10-Q: Starry Sea Acquisition Corp Q3: LOI with Forever Young

Starry Sea Acquisition Corp reports Q3 2025 results, highlighting a Letter of Intent for a proposed business combination with Forever Young International Limited, a China-based health industry operator.

Summary

• Starry Sea Acquisition Corp, a blank check company incorporated on December 5, 2024, has not commenced operations or generated operating revenues to date.
• The company successfully completed its Initial Public Offering (IPO) on August 11, 2025, selling 5,000,000 units at $10.00 per unit, generating gross proceeds of $50,000,000.
• The underwriters fully exercised their over-allotment option on August 11, 2025, generating an additional $7,500,000 in gross proceeds.
• Simultaneously with the IPO, a private placement of 247,121 units was made to the Sponsor at $10.00 per unit, raising $2,471,210.
• A total of $57,500,000 from the IPO and private placement was deposited into a Trust Account.
• For the three months ended September 30, 2025, the company reported a net income of $70,389, primarily due to $323,479 in interest earned on cash held in the Trust Account, offset by $253,090 in formation and operating costs.
• For the nine months ended September 30, 2025, the company reported a net loss of $36,715, resulting from $360,194 in formation and operating costs, partially offset by $323,479 in interest income.
• On September 29, 2025, the company entered into a Letter of Intent (LOI) with Forever Young International Limited, a Cayman Islands exempted company operating in the health industry in China, for a proposed business combination.
• The LOI contemplates a pre-money equity value for Forever Young in the range of approximately $750 million to $900 million, subject to confirmatory due diligence.
• Consideration for the business combination is expected to be rollover equity to Forever Young's shareholders in the form of ordinary shares of the post-closing publicly-listed entity, each valued at $10 per share.
• The company has 15 months from August 7, 2025, to complete its initial business combination.

Sentiment

Score: 7

Explanation: The company has successfully completed its IPO and, more importantly, has identified a specific target for a business combination and signed a Letter of Intent. This represents significant progress for a SPAC, moving it closer to its objective. While the combination is not yet finalized and risks remain, the identification of a target and the associated valuation range provide a clear path forward, which is generally viewed positively for a SPAC at this stage.

Positives

• Successfully completed its Initial Public Offering (IPO) and the full exercise of the over-allotment option, raising substantial capital.
• Identified a target company, Forever Young International Limited, and entered into a Letter of Intent for a proposed business combination, indicating significant progress towards its primary objective.
• Generated $323,479 in interest income from funds held in the Trust Account for both the three and nine months ended September 30, 2025.
• Reported a net income of $70,389 for the three months ended September 30, 2025.
• No Founder Shares are currently subject to forfeiture as of September 30, 2025, due to the full exercise of the over-allotment option.

Negatives

• Operating as a blank check company with no current operations or operating revenues, relying solely on interest income and capital raises.
• Incurred a net loss of $36,715 for the nine months ended September 30, 2025, primarily due to formation and operating costs.
• The proposed business combination with Forever Young is subject to confirmatory due diligence and negotiation, with no guarantee of successful completion.
• Significant professional and public company costs are expected to continue as the company pursues a business combination.

Risks

• Inability to complete an initial Business Combination within the 15-month Combination Period (from August 7, 2025), which would lead to liquidation and the expiration of public shareholders' rights without value.
• Proceeds held in the Trust Account could become subject to claims of creditors, potentially having priority over the claims of public shareholders.
• The requirement to have net tangible assets of at least $5,000,001 upon consummation of a Business Combination may limit the company's ability to complete certain transactions or necessitate third-party financing.
• Estimates for identifying a target business, conducting due diligence, and negotiating a business combination may be insufficient, requiring additional financing that could dilute public shareholders or impose restrictive covenants.
• The proposed business combination with Forever Young is not guaranteed to close and is subject to ongoing due diligence and negotiation.
• As an early stage and emerging growth company, the company is subject to all associated risks.

Future Outlook

The company intends to use substantially all of the net proceeds from its IPO and private placement, including funds in the Trust Account, to complete an initial business combination and cover related expenses. It anticipates increased expenses as a public company and for due diligence. The Letter of Intent with Forever Young International Limited outlines a path towards a proposed business combination, with an exclusivity period for negotiation. The company must complete an initial business combination within 15 months from August 7, 2025.

