $878,630 | $(376,960) | | Net cash flows provided by investing activities | $174,385,891 | $0 | | Net cash flows used in financing activities | $(175,285,891) | $0 | | Net Change in Cash | $(21,370) | $(376,960) | | Cash, End of Period | $71,974 | $293,562 | Notes to Condensed Financial Statements (Unaudited) The notes detail the company's SPAC status, pending business combination with DigiAsia, significant share redemptions, related-party loans, and substantial doubt about its going concern ability - The company entered into a Business Combination Agreement with DigiAsia Bios Pte. Ltd. on January 5, 2023, involving an amalgamation where DigiAsia will survive as a wholly owned subsidiary of the company[18] - The deadline to consummate a business combination has been extended multiple times, most recently to January 20, 2024, contingent on monthly deposits into the trust account by the Sponsor[29][41] - In January 2023, shareholders redeemed 16,988,575 Class A shares for approximately $175.3 million, with an additional 585,456 shares redeemed for approximately $6.4 million in July 2023[44][45] - Management has determined there is substantial doubt about the Company's ability to continue as a going concern due to liquidity needs and the mandatory liquidation deadline if a business combination is not completed[47] - As of June 30, 2023, the company had an outstanding note payable to a related party (the Sponsor) of $2,250,000, which includes funds for extension payments and operating costs[76] Management's Discussion and Analysis of Financial Condition and Results of Operations This section discusses the company's pursuit of a business combination with DigiAsia, Q2 2023 financial results, and significant liquidity challenges raising going concern doubts - The company is a blank check company that entered into a business combination agreement with DigiAsia on January 5, 2023, with the termination date extended to December 29, 2023[121][123] Net Income Comparison | Period | Net Income | Key Drivers | | :--- | :--- | :--- | | Q2 2023 | $1,032,816 | Increase in fair value of warrant liabilities ($1.08M) and dividend income ($0.38M) | | Q2 2022 | $4,245,886 | Larger increase in fair value of warrant liabilities ($4.12M) and dividend income ($0.27M) | | H1 2023 | $426,413 | Operating expenses ($0.85M) and dividend income ($1.28M) | | H1 2022 | $7,392,393 | Large increase in fair value of warrant liabilities ($7.57M) and dividend income ($0.29M) | - As of June 30, 2023, the company had only $71,974 in its operating bank account and a working capital deficit of $3,291,723, raising substantial doubt about its ability to continue as a going concern[131][132] - The company has a deferred underwriting fee of $9,000,000 payable upon completion of a business combination, with an agreement to reduce the cash portion to $4,500,000 and issue shares for the remainder if the DigiAsia transaction is consummated[134][135] Quantitative and Qualitative Disclosures about Market Risk This item is not applicable as the company qualifies as a smaller reporting company - This section is not applicable because the company is a smaller reporting company[145] Controls and Procedures Management concluded that disclosure controls were ineffective as of June 30, 2023, due to material weaknesses in accounting for complex financial instruments and accruals - As of June 30, 2023, the CEO and CFO concluded that the company's disclosure controls and procedures were not effective[148] - The ineffectiveness was attributed to material weaknesses in accounting for complex financial instruments and incomplete accounting for accruals[148] - No changes to internal control over financial reporting occurred during the quarter ended June 30, 2023, that materially affected, or are reasonably likely to materially affect, internal controls[149] PART II - OTHER INFORMATION Legal Proceedings The company reported no legal proceedings - The company has no legal proceedings to report[151] Risk Factors No material changes to previously disclosed risk factors were reported - There have been no material changes to the risk factors disclosed in the Annual Report on Form 10-K filed on March 28, 2023, or the Q1 2023 10-Q[152] Unregistered Sales of Equity Securities and Use of Proceeds Details the IPO and private placement in July 2021, which generated $200 million and $8 million respectively, with $202 million placed in a trust account - The IPO on July 20, 2021, of 20,000,000 units at $10.00 per unit generated gross proceeds of $200,000,000[153] - A simultaneous private placement of 8,000,000 warrants at $1.00 per warrant generated gross proceeds of $8,000,000[154] - Net proceeds of $202,000,000 were placed in a trust account following the IPO and private placement[156] Defaults Upon Senior Securities The company reported no defaults upon senior securities - The company has no defaults upon senior securities to report[157] Mine Safety Disclosures This section is not applicable to the company - This item is not applicable[158] Other Information The company reported no other information - The company has no other information to report[158] Exhibits This section lists the exhibits filed with the Form 10-Q, including amendments to the Business Combination Agreement and officer certifications - Lists filed exhibits, including Amendment No. 1 to the Business Combination Agreement and certifications by the CEO and CFO[159] SIGNATURES Signatures The report was duly signed and authorized on August 14, 2023, by the Chief Executive Officer and Chief Financial Officer - The report was signed on August 14, 2023, by the company's Chief Executive Officer and Chief Financial Officer[161]