References to the "Company," "Alset Capital Acquisition Corp.," "our," "us" or
"we" refer to Alset Capital Acquisition Corp. The following discussion and
analysis of the Company's financial condition and results of operations should
be read in conjunction with the unaudited interim financial statements and the
notes thereto contained elsewhere in this report. Certain information contained
in the discussion and analysis set forth below includes forward-looking
statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Exchange Act. We have based these forward-looking statements
on our current expectations and projections about future events. These
forward-looking statements are subject to known and unknown risks, uncertainties
and assumptions about us that may cause our actual results, levels of activity,
performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by such
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "should," "could," "would," "expect,"
"plan," "anticipate," "believe," "estimate," "continue," or the negative of such
terms or other similar expressions. Factors that might cause or contribute to
such a discrepancy include, but are not limited to, those described in our other
SEC filings.
Overview
We are a newly organized blank check company incorporated as a Delaware
corporation and formed for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses. While our efforts to identify a target
business may span many industries and regions worldwide, we intend to focus our
search for prospects within the real estate industry. While we are currently
reviewing certain opportunities, we have not selected any specific business
combination target at this time. We intend to effectuate our initial business
combination ("Business Combination") using cash from the proceeds of the initial
public offering and the sale of the placement units, the proceeds of the sale of
our shares in connection with our initial Business Combination (including
pursuant to backstop agreements we may enter into), shares issued to the owners
of the target, debt issued to bank or other lenders or the owners of the target,
or a combination of the foregoing.
Our sponsor is Alset Acquisition Sponsor, LLC, a Delaware limited liability
company (the "Sponsor"). The registration statement for our initial public
offering was declared effective on January 31, 2022. On February 3, 2022, we
consummated our initial public offering (the "Initial Public Offering") of
8,625,000 Units ("Units'), including the full exercise of the underwriters'
over-allotment option to purchase 1,125,000 units, at a purchase price of $10.00
per Unit.
On February 3, 2022, simultaneously with the consummation of the Initial Public
Offering, the Company consummated the private placement of 473,750 units (the
"Private Placement Units") to the Sponsor, which amount includes 33,750 Private
Placement Units purchased by the Sponsor in connection with the underwriters'
exercise of the option in full, at a price of $10.00 per Private Placement Unit,
generating gross proceeds of approximately $4.7 million (the "Private
Placement") the proceeds of which were placed in the trust account. No
underwriting discounts or commissions were paid with respect to the Private
Placement. The Private Placement was conducted as a non-public transaction and,
as a transaction by an issuer not involved in the Initial Public Offering, was
exempt from registration under the Securities Act in reliance upon Section
4(a)(2) of the Securities Act. The Private Placement Units are identical to the
Units, except that (a) the Private Placement Units and their component
securities will not be transferable, assignable or saleable until 30 days after
the consummation of the Company's initial Business Combination except to
permitted transferees and (b) the warrants and rights included as a component of
the Private Placement Units, so long as they are held by the Sponsor or its
permitted transferees, will be entitled to registration rights, respectively.
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Of the proceeds from the Initial Public Offering and the proceeds of the sale of
the Private Placement Units, net of the underwriting commissions, discounts, and
offering expenses, $87,112,500 was placed in the Trust Account ("Trust Account")
and $1,874,050 was delivered to the Company to cover operating expenses. Except
with respect to interest earned on the funds held in the Trust Account that may
be released to the Company to pay its taxes (less up to $100,000 interest to pay
dissolution expenses), the funds held in the Trust Account will not be released
from the Trust Account until the earliest of (a) the completion of the Company's
initial Business Combination, (b) the redemption of any public shares properly
submitted in connection with a stockholder vote to amend our certificate of
incorporation (A) to modify the substance or timing of our obligation to allow
redemption in connection with our initial Business Combination or certain
amendments to our charter prior thereto or to redeem 100% of our public shares
if we do not complete our initial Business Combination within 12 months from the
consummation of the Initial Public Offering (or 15 months if we have filed a
proxy statement, registration statement or similar filing for an initial
Business Combination within 12 months from the consummation of the Initial
Public Offering but have not completed the initial Business Combination within
such 12-month period, or up to 21 months if we extend the period of time to
consummate a Business Combination, at our election by two separate three month
extensions, subject to satisfaction of certain conditions, including the deposit
of up to $862,500 for each three month extension, into the Trust Account, or as
extended by our stockholders in accordance with our Amended and Restated
Certificate of Incorporation) or (ii) with respect to any other provision
relating to stockholders' rights or pre-initial Business Combination activity,
and (c) the redemption of our public shares if we are unable to complete our
initial Business Combination within 12 months from the consummation of the
Initial Public Offering (or 15 months if we have filed a proxy statement,
registration statement or similar filing for an initial Business Combination
within 12 months from the consummation of the Initial Public Offering but have
not completed the initial Business Combination within such 12-month period, or
up to 21 months if we extend the period of time to consummate a Business
Combination, at our election by two separate three month extensions, subject to
satisfaction of certain conditions, including the deposit of up to $862,500 for
each three month extension, into the Trust Account, or as extended by our
stockholders in accordance with our Amended and Restated Certificate of
Incorporation), subject to applicable law.
We will have only 12 months from the closing of the Initial Public Offering (or
up to 21 months from the closing of the Initial Public Offering or as extended
by our stockholders in accordance with our amended and restated certificate of
incorporation) to complete the initial Business Combination (the "Combination
Period"). However, if we are unable to complete the initial Business Combination
within the Combination Period (and our stockholders have not approved an
amendment to our charter extending this time period), we will (i) cease all
operations except for the purpose of winding up, (ii) as promptly as reasonably
possible but not more than ten business days thereafter, redeem the 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 on the funds held
in the Trust Account and not previously released to us to pay our taxes (less up
to $100,000 of interest to pay dissolution expenses), divided by the number of
then outstanding public shares, which redemption will completely extinguish
public stockholders' rights as stockholders (including the right to receive
further liquidating distributions, if any), subject to applicable law, and (iii)
as promptly as reasonably possible following such redemption, subject to the
approval of our remaining stockholders and our board of directors, dissolve and
liquidate, subject to our obligations under Delaware law to provide for claims
of creditors and the requirements of other applicable law.
