Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant
(1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
☒ No ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act). Yes ☒ No ☐
As of December 30, 2022, the aggregate market
value of the Registrant’s ordinary shares held by non-affiliate of the Registrant was $24,803,509.
As of March 27, 2023, the number of shares issued
and outstanding of the Registrant’s ordinary shares was 3,789,547.
None.
Certain statements in this annual report on Form
10-K (this “Form 10-K”) may constitute “forward-looking statements” for the purposes of the federal securities
laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations,
hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other
characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,”
“believe,” “continue,” “could,” “estimate,” “expect,” “intend,”
“may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,”
“should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words
does not mean that a statement is not forward-looking. Forward-looking statements in this Form 10-K may include, for example, statements
about:
The forward-looking statements contained in this
Form 10-K are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can
be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve
a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance
to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include,
but are not limited to, those factors described under the section of this Form 10-K entitled “Risk Factors.” Should one or
more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material
respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities
laws.
ITEM 1. BUSINESS
Introduction
Ace Global Business Acquisition Limited (“Ace”,
or the “Company”) is a blank check company incorporated on November 2, 2020 as a British Virgin Islands company with limited
liability and incorporated for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization,
reorganization or similar business combination with one or more target businesses. The Company has neither engaged in any operations nor
generated any revenue to date. Based on our business activities, the Company is a “shell company” as defined under the Exchange
Act of 1934 (the “Exchange Act”) because we have no operations and nominal assets consisting almost entirely of cash.
On April 8, 2021, the Company consummated the
initial public offering (“IPO”) of 4,000,000 units (the “Units”). Each Unit consists of one ordinary share (“Ordinary
Share”) and one warrant (“Warrant”) entitling its holder to purchase one Ordinary Share at a price of $11.50 per whole
share upon the consummation of an initial business combination. The Units were sold at an offering price of $10.00 per Unit (“Proposed
Offering”), generating gross proceeds of $40,000,000. The Company granted the underwriters a 45-day option to purchase up to 600,000
additional Units (over and above 4,000,000 units referred to above) solely to cover over-allotments if any.
Simultaneously with the consummation of the IPO,
we consummated the private placement (“Private Placement”) with our Sponsor of 280,000 units (the “Private Units”)
at a price of $10.00 per Private Unit, generating gross proceeds of $2,800,000. On April 9, 2021, simultaneously with the sale of the
over-allotment units, the Company consummated the private sale of an additional 24,000 Private Units, generating gross proceeds of $240,000.
The Private Units are identical to the Units sold in the IPO, except that the warrants underlying the Private Units will be non-redeemable
and may be exercised on a cashless basis, in each case so long as they continue to be held by the initial purchasers or their permitted
transferees. Additionally, because the Private Units were issued in a private transaction, the initial purchasers and their permitted
transferees will be allowed to exercise the warrants included in the Private Units for cash even if a registration statement covering
the ordinary shares issuable upon exercise of such warrants is not effective and receive unregistered ordinary shares. Additionally, such
initial purchasers agreed not to transfer, assign or sell any of the Private Units or underlying securities (except in limited circumstances,
as described in the Registration Statement) until the completion of the Company’s initial business combination. Such Initial Purchasers
were granted certain demand and piggyback registration rights in connection with the purchase of the Private Units. The Private Units
were issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, as the transactions did not involve a public offering.
The underwriters exercised the over-allotment
option in full on April 9, 2021. The sale of 600,000 units at a price of $10.00 per unit resulted in total gross proceeds of $6,000,000.
A total of $46,920,000 of the net proceeds from
the sale of Units in the IPO (including the over-allotment option units) and the private placements on April 8, 2021 and April 9, 2021,
were placed in a trust account established for the benefit of the Company’s public shareholders at Morgan Stanley maintained by
Continental Stock Transfer & Trust Company, LLC, acting as trustee. None of the funds held in trust will be released from the trust
account, other than interest income to pay any tax obligations, until the earlier of the completion of an initial business combination
within the required time period or our entry into liquidation if we have not completed a business combination in the required time period.
On May 21, 2021, our ordinary shares, and warrants underlying the Units sold in our IPO began to trade separately on a voluntary basis.
Since our IPO, our sole business activity has
been identifying and evaluating suitable acquisition transaction candidates.
Our Management Team
We will seek to capitalize on the comprehensive
experience and contacts of our executive officers in consummating an initial business combination. Our management team is comprised of
Eugene Wong, who is our Chief Executive Officer and Chairman of the Board, and Nicholas Xue-Wei Tan, who is our Chief Financial Officer.
Our management team brings a wealth of experience in identifying, negotiating with and conducting due diligence on potential candidates
for acquisition.
Mr. Wong has a wide range of experience both in
the financial and gaming industries for over a decade. Mr. Wong is currently Managing Director of Norwich Capital Limited since September
2021. Mr. Wong joined Whiz Partners Inc. in May 2013 and during his time at Whiz Partners, he became chief investment officer and partner
of the China Hero PJ Fund (“China Hero Fund”), an incubation program to support Chinese developers to create the next blockbuster
console game on the PlayStation platform. China Hero Fund is an exclusive collaboration with Sony Interactive Entertainment, one of the
largest console gaming companies in the world. During his time at Whiz Partners Asia, he also personally oversaw the injection of multiple
Japanese technology companies in audio middleware, debugging and testing and graphics renderings into the China market to improve the
quality of games. Prior to his role at Whiz Partners, he spent two years as a merger and acquisitions analyst at CDC Software Inc. (NASDAQ:
CDCS) from August 2009 to May 2011, where he worked closely with the senior management team to conduct financial analysis, due diligence
and deal structuring. He then spent one year as an investment analyst at World Bank Group from August 2012 to May 2013, where he gained
experience in market analysis and creating valuations to identify favorable investment opportunities. Mr. Wong obtained his Master of
Business Administration degree from the MIT Sloan-Tsinghua Program at Tsinghua University in May 2013, and his Bachelor of Arts in Economics
degree at the University of Chicago in July 2009.
Mr. Tan has a wide range of experience in management
and operating roles in e-commerce, consulting, consumer retail and energy production companies. He has been a partner at East Ocean Capital,
an investment holding company focused on consumer, education and healthcare sectors since June 2015. From January 2016 to January 2018,
he was the vice president of China Mall Group, South Africa’s largest group of Chinese malls. He oversaw the launch of the 150,000
m2 Home Africa mall in Johannesburg, South Africa. Prior to this role, in February 2015, he was one of the founding team members of Shopee,
one of the most popular e-commerce platforms in Southeast Asia. As the regional operations director of Shopee, he managed the business
operations and product development across Thailand, Philippines, Singapore, Taiwan, Malaysia, Vietnam and Indonesia. Shopee was later
acquired by Sea Group. Mr. Tan also worked as an associate consultant at Bain & Company, specializing in consumer retail and private
equity from January 2013 to April 2015. In 2012, he also served as a policy analyst at the Ministry of Health, PRC, where he advised on
nationwide health policies and helped author multiple research papers published in leading medical journals. Mr. Tan obtained his Bachelor’s
in Biology at Harvard University in December 2012.
With a management team with experience in merger
and acquisitions for blank check companies, connections to the Asian-American community in the United States, and experience in business
development, we believe we can source attractive deals and find compelling investment opportunities from private and public sources to
create value for shareholders. See the section titled “Management” for complete information on the experience of our
officers and directors.
Notwithstanding the foregoing, our officers and
directors are not required to commit their full time to our affairs and will allocate their time to other businesses, which may result
in a conflict of interest in allocating their time between our operations and our search for a business combination and their other businesses.
We presently expect each of our employees to devote such amount of time as they reasonably believe is necessary to our business (which
could range from only a few hours a week while we are trying to locate a potential target business to a majority of their time as we move
into serious negotiations with a target business for a business combination). As more fully discussed in “Management —
Conflicts of Interest,” if any of our officers or directors becomes aware of a business combination opportunity that falls within
the line of business of any entity to which he has pre-existing fiduciary or contractual obligations, he may be required to present such
business combination opportunity to such entity, subject to his or her fiduciary duties under the British Virgin Islands law, prior to
presenting such business combination opportunity to us. Most of our officers and directors currently have certain pre-existing fiduciary
duties or contractual obligations.
In addition, past performance by our management
team is not a guarantee either (i) of success with respect to any business combination we may consummate or (ii) that we will be able
to locate a suitable candidate for our initial business combination. Furthermore, the members of the management team may not remain with
us subsequent to the consummation of a business combination.
Competitive Advantages
Status as a Publicly Listed Company
We believe our structure will make us an attractive
business combination partner to prospective target businesses. As a publicly listed company, we will offer a target business an alternative
to the traditional initial public offering. We believe that target businesses will favor this alternative, which we believe is less expensive,
while offering greater certainty of execution than the traditional initial public offering. During an initial public offering, there are
typically expenses incurred in marketing, which would be costlier than a business combination with us. Furthermore, once a proposed business
combination is approved by our shareholders (if applicable) and the transaction is consummated, the target business will have effectively
become public, whereas an initial public offering is always subject to the underwriters’ ability to complete the offering, as well
as general market conditions that could prevent the offering from occurring. Once public, we believe the target business would have greater
access to capital and additional means of creating management incentives that are better aligned with shareholders’ interests than
it would as a private company. It can offer further benefits by augmenting a company’s profile among potential new customers and
vendors and aid in attracting talented management staffs.
Strong Financial Position and Flexibility
With the funds held in our trust account, we offer
a target business a variety of options such as creating a liquidity event for its owners, providing capital for the potential growth and
expansion of its operations or strengthening its consolidated balance sheet by reducing its debt ratio. Because we are able to complete
our initial business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility
to use an efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and
desires. However, if a business combination requires us to use substantially all of our cash to pay for the purchase price, we may need
to arrange third party financing to help fund our business combination.
Together with our management team, we believe
we have a broad network of contacts and corporate relationship that makes us efficient at:
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Sourcing and evaluating businesses, and |
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Bridging cultural differences to negotiate and execute a transaction in a timely and professional manner. |
By leveraging our management team’s industry
expertise, performing disciplined due diligence, being cautious downside protection, and providing post-acquisition value-add capabilities,
we believe that we will be able to acquire a target business that will achieve significant returns for investors.
Acquisition Strategy
Our efforts to identify a prospective target business
will not be limited to any particular industry or geographic region, although we intend to capitalize on the management team’s network
and focus our search on target businesses operating in the Greater China, Japan and Southeast Asia regions. We will seek to capitalize
on the comprehensive industry experience and network of our management team to help us in sourcing, identifying, structuring and consummating
the initial business combination. Our selection process will leverage our management team’s broad network of contacts and relationships
with various unaffiliated sources including government bodies, investment bankers, investment professionals at private equity firms, other
financial sponsors, owners of private businesses, consultants, accounting and legal firms etc. to provide us with a strong pipeline of
potential acquisition leads.
Business Combination Criteria
The focus of our management team is to create
shareholder value by leveraging its experience to improve the efficiency of the business while implementing strategies to grow revenue
and profits organically and/or through business combinations. We have utilized, and in the event that the Business Combination (as defined
below) is not consummated, will continue to utilize, the network and industry experience of our management team and their affiliates in
seeking an initial business combination and employing our business combination strategy. Over the course of their careers, the members
of our management team and their affiliates have developed a broad network of contacts and corporate relationships that we believe will
serve as a useful source of acquisition opportunities.
Consistent with our strategy, we have identified
the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. While we intend
to use these criteria and guidelines in evaluating prospective businesses, we may deviate from these criteria and guidelines should we
see fit to do so:
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Target companies with significant operations in Greater China, East Asia and South Asia regions |
We intend to leverage our management team’s
unique expertise and relationships to source a potential target. Based on our management team’s past experience and strong network
in Asia, we believe it will be advantageous to focus on finding investment opportunities in this region.
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Industry leadership and with middle-market growth business |
We intend to seek a target company that has a
leading presence across a sector or has prominent technology or product competences. We will primarily seek to acquire a target company
of mid-market range with a total enterprise value of between $150,000,000 and $300,000,000.
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Current and potential capacity for revenue and earnings growth |
We expect to target companies that have the potential
for significant revenue and earnings growth through a combination of improved production capacity, cost reduction and synergistic follow-on
acquisitions, which could result in an operating leverage for stronger revenue and earnings growth in the future.
These criteria are not intended to be exhaustive.
Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general
guidelines as well as other considerations, factors and criteria that our management may deem relevant. We used these criteria and guidelines
in evaluating business combination opportunities, including the Business Combination discussed below. Based on our evaluation of LEW (as
defined below) and the industry in which it operates, including the financial and other information provided by LEW in the course of negotiations,
we believe that LEW meets the criteria and guidelines listed above. In the event the Business Combination is not consummated, we may decide
to enter into an alternative business combination with a target business that does not meet these criteria and guidelines.
Competitive Weaknesses
We believe our competitive weaknesses to be the
following:
Limited Financial Resources
Our financial reserves will be relatively limited
when contrasted with those of venture capital firms, leveraged buyout firms and operating businesses competing for acquisitions. In addition,
our financial resources could be reduced because of our obligation to convert shares held by our public shareholders as well as any tender
offer we conduct.
Lack of experience with blank check companies
Our management team is not experienced in pursuing
business combinations on behalf of blank check companies. Other blank check companies may be sponsored and managed by individuals with
prior experience in completing business combinations between blank check companies and target businesses. Our managements’ lack
of experience may not be viewed favorably by target businesses.
Limited technical and human resources
As a blank check company, we have limited technical
and human resources. Many venture capital firms, leveraged buyout firms and operating businesses possess greater technical and human resources
than we do and thus we may be at a disadvantage when competing with them for target businesses.
Delay associated with shareholder approval
or tender offer
We may be required to seek shareholder approval
of our initial business combination. If we are not required to obtain shareholder approval of an initial business combination, we will
allow our shareholders to sell their shares to us pursuant to a tender offer. Both seeking shareholder approval and conducting a tender
offer will delay the consummation of our initial business combination. Other companies competing with us for acquisition opportunities
may not be subject to similar requirement, or may be able to satisfy such requirements more quickly than we can. As a result, we may be
at a disadvantage in competing for these opportunities.
Initial Business Combination
On December 23, 2022, we entered into a Business
Combination Agreement with LE Worldwide Limited, a British Virgin Islands business company (“LEW”) (the “Merger Agreement”),
which provides for, subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, the proposed Business Combination
between us and LEW (the transaction being referred to herein as the “Business Combination”).
Other than as specifically discussed, this Report
does not give effect to the Business Combination.
Merger Agreement
Subject to the satisfaction or waiver of the conditions
set forth in the Merger Agreement (including, but not limited to, the approval and adoption of the Merger Agreement by our shareholders),
the Business Combination is to be effected in two steps: (i) , we will merge with and into ACBA Merger Sub I Limited, a British Virgin
Islands business company and wholly owned subsidiary of Ace (“PubCo”), with PubCo remaining as the surviving publicly traded
entity (the “Reincorporation Merger”); (ii) immediately after the consummation of the Reincorporation Merger, ACBA Merger
Sub II Limited, (“Merger Sub”), a British Virgin Islands business company and wholly owned subsidiary of PubCo, will be merged
with and into LEW, resulting in LEW becoming a wholly owned subsidiary of PubCo (the “Acquisition Merger”). On March 2, 2023,
PubCo and Merger Sub each executed a joinder agreement to the Merger Agreement along with us and LEW, making PubCo and Merger Sub parties
to the Merger Agreement. As more thoroughly described below, the aggregate consideration for the Acquisition Merger is $150,000,000, payable
in the form of 15,000,000 newly issued ordinary shares of PubCo (“PubCo Ordinary Shares”) valued for purposes of calculating
the merger consideration at $10.00 per share.
With respect to the 15,000,000 PubCo Ordinary
Shares to be received by LEW shareholders upon the closing of the Business Combination, 750,000 PubCo Ordinary Shares are to be issued
and held in escrow for a period of time after closing in order to satisfy any indemnification obligations incurred under the Merger Agreement.
Escrow Agreement
At the closing of the Business Combination, PubCo,
the shareholders of LEW and an escrow agent will enter into an Escrow Agreement pursuant to which PubCo will deposit 750,000 of its PubCo
Ordinary Shares to secure the indemnification obligations as contemplated by the Merger Agreement.
Lock-Up Agreements
In connection with the transactions, LEW will
use its commercially reasonable efforts to cause shareholders of LEW who will own more than 15% of the issued and outstanding PubCo Ordinary
Shares (an aggregate of 9,874,340 PubCo Ordinary Shares) as of immediately after the Acquisition Merger becoming effective to enter into
lock-up agreements.
Employment Agreements
At the closing of the Business Combination, PubCo
will enter into employment agreements with certain key executives of LEW (the “Employment Agreements”) which will contain
the terms and conditions governing the employment of such individuals.
PIPE Investment Subscription Agreement and/or Forward Agreement
PubCo intends to enter into subscription agreements
with various investors for the private placement of PubCo Ordinary Shares (the “Private Placement”), which will close shortly
before the closing of the Business Combination. It is estimated that approximately 2,000,000 shares (“PIPE Shares”) will be
offered in the Private Placement, resulting in gross proceeds of approximately $20 million, though the amount of PIPE Shares offered,
and net proceeds could end up varying significantly.
Business Strategy and Deal Origination
Our acquisition and value creation strategy is
to identify, acquire and, after our initial business combination, build a company in the consumer or consumer-related products and services
industries that complements the experience of our management team and can benefit from their operational expertise. Our business combination
strategy leverages our management team’s network of potential proprietary and public transaction sources where we believe a combination
of our relationships, knowledge and experience in the consumer and consumer-related products and services industries could effect a positive
transformation or augmentation of existing businesses to improve their overall value proposition.
We have utilized, and in the event that the Business
Combination is not consummated, will continue to utilize, the network and industry experience of the Company’s management team and
their affiliates in seeking an initial business combination and employing our business combination strategy. Over the course of their
careers, the members of our management team and their affiliates have developed a broad network of contacts and corporate relationships
that we believe will serve as a useful source of acquisition opportunities.
