KIDZ AI Inc 8-K/A, filed Apr 16, 2025
KIDZ AI Inc. (KIDZ)
About this 8-K/A
KIDZ AI Inc filed this 8-K/A on April 16, 2025, reporting on events of April 4, 2025.
Items reported
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Amendment No. 1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
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(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e 4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
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.
Explanatory Note
Classover Holdings, Inc. (“Pubco”) is filing this Amendment No. 1 on Form 8-K/A to Pubco’s Current Report on Form 8-K, dated April 4, 2025, which was originally filed on April 10, 2025 (the “Original 8-K”), to provide exhibits under Item 9.01(d) that were omitted from the Original 8-K.
As previously disclosed in the Original 8-K, on April 4, 2025 (the “Closing Date”), Pubco, Battery Future Acquisition Corp, a Cayman Islands exempted company (“BFAC”), Class Over Inc., a Delaware corporation (“Class Over”), BFAC Merger Sub 1 Corp., a Delaware corporation (“Merger Sub 1”), and BFAC Merger Sub 2 Corp., a Delaware corporation (“Merger Sub 2” and together with Merger Sub 1, the “Merger Subs”), consummated the transactions contemplated by that certain Agreement and Plan of Merger (the “Business Combination Agreement”).
This Amendment No. 1 is being filed to include the following exhibits discussed in the Original 8-K:
--audited financial statements of Class Over Inc. and the related notes as of and for the years ended December 31, 2024 and 2023, which financial statements are being filed hereby as Exhibit 99.1.
-- Class Over’s Management’s Discussion of Financial Condition and Results of Operations for the years ended December 31, 2024 and 2023, which discussion is being filed hereby as Exhibit 99.2.
--unaudited pro forma condensed combined balance sheet as of December 31, 2024 and the unaudited pro forma condensed combined statement of profit or loss for the years ended December 31, 2024 and 2023, which pro forma information is being filed hereby as Exhibit 99.3.
Except for the foregoing, this Amendment No. 1 does not amend the Original 8-K in any way and does not modify or update any other disclosures contained in the Original 8-K. This Amendment No. 1 supplements and does not supersede the Original 8-K. Accordingly, this Amendment No. 1 should be read in conjunction with the Original 8-K.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit Index
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| Class Over Inc. audited financial statements for the years ended December 31, 2024 and 2023. | |
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104 |
| Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
+ | Schedule and exhibits to this Exhibit omitted pursuant to Regulation S-K Item 601(b)(2). Pubco agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request. |
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* | Previously filed. |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: April 16, 2025 | CLASSOVER HOLDINGS, INC. |
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| By: | /s/ Hui Luo |
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Name: Hui Luo |
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Title: Chief Executive Officer |
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EXHIBIT 99.1
Report of Independent Registered Public Accounting Firm
Board of Directors and Stockholders,
Class Over Inc.
450 7th Avenue, Suite 905
New York, NY 10123
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Class Over Inc. as of December 31, 2024, and the related statements of operations and changes in stockholders’ equity, and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of Class Over Inc. as of December 31, 2024, and the results of its operations and its cash flows for year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the entity will continue as a going concern. As discussed in Note 2 to the financial statements, the entity has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the entity’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to Class Over Inc. in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Class Over Inc. is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/ Bush & Associates CPA LLC
We have served as Class Over Inc.'s auditor since 2025.
Henderson, Nevada
April 16, 2025
| 1 |
CLASS OVER INC.
CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN US DOLLARS)
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| December 31, |
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| December 31, |
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| 2024 |
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| 2023 |
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| ASSETS |
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| Current assets: |
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| Cash |
| $ | 50,682 |
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| $ | 787,652 |
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| Prepayments and other current assets |
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| 15,557 |
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| 17,400 |
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| Due from related parties |
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| 8,251 |
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| 9,297 |
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| Total current assets |
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| 74,490 |
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| 814,349 |
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| Noncurrent assets: |
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| Property and equipment, net |
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| 218,617 |
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| 87,735 |
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| Operating lease right-of-use assets, net |
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| 1,552,242 |
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| 1,845,768 |
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| Total noncurrent assets |
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| 1,770,859 |
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| 1,933,503 |
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| TOTAL ASSETS |
| $ | 1,845,349 |
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| $ | 2,747,852 |
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| LIABILITIES AND STOCKHOLDERS' EQUITY |
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| Current liabilities: |
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| Accounts payable |
| $ | 7,200 |
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| $ | 60 |
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| Interest payable |
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| 19,072 |
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| 9,969 |
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| Deferred revenues |
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| 2,719,091 |
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| 2,561,246 |
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| Due to related parties |
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| 249,545 |
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| 356,631 |
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| Operating lease liabilities - current |
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| 314,685 |
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| 295,475 |
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| Accrued liabilities and other payables |
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| 63,415 |
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| 19,517 |
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| Total current liabilities |
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| 3,373,008 |
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| 3,242,898 |
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| Noncurrent liabilities: |
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| Convertible notes payable |
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| 1,750,000 |
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| 1,650,000 |
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| Operating lease liabilities - noncurrent |
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| 1,241,495 |
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| 1,556,180 |
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| Total noncurrent liabilities |
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| 2,991,495 |
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| 3,206,180 |
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| TOTAL LIABILITIES |
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| 6,364,503 |
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| 6,449,078 |
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| Commitments and contingencies |
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| - |
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| - |
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| Stockholders' equity: |
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| Ordinary shares, $0.0001 par value, 3,500,000 shares authorized, 1,578,500 and 1,500,000 shares issued and outstanding as of December 31, 2024 and December 31, 2023, respectively |
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| 158 |
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| 150 |
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| Additional paid-in capital |
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| 80,412 |
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| 55,300 |
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| Accumulated deficit |
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| (4,599,724 | ) |
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| (3,756,676 | ) |
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| Total stockholders' (deficit) |
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| (4,519,154 | ) |
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| (3,701,226 | ) |
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| TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY |
| $ | 1,845,349 |
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| $ | 2,747,852 |
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See accompanying notes to the consolidated financial statements.
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CLASS OVER INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(EXPRESSED IN US DOLLARS)
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| For the Year Ended December 31, |
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| 2023 |
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| Revenues: |
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| Service revenues |
| $ | 3,375,604 |
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| $ | 2,996,835 |
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| Consulting revenues (related party) |
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| 300,000 |
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| 100,000 |
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| Total revenues |
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| 3,675,604 |
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| 3,096,835 |
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| Cost of revenues: |
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| Cost of revenues |
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| 1,616,428 |
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| 1,437,979 |
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| Total cost of revenues |
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| 1,616,428 |
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| 1,437,979 |
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| Gross profit |
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| 2,059,176 |
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| 1,658,856 |
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| Operating expenses: |
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| Selling and marketing |
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| 657,003 |
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| 505,518 |
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| General and administrative |
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| 2,196,747 |
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| 1,551,633 |
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| Research and development |
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| 39,254 |
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| 26,730 |
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| Total operating expenses |
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| 2,893,004 |
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| 2,083,881 |
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| (Loss) from operations |
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| (833,828 | ) |
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| (425,025 | ) |
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| Interest and other expense |
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| (9,220 | ) |
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| (8,030 | ) |
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| (Loss) before provision for income taxes |
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| (843,048 | ) |
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| (433,055 | ) |
| Provision for income taxes |
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| - |
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| - |
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| Net (loss) |
| $ | (843,048 | ) |
| $ | (433,055 | ) |
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| Net loss per share - basic and diluted |
| $ | (0.53 | ) |
| $ | (0.29 | ) |
| Weighted average shares outstanding - basic and diluted |
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| 1,576,995 |
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| 1,500,000 |
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See accompanying notes to the consolidated financial statements.
| 3 |
CLASS OVER INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
(EXPRESSED IN US DOLLARS)
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| Ordinary shares |
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| Ordinary shares amount |
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| Additional Paid-in Capital |
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| Accumulated deficit |
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| Total |
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| Balance at December 31, 2022 |
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| 1,500,000 |
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| $ | 150 |
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| $ | 55,300 |
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| $ | (3,323,621 | ) |
| $ | (3,268,171 | ) |
| Net loss |
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| - |
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| (433,055 | ) |
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| (433,055 | ) |
| Balance at December 31, 2023 |
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| 1,500,000 |
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| $ | 150 |
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| 55,300 |
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| (3,756,676 | ) |
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| (3,701,226 | ) |
| Stock compensation issued for consulting services |
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| 78,500 |
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| 8 |
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| 25,112 |
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| - |
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| 25,120 |
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| Net loss |
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| - |
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| (843,048 | ) |
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| (843,048 | ) |
| Balance at December 31, 2024 |
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| 1,578,500 |
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| $ | 158 |
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| $ | 80,412 |
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| $ | (4,599,724 | ) |
| $ | (4,519,154 | ) |
See accompanying notes to the consolidated financial statements.
| 4 |
CLASS OVER INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN US DOLLARS)
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| For the Year Ended December 31, |
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| 2024 |
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| 2023 |
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| Cash flows from operating activities: |
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| Net (loss) |
| $ | (843,048 | ) |
| $ | (433,055 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: |
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| Depreciation and amortization |
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| 54,823 |
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| 27,741 |
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| Amortization of operating lease right-of-use assets |
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| 293,526 |
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| 282,309 |
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| Stock compensation issued for consulting services |
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| 25,120 |
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| - |
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| Changes in operating assets and liabilities: |
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| Due from related parties |
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| 1,046 |
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| (4,297 | ) |
| Prepayments and other current assets |
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| 1,843 |
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| (8,900 | ) |
| Accounts payable |
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| 7,140 |
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| (484 | ) |
| Interest payable |
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| 9,103 |
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| 5,280 |
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| Deferred revenues |
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| 157,845 |
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| 59,626 |
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| Operating lease liabilities |
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| (295,475 | ) |
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| (277,578 | ) |
| Due to related parties |
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| (237,086 | ) |
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| 324,561 |
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| Accrued liabilities and other payables |
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| 43,898 |
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| (32,977 | ) |
| Net cash (used in) operating activities |
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| (781,265 | ) |
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| (57,774 | ) |
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| Cash flows from investing activities: |
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| Purchases of property and equipment |
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| (185,705 | ) |
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| - |
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| Net cash (used in) investing activities |
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| (185,705 | ) |
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| - |
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| Cash flows from financing activities: |
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| Proceeds from convertible notes payable |
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| 100,000 |
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| 200,000 |
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| Proceeds from promissory notes related party |
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| 130,000 |
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| - |
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| Net cash provided by financing activities |
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| 230,000 |
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| 200,000 |
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| Net (decrease) increase in cash |
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| (736,970 | ) |
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| 142,226 |
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| Cash, beginning of period |
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| 787,652 |
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| 645,426 |
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| Cash, end of period |
| $ | 50,682 |
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| $ | 787,652 |
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| Supplemental disclosure of cash flow information: |
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| Cash paid during the period for: |
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| Interest |
| $ | - |
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| $ | - |
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| Income taxes |
| $ | - |
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| $ | - |
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See accompanying notes to the consolidated financial statements.
| 5 |
CLASS OVER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Description of the Business and Basis of Presentation
Class Over Inc. (the “Company,” “Classover DE,” “we,” “us” or “our”) was formed on March 16, 2022 as a holding company in Delaware, which was 100% controlled by the sole owner Hui Luo. Class Over Inc. (“Classover NJ”) was formed on June 16, 2020 in New Jersey, which was 100% controlled by the sole owner Hui Luo. Classover NJ is an online enrichment program that offers over 20 courses taught by certified instructors. It caters to children aged 4 to 17, providing personalized attention and a supportive learning environment. On April 19, 2022, Classover DE entered into a stock transfer agreement with Classover NJ. After the share exchange, Classover DE owned 100% of Classover NJ.
Classover DE and Classover NJ were under common control as the same shareholder held more than 50% of the voting ownership interest of each entity. Accordingly, the accompanying consolidated financial statements retroactively reflect the reorganization effective for all periods presented.
Basis of Presentation—The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) from the Company’s accounting records and reflect the financial position and results of operations for the fiscal years ended December 31, 2024 and 2023.
Note 2. Summary of Significant Accounting Policies
Accounting Principles—The consolidated financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States of America (GAAP).
Principles of Consolidation—The consolidated financial statements include the financial statements of the Company and its subsidiary. All significant intercompany transactions and balances between the Company and its subsidiary are eliminated upon consolidation.
Liquidity and Going Concern— As of December 31, 2024, the Company had cash of $50,682, current liabilities of $3,373,008, a working capital deficit of $3,298,518, and a stockholders’ deficit of $4,519,154. For the years ended December 31, 2024 and 2023, the Company had losses of $843,048 and $433,055, respectively. However, Management of the Company has evaluated the sufficiency of its working capital and concluded that the Company’s available cash and cash equivalents, cash generated from operations, issuance of debt and equity securities will be sufficient to support its continuous operations and to meet its payment obligations when liabilities fall due within the next twelve months from the date of issuance of these combined and consolidated financial statements. Accordingly, the Company’s combined and consolidated financial statements are prepared on going concern basis, which assumes that the Company will continue in operation for the foreseeable future and, accordingly, will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due.
