NOTES
TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE
1 – NATURE OF THE BUSINESS
WinVest
Acquisition Corp. (“WinVest,” or the “Company”) was incorporated in the State of Delaware on March 1, 2021. The
Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or
similar business combination (the “Initial Business Combination”) with one or more businesses or entities. The Company has
selected December 31 as its fiscal year end.
Throughout
this report, the terms “our,” “we,” “us,” and the “Company” refer to WinVest Acquisition
Corp.
As
of March 31, 2023, the Company had not commenced core operations. All activity for the period from March 1, 2021 (inception) through
March 31, 2023 relates to the Company’s formation and raising funds through the initial public offering (“Initial Public
Offering”), which is described below. The Company will not generate any operating revenues until after the completion of an Initial
Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived
from the Initial Public Offering.
The
registration statement pursuant to which the Company registered its securities offered in the Initial Public Offering was declared effective
on September 14, 2021. On September 17, 2021, the Company consummated its Initial Public Offering of 10,000,000 units (the “Units”).
Each Unit consists of one share of common stock of the Company, $0.0001 par value per share (the “Common Stock”), one redeemable
warrant (the “Public Warrants”), with each Public Warrant entitling the holder thereof to purchase one-half (1/2) of one
share of Common Stock at an exercise price of $11.50 per whole share, subject to adjustment and one Right (the “Rights”),
with each Right entitling the holder thereof to receive one-fifteenth (1/15) of one share of Common Stock upon the consummation by the
Company of an Initial Business Combination. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of
$100,000,000 (before underwriting discounts and commissions and offering expenses).
Simultaneously
with the consummation of the Initial Public Offering and the issuance and sale of the Units, the Company completed the private sale of
10,000,000 warrants (the “Private Placement Warrants”) at a price of $0.50 per Private Placement Warrant to our sponsor,
WinVest SPAC LLC (the “Sponsor”), generating gross proceeds of $5,000,000 (such sale, the “Private Placement”).
Each
Private Placement Warrant entitles the holders to purchase one-half of one share of Common Stock at a price of $11.50 per whole share,
subject to adjustment. The Private Placement Warrants are identical to the Public Warrants.
On
September 23, 2021, the underwriters fully exercised the over-allotment option and purchased an additional 1,500,000 Units (the “Over-Allotment
Units”), generating gross proceeds of $15,000,000 on September 27, 2021. Accordingly, no founders’ shares were subject to
forfeiture upon exercise of the full over-allotment. Simultaneously with the sale of Over-Allotment Units, the Company consummated a
private sale of an additional 900,000 Private Placement Warrants (the “Additional Private Placement Warrants”) to the Sponsor
at a purchase price of $0.50 per Private Placement Warrant, generating gross proceeds of $450,000. As of September 27, 2021, a total
of $116,150,000 of the net proceeds from the Initial Public Offering and the sale of the Private Placement Warrants and the Additional
Private Placement Warrants were deposited in a Trust Account (as defined below) established for the benefit of the Company’s public
stockholders.
Following
the closing of the Initial Public Offering on September 17, 2021, and the underwriters’ exercise of their over-allotment option
in full on September 23, 2021, an aggregate amount of $116,150,000 from the Initial Public Offering and the sale of the Private Placement
Warrants was placed in a trust account in the United States maintained by Continental Stock Transfer & Trust Company, as trustee
(the “Trust Account”). The funds held in the Trust Account will be invested only in United States “government securities”
within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”) having
a maturity of 185 days or less, or in money market funds meeting the applicable conditions under Rule 2a-7 promulgated under the Investment
Company Act and that invest solely in U.S. treasuries, so that we are not deemed to be an investment company under the Investment Company
Act. Except with respect to interest earned on the funds held in the Trust Account that may be released to us to pay our income or other
tax obligations, the proceeds will not be released from the Trust Account until the earlier of the completion of our Initial Business
Combination or our redemption of 100% of the outstanding public shares if we have not completed an Initial Business Combination in the
required time period. Any amounts not paid as consideration to the sellers of the target business may be used to finance operations of
the target business.
We
initially had 15 months from the closing of the Initial Public Offering of September 17, 2021 to consummate our Initial Business Combination.
On November 30, 2022, we held a special meeting of stockholders, at which our stockholders approved an amendment to the Company’s
amended and restated certificate of incorporation (the “November 2022 Extension Amendment”) to extend the date (the “Termination
Date”) by which the Company must consummate an Initial Business Combination from December 17, 2022 (the “Original Termination
Date”) to January 17, 2023, and to allow the Company, without another stockholder vote, to elect to extend the Termination Date
on a monthly basis for up to five times by an additional one month each time after January 17, 2023, by resolution of the Company’s
board of directors, if requested by our Sponsor, and upon five days’ advance notice prior to the applicable Termination Date, until
June 17, 2023, or a total of up to six months after the Original Termination Date, unless the closing of the Initial Business Combination
shall have occurred prior thereto, subject to the deposit by our Sponsor or its affiliates or designees, upon five days’ advance
notice prior to the applicable deadline, of $125,000, on or prior to the date of the applicable deadline, for each one-month extension.
Any such payments would be made in the form of a non-interest-bearing loan and would be repaid, if at all, from funds released to us
upon completion of our Initial Business Combination.
In
connection with the vote to approve the November 2022 Extension Amendment, the holders of 9,606,887 shares of Common Stock issued as
part of the units sold in the Initial Public Offering properly exercised their right to redeem their shares (and did not withdraw their
redemption) for cash at a redemption price of approximately $10.20 per share, for an aggregate redemption amount of approximately $98.0
million. Following such redemptions, approximately $19.6 million was left in the Trust Account and 1,893,113 shares remained outstanding.