We expect that, in the event that the Business
Combination is not consummated, these networks will continue to provide our management team with a robust flow of acquisition opportunities.
In addition, we anticipate that target business candidates will continue to be brought to our attention from various unaffiliated sources,
which may include investment market participants, private equity groups, investment banking firms, consultants, accounting firms and large
business enterprises.
Effecting a Business Combination
General
We are not presently engaged in, and we will not
engage in, any substantive commercial business for an indefinite period of time following our initial public offering. We intend to utilize
cash derived from the proceeds of our initial public offering and the private placement of private units, our share capital, debt or a
combination of these in effecting a business combination. Although substantially all of the net proceeds of our initial public offering
and the private placement of private units are intended to be applied generally toward effecting a business combination as described in
this report, the proceeds are not otherwise being designated for any more specific purposes. Accordingly, investors are investing without
first having an opportunity to evaluate the specific merits or risks of any one or more business combinations. A business combination
may involve the acquisition of, or merger with, a company which does not need substantial additional capital but which desires to establish
a public trading market for its shares, while avoiding what it may deem to be adverse consequences of undertaking a public offering itself.
These include time delays, significant expense, loss of voting control and compliance with various U.S. Federal and state securities laws.
In the alternative, we may seek to consummate a business combination with a company that may be in its early stages of development or
growth. While we may seek to effect simultaneous business combinations with more than one target business, we will probably have the ability,
as a result of our limited resources, to effect only a single business combination.
Sources of Target Businesses
We anticipate that target business candidates
will be brought to our attention from various unaffiliated sources, including investment bankers, venture capital funds, private equity
funds, leveraged buyout funds, management buyout funds and other members of the financial community. Target businesses may be brought
to our attention by such unaffiliated sources as a result of being solicited by us through calls or mailings which will not commence until
after the completion of this offering. These sources may also introduce us to target businesses they think we may be interested in on
an unsolicited basis, since many of these sources will have read this report and know what types of businesses we are targeting. Our officers
and directors, as well as their respective affiliates, may also bring to our attention target business candidates that they become aware
of through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade
shows or conventions. While we do not presently anticipate engaging the services of professional firms or other individuals that specialize
in business acquisitions on any formal basis, in the event that the Business Combination is not consummated, we may engage these firms
or other individuals in the future, in which event we may pay a finder’s fee, consulting fee or other compensation to be determined
in an arm’s length negotiation based on the terms of the transaction. In no event, however, will any of our existing officers, directors,
special advisors or initial shareholders, or any entity with which they are affiliated, be paid any finder’s fee, consulting fee
or other compensation prior to, or for any services they render in order to effectuate, the consummation of a business combination (regardless
of the type of transaction). If we decide to enter into a business combination with a target business that is affiliated with our officers,
directors or initial shareholders, we will do so only if we have obtained an opinion from an independent investment banking firm that
the business combination is fair to our unaffiliated shareholders from a financial point of view. However, as of the date of this report,
there is no affiliated entity that we consider a business combination target.
Selection of a Target Business and Structuring
of a Business Combination
Subject to the limitations that a target business
have a fair market value of at least 80% of the balance in the trust account (excluding any deferred underwriting discounts and commissions
and taxes payable on the income earned on the trust account) at the time of the execution of a definitive agreement for our initial business
combination, as described below in more detail, our management will have virtually unrestricted flexibility in identifying and selecting
a prospective target business, should the Business Combination not be consummated. We have not established any other specific attributes
or criteria (financial or otherwise) for prospective target businesses. In evaluating a prospective target business, our management may
consider a variety of factors, including one or more of the following:
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financial condition and results of operation; |
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experience and skill of management and availability of additional personnel; |
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stage of development of its products, processes or services; |
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degree of current or potential market acceptance of the products, processes or services; |
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proprietary features and degree of intellectual property or other protection for its products, processes or services; |
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regulatory environment of the industry; and |
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costs associated with effecting the business combination. |
We believe such factors will be important in evaluating
prospective target businesses, regardless of the location or industry in which such target business operates. However, this list is not
intended to be exhaustive. We used these criteria and guidelines in evaluating business combination opportunities, including with LEW.
Based on our evaluation of LEW and the industry in which it operates, including the financial and other information provided by LEW in
the course of negotiations, we believe that LEW meets the criteria and guidelines listed above. In the event that the Business Combination
is not consummated, we may decide to enter into a business combination with a target business that does not meet these criteria and guidelines.
Any evaluation relating to the merits of a particular
business combination will be based, to the extent relevant, on the above factors as well as other considerations deemed relevant by our
management in effecting a business combination consistent with our business objective. In evaluating a prospective target business, we
will conduct an extensive due diligence review which will encompass, among other things, meetings with incumbent management and inspection
of facilities, as well as review of financial and other information which is made available to us. This due diligence review will be conducted
either by our management or by unaffiliated third parties we may engage, although we have no current intention to engage any such third
parties.
The time and costs required to select and evaluate
a target business and to structure and complete the business combination cannot presently be ascertained with any degree of certainty.
Any costs incurred with respect to the identification and evaluation of a prospective target business with which a business combination
is not ultimately completed will result in a loss to us and reduce the amount of capital available to otherwise complete a business combination.
Fair Market Value of Target Business
Pursuant to Nasdaq listing rules, the target business
or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust
account (excluding any deferred underwriting discounts and commissions and taxes payable on the income earned on the trust account) at
the time of the execution of a definitive agreement for our initial business combination, although we may acquire a target business whose
fair market value significantly exceeds 80% of the trust account balance. We currently anticipate structuring a business combination to
acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure a business combination
where we merge directly with the target business or where we acquire less than 100% of such interests or assets of the target business
in order to meet certain objectives of the target management team or shareholders or for other reasons, but we will only complete such
business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or
otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under
the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target,
our shareholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending
on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which
we issue a substantial number of new shares in exchange for all of the outstanding capital of a target. In this case, we could acquire
a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our shareholders
immediately prior to our initial business combination could own less than a majority of our issued and outstanding shares subsequent to
our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or
acquired by the post-transaction company, only the portion of such business or businesses that is owned or acquired is what will be valued
for purposes of the 80% of net assets test, assuming that we obtain and maintain a listing for our securities on Nasdaq. In order to consummate
such an acquisition, we may issue a significant amount of our debt or equity securities to the sellers of such businesses and/or seek
to raise additional funds through a private offering of debt or equity securities. The fair market value of the target will be determined
by our board of directors based upon one or more standards generally accepted by the financial community (such as actual and potential
sales, earnings, cash flow and/or book value). If our board is not able to independently determine that the target business has a sufficient
fair market value, we will obtain an opinion from an unaffiliated, independent investment banking firm, or another independent entity
that commonly renders valuation opinions on the type of target business we are seeking to acquire, with respect to the satisfaction of
such criteria. We will not be required to obtain an opinion from an independent investment banking firm, or another independent entity
that commonly renders valuation opinions on the type of target business we are seeking to acquire, as to the fair market value if our
board of directors independently determines that the target business complies with the 80% threshold.
We will not be required to comply with the 80%
fair market value requirement if we are delisted from Nasdaq. If Nasdaq delists our securities from trading on its exchange after this
offering, we would not be required to satisfy the fair market value requirement described above and could complete a business combination
with a target business having a fair market value substantially below 80% of the balance in the trust account.
Lack of Business Diversification
Our business combination must be with a target
business or businesses that collectively satisfy the minimum valuation standard at the time of such acquisition, as discussed above, although
this process may entail the simultaneous acquisitions of several operating businesses at the same time. Therefore, at least initially,
the prospects for our success may be entirely dependent upon the future performance of a single business. Unlike other entities which
may have the resources to complete several business combinations of entities operating in multiple industries or multiple areas of a single
industry, it is probable that we will not have the resources to diversify our operations or benefit from the possible spreading of risks
or offsetting of losses. By consummating a business combination with only a single entity, our lack of diversification may:
| ● | subject
us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon the
particular industry in which we may operate subsequent to a business combination, and |
| ● | result
in our dependency upon the performance of a single operating business or the development or market acceptance of a single or limited
number of products, processes or services. |
If the Business Combination is not consummated
and if we subsequently determine to simultaneously acquire several businesses and such businesses are owned by different sellers, we will
need for each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other acquisitions,
which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple acquisitions, we could
also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations
(if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or
products of the acquired companies in a single operating business.
Limited Ability to Evaluate the Target Business’
Management
Although we intend to scrutinize the management
of a prospective target business when evaluating the desirability of effecting a business combination, we cannot assure you that our assessment
of the target business’ management will prove to be correct. In addition, we cannot assure you that the future management will have
the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of our officers and directors,
if any, in the target business following a business combination cannot presently be stated with any certainty. While it is possible that
some of our key personnel will remain associated in senior management or advisory positions with us following a business combination,
it is unlikely that they will devote their full time efforts to our affairs subsequent to a business combination. Moreover, they would
only be able to remain with the company after the consummation of a business combination if they are able to negotiate employment or consulting
agreements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the
business combination and could provide for them to receive compensation in the form of cash payments and/or our securities for services
they would render to the company after the consummation of the business combination. While the personal and financial interests of our
key personnel may influence their motivation in identifying and selecting a target business, their ability to remain with the company
after the consummation of a business combination will not be the determining factor in our decision as to whether or not we will proceed
with any potential business combination. Additionally, our officers and directors may not have significant experience or knowledge relating
to the operations of the particular target business.
Following a business combination, we may seek
to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we will have the
ability to recruit additional managers, or that any such additional managers we do recruit will have the requisite skills, knowledge or
experience necessary to enhance the incumbent management.
Shareholders May Not Have the Ability to
Approve an Initial Business Combination
The Business Combination requires the approval
of our shareholders. However, in the event that the Business Combination is not consummated, in connection with any alternative proposed
business combination, we will either (1) seek shareholder approval of our initial business combination at a meeting called for such purpose
at which public shareholders may seek to convert their public shares, regardless of whether they vote for or against the proposed business
combination, into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable) or (2)
provide our public shareholders with the opportunity to sell their public shares to us by means of a tender offer (and thereby avoid the
need for a shareholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account
(net of taxes payable), in each case subject to the limitations described herein. Notwithstanding the foregoing, our initial shareholders
have agreed, pursuant to written letter agreements with us, not to convert any public shares held by them into their pro rata share
of the aggregate amount then on deposit in the trust account. If we determine to engage in a tender offer, such tender offer will be structured
so that each shareholder may tender any or all of his, her or its public shares rather than some pro rata portion of his, her or
its shares. The decision as to whether we will seek shareholder approval of a proposed business combination or will allow shareholders
to sell their shares to us in a tender offer will be made by us based on a variety of factors such as the timing of the transaction, or
whether the terms of the transaction would otherwise require us to seek shareholder approval. If we so choose and we are legally permitted
to do so, we have the flexibility to avoid a shareholder vote and allow our shareholders to sell their shares pursuant to Rule 13e-4 and
Regulation 14E of the Exchange Act which regulate issuer tender offers. In that case, we will file tender offer documents with the SEC
which will contain substantially the same financial and other information about the initial business combination as is required under
the SEC’s proxy rules. We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001
upon such consummation and, solely if we seek shareholder approval, a majority of the issued and outstanding ordinary shares voted are
voted in favor of the business combination.
We chose our net tangible asset threshold of $5,000,001
to ensure that we would avoid being subject to Rule 419 promulgated under the Securities Act. However, if we seek to consummate an initial
business combination with a target business that imposes any type of working capital closing condition or requires us to have a minimum
amount of funds available from the trust account upon consummation of such initial business combination, our net tangible asset threshold
may limit our ability to consummate such initial business combination (as we may be required to have a lesser number of shares converted
or sold to us) and may force us to seek third party financing which may not be available on terms acceptable to us or at all. As a result,
we may not be able to consummate such initial business combination and we may not be able to locate another suitable target within the
applicable time period, if at all. Public shareholders may therefore have to wait until April 8, 2023 (or up to October 8, 2023, if we
have extended the period of time as described in this report) in order to be able to receive a pro rata share of the trust account.
Our sponsor and our officers and directors have
agreed (1) to vote any ordinary shares owned by them in favor of any proposed business combination, (2) not to convert any ordinary shares
in connection with a shareholder vote to approve a proposed initial business combination and (3) not sell any ordinary shares in any tender
in connection with a proposed initial business combination. As a result, if we sought shareholder approval of a proposed transaction we
only need an excess of 439,587 of our public shares (or approximately 11.6% of our issued and outstanding ordinary shares) to be voted
in favor of the transaction in order to have such transaction approved (assuming the over-allotment option is not exercised and the initial
shareholders do not purchase any units in this offering or units or shares in the after-market).
None of our officers, directors, sponsor or their
affiliates has indicated any intention to purchase units or ordinary shares in this offering or from persons in the open market or in
private transactions (other than the private units). However, if we hold a meeting to approve a proposed business combination and a significant
number of shareholders vote, or indicate an intention to vote, against such proposed business combination, our officers, directors, initial
shareholders or their affiliates could make such purchases in the open market or in private transactions in order to influence the vote.
Notwithstanding the foregoing, our officers, directors, sponsor and their affiliates will not make purchases of ordinary shares if the
purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act, which are rules designed to stop potential manipulation of
a company’s stock.
Ability to Extend Time to Complete Business
Combination
If we anticipate that we may not be able to consummate
our initial Business Combination by April 8, 2023, we may, but are not obligated to, extend the period of time to consummate the Business
Combination through October 8, 2023. Pursuant to the terms of our amended and restated memorandum and articles of association and the
amended investment management trust agreement entered into between us and Continental Stock Transfer & Trust Company, LLC, we may
extend the time to complete a business combination a total of five (5) times, as follows: (i) two (2) times for an additional three (3)
months each time from January 8, 2023 to July 8, 2023 by depositing into the trust account $0.15 for each three-month extension for each
issued and outstanding ordinary share issued in the IPO that has not been redeemed, followed by (ii) three (3) times for an additional
one (1) month each time from July 8, 2023 to October 8, 2023 by depositing into the trust account $0.05 for each one-month extension for
each issued and outstanding ordinary share issued in the IPO that has not been redeemed. On January 5, 2023, the Company issued an unsecured
promissory note in an amount of $350,332 to the Sponsor, pursuant to which such amount had been deposited into the Trust Account in order
to extend the amount of available time to complete a business combination until April 8, 2023. If we are unable to consummate the Business
Combination and are unable to complete an alternative initial business combination within such time period, we will, as promptly as possible,
but not more than ten (10) business days thereafter, redeem 100% of our outstanding public shares for a pro rata portion of the funds
held in the trust account, including a pro rata portion of any interest earned on the funds held in the trust account and not necessary
to pay our taxes, and then seek to liquidate and dissolve. However, we may not be able to distribute such amounts as a result of claims
of creditors that may take priority over the claims of our public shareholders. In the event of our dissolution and liquidation, our warrants
will expire and will be worthless.
Conversion/Tender Rights
At any meeting called to approve an initial business
combination, public shareholders may seek to convert their public shares, regardless of whether they vote for or against the proposed
business combination, into their pro rata share of the aggregate amount then on deposit in the trust account, less any taxes then
due but not yet paid. Notwithstanding the foregoing, our initial shareholders have agreed, pursuant to written letter agreements with
us, not to convert any public shares held by them into their pro rata share of the aggregate amount then on deposit in the trust
account. The conversion rights will be effected under our amended and restated memorandum and articles of association and British Virgin
Islands law as redemptions. When we hold a meeting to approve the initial Business Combination (or it we hold a meeting to approve an
alternative business combination), a holder will always have the ability to vote against a proposed business combination and not seek
conversion of his shares.
Alternatively, if we engage in a tender offer,
each public shareholder will be provided the opportunity to sell his public shares to us in such tender offer. The tender offer rules
require us to hold the tender offer open for at least 20 business days. Accordingly, this is the minimum amount of time we would need
to provide holders to determine whether they want to sell their public shares to us in the tender offer or remain an investor in our company.
Our sponsor, officers and directors will not have
conversion rights with respect to any ordinary shares owned by them, directly or indirectly, whether acquired prior to this offering or
purchased by them in this offering or in the aftermarket.
We may also require public shareholders, whether
they are a record holder or hold their shares in “street name,” to either tender their certificates (if any) to our transfer
agent or to deliver their shares to the transfer agent electronically using Depository Trust Company’s DWAC (Deposit/Withdrawal
At Custodian) System, at the holder’s option, at any time at or prior to the vote on the business combination. Once the shares are
converted by the holder, and effectively redeemed by us under British Virgin Islands law, the transfer agent will then update our Register
of Members to reflect all conversions. The proxy solicitation materials that we will furnish to shareholders in connection with the vote
for any proposed business combination will indicate whether we are requiring shareholders to satisfy such delivery requirements. Accordingly,
a shareholder would have from the time our proxy statement is mailed through the vote on the business combination to deliver his shares
if he wishes to seek to exercise his conversion rights. Under our amended and restated memorandum and articles of association, we are
required to provide at least 10 days’ advance notice of any shareholder meeting, which would be the minimum amount of time a shareholder
would have to determine whether to exercise conversion rights. As a result, if we require public shareholders who wish to convert their
ordinary shares into the right to receive a pro rata portion of the funds in the trust account to comply with the foregoing delivery
requirements, holders may not have sufficient time to receive the notice and deliver their shares for conversion. Accordingly, investors
may not be able to exercise their conversion rights and may be forced to retain our securities when they otherwise would not want to.
There is a nominal cost associated with this tendering
process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will typically charge the
tendering broker $45 and it would be up to the broker whether or not to pass this cost on to the converting holder. However, this fee
would be incurred regardless of whether or not we require holders seeking to exercise conversion rights. The need to deliver shares is
a requirement of exercising conversion rights regardless of the timing of when such delivery must be effectuated. However, in the event
we require shareholders seeking to exercise conversion rights to deliver their shares prior to the consummation of the proposed business
combination and the proposed business combination is not consummated, this may result in an increased cost to shareholders.
