Quetta Acquisition Corp SEC 10-Q Report

Quetta Acquisition Corporation, a blank check company focused on effecting a merger or similar business combination in the financial technology sector in Asia (excluding China, Hong Kong, and Macau), has released its Form 10-Q report for the quarter ended September 30, 2024. The report provides a comprehensive overview of the company's financial performance, business activities, strategic initiatives, and the challenges it faces.

Financial Highlights

Quetta Acquisition Corp reported a net income of $603,904 for the three months ended September 30, 2024, and $1,760,025 for the nine months ended September 30, 2024. This reflects interest income offset by formation and operational costs, related party administrative fees, franchise tax expense, and income tax expense.

Net Income Per Share, Redeemable Common Stock: $0.07 for the three months ended September 30, 2024, and $0.20 for the nine months ended September 30, 2024.

Net Income Per Share, Non-Redeemable Common Stock: $0.07 for the three months ended September 30, 2024, and $0.20 for the nine months ended September 30, 2024.

Business Highlights

Company Overview: Quetta Acquisition Corporation is a blank check company incorporated in Delaware on May 1, 2023, formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses or entities.

Target Focus: The company intends to focus on target businesses in Asia (excluding China, Hong Kong, and Macau) that operate in the financial technology sector.

IPO Completion: On October 11, 2023, Quetta Acquisition Corporation completed its initial public offering (IPO) of 6,900,000 units, including the full exercise of the over-allotment option, generating gross proceeds of $69,000,000.

Trust Account: Upon the closing of the IPO and the private placement, a total of $69,690,000 was placed in a trust account maintained by Continental Stock Transfer & Trust Company.

Non-Binding LOI: On May 30, 2024, the company entered into a non-binding letter of intent (LOI) with a clinical-stage therapeutics company regarding a potential business combination. However, the parties were unable to agree to terms, and the negotiations have been terminated.

Administrative Services Agreement: The company has an agreement with its sponsor to pay $10,000 per month for office space, utilities, secretarial, and administrative support. The sponsor agreed to defer the payment of such monthly fees until the consummation of the initial business combination.

Deferred Underwriting Fees: The underwriters are entitled to a deferred fee of 3.5% of the gross proceeds of the IPO, or $2,415,000, payable upon the closing of a business combination.

Future Outlook: The company has until January 11, 2025, to complete its initial business combination, following an automatic six-month extension triggered by the execution of the LOI. The company has incurred significant professional costs to remain as a publicly traded company and expects to continue incurring significant transaction costs in pursuit of a business combination.

Going Concern Consideration: Management has determined that there is substantial doubt about the company's ability to continue as a going concern due to the significant costs incurred and the uncertainty of completing a business combination within the specified period.

Strategic Initiatives

Strategic Focus: Quetta Acquisition Corporation is focused on effecting a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses or entities in the financial technology sector in Asia (excluding China, Hong Kong, and Macau).

Capital Management: On October 11, 2023, Quetta Acquisition Corporation completed its IPO of 6,900,000 units, including the full exercise of the underwriter’s over-allotment option, generating gross proceeds of $69,000,000. Simultaneously, the company sold 253,045 private units to its Sponsor, Yocto Investments LLC, in a private placement generating total gross proceeds of $2,530,450. A total of $69,690,000 from the IPO and private placement was placed in a trust account. The company incurred $1,380,000 in underwriting discounts and commissions and $1,097,729 in other offering costs. Additionally, the underwriters agreed to defer $2,415,000 in underwriting discounts and commissions. The company has an agreement to pay the Sponsor $10,000 per month for office space, utilities, secretarial, and administrative support, with unpaid amounts accruing without interest and due no later than the date of the consummation of the initial business combination.

Future Outlook: The company has until January 11, 2025, to complete its initial business combination, with the possibility of extending this period by an additional six months if a letter of intent or definitive agreement is executed. The company’s ability to consummate a business combination may be impacted by global conflicts, market volatility, and the availability of third-party financing. The company plans to use the net proceeds from the IPO and private placement, including funds held in the trust account, to finance the operations of the target business post-business combination. The company’s management has determined that there is substantial doubt about the company’s ability to continue as a going concern if it is unable to complete a business combination within the specified period.

Challenges and Risks

Forward-Looking Statements and Risks: The report includes forward-looking statements that involve risks and uncertainties which could cause actual results to differ materially from those expected. Key risks include the conditions of the Proposed Business Combination not being satisfied, which could impact the company's financial position and business strategy.

Recent Developments and Business Combination Risks: The company entered into a non-binding LOI with a clinical-stage therapeutics company, but negotiations were terminated as the parties could not agree on terms. This has extended the deadline for completing the initial business combination to January 11, 2025. The failure to finalize a business combination poses a significant risk to the company's future operations and financial stability.

Operational and Financial Risks: The company has not generated any operating revenues and expects to incur significant costs related to being a public company and pursuing a business combination. The company reported net income primarily from interest income, but operational costs, related party administrative fees, franchise tax expenses, and income tax expenses are substantial.

Liquidity and Capital Resources: As of September 30, 2024, the company had a working capital deficit of $543,906 and cash of $329,359. The company faces substantial doubt about its ability to continue as a going concern due to significant professional costs and transaction costs related to the business combination. If the company fails to complete a business combination within the specified period, it may proceed to voluntary liquidation and dissolution.

Administrative Services Agreement: The company has an agreement to pay the Sponsor $10,000 per month for administrative services, which has been deferred. This accrual without interest adds to the financial obligations that need to be settled upon the consummation of the initial business combination.

Underwriting Agreement: The company has a deferred fee obligation of $2,415,000 to the underwriters, payable only upon the completion of a business combination. This adds to the financial pressure to successfully complete a business combination.

SEC Filing: Quetta Acquisition Corp [ QETA ] - 10-Q - Nov. 01, 2024