Accordingly,
with the stockholders of the Company having approved the November 2022 Extension Amendment, on December 5, 2022, the Company issued an
unsecured promissory note in the principal amount of $750,000 (the “Extension Note”) to the Sponsor, pursuant to which the
Sponsor agreed to loan to the Company up to $ in connection with the extension of the Termination Date. Per the terms of the Extension
Note, funds available under such note are not restricted for use for extension payments. The Extension Note does not bear interest and
matures upon the earlier of (a) the closing of an Initial Business Combination and (b) the Company’s liquidation. In the event
that the Company does not consummate an Initial Business Combination, the Extension Note will be repaid only from amounts remaining outside
of the Trust Account, if any. Upon the consummation of an Initial Business Combination, the Sponsor may elect to convert any portion
or all of the amount outstanding under the Extension Note into private warrants to purchase shares of the Company’s Common Stock
at a conversion price of $0.50 per private warrant. Such private warrants will be identical to the Private Placement Warrants issued
to the Sponsor at the time of the Initial Public Offering.
As
of March 31, 2023, the Company had deposited $500,000 into
the Trust Account in connection with four drawdowns under the Extension Note pursuant to the extension of the Termination Date to
April 17, 2023. On April 17, 2023, the Company effected the fifth drawdown of $125,000 under the Extension Note and caused such sums
to be deposited into the Trust Account in connection with the extension of the Termination Date from April 17, 2023 to May 17, 2023.
On May 16, 2023, the Company effected the sixth drawdown of $125,000 under the Extension Note and caused such sums to be deposited
into the Trust Account in connection with the extension of the Termination Date from May 17, 2023 to June 17, 2023. Such amounts
will be distributed either to: (i) all the holders of shares of Common Stock issued as part of the units sold in the Initial Public
Offering upon the Company’s liquidation or (ii) holders of such shares who elect to have their shares redeemed in connection
with the consummation of an Initial Business Combination.
If
we are unable to consummate an Initial Business Combination by the Termination Date, we will, as promptly as possible but not more than
ten business days thereafter, redeem 100% of our outstanding public shares for a pro rata portion of the funds held in the Trust Account,
including a pro rata portion of any interest earned on the funds held in the Trust Account (less taxes payable and up to $100,000 of
interest to pay our dissolution expenses), and then seek to dissolve and liquidate. However, we may not be able to distribute such amounts
as a result of claims of creditors which may take priority over the claims of our public stockholders. In the event of our dissolution
and liquidation, the Rights and Public and Private Placement Warrants will expire and will be worthless.
No
compensation of any kind (including finders’, consulting or other similar fees) will be paid to any of our existing officers, directors,
stockholders, or any of their affiliates, prior to, or for any services they render in order to effectuate, the consummation of the Initial
Business Combination (regardless of the type of transaction that it is). However, such individuals will receive reimbursement for any
out-of-pocket expenses incurred by them in connection with activities on our behalf, such as identifying potential target businesses,
performing business due diligence on suitable target businesses and business combinations as well as traveling to and from the offices,
plants or similar locations of prospective target businesses to examine their operations. Since the role of present management after
our Initial Business Combination is uncertain, we have no ability to determine what remuneration, if any, will be paid to those persons
after our Initial Business Combination.
Management
intends to use any funds available outside of the Trust Account for miscellaneous expenses such as paying fees to consultants to assist
us with our search for a target business and for director and officer liability insurance premiums, with the balance being held in reserve
in the event due diligence, legal, accounting and other expenses of structuring and negotiating business combinations exceed our estimates,
as well as for reimbursement of any out-of-pocket expenses incurred by our insiders, officers and directors in connection with activities
on our behalf as described below.
The
allocation of the net proceeds available to us outside of the Trust Account, along with the interest earned on the funds held in the
Trust Account available to us to pay our income and other tax liabilities, represents our best estimate of the intended uses of these
funds. In the event that our assumptions prove to be inaccurate, we may reallocate some of such proceeds within the above-described categories.
If our estimate of the costs of undertaking due diligence and negotiating our Initial Business Combination is less than the actual amount
necessary to do so, or the amount of interest available to us from the Trust Account is insufficient, we may be required to raise additional
capital, the amount, availability and cost of which is currently unascertainable. In this event, we could seek such additional capital
through loans or additional investments from our Sponsor or third parties, Our Sponsor and/or founding stockholders may, but are not
obligated to, loan us funds as may be required. Such loans would be evidenced by promissory notes that would either be paid upon consummation
of our Initial Business Combination, or, at such lender’s discretion. However, our Sponsor and/or founding stockholders are under
no obligation to loan us any funds or invest in us. If we are unable to obtain the necessary funds, we may be forced to cease searching
for a target business and liquidate without completing our Initial Business Combination.
We
will likely use substantially all of the net proceeds of the Initial Public Offering, the Private Placement and the sale of the Additional
Private Placement Warrants, including the funds held in the Trust Account, in connection with our Initial Business Combination and to
pay our expenses relating thereto, including the deferred underwriting discounts and commissions payable to the underwriters in an amount
equal to 3.5% of the total gross proceeds raised in the offering upon consummation of our Initial Business Combination. To the extent
that our capital stock is used in whole or in part as consideration to effect our Initial Business Combination, the proceeds held in
the Trust Account which are not used to consummate an Initial Business Combination will be disbursed to the combined company and will,
along with any other net proceeds not expended, be used as working capital to finance the operations of the target business. Such working
capital funds could be used in a variety of ways including continuing or expanding the target business’ operations, for strategic
acquisitions.
To
the extent we are unable to consummate an Initial Business Combination, we will pay the costs of liquidation from our remaining assets
outside of the Trust Account. If such funds are insufficient, our Sponsor has agreed to pay the funds necessary to complete such liquidation
and has agreed not to seek repayment of such expenses.
Risks, Uncertainties and Going Concern
Management
continues to evaluate the impact of the Russia-Ukraine war, the COVID-19 pandemic and other geopolitical factors on the economy and the
capital markets and has concluded that, while it is reasonably possible that such events could have negative effects on the search for
a target company and ability to raise capital in connection with a business combination, the specific impacts are not readily determinable
as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome
of these uncertainties.
