Alpha Star Acquisition Corporation(ALSAU) - 2023 Q3 - Quarterly Report

Part I. Financial Information Financial Statements The company reported a net income of $3.72 million for the nine months ended September 30, 2023, primarily from trust account interest, with total assets decreasing and significant going concern doubt Balance Sheets Total assets decreased to $99.49 million as of September 30, 2023, due to share redemptions, while total liabilities increased to $8.15 million, widening the stockholders' deficit Balance Sheet Summary (Unaudited) | Account | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total Assets | $99,487,185 | $118,339,807 | | Marketable securities held in Trust Account | $99,368,056 | $118,228,816 | | Total Liabilities | $8,153,774 | $4,629,881 | | Promissory note – Sponsor | $4,849,613 | $1,533,332 | | Ordinary shares subject to possible redemption | $99,375,556 | $118,228,816 | | Total stockholders' deficit | $(8,042,145) | $(4,518,890) | Statements of Operations Net income significantly increased to $3.72 million for the nine months ended September 30, 2023, primarily driven by higher interest income from marketable securities in the Trust Account Statement of Operations Highlights (Unaudited) | Period | For the Three Months Ended Sep 30, 2023 | For the Three Months Ended Sep 30, 2022 | For the Nine Months Ended Sep 30, 2023 | For the Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Loss from operation costs | $104,592 | $104,983 | $316,908 | $472,504 | | Total other income | $1,337,332 | $520,450 | $4,035,277 | $693,172 | | Net Income | $1,232,740 | $415,467 | $3,718,369 | $220,668 | Statements of Changes in Stockholders' Deficit The total stockholders' deficit widened to $(8.04) million by September 30, 2023, primarily due to adjustments for shares subject to redemption and funding for business combination extensions - The accumulated deficit grew from $(4,522,095) at December 31, 2022, to $(8,045,350) at September 30, 2023[13][14] Statements of Cash Flows Net cash used in operating activities was $126,796, while investing activities provided $22.90 million from trust account withdrawals for redemptions, and financing activities used $(22.78) million Cash Flow Summary for the Nine Months Ended Sep 30 (Unaudited) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(126,796) | $(257,692) | | Net cash provided by (used in) investing activities | $22,896,037 | $(383,333) | | Net cash (used in) provided by financing activities | $(22,778,603) | $383,333 | | Net decrease in cash in escrow | $(9,362) | $(257,692) | Notes to Unaudited Financial Statements The notes highlight the company's blank check status, a March 15, 2024 business combination deadline, substantial going concern doubt, and recent share redemptions - The company is a blank check company formed to effect a business combination and will not consider entities with principal operations in China, Hong Kong, or Macau[19][20] - The deadline to consummate a business combination was extended to March 15, 2024, with failure to do so resulting in automatic liquidation, which raises substantial doubt about the company's ability to continue as a going concern[25][33] - The company entered into a non-binding letter of intent (LOI) for a business combination with Cyclebit Group, a global payments and SaaS provider[24] - In connection with an extension vote in July 2023, 2,436,497 public shares were redeemed for a total payment of $26,094,883[26][44] - The Sponsor has issued four promissory notes totaling up to $7.3 million to fund extension fees and transaction costs, with an outstanding balance of $4,849,613 as of September 30, 2023[75][76][77] - Subsequent to the quarter end, on October 12, 2023, the company received a notice from Nasdaq for non-compliance with the minimum public holders rule and has submitted a plan to regain compliance[102][103] Management's Discussion and Analysis of Financial Condition and Results of Operations The company, a blank check entity, generated $3.72 million net income from trust account interest, relies on Sponsor loans for operations, and faces substantial going concern doubt due to its impending business combination deadline Results of Operations Summary | Period | Net Income (Loss) | Key Driver | | :--- | :--- | :--- | | Q3 2023 | $1,232,740 | Interest income of $1,337,332 offset by operating costs of $104,592 | | Q3 2022 | $415,467 | Interest income of $520,450 offset by operating costs of $104,983 | | Nine Months 2023 | $3,718,369 | Interest income of $4,035,277 offset by operating costs of $316,908 | | Nine Months 2022 | $220,668 | Interest income of $693,172 offset by operating costs of $472,504 | - As of September 30, 2023, the company had $99,368,056 in marketable securities held in the Trust Account and $101,629 in cash held outside the trust for operating expenses[119][121] - The company is reliant on loans from its Sponsor to meet working capital needs and has issued four promissory notes, raising substantial doubt about its ability to continue as a going concern[122][123][125] - Contractual obligations include a $10,000 monthly fee to the Sponsor for administrative services and a deferred underwriting fee of $2,875,000 payable upon completion of a Business Combination[131][132] Quantitative and Qualitative Disclosures Regarding Market Risk The company faces minimal market or interest rate risk as Trust Account funds are invested in short-term U.S. government securities or U.S. treasury-only money market funds - Proceeds from the IPO held in the Trust Account are invested in U.S. government securities with maturities of 180 days or less, or in money market funds investing only in U.S. treasuries, minimizing material exposure to interest rate risk[141] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that as of September 30, 2023, the company's disclosure controls and procedures were effective[143] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[144] Part II. Other Information Legal Proceedings The company is not currently a party to any material legal proceedings as of the filing date - The Company is not party to any legal proceedings as of the filing date[146] Risk Factors No material changes to the previously disclosed risk factors have occurred since the Annual Report on Form 10-K for fiscal year 2022 - As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2022[147] Unregistered Sales of Equity Securities and Use of Proceeds The company details the private placement of 330,000 units to its Sponsor for $3.3 million and the deposit of $115 million IPO proceeds into the trust account for a business combination - Concurrently with the IPO, the Sponsor purchased 330,000 Private Units at $10.00 per unit for total proceeds of $3,300,000[148][150] - Gross proceeds of $115,000,000 from the IPO were generated from the sale of 11,500,000 units, with a total of $115,000,000 placed in the Trust Account[149][151] Defaults Upon Senior Securities No defaults upon senior securities have been reported - None[153] Mine Safety Disclosures Mine safety disclosures are not applicable to the company's operations - Not applicable[153] Other Information No other material information is reported in this section - None[153] Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including officer certifications and Inline XBRL documents - The report includes exhibits such as CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and Inline XBRL data files[156] Signatures Signatures The report was signed on November 14, 2023, by the Chief Executive Officer and Chief Financial Officer - The report is signed by Zhe Zhang (Chief Executive Officer) and Guojian Chen (Chief Financial Officer) on November 14, 2023[159]