Any request to convert or tender such shares once
made, may be withdrawn at any time up to the vote on the proposed business combination or expiration of the tender offer. Furthermore,
if a holder of a public share delivered his certificate in connection with an election of their conversion or tender and subsequently
decides prior to the vote on the business combination or the expiration of the tender offer not to elect to exercise such rights, he may
simply request that the transfer agent return the certificate (physically or electronically).
If the initial Business Combination is not approved
or completed for any reason, then our public shareholders who elected to exercise their conversion or tender rights would not be entitled
to convert their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any shares
delivered by public holders.
Automatic Liquidation of Trust Account if
No Business Combination
If we do not complete a business combination by
April 8, 2023 (or up to October 8, 2023, if we have extended the period of time as described in this report), it will trigger our automatic
winding up, liquidation and subsequent dissolution pursuant to the terms of our amended and restated memorandum and articles of association.
As a result, this has the same effect as if we had formally gone through a voluntary liquidation procedure under the Companies Law. Accordingly,
no vote would be required from our shareholders to commence such a voluntary winding up, dissolution and liquidation. We will, as promptly
as possible but not more than ten business days thereafter, redeem 100% of our outstanding public shares for a pro rata portion of the
funds held in the trust account, including a pro rata portion of any interest earned on the funds held in the trust account and not necessary
to pay our taxes, then seek to liquidate and dissolve. However, we may not be able to distribute such amounts as a result of claims of
creditors which may take priority over the claims of our public shareholders. In the event of our dissolution and liquidation, our warrants
will expire and will be worthless.
The amount in the trust account under the Companies
Law will be treated as funds distributable under the Companies Law provided that immediately following the date on which the proposed
distribution is proposed to be made, we are able to pay our debts as they fall due in the ordinary course of business. If we are forced
to liquidate the trust account, we anticipate that we would distribute to our public shareholders the amount in the trust account calculated
as of the date that is two days prior to the distribution date (including any accrued interest). Prior to such distribution, we would
be required to assess all claims that may be potentially brought against us by our creditors for amounts they are actually owed and make
provision for such amounts, as creditors take priority over our public shareholders with respect to amounts that are owed to them. We
cannot assure you that we will properly assess all claims that may be potentially brought against us. As such, our shareholders could
potentially be liable for any claims of creditors to the extent of distributions received by them as an unlawful payment in the event
we enter an insolvent liquidation. Furthermore, while we will seek to have all vendors and service providers (which would include any
third parties we engaged to assist us in any way in connection with our search for a target business) and prospective target businesses
execute agreements with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust
account, there is no guarantee that they will execute such agreements. Nor is there any guarantee that, even if such entities execute
such agreements with us, they will not seek recourse against the trust account or that a court would conclude that such agreements are
legally enforceable.
Each of our sponsor and our officers and directors
have agreed to waive its rights to participate in any liquidation of our trust account or other assets with respect to the insider shares
and private units and to vote their insider shares, private shares in favor of any liquidation and plan of distribution which we submit
to a vote of shareholders. There will be no distribution from the trust account with respect to our warrants or rights, which will expire
worthless.
In the event that the proceeds in the trust account are reduced below
the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account as of the date of the
liquidation of the trust account if less than $10.00 per share due to reductions in the value of the trust assets, in each case less taxes
payable, and our sponsor asserts that it is unable to satisfy its indemnification obligations or that it has no indemnification obligations
related to a particular claim, our independent directors would determine whether to take legal action against our sponsor to enforce its
indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our
sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment
may choose not to do so in any particular instance. Accordingly, we cannot assure you that due to claims of creditors the actual value
of the per-share redemption price will not be less than $10.00 per share.
The proceeds deposited in the trust account could,
however, become subject to the claims of our creditors which would be prior to the claims of our public shareholders. Although we will
seek to have all vendors, including lenders for money borrowed, prospective target businesses or other entities we engage execute agreements
with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public
shareholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be
prevented from bringing claims against the trust account, including but not limited to, fraudulent inducement, breach of fiduciary responsibility
or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with
a claim against our assets, including the funds held in the trust account. If any third party refused to execute an agreement waiving
such claims to the monies held in the trust account, we would perform an analysis of the alternatives available to us if we chose not
to engage such third party and evaluate if such engagement would be in the best interest of our shareholders if such third party refused
to waive such claims. Examples of possible instances where we may engage a third party that refused to execute a waiver include the engagement
of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other
consultants that would agree to execute a waiver or in cases where management is unable to find a provider of required services willing
to provide the waiver. In any event, our management would perform an analysis of the alternatives available to it and would only enter
into an agreement with a third party that did not execute a waiver if management believed that such third party’s engagement would
be significantly more beneficial to us than any alternative. In addition, there is no guarantee that such entities will agree to waive
any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not
seek recourse against the trust account for any reason.
Ace
Global Investment Limited, our sponsor, has agreed that, if we liquidate the trust account prior to the consummation of a business combination,
it will be liable to pay debts and obligations to target businesses or vendors or other entities that are owed money by us for services
rendered or contracted for or products sold to us in excess of the net proceeds of the IPO not held in the trust account, but only to
the extent necessary to ensure that such debts or obligations do not reduce the amounts in the trust account and only if such parties
have not executed a waiver agreement. However, we cannot assure you that it will be able to satisfy those obligations if it is required
to do so. Accordingly, the actual per-share distribution could be less than $10.65 due
to claims of creditors. Additionally, if we are deemed insolvent for the purposes of the Insolvency Act, or we are required to immediately
enter insolvent liquidation, the proceeds held in the trust account could be subject to applicable insolvency law, and may be included
in our insolvent estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any
insolvency claims deplete the trust account, we cannot assure you we will be able to return to our public shareholders at least $10.65
per share.
Competition
In the event we do not consummate the Business
Combination, we may continue to encounter intense competition from other entities having a business objective similar to ours in identifying,
evaluating and selecting an alternative target business, including other blank check companies, private equity groups and leveraged buyout
funds, and operating businesses seeking strategic combinations. Many of these entities are well established and have extensive experience
identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human
and other resources than us and our financial resources will be relatively limited when contrasted with those of many of these competitors.
While we believe there may be numerous potential target businesses that we could acquire with the net proceeds of this offering, our ability
to compete in acquiring certain sizable target businesses may be limited by our available financial resources.
The following also may not be viewed favorably
by certain target businesses:
| ● | our
obligation to seek shareholder approval of a business combination or obtain the necessary financial information to be sent to shareholders
in connection with such business combination may delay or prevent the completion of a transaction; |
| ● | our
obligation to convert public shares held by our public shareholders may reduce the resources available to us for a business combination; |
| ● | Nasdaq
may require us to file a new listing application and meet its initial listing requirements to maintain the listing of our securities
following a business combination; |
| ● | our
outstanding shares, warrants, and unit purchase options and the potential future dilution they represent; |
| ● | our
obligation to pay the deferred underwriting discounts and commissions to Ladenburg Thalmann & Co. Inc. upon consummation of our initial
business combination; |
| ● | our
obligation to either repay or issue units upon conversion of up to $500,000 of working capital loans that may be made to us by our initial
shareholders, officers, directors or their affiliates; |
| ● | our
obligation to register the resale of the insider shares, as well as the private units (and underlying securities) and any securities
issued to our initial shareholders, officers, directors or their affiliates upon conversion of working capital loans; and |
| ● | the
impact on the target business’ assets as a result of unknown liabilities under the securities laws or otherwise depending on developments
involving us prior to the consummation of a business combination. |
Any of these factors may place us at a competitive
disadvantage in successfully negotiating a business combination. Our management believes, however, that our status as a public entity
and potential access to the United States public equity markets may give us a competitive advantage over privately-held entities having
a similar business objective as ours in acquiring a target business with significant growth potential on favorable terms.
If we succeed in effecting a business combination,
there will be, in all likelihood, intense competition from competitors of the target business. We cannot assure you that, subsequent to
a business combination, we will have the resources or ability to compete effectively.
Facilities
We maintain our principal executive office at
Rm. 806, 8/F, Tower 2, Lippo Center, No. 89 Queensway, Admiralty, Hong Kong. The cost for this space is provided to us by our Sponsor,
as part of the $10,000 per month payment we make to it for general and administrative services, including office space, utilities and
administrative services to the Company. We consider our current office space adequate for our current operations.
Employees
We have two executive officers. These individuals
are not obligated to devote any specific number of hours to our matters and intend to devote only as much time as they deem necessary
to our affairs. The amount of time they will devote in any time period will vary based on whether a target business has been selected
for the business combination and the stage of the business combination process the company is in. Accordingly, once management locates
a suitable target business to acquire, they will spend more time investigating such target business and negotiating and processing the
business combination (and consequently spend more time to our affairs) than they would prior to locating a suitable target business. We
presently expect our executive officers to devote such amount of time as they reasonably believe is necessary to our business (which could
range from only a few hours a week while we are trying to locate a potential target business to a majority of their time as we move into
serious negotiations with a target business for a business combination). We do not intend to have any full-time employees prior to the
consummation of a business combination.
ITEM 1A. RISK FACTORS
An
investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together
with the other information contained in this Annual Report on Form 10-K and the prospectus associated with our Initial
Public Offering, before making a decision to invest in our securities. If any of the following events occur, our business, financial
condition and operating results may be materially adversely affected. In that event, the trading price of our securities could decline,
and you could lose all or part of your investment.
RISKS RELATING TO OUR SEARCH FOR, CONSUMMATION
OF, OR INABILITY TO CONSUMMATE, A BUSINESS COMBINATION AND POST-BUSINESS COMBINATION RISKS
Our ordinary shares subject to redemption
are classified as outside permanent equity and the changes in classification could have a material effect on our financial results.
In addition, in preparation of the Company’s
financial statements as of and for the year ended December 31, 2022, the Company concluded it should revise its financial statements to
classify all ordinary shares subject to possible redemption in temporary equity. In accordance with the SEC and its staff’s guidance
on redeemable equity instruments, ASC Topic 480, Distinguishing Liabilities from Equity (ASC 480), paragraph 10-S99, redemption provisions
not solely within the control of the Company require ordinary shares subject to redemption to be classified outside of permanent equity.
The Company had previously classified a portion of its ordinary shares in permanent equity. Although the Company did not specify a maximum
redemption threshold, its charter provides that currently, the Company will not redeem its public shares in an amount that would cause
its net tangible assets to be less than $5,000,001. The Company considered that the threshold would not change the nature of the underlying
shares as redeemable and thus would be required to be disclosed outside equity. As a result, the Company revised its previously filed
financial statements to classify all ordinary shares as temporary equity and to recognize accretion from the initial book value to redemption
value at the time of its Initial Public Offering and in accordance with ASC 480. The change in the carrying value of redeemable shares
of ordinary shares resulted in charges against accumulated deficit.
We have identified a material weakness
in our internal control over financial reporting as of December 31, 2022. If we are unable to develop and maintain an effective system
of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which
may adversely affect investor confidence in us and materially and adversely affect our business and operating results.
Following the issuance of the SEC Statement, our
management and our audit committee concluded that, in light of the SEC Statement, it was appropriate to restate our previously issued
audited financial statements as of and for the year ended December 31, 2022. See “—the changes on classification of permanent
equity could have a material effect on our financial results.” As part of such process, we identified a material weakness in our
internal controls over financial reporting.
A material weakness is a deficiency, or a combination
of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement
of our annual or interim financial statements will not be prevented, or detected and corrected on a timely basis. Effective internal controls
are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material
weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately
have the intended effects.
Going public through a business combination
rather than an underwritten offering presents risks to unaffiliated investors. Subsequent to completion of the Business Combination, we
may be required to take write-downs or write-offs, restructure its operations, or take impairment or other charges, any of which that
could have a significant negative effect on our financial condition, results of operations and price of our ordinary shares, which could
cause you to lose some or all of your investment.
Going public through a business combination rather
than an underwritten offering, as LEW is seeking to do through the Business Combination, presents risks to unaffiliated investors. Such
risks include the absence of a due diligence investigation conducted by an underwriter that would be subject to liability for any material
misstatements or omissions in a registration statement. Although the Company has conducted due diligence on LEW’s business, we cannot
assure you that this due diligence has identified all material issues that may be present in LEW’s business, that it would be possible
to uncover all material issues through a customary amount of due diligence, or that factors outside of LEW’s business and outside
of the Company’s and LEW’s control will not later arise. As a result of these factors, the combined company may be forced
to later write-down or write-off assets, restructure operations, or incur impairment or other charges that could result in reporting losses.
Even if the Company’s due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks
may materialize in a manner not consistent with the Company’s preliminary risk analysis. Even though these charges may be non-cash
items and not have an immediate impact on the combined company’s liquidity, the fact that we report charges of this nature could
contribute to negative market perceptions about the combined company or its securities. Accordingly, any of the Company’s shareholders
who choose to remain shareholders of the Company following the Business Combination could suffer a reduction in the value of their shares
and these stockholders are unlikely to have a remedy for the reduction in value.
In the event that a significant number of
Company shares are redeemed, the Company’s shares may become less liquid following the Business Combination.
If a significant number of Ordinary Shares are
redeemed, the Company may be left with a significantly smaller number of shareholders. As a result, trading in the shares of the surviving
company following the Business Combination may be limited and your ability to sell your shares in the market could be adversely affected.
Nasdaq may not list Ordinary Shares on its exchange, which could limit investors’ ability to make transactions in the Company’s
securities and subject the Company to additional trading restrictions.
The Company may waive one or more of the
conditions to the Business Combination without resoliciting shareholder approval for the Business Combination.
The Company may agree to waive, in whole or in
part, some of the conditions to its obligations to consummate the Business Combination, to the extent permitted by applicable laws. The
board of directors of the Company will evaluate the materiality of any waiver to determine whether amendment of this report and re-solicitation
of proxies is warranted. If the board of directors of the Company determines that a waiver of a condition is not sufficiently material
to warrant re-solicitation of shareholders, the Company has the discretion to consummate the Business Combination without seeking further
shareholder approval. For example, it is a condition to the Company’s obligations to close the Business Combination that there be
no restraining order, injunction or other order restricting LEW’s conduct of its business, however, if the board of directors of
the Company determines that any such order or injunction is not material to the business of the Company, then the board of directors of
the Company may elect to waive such condition and close the Business Combination without the need to resolicit proxies.
There will be a substantial number of PubCo
Ordinary Shares available for sale in the future that may adversely affect the market price of PubCo Ordinary Shares.
PubCo may issue such number of shares as may be
approved by its shareholders and authorized by its directors, in accordance with the terms of PubCo’s certificate of incorporation
(the “Certificate of Incorporation”). In connection with the transactions, LEW will use its commercially reasonable efforts
to cause shareholders of LEW who will own more than 15% of the issued and outstanding PubCo Ordinary Shares (an aggregate of 9,874,340
PubCo Ordinary Shares) as of immediately after the Acquisition Merger becoming effective to enter into lock-up agreements. In addition,
1,150,000 shares of PubCo Ordinary Shares held by our initial shareholders that are currently in an escrow account will be released and
available for sale as early as six months from the date of the Business Combination, provided that 50% of such shares will be released
on the date on which the closing price of the shares equals or exceeds $12.50 per share (as adjusted for share splits, share dividends,
reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after the initial Business
Combination. The availability of such a significant number of securities for trading in the public market, after the expiration of these
restricted periods, may have an adverse effect on the market price of PubCo Common Stock.
If we seek shareholder approval of a business
combination, such as in connection with the Business Combination, after approval of our board, our initial shareholders have agreed to
vote in favor of such initial business combination, regardless of how our public shareholders vote.
As of January 6, 2023, our initial shareholders
collectively own and are entitled to vote 1,454,000 Ordinary Shares, or approximately 38.4% of the Ordinary Shares. They have agreed to
vote their shares in favor of our initial Business Combination. Accordingly, after approval of our board, the agreement by our initial
shareholders to vote in favor of our initial Business Combination will increase the likelihood that we will receive the requisite shareholder
approval for such initial Business Combination.
We are an “emerging growth company”
and the reduced disclosure requirements applicable to emerging growth companies may make its securities less attractive to investors.
We are an “emerging growth company,”
as defined in the JOBS Act. It may remain an “emerging growth company” until the fiscal year ended December 31, 2024. However,
if our non-convertible debt issued within a three-year period or revenues exceeds $1.07 billion, or the market value of its ordinary shares
that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, we would cease
to be an emerging growth company as of the following fiscal year. As an emerging growth company, we (i) are not required to comply
with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act, (ii) have reduced disclosure obligations regarding
executive compensation in its periodic reports and proxy statements, and (iii) are exempt from the requirements of holding a nonbinding
advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Additionally,
as an emerging growth company, we have elected to delay the adoption of new or revised accounting standards that have different effective
dates for public and private companies until those standards apply to private companies. As such, our financial statements may not be
comparable to companies that comply with public company effective dates. As a result, potential investors may be less likely to invest
in our securities.
The ability of our public shareholders to
exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination
would be unsuccessful and that you would have to wait for liquidation in order to redeem your stock.
If our business combination agreement requires
us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing,
the probability that our initial business combination would be unsuccessful is increased. If our initial business combination is unsuccessful,
you would not receive your pro rata portion of the trust account until we liquidate the trust account. If you are in need of immediate
liquidity, you could attempt to sell your stock in the open market; however, at such time our stock may trade at a discount to the pro
rata amount per share in the trust account. In either situation, you may suffer a material loss on your investment or lose the benefit
of funds expected in connection with our redemption until we liquidate or you are able to sell your stock in the open market.
The requirement that we complete our initial
business combination within the prescribed time frame may give potential target businesses leverage over us in negotiating a business
combination and may decrease our ability to conduct due diligence on potential business combination targets as we approach our dissolution
deadline, which could undermine our ability to complete our business combination on terms that would produce value for our shareholders.