As
of March 31, 2023, the Company had $57,048 in its operating bank account and a working capital deficit of $1,401,576. Our liquidity needs
prior to the consummation of the Initial Public Offering have been satisfied through proceeds from advances from a related party, our
Sponsor, and from the issuance of common stock. Subsequent to the consummation of the Initial Public Offering, liquidity was satisfied
through the net proceeds from the consummation of the Initial Public Offering and the proceeds from the Sponsor’s purchase of Private Placement Warrants held outside of our Trust Account. For the period ended March 31, 2023, our net loss was $404,527 and expenses
from operating activities were $569,578, mainly due to costs associated with professional services, including legal, financial reporting,
accounting and auditing compliance expenses. We intend to use the funds held outside the Trust Account, in addition to additional funds
we may borrow under the Promissory Note, primarily to pay corporate filing and compliance expenses, identify and evaluate target businesses,
perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective
target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses,
structure, negotiate and complete an Initial Business Combination. Per the terms of the Extension Note, funds available under such note
are not restricted for use for extension payments. We believe we will need to access additional
liquidity in order to consummate an Initial Business Combination.
The
accompanying financial statements have been prepared on the basis that we will continue as a going concern, which assumes the realization
of assets and the satisfaction of liabilities in the normal course of business. As of March 31, 2023, we had not commenced any operations.
All activity for the period from March 1, 2021 (inception) through March 31, 2023 relates to our formation and the Initial Public Offering.
All activity for the fiscal year ended March 31, 2023 relates to identifying a target company for a business combination. We will not
generate any operating revenues until after the completion of our Initial Business Combination, at the earliest. We will generate non-operating
income in the form of interest income on cash and cash equivalents from the proceeds derived from the Initial Public Offering. Our ability
to commence operations is contingent upon consummating a business combination. Our management has broad discretion with respect to the
specific application of the net proceeds of the Initial Public Offering, although substantially all of the net proceeds are intended
to be applied generally toward consummating a business combination. Although management has been successful to date in raising necessary
funding, there can be no assurance that any required future financing can be successfully completed. Furthermore, our ability to consummate
our initial business combination within the contractual time period is uncertain. We have until June 17, 2023 to consummate our Initial
Business Combination. We will not be able to consummate a business combination by June 17, 2023. Based on these circumstances, management
has determined that there is substantial doubt about our ability to continue as a going concern due to the uncertainty of liquidity requirements
and the mandatory liquidation date within one year.
Management’s
plan to address the June 17, 2023 liquidation is to seek stockholder approval for, and to file, an amendment to the Company’s amended
and restated certificate of incorporation extending the Company’s current Termination Date, among other things. Pursuant to a definitive
proxy statement filed with the Securities and Exchange Commission (“SEC”) on May 19, 2023, the Company is proposing to amend
its amended and restated certificate of incorporation to (i) eliminate the limitation that the Company may not consummate an Initial
Business Combination unless it has net tangible assets of at least $5,000,001 upon consummation of such Initial Business Combination
and (ii) extend the Termination Date from June 17, 2023 to July 17, 2023 (the “Charter Extension Date”) upon the deposit
into the Trust Account of $65,000, to be loaned to the Company by the Sponsor or one or more of its affiliates, members or third-party
designees, and to allow the Company, without another stockholder vote, to elect to extend the Termination Date on a monthly basis for
up to five times by an additional one month period each after the Charter Extension Date (each, an “Additional Extension”),
by resolution of the Company’s board of directors, if requested by the Company’s Sponsor, and upon five days’ advance
notice prior to the applicable Termination Date, until December 17, 2023, or a total of up to six months after June 17, 2023, unless
the closing of an Initial Business Combination shall have occurred prior thereto, subject to the deposit of an additional $65,000 per
Additional Extension into the Trust Account by the Sponsor or its affiliates, members or third-party designees.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS
Basis
of Presentation
The
accompanying unaudited condensed financial statements have been prepared and presented in accordance with U.S. GAAP and pursuant to the
rules and regulations of the SEC. In the opinion of management, these unaudited condensed financial statements include all adjustments
necessary for a fair statement of the financial position, results of operations and cash flows of the Company, and the adjustments are
of a normal and recurring nature.
Unaudited
Interim Financial Statements
In
the opinion of the Company, the unaudited financial statements contain all adjustments, consisting of only normal recurring adjustments,
necessary for a fair statement of its financial position as of March 31, 2023, and its results of operations for the three months ended
March 31, 2023.
The accompanying unaudited condensed financial
statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 as
filed with the SEC on March 31, 2023, which contains the audited financial statements and notes thereto. The financial information as
of December 31, 2022 is derived from the audited financial statements presented in the Company’s Annual Report on Form 10-K for
the year ended December 31, 2022. The interim results for the three months ended March 31, 2023 are not necessarily indicative of the
results to be expected for the year ending December 31, 2023 or for any future interim periods.
Emerging
Growth Company
The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our
Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required
to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations
regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding
advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section
102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards
until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a
class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.
The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply
to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended
transition period which means that when a standard is issued or revised and it has different application dates for public or private
companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the
new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither
an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible
because of the potential differences in accounting standards used.
Use
of Estimates
The
preparation of unaudited condensed financial statements in conformity with U.S. GAAP requires the Company’s management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Making
estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of
a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating
its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ
significantly from those estimates.
Cash
and cash equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company did not have any cash equivalents as of March 31, 2023 and December 31, 2022, respectively.
Marketable
Securities Held in Trust Account
Following
the closing of the Initial Public Offering on September 17, 2021, and the underwriters’ exercise of their over-allotment option
in full on September 23, 2021, an aggregate amount of $116,150,000 from the Initial Public Offering and the sale of the Private Placement
Warrants was placed in a trust account in the United States maintained by Continental Stock Transfer & Trust Company and may be invested
only in U.S. government securities with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule
2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. The Trust Account is intended
as a holding place for funds pending the earliest to occur of: (i) the completion of the Initial Business Combination; (ii) the redemption
of any public shares properly submitted in connection with a stockholder vote to amend the Company’s amended and restated certificate
of incorporation (A) to modify the substance or timing of the Company’s obligation to redeem 100% of the public shares if the Company
does not complete the Initial Business Combination within 12 months from the closing of the Initial Public Offering or (B) with respect
to any other provision relating to stockholders’ rights or pre-initial business combination activity; or (iii) absent an Initial
Business Combination within 12 months from the closing of the Initial Public Offering, the return of the funds held in the Trust Account
to the public stockholders as part of redemption of the public shares.
