Overview

Metal Sky Star Acquisition Corporation is a blank check company formed in the Cayman Islands in 2021 for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses. The company intends to use cash from its initial public offering (IPO) and private unit sale, as well as debt or a combination of cash, shares, and debt to finance its business combination plans.

On September 28, 2023, the Board of Directors appointed Wenxi He as the new Chief Executive Officer and director, replacing the previous CEO Man Chak Leung. Ms. He has over 15 years of experience in the investment banking industry, previously serving as the Managing Director and Global Head of Commodity Exchange Traded Products at Bank of America Merrill Lynch.

Results of Operations

Metal Sky Star Acquisition Corporation has not engaged in any operations or generated any operating revenues to date. Its activities have been limited to organizational tasks, preparing for the IPO, and identifying a target company for a business combination. The company expects to generate non-operating income in the form of interest on marketable securities held after the IPO, but does not anticipate generating operating revenues until after completing its initial business combination.

For the years ended December 31, 2023 and 2022, the company had net income of $2,152,160 and $1,274,669 respectively. This consisted of interest income on marketable securities held in the trust account, as well as unrealized gains on those securities, offset by expenses.

Liquidity and Capital Resources

The company’s financial statements were prepared under the assumption that it will continue as a going concern. However, as of December 31, 2023, Metal Sky Star Acquisition had an accumulated deficit of $5,772,847 and a working capital deficit of $2,844,642, which raises substantial doubt about its ability to continue as a going concern.

The company will need to raise additional capital through loans or investments from its sponsor, shareholders, officers, directors, or third parties in order to complete a business combination. Its officers, directors and sponsor may provide loans, but are not obligated to do so.

On April 5, 2022, the company completed its IPO, raising $115 million. It also sold $3.3 million in private units to the sponsor. The net cash used in operating activities was $233,324 and $87,585 for 2023 and 2022 respectively. As of December 31, 2023, the company had $35,359,088 invested in the trust account.

Off-Balance Sheet Financing Arrangements

Metal Sky Star Acquisition Corporation does not have any off-balance sheet financing arrangements, special purpose entities, or other relationships that would be considered off-balance sheet.

Contractual Obligations

The company’s only significant contractual obligation is an agreement to pay its sponsor $10,000 per month for general and administrative services until the earlier of a business combination or liquidation. It also owes $2.5 million in deferred underwriting fees to the IPO underwriters, payable upon completion of a business combination.

On January 3, 2023, the company issued a promissory note to its sponsor for up to $1 million, which was later increased to $2.5 million on April 18, 2023. This note is repayable upon the consummation of the company’s initial business combination.

General Meeting

In January 2023, the company’s shareholders approved a proposal to extend the deadline to complete a business combination to February 5, 2024. This required the redemption of 5,885,324 public shares.

In October 2023, shareholders approved a further extension to August 5, 2024, with a reduced extension fee. This resulted in the redemption of an additional 2,412,260 public shares, leaving 3,202,416 unredeemed shares.

The company has not yet held a meeting to propose a further extension to April 5, 2025, which is currently under review.

Merger Agreement

On April 12, 2023, Metal Sky Star Acquisition entered into a merger agreement with Future Dao Group Holding Limited. However, this agreement was mutually terminated on October 6, 2023.

Critical Accounting Policies

The company’s critical accounting policies include the treatment of warrants as either equity-classified or liability-classified instruments, the classification of ordinary shares subject to possible redemption, and the calculation of net loss per ordinary share.

Overall, Metal Sky Star Acquisition Corporation faces significant challenges in its ability to continue as a going concern if it is unable to complete a successful business combination. The company will need to secure additional financing to fund its operations and search for a target.