IX Acquisition Corp.(IXAQU) - 2025 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements This section presents IX Acquisition Corp.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, changes in shareholders' deficit, cash flows, and explanatory notes Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (Amounts in USD) | Item | March 31, 2025 (Unaudited) | December 31, 2024 | | :------------------------------------------------ | :--------------------------- | :------------------ | | Cash | $3,750 | $3,527 | | Prepaid expenses | $26,401 | $27,052 | | Due from related party | $13,877 | $13,877 | | Total current assets | $44,028 | $44,456 | | Cash held in the Trust Account | $19,245,085 | $18,949,539 | | Accounts payable | $358,185 | $421,068 | | Accrued expenses | $2,306,166 | $2,203,224 | | Promissory note-related party | $4,242,575 | $3,856,641 | | Deferred underwriting fee payable | $6,050,000 | $6,050,000 | | Total current liabilities | $6,906,926 | $6,480,933 | | Derivative warrant liabilities | $746,000 | $1,119,000 | | Total non-current liabilities | $6,796,000 | $7,169,000 | | Total Liabilities | $13,702,926 | $13,649,933 | | Class A ordinary shares subject to possible redemption | $19,245,085 | $18,949,539 | | Total shareholders' deficit | $(13,658,898) | $(13,605,477) | | Total Assets | $19,289,113 | $18,993,995 | Unaudited Condensed Consolidated Statements of Operations Unaudited Condensed Consolidated Statements of Operations (Amounts in USD) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Operating and formation expenses | $281,488 | $880,791 | | Loss from operations | $(281,488) | $(880,791) | | Income from cash held in the Trust Account | $150,613 | $345,617 | | Interest income (expense) on an operating account | ― | $(68) | | Change in fair value of derivative warrant liabilities | $373,000 | $(186,500) | | Total other income, net | $523,613 | $159,049 | | Net income (loss) | $242,125 | $(721,742) | | Basic and diluted net income (loss) per share, Class A ordinary shares subject to redemption | $0.03 | $(0.08) | | Basic and diluted net income (loss) per share, Class A (non-redeemable) and Class B ordinary shares | $0.03 | $(0.08) | Unaudited Condensed Consolidated Statements of Changes in Shareholders' Deficit Changes in Shareholders' Deficit (Amounts in USD) | Item | March 31, 2025 | March 31, 2024 | | :------------------------------------------------ | :------------- | :------------- | | Balance — January 1 | $(13,606,052) | $(9,515,127) | | Remeasurement of Class A ordinary shares to redemption amount | $(295,546) | $(495,617) | | Net income (loss) | $242,125 | $(721,742) | | Balance — March 31 | $(13,659,473) | $(12,004,000) | Unaudited Condensed Consolidated Statements of Cash Flows Unaudited Condensed Consolidated Statements of Cash Flows (Amounts in USD) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net income (loss) | $242,125 | $(721,742) | | Change in fair value of derivative warrant liabilities | $(373,000) | $186,500 | | Income from cash held in the Trust Account | $(150,613) | $(345,617) | | Net cash used in operating activities | $(240,778) | $(308,403) | | Cash deposited in the Trust Account | $(144,933) | $(150,000) | | Net cash used in investing activities | $(144,933) | $(150,000) | | Proceeds from Extension Promissory Note | $385,934 | $441,000 | | Net cash provided by financing activities | $385,934 | $441,000 | | Net change in cash | $223 | $(17,403) | | Cash - end of the period | $3,750 | $6,875 | | Remeasurement of Class A ordinary shares to redemption amount | $295,546 | $495,617 | Notes to Unaudited Condensed Consolidated Financial Statements Note 1. Description of Organization and Business Operations - IX Acquisition Corp. is a blank check company formed on March 1, 2021, for the purpose of a Business Combination, with no operations commenced as of March 31, 2025[19][21] - The company consummated its Initial Public Offering (IPO) on October 12, 2021, selling 23,000,000 Units at $10.00 per Unit, generating $230,000,000[22] - Simultaneously with the IPO, 7,150,000 Private Placement Warrants were sold for $7,150,000[23] - A total of $231,150,000 from IPO and Private Placement proceeds was placed in a Trust Account, initially invested in U.S. Treasury obligations, but liquidated to an interest-bearing demand deposit account on November 13, 2023, to mitigate Investment Company Act risks[25][85] - The Combination Period has been extended multiple times, with the latest approval on October 9, 2024, allowing extensions until October 12, 2025, through monthly deposits by the Sponsor[34][55] - On March 29, 2024, the company entered into a Merger Agreement with AERKOMM Inc. for its initial Business Combination, which has since been amended multiple times, including on February 12, 2025, and April 12, 2025[52][57] - The company faced Nasdaq listing compliance issues regarding minimum total holders and the business combination deadline, leading to suspension of trading on December 12, 2024, and subsequent delisting, with securities now quoted on the OTC Market[58][62][64] - Key officers and directors resigned on September 23, 2024, including the CEO, and