Alpha Star Acquisition (ALSA) - 2022 Q2 - Quarterly Report

Part I. Financial Information This section presents the unaudited financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures for Alpha Star Acquisition Corporation Item 1. Financial Statements This section presents the unaudited financial statements of Alpha Star Acquisition Corporation, including balance sheets, statements of operations, changes in stockholders' deficit, and cash flows, along with detailed notes explaining the company's organization, accounting policies, and specific financial transactions Balance Sheets (Unaudited) This section provides the unaudited balance sheets, detailing assets, liabilities, and stockholders' deficit as of June 30, 2022, and December 31, 2021 Balance Sheet Summary | ASSETS / LIABILITIES AND STOCKHOLDERS' DEFICIT | June 30, 2022 | December 31, 2021 | | :--------------------------------------------- | :------------ | :---------------- | | ASSETS | | | | Cash in escrow | $175,666 | $387,858 | | Prepaid expense | $67,808 | $142,192 | | Marketable securities held in trust account | $115,173,461 | $115,000,744 | | Total current assets | $115,416,935 | $115,530,794 | | TOTAL ASSETS | $115,416,935 | $115,530,794 | | LIABILITIES AND STOCKHOLDERS' DEFICIT | | | | Accrued expenses | $133,939 | $52,999 | | Deferred underwriting commissions | $2,875,000 | $2,875,000 | | Total current liabilities | $3,008,939 | $2,927,999 | | TOTAL LIABILITIES | $3,008,939 | $2,927,999 | | Ordinary shares subject to possible redemption | $115,173,461 | $115,000,000 | | Total Stockholders' Equity (Deficit) | $(2,765,465) | $(2,397,205) | Statements of Operations (Unaudited) This section presents the unaudited statements of operations, detailing revenues, expenses, and net loss for various periods ending June 30, 2022 and 2021 Statements of Operations Summary | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Period from March 11, 2021 (inception) to June 30, 2021 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :------------------------------------------------------ | | Formation and operational costs | $178,656 | $11,050 | $367,521 | $11,050 | | Loss from operation costs | $178,656 | $11,050 | $367,521 | $11,050 | | Operating income (loss) | $(178,656) | $(11,050) | $(367,521) | $(11,050) | | Interest income | $163,331 | $- | $172,717 | $- | | Other income (loss), net | $5 | $- | $5 | $- | | Total other income | $163,336 | $- | $172,722 | $- | | Income (loss) before income taxes | $(15,320) | $(11,050) | $(194,799) | $(11,050) | | Net Loss | $(15,320) | $(11,050) | $(194,799) | $(11,050) | | Basic and diluted net loss per share (Nonredeemable ordinary shares) | $(0.01) | $(0.00) | $(0.02) | $(0.00) | Statements of Changes in Stockholders' Equity (Deficit) (Unaudited) This section outlines the changes in stockholders' equity (deficit), including net loss and remeasurement adjustments, from December 31, 2021, to June 30, 2022 Stockholders' Equity (Deficit) Changes | Metric | Balance at Dec 31, 2021 | Net Loss (Q1 2022) | Remeasurement to redemption value | Net Loss (Q2 2022) | Balance at June 30, 2022 | | :------------------------------------ | :---------------------- | :----------------- | :-------------------------------- | :----------------- | :----------------------- | | Ordinary Shares (Amount) | $3,205 | $- | $- | $- | $3,205 | | Additional Paid-In Capital | $- | $- | $- | $- | $- | | Accumulated Deficit | $(2,400,410) | $(179,479) | $(173,461) | $(15,320) | $(2,768,670) | | Total Stockholders' Equity (Deficit) | $(2,397,205) | $(179,479) | $(173,461) | $(15,320) | $(2,765,465) | Statements of Cash Flows (Unaudited) This section details the unaudited cash flow activities, including operating, investing, and financing, for the six months ended June 30, 2022, and the inception period to June 30, 2021 Cash Flow Summary | Cash Flow Activity | Six Months Ended June 30, 2022 | Period from March 11, 2021 (inception) to June 30, 2021 | | :------------------------------------ | :----------------------------- | :------------------------------------------------------ | | Net loss | $(194,799) | $(11,050) | | Interest earned in trust account | $(172,717) | $- | | Amortization of prepaid expense | $74,384 | $- | | Accrued expenses | $80,940 | $5,150 | | Net cash used in operating activities | $(212,192) | $(88,531) | | Proceeds from issuance of ordinary shares to the Sponsor | $- | $25,000 | | Proceeds of promissory note from Sponsor | $- | $300,000 | | Net cash provided by financing activities | $- | $325,000 | | Net decrease (increase) in cash and cash equivalents | $(212,192) | $236,469 | | Cash and cash equivalents at end of period | $175,666 | $236,469 | Notes to Unaudited Financial Statements This section