Common
Stock Subject to Possible Redemption
The
Company accounts for its common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification
(“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption is classified
as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption
rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within
the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’
equity. The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s
control and subject to occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented at
redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet.
The
Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable shares to equal
the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable shares are effected
by charges against additional paid-in capital and accumulated deficit.
Public
and Private Warrants
We
account for our Public Warrants and Private Placement Warrants as equity-classified instruments, based on an assessment of the warrant’s
specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC
815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments
pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for
equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other
conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant
issuance and as of each subsequent quarterly period end date while the warrants are outstanding. In that respect, the Private Placement
Warrants, as well as any warrants underlying additional units the Company issues to the Sponsor, officers, directors, initial stockholders
or their affiliates in payment of working capital loans made to the Company, were identical to the warrants underlying the Units offered
in the Initial Public Offering.
Rights
The
Company accounts for its Rights as equity-classified instruments based on an assessment of the Rights’ specific terms and applicable
authoritative guidance in ASC 480 and ASC 815. The assessment considers whether the Rights are freestanding financial instruments pursuant
to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the Rights meet all the requirements for equity classification
under ASC 815, including whether the Rights are indexed to the Company’s own common stock, among other conditions for the equity
classification. This assessment, which requires the use of professional judgement, is conducted at the time of Rights issuance.
Each
Right may be traded separately. If the Company is unable to complete an Initial Business Combination within the required time period
and the Company liquidates the funds held in the Trust Account, holders of Rights will not receive any such funds for their Rights, and
the Rights will expire worthless. The Company has not considered the effect of Rights sold in the
Initial Public Offering and the private placement to purchase shares of common stock, since the exercise of the Rights are contingent
upon the occurrence of future events.
Income
Taxes
The
Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax
assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included
the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be
realized.
ASC
740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions
taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be
sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits
as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of March 31, 2023
and 2022. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material
deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
Franchise Taxes
The Company is subject to franchise tax filing requirements
in the State of Delaware.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution,
which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. As of March 31, 2023, the Company has not experienced
losses on this account and management believes the Company is not exposed to significant risks on such account.
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements
and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term
nature.
Fair
Value Measurements
Fair
value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction
between market participants at the measurement date. U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets
or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
● |
Level
1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
|
|
● |
Level
2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted
prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active;
and |
|
|
● |
Level
3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
The
following table presents information about the Company’s assets that are measured at fair value on a recurring basis at March 31,
2023 and December 31, 2022 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair
value:
SCHEDULE OF FAIR VALUE MEASUREMENT ON RECURRING BASIC
| |
| | |
Fair value measurements at reporting date using: | |
Description | |
Fair Value | | |
Quoted prices in active markets for identical liabilities (Level 1) | | |
Significant other observable inputs (Level 2) | | |
Significant unobservable inputs (Level 3) | |
Assets: | |
| | | |
| | | |
| | | |
| | |
Marketable securities held in Trust Account at March 31, 2023 | |
$ | 20,005,762 | | |
$ | 20,005,762 | | |
$ | - | | |
$ | - | |
| |
| | | |
| | | |
| | | |
| | |
Marketable securities held in Trust Account at December 31, 2022 | |
$ | 19,571,562 | | |
$ | 19,571,562 | | |
$ | - | | |
$ | - | |
In
some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In
those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input
that is significant to the fair value measurement.
Net
Loss Per Common Share
Net
loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the reporting period.
Diluted earnings per share is computed like basic earnings per share, except the weighted average number of common shares outstanding
are increased to include additional shares from the assumed exercise of share options, if dilutive.
The
Company complies with accounting and disclosure requirements of FASB ASC Topic 260, Earnings Per Share. The Statements of Operations
include a presentation of income (loss) per redeemable share and income (loss) per non-redeemable share following the two-class
method of income per share. In order to determine the Net income (loss) attributable to both the redeemable shares and
non-redeemable shares, the Company first considered the total income (loss) allocable to both sets of shares. This is calculated
using the total net income (loss) less any dividends paid. For purposes of calculating net income (loss) per share, any
remeasurement of the ordinary shares subject to possible redemption was considered to be dividends paid to the public stockholders. Subsequent
to calculating the total income (loss) allocable to both sets of shares, the Company split the amount to be allocated using a ratio
of 0% for the redeemable public shares and 100% for the non-redeemable shares, reflective of the respective participation rights,
for the three months ended March 31, 2023.
The
income (loss) per share presented in the statement of operations is based on the following:
For
the three months ended March 31, 2023
SCHEDULE OF EARNINGS PER SHARE
| |
Common shares subject to redemption | | |
Non-redeemable Common Shares | |
| |
| | |
| |
Basic and diluted net loss per share | |
| | | |
| | |
Numerator: | |
| | | |
| | |
Allocation of net loss | |
| - | | |
| (404,527 | ) |
Denominator: | |
| | | |
| | |
Weighted-average shares outstanding | |
| 1,893,113 | | |
| 2,875,000 | |
Basic and diluted net loss per share | |
$ | - | | |
$ | (0.14 | ) |
For
the three months ended March 31, 2022
| |
Common shares subject to redemption | | |
Non-redeemable Common Shares | |
| |
| | |
| |
Basic and diluted net loss per share | |
| | | |
| | |
Numerator: | |
| | | |
| | |
Allocation of net loss | |
| (192,078 | ) | |
| (48,020 | ) |
Denominator: | |
| | | |
| | |
Weighted-average shares outstanding | |
| 11,500,000 | | |
| 2,875,000 | |
Basic and diluted net loss per share | |
$ | (0.02 | ) | |
$ | (0.02 | ) |
The
Company has not considered the effect of Warrants and Rights sold in the Initial Public Offering and the private placement to purchase
11,966,667 shares of common stock in the calculation of diluted loss per share, since the exercise of the Warrants and Rights are contingent
upon the occurrence of future events. As a result, diluted net loss per common share is the same as basic net loss per common share for
the period presented.
