AlphaTime Acquisition p(ATMC) - 2023 Q4 - Annual Report

Part I Item 1. Business AlphaTime Acquisition Corp, a blank check company, completed its IPO in January 2023, raising $69 million, and has entered a definitive merger agreement with HCYC Group Company Limited - AlphaTime Acquisition Corp is a blank check company incorporated on September 15, 2021, for the purpose of effecting a business combination. It intends to primarily focus on businesses in Asia but will not consummate a combination with an entity using a VIE structure[17][37] Initial Public Offering and Private Placement Details | Offering | Units | Price per Unit | Gross Proceeds | | :--- | :--- | :--- | :--- | | Initial Public Offering (Jan 4, 2023) | 6,000,000 | $10.00 | $60,000,000 | | Over-Allotment (Jan 9, 2023) | 900,000 | $10.00 | $9,000,000 | | Private Placement (Sponsor) | 409,200 | $10.00 | $4,092,000 | - On January 5, 2024, the Company entered into a definitive Agreement and Plan of Merger with HCYC Group Company Limited[28][29] - The deadline to consummate a business combination has been extended up to January 4, 2025, contingent on monthly deposits of $55,000 into the Trust Account[25][27] Shareholder Redemption and Trust Account Status (Dec 2023) | Metric | Value | | :--- | :--- | | Shares Redeemed | 2,160,774 | | Amount Removed from Trust | ~$23,302,146 | | Remaining Trust Balance | ~$51,108,602 | | Outstanding Ordinary Shares | 6,873,426 | Item 1A. Risk Factors The company faces substantial risks related to its business combination, including going concern issues, potential shareholder redemptions, and significant regulatory and political uncertainties, especially concerning PRC-based targets - The company's independent registered public accounting firm has expressed substantial doubt about its ability to continue as a "going concern" due to a working capital deficiency of $1,480,801 as of December 31, 2023[76] - A majority of the company's officers and directors have significant ties to the PRC, which may make it a less attractive partner for non-China-based targets and could subject a U.S. deal to CFIUS review[161][163] - If the company combines with a PRC-based business, it faces significant risks from the Chinese government, which may intervene in business activities, change regulations with little notice, and exert control over overseas offerings, potentially devaluing the company's securities[312][327][328] - Recent PRC regulations, including the draft Measures for Cybersecurity Review, may require companies with over one million users' data to undergo a cybersecurity review before listing overseas, creating uncertainty and potential delays for a business combination[294][297][299] - The Holding Foreign Companies Accountable Act (HFCAA) poses a risk of delisting from U.S. exchanges if the PCAOB is unable to inspect the company's auditor for two consecutive years, a concern if the post-combination entity uses a PRC-based auditor[389][391][392] Item 1B. Unresolved Staff Comments The company reports that it has no unresolved staff comments - Not applicable[418] Item 1C. Cybersecurity The company reports no information under this item - None[418] Item 2. Properties The company maintains its executive offices at 500 5th Avenue, Suite 938, New York, NY 10110, with costs covered by a $10,000 monthly fee paid to its sponsor for administrative services - The company's executive offices are located at 500 5th Avenue, Suite 938, New York, NY 10110. The cost is included in a $10,000 per month fee paid to the sponsor for office space and administrative services[419] Item 3. Legal Proceedings The company reports that there are no legal proceedings - None[419] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[419] Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's units, ordinary shares, rights, and warrants trade on the Nasdaq Global Market, and the company has not paid any dividends nor intends to, with IPO proceeds of $70.24 million placed in the trust account - The company's securities trade on the Nasdaq Global Market: Units (ATMCU), Ordinary Shares (ATMC), Rights (ATMCR), and Warrants (ATMCW)[422] - The company has not paid any cash dividends and does not intend to in the future[424] - The Sponsor acquired 1,725,000 founder shares for $25,000 and purchased 409,200 private placement units at $10.00 per unit in unregistered sales[424][425] Item 6. [Reserved] This item is reserved Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations As a blank check company with no operations, AlphaTime reported a $1.94 million net income in 2023 from trust account interest, but faces a $1.48 million working capital deficit and substantial doubt about its going concern, addressed by a merger agreement and sponsor loans Results of Operations (Year Ended Dec 31) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Net Income / (Loss) | $1,941,118 | ($784) | | Income from Trust Account | $3,130,199 | $0 | | Formation & Operating Costs | ($1,189,081) | ($784) | - As of December 31, 2023, the company had a cash balance of $15,054 and a working capital deficit of $1,480,801[438] - The company's management has concluded that there is substantial doubt about the company's ability to continue as a going concern due to its financial state and need for additional capital[445] - On January 5, 2024, the company entered into a definitive merger agreement with HCYC Group Company Limited[444] - The company extended its business combination deadline up to January 4, 2025, by making monthly extension payments of $55,000, funded by non-interest bearing promissory notes from the Sponsor[442] Item 7A. