Oak Woods Acquisition (OAKU) - 2023 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents the company's financial statements, management's discussion and analysis, market risk disclosures, and internal controls Item 1. Financial Statements Presents Oak Woods Acquisition Corporation's unaudited condensed financial statements and comprehensive notes for the period ended September 30, 2023 Unaudited Condensed Balance Sheets Details the company's financial position, including assets, liabilities, and equity, as of September 30, 2023, and December 31, 2022 Balance Sheet Highlights (September 30, 2023 vs. December 31, 2022): | Metric | Sep 30, 2023 ($) | Dec 31, 2022 ($) | | :-------------------------------- | :----------- | :----------- | | Cash | $527,023 | $33,478 | | Investments held in the Trust Account | $59,971,790 | $0 | | Total Assets | $60,533,813 | $267,906 | | Total Current Liabilities | $413,424 | $309,208 | | Total Liabilities | $2,425,924 | $309,208 | | Class A ordinary shares subject to possible redemption | $56,434,057 | $0 | | Total Shareholders' Equity (Deficit) | $1,673,832 | $(41,302) | Unaudited Condensed Statements of Operations Presents the company's financial performance, including revenues and expenses, for the three and nine months ended September 30, 2023 Statements of Operations Highlights (Three Months Ended Sep 30, 2023 vs. 2022): | Metric | Sep 30, 2023 ($) | Sep 30, 2022 ($) | | :-------------------------------- | :----------- | :----------- | | Formation and operating costs | $251,764 | $0 | | Operating expenses | $(251,764) | $0 | | Interest income | $4,346 | $0 | | Income earned on investments held in Trust Account | $770,154 | $0 | | Changes in fair value of warrant liabilities | $(7,400) | $0 | | Total other income | $767,100 | $0 | | Net income (loss) attributable to ordinary shares | $515,336 | $0 | | Basic and diluted net income per ordinary share, redeemable ordinary shares | $0.17 | $0 | | Basic and diluted net loss per ordinary share, non-redeemable ordinary shares | $(0.26) | $(0.00) | Statements of Operations Highlights (Nine Months Ended Sep 30, 2023 vs. Period from Inception through Sep 30, 2022): | Metric | Sep 30, 2023 ($) | Sep 30, 2022 (Inception) ($) | | :-------------------------------- | :----------- | :----------------------- | | Formation and operating costs | $473,680 | $12,642 | | Operating expenses | $(473,680) | $(12,642) | | Interest income | $18,676 | $0 | | Income earned on investments held in Trust Account | $1,465,540 | $0 | | Changes in fair value of warrant liabilities | $43,900 | $0 | | Total other income | $1,528,116 | $0 | | Net income (loss) attributable to ordinary shares | $1,054,436 | $(12,642) | | Basic and diluted net income per ordinary share, redeemable ordinary shares | $0.56 | $0 | | Basic and diluted net loss per ordinary share, non-redeemable ordinary shares | $(0.68) | $(0.01) | Unaudited Condensed Statements of Changes in Shareholders' Equity (Deficit) (Three Months) Outlines the changes in shareholders' equity (deficit) for the three months ended September 30, 2023 and 2022 - Shareholders' Equity (Deficit) for the three months ended September 30, 2023, increased from $3,624,471 as of June 30, 2023, to $1,673,832, primarily due to net income of $515,336, partially offset by accretion of redeemable ordinary shares to redemption value of $(2,465,975)[13] Unaudited Condensed Statements of Changes in Shareholders' Equity (Deficit) (Nine Months) Presents the changes in shareholders' equity (deficit) for the nine months ended September 30, 2023, and the period from inception - Shareholders' Equity (Deficit) for the nine months ended September 30, 2023, significantly increased from $(41,302) as of December 31, 2022, to $1,673,832, driven by proceeds from the sale of public units ($57,500,000) and private placement units ($3,431,250), and net income of $1,054,436, partially offset by underwriting commissions, offering costs, reclassification of common stock subject to redemption, and accretion of redeemable ordinary shares[14] Unaudited Condensed Statements of Cash Flows Summarizes the cash inflows and outflows from operating, investing, and financing activities for the nine months ended September 30, 2023 Cash Flow Summary (Nine Months Ended Sep 30, 2023 vs. Period from Inception through Sep 30, 2022): | Cash Flow Activity | Sep 30, 2023 ($) | Sep 30, 2022 (Inception) ($) | | :-------------------------------- | :----------- | :----------------------- | | Net cash used in operating activities | $(491,069) | $(10,250) | | Net cash used in investing activities | $(58,506,250) | $0 | | Net cash provided by financing activities | $59,490,864 | $36,250 | | Net change in cash | $493,545 | $26,000 | | Cash at end of period | $527,023 | $26,000 | Notes to Unaudited Condensed Financial Statements Provides detailed explanations and disclosures supporting the unaudited condensed financial statements Note 1 — Organization, Business Operation and Going Concern Consideration Describes the company's formation, business purpose, recent merger agreement, and management's going concern assessment - Oak Woods Acquisition Corporation is a blank check company incorporated on March 11, 2022, for the purpose of a business combination[19] - On August 11, 2023, the Company entered into a Merger Agreement with Huajin (China) Holdings Limited, with Huajin surviving as a wholly-owned subsidiary of Oak Woods[20][103][104] - The Company completed its IPO on March 28, 2023, raising $57,500,000 from public units and $3,431,250 from private