HHG Capital (HHGC) - 2022 Q4 - Annual Report

Part I Business HHG Capital is a blank check company seeking a business combination after its $57.5 million IPO, with an extended deadline and a restriction against targets in China - The company is a blank check company incorporated on July 15, 2020, to effect a merger, share exchange, or similar business combination and has not yet selected a target business[17] - The company is explicitly prohibited from undertaking its initial business combination with any entity that has its principal business operations in China, including Hong Kong[17] Initial Public Offering (IPO) Details | Metric | Details | | :--- | :--- | | IPO Date | September 23, 2021 | | Units Offered | 5,750,000 (including full over-allotment) | | Price per Unit | $10.00 | | Gross Proceeds | $57,500,000 | | Initial Trust Account Value | $58,075,000 (including private placement proceeds) | - On September 19, 2022, shareholders approved extending the business combination period, while 2,393,594 public shares were redeemed for approximately $24.27 million[23][90] - The company's management team has experience in cross-border business, a competitive strength, but lacks specific experience with blank check companies, a competitive weakness[18][31] Risk Factors As a smaller reporting company, HHG Capital is not required to provide detailed risk factor disclosures in this Form 10-K - The company is a smaller reporting company and is not required to make disclosures under this item[72] - For a complete list of risks, the company refers to the "Risk Factors" section in its Form S-1 registration statement (Registration No. 333-252885)[72] Unresolved Staff Comments The company reports no unresolved comments from the staff of the Securities and Exchange Commission - This item is not applicable as there are no unresolved staff comments[73] Properties The company does not own physical properties and uses office space in Singapore provided under a $10,000 monthly administrative services agreement - The company's principal executive offices are located at 1 Commonwealth Lane, 03-20, Singapore, 149544[74] - The office space is provided by Ms. Leung Po Yi as part of a $10,000 per month payment for office space and related services, which is considered adequate for current operations[69][74] Legal Proceedings The company is not currently involved in any material legal proceedings or aware of any potential material claims - The company is not currently a party to any material litigation or other legal proceedings[75] Mine Safety Disclosures This item is not applicable to the company's operations - This item is not applicable[76] Part II Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities The company's securities trade on Nasdaq, and a significant share redemption in September 2022 reduced the trust account to $34.34 million - The company's units, ordinary shares, warrants, and rights trade on the Nasdaq Capital Market under the symbols HHGCU, HHGC, HHGCW, and HHGCR, respectively[79] - As of April 13, 2023, there were 5,083,406 ordinary shares issued and outstanding held by 164 shareholders of record[80] - On September 19, 2022, 2,393,594 Public Shares were redeemed for a total of $24,274,780 from the Trust Account[90] Trust Account Balance | Date | Balance | | :--- | :--- | | Dec 31, 2021 | $58,076,283 | | Dec 31, 2022 | $34,344,102 | [Reserved] This item is intentionally left blank Management's Discussion and Analysis of Financial Condition and Results of Operations The company reported a net loss of $46,734 for 2022 and management has substantial doubt about its ability to continue as a going concern Results of Operations | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net Loss | $46,734 | $140,520 | | Dividend/Interest Income | $507,209 | $1,207 | | General & Administrative Expenses | $553,943 | $141,727 | Liquidity Position (as of Dec 31, 2022) | Metric | Amount | | :--- | :--- | | Cash | $328,869 | | Working Capital Deficit | $148,587 | - Management has concluded that significant operating losses and the potential for mandatory liquidation raise substantial doubt about the Company's ability to continue as a going concern if a Business Combination is not consummated[107][108][247] - The company has extended its business combination deadline multiple times and has until April 23, 2023, with the right to further extend monthly up to September 23, 2023, by making specified deposits into the trust account[105][108] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, HHG Capital is exempt from the requirement to provide the disclosures under this item - The company is a smaller reporting company and is not required to provide the information otherwise required under this item[123] Financial Statements and Supplementary Data This section indicates that the company's audited financial statements and related notes are included in the report, beginning on page F-1 - The company's financial statements and the notes thereto begin on page F-1 of the Annual Report[124] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company dismissed Friedman LLP and engaged Marcum LLP as its auditor in September 2022, reporting no disagreements on accounting matters - Effective September 1, 2022, the company's auditor, Friedman LLP, combined with Marcum LLP; subsequently, on September 16, 2022, the company's audit committee dismissed Friedman and engaged Marcum[125] - There were no disagreements with Friedman on any matter of accounting principles, financial statement disclosure, or auditing scope during its engagement[127] - Friedman's audit report for the year ended December 31, 2021, contained an uncertainty about the Company's ability to continue as a going concern[126] Controls and Procedures Management concluded that disclosure controls