Magnum Opus Acquisition (OPA) - 2023 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Condensed Financial Statements This section presents the unaudited condensed financial statements for Magnum Opus Acquisition Limited for the quarterly period ended March 31, 2023, detailing its financial position, operations, and cash flows as a blank check company Condensed Balance Sheets As of March 31, 2023, the company's total assets decreased significantly to $68.2 million from $203.8 million at year-end 2022, primarily due to a reduction in investments held in the Trust Account following shareholder redemptions, while total liabilities increased to $14.4 million, and the total shareholders' deficit widened to $(13.9) million from $(11.9) million Condensed Balance Sheet Data (Unaudited) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash | $516,532 | $883,307 | | Investments held in Trust Account | $67,731,730 | $202,841,231 | | Total Assets | $68,248,262 | $203,759,547 | | Liabilities & Equity | | | | Total Liabilities | $14,413,392 | $12,807,457 | | Class A ordinary shares subject to possible redemption | $67,731,730 | $202,841,231 | | Total Shareholders' Deficit | $(13,896,860) | $(11,889,141) | | Total Liabilities, Redeemable Shares and Shareholders' Deficit | $68,248,262 | $203,759,547 | Condensed Statements of Operations For the three months ended March 31, 2023, the company reported a net income of $24,980, a significant turnaround from a net loss of $(229,236) in the same period of 2022, driven by higher interest income of $1.88 million, which offset increased losses from the change in fair value of warrant liabilities and promissory notes, and lower operating costs Statements of Operations Highlights (Unaudited) | Item | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Formation and operating costs | $796,921 | $1,422,146 | | Loss from operations | $(796,921) | $(1,422,146) | | Interest income | $1,882,701 | $12,910 | | Change in fair value of warrant liabilities | $(960,000) | $1,180,000 | | Net income (loss) | $24,980 | $(229,236) | Condensed Statement of Changes in Shareholders' Deficit The total shareholders' deficit increased from $(11.9) million at the beginning of 2023 to $(13.9) million as of March 31, 2023, primarily due to a $(2.0) million re-measurement of Class A ordinary shares subject to possible redemption, partially offset by a net income of $24,980 Reconciliation of Shareholders' Deficit for Q1 2023 (Unaudited) | Description | Amount | | :--- | :--- | | Balance - January 1, 2023 | $(11,889,141) | | Re-measurement of Class A ordinary shares subject to possible redemption | $(2,032,699) | | Net income | $24,980 | | Balance – March 31, 2023 | $(13,896,860) | Condensed Statement of Cash Flows For the first three months of 2023, net cash used in operating activities was $(216,775), while investing activities provided $137.0 million, primarily from withdrawals from the Trust Account for shareholder redemptions, and financing activities used an equivalent amount, $(137.1) million, for these redemption payments, resulting in a decrease in the cash balance from $883,307 to $516,532 Cash Flow Summary for Q1 2023 (Unaudited) | Activity | Three Months Ended March 31, 2023 | | :--- | :--- | | Net cash used in operating activities | $(216,775) | | Net cash provided by investing activities | $136,992,200 | | Net cash used in financing activities | $(137,142,200) | | Net Change in Cash | $(366,775) | | Cash - Beginning of Period | $883,307 | | Cash - End of Period | $516,532 | Notes to Unaudited Condensed Financial Statements The notes detail the company's organization, accounting policies, and significant events, including the termination of the Forbes agreement, the new ASIG merger, substantial shareholder redemptions, and the going concern uncertainty - The company is a blank check company formed to effect a business combination. All activity to date relates to its formation, IPO, and search for a target[24][25] - The business combination agreement with Forbes was terminated on June 1, 2022. Subsequently, on September 30, 2022, the Company entered into a new merger agreement with Asia Innovations Group Limited (ASIG)[40][41] - In March 2023, shareholders approved extending the business combination deadline, which led to the redemption of 13,404,883 Class A shares for approximately $137.1 million, leaving about $67.5 million in the Trust Account[34][102][104] - Management has determined that the company's limited liquidity and the July 25, 2023, business combination deadline raise substantial doubt about its ability to continue as a going concern[45][46] - The company has issued convertible promissory notes to its Sponsor for up to $2.0 million to fund working capital, which are convertible into warrants at $1.00 per warrant[93][94] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and