Any potential target business with which we enter
into negotiations concerning a business combination will be aware that we must complete our initial business combination by April 8, 2023
(or up to October 8, 2023, if we have extended the period of time as described in this report). Consequently, such target business may
obtain leverage over us in negotiating a business combination, knowing that if we do not complete our initial business combination with
that particular target business, we may be unable to complete our initial business combination with any target business. This risk will
increase as we get closer to the timeframe described above. In addition, we may have limited time to conduct due diligence and may enter
into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
We may not be able to complete our initial
business combination within the prescribed time frame, in which case we would cease all operations except for the purpose of winding up
and we would redeem our public shares and liquidate, in which case our public shareholders may only receive $10.65 per share, and the
Company warrants will expire worthless.
We must complete our initial business combination
by April 8, 2023 (or up to October 8, 2023, if we have extended the period of time as described in this report). We may not be able to
find a suitable target business and complete our initial business combination by such date. If we have not completed our initial business
combination by such date, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible
but no more than ten business days thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal
to the aggregate amount then on deposit in the Trust Account, including interest earned (net of taxes payable), which redemption will
completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions,
if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of
the remaining shareholders and the Company’s board of directors, proceed to commence a voluntary liquidation and thereby a formal
dissolution of the Company, subject in each case to its obligations to provide for claims of creditors and the requirements of applicable
law. Furthermore, holders of warrants will not receive any of the funds in our trust account with respect to their warrants, nor will
they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such warrants, which will
expire worthless as result of the Company’s failure to consummate a business combination.
If third parties bring claims against the
Company, the proceeds held in trust could be reduced and the per-share liquidation price received by the Company’s shareholders
may be less than $10.65 per share.
The Company’s placing of funds in trust
may not protect such funds from third party claims against the Company. Although the Company has received executed agreements waiving
any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of the Company’s public
shareholders from many of the vendors, service providers (other than its independent accountants) and prospective target businesses with
which it does business, such vendors, service providers and prospective target businesses may still seek recourse against the trust account.
Additionally, a court may not uphold the validity of such agreements. Accordingly, the proceeds held in trust could be subject to claims
that could take priority over those of the Company’s public shareholders. If the Company liquidates the trust account before the
completion of a business combination and distributes the proceeds held therein to its public shareholders, Ace Global Investment Limited
(the “Sponsor”) has contractually agreed to ensure that the proceeds in the trust account are not reduced by the claims of
target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted for or products
sold to us, but only if such a vendor or prospective target business does not execute or has not executed such a waiver of such claims.
However, there can be no assurance from the Company or the Sponsor that they will be able to meet such obligation. Therefore, the per-share distribution
from the trust account for our shareholders may be less than $10.65 per share due to any such claims.
Additionally, if the Company is deemed insolvent
for the purposes of the Insolvency Act, 2003 of the British Virgin Islands, as amended, (the “Insolvency Act”) or we are required
to immediately enter insolvent liquidation, the proceeds held in the trust account could be subject to applicable insolvency law, and
may be included in the Company’s insolvent estate and subject to the claims of third parties with priority over the claims of our
shareholders. To the extent any insolvency claims deplete the trust account, the Company may not be able to return $10.65 per share to
our public shareholders.
Nasdaq may delist our securities from trading
on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading
restrictions.
Our securities are currently listed on the Nasdaq
Capital Market. However, we cannot assure our shareholders that our securities will continue to be listed on the Nasdaq Capital Market
in the future or prior to our initial business combination. If Nasdaq delists our securities from trading on its exchange, we could face
significant material adverse consequences, including:
| ● | A
limited availability of market quotations for our securities; |
| ● | Reduced
liquidity with respect to our securities; |
| ● | A
determination that our shares are a “penny stock,” which will require brokers trading in our securities to adhere to more
stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our securities; |
| ● | A
limited amount of news and analyst coverage for the post-transaction company; and |
| ● | A
decreased ability to issue additional securities or obtain additional financing in the future. |
The Company will not obtain an opinion from
an unaffiliated third party as to the fairness of the Business Combination to its shareholders.
The Company is not required to obtain an opinion
from an unaffiliated third party that the price it is paying is fair to its public shareholders from a financial point of view. The Company’s
public shareholders therefore must rely solely on the judgment of the Company’s board of directors.
If the Business Combination’s benefits
do not meet the expectations of financial or industry analysts, the market price of our securities may decline.
The market price of our securities may decline
as a result of the Business Combination if:
| ● | we
do not achieve the perceived benefits of the acquisition as rapidly as believed by, or to the extent anticipated by, financial or industry
analysts; |
| ● | There
are changes in the industries in which we and our customers operate; |
| ● | There
are developments involving our competitors; |
| ● | There
are changes in laws and regulations affecting our business; or |
| ● | The
effect of the Business Combination on the financial statements is not consistent with the expectations of financial or industry analysts. |
Accordingly, investors may experience a loss as
a result of decreasing share prices.
The Company’s directors and officers
may have certain conflicts in determining to recommend the acquisition of LEW, since certain of their interests, and certain interests
of their affiliates and associates, are different from, or in addition to, its shareholders’ interests.
The Company’s management and directors have
interests in and arising from the Business Combination that are different from, or in addition to, its shareholders’ interests,
which could result in a real or perceived conflict of interest. These interests include the fact that certain of the Company ordinary
shares owned by the Company’s management and directors, or their affiliates and associates, would become worthless if the Business
Combination is not approved and the Company otherwise fails to consummate a business combination prior to its liquidation date.
The existence of financial and personal interests
of one or more of the Company’s directors and officers may result in a conflict of interest on the part of such director(s) and
officer(s) between what he, she or they may believe is in the best interests of the Company and its shareholders and what he, she
or they may believe is best for himself, herself or themselves.
The business combination or post-combination
company may be materially adversely affected by the COVID-19 outbreak.
The COVID-19 outbreak has resulted in, and
outbreaks of other infectious diseases in the future could result in, a widespread health crisis that has adversely affected the economies
and financial markets worldwide, and could also adversely affect the financial performance after the Business Combination. The extent
to which COVID-19 impacts the business combination or the post-combination company will depend on future developments, which
are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and
the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other matters of
global concern continue for an extensive period of time, our ability to consummate the business combination may be materially adversely
affected. Additionally, if the financial markets or the overall economy are impacted for an extended period, the post-combination company’s
results of operations, financial position and cash flows may be materially adversely affected.
In the event that the Business Combination
is not consummated, we may seek business combination opportunities in industries or sectors which may or may not be outside of our management’s
area of expertise.
In the event that the Business Combination is
not consummated, we may consider a business combination outside of our management’s area of expertise if a business combination
candidate is presented to us and we determine that such candidate offers an attractive business combination opportunity for our Company.
Although our management will endeavor to evaluate the risks inherent in any particular business combination candidate, we cannot assure
you that we will adequately ascertain or assess all of the significant risk factors. We also cannot assure you that an investment in our
securities will not ultimately prove to be less favorable to investors than a direct investment, if an opportunity were available, in
a business combination candidate. In the event that the Business Combination is not consummated and we elect to pursue an alternative
business combination outside of the areas of our management’s expertise, our management’s expertise may not be directly applicable
to its evaluation or operation, and the information contained herein regarding the areas of our management’s expertise would not
be relevant to an understanding of the business that we elect to acquire. As a result, our management may not be able to adequately ascertain
or assess all of the significant risk factors. Accordingly, any shareholders who choose to remain shareholder following our business combination
could suffer a reduction in the value of their shares. Such shareholders are unlikely to have a remedy for such reduction in value.
Although we have identified general criteria
and guidelines that we believe are important in evaluating prospective target businesses, in the event that the Business Combination is
not consummated we may enter into an alternative business combination with a target that does not meet such criteria and guidelines, and
as a result, the target business with which we enter into our initial business combination may not have attributes entirely consistent
with our general criteria and guidelines.
We have identified general criteria and guidelines
for evaluating prospective target businesses that we have used in evaluating business combination opportunities, including LEW. In the
event that the Business Combination is not consummated, we may decide to enter into an alternative business combination with a target
business that does not meet these criteria and guidelines. If we complete our initial business combination with a target that does not
meet some or all of these guidelines, such combination may not be as successful as a combination with a business that does meet all of
our general criteria and guidelines. In addition, if we announce a prospective business combination with a target that does not meet our
general criteria and guidelines, a greater number of shareholders may exercise their redemption rights, which may make it difficult for
us to meet any closing condition with a target business that requires us to have a minimum net worth or a certain amount of cash. In addition,
if shareholder approval of the transaction is required by law, or we decide to obtain shareholder approval for business or other legal
reasons, it may be more difficult for us to attain shareholder approval of our initial business combination if the target business does
not meet our general criteria and guidelines. If we are unable to complete our initial business combination, our public shareholders may
receive only approximately $10.65 per share on the liquidation of our trust account and our warrants will expire worthless.
In the event that we do not consummate the
Business Combination, we may seek business combination opportunities with a financially unstable business or an entity lacking an established
record of revenue, cash flow or earnings, which could subject us to volatile revenues, cash flows or earnings or difficulty in retaining
key personnel.
In the event that we do not consummate the Business
Combination and to the extent we complete an alternative business combination with a financially unstable business or an entity lacking
an established record of revenues or earnings, we may be affected by numerous risks inherent in the operations of the business with which
we combine. These risks include volatile revenues or earnings and difficulties in obtaining and retaining key personnel. Although our
officers and directors will endeavor to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain
or assess all of the significant risk factors and we may not have adequate time to complete due diligence. Furthermore, some of these
risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact
a target business.
We may attempt to complete our initial business
combination with a private company about which little information is available, which may result in a business combination with a company
that is not as profitable as we suspected, if at all.
In pursuing our business combination strategy,
we may seek to effectuate our initial business combination with a privately held company. By definition, very little public information
exists about private companies, and we could be required to make our decision on whether to pursue a potential initial business combination
on the basis of limited information, which may result in a business combination with a company that is not as profitable as we suspected,
if at all.
A market for our securities may not develop,
which would adversely affect the liquidity and price of our securities.
The price of our securities may vary significantly
due to one or more potential business combinations and general market or economic conditions. Furthermore, an active trading market for
our securities may never develop or, if developed, it may not be sustained. You may be unable to sell your securities unless a market
can be established and sustained.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. PROPERTIES
We do not own any real estate or other physical
properties materially important to our operations. We maintain our principal executive office at Rm. 806, 8/F, Tower 2, Lippo Centre,
No. 89 Queensway, Admiralty, Hong Kong. The cost for this space is provided to us by our Sponsor, as part of the $10,000 per month payment
we make to it for general and administrative services, including office space, utilities and administrative services to the Company. We
consider our current office space adequate for our current operations.
ITEM 3. LEGAL PROCEEDINGS
We may be subject to legal proceedings, investigations
and claims incidental to the conduct of our business from time to time. We are not currently a party to any material litigation or other
legal proceedings brought against us. We are also not aware of any legal proceeding, investigation or claim, or other legal exposure that
has a more than remote possibility of having a material adverse effect on our business, financial condition or results of operations.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE
Our current directors and executive officers are
as follows:
| Name |
|
Age |
|
Position |
| Eugene Wong |
|
35 |
|
Chief Executive Officer, Director
and Chairman |
| Nicholas Xue-Wei Tan |
|
33 |
|
Chief Financial Officer |
| Robert Morris |
|
34 |
|
Independent Director |
| Yan Xu |
|
40 |
|
Independent Director |
| Leslie Chow |
|
39 |
|
Independent Director |
Below is a summary of the business experience
of each our executive officers and directors:
Eugene Wong. Mr. Eugene Wong has
been our Chief Executive Officer, Director and Chairman of our Board since our inception. Mr. Wong has a wide range of experience both
in the financial and gaming industries for over a decade. Mr. Wong is currently Managing Director of Norwich Capital Limited since September
2021. Mr. Wong joined Whiz Partners Inc. in May 2013 and during his time at Whiz Partners, he became chief investment officer and partner
of the China Hero PJ Fund (“China Hero Fund”), an incubation program to support Chinese developers to create the next blockbuster
console game on the PlayStation platform. China Hero Fund is an exclusive collaboration with Sony Interactive Entertainment, one of the
largest console gaming companies in the world. During his time at Whiz Partners Asia, he also personally oversaw the injection of multiple
Japanese technology companies in audio middleware, debugging and testing and graphics renderings into the China market to improve the
quality of games. Prior to his role at Whiz Partners, he spent two years as a merger and acquisitions analyst at CDC Software Inc. (NASDAQ:
CDCS) from August 2009 to May 2011, where he worked closely with the senior management team to conduct financial analysis, due diligence
and deal structuring. He then spent one year as an investment analyst at World Bank Group from August 2012 to May 2013, where he gained
experience in market analysis and creating valuations to identify favorable investment opportunities. Mr. Wong obtained his Master of
Business Administration degree from the MIT Sloan-Tsinghua Program at Tsinghua University in May 2013, and his Bachelor of Arts in Economics
degree at the University of Chicago in July 2009.
Nicholas Xue-Wei Tan. Mr. Nicholas
Tan has been our Chief Financial Officer since inception. Mr. Tan has a wide range of experience in management and operating roles in
e-commerce, consulting, consumer retail and energy production companies. He has been a partner at East Ocean Capital, an investment holding
company focused on consumer, education and healthcare sectors since June 2015. From January 2016 to January 2018, he was the vice president
of China Mall Group, South Africa’s largest group of Chinese malls. He oversaw the launch of the 150,000 m2 Home Africa mall in
Johannesburg, South Africa. Prior to this role, in February 2015, he was one of the founding team members of Shopee, one of the most popular
e-commerce platforms in Southeast Asia. As the regional operations director of Shopee, he managed the business operations and product
development across Thailand, Philippines, Singapore, Taiwan, Malaysia, Vietnam and Indonesia. Shopee was later acquired by Sea Group.
Mr. Tan also worked as an associate consultant at Bain & Company, specializing in consumer retail and private equity from January
2013 to April 2015. In 2012, he also served as a policy analyst at the Ministry of Health, PRC, where he advised on nationwide health
policies and helped author multiple research papers published in leading medical journals. Mr. Tan obtained his Bachelor’s in Biology
at Harvard University in December 2012.
Robert Morris. Mr. Morris has served
as an independent director since our inception. Mr. Morris has over a decade of experience working in the banking and investment industries
with experience in trading convertible bonds. He is currently a portfolio manager at Oasis Management since August 2020, he joined as
an analyst since December 2016, a private investment fund management company with $3 billion of assets under management. From June 2010
to October 2016, he worked at UBS Investment Bank in both London and Hong Kong. He spent the first 2 years in London where he was a convertible
bond trader focused on technology, telecoms, and real estate market. In June 2012, he moved to UBS’s Hong Kong office where he specialized
in high yield credit, distressed convertible bonds, and trading special situation convertibles. He also helped advise bankers and capital
market groups on looking for optimal solutions to refinance under difficult financial situations. In 2013, he was promoted to be the associate
director where he managed risk management, market making and proprietary trading in pan-Asian convertible bonds. Mr. Morris graduated
from London School of Economics with a Bachelor’s in Economics with 1st class honors in 2009. After which, he obtained his CFA license.
Yan Xu. Ms. Xu has served as an
independent director since our inception. Ms. Xu has over 9 years of experience working in the Chinese gaming market and in a variety
of industries in the Japanese market. She has also worked closely with top executives in PRC companies. Ms. Xu has been an independent
director for Inception Growth Acquisition Limited since March 2023. Since February 2014, Ms. Xu has served as the head of the Japanese
division for Whiz Partners Asia Ltd where she worked closely with Japanese companies to help identify potential Chinese partners to expand
their business operations. She has also been the vice president of the China Hero Fund project, one of the first funds created to support
game developers in China since 2016. Prior to this role, she worked as the assistant to the chief executive officer for Blue Ridge China,
where she was responsible for post-investment tracking. Between 2008 to 2011, she worked at SinoCom Software Group Ltd. as secretary to
the third division and team leader of the translation department. Ms. Xu also spent 3 years working at Neusoft Group Co. Ltd as secretary
of the business software division and team leader of the translation department. She graduated from Dalian University of Foreign Studies
with a Bachelors in Japanese in July 2003, and from Jilin University with a minor in law in July 2005.
Leslie Chow. Mr. Chow has served
an independent director since our inception. Mr. Chow specializes in helping companies based in China and the Asia Pacific region to publicly
list in US, Hong Kong and Australia equity markets as well as providing financial consulting services. Mr. Chow is the Chief Executive
Officer and secretary of Neo Technology Acquisition Corporation since May 2021. He has been the co-founder of ZHEN in July 2020, a blockchain
app for art authentication, and chief financial officer of Phase Scientific International Limited since August 2019, a biotech start-up
that specializes in improving performance of point-of-care and lab-based diagnostics. He has also been an independent non-executive director
for Golden Power Group Holdings (HKex:3919) since July 2015. Prior to these roles, he worked at Takung Art Co., Ltd, first as a consultant
and then as chief financial officer where he managed and controlled all financial related activities for the company from August 2015
to August 2019. From April 2009 to August 2015, he was a partner at Albeck Financial Services where he managed the Asia-Pacific office
focusing on companies that want to be publicly listed and also offering financial consultation in merger and acquisitions transactions,
valuation of financial instruments, financial statements, cross-border equity and GAAP. From 2005-2009, he was a senior auditor at Deloitte
& Touche LLP where he facilitated multinational audit engagements in internal control procedures and reporting. He graduated from
the University of California Santa Barbara with a Bachelor’s in Business Economics with an emphasis in Accounting in 2005. He has
also obtained his CPA license and passed the CFA level 2 examination.
Director Independence
Nasdaq requires that a majority of our board must
be composed of “independent directors.” Currently, Robert Morris, Yan Xu and Leslie Chow would each be considered an “independent
director” under the Nasdaq listing rules, which is defined generally as a person other than an officer or employee of the company
or its subsidiaries or any other individual having a relationship, which, in the opinion of the company’s board of directors would
interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. Our independent
directors will have regularly scheduled meetings at which only independent directors are present.
We will only enter into a business combination
if it is approved by a majority of our independent directors. Additionally, we will only enter into transactions with our officers and
directors and their respective affiliates that are on terms no less favorable to us than could be obtained from independent parties. Any
related-party transactions must also be approved by our audit committee and a majority of disinterested independent directors.