Use of Estimates—The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant estimates and assumptions reflected in the consolidated financial statements include, but are not limited to, useful lives of property and equipment, valuation of deferred tax assets and liabilities, operating lease right-of-use assets and liabilities and deferred revenue. Actual results may differ materially from such estimates. Management believes that the estimates, and judgments upon which they rely, are reasonable based upon information available to them at the time that these estimates and judgments are made. To the extent that there are material differences between these estimates and actual results, the Company’s consolidated financial statements will be affected.
Revenue Recognition— The Company has three predominant sources of revenue: time-based subscriptions, credit-based subscriptions to our online courses, and marketing consulting services.
| 6 |
Subscription Revenue
Customers are required to pay in advance to enroll for courses. For time-based subscriptions, we are obligated to provide students with unlimited access to our course for a specified term. For credit-based subscriptions, we offer our students the flexibility to take courses at any time up to the limit of their prepaid balance. Each contract of the online education service is accounted for as a single performance obligation which is satisfied ratably over the service period. We charge fixed fees for the services contracts. The proceeds collected are initially recorded as deferred revenue. For credit-based subscriptions, revenues are recognized proportionately as the courses are delivered. For time-based subscriptions, revenues are recognized on a straight-line basis over the subscription period from the date in which the students activate the courses to the date of expiration. Refunds are provided to the students who decide to withdraw from the subscribed courses within the course offer period and a proportional refund is based on the percentage of untaken courses to the total courses purchased. Historically, the Company has not experienced material refunds.
Consulting Revenue
The Company also generates revenue from consulting services. The Company’s consulting program is designed to teach startup founders within the education sector how to market their product, refine their course content, infrastructure, and business models, achieve market fit and operating efficiency, and scale the startup into a high growth education business. The Company’s performance obligation is to provide consulting services to startup founders for a specific term. Customers are required to prepay the full consulting service charge, which is fixed and determinable, at contract inception to secure program spot, and revenue is recognized over time on a straight-line basis through the service term.
Principal Agent Considerations—The Company makes its application available to be downloaded through third-party digital distribution service providers. Users who intend to enroll our courses are directed to third-party payment platforms before completing the subscription with us. The Company evaluates the purchases via third-party payment processors to determine whether its revenues should be reported gross or net of fees retained by the payment processor. The Company is the principal in the transaction with the end user as a result of controlling, hosting, and integrating the delivery of the virtual items to the end user. The Company records revenue on a gross basis as a principal and records fees paid to third-party payment platforms as cost of revenues.
Deferred Revenue— Deferred revenue mostly consists of payments we receive in advance of revenue recognition. Revenue is recognized over the life of the subscription, or as the delivery of the pre-purchased class sessions occurs. The Company classifies deferred revenue as a short-term liability on the balance sheets as the longest subscription plan is for twelve months and the remaining sessions are expected to be delivered within twelve months or less.
Cost of Revenue—Cost of revenue predominantly consists of streaming services, third-party payment processing fees, and wages for teachers and certain employees engaged in producing the revenue.
Referral Incentives – Referral incentives are course credits that we offer to our customers for referring new customers. The incentives are expensed as incurred when the credits are consummated and the corresponding expenses, which are independent educators’ compensation allocated to service the referral credits, are included in selling expenses
Cash and Cash Equivalents—Cash consists primarily of cash on hand and bank deposits. The Company maintains cash deposits with financial institutions that may exceed federally insured limits at times. The following table shows the breakout between cash on hand and bank deposits.
|
|
| December 31, 2024 |
|
| December 31, 2023 |
| ||
|
|
|
|
|
|
|
| ||
| Cash on hand |
| $ | 3,144 |
|
| $ | 3,144 |
|
| Bank deposits |
|
| 47,538 |
|
|
| 784,508 |
|
| Total cash shown in the Statement of Cash Flows |
| $ | 50,682 |
|
| $ | 787,652 |
|
| 7 |
Property and Equipment—Property and equipment primarily includes computers and furniture stated at cost, less accumulated depreciation. Depreciation is computed on the straight-line method over 5 years.
Leasehold improvements are amortized over the lesser of the life of the lease or the estimated useful life of the leasehold improvements. Costs related to maintenance and repairs that do not extend the assets’ useful life are expensed as incurred.
Income Taxes—The Company provides for income taxes in accordance with the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities for financial reporting and for income tax reporting. The deferred tax asset or liability represents the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. A valuation allowance is established for any deferred tax asset for which it is determined that it is more likely than not that some or all of the deferred tax assets will not be realized.
The Company utilizes a two-step approach to recognizing and measuring uncertain tax positions accounted for in accordance with the asset and liability method. The first step is to evaluate the tax position for recognition by determining whether evidence indicates that it is more likely than not that a position will be sustained if examined by a taxing authority.
The second step is to measure the tax benefit as the largest amount that is 50% likely of being realized upon settlement with a taxing authority. There were no amounts recorded at December 31, 2024 and December 31, 2023 related to uncertain tax positions.
Fair Value of Financial Instruments—The Company accounts for certain assets and liabilities at fair value in accordance with the accounting guidance applicable to fair value measurements and disclosures.
The carrying values of cash, accounts payable, deferred revenues, interest payable, due to related parties, and accrued liabilities and other payables are deemed to be reasonable estimates of their fair values because of their short-term nature.
Research and Development Costs— Research and development expenses are expensed as incurred and include compensation-related expenses to the outsourced subcontractors for maintenance of our online learning platform.
Segment Information and Geographic Data—FASB ASC 280, Segment Reporting, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in consolidated financial statements for details on the Company’s business segments.
The Company uses the management approach to determine reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker (“CODM”) for making decisions, allocating resources and assessing performance. The Company’s CODM has been identified as the CEO, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company. Based on management’s assessment, the Company determined that it has only one operating segment and therefore one reportable segment as defined by ASC 280.
Advertising Costs—Advertising costs amounted to $63,176 and $96,255 for the years ended December 31, 2024 and 2023, respectively. Advertising costs are expensed as incurred and included in selling expenses.
Contingencies—The Company records accruals for contingencies and legal proceedings expected to be incurred in connection with a loss contingency when it is probable that a liability has been incurred and the amount can be reasonably estimated.
If a loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss, would be disclosed.
| 8 |
Operating Leases—Effective January 1, 2022, the Company adopted ASU 2016-02, “Leases” (Topic 842), and elected the practical expedients that does not require the Company to reassess: (1) whether any expired or existing contracts are, or contain, leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. For lease terms of twelve months or fewer, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. The Company also adopted the practical expedient that allows lessees to treat the lease and non-lease components of a lease as a single lease component. On November 1, 2022, the Company recognized approximately $2.2 million of right of use (“ROU”) assets and operating lease liabilities based on the present value of the future minimum rental payments of the sublease with related party Dream Go for its office space expiring on October 31,2029, using an incremental borrowing rate of 4%.
The Company determines if a contract contains a lease at inception. US GAAP requires that the Company’s leases be evaluated and classified as operating or finance leases for financial reporting purposes. The classification evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option would result in an economic penalty. The Company’s real estate sublease has been classified as an operating lease.
Since the implicit rate for the Company’s sublease was not readily determinable, the Company used its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a similar economic environment and over a similar term.
The Company generally considers the economic life of its operating lease ROU assets to be comparable to the useful life of similar owned assets. The Company has elected the short-term lease exception; therefore operating lease ROU assets and liabilities do not include leases with a lease term of twelve months or less. Our sublease does not provide a residual guarantee. The operating lease ROU asset also excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term.
The Company reviews the impairment of its ROU assets consistent with the approach applied for its other long-lived assets. The Company reviews the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected to include the carrying amount of operating lease liabilities in any tested asset group and includes the associated operating lease payments in the undiscounted future pre-tax cash flows.
Earnings (loss) per Share
The Company computes earnings (loss) per share (“EPS”) in accordance with FASB ASC 260, “Earnings per Share”. ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average ordinary shares outstanding for the period. Diluted EPS presents the diluted effect on a per share basis of the potential ordinary shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the years ended December 31, 2024 and 2023, the convertible notes payable were excluded from the calculation of diluted EPS as their inclusion would have been anti-dilutive.
Recently Adopted Accounting Pronouncements—
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which modifies the measurement of expected credit losses of certain financial instruments. This new guidance was effective for private companies for fiscal years beginning after December 15, 2021, but early adoption was permitted. The adoption of this guidance did not have an impact on our consolidated financial statements and related disclosures.
| 9 |
Note 3. Property and Equipment, net
Property and equipment consists of the following as of December 31, 2024 and December 31, 2023:
|
|
| December 31, 2024 |
|
| December 31, 2023 |
| ||
| Computers and electronic equipment |
| $ | 55,532 |
|
| $ | 55,532 |
|
| Furniture and fixtures |
|
| 91,018 |
|
|
| 83,178 |
|
| Leasehold improvements |
|
| 177,865 |
|
|
| — |
|
| Total property and equipment |
|
| 324,415 |
|
|
| 138,710 |
|
| Less: accumulated depreciation |
|
| (105,798 | ) |
|
| (50,975 | ) |
| Total property and equipment, net |
| $ | 218,617 |
|
| $ | 87,735 |
|
Depreciation expense was $54,823 and $27,741 for the years ended December 31, 2024 and 2023, respectively, and is included within general and administrative expenses in the Company’s statements of operations.
Note 4. Leases
On November 1, 2022, the Company entered into an operating sublease with a related party, Dream Go, for its office space located at 450 7th Avenue, Suite 905, New York, NY 10123 expiring on October 31, 2029. On November 1, 2022, the Company recognized approximately $2.2 million of ROU assets and operating lease liabilities based on the present value of the future minimum rental payments of the sublease, using an incremental borrowing rate of 4%.
As of December 31, 2024, the Company’s operating sublease had a remaining lease term of approximately 4.8 years.
For the years ended December 31, 2024 and 2023, rent expense for the operating sublease was $361,011 and $361,012, respectively.
The Company’s sublease obligations as of December 31, 2024 are presented below:
| Year ending December 31, |
|
|
| |
| 2025 |
| $ | 370,221 |
|
| 2026 |
|
| 242,211 |
|
| 2027 |
|
| 388,790 |
|
| 2028 |
|
| 407,405 |
|
| Remaining |
|
| 310,114 |
|
| Total future lease payments |
|
| 1,718,741 |
|
| Less: Interest |
|
| (162,561 | ) |
| Present value of lease liabilities |
| $ | 1,556,180 |
|
Future amortization of the Company’s ROU assets is presented below:
| Year ended December 31, |
|
|
| |
| 2025 |
| $ | 305,476 |
|
| 2026 |
|
| 314,154 |
|
| 2027 |
|
| 326,161 |
|
| 2028 |
|
| 340,709 |
|
| Remaining |
|
| 265,742 |
|
| Total |
| $ | 1,552,242 |
|
| 10 |
Subleases
On November 1, 2022, the Company entered into sublease agreements with related parties (1) Dream Legal Group, Inc., (2) Tigerless Health, Inc., and (3) First Cover, Inc. to sub rent portions of its office space located at 450 7th Avenue, Suite 905, New York, NY 10123. These subleases are month-to-month starting on November 1, 2022 and ending upon a notice of 30 days from either party.
On July 1, 2024, the Company terminated the subleases with Tigerless Health, Inc, and First Cover, Inc. Sublease income is recognized on the straight-line basis over the lease term. Billed and uncollected operating lease receivables will be included in due from related parties which are stated at their estimated net realizable value. For the years ended December 31, 2024 and 2023, the Company’s income from these three subleases totaled $108,965 and $149,807, respectively (which has been reflected as a reduction of general and administrative expenses in the accompanying consolidated Statements of Operations).
Note 5. Accrued Liabilities and Other Payables
Accrued liabilities and other payables consisted of the following:
|
|
| December 31, 2024 |
|
| December 31, 2023 |
| ||
| Credit card payable |
| $ | 58,269 |
|
| $ | 15,289 |
|
| Payroll tax payable |
|
| 5,146 |
|
|
| 4,228 |
|
| Total |
| $ | 63,415 |
|
| $ | 19,517 |
|
Note 6. Income Taxes
The Company had no income tax provision for the years ended December 31, 2024 and 2023.
The Company has the following deferred tax assets (liabilities) as of December 31, 2024 and 2023:
|
|
| December 31, 2024 |
|
| December 31, 2023 |
| ||
| Net operating loss carryforwards |
| $ | 965,019 |
|
| $ | 790,223 |
|
| Other expense temporary difference |
|
| 2,813 |
|
|
| 2,544 |
|
| Total deferred tax assets |
|
| 967,833 |
|
|
| 792,767 |
|
| Deferred revenue |
|
| - |
|
|
| - |
|
| Deferred tax liability- Depreciation |
|
| (2,263 | ) |
|
| (2,777 | ) |
| Allowance |
|
| (965,570 | ) |
|
| (789,990 | ) |
| Net deferred taxes |
| $ | - |
|
| $ | - |
|
The Company evaluated the recoverable amounts of deferred tax assets, and provided a valuation allowance to the extent that future taxable profits will not be available against which the net operating loss and temporary differences can be utilized. A valuation allowance is provided against deferred tax assets when the Company determines that it is more likely than not that the deferred tax assets will not be utilized in the future. In making such determination, the Company considered factors including future taxable income exclusive of reversing temporary differences and tax loss carry forwards. The Company has provided a full valuation allowance for the net deferred tax asset as it is not more likely than not that the asset will be realized.
| 11 |
The provision for income taxes differs from the amounts computed by applying the federal statutory rate as follows for the periods ended December 31, 2024 and 2023:
|
|
| December 31, 2024 |
|
| December 31, 2023 |
| ||
| Federal statutory rate |
|
| 21.0 | % |
|
| 21.0 | % |
| Valuation allowance |
|
| (21.0 | ) |
|
| (21.0 | ) |
|
|
|
|
|
|
|
|
|
|
| Effective income tax rate |
|
| 0.0 | % |
|
| 0.0 | % |
The effective tax rate for the three and twelve months ended December 31, 2024 and 2023 is less than the statutory rate primarily as a result of the valuation allowance for net deferred tax assets.