Recent
Accounting Pronouncements
In
June 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-03,
Fair Value Measurement (Topic 820) (“ASU 2022-03”). The amendments in ASU 2022-03 clarify that a contractual restriction
on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered
in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual
sale restriction. The amendments in this Update also require additional disclosures for equity securities subject to contractual sale
restrictions. The provisions in this Update are effective for fiscal years beginning after December 15, 2023 for public business entities.
Early adoption is permitted. The Company does not expect to early adopt this ASU. The Company is currently evaluating the impact of adopting
this guidance on the balance sheets, results of operations and cash flows.
The
Company does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would
have a material effect on the Company’s financial statements.
NOTE
3 - INITIAL PUBLIC OFFERING
Pursuant
to the Initial Public Offering, on September 17, 2021, the Company sold 10,000,000 Units at a price of $10.00 per Unit for a total of
$100,000,000, which increased to 11,500,000 Units for a total of $115,000,000 when the over-allotment option was exercised in full on
September 23, 2021. Each Unit consists of one share of common stock, one Right and one Public Warrant. Each Right entitles the holder
thereof to receive one-fifteenth (1/15) of one share of common stock upon the consummation of an Initial Business Combination. Each redeemable
Public Warrant entitles the holder to purchase one half (1/2) of one share of common stock at a price of $11.50 per full share, subject
to adjustment (see Note 7).
In
connection with its Initial Public Offering, the Company incurred offering costs of $2,923,969, consisting of $2,400,000 of underwriting
commissions and expenses and $523,969 of costs related to the Initial Public Offering. Additionally, the Company recorded deferred underwriting
commissions of $4,025,000 payable only upon completion of our Initial Business Combination.
NOTE
4 – RELATED PARTY TRANSACTIONS
Sponsor
Shares
On
March 16, 2021, our Sponsor purchased shares (the “Founder Shares”) of the Company’s common stock for an
aggregate price of $.
Prior
to the effective date of our registration statement in connection with our Initial Public Offering, the Company entered into agreements
with its directors in connection with their board service and certain members of its advisory board in connection with their advisory
board service for its Sponsor to transfer an aggregate of 277,576 of its founder shares to the Company’s directors for no cash
consideration and an aggregate of 60,000 of its founder shares to certain members of the Company’s advisory board for no cash consideration,
for a total of 337,576 shares, approximating the fair value of the shares on such date, or $34. The shares were subsequently transferred
prior to the effectiveness of the Company’s registration statement. The founder shares do not have redemption rights and will be
worthless unless the Company consummates its Initial Business Combination.
Private
Placement Warrants
Our
Sponsor purchased from us an aggregate of 10,900,000 Private Placement Warrants at a purchase price of $0.50 per warrant, or $5,450,000
in the aggregate, in a private placement that closed simultaneously with the closing of the Initial Public Offering. A portion of the
proceeds we received from the purchase equal to $3,450,000 was placed in the Trust Account so that at least $10.10 per share sold to
the public in the Initial Public Offering is held in trust.
As
previously disclosed, on December 5, 2022, the Company issued an unsecured promissory note in the principal amount of $750,000
(the “Extension Note”) to the Sponsor,
pursuant to which the Sponsor agreed to loan to the Company up to $in connection with the extension of the Termination
Date. The Extension Note does not bear interest and matures upon the earlier of (a) the closing of an Initial Business Combination and
(b) the Company’s liquidation. In the event that the Company does not consummate an Initial Business Combination, the Extension
Note will be repaid only from amounts remaining outside of the Trust Account, if any. Upon the consummation of an Initial Business Combination,
the Sponsor may elect to convert any portion or all of the amount outstanding under the Extension Note into private warrants to purchase
shares of the Company’s Common Stock at a conversion price of $0.50
per private warrant. Such private warrants will
be identical to the Private Placement Warrants issued to the Sponsor at the time of the Initial Public Offering.
During
2023, the Company effected drawdowns of $625,000
under the Extension Note and caused such sums
to be deposited into the Trust Account in connection with the extension of the Termination Date from January 17, 2023 to June 17,
2023. Such amounts will be distributed either to: (i) all of the holders of shares of Common Stock issued as part of the units sold in
the IPO upon the Company’s liquidation or (ii) holders of Public Shares who elect to have their shares redeemed in connection with
the consummation of an Initial Business Combination.
During
2023, the Company effected drawdowns of $123,000 under
the Promissory Note for working capital requirements. These amounts remain outstanding as of March 31, 2023.
Related
Party Advances
As
of March 31, 2023 and December 31, 2022, there were no “related party advances”.
Promissory
Note – Related Party
On
March 16, 2021, the Company issued an unsecured promissory note to the Sponsor (extended by amendment in March 2022 to the consummation
of an initial business combination) (the “Promissory Note”), pursuant to which the Company could borrow up to an aggregate
principal amount of $300,000,
of which $0
was outstanding under the Promissory Note as
of December 31, 2022 and 2021. During 2023, the Company effected drawdowns of $123,000
under the Promissory Note. The Promissory Note
is non-interest bearing and payable on the date on which the Company consummates its Initial Business Combination. The Sponsor may elect
to convert any portion or all of the amount outstanding under this Promissory Note into Private Placement Warrants to purchase shares
of common stock of the Company at a conversion price of $0.50
per warrant, and each warrant will entitle the
holder to acquire one-half share of the Company’s common stock at an exercise price of $11.50
per share, commencing on the date of the Initial
Business Combination of the Company, and otherwise on the terms of the Private Placement Warrants.