Board Committees
The Board has a standing audit, nominating and
compensation committee, which were established at the closing of our initial public offering. The independent directors oversee director
nominations. Each committee has a charter, which was filed with the SEC as exhibits to the Registration Statement on Form S-1 on February
8, 2021.
Audit Committee
Under the Nasdaq listing standards and applicable
SEC rules, we are required to have three members of the Audit Committee, all of whom must be independent. We have established an Audit
Committee of the board of directors, which consists of Robert Morris, Yan Xu, and Leslie Chow, each of whom is an independent director
under Nasdaq’s listing standards. Leslie Chow is the Chairperson of the Audit Committee. The Audit Committee’s duties, which
are specified in our Audit Committee Charter, include, but are not limited to:
| ● | reviewing and discussing with management and the independent
auditor the annual audited financial statements, and recommending to Ace’s board of directors whether the audited financial statements
should be included in our Form 10-K; |
| ● | discussing with management and the independent auditor significant
financial reporting issues and judgments made in connection with the preparation of our financial statements; |
| ● | discussing with management major risk assessment and risk
management policies; |
| ● | monitoring the independence of the independent auditor; |
| ● | verifying the rotation of the lead (or coordinating) audit
partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law; |
| ● | reviewing and approving all related-party transactions; |
| ● | inquiring and discussing with management our compliance with
applicable laws and regulations; |
| ● | pre-approving all audit services and permitted non-audit
services to be performed by our independent auditor, including the fees and terms of the services to be performed; |
| ● | appointing or replacing the independent auditor; |
| ● | determining the compensation and oversight of the work of
the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting)
for the purpose of preparing or issuing an audit report or related work; |
| ● | establishing procedures for the receipt, retention and treatment
of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our
financial statements or accounting policies; and |
| ● | approving reimbursement of expenses incurred by our management
team in identifying potential target businesses. |
Financial Experts on Audit Committee
The Audit Committee will at all times be composed
exclusively of “independent directors” who are “financially literate” as defined under Nasdaq listing standards.
Nasdaq listing standards define “financially literate” as being able to read and understand fundamental financial statements,
including a company’s consolidated balance sheet, consolidated income statement and consolidated cash flow statement.
In addition, we must certify to Nasdaq that the
Audit Committee has, and will continue to have, at least one member who has past employment experience in finance or accounting, requisite
professional certification in accounting, or other comparable experience or background that results in the individual’s financial
sophistication. Our board of directors has determined that Leslie Chow qualifies as an “audit committee financial expert”,
as defined under rules and regulations of the SEC.
Nominating Committee
The members of the Nominating Committee are Robert
Morris, Yan Xu, and Leslie Chow, each of whom is an independent director under Nasdaq’s listing standards. Robert Morris is the
Chairperson of the Nominating Committee. The Nominating Committee is responsible for overseeing the selection of persons to be nominated
to serve on our board of directors. The Nominating Committee considers persons identified by its members, management, shareholders, investment
bankers and others.
The guidelines for selecting nominees, which are
specified in the Nominating Committee Charter, generally provide those persons to be nominated:
| ● | should have demonstrated notable or significant achievements
in business, education or public service; |
| ● | should possess the requisite intelligence, education and
experience to make a significant contribution to our Board of Directors and bring a range of skills, diverse perspectives and backgrounds
to its deliberations; and |
| ● | should have the highest ethical standards, a strong sense
of professionalism and intense dedication to serving the interests of the shareholders. |
The Nominating Committee will consider a number
of qualifications relating to management and leadership experience, background and integrity and professionalism in evaluating a person’s
candidacy for membership on the board of directors. The Nominating Committee may require certain skills or attributes, such as financial
or accounting experience, to meet specific board needs that arise from time to time and will also consider the overall experience and
makeup of its members to obtain a broad and diverse mix of board members. The Nominating Committee does not distinguish among nominees
recommended by shareholders and other persons.
Compensation Committee
The members of the Compensation Committee are
Robert Morris, Yan Xu, and Leslie Chow, each of whom is an independent director under Nasdaq’s listing standards. Yan Xu is the
Chairperson of the Compensation Committee. The Compensation Committee’s duties, which are specified in our Compensation Committee
Charter, include, but are not limited to:
| ● | reviewing and approving on an annual basis the corporate
goals and objectives relevant to our president and chief executive officer’s compensation, evaluating our president and chief executive
officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our president
and chief executive officer based on such evaluation; |
| ● | reviewing and approving the compensation of all of our other
executive officers; |
| ● | reviewing our executive compensation policies and plans; |
| ● | implementing and administering our incentive compensation
equity-based remuneration plans; |
| ● | assisting management in complying with our proxy statement
and annual report disclosure requirements; |
| ● | approving all special perquisites, special cash payments
and other special compensation and benefit arrangements for our executive officers and employees; |
| ● | if required, producing a report on executive compensation
to be included in our annual proxy statement; and |
| ● | reviewing, evaluating and recommending changes, if appropriate,
to the remuneration for directors. |
The charter also provides that the Compensation
Committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and will
be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving
advice from a compensation consultant, external legal counsel or any other adviser, the Compensation Committee will consider the independence
of each such adviser, including the factors required by Nasdaq and the SEC.
Conflicts of Interest
Investors should be aware of the following potential
conflicts of interest:
| |
● |
The Sponsor and the Company’s directors and officers have waived their rights to redeem their Ordinary Shares (including shares underlying the Units), or to receive distributions with respect to these shares upon the liquidation of the Trust Account if Ace is unable to consummate a business combination. Accordingly, the Ordinary Shares, as well as the Units purchased by the Sponsor and the Company’s officers and directors, will be worthless if the Company does not consummate a business combination. |
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If the proposed Business Combination is not completed by April 8, 2023 (or up to October 8, 2023, if the time period is extended, as described herein), the Company will be required to liquidate. In such event, the 1,150,000 Ordinary Shares held by the initial shareholders, which were acquired prior to the IPO for an aggregate purchase price of $25,000, will be worthless. Such shares had an aggregate market value of approximately $12,270,500 based on the closing price of the Ordinary Shares of $10.67 on Nasdaq as of January 6, 2023; |
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● |
If the proposed Business Combination is not completed by April 8, 2023 (or up to October 8, 2023, if the time period is extended, as described herein), the 304,000 Private Units purchased by the Sponsor for a total purchase price of $3,040,000, will be worthless. Such Private Units had an aggregate market value of approximately $3,243,680 based on the closing price of the Units of $10.67 on Nasdaq as of January 6, 2023; |
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● |
On March 28, 2022, July 6, 2022, September 28, 2022, and January 5, 2023, Ace issued unsecured promissory notes in the aggregate principal amount of $ $455,400, $455,400, $455,400 and $ 350,332 (the “Notes”), respectively, to the Sponsor in exchange for the Sponsor depositing such amounts into Ace’s trust account in order to extend the amount of time it has available to complete a business combination. The Notes do not bear interest and mature upon the closing of a business combination by Ace. In addition, the Notes may be converted by the holder into the Units at a price of $10.00 per unit by providing Ace with written notice of its intention to convert the Notes at least one business day prior to the closing of the Business Combination. If the proposed Business Combination is not completed by April 8, 2023 (or up to October 8, 2023, if the time period is extended, as described herein), the Notes shall be deemed to be terminated and no amounts will thereafter be due, or if the Notes have been converted, the Units will be worthless. Such Units would have had an aggregate market value of approximately $1,457,735 based on the closing price of the Units of $10.67 on Nasdaq as of January 6, 2023; |
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None of our officers and directors is required to commit their full time to our affairs and, accordingly, they may have conflicts of interest in allocating their time among various business activities. |
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In the course of their other business activities, our officers and directors may become aware of investment and business opportunities which may be appropriate for presentation to our company as well as the other entities with which they are affiliated. Our management has pre-existing fiduciary duties and contractual obligations and may have conflicts of interest in determining to which entity a particular business opportunity should be presented. |
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Our officers and directors may in the future become affiliated with entities, including other blank check companies, engaged in business activities similar to those intended to be conducted by our company. |
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The insider shares owned by our officers and directors will be released from escrow only if a business combination is successfully completed and subject to certain other limitations. Additionally, our officers and directors will not receive distributions from the Trust Account with respect to any of their insider shares if we do not complete a business combination. Furthermore, our initial shareholders have agreed that the private units will not be sold or transferred by them until after we have completed our initial business combination. In addition, our officers and directors may loan funds to us after the IPO and may be owed reimbursement for expenses incurred in connection with certain activities on our behalf which would only be repaid if we complete an initial business combination. For the foregoing reasons, the personal and financial interests of our directors and executive officers may influence their motivation in identifying and selecting a target business, completing a business combination in a timely manner and securing the release of their shares. |
Under British Virgin Islands law, directors owe
the following fiduciary duties:
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● |
duty to act in good faith in what the director believes to be in the best interests of the company as a whole; |
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duty to exercise powers for the purposes for which those powers were conferred and not for a collateral purpose; |
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directors should not properly fetter the exercise of future discretion; |
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duty not to put themselves in a position in which there is a conflict between their duty to the company and their personal interests; and |
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duty to exercise independent judgment. |
In addition to the above, directors also owe a
duty of care which is not fiduciary in nature. This duty has been defined as a requirement to act as a reasonably diligent person having
both the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as are carried
out by that director in relation to the company and the general knowledge skill and experience which that director has.
As set out above, directors have a duty not to
put themselves in a position of conflict and this includes a duty not to engage in self-dealing, or to otherwise benefit as a result of
their position. However, in some instances what would otherwise be a breach of this duty can be forgiven and/or authorized in advance
by the shareholders provided that there is full disclosure by the directors. This can be done by way of permission granted in the memorandum
and articles of association or alternatively by shareholder approval at general meetings.
Accordingly, as a result of multiple business
affiliations, our officers and directors may have similar legal obligations relating to presenting business opportunities meeting the
above-listed criteria to multiple entities. In addition, conflicts of interest may arise when our board evaluates a particular business
opportunity with respect to the above-listed criteria. We cannot assure you that any of the above mentioned conflicts will be resolved
in our favor. Furthermore, most of our officers and directors have pre-existing fiduciary obligations to other businesses of which they
are officers or directors. To the extent they identify business opportunities which may be suitable for the entities to which they owe
pre-existing fiduciary obligations, our officers and directors will honor those fiduciary obligations. Accordingly, it is possible they
may not present opportunities to us that otherwise may be attractive to us unless the entities to which they owe pre-existing fiduciary
obligations and any successors to such entities have declined to accept such opportunities.
In order to minimize potential conflicts of interest
which may arise from multiple corporate affiliations, each of our officers and directors has contractually agreed, pursuant to a written
agreement with us, until the earliest of a business combination, our liquidation or such time as he ceases to be an officer or director,
to present to our company for our consideration, prior to presentation to any other entity, any suitable business opportunity which may
reasonably be required to be presented to us, subject to any pre-existing fiduciary or contractual obligations he might have.
The following table summarizes the current pre-existing
fiduciary or contractual obligations of our officers and directors.
| Name
of Individual |
|
Name
of Affiliated Company |
|
Affiliation |
|
Priority/Preference
relative
to Ace Global Business
Acquisition Limited |
| Eugene
Wong |
|
Norwich Capital Limited
Whiz Partners Asia Ltd. |
|
Managing Director
Managing Director & Partner |
|
Norwich Capital Limited Whiz Partners Asia Ltd. |
| Nicholas
Xue-Wei Tan |
|
East Ocean Capital |
|
Partner |
|
East Ocean Capital |
Robert Morris |
|
Oasis Management
Inception Growth Acquisition Limited |
|
Portfolio Manager
Independent Director |
|
Oasis Management
Inception Growth Acquisition Limited
|
| Yan Xu |
|
Whiz Partners Asia Ltd. |
|
Vice President |
|
Whiz Partners Asia Ltd. |
| Leslie
Chow |
|
Phase Scientific International Limited |
|
Chief Financial Officer |
|
Phase Scientific International Limited |
In connection with the vote required for any business
combination, all of our existing shareholders, including all of our officers and directors, have agreed to vote their respective insider
shares and private shares in favor of any proposed business combination. In addition, they have agreed to waive their respective rights
to participate in any liquidation distribution with respect to those ordinary shares acquired by them prior to the IPO. If they purchased
ordinary shares in the IPO or in the open market, however, they would be entitled to participate in any liquidation distribution in respect
of such shares but have agreed not to convert such shares (or sell their shares in any tender offer) in connection with the consummation
of our initial business combination or an amendment to our amended and restated memorandum and articles of association relating to pre-business
combination activity.
All ongoing and future transactions between us
and any of our officers and directors or their respective affiliates will be on terms believed by us to be no less favorable to us than
are available from unaffiliated third parties. Such transactions will require prior approval by our audit committee and a majority of
our uninterested “independent” directors, or the members of our board who do not have an interest in the transaction, in either
case who had access, at our expense, to our attorneys or independent legal counsel. We will not enter into any such transaction unless
our audit committee and a majority of our disinterested “independent” directors determine that the terms of such transaction
are no less favorable to us than those that would be available to us with respect to such a transaction from unaffiliated third parties.
To further minimize conflicts of interest, we
have agreed not to consummate our initial business combination with an entity that is affiliated with any of our officers, directors or
initial shareholders, unless we have obtained (i) an opinion from an independent investment banking firm that the business combination
is fair to our unaffiliated shareholders from a financial point of view and (ii) the approval of a majority of our disinterested and independent
directors (if we have any at that time). Furthermore, in no event will any of our initial shareholders, officers, directors, special advisors
or their respective affiliates be paid any finder’s fee, consulting fee or other similar compensation prior to, or for any services
they render in order to effectuate, the consummation of our initial business combination.
Code of Ethics
We adopted a code of conduct and ethics applicable
to our directors, officers and employees in accordance with applicable federal securities laws. The code of ethics codifies the business
and ethical principles that govern all aspects of our business.
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Securities Exchange Act of
1934, as amended, or the Exchange Act, requires our executive officers, directors and persons who beneficially own more than 10% of a
registered class of our equity securities to file with the Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership of our ordinary shares and other equity securities. These executive officers, directors, and greater than 10%
beneficial owners are required by SEC regulation to furnish us with copies of all Section 16(a) forms filed by such reporting persons.
Based solely on our review of such forms furnished
to us and written representations from certain reporting persons, we believe that all filing requirements applicable to our executive
officers, directors and greater than 10% beneficial owners were filed in a timely manner.
ITEM 11. EXECUTIVE COMPENSATION
Employment Agreements
We have not entered into any employment agreements
with our executive officers, and have not made any agreements to provide benefits upon termination of employment.
Executive Officer and Director Compensation
No executive officer has received any cash compensation
for services rendered to us. No compensation of any kind, including finders, consulting or other similar fees, will be paid to any of
our existing shareholders, including our directors, or any of their respective affiliates, prior to, or for any services they render in
order to effectuate, the consummation of a business combination. However, such individuals will be reimbursed for any out-of-pocket expenses
incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable
business combinations. There is no limit on the amount of these out-of-pocket expenses and there will be no review of the reasonableness
of the expenses by anyone other than our board of directors and audit committee, which includes persons who may seek reimbursement, or
a court of competent jurisdiction if such reimbursement is challenged.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS
The following table sets forth as of January 6,
2023 the number of ordinary shares beneficially owned by (i) each person who is known by us to be the beneficial owner of more than five
percent of our issued and outstanding ordinary shares (ii) each of our officers and directors; and (iii) all of our officers and directors
as a group. As of January 6, 2023, we had 3,789,547 ordinary shares issued and outstanding.