No uncertain tax benefits have been recorded for the three and twelve months ended December 31, 2024 and 2023.
On March 27, 2020, the “Coronavirus Aid, Relief and Economic Security (CARES) Act” (the “Act”) was signed into law. The Act includes provisions relating to refundable payroll tax credits, deferment of the employer portion of certain payroll taxes, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The Company analyzed the provisions of the Act and determined there was no significant impact to its income taxes for the periods presented.
As of December 31, 2024, the Company has approximately $4,595,000 in federal net operating loss carryforwards. These loss carryforwards have an indefinite life.
The Company’s tax years 2021 and forward generally remain subject to examination by federal and state tax authorities.
Note 7. Related parties
As of December 31, 2024 and December 31, 2023, the Company has related party transactions with the following affiliates and affiliated entities:
| Related Party Name | Relationship | |
| Hui Luo | Majority owner of the Company | |
| Yi Liu | Spouse of Hui Luo | |
| Genius Kid Class LLC |
| An entity controlled by Yi Liu |
| Dream Legal Group, Inc |
| An entity controlled by Hui Luo |
| Ideal Force LLC |
| An entity controlled by Yi Liu |
| Tigerless Health, Inc* |
| Hui Luo as a minority shareholder |
| First Cover, Inc* |
| Hui Luo as a minority shareholder |
| Dream Go Inc. |
| An entity controlled by Hui Luo |
*In November 2023, Hui Luo transferred the minority ownership of Tigerless Heath, Inc and First Cover, Inc to other third parties and those two entities are no longer related parties of the Company.
Due from related parties
|
|
| As of December 31, |
| |||||
|
|
| 2024 |
|
| 2023 |
| ||
|
|
|
|
|
|
|
| ||
| Due from First Cover, Inc* |
| $ | — |
|
| $ | 2,699 |
|
| Due from Tigerless Health, Inc* |
|
| — |
|
|
| 6,598 |
|
| Due from Dream Legal Group, Inc. |
|
| 8,251 |
|
|
| - |
|
| Total due from related parties |
| $ | 8,251 |
|
| $ | 9,297 |
|
*As of December 31, 2024, Tigerless Heath, Inc and First Cover, Inc are no longer related parties to the Company.
| 12 |
Due to related parties
|
|
| As of December 31, |
| |||||
|
|
| 2024 |
|
| 2023 |
| ||
| Due to Yi Liu-accrued interest on convertible note* (see Note 8) |
| $ | — |
|
| $ | 2,146 |
|
| Due to Luo Hui-accrued interest on promissory note*** |
|
| 866 |
|
|
| — |
|
| Due to Luo Hui – promissory note*** |
|
| 130,000 |
|
|
| - |
|
| Due to Dream Go Inc. |
|
| 117,379 |
|
|
| 54,485 |
|
| Due to Genius Kid Class LLC** |
|
| — |
|
|
| 300,000 |
|
| Total due to related parties - current |
|
| 249,545 |
|
|
| 356,631 |
|
| Due to Yi Liu – convertible note due February 7, 2027* (see Note 8) |
|
| — |
|
|
| 250,000 |
|
* Convertible note was transferred from Yi Liu to third party holders on December 20, 2024.
**Consulting fee received in advance. Services were provided over the nine months ended September 30, 2024.
*** Due on August 15, 2025, at a rate of 4% per annum.
The following table represents related party transactions for the years ended December 31, 2024 and 2023:
|
|
|
|
| Year Ended December 31, |
| |||||
| Name |
| Business Purpose of Transaction |
| 2024 |
|
| 2023 |
| ||
| Dream Legal Group, Inc |
| Sublease income |
| $ | 71,344 |
|
| $ | 60,080 |
|
| First Cover, Inc* |
| Sublease income |
|
| — |
|
|
| 22,432 |
|
| Tigerless Health, Inc* |
| Sublease income |
|
| — |
|
|
| 67,295 |
|
| Dreamgo Inc. |
| Rent expense |
|
| 361,011 |
|
|
| 361,011 |
|
| Genius Kid Class LLC |
| Consulting revenue |
|
| 300,000 |
|
|
| 100,000 |
|
*In November 2023, Hui Luo transferred the minority ownership of Tigerless Heath, Inc and First Cover, Inc to other third parties and those two entities are no longer related parties of the Company.
Sublease income has been reflected as a reduction of general and administrative expenses in the accompanying consolidated statements of operations.
As of December 31, 2024 and December 31, 2023, the Company has the following ROU assets and operating lease liabilities recognized from related party under ASC 842 (Note 4):
|
|
|
|
| December 31, 2024 |
|
| December 31, 2023 |
| ||
| Dreamgo Inc. |
| ROU assets |
| $ | 1,552,242 |
|
| $ | 1,845,768 |
|
| Dreamgo Inc. |
| Short term obligation under operating leases |
| $ | (314,685 | ) |
| $ | (295,475 | ) |
| Dreamgo Inc. |
| Long term obligation under operating leases |
| $ | (1,241,495 | ) |
| $ | (1,556,180 | ) |
| 13 |
Note 8. Convertible Notes Payable
Promissory convertible notes are unsecured obligations subordinated to the Company’s senior debts, if any. These notes have a principal balance that accrues simple interest at a rate of 0.44% per annum and matures five years from the date of issuance.
The conversion of these notes into equity occurs at the earliest of:
|
| 1) | the closing of the next qualified equity financing, which is the next sale of preferred stock for purpose of raising capital following the issuance of convertible notes; or |
|
| 2) | at the election of the requisite noteholders following a corporate transaction, which occurs at i) the sale, transfer, or disposition of all or substantially all of the Company’s assets; or ii) the consummation of a merger or consolidation of the Company with or into entity; or iii) the transfer of more than 50% of outstanding voting securities of the Company; or |
|
| 3) | at the maturity. |
The conversion price is calculated based on:
|
| 1) | the product of 80% and the lowest per share purchase price of preferred stock issued in the next equity financing; or |
|
| 2) | the quotient resulting from dividing a conversion valuation cap by the fully diluted capitalization of the Company immediately prior to the closing of a corporate transaction; or |
|
| 3) | the quotient resulting from dividing a conversion valuation cap by the fully diluted capitalization of the Company immediately prior to maturity. |
Convertible notes payable is comprised of the following as of December 31, 2024 and December 31, 2023:
| Borrower No. |
|
| Amount |
|
| Interest Rate |
|
| Conversion Cap |
|
| Closing Date |
| Maturity Date |
| December 31, 2024 |
|
| December 31, 2023 |
| ||||||
|
| 1 |
|
| $ | 250,000 |
|
|
| 0.44 | % |
| $ | 3,000,000 |
|
| 2/7/2022 |
| 2/7/2027 |
| $ | 250,000 |
|
| $ | 250,000 |
|
|
| 2 |
|
|
| 62,500 |
|
|
| 0.44 | % |
|
| 3,000,000 |
|
| 2/7/2022 |
| 2/7/2027 |
|
| 62,500 |
|
|
| 62,500 |
|
|
| 3 |
|
|
| 62,500 |
|
|
| 0.44 | % |
|
| 3,000,000 |
|
| 2/7/2022 |
| 2/7/2027 |
|
| 62,500 |
|
|
| 62,500 |
|
|
| 4 |
|
|
| 35,000 |
|
|
| 0.44 | % |
|
| 3,000,000 |
|
| 2/7/2022 |
| 2/7/2027 |
|
| 35,000 |
|
|
| 35,000 |
|
|
| 5 |
|
|
| 90,000 |
|
|
| 0.44 | % |
|
| 3,000,000 |
|
| 2/7/2022 |
| 2/7/2027 |
|
| 90,000 |
|
|
| 90,000 |
|
|
| 6 |
|
|
| 50,000 |
|
|
| 0.44 | % |
|
| 3,000,000 |
|
| 2/7/2022 |
| 2/7/2027 |
|
| 50,000 |
|
|
| 50,000 |
|
|
| 7 |
|
|
| 50,000 |
|
|
| 0.44 | % |
|
| 3,000,000 |
|
| 2/7/2022 |
| 2/7/2027 |
|
| 50,000 |
|
|
| 50,000 |
|
|
| 8 |
|
|
| 10,000 |
|
|
| 0.44 | % |
|
| 3,000,000 |
|
| 2/7/2022 |
| 2/7/2027 |
|
| 10,000 |
|
|
| 10,000 |
|
|
| 9 |
|
|
| 50,000 |
|
|
| 0.44 | % |
|
| 3,000,000 |
|
| 2/7/2022 |
| 2/7/2027 |
|
| 50,000 |
|
|
| 50,000 |
|
|
| 10 |
|
|
| 30,000 |
|
|
| 0.44 | % |
|
| 3,000,000 |
|
| 2/7/2022 |
| 2/7/2027 |
|
| 30,000 |
|
|
| 30,000 |
|
|
| 11 |
|
|
| 100,000 |
|
|
| 0.44 | % |
|
| 3,000,000 |
|
| 2/7/2022 |
| 2/7/2027 |
|
| 100,000 |
|
|
| 100,000 |
|
|
| 12 |
|
|
| 50,000 |
|
|
| 0.44 | % |
|
| 3,000,000 |
|
| 2/7/2022 |
| 2/7/2027 |
|
| 50,000 |
|
|
| 50,000 |
|
|
| 13 |
|
|
| 20,000 |
|
|
| 0.44 | % |
|
| 3,000,000 |
|
| 2/7/2022 |
| 2/7/2027 |
|
| 20,000 |
|
|
| 20,000 |
|
|
| 14 |
|
|
| 20,000 |
|
|
| 0.44 | % |
|
| 3,000,000 |
|
| 2/7/2022 |
| 2/7/2027 |
|
| 20,000 |
|
|
| 20,000 |
|
|
| 15 |
|
|
| 20,000 |
|
|
| 0.44 | % |
|
| 3,000,000 |
|
| 3/3/2022 |
| 3/3/2027 |
|
| 20,000 |
|
|
| 20,000 |
|
|
| 16 |
|
|
| 18,176 |
|
|
| 0.44 | % |
|
| 3,000,000 |
|
| 2/7/2022 |
| 2/7/2027 |
|
| 18,176 |
|
|
| 18,176 |
|
|
| 17 |
|
|
| 53,015 |
|
|
| 0.44 | % |
|
| 3,000,000 |
|
| 2/7/2022 |
| 2/7/2027 |
|
| 53,015 |
|
|
| 53,015 |
|
|
| 18 |
|
|
| 53,015 |
|
|
| 0.44 | % |
|
| 3,000,000 |
|
| 2/7/2022 |
| 2/7/2027 |
|
| 53,015 |
|
|
| 53,015 |
|
|
| 19 |
|
|
| 27,265 |
|
|
| 0.44 | % |
|
| 3,000,000 |
|
| 2/7/2022 |
| 2/7/2027 |
|
| 27,265 |
|
|
| 27,265 |
|
|
| 20 |
|
|
| 98,529 |
|
|
| 0.44 | % |
|
| 3,000,000 |
|
| 2/7/2022 |
| 2/7/2027 |
|
| 98,529 |
|
|
| 98,529 |
|
|
| 21 |
|
|
| 50,000 |
|
|
| 0.44 | % |
|
| 3,000,000 |
|
| 4/7/2022 |
| 4/7/2027 |
|
| 50,000 |
|
|
| 50,000 |
|
|
| 22 |
|
|
| 200,000 |
|
|
| 0.44 | % |
|
| 5,000,000 |
|
| 12/6/2023 |
| 12/6/2028 |
|
| 200,000 |
|
|
| 200,000 |
|
|
| 23 |
|
|
| 50,000 |
|
|
| 0.44 | % |
|
| 5,000,000 |
|
| 3/15/2024 |
| 3/15/2029 |
|
| 50,000 |
|
|
| - |
|
|
| 24 |
|
|
| 50,000 |
|
|
| 0.44 | % |
|
| 5,000,000 |
|
| 3/15/2024 |
| 3/15/2029 |
|
| 50,000 |
|
|
| - |
|
|
| 25 |
|
|
| 87,500 |
|
|
| 0.44 | % |
|
| 3,000,000 |
|
| 2/7/2022 |
| 2/7/2027 |
|
| 87,500 |
|
|
| 87,500 |
|
|
| 26 |
|
|
| 62,500 |
|
|
| 0.44 | % |
|
| 3,000,000 |
|
| 2/7/2022 |
| 2/7/2027 |
|
| 62,500 |
|
|
| 62,500 |
|
|
| 27 |
|
|
| 100,000 |
|
|
| 0.44 | % |
|
| 3,000,000 |
|
| 2/7/2022 |
| 2/7/2027 |
|
| 100,000 |
|
|
| 100,000 |
|
| Totals |
|
| $ | 1,750,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 1,750,000 |
|
| $ | 1,650,000 |
| |
| 14 |
Note 9. Segment information and revenue analysis
The Company follows ASC 280, Segment Reporting, which requires that companies disclose segment data based on how management makes decisions about allocating resources to each segment and evaluating their performances. The Company has one reporting segment. The Company’s chief operating decision maker has been identified as the chief executive officer, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company and hence the Company has only one reportable segment. The Company does not distinguish between markets or segments for the purpose of internal reporting.
