Financial Reporting and Internal Controls - A material weakness in internal control over financial reporting was identified as of December 31, 2022, which may affect the accuracy and timeliness of financial reporting[90]. - Disclosure controls and procedures were evaluated as ineffective as of December 31, 2022, indicating potential weaknesses in financial reporting[161]. - The company identified material weaknesses in internal control over financial reporting related to the accounting for warrants, ordinary shares subject to possible redemption, and accrued expenses[166]. - The company plans to enhance its internal control over financial reporting by providing better access to accounting literature and increasing communication among personnel and third-party professionals[167]. - The Audit Committee consists of independent directors Robert Morris, Yan Xu, and Leslie Chow, who are responsible for overseeing financial reporting and compliance[181]. - Leslie Chow is designated as the "audit committee financial expert" under SEC regulations, ensuring financial literacy within the Audit Committee[184]. - The company has established a remediation plan to address identified material weaknesses, although it cannot guarantee the effectiveness of these initiatives[167]. Business Combination and Operations - The company must complete its initial business combination by April 8, 2023, or it will cease operations and redeem public shares at a price of 1,084,218 for the year ended December 31, 2022, driven by a change in the fair value of the warrant liability of 693,058[139]. - For the year ended December 31, 2021, the company reported a net loss of 1,024,127[140]. - The company reported a net income of 1,002,595 for the year ended December 31, 2021, indicating a significant turnaround[263]. - Basic and diluted net income per share for the year ended December 31, 2022, was (1.27) per share for the year ended December 31, 2021, indicating improved profitability on a per-share basis[264]. Shareholder and Equity Information - Initial shareholders own approximately 38.4% of the ordinary shares and have agreed to vote in favor of the initial business combination, increasing the likelihood of receiving requisite shareholder approval[99]. - The company may issue a substantial number of shares in the future, which could adversely affect the market price of its ordinary shares[97]. - If a significant number of ordinary shares are redeemed, trading liquidity may decrease, potentially limiting investors' ability to sell their shares[95]. - The company will only enter into business combinations approved by a majority of independent directors, ensuring compliance with Nasdaq listing rules[180]. - All existing shareholders, including officers and directors, have agreed to vote their shares in favor of any proposed business combination[199]. Trust Account and Liquidation - The trust account funds may be subject to third-party claims, potentially reducing the per-share liquidation price for shareholders below 46,920,000, which will be invested in U.S. government securities[279]. - Shareholders will have the opportunity to redeem their Public Shares for a pro rata portion of the Trust Account, initially set at 46,000,000 from its IPO by selling 4,000,000 units at an offering price of 46,920,000 from the IPO and private placement was placed in a trust account for the benefit of the company's public shareholders[133]. - The company incurred 920,000 in underwriting fees and $205,000 in other costs[142]. - The company intends to use substantially all net proceeds from the IPO to acquire target businesses and cover related expenses, with remaining funds allocated for working capital, marketing, and R&D[143]. Risks and Concerns - The company may face significant adverse consequences if its securities are delisted from the Nasdaq Capital Market, including reduced liquidity and a potential classification as a "penny stock"[113]. - The COVID-19 outbreak may materially adversely affect the business combination or post-combination company, depending on future developments[117]. - The financial statements indicate a significant working capital deficiency and substantial doubt about the company's ability to continue as a going concern[246]. - The company has incurred significant losses and needs to raise additional funds to meet its obligations and sustain operations[246]. Shareholder Agreements and Compensation - No executive officer has received any cash compensation for services rendered, and no compensation will be paid prior to the consummation of a business combination[205]. - All ongoing and future transactions with officers and directors will require prior approval by the audit committee and a majority of independent directors[200]. - The company has adopted a code of conduct and ethics applicable to its directors, officers, and employees[202]. - The company has agreed not to consummate business combinations with entities affiliated with initial shareholders without an independent fairness opinion[228].
Ace Business Acquisition (ACBA) - 2022 Q4 - Annual Report