Management Comments

• "We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational activities and those necessary to prepare for the initial public offering and subsequent to our initial public offering, identifying a target company for an initial business combination."
• "We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting, and auditing compliance), as well as for due diligence expenses related to our initial business combination."
• "We currently believes that it does not need additional capital to satisfy its liquidity needs beyond the net proceeds from the consummation of the IPO and the proceeds held outside of the Trust Account for paying existing accounts payable, identifying and evaluating prospective business combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Initial Business Combination."

Industry Context

Starry Sea Acquisition Corp operates as a Special Purpose Acquisition Company (SPAC), a common vehicle for private companies to go public. The filing reflects typical SPAC activities, including raising capital through an IPO, placing funds in a trust, and actively searching for a target business. The Letter of Intent with Forever Young International Limited, a health industry operator in China, indicates a strategic focus on the healthcare sector and potentially the Chinese market, aligning with broader trends of SPACs targeting high-growth industries and international expansion opportunities.

Comparison to Industry Standards

• The company's structure, including the $10.00 per unit IPO price, the establishment of a trust account, and the 15-month timeline to complete a business combination, is consistent with standard practices for SPACs in the market.
• The target valuation range of approximately $750 million to $900 million for Forever Young suggests a pursuit of a mid-to-large-cap acquisition, which is a common strategy for SPACs aiming to deliver significant value.
• The inclusion of rights (one-sixth of an ordinary share per right) in the IPO units is a typical feature designed to provide additional upside to investors upon the successful completion of a business combination.
• The underwriting compensation, consisting of a 2% cash discount and 3.5% in Representative Shares, falls within the customary range for SPAC IPOs, reflecting the industry's compensation structure for such offerings.

Related Party Transactions

• The Sponsor (STARRY SEA INVESTMENT LIMITED) purchased 1,437,500 Founder Shares for an aggregate price of $25,000 on February 14, 2025.
• The Sponsor purchased 247,121 Initial Private Placement Units for an aggregate purchase price of $2,471,210.
• The Sponsor loaned the Company up to $500,000 via a Promissory Note, of which $387,484 was drawn and repaid in full on August 11, 2025.
• As of September 30, 2025, the Sponsor had advanced the Company $19,352, which is non-interest bearing and due on demand.
• The Company agreed to pay an affiliate of the Sponsor $10,000 per month for administrative support services, commencing August 11, 2025, with $16,774 accrued as of September 30, 2025.
• Founder Shares and Private Placement Units held by the Sponsor and certain transferees are subject to specific transfer restrictions and voting agreements related to the business combination.

Stakeholder Impact

• **Shareholders (Public)**: Potential for value creation if the business combination with Forever Young is successfully completed. However, there is a risk of rights expiring worthless and liquidation if no business combination is consummated within the specified timeframe. Redemption rights are available under certain conditions.
• **Sponsor**: Holds significant equity interests (Founder Shares, Private Placement Units) and is actively involved in the company's financing and administrative support. The Sponsor bears liability for certain third-party claims against the Trust Account.
• **Underwriters**: Received cash underwriting commissions of $1,150,000 and 201,250 Representative Shares for their role in the IPO.
• **Forever Young International Limited**: Stands to become a publicly-listed entity through the proposed business combination, with its shareholders receiving rollover equity in the combined entity.
• **Creditors**: The proceeds in the Trust Account could potentially be subject to claims from creditors, which might have priority over public shareholders' claims in certain circumstances.

Next Steps

• Negotiate and finalize a definitive agreement for the proposed business combination with Forever Young International Limited.
• Complete confirmatory due diligence on Forever Young International Limited.
• Seek shareholder approval for the business combination, if required.
• Complete the initial business combination within 15 months from August 7, 2025.

Key Dates

Recommendation

The company has achieved a critical milestone by successfully completing its IPO and, more importantly, by entering into a Letter of Intent for a proposed business combination with Forever Young International Limited. This development significantly de-risks the SPAC's journey, as the primary challenge for many SPACs is identifying a suitable target. However, the business combination is still subject to confirmatory due diligence and negotiation of a definitive agreement, meaning there is no guarantee of completion. Investors should hold their positions to monitor the progress of these negotiations and the final terms of the deal, as the ultimate success and value creation will depend on the quality of the target and the specifics of the merger agreement.

Keywords

SPAC, Business Combination, Forever Young International Limited, Healthcare Industry China, IPO, Trust Account, 10-Q, Quarterly Report, Merger, Acquisition, SEC Filing, STARRY SEA ACQUISITION CORP, Blank Check Company