Disaggregated information of revenues by stream are as follows:
|
|
| 2024 |
|
| 2023 |
| ||
| Revenues: |
|
|
|
|
|
| ||
| Time-based subscriptions |
| $ | 1,161,383 |
|
| $ | 1,327,108 |
|
| Credit-based subscriptions |
|
| 2,214,221 |
|
|
| 1,669,727 |
|
| Marketing revenues (related party) |
|
| 300,000 |
|
|
| 100,000 |
|
| Total revenues |
| $ | 3,675,604 |
|
| $ | 3,096,835 |
|
Note 10. Commitments and Contingencies
Acquisition Agreement
On May 12, 2024, the Company executed an Agreement and Plan of Merger (“Business Combination Agreement”) with Battery Future Acquisition Corp. ( “BFAC”), Classover Holdings, Inc. (“Pubco”), BFAC Merger Sub 1 Corp. (“Merger Sub 1”), and BFAC Merger Sub 2 Corp. (“Merger Sub 2”). The Business Combination Agreement provides for Pubco’s acquisition of 100% of the issued and outstanding equity of the Company in exchange for the issuance of (1) an aggregate of 6,534,014 shares of Pubco Class A common stock, (2) an aggregate of 5,964,986 shares of Pubco Class B common stock to the Company stockholders and Company noteholders and (3) an aggregate of 1,000,000 shares of Pubco preferred stock allocated among the Company stockholders and Company noteholders as specified in the Business Combination Agreement. Closing of the Business Combination Agreement is subject to satisfaction of certain conditions precedent.
Legal Proceedings
The Company may be involved in various claims and legal actions arising in the ordinary course of business. The Company establishes an accrued liability for legal proceedings only when those matters present loss contingencies that are both probable and reasonably estimatable.
At December 31, 2024, the Company was not involved in any material legal proceedings regarding claims or legal actions against the Company.
Note 11. Concentration of risk
Credit risk—The Company’s concentration of credit risk relates to financial institutions holding the Company’s cash. The Company maintains cash deposits with financial institutions that may exceed federally insured limits at times. The insurance coverage for cash deposits at each bank is $250,000. As of December 31, 2024, the cash balance in each financial institution is insured by the FDIC. Management believes that the financial institutions that hold the Company’s deposits are financially credit worthy and, accordingly, minimal credit risk exists with respect to those balances.
| 15 |
Customer concentration risk—For the three and twelve months ended December 31, 2024 and 2023, no customer accounted for more than 10% of the Company’s total revenues.
Vendor concentration risk—For the three and twelve months ended December 31, 2024 and 2023, no vendor accounted for over 10% of the Company’s total purchases.
Note 12. Subsequent Events
As previously disclosed, on May 12, 2024, the Company entered into the Business Combination Agreement by and among the Company, BFAC, Pubco, Merger Sub 1 and Merger Sub 2.
Pursuant to the Business Combination Agreement, upon the closing of the Business Combination (the “Closing”), Merger Sub 1 was to merge with and into BFAC (the “Reorganization Merger”), with BFAC being the surviving corporation of the Reorganization Merger and becoming a wholly-owned subsidiary of Pubco, and then, immediately following the consummation of the Reorganization Merger, Merger Sub 2 was to merge with and into the Company (the “Acquisition Merger”, and together with the Reorganization Merger the “Mergers”), with the Company being the surviving corporation of the Acquisition Merger and becoming a wholly-owned subsidiary of Pubco.
On April 4, 2025 (the “Closing Date”), the parties consummated the Mergers and the transactions contemplated by the Business Combination Agreement. Pubco issued to the former security holders of the Company an aggregate of 6,535,014 shares of Class A Common Stock, 5,964,986 shares of Class B Common Stock and 1,000,000 shares of Series A preferred stock in exchange for their equity interests in the Company.
In addition, at Closing, Pubco issued to a certain investor (the “PIPE Investor”) (i) 2,400 shares of Series B preferred stock, (ii) a warrant to purchase 1,600 shares of Series B Preferred Stock (the “First Preferred Warrant”), and (iii) a warrant to purchase 1,000 shares of Series B Preferred Stock (the “Second Preferred Warrant,” and together with the First Preferred Warrant, the “Preferred Warrants”), pursuant to the terms of a PIPE Agreement, dated November 22, 2024 (the “PIPE Agreement”), entered into by Pubco, BFAC and the PIPE Investor. At the Closing, the PIPE Investor exercised the First Preferred Warrant to purchase 1,000 shares of Series B Preferred Stock and on April 14, 2025, the PIPE Investor exercised the remaining portion of the First Preferred Warrant and the Second Preferred Warrant in full. Accordingly, Pubco issued to the PIPE Investor an aggregate of 5,000 shares of Series B Preferred Stock for an aggregate of $4,750,000 (net of original issue discount). In connection with this transaction, certain former shareholders of the Company transferred an aggregate of 1,000,000 shares of Class B Common Stock of Pubco to the PIPE Investor.
| 16 |
EXHIBIT 99.2
CLASSOVER’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Throughout this section, unless otherwise noted “we”, “us”, “our”, or the “Company,” refers to Class Over Inc. and its consolidated subsidiaries. You should read the following discussion and analysis in conjunction with the Company’s consolidated financial statements, which the Company has prepared in accordance with GAAP, included elsewhere in this Current Report on Form 8-K (the “Form 8-K”). This discussion contains forward-looking statements that involve risks and uncertainties. The Company’s actual results and timing of events could differ materially from those anticipated in these forward-looking statements due to various factors, including those set forth under “Risk Factors” in the Form 8-K.
Overview
We are an online enrichment class platform that offers over 40 courses taught by experienced, independent educators. Our program caters to children aged 4 to 17, providing personalized attention and a supportive learning environment. Unlike traditional classes, we give students the unique opportunity to explore their interest in-depth via interactive, live streaming courses with flexible time slots. Although we have incurred continuing losses from operations and net losses in the past few years, our business has experienced continuous growth in sales. Our total revenue increased by $578,769, or 19%, from $3,096,835 for the year ended December 31, 2023, to $3,675,604 for the year ended December 31, 2024. Our gross profit increased by $400,320, from $1,658,856 for the year ended December 31, 2023, to $2,059,176 for the year ended December 31, 2024. Gross profit margin increased from 54% for the year ended December 31, 2023 to 56% for the year ended December 31, 2024.
Business Model
We understand that it is easier to learn when students are interested, so we highlight variety in our business model. Our platform offers a wide breadth of affordable enrichment programs including language, science, technology, engineering, arts, mathematics, music, and many more. Since our platform handles enrollments, record keeping, and many other tasks that usually take up educators’ time, our educator can focus on sharing knowledge about topics they love with our students.
We analyze data gathered on our platform to better determine our students’ most relevant needs, helping us match them with relevant courses and learning paths, thereby driving higher satisfaction. Once a learner enrolls in a course, we strive to provide an effective learning experience through tutoring, assessments, Q&As, and interactive exercises.
We provide time-based subscriptions and credit-based subscriptions to our online courses. For time-based subscriptions, we provide students with unlimited access to our courses for a specified period of time. For credit-based subscriptions, we offer our students the flexibility to take courses at any time up to the limit of their prepaid balance.
Key Factors Affecting Our Performance
Our results of operations and financial condition have been, and will continue to be, affected by a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and elsewhere in the Form 8-K.
| 1 |
Ability to attract new registered users base
Our business model is dependent upon our ability to grow and maintain a large user base. As of December 31, 2024 and 2023, we have 61,387 and 38,954 registered users, respectively.
"Registered users" are individuals who have signed up and created an account on our platform. This group includes all users who access our services, regardless of whether they have made a financial commitment to our offerings. Registered users may take advantage of free trials, access limited content, or use basic features available at no cost. While registered users do not directly contribute to subscription revenue, they play a crucial role in the overall revenue strategy by expanding the potential market. They provide a pool of potential customers who can be converted into paying customers through targeted marketing and engagement strategies. Additionally, registered users might generate revenue through advertisements, in-app purchases, or by upgrading to paid plans.
Ability to retain customer relationships
Our future revenue growth will also depend on our ability to retain existing customers and deepen engagement with our user base over time.
Ability to attract and retain high quality independent teacher contractors
We believe that students are attracted to us largely because of the high quality and wide selection of enrichment and academic lessons offered by our high quality independent teacher contractors, and that continuing to attract and retain many high quality educator partners will be an important factor in attracting registered users and paid subscribers and increasing our revenue over time. We believe that our reach, reputation, and compensation packages provide an attractive value proposition for educators to partner with us to develop and distribute enrichment content. To be the platform of choice for educator partners, we continue to invest in increasing the size and engagement of our user base, improving recommendation and personalization features, and developing marketing capabilities that drive higher conversions. As of December 31, 2024 and 2023, we have 936 and 731 educator partners working with us, respectively.
Operating Efficiency
Our ability to maintain and increase profitability also depends on our ability to effectively control our costs and expenses. The significant component of our cost of revenues is the compensation expense to our educators. Our gross profit margin increased from 54% for the year ended December 31, 2023 to 56% for the year ended December 31, 2024 due to the optimization of class size. We pay our educators based on the number of hours they teach. In addition, we initiated time limit on certain courses, which encouraged students to pick courses in a shorter period of time, which also lead to an increase in the number of students in each class. However, to ensure quality of our online courses, we generally maintain a student to teacher ratio within 6:1.
| 2 |
Key Components of Results of Operations
Revenues
We have three predominant sources of revenue : (i) time-based subscriptions, (ii) credit-based subscriptions to our online courses and (iii) marketing consulting services. Customers are required to pay in advance to enroll for courses. In 2023, we started generating consulting revenue by providing marketing consulting services.
Cost of revenues
Cost of revenue consists of streaming services, third-party payment processing fees, and compensation for teachers and certain employees.
Selling expenses
Selling expenses consist primarily of advertising costs on social media platforms such as Google and WeChat.
General and administrative expenses
General and administrative expenses consist primarily of (i) compensation for our management and administrative personnel, (ii) expenses in connection with operation supporting functions such as legal, accounting, consulting, and other professional service fees, and (iii) office rental, depreciation, and other administrative related expenses.
Research and Development Expenses
Our research and development expenses include compensation-related expenses to the outsourced subcontractors for maintenance of our online learning platform.
| 3 |
Results of Operations
For the years ended December 31, 2024 and 2023
The following table summarizes our results of operations for the years presented. The results below are not necessarily indicative of results to be expected for future periods.
|
|
| For the year ended December 31, 2024 |
|
| For the year ended December 31, 2023 |
|
| Variance $ |
|
| Variance % |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Revenues: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Service revenues |
| $ | 3,375,604 |
|
| $ | 2,996,835 |
|
| $ | 378,769 |
|
|
| 13 | % |
| Consulting revenues (related party) |
|
| 300,000 |
|
|
| 100,000 |
|
|
| 200,000 |
|
|
| 200 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total revenues |
|
| 3,675,604 |
|
|
| 3,096,835 |
|
|
| 578,769 |
|
|
| 19 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of revenues |
|
| 1,616,428 |
|
|
| 1,437,979 |
|
|
| 178,449 |
|
|
| 12 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total cost of revenues |
|
| 1,616,428 |
|
|
| 1,437,979 |
|
|
| 178,449 |
|
|
| 12 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross profit |
|
| 2,059,176 |
|
|
| 1,658,856 |
|
|
| 400,320 |
|
|
| 24 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling and marketing |
|
| 657,003 |
|
|
| 505,518 |
|
|
| 151,485 |
|
|
| 30 | % |
| General and administrative |
|
| 2,196,747 |
|
|
| 1,551,633 |
|
|
| 634,639 |
|
|
| 41 | % |
| Research and development |
|
| 39,254 |
|
|
| 26,730 |
|
|
| 12,524 |
|
|
| 47 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total operating expenses |
|
| 2,893,004 |
|
|
| 2,083,881 |
|
|
| 798,648 |
|
|
| 38 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Loss) from operations |
| $ | (833,828 | ) |
| $ | (425,025 | ) |
|
| (398,328 | ) |
|
| 94 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest and Other expense |
|
| (9,220 | ) |
|
| (8,030 | ) |
|
| (1,117 | ) |
|
| 14 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Loss) before provision for income taxes |
|
| (843,048 | ) |
|
| (433,055 | ) |
|
| (399,445 | ) |
|
| 92 | % |
| Provision for income taxes |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net (loss) |
| $ | (843,048 | ) |
| $ | (433,055 | ) |
|
| (399,445 | ) |
|
| 92 | % |
| 4 |
Revenue
The summary information by revenue stream are as follows:
|
|
| For the year ended December 31, |
|
| Variance |
|
| Variance |
| |||||||
|
|
| 2024 |
|
| 2023 |
|
| Amount |
|
| % |
| ||||
| Service revenues |
| $ | 3,375,604 |
|
| $ | 2,996,835 |
|
| $ | 378,769 |
|
|
| 13 | % |
| Consulting revenues (related party) |
|
| 300,000 |
|
|
| 100,000 |
|
|
| 200,000 |
|
|
| 200 | % |
| Total |
| $ | 3,675,604 |
|
| $ | 3,096,835 |
|
| $ | 578,769 |
|
|
| 19 | % |
Our total revenue increased by $578,769, or 19% from $3,096,835 for the year ended December 31, 2023, to $3,675,604 for the year ended December 31, 2024.