results of operations, highlighting the shift to net income in Q1 2023, the proposed ASIG merger, and the critical liquidity situation raising substantial doubt about its going concern ability Results of Operations The company has not generated any revenue from operations, reporting a net income of $24,980 for Q1 2023, compared to a net loss of $(229,236) for Q1 2022, with the income primarily due to $1.88 million in interest income, partially offset by losses on the fair value of warrant liabilities and promissory notes, and operating costs Comparison of Quarterly Results | Item | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net Income (Loss) | $24,980 | $(229,236) | | Key Drivers | Interest income of $1,882,701 | Gain on fair value of warrant liabilities of $1,180,000 | | Operating Costs | $796,921 | $1,422,146 | Proposed Business Combinations The company's initial business combination agreement with Forbes was terminated on June 1, 2022, and on September 29, 2022, the company entered into a new merger agreement with Asia Innovations Group Limited (ASIG), where the company will become a wholly-owned subsidiary of ASIG - The Forbes Business Combination Agreement was terminated on June 1, 2022[145] - On September 29, 2022, the Company entered into a new business combination agreement with ASIG[145][146] Liquidity, Capital Resources, and Going Concern Consideration As of March 31, 2023, the company had only $516,532 in cash outside the Trust Account and a working capital deficit of $7.0 million, which management states may not be sufficient to operate until the July 25, 2023, business combination deadline, raising substantial doubt about the company's ability to continue as a going concern, as it relies on working capital loans from its Sponsor, with $2.0 million outstanding under convertible promissory notes - As of March 31, 2023, the company had $516,532 in cash and a working capital deficit of $6,970,160[150] - The company must complete a Business Combination by July 25, 2023, or face mandatory liquidation, and this deadline and the current liquidity position raise substantial doubt about its ability to continue as a going concern[150] - The company has borrowed $2,000,000 from its Sponsor through unsecured convertible promissory notes to fund working capital[153] Critical Accounting Policies Management identifies key accounting policies that require significant estimates and judgment, including the accounting for warrant liabilities as derivatives measured at fair value, the fair value option for related-party promissory notes, and the classification of Class A ordinary shares subject to redemption outside of permanent equity - Warrants are accounted for as liabilities at fair value, with changes recognized in the Statement of Operations[160] - Class A ordinary shares subject to possible redemption are classified as temporary equity and adjusted to redemption value each reporting period[162][163] - Related-party promissory notes are accounted for under the fair value option, with changes in fair value recognized in the statement of operations[161] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section is not applicable as the company qualifies as a smaller reporting company - This item is not applicable as we are a smaller reporting company[165] Item 4. Controls and Procedures Based on an evaluation as of March 31, 2023, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective, with no material changes in the company's internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2023[166] - There has been no change in internal control over financial reporting during the most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, internal controls[166] PART II – OTHER INFORMATION Item 1. Legal Proceedings The company reports no legal proceedings - None[168] Item 1A. Risk Factors There have been no material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2022 - There have been no material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on April 4, 2023[168] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities or use of proceeds - None[168] Item 5. Other Information The company reports no other information - None[168] Item 6. Exhibits This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including officer certifications and XBRL data files - The exhibits filed with the report include certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Sarbanes-Oxley Act Sections 302 and 906, as well as XBRL instance and taxonomy documents[169] Signatures Signatures The report was duly signed and authorized on May 22, 2023, by Hou Pu Jonathan Lin, Chief Executive Officer and Director, and Ka Man Kevin Lee, Chief Financial Officer and Director - The Form 10-Q was signed on May 22, 2023, by Hou Pu Jonathan Lin (CEO) and Ka Man Kevin Lee (CFO)[171]