new appointments were made to the audit and compensation committees[65][67] Note 2. Basis of Presentation and Summary of Significant Accounting Policies and Going Concern - The financial statements are prepared in accordance with GAAP for interim financial information and Article 10 of Regulation S-X[68] - Management has identified a substantial doubt about the company's ability to continue as a going concern due to its liquidity condition and the mandatory liquidation deadline if a Business Combination is not consummated by October 12, 2025[72][73] - The company is an 'emerging growth company' and has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards[75][78] - Significant accounting estimates include the fair value of warrants, which are re-valued at each reporting date with changes recognized in the statements of operations[79][86] - Class A ordinary shares subject to redemption are classified outside of permanent equity and adjusted to redemption value at each reporting period[93][94] - The company has no income taxes in the Cayman Islands and no significant uncertain tax positions[99][100] - ASU 2023-07 (Segment Reporting) was adopted retrospectively in fiscal year 2024 with no material impact, and ASU 2023-09 (Income Taxes) is effective for fiscal years beginning after December 15, 2024, with no material impact expected[106][107] Note 3. Initial Public Offering - The company sold 23,000,000 Units in its IPO on October 12, 2021, at $10.00 per Unit, including the full exercise of the over-allotment option[109] - Each Unit consisted of one Public Share and one-half of one Public Warrant, exercisable at $11.50 per whole share[109] Note 4. Private Placement - Simultaneously with the IPO, the Sponsor, Cantor, and Odeon purchased 7,150,000 Private Placement Warrants at $1.00 each, generating $7,150,000[110] - These warrants are exercisable at $11.50 per share; proceeds were added to the Trust Account[111] - If a Business Combination is not completed, Private Placement Warrants will expire worthless[111] Note 5. Related Party Transactions - The Sponsor was issued 5,750,000 Class B ordinary shares (Founder Shares) for $25,000, which converted to Class A ordinary shares on May 9, 2023[112][113] - Anchor Investors purchased 1,747,879 Founder Shares from the Sponsor for $0.004 per share, agreeing to vote in favor of the Business Combination and adhere to lock-up restrictions[118] - The company has an agreement with the Sponsor to pay up to $10,000 per month for administrative services, but these fees were waived for the three months ended March 31, 2025 and 2024[121] - The Sponsor committed to loan the company up to $1,400,000 for working capital, convertible into Private Placement Warrants[122] - The Extension Promissory Note with the Sponsor, initially up to $1 million, was amended multiple times, increasing the principal amount to $4,500,000 by September 20, 2024, bearing no interest and convertible into warrants[123][124][125][126][127] - As of March 31, 2025, $4,242,575 was drawn on the Extension Promissory Note[128] - The company had $13,877 due from a related party as of March 31, 2025, and December 31, 2024[130] Note 6. Commitment and Contingencies - Holders of Founder Shares, Private Placement Warrants, and warrants from working capital loans are entitled to registration rights[131] - Underwriters were paid a $4,000,000 cash underwriting discount and are due $12,100,000 in deferred underwriting commissions upon Business Combination completion[133] - Underwriters agreed to forfeit a portion of deferred underwriting commissions, reducing the payable amount to $6,050,000 if the Business Combination target's pre-money valuation exceeds $100 million[134] - The Merger Agreement with AERKOMM was amended on September 25, 2024, February 12, 2025, and April 12, 2025, to adjust lock-up periods, Founder Share escrow, working capital provisions, and the closing date[139][140][141] - The company recorded a $1,349,167 account receivable related to a target delay charge as of March 31, 2025, with a full allowance for credit loss[142] - Subscription Agreements for a PIPE Investment of $35,000,000 at $11.50 per share were entered into, with AERKOMM aiming for a minimum of $45,000,000 (minus SAFE Investments)[143] - SAFE Agreements for an aggregate of $4,997,200 were entered into as of December 4, 2024, convertible into common stock at $11.50 per share upon merger closing, plus additional Incentive Shares[147] - Sponsor and AERKOMM Supporting Shareholders entered into support agreements to vote in favor of the merger and against alternative proposals[149][150] - Benchmark was appointed as a non-exclusive PIPE placement agent, with fees based on gross proceeds, and Yuanta Securities was engaged as a sub-placement agent[154][157] Note 7. Warrants - As of March 31, 2025, there were 18,650,000 warrants outstanding, comprising 11,500,000 Public Warrants and 7,150,000 Private Placement Warrants[158] - Public Warrants become exercisable 30 days after Business Combination completion or 12 months from IPO closing, expiring five years from Business Combination completion[159] - The company may redeem warrants for cash