Service revenues increased by $378,769, or 13%, from $2,996,835 for the year ended December 31, 2023, to $3,375,604 for the year ended December 31, 2024, driven by an increase in credit-based subscriptions and higher student enrollment during 2024. We generated $300,000 in marketing consulting services revenue from Genius Kid Class LLC, one of our related parties. Consulting revenue increased by 200,000, or 200%, from $100,000 for the year ended December 31, 2023 to $300,000 for the year ended December 31, 2024. Our revenue is likely to decrease if we were unable to diversify our consulting client base.
Costs of Revenue
|
|
| For the year ended December 31, |
|
| Variance |
|
| Variance |
| |||||||
|
|
| 2024 |
|
| 2023 |
|
| Amount |
|
| % |
| ||||
| Compensation |
| $ | 1,443,660 |
|
| $ | 1,298,917 |
|
| $ | 144,743 |
|
|
| 11 | % |
| Payment Processing Fee |
|
| 86,903 |
|
|
| 75,206 |
|
|
| 11,697 |
|
|
| 16 | % |
| Streaming Services |
|
| 85,865 |
|
|
| 63,856 |
|
|
| 22,009 |
|
|
| 34 | % |
| Total |
| $ | 1,616,428 |
|
| $ | 1,437,979 |
|
| $ | 178,449 |
|
|
| 12 | % |
Cost of revenues increased by $178,449, or 12%, from $1,437,979 for the year ended December 31, 2023, to $1,616,428 for the year ended December 31, 2024.
Compensation expenses for independent educators and employees directly involved in providing services increased by $144,743, or 11%, from $1,298,917 for the year ended December 31, 2023, to $1,443,660 for the year ended December 31, 2024. The increase in compensation expenses, along with the increase in payment process and streaming service expenses, were in line with our growth in student base and service revenue.
| 5 |
Gross profit margin
Our gross profit and gross profit margin from the two revenue streams are summarized as follows:
|
|
| For the year ended December 31, |
| |||||||||
|
|
| 2024 |
|
| 2023 |
|
| Variance |
| |||
| Service revenues |
|
|
|
|
|
|
|
|
| |||
| Gross profit |
| $ | 1,818,772 |
|
| $ | 1,571,356 |
|
| $ | 247,416 |
|
| Gross margin |
|
| 54 | % |
|
| 52 | % |
|
| 2 | % |
| Consulting revenues (related party) |
|
|
|
|
|
|
|
|
|
|
|
|
| Gross profit |
| $ | 240,404 |
|
| $ | 87,500 |
|
| $ | 152,904 |
|
| Gross margin |
|
| 80 | % |
|
| 88 | % |
|
| (8 | )% |
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
| Gross profit |
| $ | 2,059,176 |
|
| $ | 1,658,856 |
|
| $ | 400,320 |
|
| Gross margin |
|
| 56 | % |
|
| 54 | % |
|
| 2 | % |
The total gross profit margin increased from 54% in 2023 to 56% in 2024, as a result of our improving service revenue margin during 2024.
The Company’s gross margin of service revenue increased from 52% for the year ended December 31, 2023 to 54% for the year ended December 31, 2024, mainly due to a higher growth rate in service revenue as compared to growth rate in related costs as the company’s continuous effort to optimize class size and class schedules.
Our gross margin of consulting revenue was 80% and 88% for the years ended December 31, 2024 and 2023, respectively. We expect the gross margin of consulting services to be greater than subscription services in general. If our consulting revenue grows faster than our subscription revenue, our overall margin is likely to benefit from the shift in revenue mix.
Operating expenses
During the year ended December 31, 2024, we incurred total operating expenses of $2,893,004, an increase of $809,123, or 38%, as compared to total operating expenses of $2,083,881 during the year ended December 31, 2023.
Selling expenses increased by $151,485, or 30% from $505,518 for the year ended December 31, 2023, to $657,003 for the year ended December 31, 2024. Selling expenses include sales personnel payroll expenses, marketing and promotion expenses, and meals and entertainment expenses in relation to sales activities.
There was an approximately 45% increase in our sales personnel payroll expenses from $409,263 in 2023 to $593,826 in 2024. The increase in sales personnel payroll expenses was primarily attributable to the implementation of a performance-based compensation model that aligns incentives more closely to the Company’s overall performance. As a result, our growth in revenue has pushed up our sales personnel payroll expenses in 2024.
The increase in selling expenses was partially offset by a decrease in marketing and promotional expenses. There was an approximately 34% decrease in our marketing and promotional expenses from $96,254 in 2023 to $63,176 in 2024. The reduction in marketing and promotional expenses was primarily achieved through the implementation of strategic cost saving measures, specifically the reduction of expenditures on social media companies and channels. Additionally, we engaged in collaborative partnerships with social influencers in the education sector to bolster audience engagement, leveraging their audience base for more targeted and impactful outreach efforts. Notably, the results delivered by our influencer partners are more promising as compared to traditional marketing, and more importantly, at a lower cost.
| 6 |
General and administrative expenses increased by $645,114, or 42%, from $1,551,633 for the year ended December 31, 2023, to $2,196,747 for the year ended December 31, 2024. Our general and administrative expenses include compensation related to the administrative personnel, amortization and depreciation expenses, rent, and other general expenses.
There was an approximately 18% increase in our compensation expenses to administrative personnel from $1,173,111 in 2023 to $1,384,246 in 2024, which was one of the attributes to the increase of general and administrative expenses. The increase in compensation expenses was primarily attributable to the hiring and expansion of administrative staff. During the year ended December 31, 2024, the Company also incurred $349,545 of professional expenses in relation to the business combination (“Business Combination”) with Battery Future Acquisition Corp. (“BFAC”).
Research and development expenses increased by $12,524, or 47%, from $26,730 for the year ended December 31, 2023, to $39,254 for the year ended December 31, 2024. The increase was primarily attributable to increasing maintenance expenses for our mobile app.
Interest and other
Interest and other expenses for the year ended December 31, 2023 was $8,030 as compared to $9,220 for the year ended December 31, 2024.
Provision for income taxes
The Company had no income tax provision for the years ended December 31, 2024 and 2023. We have made a full allowance on the deferred tax assets as we have determined that it is not more likely than not that the assets will be realized.
Net Loss
As a result of the combination of factors discussed above, our net loss increased from $433,055 for the year ended December 31, 2023 to $843,048 for the year ended December 31, 2024.
Liquidity and Capital Resources
As of December 31, 2024, we had cash and cash equivalents of $50,682. Cash consists primarily of cash on hand and bank deposits. The Company maintains cash deposits with financial institutions that may exceed federally insured limits at times. The following table shows the breakout between cash on hand and bank deposits:
|
|
| December 31, 2024 |
|
| December 31, 2023 |
| ||
|
|
|
|
|
|
|
| ||
| Cash on hand |
| $ | 3,144 |
|
| $ | 3,144 |
|
| Bank deposits |
|
| 47,538 |
|
|
| 784,508 |
|
| Total cash shown in the Statement of Cash Flows |
| $ | 50,682 |
|
| $ | 787,652 |
|
| 7 |
The accompanying consolidated financial statements have been prepared applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. As of December 31, 2024, the Company had cash of $50,682, current liabilities of $3,373,008, a working capital deficit of $3,298,518, a stockholders’ deficit of $4,519,154, and a net loss of $843,048 for the year. These factors among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time.
On November 22, 2024, the Company, Classover Holdings, Inc. (“Pubco”) and BFAC executed the PIPE Agreement with the PIPE investor for the sale of up to 5,000 shares of Series B Preferred Stock of Pubco (the “Series B Pubco Preferred Stock”) at a purchase price of up to an aggregate of $5 million (the “PIPE Financing”). Of such shares, (i) 2,400 shares were to be issued upon consummation of the Business Combination, (ii) up to 1,600 shares were to be issued upon exercise of certain warrants to purchase shares of Series B Pubco Preferred Stock (the “First Preferred Warrants”) , and (iii) up to 1,000 shares were to be issued upon exercise of certain warrants to purchase shares of Series B Pubco Preferred Stock (the “Second Preferred Warrants”, and collectively with the First Preferred Warrants, the “Preferred Warrants”).
The Business Combination was consummated on April 4, 2025. Simultaneously with the consummation of the Business Combination, Pubco consummated the initial sale of Series B Pubco Preferred Stock pursuant to the PIPE Agreement and on April 14, 2025, Pubco consummated the sale of the remaining shares of Series B Preferred Stock pursuant to the PIPE Agreement and received an aggregate of $4,750,000 (net of original issue discount). The Company has evaluated the significance of the PIPE Financing and concluded that the PIPE Financing is an effective mitigation plan that provides sufficient liquidity to support its continuous operations and to meet its payment obligations when liabilities fall due within the next twelve months from the date of issuance of the combined and consolidated financial statements. Accordingly, the factors raising the going concern uncertainty are alleviated.
The financial statements do not include any adjustment relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
We may, however, need additional cash resources in the future if we experience changes in business conditions or other developments, or if we find and wish to pursue opportunities for investments, acquisitions, capital expenditures or similar actions. If we determine that our cash requirements exceed the amount of cash and cash equivalents we have on hand at the time, we may seek to issue additional equity or debt securities. The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.
| 8 |
|
|
| For the Years Ended December 31, |
| |||||
|
|
| 2024 |
|
| 2023 |
| ||
|
|
|
|
|
|
|
| ||
| Net cash (used in) operating activities |
| $ | (781,265 | ) |
| $ | (57,774 | ) |
| Net cash (used in) investing activities |
|
| (185,705 | ) |
|
| - |
|
| Net cash provided by financing activities |
|
| 230,000 |
|
|
| 200,000 |
|
| Change in cash and cash equivalents |
|
| (736,970 | ) |
|
| 142,226 |
|
| Cash and cash equivalents, beginning of year |
|
| 787,652 |
|
|
| 645,426 |
|
| Cash and cash equivalents, end of year |
| $ | 50,682 |
|
| $ | 787,652 |
|
Operating Activities
Net cash used in operating activities for the year ended December 31, 2024 was primarily attributable to net loss of $843,048 and decrease in operating lease liabilities of $295,475 as we made payment under the lease contract and decrease in due to related parties of $237,086 as we paid off the related party loans. Cash outflow was partially offset by the non-cash amortization of operating lease right-of-use assets $293,526, depreciation and amortization expenses of $54,823, non-cash stock compensation expenses of $25,120, and increase in deferred revenues of $157,845 as we collected in advance from online class subscription.
Net cash used in operating activities for the year ended December 31, 2023 was primarily attributable to net loss of $433,055 and decrease in operating lease liabilities of $277,578 as we made payment under the lease contract. Cash outflow was partially offset by the non-cash amortization of operating lease right-of-use assets $282,309, increase in deferred revenues of $59,626 as we collected in advance from online class subscription, increase in due to related party $324,561 as we collected in advance from related party for the consulting service.
Investing Activities
Net cash used in investing activities was $185,705 for the year ended December 31, 2024, as compared to $0 for the year ended December 31, 2023.
The increase was primarily due to our purchases of property and equipment in the amount of $185,705 in 2024.
Financing Activities
Net cash provided by financing activities was $230,000 for the year ended December 31, 2024, an increase of $30,000, or 15%, as compared to $200,000 net cash provided by financing activities for the year ended December 31, 2023. The increase was mainly due to the issuance of promissory note in the amount of $130,000 to the related party in 2024.
| 9 |
Critical Accounting Policies and Estimates
Accounting Principles—The consolidated financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States of America (GAAP).
Principles of consolidation—The consolidated financial statements include the financial statements of the Company and its subsidiary. All significant intercompany transactions and balances between the Company and its subsidiary are eliminated upon consolidation.
Use of Estimates— The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant estimates and assumptions reflected in the consolidated financial statements include, but are not limited to, useful lives of property and equipment, valuation of deferred tax assets and liabilities, operating lease right-of-use assets and liabilities and deferred revenue. Actual results may differ materially from such estimates. Management believes that the estimates, and judgments upon which they rely, are reasonable based upon information available to them at the time that these estimates and judgments are made. To the extent that there are material differences between these estimates and actual results, the Company’s consolidated financial statements will be affected.
Revenue Recognition— The Company has three predominant sources of revenue: time-based subscriptions, credit-based subscriptions to our online courses, and marketing consulting services.