The
Company analyzed the conversion feature of the Promissory Note into private warrants under ASC 815, Derivatives and Hedging, ASC
450, Contingencies, ASC 480, Distinguishing Liabilities from Equity and ASU 2020-06, Debt—Debt with Conversion
and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). Prior
to any Business Combination, the outstanding amounts under the Promissory Note are recorded as a liability on the balance sheet. The
conversion feature for any such outstanding amounts requires liability treatment on the balance sheet and should be recorded at fair
value with changes to the fair value being recorded through the income statement. Once converted, the private warrants, being identical
to the Public Warrants, will be classified under equity treatment. However, given that the fair value of such conversion feature is not
material as of the fourth drawdown date, and the reporting date, or March 31, 2023, management has not recorded any such adjustment to
the Company’s financial statements.
Extension
Note – Related Party
On
December 5, 2022, we issued the Extension Note to our Sponsor, pursuant to which the Sponsor agreed to loan to us up to $750,000 in
connection with the extension of the Termination Date. The Extension Note does not bear interest and matures upon the earlier of (a)
the closing of a business combination and (b) our liquidation. In the event that we do not consummate a business combination, the
Extension Note will be repaid only from amounts remaining outside of the trust account, if any. Upon the consummation of a business
combination, the Sponsor may elect to convert any portion or all of the amount outstanding under the Extension Note into private
warrants to purchase shares of our Common Stock at a conversion price of $0.50 per
private warrant. Such private warrants will be identical to the Private Placement Warrants issued to the Sponsor at the time of our
Initial Public Offering. On December 5, 2022, we effected the first drawdown of $125,000 under
the Extension Note and caused the Sponsor to deposit such sum into the trust account in connection with the extension of the
Termination Date from December 17, 2022 to January 17, 2023. During 2023, we effected drawdowns of $625,000 under
the Extension Note and caused such sums to be deposited into the Trust Account in connection with the extension of the Termination Date from January 17, 2023 to June 17, 2023.
The
Company analyzed the conversion feature of the Extension Note into private warrants under ASC 815, Derivatives and Hedging, ASC
450, Contingencies, ASC 480, Distinguishing Liabilities from Equity and ASU 2020-06, Debt—Debt with Conversion
and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). Prior
to any Business Combination, the outstanding amounts under the Extension Note are recorded as a liability on the balance sheet. The conversion
feature for any such outstanding amounts requires liability treatment on the balance sheet and should be recorded at fair value with
changes to the fair value being recorded through the income statement. Once converted, the private warrants, being identical to the Public
Warrants, will be classified under equity treatment. However, given that the fair value of such conversion feature is not material as
of the fourth drawdown date, and the reporting date, or March 31, 2023, management has not recorded any such adjustment to the Company’s
financial statements.
Administrative
Support Agreement
The
Company entered into an agreement to pay our Sponsor a monthly fee of $10,000 for office space, secretarial, and administrative support
services provided to the Company beginning in September 2021 and continuing monthly until the earlier of the completion of an Initial
Business Combination or the Company’s liquidation. As of March 31, 2023, $135,000 is owed to the Sponsor under this agreement.
NOTE
5 – COMMITMENTS AND CONTINGENCIES
Registration
Rights
The
holders of the Founder Shares are entitled to registration rights pursuant to a registration rights agreement signed on the effective
date of the Initial Public Offering. The holders of the majority of these securities are entitled to make up to three demands that the
Company register such securities. The holders of the majority of the Founder Shares can elect to exercise these registration rights at
any time commencing three months prior to the date on which the Founder Shares are to be released from escrow. In addition, the holders
have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our consummation
of our Initial Business Combination.
Underwriting
Agreement
The
Company granted the underwriters a 45-day option from the date of its prospectus to purchase up to 1,500,000 additional Units to cover
over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions. On September 23, 2021,
the underwriters exercised the over-allotment option in full and purchased an additional 1,500,000 Units (the “Over-Allotment Units”),
generating gross proceeds of $15,000,000 on September 27, 2021.
The
underwriters received a cash underwriting discount of $0.20
per Unit, or $2,300,000
in the aggregate, and were paid offering expenses
of $100,000
upon the closing of the Initial Public Offering
including the overallotment.
Finder’s
Fee Agreement
On
July 12, 2022, the Company entered into a finder’s fee agreement with a third-party finder (“Finder”), payable only
upon the successful consummation of the Finder’s identification of merger target companies which shall occur only if the merger
target companies are identified and introduced by the Finder and acknowledged by the Company in writing during the retention period,
which shall be one year after origination and will continue for one year after such period, unless terminated earlier, and provided an Initial
Business Combination is consummated with a merger target company identified within such period. For purposes of the agreement, the finder’s
fee shall be calculated as 1% of the sum of any cash and noncash consideration actually delivered and paid in connection with an Initial
Business Combination.
Agent
Agreement
On
July 19, 2022, the Company entered an agent agreement with a FINRA registered broker-dealer (“Agent”), by which the Company
engaged the Agent as its non-exclusive agent to use commercially reasonable efforts to refer the Company to potential target companies
for an Initial Business Combination. If the Company completes a transaction with any such target company referred to by the Agent within
18 months after such referral, the Agent shall be paid a success fee based upon the transaction value, which shall become due and payable
concurrently with the Initial Business Combination.
Chardan
Capital Markets, LLC. M&A / Capital Markets Advisory Agreement
On
July 23, 2022, the Company entered a M&A/Capital Markets Advisory Agreement (“M&A Agreement”) with Chardan Capital
Markets, LLC, (“Chardan”) by which Chardan shall assist and advise the Company in completing an Initial Business Combination.
