Oak Woods Acquisition (OAKU) - 2023 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements This section presents the company's unaudited condensed financial statements and accompanying explanatory notes Unaudited Condensed Balance Sheets | Metric | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash | $967,356 | $33,478 | | Investments held in Trust Account | $58,527,308 | — | | Total Assets | $59,494,664 | $267,906 | | Liabilities | | | | Promissory note – related party | $380,340 | $295,000 | | Derivative Warrant Liability – Private Warrant | $62,400 | — | | Deferred underwriting commission | $2,012,500 | — | | Total Liabilities | $2,459,195 | $309,208 | | Shareholders' Equity (Deficit) | | | | Total Shareholders' Equity (Deficit) | $5,366,187 | $(41,302) | Unaudited Condensed Statements of Operations | Metric | Three Months Ended March 31, 2023 | Period from March 11, 2022 (Inception) through March 31, 2022 | | :--- | :--- | :--- | | Formation and operating costs | $43,943 | $10,250 | | Operating expenses | $(43,943) | $(10,250) | | Interest income | $4,901 | — | | Income earned on investments held in Trust Account | $21,058 | — | | Total other income | $25,959 | — | | Net loss attributable to ordinary shares | $(17,984) | $(10,250) | | Basic and diluted net income per ordinary share, redeemable ordinary shares | $0.40 | — | | Basic and diluted net loss per ordinary share, non-redeemable ordinary shares | $(0.07) | $(0.01) | Unaudited Condensed Statements of Changes in Shareholders' Equity (Deficit) | Metric | Balance as of Dec 31, 2022 | Sale of public units in IPO | Sale of private placement units | Net loss | Balance as of Mar 31, 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Shareholders' Equity (Deficit) | $(41,302) | $57,500,000 | $3,431,250 | $(17,984) | $5,366,187 | - The company's total shareholders' equity (deficit) significantly increased from a deficit of $(41,302) at December 31, 2022, to an equity of $5,366,187 at March 31, 2023, primarily due to proceeds from the initial public offering and private placement[12] Unaudited Condensed Statements of Cash Flows | Cash Flow Activity | Three Months Ended March 31, 2023 | Period from March 11, 2022 (Inception) through March 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(100,107) | — | | Net cash provided by (used in) investing activities | $(58,506,250) | — | | Net cash provided by financing activities | $59,540,235 | — | | Net change in cash | $933,878 | — | | Cash at end of period | $967,356 | — | Notes to Unaudited Condensed Financial Statements Note 1 — Organization, Business Operation and Going Concern Consideration This note details the Company's formation as a SPAC, its IPO, and substantial doubt about its ability to continue as a going concern - The Company is a blank check company (SPAC) incorporated on March 11, 2022, formed to pursue a business combination, with an intention to target the public and private healthcare, medical services, and technology-enabled healthcare services sectors[17][99] - On March 28, 2023, the Company consummated its IPO, selling 5,750,000 public units for $57,500,000 gross proceeds, and simultaneously sold 343,125 private units to its Sponsor for $3,431,250[20][103] - A total of $58,506,250 from the IPO and private placement was placed in a Trust Account, to be invested in U.S. government treasury bills or money market funds, and will not be released until a business combination or liquidation[22][137] - Management has determined that conditions raise substantial doubt about the Company's ability to continue as a going concern due to its limited operations and the uncertainty of completing a Business Combination within the Combination Period[33][107] Note 2 — Significant accounting policies This note outlines the Company's significant accounting policies, basis of presentation, and specific treatments for warrants and redeemable shares - The unaudited condensed financial statements are presented in conformity with US GAAP and SEC rules, with certain information condensed[36][37] - The Company is an "emerging growth company" and has elected to use the extended transition period for complying with new or revised financial accounting standards[38][40] - Warrants are accounted for as either equity-classified or liability-classified instruments based on specific terms and applicable authoritative guidance (ASC 480 and ASC 815); liability-classified warrants are recorded at fair value with changes recognized in operations[45][46][120][121] - Class A ordinary shares subject to possible redemption are classified as temporary equity at redemption value, with changes in redemption value recognized in additional paid-in capital or accumulated deficit[47][48][118][119] Note 3 — Initial Public Offering This note details the successful completion of the Company's Initial Public Offering on March 28, 2023 - On March 28, 2023, the Company sold 5,750,000 Units at $10.00 per Unit, generating gross proceeds of $57,500,000, including the full exercise of the over-allotment option[62][103] - Each Unit consists of one Class A ordinary share, one Public