Subscription Revenue
Customers are required to pay in advance to enroll for course. For time-based subscriptions, we are obligated to provide students with unlimited access to our course for a specified term. For credit-based subscriptions, we offer our students the flexibility to take courses at any time up to the limit of their prepaid balance. Each contract of the online education service is accounted for as single performance obligation which is satisfied ratably over the service period. We charge fixed fees to the services contracts. The proceeds collected are initially recorded as deferred revenue. For credit-based subscriptions, revenues are recognized proportionately as the courses are delivered. For time-based subscriptions, revenues are recognized on a straight-line basis over the subscription period from the date in which the students activate the courses to the date of expiration. Refunds are provided to the students who decide to withdraw from the subscribed courses within the course offer period and a proportional refund is based on the percentage of untaken courses to the total courses purchased. Historically, the Company has not experienced material refunds.
Consulting Revenue
The Company also generates revenue from consulting services. The Company’s consulting program is designed to teach startup founders within the education sector how to market their product, refine their course content, infrastructure, and business models, achieve market fit and operating efficiency, and scale the startup into a high growth education business. The Company’s performance obligation is to provide consulting services to startup founders for a specific term. Customers are required to prepay full consulting service charge, which is fixed and determinable, at contract inception to secure program spot, and revenue is recognized overtime on a straight-line basis through the service term.
Principal Agent Considerations—The Company makes its application available to be downloaded through third-party digital distribution service providers. Users who intend to enroll our courses are directed to third-party payment platforms before completing subscription with us. The Company evaluates the purchases via third-party payment processors to determine whether its revenues should be reported gross or net of fees retained by the payment processor. The Company is the principal in the transaction with the end user as a result of controlling, hosting, and integrating the delivery of the virtual items to the end user. The Company records revenue on a gross basis as a principal and records fees paid to third-party payment platforms as cost of revenues.
| 10 |
Deferred Revenue— Deferred revenue mostly consists of payments we receive in advance of revenue recognition. Revenue is recognized over the life of the subscription, or as the delivery of the pre-purchased class sessions. The Company classifies deferred revenue as a short-term liability on the balance sheets as the longest subscription plan is for twelve months and the remaining session are expected to be delivered within twelve months or less.
Cost of Revenue—Cost of revenue predominantly consists of streaming services, third-party payment processing fees, and wages for teachers and certain employees engaged in producing the revenue.
Property and Equipment—Property and equipment primarily includes computers and furniture are stated at cost, less accumulated depreciation. Depreciation is computed on the straight-line method over 5 years.
Leasehold improvements are amortized over the lesser of the life of the lease or the estimated useful life of the leasehold improvements. Costs related to maintenance and repairs that do not extend the assets’ useful life are expensed as incurred.
Income Taxes—The Company provides for income taxes in accordance with the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities for financial reporting and for income tax reporting. The deferred tax asset or liability represents the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. A valuation allowance is established for any deferred tax asset for which it is determined that it is more likely than not that some or all of the deferred tax assets will not be realized.
The Company utilizes a two-step approach to recognizing and measuring uncertain tax positions accounted for in accordance with the asset and liability method. The first step is to evaluate the tax position for recognition by determining whether evidence indicates that it is more likely than not that a position will be sustained if examined by a taxing authority.
The second step is to measure the tax benefit as the largest amount that is 50% likely of being realized upon settlement with a taxing authority. There were no amounts recorded at September 30, 2024 and 2023 related to uncertain tax positions.
Fair Value of Financial Instruments—The Company accounts for certain assets and liabilities at fair value in accordance with the accounting guidance applicable to fair value measurements and disclosures.
The carrying values of cash, cash equivalents, accounts payable, deferred revenues, interest payable, loan payable, due to related parties, operating lease liabilities and accrued liabilities and other payables are deemed to be reasonable estimates of their fair values because of their short-term nature.
Research and Development Costs— Research and development expenses include compensation-related expenses to the outsourced subcontractors for maintenance of our online learning platform.
Recent Issued Accounting Pronouncements
For a detailed discussion on recent accounting pronouncements, see Note 2 to the consolidated financial statements included elsewhere in the Form 8-K.
Contingencies—The Company records accruals for contingencies and legal proceedings expected to be incurred in connection with a loss contingency when it is probable that a liability has been incurred and the amount can be reasonably estimated. If a loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss, would be disclosed.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements including arrangements that would affect the Company’s liquidity, capital resources, market risk support and credit risk support or other benefits.
| 11 |
EXHIBIT 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The unaudited pro forma condensed combined financial statements are based on the historical financial information of Battery Future Acquisition Corp. (BFAC”) for the years ended December 31, 2024 and 2023, adjusted to give effect to the Business Combination.
The unaudited pro forma condensed combined balance sheet as of December 31, 2024 combines the unaudited condensed historical balance sheet of BFAC as of December 31, 2024 with the audited historical condensed consolidated balance sheet of Class Over Inc. (the “Company”) and the unaudited condensed consolidated balance sheet of Classover Holdings, Inc. (“Pubco”) as of December 31, 2024, giving effect to the Business Combination as if it had been consummated as of that date.
The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2024 combines the unaudited historical condensed statement of operations of BFAC for year ended December 31, 2024 with the audited historical condensed consolidated statement of operations of the Company for the year ended December 31, 2024, and the unaudited historical condensed consolidated statement of operations of the Pubco for the period from inception to December 31, 2024. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2023 combines the audited historical condensed statement of operations of BFAC for year ended December 31, 2023 with the audited historical condensed consolidated statement of operations of the Company for the year ended December 31, 2023, giving effect to the Business Combination as if it had occurred as of January 1, 2023.
Notwithstanding the legal form of the Business Combination, the Business Combination will be accounted for as a reverse recapitalization in accordance with US GAAP. Under this method of accounting, BFAC will be treated as the acquired company and the Company will be treated as the acquirer for financial statement reporting purposes.
The adjustments presented on the unaudited pro forma condensed combined financial statements have been identified and presented to provide relevant information necessary for an accurate understanding of the combined company upon consummation of the Business Combination.
The unaudited pro forma condensed combined financial information is for illustrative purposes only.
The financial results may have been different had the companies always been combined. You should not rely on the unaudited pro forma condensed combined financial information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined company will experience. BFAC and the Company have not had any historical relationship prior to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.
The unaudited pro forma condensed combined financial information has been prepared assuming two redemption scenarios as following:
|
| · | Assuming No Redemptions: This scenario assumes that no BFAC Public Shares are redeemed and funds held in Trust Account will be fully retained and released to Pubco at closing of the Business Combination; |
|
|
|
|
|
| ·
| Assuming Maximum Redemptions: This scenario assumes that all of BFAC’s 3,683,125 Public Shares subject to redemption are redeemed at price of approximately $11.49 per share, resulting in an aggregate payment of approximately $42.30 million out of the Trust Account. |
| 1 |
The pro forma outstanding Pubco Common Stock immediately after the Business Combination under two redemption scenarios (which amounts are based on information as of December 31, 2024, as adjusted for events that relate to material transactions consummated after such date through the date hereof) is as follows:
|
|
| Pro Forma Combined |
| |||||||||||||
|
|
| Assuming No Redemptions |
|
| Assuming Maximum Redemptions |
| ||||||||||
|
|
| Number of Common Shares |
|
| % |
|
| Number of Common Shares |
|
| % |
| ||||
| BFAC public shares |
|
| 3,683,125 |
|
|
| 14.3 | % |
|
| - |
|
|
| - | % |
| BFAC founder shares (including non-redeemable Class A shares held by founders) |
|
| 8,625,000 |
|
|
| 33.5 | % |
|
| 8,625,000 |
|
|
| 39.0 | % |
| Mrs. Hui Luo – Company founder and shareholder (super voting class) |
|
| 6,535,014 |
|
|
| 25.3 | % |
|
| 6,535,014 |
|
|
| 29.6 | % |
| The rest of Company shareholders and note holders |
|
| 5,964,986 |
|
|
| 23.1 | % |
|
| 5,964,986 |
|
|
| 27.0 | % |
| Shares issued to advisors |
|
| 975,000 |
|
|
| 3.8 | % |
|
| 975,000 |
|
|
| 4.4 | % |
| Total common shares outstanding* |
|
| 25,783,125 |
|
|
| 100.0 | % |
|
| 22,100,000 |
|
|
| 100.0 | % |
* Not including 1,000,000 Series A preferred shares to be issued to Company shareholders as part of the merger consideration at business combination, and 2,400 Series B preferred shares to be issued to PIPE Investors at business combination as the initial installment of PIPE Financing.
The historical financial information of BFAC was derived from the unaudited condensed financial statements of BFAC as of and for the year ended December 31, 2024, as well as the audited condensed financial statements of BFAC as of and for the year ended December 31, 2023. The historical financial information of Pubco was derived from the unaudited condensed consolidated financial statements of Pubco as of and for the period from inception to December 31, 2024. The historical financial information of the Company was derived from the audited condensed financial statements of the Company as of and for the years ended December 31, 2024 and 2023.
The information is only a summary and should be read together with BFAC’s, Pubco’s, and the Company’s audited and unaudited financial statements and related notes, “Classover’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “BFAC’s Discussion and Analysis of Financial Condition and Results of Operations” and other financial information included elsewhere in its proxy statement/prospectus.
The following unaudited pro forma condensed combined financial information is provided to aid you in your analysis of the financial aspects of the Business Combination and the related transactions. The unaudited pro forma condensed combined financial information is for illustrative purposes only. The financial results may have been different had the companies always been combined. You should not rely on the unaudited pro forma condensed combined financial information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined company will experience.
| 2 |
Unaudited Pro Forma Condensed Combined Balance Sheet as of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
| Assuming No Redemption Scenario |
|
| Assuming Maximum Redemption Scenario |
| |||||||||||||
|
|
| Classover |
|
| BFAC |
|
| Pubco |
|
| Transaction Accounting Adjustments |
|
| Pro Forma Combined |
|
| Transaction Accounting Adjustments |
|
| Pro Forma Combined |
| |||||||
| ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
| Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
| Cash |
| $ | 50,682 |
|
| $ | 1,815 |
|
| $ | 2 |
|
|
| 42,302,760 | (A) |
|
| 42,932,924 |
|
|
| 42,302,760 | (A) |
|
| 630,164 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (511,860 | )(H) |
|
|
|
|
|
| (42,302,760 | )(C) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (544,428 | )(E) |
|
|
|
|
|
| (511,860 | )(H) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (616,045 | )(F) |
|
|
|
|
|
| (544,428 | )(E) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,250,000 | (K) |
|
|
|
|
|
| (616,045 | )(F) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (2 | )(L) |
|
|
|
|
|
| 2,250,000 | (K) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (2 | )(L) |
|
|
|
|
| Prepayments and other current assets |
|
| 15,557 |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
| 15,557 |
|
|
|
|
|
|
| 15,557 |
|
| Due from related parties |
|
| 8,251 |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
| 8,251 |
|
|
|
|
|
|
| 8,251 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total current assets |
| $ | 74,490 |
|
| $ | 1,815 |
|
| $ | 2 |
|
|
|
|
|
|
| 42,956,732 |
|
|
|
|
|
|
| 653,972 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Noncurrent assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash held in trust account |
|
| - |
|
|
| 42,302,760 |
|
|
| - |
|
|
| (42,302,760 | )(A) |
|
| - |
|
|
| (42,302,760 | )(A) |
|
| - |
|