provides detailed explanations and disclosures supporting the unaudited financial statements, covering organization, accounting policies, and specific transactions Note 1 – Description of Organization and Business Operations This note describes Alpha Star Acquisition Corporation's formation as a blank check company, its IPO, and its financial status, including the trust account and going concern considerations - Alpha Star Acquisition Corporation is a blank check company incorporated on March 11, 2021, formed to effect a Business Combination, with an intent to focus on businesses connected to the Asian market[24] - The Company consummated its Initial Public Offering (IPO) on December 15, 2021, selling 11,500,000 units at $10.00 per unit, generating gross proceeds of $115,000,000[27] - As of June 30, 2022, the Trust Account held $115,173,461 in marketable securities, primarily invested in U.S. government treasury bills or money market funds[29][30][31] - Management has determined that the uncertainty surrounding the mandatory liquidation date (September 15, 2023) if a Business Combination is not completed, raises substantial doubt about the Company's ability to continue as a going concern[34][35] Note 2 – Summary of Significant Accounting Policies This note outlines the Company's key accounting policies, including its status as an emerging growth company, fair value measurement of marketable securities, and classification of redeemable ordinary shares - 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[38][39] - Marketable securities held in the Trust Account are classified as trading securities and presented at fair value, with gains and losses included in interest income[43] - Ordinary shares subject to possible redemption are classified as temporary equity and presented at redemption value, as redemption rights are outside the Company's control[46][47] - Diluted net income (loss) per ordinary share is the same as basic net income (loss) per ordinary share because the exercise of warrants is contingent upon future events[50] Note 3 – Initial Public Offering This note details the Company's Initial Public Offering, including the number of units sold, the price per unit, and the composition of each unit - On December 15, 2021, the Company consummated its IPO, selling 11,500,000 units at $10.00 per unit, generating gross proceeds of $115,000,000[60] - Each unit consists of one ordinary share, one redeemable warrant, and one right to receive one-seventh (1/7) of an ordinary share upon consummation of a Business Combination[60] Note 4 – Private Placement This note describes the private placement of units to the Sponsor, including the number of units, price, and total proceeds added to the Trust Account - Concurrently with the IPO, the Sponsor purchased 330,000 units in a private placement at $10.00 per unit, totaling $3,300,000, with proceeds added to the Trust Account[61] Note 5 – Related Party Transactions This note details transactions with related parties, including the Sponsor's purchase of Founder Shares, administrative service fees, and a promissory note - The Sponsor purchased 2,875,000 Founder Shares for $25,000, with no shares subject to forfeiture as of June 30, 2022, due to the underwriters' full exercise of the over-allotment option[63] - The Company pays the Sponsor $10,000 per month for administrative services, incurring $60,000 for the six months ended June 30, 2022[65] - An unsecured promissory note from the Sponsor for up to $300,000 was issued on March 26, 2021, and subsequently repaid[66] Note 6 – Commitments and Contingencies This note outlines the Company's commitments and contingencies, including the underwriters' over-allotment option, underwriting commissions, and registration rights - The underwriters fully exercised their over-allotment option for 1,500,000 units on December 15, 2021[69] - The Company paid a cash underwriting commission of $2,300,000 and has a deferred underwriting commission of $2,875,000, payable upon completion of the initial Business Combination[71] - Holders of Founder Shares are entitled to registration rights for their securities[72] Note 7 – Stockholders' Deficit This note details the components of stockholders' deficit, including issued ordinary shares, public and private warrants, and their respective terms - As of June 30, 2022, there were 3,205,000 ordinary shares issued and outstanding, excluding 11,500,000 shares subject to possible redemption[73] - The Company had 11,500,000 public warrants and 330,000 private warrants outstanding as of June 30, 2022[74][77] - Each public warrant entitles the holder to purchase one-half ordinary share at $11.50, exercisable 30 days after the completion of an initial business combination[75] - Rights