Unless otherwise indicated, we believe that all
persons named in the table have sole voting and investment power with respect to all ordinary shares beneficially owned by them. The following
table does not reflect record of beneficial ownership of any ordinary shares issuable upon exercise of the warrants or conversion of rights,
as the warrants are not exercisable within 60 days of January 6, 2023.
| Name and Address of Beneficial Owner(1) | |
Amount and
Nature of
Beneficial Ownership of
Ordinary Shares | | |
Approximate
Percentage of
Outstanding
Ordinary Shares | |
| 5% Or Greater Holder | |
| | |
| |
| Ace Global Investment Limited(1) | |
| 1,369,000 | | |
| 36.13 | % |
| Karpus Investment Management(2) | |
| 494,867 | | |
| 13.06 | % |
| Feis Equities LLC / Lawrence M. Feis (3) | |
| 327,357 | | |
| 8.64 | % |
| Polar Asset Management Partners Inc.(4) | |
| 380,000 | | |
| 10.03 | % |
| ATW SPAC Management LLC / Antonio Ruiz-Gimenez(5) | |
| 396,000 | | |
| 10.45 | % |
| Fir Tree Capital Management LP(6) | |
| 310,000 | | |
| 8.18 | % |
| Executive Officers and Directors | |
| | | |
| | |
| Eugene Wong | |
| 20,000 | | |
| * | |
| Nicholas Xue-Wei Tan | |
| 20,000 | | |
| * | |
| Robert Morris | |
| 15,000 | | |
| * | |
| Yan Xu | |
| 15,000 | | |
| * | |
| Leslie Chow | |
| 15,000 | | |
| * | |
| All directors and executive officers as a group (5 individuals)(7) | |
| 85,000 | | |
| 2.24 | % |
| (1) |
The principal business office of Ace Global Investment Limited (the “Sponsor”) is located at Rm. 806, 8/F, Tower 2, Lippo Centre, No. 89 Queensway, Admiralty, Hong Kong. The 1,369,000 ordinary shares held by the Sponsor may be deemed to be indirectly beneficially owned by Ms. Chan Yuen Wah. |
| |
|
| (2) |
Information is based solely on a report on Schedule 13G filed by Karpus Management, Inc d/b/a Karpus Investment Management (“Karpus”) on February 14, 2023. The principal business office of Karpus is located at 183 Sully’s Trail, Pittsford, New York 14534. Karpus possesses the sole voting power and sole dispositive power with respect to the 494,867 ordinary shares held by accounts managed by Karpus and beneficially owned by Karpus. Karpus is a registered investment adviser under Section 203 of the Investment Advisers Act of 1940 and is controlled by City of London Investment Group plc (“CLIG”), which is listed on the London Stock Exchange. However, in accordance with SEC Release No. 34-39538 (January 12, 1998), effective informational barriers have been established between Karpus and CLIG such that voting and investment power over the subject securities is exercised by Karpus independently of CLIG, and, accordingly, attribution of beneficial ownership is not required between Karpus and CLIG. |
| |
|
| (3) |
Information is based solely on a report on Schedule 13G filed by Feis Equities LLC (“Feis”) and Lawrence M. Feis (“Lawrence”) on February 8, 2023. The principal business office of Feis and Lawrence is located at 20 North Wacker Drive, Suite 2115, Chicago, Illinois 60606. Feis and Lawrence possess the sole voting power and sole dispositive power with respect to the 327,357 ordinary shares held by Feis and Lawrence. |
| |
|
| (4) |
Information is based solely on a report on Form 3 filed by Polar Asset Management Partners Inc. (“Polar”) on January 19, 2023. The principal business office of Polar is located at 16 York Street, Suite 2900, Toronto, A6, M5J 0E6. Polar is a company incorporated under the laws of Ontario, Canada, which serves as investment advisor to Polar Multi-Strategy Master Fund, a Cayman Islands exempted company (“PMSMF”) and has sole voting and investment discretion with respects to the 380,000 ordinary shares held by PMSMF. |
| |
|
| (5) |
Information is based solely on a report on Schedule 13G filed by ATW SPAC Management LLC (“ATW”) and Antonio Ruiz-Gimenez on February 14, 2022. The principal business office (or residence) of ATW and Antonio Ruiz-Gimenez is located at 7969 NW 2nd Street, #401, Miami, Florida 33126. ATW and Antonio Ruiz-Gimenez possess the shared voting power and shared dispositive power with respect to the 396,000 ordinary shares held by one or more separately managed accounts managed by ATW, which has been delegated exclusive authority to vote and/or direct the disposition of the ordinary shares held by such separately managed accounts. Antonio Ruiz-Gimenez is the managing member of ATW. For the purposes of Reg. Section 240.13d-3, ATW and Antonio Ruiz-Gimenez are deemed to be the beneficial owners of the 396,000 ordinary shares. |
| |
|
| (6) |
Information is based solely on a report on Schedule 13G filed by Fir Tree Capital Management LP (“Fir Tree”) on February 14, 2022. The principal business office of Fir Tree is located at 55 West 46th Street, 29th Floor New York, NY 10036. Fir Tree possesses the sole voting power and sole dispositive power with respect to the 310,000 ordinary shares beneficially owned by Fir Tree. |
| (7) | Unless otherwise indicated, the business address of each of the individuals is c/o Ace Global Business
Acquisition Limited, Rm. 806, 8/F, Tower 2, Lippo Centre, No. 89 Queensway, Admiralty, Hong Kong. |
All of the insider shares issued and outstanding
prior to the IPO were placed in escrow with Continental Stock Transfer & Trust Company, LLC, as escrow agent, until (1) with respect
to 50% of the insider shares, the earlier of one year after the date of the consummation of our initial business combination and the date
on which the closing price of our ordinary shares equals or exceeds $12.50 per share (as adjusted for share splits, share capitalizations,
reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after our initial business
combination and (2) with respect to the remaining 50% of the insider shares, one year after the date of the consummation of our initial
business combination, or earlier, in either case, if, subsequent to our initial business combination, we consummate a liquidation, merger,
share exchange or other similar transaction which results in all of our shareholders having the right to exchange their shares for cash,
securities or other property.
During the escrow period, the holders of these
shares will not be able to sell or transfer their securities except (i) to the Company’s pre-IPO shareholders, or to the Company’s
officers, directors, advisors and employees, (ii) if the Initial Shareholder is an entity, as a distribution to partners, members or shareholders
of the Initial Shareholder upon the liquidation and dissolution of the Initial Shareholder, (iii) by bona fide gift to a member of the
Initial Shareholder’s immediate family or to a trust, the beneficiary of which is the Initial Shareholder or a member of the Initial
Shareholder’s immediate family for estate planning purposes, (iv) by virtue of the laws of descent and distribution upon death of
the Initial Shareholder, (v) pursuant to a qualified domestic relations order, (vi) by private sales made in connection with the consummation
of a Business Combination at prices no greater than the price at which the Private Units were originally purchased or (vii) to the Company
for cancellation in connection with the consummation of our initial business combination, in each case (except for clause (vii)) where
the transferee agrees to the terms of the escrow agreement, but will retain all other rights as our shareholders, including, without limitation,
the right to vote their ordinary shares and the right to receive cash dividends, if declared. If dividends are declared and payable in
ordinary shares, such dividends will also be placed in escrow. If we are unable to effect a business combination and liquidate the trust
account, none of our initial shareholders will receive any portion of the liquidation proceeds with respect to their insider shares.
In order to meet our working capital needs, our
initial shareholders, officers and directors or their affiliates may, but are not obligated to, loan us funds, from time to time or at
any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note. The notes
would either be paid upon consummation of our initial business combination, without interest, or, at the lender’s discretion, up
to $500,000 of the notes may be converted upon consummation of our business combination into private units at a price of $10.00 per unit
(which, for example, would result in the holders being issued units to acquire 55,000 ordinary shares (which includes 5,000 shares issuable
upon conversion of rights) and warrants to purchase 25,000 ordinary shares if $500,000 of notes were so converted). Our shareholders have
approved the issuance of the units and underlying securities upon conversion of such notes, to the extent the holder wishes to so convert
them at the time of the consummation of our initial business combination. If we do not complete a business combination, the loans will
not be repaid.
Our Sponsor and our executive officers and directors
are deemed to be our “promoters,” as that term is defined under the Federal securities laws.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE
In November 2020, 1,000 shares were sold. In December
2020, the Company issued another 1,149,000 ordinary shares resulting in an aggregate of 1,150,000 ordinary shares outstanding to the sponsor
and our directors and officers, which we refer to throughout this report as the “insider shares,” for an aggregate purchase
price of $25,000, or approximately $0.02 per share.
Simultaneously with the closing of the IPO, the
Company consummated the private placement with certain of its initial shareholders of 304,000 units at a price of $10.00 per Private Unit,
generating total proceeds of $3,040,000.
In order to meet our working capital needs following
the consummation of the IPO, our initial shareholders, officers and directors and their respective affiliates may, but are not obligated
to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would
be evidenced by a promissory note. The notes would either be paid upon consummation of our initial business combination, without interest,
or, at the lender’s discretion, up to $600,000 of the notes may be converted upon consummation of our business combination into
private units at a price of $10.00 per unit (which, for example, would result in the holders being issued units to acquire 60,000 ordinary
shares and warrants to purchase 60,000 ordinary shares if $600,000 of notes were so converted). Our shareholders have approved the issuance
of the units and underlying securities upon conversion of such notes, to the extent the holder wishes to so convert them at the time of
the consummation of our initial business combination. If we do not complete a business combination, the loans would be repaid out of funds
not held in the trust account, and only to the extent available.
The holders of our insider shares issued and outstanding
prior to the date of the IPO, as well as the holders of the private units (and all underlying securities) and any securities our initial
shareholders, officers, directors or their affiliates may be issued in payment of working capital loans made to us, will be entitled to
registration rights pursuant to offering registration rights agreement. The holders of a majority of these securities are entitled to
make up to two demands that we register such securities. The holders of the majority of the insider shares can elect to exercise these
registration rights at any time commencing three months prior to the date on which these ordinary shares are to be released from escrow.
The holders of a majority of the private units or securities issued in payment of working capital loans made to us can elect to exercise
these registration rights at any time after we consummate a business combination. In addition, the holders have certain “piggy-back”
registration rights with respect to registration statements filed subsequent to our consummation of a business combination. We will bear
the expenses incurred in connection with the filing of any such registration statements.
We will reimburse our officers and directors for
any reasonable out-of-pocket business expenses incurred by them in connection with certain activities on our behalf such as identifying
and investigating possible target businesses and business combinations. There is no limit on the amount of out-of-pocket expenses reimbursable
by us; provided, however, that to the extent such expenses exceed the available proceeds not deposited in the trust account and the interest
income earned on the amounts held in the trust account, such expenses would not be reimbursed by us unless we consummate an initial business
combination. Our audit committee will review and approve all reimbursements and payments made to any initial shareholder or member of
our management team, or our or their respective affiliates, and any reimbursements and payments made to members of our audit committee
will be reviewed and approved by our Board of Directors, with any interested director abstaining from such review and approval.
The Sponsor has paid the expenses incurred by
the Company an aggregate of $893,814 on a non-interest bearing basis as of December 31, 2022. As of December 31, 2022 and 2021, the Company
owed a balance of $893,814 and $185,867, respectively, to our Sponsor.
The Company is obligated to pay our Sponsor a
monthly fee of $10,000 for general and administrative services. However, pursuant to the terms of such agreement, the Company may delay
payment of such monthly fee upon a determination by the Company’s audit committee that the Company lack sufficient funds held outside
the trust to pay actual or anticipated expenses in connection with the initial business combination. Any such unpaid amount will accrue
without interest and be due and payable no later than the date of the consummation of our initial business combination.
All ongoing and future transactions between us
and any of our officers and directors or their respective affiliates will be on terms believed by us to be no less favorable to us than
are available from unaffiliated third parties. Such transactions, including the payment of any compensation, will require prior approval
by a majority of our uninterested “independent” directors (to the extent we have any) or the members of our board who do not
have an interest in the transaction, in either case who had access, at our expense, to our attorneys or independent legal counsel. We
will not enter into any such transaction unless our disinterested “independent” directors (or, if there are no “independent”
directors, our disinterested directors) determine that the terms of such transaction are no less favorable to us than those that would
be available to us with respect to such a transaction from unaffiliated third parties.
Related Party Policy
Our Code of Ethics requires us to avoid, wherever
possible, all related party transactions that could result in actual or potential conflicts of interests, except under guidelines approved
by the board of directors (or the audit committee). Related-party transactions are defined as transactions in which (1) the aggregate
amount involved will or may be expected to exceed $120,000 in any calendar year, (2) we or any of our subsidiaries is a participant, and
(3) any (a) executive officer, director or nominee for election as a director, (b) greater than 5% beneficial owner of our ordinary shares,
or (c) immediate family member, of the persons referred to in clauses (a) and (b), has or will have a direct or indirect material interest
(other than solely as a result of being a director or a less than 10% beneficial owner of another entity). A conflict of interest situation
can arise when a person takes actions or has interests that may make it difficult to perform his or her work objectively and effectively.
Conflicts of interest may also arise if a person, or a member of his or her family, receives improper personal benefits as a result of
his or her position.
We also require each of our directors and executive
officers to annually complete a directors’ and officers’ questionnaire that elicits information about related party transactions.
Our audit committee, pursuant to its written charter,
will be responsible for reviewing and approving related-party transactions to the extent we enter into such transactions. All ongoing
and future transactions between us and any of our officers and directors or their respective affiliates will be on terms believed by us
to be no less favorable to us than are available from unaffiliated third parties. Such transactions will require prior approval by our
audit committee and a majority of our uninterested “independent” directors, or the members of our board who do not have an
interest in the transaction, in either case who had access, at our expense, to our attorneys or independent legal counsel. We will not
enter into any such transaction unless our audit committee and a majority of our disinterested “independent” directors determine
that the terms of such transaction are no less favorable to us than those that would be available to us with respect to such a transaction
from unaffiliated third parties. Additionally, we require each of our directors and executive officers to complete a directors’
and officers’ questionnaire that elicits information about related party transactions.
These procedures are intended to determine whether
any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director,
employee or officer.
To further minimize potential conflicts of interest,
we have agreed not to consummate a business combination with an entity which is affiliated with any of our initial shareholders unless
we obtain an opinion from an independent investment banking firm that the business combination is fair to our unaffiliated shareholders
from a financial point of view. Furthermore, in no event will any of our existing officers, directors or initial shareholders, or any
entity with which they are affiliated, be paid any finder’s fee, consulting fee or other compensation prior to, or for any services
they render in order to effectuate, the consummation of a business combination.
Director Independence
Nasdaq listing standards require that within one
year of the listing of our securities on the Nasdaq Capital Market we have at least three independent directors and that a majority of
our board of directors be independent. For a description of the director independence, see above Part III, Item 10 - Directors, Executive
Officers and Corporate Governance.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following is a summary of fees paid or to
be paid to Marcum LLP (“Marcum”) and Friedman LLP (“Friedman”), prior to the acquisition of certain assets of
Friedman by Marcum effective September 1, 2022, for services rendered.
Audit Fees. Audit fees consist of fees
billed for professional services rendered for the audit of our year-end financial statements and services that are normally provided by
Friedman and Marcum in connection with regulatory filings. The aggregate fees billed by Friedman and Marcum for professional services
rendered for the audit of our annual financial statements, review of the financial information included in our Forms 10-Q for the respective
periods and other required filings with the SEC for the years ended December 31, 2022 and 2021 totaled approximately $66,000 and $66,000,
respectively. The above amounts include interim procedures and audit fees, as well as attendance at audit committee meetings.
Audit-Related Fees. Audit-related services
consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our financial
statements and are not reported under “Audit Fees.” These services include attest services that are not required by statute
or regulation and consultations concerning financial accounting and reporting standards. We did not pay Friedman for consultations concerning
financial accounting and reporting standards for the years ended December 31, 2022 and 2021.
Tax Fees. We did not pay Friedman or Marcum
for tax planning and tax advice for the years ended December 31, 2022 and 2021.
All Other Fees. We did not pay Friedman
or Marcum for other services for the years ended December 31, 2022 and 2021.
Pre-Approval Policy
Our audit committee was formed upon the consummation
of our Initial Public Offering. As a result, the audit committee did not pre-approve all of the foregoing services, although any services
rendered prior to the formation of our audit committee were approved by our board of directors. All services subsequent to the formation
of the audit committee have been approved by the audit committee.
The accompanying notes are an integral part of
these consolidated financial statements.
The accompanying notes are an integral part of
these consolidated financial statements.
The accompanying notes are an integral part of
these consolidated financial statements.
The accompanying notes are an integral part of
these consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 –
ORGANIZATION AND BUSINESS BACKGROUND
Ace Global Business Acquisition Limited (“ACE”
and the “Company”) is a newly organized blank check company incorporated on November 2, 2020, under the laws of the British
Virgin Islands for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation, purchasing all or substantially
all of the assets of, entering into contractual arrangements, or engaging in any other similar business combination with one or more businesses
or entities (Business Combination”). Although the Company is not limited to a particular industry or geographic region for purposes
of consummating a Business Combination, the Company intends to focus on opportunities in the artificial intelligence and any other related
technology innovations market in North America.
ACBA Merger Sub I Limited (“PubCo”)
is a company incorporated on December 28, 2022, under the laws of the British Virgin Island for the purpose of effecting the business
combination. PubCo is wholly owned by ACE.
ACBA Merger Sub II Limited (“Merger Sub”)
is a company incorporated on December 29, 2022, under the laws of the British Virgin Island for the purpose of effecting the business
combination. Merger Sub is wholly owned by PubCo.
The Company’s entire activity from inception
up to December 31, 2022 was in preparation for the initial public offering. Since the initial public offering, the Company’s activity
has been limited to the evaluation of business combination candidates. The Company has selected December 31 as its fiscal year end.
Financing
The registration statement for the Company’s
Initial Public Offering became effective on April 5, 2021. On April 8, 2021, the Company consummated the Initial Public Offering of 4,000,000
units (the “Public Units”), at $10.00 per Public Unit, generating gross proceeds of $40,000,000 which is described in Note
3.
Subsequently, the underwriters exercised their
over-allotment option in full, and the closing of the issuance and sale of the additional Public Units occurred on April 9, 2021. The
total aggregate issuance by the Company of 600,000 units at a price of $10.00 per unit resulted in gross proceeds of $6,000,000.
Simultaneously with the closing of the Initial
Public Offering on April 8, 2021, the Company consummated the sale of 280,000 units (the “Private Units”) at a price of $10.00
per Private Unit in a private placement, generating gross proceeds of $2,800,000, which is described in Note 4. On April 9, 2021, simultaneously
with the sale of the over-allotment units, the Company consummated the private sale of an additional 24,000 Private Units, generating
gross proceeds of $240,000.
Transaction costs amounted to $1,125,000, consisting
of $920,000 of underwriter’s fees and $205,000 of other offering costs.
Trust Account
Following the closing of the Initial Public Offering
on April 8, 2021 and exercise of the over-allotment option on April 9, 2021, an aggregate amount of $46,920,000 from the net proceeds
of the sale of the Public Units in the Initial Public Offering and the sale of the Private Placement Units was placed in a trust account
(the “Trust Account”). The aggregate amount of $46,920,000 ($10.20 per Public Unit) will be invested in U.S. government securities,
within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or in any open-ended
investment company that holds itself out as a money market fund meeting certain conditions of Rule 2a-7 of the Investment Company Act,
as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds
in the Trust Account to the Company’s shareholders, as described below, except that interest earned on the Trust Account can be
released to the Company to pay its tax obligations.
ACE GLOBAL BUSINESS ACQUISITION LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Business Combination
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the Initial Public Offering and sale of the Private Units, although substantially
all of the net proceeds are intended to be applied generally toward consummating a Business Combination. NASDAQ rules provide that the
Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance
in the Trust Account (as defined below) (less any deferred underwriting commissions and taxes payable on interest earned) at the time
of the signing of an agreement to enter into a Business Combination. The Company will only complete a Business Combination if the post-Business
Combination company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling
interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940,
as amended (the “Investment Company Act”). There is no assurance that the Company will be able to successfully effect a Business
Combination.