In the event an Initial Business Combination is consummated during the term of this Agreement, the Company shall pay to Chardan at the
closing of the Initial Business Combination the M&A Fee. If the M&A Agreement specifies that the M&A Fee is to be based on
the “Aggregate Value” of an Initial Business Combination, such term means, without duplication, an amount equal to the sum
of the aggregate value of any securities issued, promissory notes delivered by the Company to a target company in connection with an
Initial Business Combination, and any other cash and non-cash consideration (using such values as set forth in such Initial Business
Combination’s definitive agreement) delivered and paid in connection with an Initial Business Combination, and the amount of all
debt and debt-like instruments of the Targets immediately prior to closing that (a) are assumed or acquired by the Company or (b) retired
or defeased in connection with such Business Combination less any amounts of Financing that are the basis of a Financing Fee. Even if
an Initial Business Combination is not consummated prior to the expiration or termination of the M&A Agreement, Chardan shall be
entitled to the full M&A Fee with respect to any transaction consummated involving an Introduced Party that occurs within 18 months
of the expiration or termination of the M&A Agreement or within 12 months of the expiration or termination of the M&A Agreement
for any party not deemed an introduced party by Chardan.
In
the event an Initial Business Combination is consummated involving a party other than an introduced party by Chardan, the Company will
pay to Chardan an M&A Fee equal to the greater of $800,000 or 1% of the aggregate value of the Initial Business Combination, paid
at the close of the Initial Business Combination. In the event an Initial Business Combination is consummated with an introduced party
as business combination target, the Company shall pay to Chardan an aggregate M&A Fee based on the aggregate value of the Initial
Business Combination according to the following schedule:
|
● |
3%
of the first $100 million aggregate value; |
|
● |
2%
of the aggregate value greater than $100 million but less than $200 million; |
|
● |
1%
of the aggregate value greater than $200 million. |
The
M&A Fee will be paid either in cash out of the flow of funds from the Trust Account or in registered and free trading securities
of the Company, as the parties may agree.
The
Company will pay a cash fee equal to 5% of the aggregate sales price of securities sold in the financing to introduced parties. A cash
fee equal to 1% of the aggregate sales price of public or private securities sold in a financing transaction to investors other than
introduced parties. If such sale of securities occurs through multiple closings, then a pro rata portion of such fee shall be paid upon
each closing. The financing fee will be paid in cash from the flow of funds from the Financing.
The
Company will pay Chardan up to $150,000 in aggregate for reimbursable out of pocket expenses.
As
of March 31, 2023 and December 31, 2022, the Company recorded deferred underwriting commissions of $4,025,000 payable to Chardan only
upon completion of its Initial Business Combination.
NOTE
6 – COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION
The
Company’s common stock features certain redemption rights that are considered to be outside of the Company’s control and
subject to occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented at redemption
value as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet.
The
following is a reconciliation of the Company’s common stock subject to possible redemption as of March 31, 2023.
SCHEDULE OF COMMON STOCK REDEMPTION
| |
Common Shares Subject to Possible Redemption | |
| |
| |
Gross proceeds from initial public offering | |
$ | 115,000,000 | |
| |
| | |
Less: | |
| | |
Offering costs allocated to common stock subject to possible redemption | |
| (6,498,541 | ) |
Proceeds allocated to public warrants | |
| (2,357,500 | ) |
Plus: | |
| | |
Deposit to Trust Account from private placement | |
| 1,150,000 | |
Accretion on common stock subject to possible redemption | |
| 8,856,041 | |
Balance, December 31, 2021 | |
| 116,150,000 | |
Accretion of common stock subject to possible redemption | |
| 1,422,276 | |
Redemption of common stock | |
| (98,000,714 | ) |
Balance, December 31, 2022 | |
$ | 19,571,562 | |
Deposits to Trust Account | |
| 375,000 | |
Accretion of common stock subject to possible redemption | |
| 209,051 | |
Taxes withdrawn from Trust Account | |
| (149,851 | ) |
Balance, March 31, 2023 | |
| 20,005,762 | |
NOTE
7 – STOCKHOLDERS’ DEFICIT
Common
Stock
The
Company’s amended and restated certificate of incorporation authorizes the issuance of 100,000,000 shares of common stock, par
value $0.0001, and 1,000,000 shares of undesignated preferred stock, $0.0001 par value.
In
March 2021, the Company issued 2,875,000 founder shares of common stock at a price of approximately $0.01 per share for total cash of
$25,000. There are no shares of preferred stock outstanding as of March 31, 2023 and December, 31, 2022.
Rights
The
registration statement pursuant to which the Company registered its securities offered in the Initial Public Offering was declared effective
on September 14, 2021. On September 17, 2021, the Company consummated its Initial Public Offering of 10,000,000 Units. Each Unit consists
of one share of common stock of the Company, $0.0001 par value per share, one redeemable warrant, with each Public Warrant entitling
the holder thereof to purchase one-half (1/2) of one share of Common Stock at an exercise price of $11.50 per whole share, subject to
adjustment and one Right, with each Right entitling the holder thereof to receive one-fifteenth (1/15) of one share of Common Stock upon
the consummation by the Company of an Initial Business Combination. Each Right may be traded separately. If the Company is unable to
complete an Initial Business Combination within the required time period and the Company liquidates the funds held in the Trust Account,
holders of Rights will not receive any such funds for their Rights, and the Rights will expire worthless.
Public
Warrants
Each
redeemable warrant entitles the registered holder to purchase one half of one share of common stock at a price of $11.50 per full share,
subject to adjustment as discussed below, at any time commencing on the later of the completion of an Initial Business Combination and
12 months from the closing of the Initial Public Offering. No warrants will be exercisable for cash unless the Company has an effective
and current registration statement covering the shares of common stock issuable upon exercise of the warrants and a current prospectus
relating to such shares of common stock. Notwithstanding the foregoing, if a registration statement covering the shares of common stock
issuable upon exercise of the warrants is not effective within 90 days from the consummation of our Initial Business Combination, warrant
holders may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain
an effective registration statement, exercise warrants on a cashless basis. The warrants will expire five years from the consummation
of an initial Business Combination.
