Aura FAT Projects Acquisition p(AFAR) - 2023 Q4 - Annual Report

FORM 10-K Cover Page Information Aura FAT Projects Acquisition Corp, a Cayman Islands blank check company, filed its Annual Report on Form 10-K for the fiscal year ended November 30, 2023, with securities registered on Nasdaq - Aura FAT Projects Acquisition Corp is a blank check company incorporated in the Cayman Islands, filing its Annual Report on Form 10-K for the fiscal year ended November 30, 2023[1][2] Securities Registered on Nasdaq | Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | | :------------------ | :---------------- | :-------------------------------------- | | Units, each consisting of one Class A ordinary share and one redeemable warrant | AFARU | The Nasdaq Stock Market LLC | | Class A ordinary share, par value $0.0001 par value per share | AFAR | The Nasdaq Stock Market LLC | | Redeemable Warrants, each exercisable for one Class A ordinary share at an exercise price of $11.50 per share | AFARW | The Nasdaq Stock Market LLC | - The registrant is classified as a Non-accelerated filer, a Smaller reporting company, and an Emerging growth company[7] Outstanding Shares as of February 26, 2024 | Class of Shares | Number of Shares Outstanding | | :-------------- | :--------------------------- | | Class A Ordinary Shares | 2,906,696 | | Class B Ordinary Shares | 2,875,000 | Cautionary Note Regarding Forward-Looking Statements This section highlights that the report contains forward-looking statements based on management's expectations, which are subject to material differences due to various risk factors - The report contains forward-looking statements, identifiable by terms like 'believes,' 'estimates,' 'anticipates,' 'expects,' 'intends,' 'plans,' 'may,' 'will,' 'potential,' 'projects,' 'predicts,' 'continue,' or 'should,' with actual results potentially differing materially due to various factors[12][13] - Key factors that could cause actual results to differ include the ability to complete an initial business combination, success in retaining key personnel, potential conflicts of interest, ability to obtain additional financing, and public securities liquidity[12][14] Definitions This section provides definitions for key terms used throughout the report, ensuring clarity and consistent understanding of financial and legal terminology - This section defines key terms such as 'board of directors,' 'charter,' 'Companies Act,' 'Continental,' 'DWAC System,' 'Exchange Act,' 'founder shares,' 'GAAP,' 'IFRS,' 'initial business combination,' 'initial public offering,' 'initial shareholders,' 'Investment Company Act,' 'JOBS Act,' 'MaloneBailey,' 'management,' 'Nasdaq,' 'Ordinary shares,' 'PCAOB,' 'private placement warrants,' 'public shares,' 'public shareholders,' 'public units,' 'public warrants,' 'Registration Statement,' 'Report,' 'Sarbanes-Oxley Act,' 'SEC,' 'Securities Act,' 'sponsor,' 'trust account,' 'units,' 'warrants,' and 'we,' 'us,' 'Company' or 'our Company'[15][16] PART I This part covers the company's business operations, risk factors, unresolved staff comments, cybersecurity posture, property details, legal proceedings, and mine safety disclosures Item 1. Business Aura FAT Projects Acquisition Corp is a blank check company formed to effect a business combination, focusing on new financial services technology, Web 3.0, blockchain, cryptocurrency, and e-gaming in Southeast Asia and Australia - The Company is a blank check company incorporated on December 6, 2021, for a business combination, classified as a 'shell company' with no operations and nominal assets[18] - On April 18, 2022, the Company completed its IPO of 11.5 million units at $10.00 per unit, generating $115 million, and a private sale of 5 million Private Placement Warrants for $5 million[19][20] - Shareholders approved an extension to complete an initial business combination from July 18, 2023, to July 18, 2024, via twelve one-month extensions[22] - On May 7, 2023, the Company entered a definitive Business Combination Agreement with Allrites Holdings Pte Ltd., a Singapore private company, making Allrites a wholly owned subsidiary[23][24] - The business strategy focuses on identifying and completing an initial business combination with a company in new financial services technology, Web 3.0, blockchain, cryptocurrency, digital ledger, and e-gaming, particularly in Southeast Asia and Australia[32][36] - As of November 30, 2023, the Company had $30.60 million available in the trust account for an initial business combination[53] Item 1A. Risk Factors The company, as a smaller reporting entity, provides a partial list of material risks, including its lack of operating history, going concern uncertainties, and potential for sponsor profit despite public shareholder losses - The Company is a newly incorporated Cayman Islands exempt company with no operating history or revenues, raising 'going concern' uncertainties[118] - Risks include failure to complete the initial business combination within the timeframe, limited shareholder rights to trust funds, and potential third-party claims liability[118][119] - Other risks involve conflicts of interest of the sponsor, officers, and directors, limited ability to assess target management, potential inability to obtain additional