The Company will provide its shareholders with
the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection
with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer. In connection with an Initial
Business Combination, the Company may seek shareholder approval of a Business Combination at a meeting called for such purpose at which
shareholders may seek to redeem their shares, regardless of whether they vote for or against a Business Combination. The Company will
proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business
Combination and, if the Company seeks shareholder approval, a majority of the outstanding shares voted are voted in favor of the Business
Combination.
If a shareholder vote is not required and the
Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to its Amended and
Restated Memorandum and Articles of Association, offer such redemption pursuant to the tender offer rules of the Securities and Exchange
Commission (“SEC”), and file tender offer documents containing substantially the same information as would be included in
a proxy statement with the SEC prior to completing a Business Combination.
The
shareholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially
$10.20 per Public Share, subject to an increase of up to an additional $0.15 per Public Share in
the event that the Ace Global Investment Limited, the sponsor elects to extend the period of time to consummate a Business Combination
(see below), plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay
its tax obligations). The per-share amount to be distributed to shareholders who redeem their Public Shares will not be reduced by the
deferred underwriting commissions the Company will pay to the underwriter (as discussed in Note 9). There will be no redemption rights
upon the completion of a Business Combination with respect to the Company’s rights or warrants. The ordinary shares will be recorded
at redemption value and classified as temporary equity upon the completion of the Initial Public Offering, in accordance with Accounting
Standards Codification (“ASC”) Topic 480 Distinguishing Liabilities from Equity.
The sponsor and any of the Company’s officers
or directors that may hold Founder Shares (as defined in Note 5) (the “shareholders”) and the underwriters will agree (a)
to vote their Founder Shares, the ordinary shares included in the Private Units (the “Private Shares”) and any Public Shares
purchased during or after the Initial Public Offering in favor of a Business Combination, (b) not to propose an amendment to the Company’s
Amended and Restated Memorandum and Articles of Association with respect to the Company’s pre-Business Combination activities prior
to the consummation of a Business Combination unless the Company provides dissenting public shareholders with the opportunity to redeem
their Public Shares in conjunction with any such amendment; (c) not to redeem any shares (including the Founder Shares) and Private Shares
into the right to receive cash from the Trust Account in connection with a shareholder vote to approve a Business Combination (or to sell
any shares in a tender offer in connection with a Business Combination if the Company does not seek shareholder approval in connection
therewith) or a vote to amend the provisions of the Amended and Restated Memorandum and Articles of Association relating to shareholders’
rights of pre-Business Combination activity and (d) that the Founder Shares and Private Shares shall not participate in any liquidating
distributions upon winding up if a Business Combination is not consummated. However, the shareholders will be entitled to liquidating
distributions from the Trust Account with respect to any Public Shares purchased during or after the Initial Public Offering if the Company
fails to complete its Business Combination.
ACE GLOBAL BUSINESS ACQUISITION LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On August 23, 2021, the Company, DDC Enterprise
Limited (“DDC”) and Ka Yin Norma Chu (as shareholders’ representative) entered into a Share Exchange Agreement, pursuant
to which the Company will purchase from DDC’s shareholders all of the issued and outstanding shares and other equity interests in
and of DDC. Upon the closing of the transactions contemplated in the Share Exchange Agreement, Ace will acquire 100% of the issued and
outstanding securities of DDC, in exchange for approximately 30,000,000 of the Company’s ordinary shares, among which 3,000,000
ordinary shares are to be issued and held in escrow to satisfy any indemnification obligations of the seller.
On July 11, 2022, the Company and DDC Enterprise
Limited (“DDC”) entered into that certain Mutual Termination of Share Exchange Agreement (the “Mutual Termination Agreement”)
pursuant to which the Company and DDC mutually agreed to terminate the Share Exchange Agreement pursuant to Section 12.3(a) thereof. Except
as otherwise set forth in the Share Exchange Agreement, none of the Contracting Parties shall have any further liability thereunder.
On December 23, 2022, the Company has entered
into a business combination agreement (the “Agreement”) with LE Worldwide Limited (“LEW”), a British Virgin Islands
business company. ACBA will merge with and into ACBA Merger Sub I Limited, a British Virgin Islands business company and wholly owned
subsidiary of the ACBA (the “Purchaser”). ACBA Merger Sub II Limited, a British Virgin Islands business company and wholly
owned subsidiary of ACBA (the “Merger Sub”), to be formed for the sole purpose of merging with and into the Company in which
the Company will be the surviving entity and a wholly owned subsidiary of Purchaser (the “Acquisition Merger”). Upon the Acquisition
Merger becoming effective, the Purchaser shall pay an aggregate consideration of $150,000,000 (the “Merger Consideration”)
to the Company’s shareholders which shall be issued and divided into $10.00 per Ordinary Share of the Purchaser (the “Merger
Consideration Shares”).
On January 5, 2023, the Company filed an amended
and restated memorandum and articles of association (the “Charter Amendment”), giving the Company the right to extend the
date by which it has to complete a business combination up to a total of five (5) times, as follows: (i) two (2) times for an additional
three (3) months each time from January 8, 2023 to July 8, 2023, followed by (ii) three (3) times for an additional one (1) month each
time from July 8, 2023 to October 8, 2023.
The
Company will have to consummate a Business Combination by April 8, 2022. However, if the Company anticipates that it may not be able
to consummate a Business Combination within 12 months, the Company may extend the period of time to consummate a Business Combination
up to eight times, five times by an additional three months each time and 3 times by an additional one month each time (for a total of
up to 30 months) to complete a Business Combination. Pursuant to the terms of our memorandum and articles of association and the trust
agreement entered into between us and Continental Stock Transfer & Trust Company, both as amended, in order to extend the time available
for the Company to consummate a Business Combination, the Company’s sponsor or its affiliate or designees, upon five days advance
notice prior to the applicable deadline, must deposit into the Trust Account the applicable extension fees, on or prior to the date of
the applicable deadline, for each extension. The Company’s sponsor or its affiliates or designees will receive a non-interest bearing,
unsecured promissory note equal to the amount of any such deposit that will not be repaid in the event that the Company are unable to
close a Business Combination unless there are funds available outside the Trust Account to do so. Such notes would either be paid upon
consummation of our initial Business Combination or at the lender’s discretion, converted upon consummation of our Business Combination
into additional private units at a price of $10.00 per unit. On each of April 8, 2022, July 6, 2022 and September 28, 2022, the Company
issued an unsecured promissory note in an amount of $455,400 to the Sponsor, pursuant to which such amount had been deposited into the
Trust Account in order to extend the amount of available time to complete a business combination until January 8, 2023. On January 5,
2023, the Company issued an unsecured promissory note in an amount of $350,332 to the Sponsor, pursuant to which such amount had been
deposited into the Trust Account in order to extend the amount of available time to complete a business combination until April 8, 2023.
As of December 31, 2022 and 2021, the note payable balance of $1,366,200 and $0, respectively.
ACE GLOBAL BUSINESS ACQUISITION LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Liquidation and going concern
The Company initially had 12 months from the consummation
of this offering to consummate the initial business combination. If the Company does not complete a business combination within 12 months
from the consummation of the Public Offering, the Company will trigger an automatic winding up, dissolution and liquidation pursuant to
the terms of the amended and restated memorandum and articles of association. As a result, this has the same effect as if the Company
had formally gone through a voluntary liquidation procedure under the Companies Law. Accordingly, no vote would be required from our shareholders
to commence such a voluntary winding up, dissolution and liquidation. However, the Company may extend the period of time to consummate
a business combination eight times (for a total of up to 30 months from the consummation of the Public Offering to complete a business
combination). As of the date of this report, the Company has extended four times by an additional three months each time (for a total
of up to 24 months from the consummation of the Public Offering to complete a business combination), and so it now has until April 8,
2023 to consummate a business combination. Pursuant to the terms of the current amended and restated memorandum and articles of association
and the trust agreement between the Company and Continental Stock Transfer & Trust Company, LLC, in order to extend the time available
for the Company to consummate our initial business combination, the Company’s insiders or their affiliates or designees, upon five
days advance notice prior to the applicable deadline, must deposit into the Trust Account $0.15 per public share, on or prior to the date
of the applicable deadline. The insider, Ace Global Investment Limited, has received non-interest bearing, unsecured promissory notes
equal to the amount of any such deposits (i.e., $455,400 for each of the first three extensions for each of three extension on April 2022,
July 2022 and September 2022 and $350,332 on January 2023) that will not be repaid in the event that we are unable to close a business
combination unless there are funds available outside the Trust Account to do so. Such notes would either be paid upon consummation of
the Company’s initial business combination, or, at the lender’s discretion, converted upon consummation of our business combination
into additional Private Units at a price of $10.00 per unit. The Company’s shareholders have approved the issuance of the Private
Units upon conversion of such notes, to the extent the holder wishes to so convert such notes at the time of the consummation of the Company’s
initial business combination. In the event that the Company receives notice from the Company’s insiders five days prior to the applicable
deadline of their intent to effect an extension, the Company intends to issue a press release announcing such intention at least three
days prior to the applicable deadline. In addition, the Company intends to issue a press release the day after the applicable deadline
announcing whether or not the funds had been timely deposited. If the Company is unable to consummate the Company’s initial business
combination by April 8, 2023, the Company will, as promptly as possible but not more than ten business days thereafter, redeem 100% of
the Company’s outstanding public shares for a pro rata portion of the funds held in the Trust Account, including a pro rata portion
of any interest earned on the funds held in the Trust Account and not necessary to pay taxes, and then seek to liquidate and dissolve.
However, the Company may not be able to distribute such amounts as a result of claims of creditors which may take priority over the claims
of the Company’s public shareholders. In the event of dissolution and liquidation, the public rights will expire and will be worthless.
Accordingly, the Company may not be able to obtain
additional financing. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve
liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction,
and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable
terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern through one
year from the date of these consolidated financial statements if a Business Combination is not consummated. These consolidated financial
statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that
might be necessary should the Company be unable to continue as a going concern.
ACE GLOBAL BUSINESS ACQUISITION LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 –
SIGNIFICANT ACCOUNTING POLICIES
These accompanying consolidated financial statements
have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”)
and pursuant to the rules and regulations of the SEC.
| ● | Emerging growth company |
The Company is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”),
and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting
firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation
in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive
compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that
when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging
growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison
of the Company’s consolidated financial statements with another public company which is neither an emerging growth company nor an
emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences
in accounting standards used.
In preparing these consolidated financial statements
in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported expenses during
the reporting period.
Making estimates requires management to exercise
significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances
that existed at the date of the consolidated financial statements, which management considered in formulating its estimate, could change
in the near term due to one or more future confirming events. Accordingly, Actual results may differ from these estimates.
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents
as of December 31, 2022 and 2021.
| ● | Cash and investment held in trust account |
At December
31, 2022 and 2021, substantially all of the assets held in the Trust Account were held in money market funds, which are invested primarily
in U.S. Treasury securities. These securities are presented on the Balance Sheets at fair value at the end of each reporting period. Earnings
on these securities is included in dividend income in the accompanying Statement of Operations and is automatically reinvested. The fair
value for these securities is determined using quoted market prices in active markets.
ACE GLOBAL BUSINESS ACQUISITION LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| ● | Deferred offering costs |
Deferred offering costs consist of underwriting,
legal, accounting and other expenses incurred through the balance sheet date that are directly related to the Initial public Offering
and that were charged to shareholders’ equity upon the completion of the Initial Public Offering.
The Company accounts for warrants as either equity-classified
or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance
in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing
Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers
whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480,
and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed
to the Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement”
in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires
the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while
the warrants are outstanding.
For issued or modified warrants that meet all
of the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance.
For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded
as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair
value of the warrants are recognized as a non-cash gain or loss on the statements of operations. The Company accounts for its Public Warrants
as equity and the Private Warrants as liabilities.
| ● | Ordinary shares subject to possible redemption |
The Company accounts for its ordinary shares subject
to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Ordinary
shares subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally
redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within the control of the holder
or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary
equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s ordinary shares feature
certain redemption rights that are subject to the occurrence of uncertain future events and considered to be outside of the Company’s
control. Accordingly, at December 31, 2022 and 2021, 46,000,000 and 46,000,000 ordinary shares subject to possible redemption, respectively,
are presented as temporary equity, outside of the shareholders’ equity section of the Company’s consolidated balance sheets.
The Company has made a policy election in accordance
with ASC 480-10-S99-3A and recognizes changes in redemption value in accumulated deficit immediately as if the end of the first reporting
period after the IPO was the redemption date.
ACE GLOBAL BUSINESS ACQUISITION LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| ● | Fair value of financial instruments |
FASB ASC Topic 820 Fair Value Measurements and
Disclosures (“ASC 820”) defines fair value, the methods used to measure fair value and the expanded disclosures about fair
value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between the buyer and the seller at the measurement date. In determining fair value, the valuation techniques consistent with the market
approach, income approach and cost approach shall be used to measure fair value. FASB ASC Topic 820 establishes a fair value hierarchy
for inputs, which represents the assumptions used by the buyer and seller in pricing the asset or liability. These inputs are further
defined as observable and unobservable inputs. Observable inputs are those that buyer and seller would use in pricing the asset or liability
based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about
the inputs that the buyer and seller would use in pricing the asset or liability developed based on the best information available in
the circumstances.
The fair value hierarchy is categorized into three
levels based on the inputs as follows:
| Level 1 — |
Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, the valuation of these securities does not entail a significant degree of judgment. |
| |
|
| Level 2 — |
Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from or corroborated by the market through correlation or other means. |
| |
|
| Level 3 — |
Valuations based on inputs that are unobservable and significant to the overall fair value measurement. |
The fair value of the Company’s certain
assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,”
approximates the carrying amounts represented in the consolidated balance sheet. The fair values of cash and cash equivalents, and other
current assets, accrued expenses, due to the sponsor are estimated to approximate the carrying values as of December 31, 2022 due to the
short maturities of such instruments. See Note 8 for the disclosure of the Company’s assets and liabilities that were measured at
fair value on a recurring basis.
| ● | Concentration of credit risk |
Financial instruments that potentially subject
the Company to concentration of credit risk consist of a cash account in a financial institution. The Company has not experienced losses
on this account and management believes the Company is not exposed to significant risks on such account.
Income taxes are determined in accordance with
the provisions of ASC Topic 740, Income Taxes (“ASC 740”). Under this method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of
existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income
tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment
date.
ACE GLOBAL BUSINESS ACQUISITION LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ASC 740 prescribes a comprehensive model for how
companies should recognize, measure, present, and disclose in their consolidated financial statements uncertain tax positions taken or
expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the consolidated financial statements
when it is more likely than not the position will be sustained upon examination by the tax authorities. The Company’s management
determined that the British Virgin Islands is the Company’s major tax jurisdiction. The Company recognizes accrued interest and
penalties related to unrecognized tax benefits, if any, as an income tax expense. There were no unrecognized tax benefits and no amounts
accrued for interest and penalties as of December 31, 2022 and 2021. The Company is currently not aware of any issues under review that
could result in significant payments, accruals or material deviation from its position.
The Company may be subject to potential examination
by foreign taxing authorities in the area of income taxes. These potential examinations may include questioning the timing and amount
of deductions, the nexus of income among various tax jurisdictions and compliance with foreign tax laws.
The Company’s tax provision is zero for
the years ended December 31, 2022 and 2021.
The Company is considered to be an exempted British
Virgin Islands Company, and is presently not subject to income taxes or income tax filing requirements in the British Virgin Islands or
the United States.
| | ● | Net income (loss) per share |
The Company calculates net income (loss) per share
in accordance with ASC 260, Earnings per Share. In order to determine the net income (loss) attributable to both the redeemable shares
and non-redeemable shares, the Company first considered the undistributed income (loss) allocable to both the redeemable ordinary shares
and non-redeemable Ordinary shares and the undistributed income (loss) is calculated using the total net loss less any dividends paid.
The Company then allocated the undistributed income (loss) ratably based on the weighted average number of shares outstanding between
the redeemable and non-redeemable Ordinary shares. Any remeasurement of the accretion to the redemption value of the Ordinary shares subject
to possible redemption was considered to be dividends paid to the public stockholders. As of December 31, 2022, the Company has not considered
the effect of the warrants sold in the Initial Public Offering to purchase an aggregate of 4,904,000 shares in the calculation of diluted
net loss per share, since the exercise of the warrants is contingent upon the occurrence of future events and the inclusion of such warrants
would be anti-dilutive and the Company did not have any other dilutive securities and other contracts that could, potentially, be exercised
or converted into Ordinary shares and then share in the earnings of the Company. As a result, diluted loss per share is the same as basic
loss per share for the period presented.
The net income (loss) per share presented in the
consolidated statement of operations is based on the following:
| | |
For the
Years Ended
December 31, | |
| | |
2022 | | |
2021 | |
| Net income (loss) | |
$ | 1,084,218 | | |
$ | (1,002,595 | ) |
| Accretion of carrying value to redemption value | |
| (2,062,188 | ) | |
| (5,014,797 | ) |
| Net loss including accretion of carrying value to redemption value | |
$ | (977,970 | ) | |
$ | (6,017,392 | ) |
| | |
For the years ended December 31, | |
| | |
2022 | | |
2021 | |
| | |
Redeemable
Ordinary Share | | |
Non-
Redeemable
Ordinary Share | | |
Redeemable Ordinary Share | | |
Non-Redeemable
Ordinary Share | |
| Basic and diluted net income (loss) per share: | |
| | |
| | |
| | |
| |
| Numerators: | |
| | |
| | |
| | |
| |
| Allocation of net loss including carrying value to redemption value | |
$ | (743,089 | ) | |
$ | (234,881 | ) | |
$ | (4,270,282 | ) | |
$ | (1,747,110 | ) |
| Accretion of carrying value to redemption value | |
| 2,062,188 | | |
| - | | |
| 5,014,797 | | |
| - | |
| Allocation of net income (loss) | |
$ | 1,319,099 | | |
$ | (234,881 | ) | |
$ | 744,515 | | |
$ | (1,747,110 | ) |
| Denominators: | |
| | | |
| | | |
| | | |
| | |
| Weighted-average shares outstanding | |
| 4,600,000 | | |
| 1,454,000 | | |
| 3,352,329 | | |
| 1,371,545 | |
Basic and diluted net income (loss) per share | |
$ | 0.29 | | |
$ | (0.16 | ) | |
$ | 0.22 | | |
$ | (1.27 | ) |
ACE GLOBAL BUSINESS ACQUISITION LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Parties, which can be a corporation or individual,
are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant
influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are
subject to common control or common significant influence.
| ● | Recent accounting pronouncements |
The Company has considered all new accounting
pronouncements and has concluded that there are no new pronouncements that may have a material impact on the results of operations, financial
condition, or cash flows, based on the current information.