automatically convert to 1/7 of an ordinary share upon consummation of the initial business combination[78] Note 8 – Fair Value Measurements This note explains the fair value measurement of the Company's marketable securities held in the Trust Account, categorized using Level 1 inputs - The Company's marketable securities held in the Trust Account are measured at fair value using Level 1 inputs (quoted prices in active markets)[81] Fair Value of Marketable Securities | Assets | June 30, 2022 | December 31, 2021 | | :------------------------------------ | :------------ | :---------------- | | Marketable Securities held in Trust Account | $115,173,461 | $115,000,744 | Note 9 – Subsequent Events This note confirms that no subsequent events requiring adjustment or disclosure were identified up to the financial statement issuance date - The Company did not identify any subsequent events requiring adjustment or disclosure in the financial statements up to August 12, 2022[84] 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 results of operations, highlighting its status as a blank check company, its lack of operating revenues, and its liquidity position, including the use of IPO proceeds and potential need for additional financing Special Note Regarding Forward-Looking Statements This section cautions that the Quarterly Report contains forward-looking statements subject to risks and uncertainties, and the Company disclaims any obligation to update them - The Quarterly Report includes forward-looking statements that involve risks and uncertainties, and actual results may differ materially from expectations[87] - The Company disclaims any intention or obligation to update or revise any forward-looking statements[87] Overview This section provides an overview of Alpha Star Acquisition Corporation as a blank check company formed to effect a Business Combination, anticipating significant acquisition-related costs - Alpha Star Acquisition Corporation is a blank check company formed to effect a Business Combination, expecting to incur significant costs in pursuit of its acquisition plans[88] Results of Operations This section details the Company's financial performance, noting no operating revenues and activities focused on organizational tasks and target identification - The Company has not engaged in any operations or generated operating revenues to date, with activities focused on organizational tasks, IPO preparation, and identifying a target company[89] Key Financial Metrics | Metric | Six Months Ended June 30, 2022 | Three Months Ended June 30, 2022 | | :------------------------------------ | :----------------------------- | :------------------------------- | | Net Loss | $(194,799) | $(15,320) | | Operating Costs | $367,521 | $178,656 | | Interest Income on Marketable Securities | $172,717 | $163,331 | Liquidity and Capital Resources This section discusses the Company's liquidity, including IPO and private placement proceeds, cash used in operations, funds in the Trust Account, and potential needs for additional financing - The Company's liquidity sources include $115,000,000 from the IPO and $3,300,000 from a private placement, with offering costs totaling $5,669,696[92] - Net cash used in operating activities was $212,192 for the six months ended June 30, 2022[93] - As of June 30, 2022, $115,173,461 was held in the Trust Account for the Business Combination, and $175,666 was held outside for identifying and evaluating target businesses[94][95] - The Company may need to raise additional funds to meet operating expenditures, complete a Business Combination, or cover redemptions[97] Off-Balance Sheet Financing Arrangements This section confirms that the Company has no off-balance sheet arrangements as of June 30, 2022 - The Company has no obligations, assets, or liabilities considered off-balance sheet arrangements as of June 30, 2022[99] Contractual Obligations This section outlines the Company's contractual obligations, including a monthly administrative fee to the Sponsor and a deferred underwriting commission - The Company has a monthly administrative fee of $10,000 payable to the Sponsor for general and administrative services[100] - A deferred underwriting commission of $2,875,000 is payable upon the closing of a Business Combination[100] Critical Accounting Policies This section discusses the Company's critical accounting policies, focusing on the classification of warrants and ordinary shares subject to possible redemption - The Company accounts for warrants as either equity-classified or liability-classified instruments based on specific terms and authoritative guidance, requiring professional judgment[102] - Ordinary shares subject to possible redemption are classified