financing, and adverse effects of warrants on ordinary share market price[119] Item 1B. Unresolved Staff Comments There are no unresolved staff comments to report - The Company has no unresolved staff comments[121] Item 1C. Cybersecurity As a special purpose acquisition company with no business operations, the Company does not consider itself to face significant cybersecurity risk and has not adopted a formal cybersecurity risk management program - As a special purpose acquisition company with no business operations, the Company does not consider itself to face significant cybersecurity risk[122] - The Company has not adopted a formal cybersecurity risk management program or processes, with the board of directors generally overseeing such risks[122] - No cybersecurity incidents have been encountered since the Company's IPO[122] Item 2. Properties The Company's executive offices are located in Singapore, for which it pays a monthly fee to an affiliate of its sponsor, covering office space, utilities, and administrative support - The Company's executive offices are located at 1 Phillip Street, 09-00, Royal One Phillip, Singapore, 048692[123] - A monthly fee of $20,000 is paid to Fat Ventures Pte. Ltd., an affiliate of the sponsor, for office space, utilities, and administrative support[123] - The current office space is considered adequate for the Company's operations[123] Item 3. Legal Proceedings To the best of management's knowledge, there are no legal proceedings currently pending or contemplated against the Company, its officers, directors, or property - There is no litigation currently pending or contemplated against the Company, its officers, or directors[124] Item 4. Mine Safety Disclosures This item is not applicable to the Company - Mine Safety Disclosures are not applicable to the Company[125] PART II This part covers market information, financial condition, results of operations, market risk disclosures, financial statements, accounting changes, controls and procedures, and other information Item 5. Market for Registrant's Common Equity, Related Shareholder Matters, and Issuer Purchases of Equity Securities The Company's units, public shares, and public warrants are traded on Nasdaq, with limited record holders, no cash dividends paid, and no equity compensation plans authorized - The Company's units, public shares, and public warrants are traded on Nasdaq under symbols 'AFARU,' 'AFAR,' and 'AFARW,' with units commencing public trading on April 13, 2022, and shares/warrants on June 3, 2022[128] Holders of Record as of February 26, 2024 | Security Type | Number of Holders of Record | | :-------------------- | :-------------------------- | | Units | 1 | | Class A ordinary share | 4 | | Warrants | 2 | - The Company has not paid any cash dividends on its ordinary shares to date and does not intend to prior to completing its initial business combination[130] Use of Proceeds from Initial Public Offering and Private Placement | Source | Gross Proceeds | | :----------------------------------- | :------------- | | Initial Public Offering (11.5M units) | $115,000,000 | | Private Placement (5M warrants) | $5,000,000 | | Total placed in Trust Account | $117,300,000 | Item 6. [Reserved] This item is reserved and contains no information Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The Company, a blank check entity, has not generated operating revenues and continues to incur significant costs in pursuit of a business combination, facing a working capital deficit and going concern uncertainties - The Company is a blank check company with no operating revenues to date, incurring significant costs in pursuit of a business combination[139][156] - Shareholders approved an extension to complete an initial business combination until July 18, 2024, with the sponsor depositing $50,000 or $0.045 per share for each one-month extension, totaling $250,000 for five extensions as of November 30, 2023[141] - Holders of 8,708,304 Class A ordinary shares exercised redemption rights for $92.51 million, or approximately $10.62 per share, in connection with extension and NTA proposals[142] - A definitive Business Combination Agreement was entered into with Allrites Holdings Pte Ltd. on May 7, 2023, where Allrites shareholders will receive 9.2 million Company Class A Ordinary Shares (valued at $92 million) and potential earnout shares based on future recurring revenue thresholds[144][146][147] Net Income Summary | Period | Net Income | | :-------------------------------------- | :--------- | | Year Ended November 30, 2023 | $2,410,775 | | Period from Dec 6, 2021 (inception) to Nov 30, 2022 | $817,089 | - As of November 30, 2023, the Company had $233,088 in cash and marketable securities of $30.60 million in the Trust Account, but a working capital deficit of $1.57 million, raising substantial doubt about its ability to continue as a going concern without additional funds or completing a business combination by March 18, 2024[163][164][168][294][296] Item 7A. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, the Company is not required to provide quantitative and qualitative disclosures about market risk - Quantitative and Qualitative Disclosures about Market Risk are not required for smaller reporting companies[174] Item 8. Financial Statements and Supplementary Data This item refers to the Company's audited financial statements and supplementary data, which are included elsewhere in the report - Financial statements and supplementary data are included following Item 15 of this Report[175] Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There have been no changes in or disagreements with accountants on accounting and financial disclosure - There are no changes in and disagreements with accountants on accounting and financial disclosure[177] Item 9A. Controls and Procedures The Company's disclosure controls and procedures were not effective as of November 30, 2023, due to material weaknesses in internal controls, with no material changes in internal control over financial reporting during the most recent fiscal quarter - The Company's disclosure controls and procedures were not effective as of November 30, 2023, due to material weaknesses in written policies and procedures of internal controls[179] - Management determined that the Company did not maintain effective internal control over financial reporting as of November 30, 2023, based on the COSO framework[181] - There were no changes in internal control over financial reporting during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[182] Item 9B. Other Information There is no other information to report under this item - There is no other information to report under this item[183] Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the Company - Disclosure regarding foreign jurisdictions that prevent inspections is not applicable[184] PART III This part details the Company's directors, executive officers, corporate governance, executive compensation, security ownership, related party transactions, and principal accountant fees and services Item 10. Directors, Executive Officers and Corporate Governance The Company's board of directors, including independent members, oversees financial reporting and executive compensation through established audit and compensation committees, and has adopted a Code of Ethics Directors and Executive Officers | Name | Age | Position | | :-------------- | :-- | :------------------------------------------ | | Tristan Lo | 40 | Co-Chief Executive Officer, Director and Chairman of Board | | David Andrada | 42 | Co-Chief Executive Officer, Chief Financial Officer and Director | | Calvin Ng | 40 | Director | | Nils Michaelis | 49 | Director | | Thorsten Neumann| 41 | Independent Director | | Aneel Ranadive | 39 | Independent Director | | John Laurens | 62 | Independent Director | | Jay McCarthy | 60 | Independent Director | | Andrew Porter | 45 | Independent Director | - The Company has 8 directors, with officers appointed by the board at its discretion, and has established an audit committee and a compensation committee[203][204] - The audit committee consists of independent directors Jay McCarthy, John Laurens (Chair), and Thorsten Neumann, with John Laurens qualifying as an 'audit committee financial expert'[206][207] - The compensation committee consists of independent directors Andrew Porter (Chair) and Aneel Ranadive[208] - The Company has adopted a Code of Ethics applicable to its directors, officers, and employees[216] Item 11. Executive Compensation None of the Company's officers have received cash compensation for services rendered, with administrative fees paid to an affiliate and potential future consulting fees post-business combination - None of the Company's officers have received any cash compensation for services rendered[217] - A monthly payment of $20,000 is made to Fat Ventures Pte. Ltd., an affiliate of the sponsor, for office space, utilities, and administrative support, with out-of-pocket expenses reimbursed[217] - After completing an initial business combination, directors or management team members remaining with the combined company may receive consulting or management fees, which will be fully disclosed to shareholders[218] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters As of February 26, 2024, the sponsor and executive officers/directors as a group beneficially own 49.73% of total outstanding ordinary shares, with founder shares subject to transfer restrictions Beneficial Ownership of Ordinary Shares as of February 26, 2024 | Name and Address of Beneficial Owner | Number of Shares Beneficially Owned | Percentage of Outstanding Class B Ordinary Shares | Percentage of Total Outstanding Ordinary Share | | :----------------------------------- | :---------------------------------- | :------------------------------------------------ | :--------------------------------------------- | | Aura FAT Projects Capital LLC | 2,875,000 | 100% | 49.73% | | All executive officers and directors as a group (9 individuals) | 2,875,000 | 100% | 49.73% | - Founder shares (Class B ordinary shares) are subject to transfer restrictions until the earlier of one year after the business combination or specific share price/liquidation events[221] - There are no securities authorized for issuance under equity compensation plans and no changes in control have occurred[224][225] Item 13. Certain Relationships and Related Transactions, and Director Independence The Company has several related party transactions, including sponsor share purchases, monthly