were ineffective as of year-end 2022 due to a material weakness in financial reporting expertise - Management concluded that disclosure controls and procedures were not effective as of December 31, 2022[130] - The ineffectiveness was due to a material weakness related to a lack of accounting staff with appropriate knowledge of U.S. GAAP and SEC reporting[130] - Remediation plans include hiring more qualified accounting personnel and implementing a new "Financial and Accounting Policy and Procedure Manual"[130] - This annual report does not include an auditor's attestation report on internal controls because the company is an emerging growth company[133] Other Information The company reported no information for this item - None[135] Disclosure Regarding Foreign Jurisdictions That Prevent Inspections This disclosure requirement is not applicable to the company - Not applicable[136] Part III Directors, Executive Officers and Corporate Governance This section details the company's leadership, board structure with three independent committees, and the adoption of a code of ethics Executive Officers | Name | Position | | :--- | :--- | | Chee Shiong (Keith) Kok | Director and Chief Executive Officer | | Shuk Man (Lora) Chan | Chief Financial Officer | - The Board has standing Audit, Nominating, and Compensation committees, each composed of independent directors: Siang Yong Chew, Weiyi Di, and Tzu Fei (Philip) Ting[147][149][152][155] - The Board has determined that Tzu Fei (Philip) Ting qualifies as an "audit committee financial expert" under SEC rules[149] - The company has adopted a code of conduct and ethics applicable to its directors, officers, and employees[156] Executive Compensation Executive officers and directors have received no cash compensation for their services but are entitled to reimbursement for out-of-pocket expenses - No executive officer or director has received any cash compensation for services rendered to the company[160] - The company has not entered into any employment agreements with its executive officers[159] - Officers and directors will be reimbursed for out-of-pocket expenses incurred in connection with company activities, such as identifying potential target businesses[160] Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters As of April 2023, the Sponsor, Mr. Hooy Kok Wai, is the principal shareholder with 71.1% beneficial ownership of the company's shares Beneficial Ownership (as of April 13, 2023) | Beneficial Owner | Percentage of Outstanding Shares | | :--- | :--- | | Hooy Kok Wai (Sponsor) | 71.1% | | All directors and executive officers as a group (7 individuals) | 5.02% | - The ownership percentages are based on 5,083,406 ordinary shares issued and outstanding as of April 13, 2023[161] Certain Relationships and Related Transactions, and Director Independence This section details transactions with related parties, including the Sponsor and CEO, which are subject to audit committee review and approval - The Sponsor, Mr. Hooy Kok Wai, acquired 1,437,500 insider shares and purchased 255,000 private units in a private placement[165][166] - The company is obligated to pay Ms. Leung Po Yi a monthly fee of $10,000 for general and administrative services[174] - As of December 31, 2022, the company owed an aggregate of $150,000 to the Sponsor and the CEO for expenses they paid on the company's behalf[173] - The company has a Related Party Policy requiring the audit committee to review and approve transactions exceeding $120,000 involving executive officers, directors, or major shareholders[176][179] Principal Accountant Fees and Services The company paid audit fees to Marcum LLP and Friedman LLP in 2022 and 2021 respectively, with no other fees paid for other services Audit Fees | Firm | Fiscal Year | Audit Fees Billed | | :--- | :--- | :--- | | Marcum LLP | 2022 | ~$51,805 | | Friedman LLP | 2021 | ~$20,000 | - No fees were paid for audit-related, tax, or other services in 2022 and 2021[185][186] - The audit committee pre-approves all auditing services and permitted non-audit services to be performed by the auditors[187] Part IV Exhibits and Financial Statement Schedules This section lists the financial statements and provides an index of all exhibits filed with the Form 10-K, including key corporate documents - This section lists the financial statements, which include the Reports of Independent Registered Public Accounting Firm, Balance Sheets, Statements of Comprehensive Loss, Statements of Changes in Shareholders' Equity, and Statements of Cash Flows[190][193] - An exhibit index is provided, listing key agreements such as the Underwriting Agreement, Warrant Agreement, Rights Agreement, and various certifications required by the SEC[192][196] Financial Statements The audited financial statements for 2022 and 2021 are presented, with the auditor's report noting a going concern uncertainty Balance Sheet Highlights (as of Dec 31, 2022 vs 2021) | Account | 2022 | 2021 | | :--- | :--- | :--- | | Total Assets | $34,678,996 | $58,860,235 | | Investments held in Trust Account | $34,344,102 | $58,076,283 | | Total Liabilities | $1,801,307 | $1,660,708 | | Ordinary shares subject to redemption | $34,344,102 | $49,193,098 | | Total Shareholders' (Deficit) Equity | ($1,466,413) | $8,006,429 | Statement of Comprehensive Loss | Metric | Year ended Dec 31, 2022 | Year ended Dec 31, 2021 | | :--- | :--- | :--- | | Net Loss | ($46,734) | ($140,520) | - The auditor's report from Marcum LLP for the 2022 financial statements includes an explanatory paragraph expressing substantial doubt about the Company's ability to continue as a going concern[205] - On September 19, 2022, 2,393,594 Public Shares were redeemed, reducing the number of shares subject to possible redemption from 5,750,000 to 3,356,406[240][293]