| Property and equipment, net |
|
| 218,617 |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
| 218,617 |
|
|
|
|
|
|
| 218,617 |
|
| Operating lease right-of-use assets, net |
|
| 1,552,242 |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
| 1,552,242 |
|
|
|
|
|
|
| 1,552,242 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total noncurrent assets |
|
| 1,770,859 |
|
|
| 42,302,760 |
|
|
| - |
|
|
|
|
|
|
| 1,770,859 |
|
|
|
|
|
|
| 1,770,859 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| TOTAL ASSETS |
| $ | 1,845,349 |
|
| $ | 42,304,575 |
|
| $ | 2 |
|
|
|
|
|
| $ | 44,727,591 |
|
|
|
|
|
| $ | 2,424,831 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND STOCKHOLDER'S EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accounts payable |
| $ | 7,200 |
|
| $ | - |
|
| $ | - |
|
|
|
|
|
|
| 7,200 |
|
|
|
|
|
|
| 7,200 |
|
| Interest payable |
|
| 19,072 |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
| 19,072 |
|
|
|
|
|
|
| 19,072 |
|
| Deferred revenues |
|
| 2,719,091 |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
| 2,719,091 |
|
|
|
|
|
|
| 2,719,091 |
|
| Due to related parties |
|
| 249,545 |
|
|
| 312,087 |
|
|
| - |
|
|
| (312,087 | )(H) |
|
| 249,545 |
|
|
| (312,087 | )(H) |
|
| 249,545 |
|
| Operating lease liabilities - current |
|
| 314,685 |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
| 314,685 |
|
|
|
|
|
|
| 314,685 |
|
| Accrued liabilities and other payables |
|
| 63,415 |
|
|
| 199,773 |
|
|
| 238 |
|
|
| (199,773 | )(H) |
|
| 63,415 |
|
|
| (259 | )(C) |
|
| 63,156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (238 | )(L) |
|
|
|
|
|
| (199,773 | )(H) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (238 | )(L) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total current liabilities |
|
| 3,373,008 |
|
|
| 511,860 |
|
|
| 238 |
|
|
|
|
|
|
| 3,373,008 |
|
|
|
|
|
|
| 3,372,749 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Noncurrent liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Convertible notes payable |
|
| 1,750,000 |
|
|
| - |
|
|
| - |
|
|
| (1,750,000 | )(G) |
|
| - |
|
|
| (1,750,000 | )(G) |
|
| - |
|
| Operating lease liabilities - noncurrent |
|
| 1,241,495 |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
| 1,241,495 |
|
|
|
|
|
|
| 1,241,495 |
|
| Warrant liability |
|
| - |
|
|
| 431,250 |
|
|
| - |
|
|
|
|
|
|
| 431,250 |
|
|
|
|
|
|
| 431,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total noncurrent liabilities |
|
| 2,991,495 |
|
|
| 431,250 |
|
|
| - |
|
|
|
|
|
|
| 1,672,745 |
|
|
|
|
|
|
| 1,672,745 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| TOTAL LIABILITIES |
| $ | 6,364,503 |
|
| $ | 943,110 |
|
| $ | 238 |
|
|
|
|
|
| $ | 5,045,753 |
|
|
|
|
|
| $ | 5,045,494 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Class A ordinary share subject to possible redemption |
|
| - |
|
|
| 42,302,501 |
|
|
| - |
|
|
| (42,302,501 | )(B) |
|
| - |
|
|
| (42,302,501 | )(C) |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stockholder's equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Classover's Ordinary shares, $0.0001 par value |
|
| 158 |
|
|
| - |
|
|
| - |
|
|
| (158 | )(G) |
|
| - |
|
|
| (158 | )(G) |
|
| - |
|
| BFAC Class A Ordinary shares, $0.0001 par value |
|
| - |
|
|
| 200 |
|
|
| - |
|
|
| (200 | )(J) |
|
| - |
|
|
| (200 | )(J) |
|
| - |
|
| BFAC Class B Ordinary shares, $0.0001 par value |
|
| - |
|
|
| 663 |
|
|
| - |
|
|
| (663 | )(D) |
|
| - |
|
|
| (663 | )(D) |
|
| - |
|
| Pubco Class B Ordinary Shares, $0.0001 par value |
|
| - |
|
|
| - |
|
|
| 1 |
|
|
| (1 | )(L) |
|
| - |
|
|
| (1 | )(L) |
|
| - |
|
| New issuance of Pubco Series A Preferred shares, $0.0001 par value |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 100 | (G) |
|
| 100 |
|
|
| 100 | (G) |
|
| 100 |
|
| New issuance of Pubco Series B Preferred shares, $0.0001 par value |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1 | (K) |
|
| 1 |
|
|
| 1 | (K) |
|
| 1 |
|
| New issuance of Pubco Class B Ordinary shares, $0.0001 par value |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 368 | (B) |
|
| 1,925 |
|
|
| 663 | (D) |
|
| 1,557 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 663 | (D) |
|
|
|
|
|
| 694 | (G) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 694 | (G) |
|
|
|
|
|
| 200 | (J) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 200 | (J) |
|
|
|
|
|
|
|
|
|
|
|
|
| New issuance of Pubco Class A Ordinary shares, $0.0001 par value |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 654 | (G) |
|
| 654 |
|
|
| 654 | (G) |
|
| 654 |
|
| Additional paid-in capital |
|
| 80,412 |
|
|
| 2,438,872 |
|
|
| 1 |
|
|
| 42,302,133 | (B) |
|
| 45,439,355 |
|
|
| 1,748,710 | (G) |
|
| 3,137,222 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,748,710 | (G) |
|
|
|
|
|
| (3,380,771 | )(I) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (3,380,771 | )(I) |
|
|
|
|
|
| 2,249,999 | (K) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,249,999 | (K) |
|
|
|
|
|
| (1 | )(L) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1 | )(L) |
|
|
|
|
|
|
|
|
|
|
|
|
| Retained earnings (Accumulated deficit) |
|
| (4,599,724 | ) |
|
| (3,380,771 | ) |
|
| (238 | ) |
|
| (544,428 | )(E) |
|
| (5,760,197 | ) |
|
| (544,428 | )(E) |
|
| (5,760,197 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (616,045 | )(F) |
|
|
|
|
|
| (616,045 | )(F) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,380,771 | (I) |
|
|
|
|
|
| 3,380,771 | (I) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 238 | (L) |
|
|
|
|
|
| 238 | (L) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total stockholder's equity |
|
| (4,519,154 | ) |
|
| (941,036 | ) |
|
| (236 | ) |
|
|
|
|
|
| 39,681,838 |
|
|
|
|
|
|
| (2,620,663 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY |
| $ | 1,845,349 |
|
| $ | 42,304,575 |
|
| $ | 2 |
|
|
|
|
|
| $ | 44,727,591 |
|
|
|
|
|
| $ | 2,424,831 |
|
See accompanying notes to the unaudited pro forma combined financial information.
| 3 |
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
| Assuming No Redemption Scenario |
|
| Assuming Maximum Redemption Scenario |
| |||||||||||||||||
|
|
| Classover |
|
| BFAC |
|
| Pubco |
|
| Transaction Accounting Adjustments |
|
|
|
| Pro Forma Combined |
|
| Transaction Accounting Adjustments |
|
|
| Pro Forma Combined |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
| Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
| Service revenues |
| $ | 3,375,604 |
|
| $ | - |
|
| $ | - |
|
|
|
|
|
|
| $ | 3,375,604 |
|
|
|
|
|
|
| $ | 3,375,604 |
| ||
| Consulting revenues (related party) |
|
| 300,000 |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
| 300,000 |
|
|
|
|
|
|
|
| 300,000 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Total revenues |
|
| 3,675,604 |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
| 3,675,604 |
|
|
|
|
|
|
|
| 3,675,604 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Cost of revenues |
|
| 1,616,428 |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
| 1,616,428 |
|
|
|
|
|
|
|
| 1,616,428 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Total cost of revenues |
|
|
|
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
| 1,616,428 |
|
|
|
|
|
|
|
| 1,616,428 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Gross profit |
|
| 2,059,176 |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
| 2,059,176 |
|
|
|
|
|
|
|
| 2,059,176 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Selling and marketing |
|
| 657,003 |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
| 657,003 |
|
|
|
|
|
|
|
| 657,003 |
| ||
| General and administrative |
|
| 2,196,747 |
|
|
| 561,738 |
|
|
| 238 |
|
|
| (238 | )EE |
|
|
|
| 2,758,485 |
|
|
| (238 | )EE |
|
|
|
| 2,758,485 |
|
| Research and development |
|
| 39,254 |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
| 39,254 |
|
|
|
|
|
|
|
|
| 39,254 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total operating expenses |
|
| 2,893,004 |
|
|
| 561,738 |
|
|
| 238 |
|
|
|
|
|
|
|
|
| 3,454,742 |
|
|
|
|
|
|
|
|
| 3,454,742 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Loss) from operations |
| $ | (833,828 | ) |
| $ | (561,738 | ) |
| $ | (238 | ) |
|
|
|
|
|
|
|
| (1,395,566 | ) |
|
|
|
|
|
|
|
| (1,395,566 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other Income (Expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest Income (Expense) |
|
| (9,220 | ) |
|
| 2,229,081 |
|
|
| - |
|
|
| (2,229,081 | )AA |
|
|
|
| (9,220 | ) |
|
| (2,229,081 | )AA |
|
|
|
| (9,220 | ) |
| Change in fair value of warrants |
|
| - |
|
|
| 1,447,044 |
|
|
| - |
|
|
|
|
|
|
|
|
| 1,447,044 |
|
|
|
|
|
|
|
|
| 1,447,044 |
|
| (Loss) on promissory note - related party |
|
| - |
|
|
| (7,306 | ) |
|
| - |
|
|
|
|
|
|
|
|
| (7,306 | ) |
|
|
|
|
|
|
|
| (7,306 | ) |
| Debt forgiveness |
|
| - |
|
|
| 1,606,901 |
|
|
| - |
|
|
|
|
|
|
|
|
| 1,606,901 |
|
|
|
|
|
|
|
|
| 1,606,901 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total other income (expense) |
|
| (9,220 | ) |
|
| 5,275,720 |
|
|
| - |
|
|
|
|
|
|
|
|
| 3,037,419 |
|
|
|
|
|
|
|
|
| 3,037,419 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (Loss) before provision for income taxes |
|
| (843,048 | ) |
|
| 4,713,982 |
|
|
| (238 | ) |
|
|
|
|
|
|
|
| 1,641,853 |
|
|
|
|
|
|
|
|
| 1,641,853 |
|
| Provision for income taxes |
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
| $ | (843,048 | ) |
| $ | 4,713,982 |
|
| $ | (238 | ) |
|
|
|
|
|
|
|
| 1,641,853 |
|
|
|
|
|
|
|
|
| 1,641,853 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss per share - basic and diluted |
|
| (0.53 | ) |
|
| 0.34 |
|
|
| (2.38 | ) |
|
|
|
|
|
|
|
| 0.06 |
|
|
|
|
|
|
|
|
| 0.07 |
|
| Weighted average shares outstanding - basic and diluted* |
|
| 1,576,995 |
|
|
| 13,795,599 |
|
|
| 100 |
|
|
| 10,410,431 | DD |
|
|
|
| 25,783,125 |
|
|
| 6,727,306 | DD |
|
|
|
| 22,100,000 |
|
See accompanying notes to the unaudited pro forma combined financial information.
| 4 |
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2023
|
|
|
|
|
|
|
|
| Assuming No Redemption Scenario |
|
| Assuming Maximum Redemption Scenario |
| ||||||||||||||||
|
|
| Classover |
|
| BFAC |
|
| Transaction Accounting Adjustments |
|
|
|
| Pro Forma Combined |
|
| Transaction Accounting Adjustments |
|
|
|
| Pro Forma Combined |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| Service revenues |
| $ | 2,996,835 |
|
| $ | - |
|
|
|
|
|
|
|
| 2,996,835 |
|
|
|
|
|
|
|
| 2,996,835 |
| ||
| Consulting revenues (related party) |
|
| 100,000 |
|
|
| - |
|
|
|
|
|
|
|
| 100,000 |
|
|
|
|
|
|
|
| 100,000 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Total revenues |
|
| 3,096,835 |
|
|
| - |
|
|
|
|
|
|
|
| 3,096,835 |
|
|
|
|
|
|
|
| 3,096,835 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Cost of revenues |
|
| 1,437,979 |
|
|
| - |
|
|
|
|
|
|
|
| 1,437,979 |
|
|
|
|
|
|
|
| 1,437,979 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Total cost of revenues |
|
| 1,437,979 |
|
|
| - |
|
|
|
|
|
|
|
| 1,437,979 |
|
|
|
|
|
|
|
| 1,437,979 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Gross profit |
|
| 1,658,856 |
|
|
| - |
|
|
|
|
|
|
|
| 1,658,856 |
|
|
|
|
|
|
|
| 1,658,856 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Selling and marketing |
|
| 505,518 |
|
|
| - |
|
|
|
|
|
|
|
| 505,518 |
|
|
|
|
|
|
|
| 505,518 |
| ||
| General and administrative |
|
| 1,551,633 |
|
|
| 3,430,328 |
|
|
| 544,428 | BB |
|
|
|
| 6,142,434 |
|
|
| 544,428 | BB |
|
|
|
| 6,142,434 |
|
|
|
|
|
|
|
|
|
|
|
|
| 616,045 | CC |
|
|
|
|
|
|
|
| 616,045 | CC |
|
|
|
|
|
|
| Research and development |
|
| 26,730 |
|
|
| - |
|
|
|
|
|
|
|
|
| 26,730 |
|
|
|
|
|
|
|
|
| 26,730 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total operating expenses |
|
| 2,083,881 |
|
|
| 3,430,328 |
|
|
|
|
|
|
|
|
| 6,674,682 |
|
|
|
|
|
|
|
|
| 6,674,682 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Loss) from operations |
| $ | (425,025 | ) |
| $ | (3,430,328 | ) |
|
|
|
|
|
|
|
| (5,015,826 | ) |
|
|
|
|
|
|
|
| (5,015,826 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other Income (Expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest Income (Expense) |
|
| (8,030 | ) |
|
| 9,953,034 |
|
|
| (9,953,034 | )AA |
|
|
|
| (8,030 | ) |
|
| (9,953,034 | )AA |
|
|
|
| (8,030 | ) |
| Change in fair value of warrants |
|
| - |
|
|
| (1,260,642 | ) |
|
|
|
|
|
|
|
| (1,260,642 | ) |
|
|
|
|
|
|
|
| (1,260,642 | ) |
| (Loss) on promissory note - related party |
|
| - |
|
|
| (76,149 | ) |
|
|
|
|
|
|
|
| (76,149 | ) |
|
|
|
|
|
|
|
| (76,149 | ) |
| Debt forgiveness |
|
| - |
|
|
| 80,059 |
|
|
|
|
|
|
|
|
| 80,059 |
|
|
|
|
|
|
|
|
| 80,059 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total other income (expense) |
|
| (8,030 | ) |
|
| 8,696,302 |
|
|
|
|
|
|
|
|
| (1,264,762 | ) |
|
|
|
|
|
|
|
| (1,264,762 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (Loss) before provision for income taxes |
|
| (433,055 | ) |
|
| 5,265,974 |
|
|
|
|
|
|
|
|
| (6,280,588 | ) |
|
|
|
|
|
|
|
| (6,280,588 | ) |
| Provision for income taxes |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
| $ | (433,055 | ) |
| $ | 5,265,974 |
|
|
|
|
|
|
|
|
| (6,280,588 | ) |
|
|
|
|
|
|
|
| (6,280,588 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss per share - basic and diluted |
|
| (0.29 | ) |
|
| 0.18 |
|
|
|
|
|
|
|
|
| (0.23 | ) |
|
|
|
|
|
|
|
| (0.28 | ) |
| Weighted average shares outstanding - basic and diluted* |
|
| 1,500,000 |
|
|
| 29,318,851 |
|
|
| (3,548,252 | )DD |
|
|
|
| 27,270,599 |
|
|
| (8,718,851 | )DD |
|
|
|
| 22,100,000 |
|
See accompanying notes to the unaudited pro forma combined financial information.
| 5 |
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
1. Basis of Presentation
The Business Combination will be accounted for as a reverse recapitalization under U.S. GAAP. Under this method of accounting, BFAC will be treated as the “acquired” company for financial reporting purposes. This determination is primarily based on the Company’s stockholders being expected to comprise 92.73% or 94.64% of the voting power of Pubco under the two redemption scenarios, respectively, after considering the 25:1 voting power of the Class A shares that Ms. Hui Luo owns after the Business Combination, directors appointed by the Company constituting four of the five members of Pubco’s board of directors, the Company’s operations prior to the transaction comprising the only ongoing operations of Pubco, and the Company’s senior management comprising all of the senior management of Pubco.