if the Class A ordinary share price equals or exceeds $18.00 for 20 trading days within a 30-day period[164][167] - Private Placement Warrants are non-transferable and non-redeemable by the company as long as held by initial purchasers or permitted transferees, but otherwise have identical terms to Public Warrants[170] - Warrants are recorded as derivative liabilities at fair value and re-measured at each balance sheet date, with changes recognized in the consolidated statements of operations[171] Note 8. Class A Ordinary Shares Subject to Possible Redemption and Shareholders' Deficit - The company is authorized to issue 1,000,000 preference shares, but none were issued or outstanding as of March 31, 2025[172] - 200,000,000 Class A ordinary shares are authorized, with 4,002,121 issued and outstanding (excluding 1,610,373 subject to redemption) as of March 31, 2025[173] - 20,000,000 Class B ordinary shares are authorized, with 1,747,879 issued and outstanding as of March 31, 2025[174] - Class A and Class B ordinary shareholders generally vote together, with Class B holders having enhanced voting rights for director appointments and continuation votes prior to a Business Combination[175][176] Note 9. Fair Value Measurements Fair Value Measurements of Liabilities (Amounts in USD) | Description | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Warrant liability – Public Warrants | $460,000 (Level 2) | $690,000 (Level 2) | | Warrant liability – Private Placement Warrants | $286,000 (Level 3) | $429,000 (Level 3) | | Total Liabilities | $746,000 | $1,119,000 | - Assets held in the Trust Account were approximately $19.2 million in cash as of March 31, 2025, and $18.9 million as of December 31, 2024[178] - Public Warrants are measured based on listed market price (Level 2), while Private Placement Warrants are valued using a probability-adjusted Black-Scholes model (Level 3 inputs)[180][183] Significant Inputs for Private Placement Warrants Valuation | Input | March 31, 2025 | December 31, 2024 | | :---------------------- | :------------- | :---------------- | | Stock price | $11.86 | $11.55 | | Exercise price | $11.50 | $11.50 | | Dividend yield | 0 % | 0 % | | Expected term (in years) | 5.53 | 5.78 | | Volatility | 2.30 % | 3.00 % | | Risk-free rate | 3.92 % | 4.32 % | | Fair value | $0.04 | $0.06 | | Probability of Business Combination | 1.5 % | 2.3 % | - The company recognized a gain of $373,000 on derivative warrant liabilities for Q1 2025, compared to a loss of $186,500 for Q1 2024[184] - The estimated fair value of the conversion feature related to the Extension Promissory Note was zero as of March 31, 2025[188] Note 10. Segment Information - The company operates as a single operating segment, with the Chief Executive Officer and Chief Financial Officer (CODM) reviewing overall operating results[190] Key Metrics Reviewed by CODM (Amounts in USD) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Trust Account | $19,245,085 | $18,949,539 | | Cash | $3,750 | $3,527 | | Operating and formation expenses (Q1) | $281,488 | $880,791 | | Interest earned on Trust Account (Q1) | $150,613 | $345,617 | Note 11. Subsequent Events - On April 12, 2025, the company, Merger Sub, and AERKOMM entered into a third amendment to the Merger Agreement to amend the closing date term[195] - The company made two deposits of $48,311 into the Trust Account on May 13, 2025, and June 13, 2025, to extend the Combination Period until July 12, 2025[195] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and operational results, including an overview of its SPAC activities, details of the proposed merger with AERKOMM, recent financial performance, liquidity, and critical accounting estimates Overview - The company is a blank check company formed to effect a business combination, utilizing proceeds from its IPO and private placement[199] - The IPO on October 12, 2021, raised $230,000,000, and a private placement of warrants raised $7,150,000[200][201] - Trust Account funds were moved to an interest-bearing demand deposit account on November 13, 2023, to mitigate Investment Company Act risks[202] The Merger Agreement - The company entered into a Merger Agreement with AERKOMM Inc. on March 29, 2024, for its initial Business Combination[203] - Amendments to the Merger Agreement on September 25, 2024, February 12, 2025, and April 12, 2025, addressed lock-up periods, Founder Shares escrow, working capital, termination conditions, and the closing date[205][206] Agreements Related to the Merger Agreement - The Sponsor Support Agreement obligates the Sponsor to vote in favor of the merger and against alternative proposals[207] - The AERKOMM Support Agreement binds certain AERKOMM shareholders to approve the merger and related transactions[209] - Subscription Agreements for a PIPE Investment of $35,000,000 were executed, with AERKOMM aiming for a minimum of $45,000,000 (inclusive of SAFE Agreements)[211][213] - SAFE Agreements totaling $4,997,200 were entered into as of December 4, 2024, convertible into common stock at $11.50 per share upon merger closing, including Incentive Shares[216] - Benchmark was appointed as a non-exclusive PIPE