administrative fees, and potential working capital loans, all reviewed by the audit committee, with a majority of the board being independent - The sponsor purchased 2.875 million founder shares for $25,000 and 5 million private placement warrants for $5 million[226][227] - The Company pays Fat Projects Pte. Ltd., an affiliate of its sponsor, $20,000 per month for office space, utilities, and administrative support[228] - The sponsor or its affiliates may provide non-interest-bearing working capital loans, convertible into warrants, to finance transaction costs for an initial business combination[231] - The Company has adopted a code of ethics, and its audit committee is responsible for reviewing and approving related party transactions to minimize conflicts of interest[235][237] - A majority of the Company's board of directors are independent, with Tristan Lo, David Andrada, Nils Michaelis, and Calvin Ng identified as non-independent[241] Item 14. Principal Accountant Fees and Services MaloneBailey serves as the independent registered public accounting firm, with audit fees for the fiscal year ended November 30, 2023, totaling approximately $77,500, and all services pre-approved by the audit committee - MaloneBailey acts as the Company's independent registered public accounting firm[243] Principal Accountant Fees | Fee Type | Year Ended Nov 30, 2023 | Period Dec 6, 2021 (inception) to Nov 30, 2022 | | :-------------- | :---------------------- | :--------------------------------------------- | | Audit Fees | $77,500 | $72,800 | | Audit-Related Fees| None | None | | Tax Fees | None | None | | All Other Fees | None | None | - The audit committee pre-approves all auditing services and permitted non-audit services[248] PART IV This part lists the exhibits, financial statements, and financial statement schedules included in the report, along with a statement on the Form 10-K Summary's applicability Item 15. Exhibits, Financial Statements and Financial Statement Schedules This section lists the financial statements, financial statement schedules, and exhibits filed as part of the report, including the Report of Independent Registered Public Accounting Firm and various financial statements - The report includes audited financial statements: Report of Independent Registered Public Accounting Firm, Balance Sheets, Statements of Operations, Statements of Changes in Shareholders' Deficit, Statements of Cash Flows, and Notes to Financial Statements[251] - All financial statement schedules are omitted as not applicable or immaterial[252] - A comprehensive list of exhibits is filed as part of this Report, with details on incorporation by reference[252][256][257] Item 16. Form 10-K Summary This item is not applicable to the Company - Form 10-K Summary is not applicable[253] Signatures The Report was signed on February 26, 2024, by the Co-Chief Executive Officers and other directors - The Report was signed on February 26, 2024, by Tristan Lo (Co-Chief Executive Officer and Chairman and Director) and David Andrada (Co-Chief Executive Officer and Chief Financial Officer and Director), along with other directors[373][374] Financial Statements Index The financial statements index lists the Report of Independent Registered Public Accounting Firm, Balance Sheets, Statements of Operations, Statements of Changes in Shareholders' Deficit, Statements of Cash Flows, and Notes to Financial Statements - The financial statements index lists the Report of Independent Registered Public Accounting Firm, Balance Sheets, Statements of Operations, Statements of Changes in Shareholders' Deficit, Statements of Cash Flows, and Notes to Financial Statements[260] Report of Independent Registered Public Accounting Firm MaloneBailey, LLP issued an unqualified opinion on the Company's financial statements but highlighted a 'Going Concern Matter' due to liquidation risk if a business combination is not completed - MaloneBailey, LLP, the independent registered public accounting firm, issued an unqualified opinion on the Company's financial statements for the periods ended November 30, 2023, and 2022[262] - The auditors highlighted a 'Going Concern Matter' due to the Company's dependence on completing a business combination within a prescribed period and the risk of liquidation if unsuccessful, raising substantial doubt about its ability to continue as a going concern[263] - The audit was conducted in accordance with PCAOB standards, but the Company was not required to have, nor were the auditors engaged to perform, an audit of its internal control over financial reporting[265] Financial Statements This section presents the Company's core financial statements, including Balance Sheets, Statements of Operations, Statements of Changes in Shareholders' Deficit, Statements of Cash Flows, and accompanying Notes Balance Sheets The balance sheets show a significant decrease in total assets and Class A ordinary shares subject to possible redemption from November 30, 2022, to November 30, 2023, primarily due to share redemptions Balance Sheet Summary (Selected Items) | Item | Nov 30, 2023 | Nov 30, 2022 | | :-------------------------------------------- | :------------ | :------------- | | Total Assets | $30,968,480 | $119,266,406 | | Cash | $233,088 | $360,530 | | Cash and marketable