as temporary equity and measured at redemption value, as redemption rights are outside the Company's control[104] Recent accounting standards This section states that management does not anticipate any material effect from recently issued, but not yet effective, accounting standards on the interim financial statements - Management does not believe that any recently issued, but not yet effective, accounting standards would have a material effect on the interim condensed financial statements[109] Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk The Company reports no material exposure to market or interest rate risk as of June 30, 2022, due to its investment strategy of holding U.S. government securities with short maturities - As of June 30, 2022, the Company was not subject to any material market or interest rate risk[110] - Net proceeds from the IPO, including amounts in the Trust Account, are invested in U.S. government securities with maturities of 180 days or less or in money market funds investing solely in U.S. treasuries[110] Item 4. Controls and Procedures This section details the evaluation of the company's disclosure controls and procedures, concluding their effectiveness, and confirms no material changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures This section confirms that the Chief Executive Officer and Chief Financial Officer concluded the Company's disclosure controls and procedures were effective as of March 31, 2022 - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of March 31, 2022[111] Changes in Internal Control Over Financial Reporting This section reports no material changes in the Company's internal control over financial reporting during the most recently completed fiscal quarter - There has been no change in the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting during the most recently completed fiscal quarter[112] Part II. Other Information This section provides additional disclosures including legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and a list of exhibits Item 1. Legal Proceedings The Company is not currently involved in any legal proceedings as of the filing date of this Form 10-Q - The Company is not a party to any legal proceedings as of the filing date of this Form 10-Q[114] Item 1A. Risk Factors The Company refers to the risk factors previously disclosed in its annual report on Form 10-K for the fiscal year ended December 31, 2021, and confirms no material changes to these risks as of the date of this Quarterly Report - There have been no material changes to the risk factors disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021[115] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the private placement of 330,000 units to the Sponsor and outlines the comprehensive use of proceeds from both the IPO and the private placement, primarily for deposit into the Trust Account Use of Proceeds This section details the proceeds from the IPO and private placement, specifying the number of units sold, price, and the total amount deposited into the trust account - The Company completed its IPO on December 15, 2021, selling 11,500,000 units at $10.00 each, generating gross proceeds of $115,000,000[117] - Concurrently, the Company sold 330,000 Private Placement Units to the Sponsor at $10.00 per unit, generating gross proceeds of $3,300,000[118] - A total of $115,000,000 from the IPO and private placement proceeds was placed in a U.S.-based trust account[119] Item 3. Defaults Upon Senior Securities The Company reports no defaults upon senior securities - There are no defaults upon senior securities[120] Item 4. Mine Safety Disclosures This item is not applicable to the Company's operations - Mine Safety Disclosures are not applicable to the Company[121] Item 5. Other Information The Company has no other information to disclose under this item - No other information to disclose[121] Item 6. Exhibits This section lists all exhibits filed as part of, or incorporated by reference into, the Quarterly Report on Form 10-Q, including various certifications and XBRL documents - Exhibits include certifications from the Principal Executive Officer and Principal Financial Officer (31.1, 31.2, 32.1, 32.2) and Inline XBRL documents (101.INS, 101.CAL, 101.SCH, 101.DEF, 101.LAB, 101.PRE, 104)[123] Part III. Signatures This section contains the official signatures of the Company's Chief Executive Officer and Chief Financial Officer, affirming the report's submission Signatures The report is duly signed on behalf of Alpha Star Acquisition Corporation by its Chief Executive Officer and Chief Financial Officer - The report was signed on August 12, 2022, by Zhe Zhang, Chief Executive Officer, and Guojian Chen, Chief Financial Officer[125]