placement agent, with amendments to its fee structure, and Yuanta Securities was engaged as a sub-placement agent[217][218][219][220] Extension of Combination Period and Share Redemptions - Shareholders approved multiple extensions of the Combination Period, most recently until October 12, 2025, with monthly contributions from the Sponsor[233][237] - In connection with the April 2023 extension vote, 18,336,279 Class A ordinary shares were redeemed for approximately $189 million[223] - Following the December 2023 extension vote, 1,817,650 public shares were redeemed for approximately $19.99 million, setting the monthly Sponsor contribution at $50,000[235] - After the October 2024 extension vote, 1,235,698 public shares were redeemed for approximately $14.30 million, adjusting the monthly Sponsor contribution to $48,311[238] - The company made nine deposits of $48,311 from October 2024 to June 2025 to extend the Combination Period until July 12, 2025[239][250] Contribution and Extension Promissory Note - The Sponsor provides loans for working capital and extension payments, formalized through an Extension Promissory Note[244] - The promissory note was amended multiple times, increasing the principal amount to $4.5 million by September 20, 2024[244][246][248] - The note bears no interest and is due upon Business Combination or liquidation, with up to $1,500,000 convertible into warrants[244][248] - As of March 31, 2025, the outstanding principal under the Third Amended and Restated Extension Promissory Note was $4,242,575[250] Founder Conversion - On May 9, 2023, the Sponsor converted all 4,002,121 Class B ordinary shares into Class A ordinary shares on a one-for-one basis[251] Recent Developments (Nasdaq Notice) - The company received a Nasdaq notice on October 9, 2023, for non-compliance with the Minimum Total Holders Rule (400 holders)[252] - Despite a plan to regain compliance, Nasdaq issued another notice on April 30, 2024, for continued non-compliance, but the company was granted continued listing after an appeal on August 5, 2024[255] - On October 7, 2024, Nasdaq notified the company of non-compliance with IM 5101-2 for not completing a business combination within 36 months, leading to suspension of trading on October 14, 2024[256] - The company withdrew its appeal on December 10, 2024, resulting in delisting from Nasdaq on December 12, 2024, and its securities began trading on the OTC Market[258] Results of Operations Net Income (Loss) Summary (Amounts in USD) | Period | Net Income (Loss) | | :-------------------------------- | :---------------- | | Three months ended March 31, 2025 | $242,000 | | Three months ended March 31, 2024 | $(722,000) | - Q1 2025 net income was driven by a $373,000 gain from change in fair value of derivative warrant liability and $150,000 in Trust Account income, partially offset by $281,000 in operating expenses[261] - Q1 2024 net loss was primarily due to $881,000 in operating expenses and a $187,000 loss from change in fair value of derivative warrant liability, partially offset by $346,000 in Trust Account income[262] Factors That May Adversely Affect Our Results of Operations - Economic uncertainty, market volatility, and geopolitical instability (e.g., Ukraine, Middle East conflicts) may adversely affect operations and the ability to complete a business combination[263] Liquidity, Capital Resources and Going Concern - As of March 31, 2025, the company had approximately $3,700 in cash outside the Trust Account and a working capital deficit of approximately $6.9 million[265] Cash Flow Summary (Amounts in USD) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(240,000) | $(308,000) | | Net cash used in investing activities | $(145,000) | $(150,000) | | Net cash provided by financing activities | $386,000 | $441,000 | - The company had approximately $19 million in the Trust Account as of March 31, 2025, intended for the initial business combination[268] - Management has determined that the liquidity condition and mandatory liquidation deadline (October 12, 2025) raise substantial doubt about the company's ability to continue as a going concern[271][272] Contractual Obligations - Holders of Founder Shares, Private Placement Warrants, and working capital loan warrants are entitled to registration rights[274] - Deferred underwriting commissions of $12,100,000 are payable upon completion of a business combination, subject to reduction agreements[276][277][278] - The administrative support agreement with the Sponsor for $10,000 per month was waived for the three months ended March 31, 2025 and 2024[279] Off-Balance Sheet Arrangements - As of March 31, 2025, the company did not have any off-balance sheet arrangements[280] Critical Accounting Estimates - Class A ordinary shares subject to possible redemption are classified outside of permanent equity and adjusted to redemption value[282][283] - Derivative financial instruments, including Public and Private Placement Warrants, are recorded as derivative liabilities at fair value and re-valued at each reporting date[285][286] - Convertible instruments with conversion options in promissory notes are bifurcated and accounted