Liquidity and Capital Resources
As of August 31, 2022, we had $1,507,307 in cash and a working capital of
$1,352,503.
Our liquidity needs up to August 31, 2022 had been satisfied through a capital
contribution from our Sponsor of $25,000 for the founder shares and the loan
from our Sponsor in addition to our Sponsor paying offering and formation costs
on behalf of the Company. After consummation of the Initial Public Offering on
February 3, 2022, we had approximately $1.9 million in our operating bank
account and working capital of approximately $1.65 million. In addition, in
order to finance transaction costs in connection with a Business Combination,
our sponsor or an affiliate of the Sponsor or certain of our officers and
directors may, but are not obligated to, provide us Working Capital Loans. As of
August 31, 2022, there were no amounts outstanding under any Working Capital
Loans.
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Based on the foregoing, management believes that we will have sufficient working
capital to meet our needs through the earlier of the consummation of a Business
Combination or one year from this filing. Over this time period, we will be
using these funds for paying existing accounts payable, identifying and
evaluating prospective initial Business Combination candidates, performing due
diligence on prospective target businesses, paying for travel expenditures,
selecting the target business to merge with or acquire, and structuring,
negotiating and consummating the Business Combination.
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic and has
concluded that while it is reasonably possible that the economic effects of the
pandemic could have a negative effect on our financial position, results of our
operations, and/or search for a target company, the specific impact is not
readily determinable as of the date of these financial statements. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Results of Operations
As of August 31, 2022, we had not commenced any operations. All activity for the
period from October 20, 2021 (inception) through August 31, 2022 relates to our
formation and the Initial Public Offering. We have neither engaged in any
operations nor generated any revenues to date. We will not generate any
operating revenues until after the completion of our initial Business
Combination, at the earliest. We will generate non-operating income in the form
of interest income on cash and cash equivalents from the proceeds derived from
the Initial Public Offering. We expect to incur increased expenses as a result
of being a public company (for legal, financial reporting, accounting and
auditing compliance), as well as for due diligence expenses.
For the three and nine months ended August 31, 2022, we had net income of
$122,132 and $14,650, respectively, consisting of interest income partially
offset by operating expenses.
Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations,
operating lease obligations, purchase obligations or long-term liabilities.
Administrative Services Agreement
Commencing on the date that our securities are first listed on the NASDAQ
Capital Market, we agreed to pay the Sponsor $10,000 per month for office space,
utilities and secretarial and administrative support services. Upon completion
of the initial Business Combination or our liquidation, we will cease paying
these monthly fees.
Registration Rights
The holders of the founder shares, the placement units (including securities
contained therein) and warrants (including securities contained therein) that
may be issued upon conversion of working capital loans, and any shares of Class
A common stock issuable upon the exercise of the placement units and any shares
of Class A common stock that may be issued upon exercise of the warrants issued
upon conversion as part of the working capital loans and Class A common stock
issuable upon conversion of the founder shares, are entitled to registration
rights pursuant to a registration rights agreement signed on the effective date
of the Initial Public Offering, requiring us to register such securities for
resale (in the case of the founder shares, only after conversion to our Class A
common stock). The holders of the majority of these securities are entitled to
make up to three demands, excluding short form demands, that we register such
securities. In addition, the holders have certain "piggy-back" registration
rights with respect to registration statements filed subsequent to our
completion of our initial Business Combination and rights to require us to
register for resale such securities pursuant to Rule 415 under the Securities
Act. The registration rights agreement does not contain liquidated damages or
other cash settlement provisions resulting from delays in registering our
securities. We will bear the expenses incurred in connection with the filing of
any such registration statements.
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Underwriting Agreement
On February 3, 2022, the Company paid a cash underwriting discount of $0.20 per
Unit, or $1,725,000.
In addition, the underwriters are entitled to a deferred fee of $0.35 per Unit,
or $3,018,750 in the aggregate. The deferred fee will become payable to the
underwriters from the amounts held in the Trust Account solely in the event that
the Company completes a Business Combination, subject to the terms of the
underwriting agreement.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and income and expenses
during the periods reported. Actual results could materially differ from those
estimates.
The Company has determined there are no critical accounting policies or
estimates in the periods covered in this report.
Critical Accounting Estimate
An accounting estimate where (a) the nature of the estimate is material due to
the levels of subjectivity and judgment necessary to account for highly
uncertain matters or the susceptibility of such matters to change and (b) the
impact of the estimate on financial condition or operating performance is
material.
Critical Accounting Policies and Practices
A company's accounting policies and practices that are both most important to
the portrayal of the company's financial condition and results, and require
management's most difficult, subjective, or complex judgments, often because of
the need to make estimates about the effects of matters that are inherently
uncertain.
Off-Balance Sheet Arrangements
As of August 31, 2022, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K.
Inflation
We do not believe that inflation had a material impact on our business, revenues
or operating results during the period presented.
Emerging Growth Company Status
We are an "emerging growth company," as defined in Section 2(a) of the
Securities Act of 1933, as amended, (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 auditor
attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding executive compensation in our periodic reports
and proxy statements, and exemptions from the requirements of holding a
nonbinding advisory vote on executive compensation and stockholder approval of
any golden parachute payments not previously approved.
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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. We have 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, us, 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
our 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.
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