Accordingly, for accounting purposes, the financial statements of Pubco will represent a continuation of the financial statements of the Company with the Business Combination treated as the equivalent of the Company issuing stock for the net assets of BFAC, accompanied by a recapitalization. The net assets of BFAC will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be presented as those of the Company in future reports of Pubco.
The unaudited pro forma condensed combined balance sheet as of December 31, 2024 gives pro forma effect to the Business Combination and the other events contemplated by the Business Combination Agreement as if they had been consummated on December 31, 2024. The unaudited pro forma condensed combined statements of operations for the for the years ended December 31, 2024 and 2023, give pro forma effect to the Business Combination and the other transactions contemplated by the Business Combination Agreement as if they had been consummated on January 1, 2023.
The unaudited pro forma condensed combined financial information was derived from and should be read in conjunction with the following historical financial statements and the accompanying notes, which are included elsewhere in this proxy statement/prospectus:
|
| · | the historical unaudited financial statements of BFAC as of December 21, 2024; |
|
|
|
|
|
| · | the historical audited financial statements of BFAC as of December 31, 2023; |
|
|
|
|
|
| · | the historical audited consolidated financial statements of the Company as of and for the year ended December 31, 2024; |
|
|
|
|
|
| · | the historical audited consolidated financial statements of the Company as of and for the year ended December 31, 2023; |
|
|
|
|
|
| · | the historical unaudited consolidated financial statements of the Pubco as of and for the period from inception to December 31, 2024; and |
|
|
|
|
|
| · | other information relating to BFAC, Pubco, and the Company contained in this current report, including the Business Combination Agreement and the description of certain terms thereof set forth under certain proposals. |
| 6 |
Management has made significant estimates and assumptions in its determination of the pro forma adjustments based on information available as of the date of this current report on Form 8-K. As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented as additional information becomes available. Management considers this basis of presentation to be reasonable under the circumstances.
One-time direct and incremental transaction costs anticipated to be incurred prior to, or concurrent with, the closing of the Business Combination are reflected in the unaudited pro forma condensed combined balance sheet as a direct reduction to Pubco’s retained earnings or additional paid-in capital, and are assumed to be either cash settled or settled in shares. Please refer to Note 2.
2. Adjustments to Unaudited Pro Forma Condensed Combined Financial Information
Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet as of December 31, 2024
The adjustments included in the unaudited pro forma condensed combined balance sheet as of December 31, 2024 are as follows:
|
| (A) | Reflects the liquidation and reclassification of $42,302,760 of cash held in the Trust Account to cash and cash equivalents that becomes available for general use by Pubco following the Closing. |
|
|
|
|
|
| (B) | Reflects the reclassification of BFAC ordinary shares subject to possible redemption to permanent equity immediately prior to the Closing assuming no redemption. |
|
|
|
|
|
| (C) | Represents the Maximum redemption scenario in which 3,683,125 shares of BFAC public ordinary shares are redeemed at a redemption price of approximately $11.49 per share. |
|
|
|
|
|
| (D) | Reflects the conversion of 6,625,000 BFAC Class B founder shares to Pubco Class B common stock on a one-on-one basis. |
|
|
|
|
|
| (E) | Represents preliminary estimated transaction costs to be incurred by BFAC of approximately $922,000, inclusive of advisory, legal, accounting, SEC registration, proxy service, and printing fees that are incurred in connection with the Transactions, $377,572 has been accrued as of December 31, 2024. Transaction cost that already accrued as of December 31, 2024 is recorded as a reduction of accrued liabilities; Transaction cost that is expected to be paid prior to the Closing in the amount of $544,428 is recorded as general expenses and a reduction of retained earnings. Transaction cost expensed through retained earnings are included in the unaudited pro forma condensed combined statement of operations. |
|
|
|
|
|
| (F) | Represents preliminary estimated transaction costs to be incurred by Classover of approximately $1,000,000, inclusive of advisory, legal, accounting, and printing fees that are incurred in connection with the Transactions, $383,955 has been accured and paid as of December 31, 2024, which has been reflected in Classover's historical statement of operations; Transaction cost that is expected to be paid prior to the Closing in the amount of $616,045 is recorded as general expenses and a reduction of retained earnings. Transaction cost expensed through retained earnings are included in the unaudited pro forma condensed combined statement of operations. |
|
|
|
|
|
| (G) | Reflects the recapitalization through 1) issuance of 12,500,000 shares of Pubco’s common stock in exchange for Classover’s common stock shareholder and convertible debt holders, including 6,535,014 Class A super voting shares to the founder, and 5,964,986 Class B shares to the rest of Classover shareholders and noteholders, 2) the issuance of 1,000,000 Series A Pubco Preferred Stock and 3) the issuance of 975,000 ordinary shares to advisors at the Closing. The amount is allocated to ordinary shares at $0.0001 per share, and the difference between historical book value of Classover’s common stock and the amount allocated to ordinary shares are then charged to additional paid-in capital. Pubco’s new shares are issued at $10.00 per share. |
|
| (H) | Reflects the payment of BFAC's accrued liabilities and due to related parties at closing. |
|
|
|
|
|
| (I) | Reflects the reclassification of BFAC’s historical accumulated deficit to additional paid-in capital. Adjustment is made to the extend that paid-in capital would not be negative under maximum redemption scenario. |
|
|
|
|
|
| (J) | Reflects the conversion of 2,000,000 BFAC Class A non-redeemable shares to Pubco Class B common stock on a one-on-one basis. |
|
|
|
|
|
| (K) | Reflects an issuance of 2,400 Series B preferred shares to the PIPE Investor at the closing of the Business Combination in exchange for an aggregate net amount investment of $2.25 million. The issuance is the first installment of the three-installment $5 million PIPE Financing pursuant to the PIPE Agreement which was executed on November 22, 2024. Of the $5.0 million investment: (i) 2,400 shares shall be issued upon consummation of the Business Combination; (ii) up to 1,600 shares shall be issued upon exercise of the First Preferred Warrants; and (iii) up to 1,000 shares shall be issued upon exercise of the Second Preferred Warrantsn. The Preferred Warrants expire on the 12-month anniversary of the consummation of the business combination and have an initial exercise price of $1,000, subject to adjustment as set forth therein. The Company has determined that the second two installments are not material probable transactions (because neither are guaranteed to be consummated) and thus excluded them from the pro forma. |
|
|
|
|
|
| (L) | Reflects elimination between BFAC and its subsidiary Pubco. |
| 7 |
Adjustments to Unaudited Pro Forma Condensed Combined Statement of Operations for the Year Ended December 31, 2024
The adjustments included in the unaudited pro forma condensed combined statement of operations for the nine months ended December 31, 2024 are as follows:
| (AA) | Represents the elimination of interest income related to the investments held in the BFAC Trust Account. | |
| (DD) | Represents the calculation of net income per share using the historical weighted average shares outstanding and the issuance of additional shares in connection with the Business Combination and other related events, assuming such additional shares were outstanding since January 1, 2023. As the Business Combination is being reflected as if it had occurred as of January 1, 2023, the calculation of weighted average shares outstanding for basic and diluted net income per share assumes the shares issued in connection with the Business Combination have been outstanding for the entire periods presented. | |
| (EE) | Reflects elimination between BFAC and its subsidiary Pubco. |
Adjustments to Unaudited Pro Forma Condensed Combined Statement of Operations for the Year Ended December 31, 2023
The adjustments included in the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2023 are as follows:
|
| (AA) | Represents the elimination of interest income related to the investments held in the BFAC Trust Account. |
|
|
|
|
|
| (BB) | Represents preliminary estimated transaction costs to be incurred by BFAC of approximately $544,428 in connection with the Business Combination. Please refer to Note 2 (E) |
|
|
|
|
|
| (CC) | Represents preliminary estimated transaction costs to be incurred by Classover of approximately $616,045 in connection with the Business Combination. Please refer to Note 2 (F) |
|
|
|
|
|
| (DD) | Represents the calculation of net income per share using the historical weighted average shares outstanding and the issuance of additional shares in connection with the Business Combination and other related events, assuming such additional shares were outstanding since January 1, 2023. As the Business Combination is being reflected as if it had occurred as of January 1, 2023, the calculation of weighted average shares outstanding for basic and diluted net income per share assumes the shares issued in connection with the Business Combination have been outstanding for the entire periods presented. |
| 8 |
3. Net Income per Share
Net income per share is calculated using the historical weighted average shares outstanding and the issuance of additional shares in connection with the Business Combination and other related events, assuming such additional shares were outstanding since January 1, 2023. As the Business Combination is being reflected as if it had occurred as of January 1, 2023, the calculation of weighted average shares outstanding for basic and diluted net income per share assumes the shares issued in connection with the Business Combination have been outstanding for the entire periods presented. Under the maximum redemptions scenario, the Common Shares assumed to be redeemed by BFAC Public Shareholders are eliminated as of January 1, 2023.
The unaudited pro forma condensed combined financial information has been prepared assuming no redemptions scenario and maximum redemptions scenario.
|
|
| Assuming No Redemption Scenario |
|
|
|
|
| Assuming Maximum Redemption Scenario |
|
|
| |||||||||||||||||||||
|
|
| Year Ended December 31, 2024 |
|
|
|
| Year Ended December 31, 2023 |
|
|
|
|
| Year Ended December 31, 2024 |
|
|
|
| Year Ended December 31, 2023 |
|
|
| |||||||||||
| Pro forma net income attributable to common shareholders |
|
| 1,641,853 |
|
|
|
|
|
| (6,280,588 | ) |
|
|
|
|
| 1,641,853 |
|
|
|
|
|
| (6,280,588 | ) |
|
|
| ||||
| Weighted average shares outstanding – basic and diluted |
|
| 25,783,125 |
|
|
|
|
|
| 27,270,599 |
|
|
|
|
|
| 22,100,000 |
|
|
|
|
|
| 22,100,000 |
|
|
|
| ||||
| Net income per share – basic and diluted |
|
| 0.06 |
|
|
|
|
|
| (0.23 | ) |
|
|
|
|
| 0.07 |
|
|
|
|
|
| (0.28 | ) |
|
|
| ||||
| Weighted average shares outstanding – basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| BFAC redeemable public shares |
|
| 3,683,125 |
|
|
| 14.3 | % |
|
| 5,170,599 |
|
|
| 19.0 | % |
|
| - |
|
|
| 0.0 | % |
|
| - |
|
|
| 0.0 | % |
| BFAC founder shares (including non-redeemable Class A shares held by founders) |
|
| 8,625,000 |
|
|
| 33.5 | % |
|
| 8,625,000 |
|
|
| 31.6 | % |
|
| 8,625,000 |
|
|
| 39.0 | % |
|
| 8,625,000 |
|
|
| 39.0 | % |
| Mrs. Hui Luo - founder and shareholder of Classover (super voting class) |
|
| 6,535,014 |
|
|
| 25.3 | % |
|
| 6,535,014 |
|
|
| 24.0 | % |
|
| 6,535,014 |
|
|
| 29.6 | % |
|
| 6,535,014 |
|
|
| 29.6 | % |
| The rest of Classover's shareholders and note holders |
|
| 5,964,986 |
|
|
| 23.1 | % |
|
| 5,964,986 |
|
|
| 21.9 | % |
|
| 5,964,986 |
|
|
| 27.0 | % |
|
| 5,964,986 |
|
|
| 27.0 | % |
| Shares issued to advisors |
|
| 975,000 |
|
|
| 3.8 | % |
|
| 975,000 |
|
|
| 3.6 | % |
|
| 975,000 |
|
|
| 4.4 | % |
|
| 975,000 |
|
|
| 4.4 | % |
| Total |
|
| 25,783,125 |
|
|
| 100.0 | % |
|
| 27,270,599 |
|
|
| 100.0 | % |
|
| 22,100,000 |
|
|
| 100.0 | % |
|
| 22,100,000 |
|
|
| 100.0 | % |
| 9 |