for as freestanding derivative financial instruments[287] Recent Accounting Pronouncements - ASU 2023-07 (Segment Reporting) was adopted retrospectively in fiscal year 2024 with no material impact[288] - ASU 2023-09 (Income Taxes) is effective for fiscal years beginning after December 15, 2024, with no material impact expected[289] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, IX Acquisition Corp. is not required to provide detailed quantitative and qualitative disclosures about market risk in this report - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[291] Item 4. Controls and Procedures Management, including the Certifying Officers, evaluated the effectiveness of the company's disclosure controls and procedures, concluding they were effective as of March 31, 2025. No material changes to internal control over financial reporting occurred during the quarter - Disclosure controls and procedures were evaluated and deemed effective as of March 31, 2025[293] - No material changes to internal control over financial reporting occurred during the quarterly period ended March 31, 2025[295] PART II – OTHER INFORMATION Item 1. Legal Proceedings As of the report date, there are no pending or contemplated legal proceedings against IX Acquisition Corp. or its officers and directors - No litigation is currently pending or contemplated against the company, any of its officers or directors in their capacity as such or against any of its property[298] Item 1A. Risk Factors This section highlights key risks, including substantial doubt about the company's ability to continue as a going concern, potential reduction in Trust Account interest due to investment liquidation, the risk of being deemed an investment company, and the impact of military conflicts and new SEC SPAC rules on business combination efforts - Substantial doubt exists about the company's ability to continue as a 'going concern' due to potential financing needs and the deadline for completing an initial Business Combination[300] - The liquidation of Trust Account investments to an interest-bearing demand deposit account on November 13, 2023, may result in less interest earned, reducing potential redemption amounts for Public Shareholders[301][302][307] - There is a risk that the company could be deemed an unregistered investment company, potentially forcing liquidation and preventing the Business Combination[303][306] - Military or other conflicts (e.g., Ukraine, Middle East) may increase market volatility and affect target companies, making it more difficult to consummate a Business Combination[304] - New SEC SPAC Rules (effective July 1, 2024) and guidance may increase costs and time needed to complete a business combination, potentially leading to earlier liquidation[308] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities There were no unregistered sales of equity securities or issuer purchases. The use of proceeds from the IPO and private placement remains consistent with the registration statement, though Trust Account investments were liquidated to an interest-bearing demand deposit account - No unregistered sales of equity securities occurred[309] - There has been no material change in the planned use of proceeds from the Initial Public Offering and Private Placement[310] - On November 13, 2023, Trust Account investments were liquidated and funds are now held in an interest-bearing demand deposit account[311] - No purchases of equity securities were made by the issuer and affiliated purchasers[312] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities - No defaults upon senior securities were reported[313] Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine safety disclosures are not applicable to the company[314] Item 5. Other Information No other information is reported under this item - No other information was reported under this item[315] Item 6. Exhibits This section lists the exhibits filed as part of, or incorporated by reference into, the report, including various certifications and XBRL documents Key Exhibits Filed | No. | Description of Exhibit | | :--- | :--- | | 10.1 | Amended and Restated Promissory Note, dated September 8, 2023, issued to IX Acquisition Sponsor LLC | | 31.1 | Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934 | | 31.2 | Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934 | | 32.1 | Certification of the Principal Executive Officer pursuant to 18 U.S.C. 1350 | | 32.2 | Certification of the Principal Financial Officer pursuant to 18 U.S.C. 1350 | | 101.INS | Inline XBRL Instance Document | | 101.SCH | Inline XBRL Taxonomy Extension Schema Document | | 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | | 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | | 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | 104 | Cover Page Interactive Data File | SIGNATURES The report is duly signed on behalf of IX Acquisition Corp. by Noah Aptekar, serving as Chief Executive Officer, Chief Financial Officer, and Chief Operating Officer - The report was signed by Noah Aptekar, Chief Executive Officer, Chief Financial Officer, and Chief Operating Officer, on June 26, 2025[320][321]