diff --git a/extensions/custom-folder/CHANGELOG.md b/extensions/custom-folder/CHANGELOG.md
index 397857aad492..3c727a984840 100644
--- a/extensions/custom-folder/CHANGELOG.md
+++ b/extensions/custom-folder/CHANGELOG.md
@@ -1,5 +1,9 @@
 # Custom folder Changelog
 
+## [Fix First icon swap] - 2024-08-28
+- Fixed the issue with the first icon swap.
+- Now handles spaces in paths.
+
 ## [Feat Easily apply the custom icon] - 2024-08-25
 - Added the ability to easily apply the new custom icon to a target folder.
 
diff --git a/extensions/custom-folder/src/result.tsx b/extensions/custom-folder/src/result.tsx
index 3800739ed7ba..d7c3ecb6c50e 100644
--- a/extensions/custom-folder/src/result.tsx
+++ b/extensions/custom-folder/src/result.tsx
@@ -5,7 +5,6 @@ import { useEffect, useState } from "react";
 import { base64ToFile } from "./utils/saveFile";
 import path from "path";
 import { ReplaceAction } from "./replaceAction";
-import { sanitizePngFilePath } from "./utils/verifications";
 
 export default function Result({ formValues }: { formValues: FolderForm }) {
   const [isLoading, setIsLoading] = useState<boolean>(false);
@@ -39,7 +38,7 @@ export default function Result({ formValues }: { formValues: FolderForm }) {
       });
       return;
     }
-    base64ToFile(imageResult?.baseImage, sanitizePngFilePath(output))?.then(async (res) => {
+    base64ToFile(imageResult?.baseImage, output)?.then(async (res) => {
       if (res === "success") {
         await showToast({
           style: Toast.Style.Success,
@@ -98,7 +97,7 @@ export default function Result({ formValues }: { formValues: FolderForm }) {
         <ActionPanel>
           {formValues.targetFolderPath && formValues.targetFolderPath.length > 0 && (
             <ReplaceAction
-              iconPath={sanitizePngFilePath(`${tmpDirectory}/${imageResult?.name}`)}
+              iconPath={`${tmpDirectory}/${imageResult?.name}`}
               targetFolderPath={formValues?.targetFolderPath?.[0]}
               onAction={() => saveFile(`${tmpDirectory}/${imageResult?.name}`, "applied")}
             />
diff --git a/extensions/custom-folder/src/utils/replaceIconScript.ts b/extensions/custom-folder/src/utils/replaceIconScript.ts
index 1731f047e693..11027d9811bd 100644
--- a/extensions/custom-folder/src/utils/replaceIconScript.ts
+++ b/extensions/custom-folder/src/utils/replaceIconScript.ts
@@ -2,49 +2,41 @@ import { checkPathIsDirectory, sanitizeDirectoryPath } from "./verifications";
 
 export const replaceIconScript = (sanitizedIconPath: string, targetPath: string) => {
   const sanitizedTargetPath = sanitizeDirectoryPath(targetPath);
-  const isDirValid = checkPathIsDirectory(sanitizedTargetPath);
+  const isDirValid = checkPathIsDirectory(targetPath);
 
   if (isDirValid) {
     return `
       bash -c
       #!/bin/sh
-      # Sets a custom icon to a directory
-      # Usage setIcon.sh /path/to/iconImage /path/to/targetFolder
-      iconSource=${sanitizedIconPath}
-      iconDestination=${sanitizedTargetPath}
-      icon=/tmp/$(basename $iconSource)
-      rsrc=/tmp/icon.rsrc
-      echo $icon
-      echo $iconSource
+      iconDestination="${sanitizedTargetPath}"
+      iconSource="${sanitizedIconPath}"
+      icon="/tmp/$(basename "$iconSource")"
+      rsrc="/tmp/icon.rsrc"
       
       # Create icon from the iconSource
-      cp $iconSource $icon
+      cp "$iconSource" "$icon"
       
       # Add icon to image file, meaning use itself as the icon
-      sips -i $icon
+      sips -i "$icon"
       
-      if [ -d $iconDestination ]; then
-          # Destination is a directory
-          # If the Icon? file already exists - delete it by updating the item via applescript, a simple rm wouldn't trigger a render refresh
-          if [ -f $iconDestination/Icon? ]; then
-              rm $iconDestination/Icon?
-              osascript -e 'tell application "Finder" to update item POSIX file "'"$iconDestination"'"'
+      if [ -d "$iconDestination" ]; then
+          if [ -f "$iconDestination"/$'Icon\r' ]; then
+              rm "$iconDestination"/$'Icon\r'
           fi
+          osascript -e 'tell application "Finder" to update item POSIX file "'"$iconDestination"'"'
       
           # Take that icon and put it into a rsrc file
-          DeRez -only icns $icon >$rsrc
+          DeRez -only icns "$icon" >"$rsrc"
       
-          # Apply the rsrc file to
-          SetFile -a C $iconDestination
+          # Apply the rsrc file to the destination
+          SetFile -a C "$iconDestination"
       
-          touch $iconDestination/$'Icon\r'
-          Rez -append $rsrc -o $iconDestination/Icon?
-          SetFile -a V $iconDestination/Icon?
+          touch "$iconDestination"/$'Icon\r'
+          Rez -append "$rsrc" -o "$iconDestination"/$'Icon\r'
+          SetFile -a V "$iconDestination"/$'Icon\r'
       fi
       
-      echo $iconDestination
-      
-      rm $rsrc $icon
+      rm "$rsrc" "$icon"
     `;
   }
   return undefined;
diff --git a/extensions/custom-folder/src/utils/verifications.tsx b/extensions/custom-folder/src/utils/verifications.tsx
index 82c892869545..5c56876226dd 100644
--- a/extensions/custom-folder/src/utils/verifications.tsx
+++ b/extensions/custom-folder/src/utils/verifications.tsx
@@ -43,5 +43,5 @@ export const sanitizePngFilePath = (filePath: string): string => {
 };
 
 export const sanitizeDirectoryPath = (directoryPath: string): string => {
-  return directoryPath.replace(/[^a-zA-Z0-9/_-]/g, "");
+  return directoryPath.replace(/[^a-zA-Z0-9/_ -]/g, "");
 };