NOTE 3 –
INITIAL PUBLIC OFFERING
On April 8, 2021, the Company sold 4,000,000 Public
Units at a price of $10.00 per Public Unit. On April 9, 2021, the Company sold an additional 600,000 units to cover over-allotments. Each
Public Unit consists of one ordinary share and one redeemable warrant (“Public Warrant”). Each Public Warrant entitles the
holder to purchase one ordinary share at an exercise price of $11.50 per whole share (see Note 6).
The Company paid an upfront underwriting discount
of $920,000, equal to 2% of the gross offering proceeds to the underwriter at the closing of the Initial Public Offering, with an additional
fee of $1,840,000 (the “Deferred Underwriting Discount”) or 4% of the gross offering proceeds payable upon the Company’s
completion of the Business Combination. The Deferred Underwriting Discount will become payable to the underwriter from the amounts held
in the Trust Account solely in the event the Company completes its Business Combination. In the event that the Company does not close
the Business Combination, the underwriter has waived its right to receive the Deferred Underwriting Discount. The underwriter is not entitled
to any interest accrued on the Deferred Underwriting Discount.
NOTE 4 –
PRIVATE PLACEMENT
Simultaneously with the closing of the Initial
Public Offering, the Company consummated a private placement of 280,000 Private Units at $10.00 per unit, purchased by the sponsor. On
April 9, 2021, the Company consummated an additional 24,000 units at $10.00 per unit to cover over-allotments.
The Private Units are identical to the units sold
in the Initial Public Offering except that the warrants included in the Private Units (the “Private Warrants”) are non-redeemable
and may be exercised on a cashless basis so long as the Private Warrants continue to be held by the initial purchasers of the Placement
Units or their permitted transferees.
ACE GLOBAL BUSINESS ACQUISITION LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 –
RELATED PARTY TRANSACTIONS
Founder
Shares
In November 2020, the Company issued an aggregate
of 1,000 founder shares to the initial shareholders for an aggregate purchase price of $1.
In December 2020, the Company issued an aggregate
of 1,149,000 additional founder shares to the initial shareholders for an aggregate purchase price of $24,999.
Advances
from a Related Party
As of December 31, 2022 and 2021, the Company
had a temporary advance from sponsor for its deferred cost of the Initial Public Offering. The balance is unsecured, interest-free and
would either be paid upon consummation of the Company initial Business Combination or at the lender’s discretion, converted upon
consummation of Business Combination into additional private units at a price of $10.00 per unit. As of December 31, 2022 and 2021, the
balances due to related parties were $893,814 and $185,867, respectively.
Administrative Services Agreement
The Company is obligated, commencing from January
1, 2021, to pay Ace Global Investment Limited a monthly fee of $10,000 for general and administrative services. This agreement will terminate
upon completion of the Company’s business combination or the liquidation of the trust account to public shareholders.
Related Party Extensions Loan
The Company will have to consummate a Business
Combination by April 8, 2022. However, if the Company anticipates that it may not be able to consummate a Business Combination within
12 months, the Company may extend the period of time to consummate a Business Combination up to eight times, five times by an additional
three months each time and 3 times by an additional one month each time (for a total of up to 30 months) to complete a Business Combination.
Pursuant to the terms of our memorandum and articles of association and the trust agreement entered into between us and Continental Stock
Transfer & Trust Company, both as amended, in order to extend the time available for the Company to consummate a Business Combination,
the Company’s sponsor or its affiliates or designees, upon five days advance notice prior to the applicable deadline, must deposit
into the Trust Account the applicable extension fees, on or prior to the date of the applicable deadline, for each extension. The Company’s
sponsor or its affiliates or designees will receive a non-interest bearing, unsecured promissory note equal to the amount of any such
deposit that will not be repaid in the event that the Company are unable to close a Business Combination unless there are funds available
outside the Trust Account to do so. Such notes would either be paid upon consummation of our initial Business Combination or at the lender’s
discretion, converted upon consummation of our Business Combination into additional private units at a price of $10.00 per unit.
On each of April 8, 2022, July 6, 2022 and September
28, 2022, the Company issued an unsecured promissory note in an amount of $455,400 to the Sponsor, pursuant to which such amount had been
deposited into the Trust Account in order to extend the amount of available time to complete a business combination until January 8, 2023.
On January 5, 2023, the Company issued an unsecured promissory note in an amount of $350,332 to the Sponsor, pursuant to which such amount
had been deposited into the Trust Account in order to extend the amount of available time to complete a business combination until April
8, 2023. The Note is non-interest bearing and are payable upon the closing of a business combination. In addition, the Note may be converted,
at the lender’s discretion, into additional Private Units at a price of $10.00 per unit. As of December 31, 2022 and 2021, the note
payable balance of $1,366,200 and $0, respectively.
ACE GLOBAL BUSINESS ACQUISITION LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 –
SHAREHOLDERS’ (DEFICIT) EQUITY
Ordinary shares
The Company is authorized to issue 100,000,000
ordinary shares at par $0.001. Holders of the Company’s ordinary shares are entitled to one vote for each share.
In April 2021, the Company sold 4,600,000 units
at a price of $10.00 per Public Unit in the Public Offering.
In April 2021, the Company issued 304,000 ordinary
shares under the private placement of 304,000 private units at $10 per unit, to the Sponsor.
As of December 31, 2022 and 2021, 1,454,000 and
1,150,000 ordinary shares were issued and outstanding excluding 4,600,000 and 4,600,000 shares are subject to possible conversion.
Public Warrants
As of December 31, 2022 and 2021, 4,600,000 and
4,600,000 public warrants were issued and outstanding.
Each public warrant entitles the holder thereof
to purchase one-half (1/2) of one ordinary share at a price of $11.50 per full share, subject to adjustment as described in this prospectus.
Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of shares. This means that only
an even number of warrants may be exercised at any given time by a warrant holder.
No public warrants will be exercisable for cash
unless the Company has an effective and current registration statement covering the ordinary shares issuable upon exercise of the warrants
and a current prospectus relating to such ordinary shares. It is the Company’s current intention to have an effective and current
registration statement covering the ordinary shares issuable upon exercise of the warrants and a current prospectus relating to such ordinary
shares in effect promptly following consummation of an initial business combination.
Notwithstanding the foregoing, if a registration
statement covering the ordinary shares issuable upon exercise of the public warrants is not effective within 90 days following the consummation
of our initial business combination, public warrant holders may, until such time as there is an effective registration statement and during
any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to
an available exemption from registration under the Securities Act. In such event, each holder would pay the exercise price by surrendering
the warrants for that number of ordinary shares equal to the quotient obtained by dividing (x) the product of the number of ordinary shares
underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value”
(defined below) by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of the
ordinary shares for the 10 trading days ending on the day prior to the date of exercise. For example, if a holder held 300 warrants to
purchase 150 shares and the fair market value on the date prior to exercise was $15.00, that holder would receive 35 shares without the
payment of any additional cash consideration. If an exemption from registration is not available, holders will not be able to exercise
their warrants on a cashless basis.
The warrants will become exercisable on the later
of the completion of an initial business combination and December 31, 2022. The warrants will expire at 5:00 p.m., New York City time,
on the fifth anniversary of our completion of an initial business combination, or earlier upon redemption.
The Company may redeem the outstanding warrants
(including any outstanding warrants issued upon exercise of the unit purchase option issued to Ladenburg Thalmann & Co., Inc.,), in
whole and not in part, at a price of $0.01 per warrant:
| |
● |
at any time while the Public Warrants are exercisable, |
| |
● |
upon not less than 30 days’ prior written notice of redemption to each Public Warrant holder, |
| | ● | if, and only if, the reported last sale price of the ordinary shares equals or exceeds $18 per share, for any 20 trading days within a 30 trading day period ending on the third trading day prior to the notice of redemption to Public Warrant holders, and |
| |
● |
if, and only if, there is a current registration statement in effect with respect to the issuance of the ordinary shares underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption. |
ACE GLOBAL BUSINESS ACQUISITION LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
If the foregoing conditions are satisfied and
the Company would issue a notice of redemption, each warrant holder can exercise his, her or its warrant prior to the scheduled redemption
date. However, the price of the ordinary shares may fall below the $18.00 trigger price as well as the $11.50 warrant exercise price per
full share after the redemption notice is issued and not limit our ability to complete the redemption.
The redemption criteria for the warrants have
been established at a price which is intended to provide warrant holders a reasonable premium to the initial exercise price and provide
a sufficient differential between the then-prevailing share price and the warrant exercise price so that if the share price declines as
a result of our redemption call, the redemption will not cause the share price to drop below the exercise price of the warrants.
If the Company calls the warrants for redemption
as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a “cashless
basis.” In such event, each holder would pay the exercise price by surrendering the whole warrants for that number of ordinary shares
equal to the quotient obtained by dividing (x) the product of the number of ordinary shares underlying the warrants, multiplied by the
difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value.
The “fair market value” shall mean the average reported last sale price of the ordinary shares for the 10 trading days ending
on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Whether the Company will
exercise our option to require all holders to exercise their warrants on a “cashless basis” will depend on a variety of factors
including the price of our ordinary shares at the time the warrants are called for redemption, the Company’s cash needs at such
time and concerns regarding dilutive share issuances.
NOTE 7 – ORDINARY SHARE SUBJECT TO POSSIBLE
REDEMPTION
The Company accounts for its ordinary shares subject
to possible redemption in accordance with the guidance in ASC 480. Ordinary shares subject to mandatory redemption (if any) are classified
as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature
redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not
solely within the Company’s control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’
equity. The Company’s ordinary shares feature certain redemption rights that are subject to the occurrence of uncertain future events
and considered to be outside of the Company’s control. Accordingly, at December 31, 2022 and 2021, 4,600,000 and 4,600,000 ordinary
shares subject to possible redemption, respectively, are presented as temporary equity, outside of the shareholders’ equity section
of the Company’s consolidated balance sheets.
| | |
For the
Year Ended
December 31, | |
| | |
2022 | | |
2021 | |
| Total ordinary shares issued | |
| 6,054,000 | | |
| 6,054,000 | |
| Shares issued classified as equity | |
| (1,454,000 | ) | |
| (1,454,000 | ) |
| Ordinary shares, subject to redemption | |
| 4,600,000 | | |
| 4,600,000 | |
NOTE 8 – FAIR VALUE MEASUREMENTS
The fair value of the Company’s financial
assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale
of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the
measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of
observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions
about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities
based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
Level 1: Quoted prices in active markets for identical
assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with
sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2: Observable inputs other than Level 1
inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical
assets or liabilities in markets that are not active.
Level 3: Unobservable inputs based on our assessment
of the assumptions that market participants would use in pricing the asset or liability.
ACE GLOBAL BUSINESS ACQUISITION LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table presents information about
the Company’s assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2022 and 2021, and
indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.
| | |
December 31, | | |
Quoted Prices In
Active
Markets | | |
Significant Other
Observable
Inputs | | |
Significant Other
Unobservable
Inputs | |
| Description | |
2022 | | |
(Level 1) | | |
(Level 2) | | |
(Level 3) | |
| Assets: | |
| | |
| | |
| | |
| |
| U.S. Treasury Securities held in Trust Account* | |
$ | 48,982,188 | | |
$ | 48,982,188 | | |
$ | - | | |
$ | - | |
| | |
| | | |
| | | |
| | | |
| | |
| Liabilities: | |
| | | |
| | | |
| | | |
| | |
| Warrant liabilities – Private Warrants | |
$ | 10,000 | | |
$ | - | | |
$ | - | | |
$ | 10,000 | |
| | |
December 31, | | |
Quoted Prices In
Active
Markets | | |
Significant Other
Observable
Inputs | | |
Significant Other
Unobservable
Inputs | |
| Description | |
2021 | | |
(Level 1) | | |
(Level 2) | | |
(Level 3) | |
| Assets: | |
| | |
| | |
| | |
| |
| U.S. Treasury Securities held in Trust Account* | |
$ | 46,922,878 | | |
$ | 46,922,878 | | |
$ | - | | |
$ | - | |
| | |
| | | |
| | | |
| | | |
| | |
| Liabilities: | |
| | | |
| | | |
| | | |
| | |
| Warrant liabilities – Private Warrants | |
$ | 1,240,000 | | |
$ | - | | |
$ | - | | |
$ | 1,240,000 | |
| * | included in cash and investments
held in trust account on the Company’s consolidated balance sheets. |
The
private warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the consolidated
balance sheets.
The Company established the initial fair value
for the private warrants at $1,258,560 on April 9, 2021, the date of the Company’s Initial Public Offering, using a Black-Scholes
model. The Company allocated the proceeds received from the sale of Private Units, first to the private warrants based on their fair
values as determined at initial measurement, with the remaining proceeds recorded as ordinary shares subject to possible redemption,
and ordinary shares based on their relative fair values recorded at the initial measurement date. The warrants were classified as Level
3 at the initial measurement date due to the use of unobservable inputs. The expected life of the warrants is assumed to be five years
after the completion of the initial business combination.
The key inputs into
the binomial model and Black-Scholes model were as follows at their measurement dates:
| | |
December 31,
2022 | | |
December 31,
2021 | | |
April 9,
2021
(Initial
measurement) | |
| Input | |
| | |
| | |
| |
| Share price | |
$ | 10.62 | | |
$ | 10.15 | | |
$ | 10.00 | |
| Risk-free interest rate | |
| 1.18 | % | |
| 1.26 | % | |
| 0.87 | % |
| Volatility | |
| 1 | % | |
| 49 | % | |
| 52 | % |
| Exercise price | |
$ | 11.50 | | |
$ | 11.50 | | |
$ | 11.50 | |
| Warrant life | |
| 5 years | | |
| 5 years | | |
| 5 years | |
As of December 31, 2022, the aggregate
value of the Private Warrants was $10,000. The change in fair value from December 31, 2021 to December 31, 2022 was approximately $(1,230,000).
As of December 31, 2021, the aggregate
value of the Private Warrants was $1.24 million. The change in fair value from April 9, 2021 to December 31, 2021 was approximately $(18,560).
ACE GLOBAL BUSINESS ACQUISITION LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
To the extent that valuation is based on models
or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Because of the
inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used
had a ready market for the investments existed. Accordingly, the degree of judgment exercised by the Company in determining fair value
is greatest for investments categorized in Level 3. Level 3 financial liabilities consist of the Private Warrant liability for which there
is no current market for these securities such that the determination of fair value requires significant judgment or estimation. Changes
in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates
or assumptions and recorded as appropriate.
NOTE 9
– COMMITMENTS AND CONTINGENCIES
Risks and Uncertainties
Management is currently evaluating the impact
of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect
on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily
determinable as of the date of these consolidated financial statements. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Registration Rights
The holders of the Founder Shares, the Private
Warrants (and their underlying securities) and the warrants that may be issued upon conversion of the Working Capital Loans (and their
underlying securities) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on
the effective date of the Initial Public Offering. The holders of a majority of these securities will be entitled to make up to two demands
that the Company registers such securities. The holders of the majority of the Founder Shares can elect to exercise these registration
rights at any time commencing three months prior to the date on which these ordinary shares are to be released from escrow. The holders
of a majority of the Private Warrants and warrants issued in payment of Working Capital Loans made to the Company (or underlying securities)
can elect to exercise these registration rights at any time after the Company consummates a Business Combination. In addition, the holders
will have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion
of a Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriter Agreement
The underwriters are entitled to a deferred fee
of 4.0% of the gross proceeds of the Initial Public Offering, or $1,840,000 until the closing of the Business Combination. The deferred
fee can be paid in cash, stock or a combination of both (at the underwriter’s discretion). Any stock issued as a part of the deferred
fee will be issued to the underwriters at the value per share in the Company’s Trust Account, subject to any additional increases
in the amount in trust per the Company’s trust extensions. Stock to be issued to the underwriters will have unlimited piggyback
registration rights and the same rights afforded other holders of the Company’s ordinary share.
NOTE 10
– SUBSEQUENT EVENTS
In accordance with ASC 855, Subsequent Events,
which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before the
consolidated financial statements are issued, the Company has evaluated all events or transactions that occurred after the balance sheet
date, up through the date was the Company issued the consolidated financial statements.
On January 5, 2023, the Company held its annual
meeting of shareholders. During this meeting, the Company’s shareholders approved the proposals to (i) amend the second amended
and restated memorandum and articles of association to further extend the date by which it has to consummate a business combination five
times, as follows: (a) two times for an three additional months each time from January 8, 2023 to July 8, 2023; (b) followed by three
times for an additional one month each time from July 8, 2023 to October 8, 2023 and (ii) amend the investment management trust agreement,
dated as of April 5, 2021 by and between the Company and Continental Stock Transfer & Trust Company, LLC (“Continental”)
to allow it to further extend the time to complete a business combination total of five times, as follows: (a) two times for an additional
three months each time from January 8, 2023 to July 8, 2023 and followed by (ii) three (3) times for an additional one (1) month each
time from July 8, 2023 to October 8, 2023
On January 5, 2023, 2,264,453 shares were redeemed
by a number of shareholders at a price of approximately $10.65 per share, in an aggregate principal amount of $24,120,397.
On January 5, 2023, the Company issued unsecured
promissory note in the aggregate principal amount of $350,332 to Ace Global Investment Limited in exchange for Ace Global Investment Limited
depositing such amount into the Company’s trust account in order to extend the amount of available time to complete a business combination.
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