Right (converting to one-sixth of a share upon business combination), and one redeemable Public Warrant (exercisable at $11.50 per share)[62][103] Note 4 — Private Placement This note describes the private placement of units to the Sponsor, which occurred concurrently with the IPO - Simultaneously with the IPO, the Sponsor purchased 343,125 Private Units at $10.00 per unit, generating total gross proceeds of $3,431,250[63][103][135] - Private Units are identical to Public Units but include specific registration rights and transfer restrictions; proceeds were added to the Trust Account[63][136][137] Note 5 — Related Party Transactions This note details various transactions with related parties, including founder shares, promissory notes, and administrative service fees - The Sponsor acquired 2,156,250 Class B ordinary shares for $25,000 on October 25, 2022; after a surrender and cancellation of 718,750 shares, 1,437,500 Class B ordinary shares were outstanding as of March 31, 2023[64][78] - As of March 31, 2023, the Sponsor provided promissory notes aggregating $380,340, which are non-interest bearing, unsecured, and due by May 31, 2023[70][111][112] - The Company is obligated to pay the Sponsor a monthly fee of $10,000 for general and administrative services, commencing March 28, 2023[71][113] Note 6 — Commitments & Contingencies This note outlines the Company's key commitments, including registration rights and underwriting agreement terms - Holders of founder shares, private placement units, and other securities will have registration rights to require the Company to register a sale of their securities[72][110] - The underwriters received a cash underwriting discount of $1,150,000 and are entitled to a deferred underwriting fee of $2,012,500, payable upon the closing of a Business Combination[75][116] Note 7 — Shareholder's Equity This note provides a detailed breakdown of the Company's authorized and outstanding share capital - As of March 31, 2023, there were 343,125 Class A ordinary shares issued and outstanding (excluding 5,750,000 shares subject to possible redemption) and 1,437,500 Class B ordinary shares issued and outstanding[77][78] - Each right entitles the holder to receive one-sixth (1/6) of a Class A ordinary share upon consummation of an initial Business Combination, with no fractional shares issued[79][80] - Each warrant entitles the holder to purchase one Class A ordinary share at $11.50, exercisable on the later of 12 months from IPO closing or 30 days after the initial Business Combination[81] Note 8 — Derivative Warrant Liabilities This note explains the accounting treatment and terms of the Company's Private Warrants as derivative liabilities - As of March 31, 2023, the Company had 343,125 Private Warrants outstanding, which are recognized as warrant liabilities and subsequently measured at fair value[87][93] - Private Warrants are identical to Public Warrants but include registration rights, are exercisable on a cashless basis, and are not redeemable by the Company while held by initial purchasers or affiliates[88] Note 9 — Fair Value Measurements This note describes the Company's approach to fair value measurements and the valuation of its Private Warrants - The fair value hierarchy categorizes inputs into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[89][90] - The fair value of Private Warrants ($62,400 as of March 31, 2023) is a Level 3 measurement, estimated using a Binomial model based on assumptions for volatility (9.30%), stock price ($10.00), expected life (5.76 years), risk-free rate (3.63%), and dividend yield (0.00%)[93][94][95][96] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on financial condition, results of operations, liquidity, and critical accounting policies Cautionary Note Regarding Forward-Looking Statements - This Quarterly Report includes forward-looking statements regarding the Company's financial position, business strategy, and future operations, which involve risks and uncertainties that could cause actual results to differ materially[98] - The Company disclaims any intention or obligation to update or revise any forward-looking statements, except as expressly required by applicable securities law[98] Overview - The Company is a blank check company, incorporated on March 11, 2022, for the purpose of entering into a business combination, with an intention to pursue targets in the public and private healthcare, medical services, and technology-enabled healthcare services sectors in the Asia-Pacific region[99] - As of March 31, 2023, the Company had not commenced any operations and will not generate operating revenues until after the completion of a Business Combination, instead generating non-operating income from interest on IPO proceeds[100] Results of Operations | Metric | Three Months Ended March 31, 2023 | Period from March 11, 2022 (Inception) through March 31, 2022 | | :--- | :--- | :--- | | Net loss | $(17,984) | $(10,250) | | Operating expenses | $43,943 | $10,250 | | Interest income (operating account) | $4,901 | — | | Income earned on investments (trust account) | $21,058 | — | - The