securities held in Trust Account | $30,604,459 | $118,785,342 | | Total Current Liabilities | $1,929,825 | $124,102 | | Deferred underwriting commission | $4,025,000 | $4,025,000 | | Class A ordinary shares subject to possible redemption | $30,604,459 | $118,785,342 | | Total Shareholders' Deficit | $(5,590,804) | $(3,668,038) | Statements of Operations The Company reported a net income of $2.41 million for the year ended November 30, 2023, primarily driven by interest income from marketable securities in the Trust Account, offsetting operating and formation costs Statements of Operations Summary | Item | Year Ended Nov 30, 2023 | Period from Dec 6, 2021 (Inception) Through Nov 30, 2022 | | :-------------------------------------------- | :---------------------- | :------------------------------------------------------- | | Operating and formation costs | $1,673,108 | $668,272 | | Interest earned on marketable securities held in Trust Account | $4,082,917 | $1,483,349 | | Net income | $2,410,775 | $817,089 | | Basic and diluted net income per share, Class A ordinary shares | $0.22 | $0.08 | - Net income for the year ended November 30, 2023, was $2.41 million, primarily from interest income on trust account securities ($4.08 million), offset by operating and formation costs ($1.67 million)[157][272] - Basic and diluted net income per share for Class A ordinary shares increased from $0.08 in the prior period to $0.22 for the year ended November 30, 2023[272] Statements of Changes in Shareholders' Deficit The statements reflect a significant increase in accumulated deficit from $(3.67 million) at November 30, 2022, to $(5.59 million) at November 30, 2023, primarily due to accretion of Class A ordinary shares to redemption value Shareholders' Deficit Changes | Item | Nov 30, 2023 | Nov 30, 2022 | | :-------------------------------------------- | :------------ | :------------- | | Accumulated deficit | $(5,591,104) | $(3,668,338) | | Total Shareholders' Deficit | $(5,590,804) | $(3,668,038) | - The accumulated deficit increased by approximately $1.92 million from November 30, 2022, to November 30, 2023, driven by accretion of Class A ordinary shares to redemption value ($4.08 million) and extension funds ($250,000), partially offset by net income ($2.41 million)[274] Statements of Cash Flows For the year ended November 30, 2023, cash used in operating activities was $677,442, while investing activities provided $92.26 million, and financing activities used $91.71 million, resulting in a net cash decrease of $127,442 Cash Flow Summary | Cash Flow Activity | Year Ended Nov 30, 2023 | Period from Dec 6, 2021 (Inception) To Nov 30, 2022 | | :-------------------------------------- | :---------------------- | :-------------------------------------------------- | | Net cash used in operating activities | $(677,442) | $(664,685) | | Net cash provided by (used in) investing activities | $92,264,424 | $(117,300,000) | | Net cash (used in) provided by financing activities | $(91,714,424) | $118,325,215 | | Net Change in Cash | $(127,442) | $360,530 | | Cash – End of period | $233,088 | $360,530 | - Cash used in operating activities was $677,442 for the year ended November 30, 2023, influenced by net income and interest earned on marketable securities[161][276] - Investing activities saw a significant inflow of $92.26 million, primarily due to $92.51 million cash withdrawn from the Trust Account in connection with redemptions[161][276] - Financing activities resulted in a net outflow of $91.71 million, largely due to the redemption of common stock ($92.51 million) and partially offset by advances from related parties ($550,000)[276] Notes to Financial Statements The notes detail the Company's organization, accounting policies, proposed business combination with Allrites, going concern uncertainty, related party transactions, and shareholder equity components - The Company is a Cayman Islands exempted company, a blank check company formed on December 6, 2021, for a Business Combination, and has not commenced operations or generated operating revenues[278][279] - The Company consummated its IPO on April 18, 2022, raising $115 million from units and $5 million from private placement warrants, with $117.3 million placed in a Trust Account[280][281][285] - A definitive Business Combination Agreement was entered into with Allrites Holdings Pte Ltd. on May 7, 2023, involving a share recapitalization and exchange of 9.2 million Company Class A Ordinary Shares for Allrites shareholders, plus potential earnout shares[297][338][339][340][341] - The Company faces a 'Going Concern Consideration' due to a working capital deficit of $1.57 million as of November 30, 2023, and the need to complete a Business Combination by March 18, 2024, or liquidate[294][296] - Related party transactions include the sponsor's purchase of founder shares and private placement warrants, a $20,000 monthly administrative fee to an affiliate, and advances from the sponsor totaling $800,000 for the year ended November 30, 2023[325][327][332] - The Company's Class A ordinary shares subject to possible redemption are classified as temporary equity and measured at redemption value, which was $30.60 million as of November 30, 2023, following significant redemptions[309][312]