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is not required to provide the information for this item - The company is a smaller reporting company and is not required to provide the information under this item[470] Item 8. Financial Statements and Supplementary Data This item refers to the full financial statements and supplementary data which appear following Item 15 of the report - The financial statements and supplementary data are located after Item 15 of the report[470] Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[470] Item 9A. Controls and Procedures Management concluded that as of December 31, 2023, the company's disclosure controls and procedures were not effective due to a material weakness related to the lack of a qualified SEC reporting professional - Management concluded that disclosure controls and procedures were not effective as of December 31, 2023[471] - The ineffectiveness was due to a material weakness in internal control over financial reporting, specifically the lack of a qualified SEC reporting professional[471][475] - Remediation plans include enhancing the review process for complex accounting, consulting with third-party professionals, and considering additional experienced staff[471][475] Item 9B. Other Information The company reports no other information - None[477] Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - Not applicable[477] Part III Item 10. Directors, Executive Officers and Corporate Governance This section provides biographical information for the company's directors and executive officers, noting that a majority of the board is independent, and addresses potential conflicts of interest and the adopted Code of Ethics Directors and Executive Officers | Name | Position | | :--- | :--- | | Xinfeng Feng | Chairwoman of the Board of Directors | | Dajiang Guo | Chief Executive Officer | | Jichuan Yang | Chief Financial Officer | | Li Wei | Independent Director | | Wen He | Independent Director | | Michael L Coyne | Independent Director | - The board has determined that Li Wei, Wen He, and Michael L. Coyne are independent directors, constituting a majority of the board[490] - The company has an Audit Committee and a Compensation Committee, both composed of independent directors. Li Wei chairs the Audit Committee, and Wen He chairs the Compensation Committee[495][498] - The company has adopted a Code of Ethics applicable to all directors, officers, and employees[507] - Significant conflicts of interest exist as officers and directors have fiduciary duties to other entities. The company has renounced its interest in any corporate opportunity unless it is expressly offered to a director or officer solely in their capacity as such for the company[508][509] Item 11. Executive Compensation No officers or directors have received cash compensation for their services, with the company reimbursing its sponsor $10,000 per month for administrative services, and future compensation to be determined by an independent compensation committee post-combination - No executive officers or directors have received any cash compensation for services rendered[525] - The company reimburses its sponsor $10,000 per month for office space, utilities, and administrative services[525] - Post-business combination compensation for any remaining officers and directors will be determined by a compensation committee composed solely of independent directors[526] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters This section details the beneficial ownership of the company's ordinary shares as of April 15, 2024, with the sponsor and Chairwoman each holding 25.0% of outstanding shares Security Ownership of Beneficial Owners (as of April 15, 2024) | Name of Beneficial Owner | Shares Beneficially Owned | Percentage of Outstanding Shares | | :--- | :--- | :--- | | Alphamade Holding LP | 1,725,000 | 25.0% | | Xinfeng Feng | 1,725,000 | 25.0% | | All executive officers and directors as a group | 1,725,000 | 25.0% | | Space Summit Capital, LLC | 475,000 | 6.9% | | Glazer Capital, LLC | 585,000 | 8.5% | | ATW SPAC Management, LLC | 438,093 | 6.4% | Item 13. Certain Relationships and Related Transactions, and Director Independence This section outlines transactions between the company and related parties, including the sponsor's acquisition of founder shares and private placement units, and promissory notes totaling $1.35 million for business combination extensions - The sponsor purchased 1,725,000 founder shares for $25,000 and an aggregate of 409,200 private units at $10.00 per unit[534][535] - The company entered into non-interest bearing promissory notes with the Sponsor for $690,000 (September 2023) and $660,000 (December 2023) to fund extensions for completing the business combination[538] - The company has an administrative services agreement to pay an affiliate of the Sponsor $10,000 per month for office space and other services[536] - The audit committee has a policy for reviewing and