Company's activities through March 31, 2023, were limited to organizational activities and preparing for the IPO, with no operating revenues generated[101] Liquidity and Capital Resources - The Company consummated its IPO and private placement on March 28, 2023, generating gross proceeds of $57,500,000 and $3,431,250, respectively[103] | Metric | March 31, 2023 | | :--- | :--- | | Cash held outside Trust Account | $967,356 | | Working capital | $520,661 | | Net cash used in operating activities (3 months) | $(100,107) | - Management has determined that conditions raise substantial doubt about the Company's ability to continue as a going concern due to the need to complete a Business Combination within the Combination Period[107] Off-Balance Sheet Arrangements - The Company had no obligations, assets, or liabilities considered off-balance sheet arrangements as of March 31, 2023[109] Contractual Obligations - Holders of founder shares, Private Placement Units, and other securities will be entitled to registration rights[110] - As of March 31, 2023, the Sponsor provided promissory notes aggregating $380,340, which are non-interest bearing, unsecured, and due by May 31, 2023[111][112] - The Company is obligated to pay the Sponsor a monthly fee of $10,000 for general and administrative services, commencing March 28, 2023[113] - The underwriter is entitled to a deferred fee of $2,012,500, payable upon the completion of a business combination[116] Critical Accounting Policies - Ordinary shares subject to possible redemption are classified as temporary equity at redemption value, with changes recognized immediately as they occur[118][119] - Warrants are classified as either equity or liability instruments based on specific terms; liability-classified warrants are recorded at fair value with changes recognized as non-cash gain or loss on the statements of operations[120][121] - Net loss per share is computed by dividing net loss by the weighted average number of ordinary shares outstanding, excluding ordinary shares subject to forfeiture[122] Recent Accounting Pronouncements - ASU 2020-06, which simplifies accounting for certain financial instruments like convertible debt and derivatives, is effective January 1, 2024, for the Company[124] - The Company is currently assessing the potential impact of ASU 2020-06 on its financial position, results of operations, or cash flows[124] Item 3. Quantitative and Qualitative Disclosures about Market Risk The Company is not required to provide market risk disclosures as a smaller reporting company - As a smaller reporting company, the Company is not required to make disclosures under this Item[126] Item 4. Control and Procedures This section reports on the effectiveness of the Company's disclosure controls and procedures as of the quarter-end - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of March 31, 2023[128] - There were no material changes in the Company's internal control over financial reporting during the most recent fiscal quarter[129] PART II – OTHER INFORMATION Item 1. Legal Proceedings This section confirms the Company is not currently involved in any legal proceedings - The Company is not involved in any legal proceedings[132] Item 1A. Risk Factors This section refers to previously disclosed risk factors, with no material changes reported - Risk factors are described in the Company's final prospectus filed with the SEC on March 24, 2023[133] - As of the date of this Report, there have been no material changes to the disclosed risk factors[133] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the proceeds from the IPO and private placement and their deposit into a trust account - On March 28, 2023, the Company consummated its IPO, selling 5,750,000 Public Units for gross proceeds of $57,500,000[134] - Simultaneously, a private placement with the Sponsor resulted in the purchase of Private Units for total proceeds of $3,431,250[135] - A total of $58,506,250 of the net proceeds from the IPO and Private Placement was deposited into a trust account[137] Item 3. Defaults Upon Senior Securities This section confirms that there have been no defaults upon senior securities - There are no defaults upon senior securities[138] Item 4. Mine Safety Disclosures This section states that disclosures related to mine safety are not applicable - Mine Safety Disclosures are not applicable[139] Item 5. Other Information This section indicates that there is no other information to report under this item - No other information is reported under this item[140] Item 6. Exhibits This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q - The exhibits include certifications from the Principal Executive Officer and Principal Financial Officer (31.1, 32.1) and various Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[142] SIGNATURES SIGNATURES This section contains the authorized signatures certifying the submission of the Form 10-Q report - The report was signed by Lixin Zheng, Chairman, Chief Executive Officer, and Chief Financial Officer (Principal Executive Officer and Principal Accounting Officer) on May 19, 2023[147]