units, with $58,506,250 placed in a Trust Account[22][24] - Management has determined that conditions raise substantial doubt about the Company's ability to continue as a going concern, primarily due to the uncertainty of completing a Business Combination within the Combination Period[35] Note 2 — Significant accounting policies Details the significant accounting policies applied in preparing the financial statements, including GAAP and EGC considerations - The financial statements are prepared in accordance with GAAP for interim financial information and SEC regulations, with certain disclosures condensed or omitted[38] - The Company is an 'emerging growth company' and has elected not to opt out of the extended transition period for new accounting standards, which may affect comparability with other public companies[40][41] - Key accounting policies include presenting investments held in the Trust Account at fair value, charging offering costs to shareholders' equity upon IPO completion, and classifying warrants as either equity or liability based on specific terms[44][45][47] - Ordinary shares subject to possible redemption are classified as temporary equity and presented at redemption value, with changes in redemption value recognized in additional paid-in capital or accumulated deficit[49][50] Note 3 — Initial Public Offering Provides details on the company's Initial Public Offering, including units sold, proceeds, and warrant terms - On March 28, 2023, the Company sold 5,750,000 Public Units at $10.00 per unit, generating gross proceeds of $57,500,000, including the full exercise of the over-allotment option[65] - Each Public Unit consists of one Class A ordinary share, one redeemable warrant, and one right to receive one-sixth of one Class A ordinary share upon business combination[65] - Warrants become exercisable on the later of 30 days after business combination or 12 months from IPO, expiring five years after business combination[65] Note 4 — Private Placement Describes the private placement of units to the Sponsor, including proceeds and unit characteristics - Simultaneously with the IPO, the Sponsor purchased 343,125 Private Units at $10.00 per unit, generating $3,431,250 in gross proceeds[67] - Private Units are identical to Public Units but include certain registration rights and transfer restrictions, with proceeds added to the Trust Account[67] Note 5 — Related Party Transactions Outlines transactions and agreements with related parties, including the Sponsor, founder shares, and administrative fees - The Sponsor acquired 1,437,500 Class B ordinary shares (founder shares) for $25,000, which are subject to transfer restrictions until one year after business combination or when Class A shares reach $12.50 for 20 trading days within a 30-day period[68][69][71] - The Sponsor or affiliates may provide Working Capital Loans, up to $1,151,000, convertible into units identical to Private Units upon business combination[72] - The Company repaid a $500,000 promissory note from the Sponsor in June 2023, with no outstanding balance as of September 30, 2023[73][74] - The Company is obligated to pay the Sponsor a monthly fee of $10,000 for administrative services, with $60,000 accrued for the nine months ended September 30, 2023, and remaining unpaid[75][76] Note 6 — Commitments & Contingencies Details the company's commitments and contingencies, including registration rights and deferred underwriting fees - Holders of founder shares, private placement units, and securities from working capital loans have registration rights to require the Company to register their securities for sale[77] - 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 from the Trust Account[79] Note 7 — Shareholder's Equity Describes the company's authorized and outstanding share capital, including Class A and Class B ordinary shares, rights, and warrants - The Company is authorized to issue 5,000,000 preferred shares (none issued), 500,000,000 Class A ordinary shares, and 50,000,000 Class B ordinary shares[80][81][82] - As of September 30, 2023, 343,125 Class A ordinary shares (excluding 5,750,000 subject to redemption) and 1,437,500 Class B ordinary shares were issued and outstanding[81][82] - Each right converts into one-sixth of a Class A ordinary share upon business combination, and each warrant entitles the holder to purchase one Class A ordinary share at $11.50[83][85] Note 8 — Derivative Warrant Liabilities Explains the accounting treatment and characteristics of derivative warrant liabilities, specifically Private Warrants - As of September 30, 2023, 343,125 Private Warrants are outstanding and recognized as warrant liabilities, measured at fair value[90] - Private Warrants are identical to Public Warrants but include registration rights, are exercisable on a cashless basis, and are not redeemable by the Company as long as held by initial purchasers or affiliates[91] Note 9 — Fair Value Measurements Discusses the company's fair value measurements for assets and liabilities, utilizing a three-level hierarchy - The Company uses a fair value hierarchy (Level 1, 2, 3) to classify assets and liabilities based on observable and unobservable inputs[92][96] Fair Value Measurements (September 30, 2023): | Description | Level | Fair Value ($) | | :-------------------------------- | :---- | :----------- | | Cash held in trust account | 1 | $59,971,790 | | Derivative Warrant Liability – Private Warrant | 2 | $18,500 | - Private Warrants were initially valued using a Binomial Model (Level 3) but were