approving related party transactions exceeding $120,000[543] Item 14. Principal Accountant Fees and Services This section summarizes the fees paid to the company's principal accountant, UHY LLP, with total audit fees of approximately $117,989 for fiscal year 2023 Fees Paid to UHY LLP | Fee Type | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Audit Fees | $117,989 | $28,686 | | Audit-Related Fees | $0 | $60,931 | | Tax Fees | $0 | $0 | | All Other Fees | $0 | $0 | Part IV Item 15. Exhibits, Financial Statement Schedules This section lists all key legal and financial documents filed as part of the Form 10-K, including the Merger Agreement with HCYC and various agreements with the sponsor and underwriters - Lists key legal and financial documents filed with the report, including the Merger Agreement dated January 5, 2024, and various agreements with the sponsor and underwriters[550][551] Item 16. Form 10-K Summary The company reports no information under this item - None[552] Financial Statements Report of Independent Registered Public Accounting Firm UHY LLP issued an unqualified opinion on the financial statements but included an explanatory paragraph expressing substantial doubt about the company's going concern ability due to insufficient working capital - The auditor's report contains an explanatory paragraph expressing substantial doubt about the Company's ability to continue as a going concern[559] - The basis for the going concern doubt is that the Company has incurred and expects to continue to incur significant costs, and its cash and working capital are insufficient to complete its planned activities for one year[559] Financial Statements Tables The financial statements reveal $74.1 million in total assets, primarily in the trust account, a $3.9 million shareholders' deficit, and a $1.94 million net income in 2023 driven by trust account interest Balance Sheet Summary (as of Dec 31, 2023) | Account | Amount | | :--- | :--- | | Total Assets | $74,120,305 | | Investment held in Trust Account | $74,062,199 | | Total Liabilities | $3,953,907 | | Total Shareholders' (Deficit) | ($3,895,801) | Statement of Operations Summary (Year ended Dec 31, 2023) | Account | Amount | | :--- | :--- | | Formation and operating costs | ($1,189,081) | | Income earned on Trust Account | $3,130,199 | | Net income | $1,941,118 | Notes to Financial Statements The notes provide detailed explanations of accounting policies and financial items, covering organization, going concern, significant policies, IPO, private placements, related-party transactions, commitments, and shareholders' equity Note 1 – Description of Organization, Business Operations and Going Concern This note details the company's SPAC formation, January 2023 IPO, and business combination timeline extended to January 2025, while reiterating substantial doubt about its going concern ability due to insufficient working capital - The company will have until January 4, 2025, to consummate a Business Combination, subject to monthly extensions requiring a deposit of $55,000 each[585] - In December 2023, shareholders redeemed 2,160,774 shares, resulting in approximately $23.3M being removed from the Trust Account, leaving a balance of approximately $51.1M[593] - Management states that the company will not have sufficient working capital to meet its needs through the earlier of a business combination or one year from the filing, raising substantial doubt about its ability to continue as a going concern[595] Note 2 - Significant Accounting Policies This note outlines key accounting policies, including the company's status as an emerging growth company, classification of redeemable ordinary shares, two-class method for net income per share, and fair value measurement of financial instruments - The company classifies ordinary shares subject to possible redemption as temporary equity, measured at redemption value. As of Dec 31, 2023, 6,900,000 shares were classified as such[615] - Net income per share is calculated using the two-class method, allocating earnings between redeemable and non-redeemable shares[608] - 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[601] Note 5 - Related Party Transactions This note details transactions with the sponsor, Alphamade Holding LP, including founder share and private unit purchases, promissory notes for business combination extensions, and administrative service agreements - The Sponsor holds 1,725,000 Founder Shares and purchased an aggregate of 409,200 Private Units[629] - The Sponsor provided a $690,000 non-interest-bearing loan to the Company in September 2023 to fund the extension of the business combination period[633] - As of Dec 31, 2023, the amount due to the related party for paying formation and operating costs was $199,318[634] Note 9 - Subsequent Events This note describes significant post-balance sheet events, including the definitive merger agreement with HCYC Group Company Limited on January 5, 2024, and subsequent trust account deposits to extend the business combination deadline - On January 5, 2024, the Company entered into a definitive Agreement and Plan of Merger with HCYC Group Company Limited[651] - The Company deposited funds to extend its business combination deadline to April 4, 2024, and subsequently to May 4, 2024[653]