reclassified to Level 2 after Public Warrants began trading, as their value became approximately the same[99][100][102] Note 10 — Merger Agreement and Related Matters Provides information on the recently executed Merger Agreement with Huajin (China) Holdings Limited - On August 11, 2023, the Company entered into a Merger Agreement with Huajin (China) Holdings Limited, where Huajin will merge into a wholly-owned subsidiary of Oak Woods[103][104] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, operational results, and liquidity, emphasizing its blank check status and the recent merger agreement - Oak Woods Acquisition Corporation is a blank check company formed on March 11, 2022, to effect a business combination, and has not commenced operations or generated operating revenues[107][109] - On August 11, 2023, the Company entered into a Merger Agreement with Huajin (China) Holdings Limited, with Huajin surviving as a wholly-owned subsidiary of Oak Woods[108][110] - For the three months ended September 30, 2023, the Company reported net income of $515,336, primarily from interest income on the trust account[113] - For the nine months ended September 30, 2023, the Company reported net income of $1,054,436, a significant improvement from a net loss of $12,642 in the prior year period[114][115] - The Company consummated its IPO on March 28, 2023, raising $57,500,000 from public units and $3,431,250 from private units, with $527,023 cash held outside the Trust Account as of September 30, 2023[116][118] - Management has determined that conditions raise substantial doubt about the Company's ability to continue as a going concern due to the uncertainty of completing a Business Combination within the Combination Period[120] - The Company has contractual obligations including a $2,012,500 deferred underwriting fee payable upon business combination and a $10,000 monthly administrative service fee to the Sponsor, with $30,000 accrued for the three and nine months ended September 30, 2023[126][127][129] Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, Oak Woods Acquisition Corporation is not required to provide quantitative and qualitative disclosures about market risk in this report - The Company is a smaller reporting company and is exempt from disclosures under this item[140] Item 4. Control and Procedures The Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the Company's disclosure controls and procedures as of September 30, 2023, concluding they were effective. There were no material changes in internal control over financial reporting during the most recent fiscal quarter - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of September 30, 2023[142] - There were no material changes in the Company's internal control over financial reporting during the most recent fiscal quarter[143] PART II – OTHER INFORMATION Presents other required information, including legal proceedings, risk factors, equity sales, and various exhibits Item 1. Legal Proceedings The Company reported no legal proceedings as of the reporting date - No legal proceedings to report[146] Item 1A. Risk Factors The Company refers to previously disclosed risk factors in its final prospectus and highlights new geopolitical risks, including conflicts in Ukraine and between Israel and Hamas, which could materially affect its ability to consummate a Business Combination or the operations of a target business - The Company refers to the risk factors described in its final prospectus filed on March 24, 2023[147] - New geopolitical risks, including military action in Ukraine and the conflict between Israel and Hamas, could materially and adversely affect the Company's ability to consummate a Business Combination or the operations of a target business[148] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the Company's IPO and simultaneous private placement, including the number of units sold, gross proceeds, and the deposit of net proceeds into a trust account. It also outlines the key differences and restrictions for the private units compared to public units - On March 28, 2023, the Company consummated its IPO, selling 5,750,000 Public Units at $10.00 each, generating gross proceeds of $57,500,000[149] - Simultaneously, a private placement with the Sponsor generated $3,431,250 from the sale of Private Units at $10.00 each[150] - The Private Units have identical terms to Public Units but include transfer restrictions, registration rights, and voting agreements[151] - A total of $58,506,250 of net proceeds from the IPO and Private Placement were deposited into a trust account[152] Item 3. Defaults Upon Senior Securities The Company reported no defaults upon senior securities - No defaults upon senior securities[153] Item 4. Mine Safety Disclosures This item is not applicable to the Company - This item is not applicable to the Company[154] Item 5. Other Information The Company reported no other information for this item - No other information to report[155] Item 6. Exhibits This section lists the exhibits filed as part of, or incorporated by reference into, the Quarterly Report on Form 10-Q, including certifications and XBRL documents - Exhibits filed include certifications of principal executive and financial officers (31.1, 32.1) and various Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[157] SIGNATURES Contains the official signatures certifying the accuracy and completeness of the report - The report was signed by Lixin Zheng, Chairman, Chief Executive Officer, and Chief Financial Officer, on November 13, 2023[162]