The
Company may call the outstanding warrants for redemption (excluding the Private Placement Warrants and warrants underlying the units
that may be issued upon conversion of working capital loans), in whole and not in part, at a price of $0.01 per warrant:
● |
at
any time while the warrants are exercisable; |
● |
upon
not less than 30 days’ prior written notice of redemption to each warrant holder; |
● |
if,
and only if, the reported last sale price of the shares of common stock equals or exceeds $16.50 per share (as adjusted for stock
splits, stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30-day trading period ending on
the third business day prior to the notice of redemption to warrant holders (the “Force-Call Provision”), and |
● |
if,
and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such warrants
at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the
date of redemption. |
The
right to exercise will be forfeited unless the warrants are exercised prior to the date specified in the notice of redemption. On and
after the redemption date, a record holder of a warrant will have no further rights except to receive the redemption price for such holder’s
warrant upon surrender of such warrant.
The
redemption criteria for our warrants have been established at a price which is intended to provide warrant holders a reasonable premium
to the initial exercise price and provide a sufficient differential between the then-prevailing share price and the warrant exercise
price so that if the share price declines as a result of our redemption call, the redemption will not cause the share price to drop below
the exercise price of the warrants.
If
the Company calls the warrants for redemption as described above, management of the Company will have the option to require all holders
that wish to exercise warrants to do so on a “cashless basis.”
In
addition, if (x) the Company issues additional shares of Common Stock or equity-linked securities for capital raising purposes in connection
with the closing of the Initial Business Combination at an issue price or effective issue price of less than $9.50 per share of Common
Stock (with such issue price or effective issue price to be determined in good faith by the Company’s Board of Directors), (y)
the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available
for funding the Initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Common Stock
during the 20 trading day period starting on the trading day prior to the day on which the Company consummates the Initial Business Combination
(such price, the “Market Value”) is below $9.50 per share, the Warrant Price shall be adjusted (to the nearest cent) to be
equal to 115% of the Market Value, and the last sales price of the Common Stock that triggers the Company’s right to redeem the
Warrants pursuant to Section 6.1 below shall be adjusted (to the nearest cent) to be equal to 165% of the Market Value.
The
Private Placement Warrants, as well as any warrants underlying additional units the Company issues to the Sponsor, officers, directors,
initial stockholders or their affiliates in payment of working capital loans made to the Company, will be identical to the warrants underlying
the Units being offered in the Initial Public Offering.
NOTE
8 – INCOME TAXES
The
Company’s effective tax rate for the three months ended March 31, 2023 and 2022, was (12.2%) and 0%, respectively. The Company’s
effective tax rate differs from the statutory income tax rate of 21% primarily due to the recording of a full valuation allowance on
deferred tax assets.
The
Company has evaluated its income tax positions and has determined that it does not have any uncertain tax positions. The Company will
recognize interest and penalties related to any uncertain tax positions through its income tax expense.
The
Company files income tax returns in the U.S., Delaware and Massachusetts jurisdictions and is subject to examination by the various taxing
authorities since inception.
On
August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, which includes a 15% minimum tax on the adjusted
financial statement income of corporations with a three taxable year average annual adjusted financial statement income in excess of
$1 billion, a 1% excise tax on net stock repurchases made by publicly traded US corporations and several tax incentives to promote clean
energy. The alternative minimum tax and the excise tax are effective in taxable years beginning after December 31, 2022. While these
tax law changes have no immediate effect and are not expected to have a material adverse effect on our results of operations going forward,
we will continue to evaluate its impact as further information becomes available.
NOTE
9 – SUBSEQUENT EVENTS
Management
evaluated subsequent events and transactions that occurred after the balance sheet date, up to the date that the financial statements
were issued. Based upon this review, other than as set forth below, management did not identify any subsequent events that would have
required adjustment or disclosure in the financial statements.
Extension
Note Drawdowns
On
April 17, 2023, the Company effected the fifth drawdown of $125,000 under
the Extension Note and caused such sums to be deposited into the Trust Account in connection with the extension of the Termination
Date from April 17, 2023 to May 17, 2023. On May 16, 2023, the Company effected the sixth drawdown of $125,000 under the Extension
Note and caused such sums to be deposited into the Trust Account in connection with the extension of the Termination Date from May
17, 2023 to June 17, 2023. Such amounts will be distributed either to: (i) all of the holders of shares of Common Stock issued as
part of the units sold in the IPO upon the Company’s liquidation or (ii) holders of Public Shares who elect to have their
shares redeemed in connection with the consummation of an Initial Business Combination.
Special
Meeting of Stockholders
On
May 19, 2023, the Company filed a definitive proxy statement with the SEC to amend to amend its amended and restated certificate of
incorporation to (i) eliminate the limitation that the Company may not consummate an Initial Business Combination unless it has net
tangible assets of at least $5,000,001
upon consummation of such Initial Business Combination and (ii) extend the Termination Date from June 17, 2023 to the Charter
Extension Date (July 17, 2023) upon the deposit into the Trust Account of $65,000,
to be loaned to the Company by the Sponsor or one or more of its affiliates, members or third-party designees, and to allow the
Company, without another stockholder vote, to elect to extend the Termination Date to for up to five Additional Extensions, by
resolution of the Company’s board of directors, if requested by the Company’s Sponsor, and upon five days’ advance
notice prior to the applicable Termination Date, until December 17, 2023, or a total of up to six months after June 17, 2023, unless
the closing of an Initial Business Combination shall have occurred prior thereto, subject to the deposit of an additional $65,000
per Additional Extension into the Trust Account by the Sponsor or its affiliates, members or third-party designees. If the proposal
to extend the Termination Date is approved and effective, the Company’s stockholders may elect to redeem their shares of
Common Stock. An electing stockholder will be entitled to receive a per-share price, payable in cash, equal to the aggregate amount
then on deposit in the Trust Account, including interest (net of taxes payable), divided by the number of then-outstanding shares of
Common Stock issued as part of the units sold in the Initial Public Offering. This redemption right will apply to each public
stockholder regardless of whether and how such holder votes on the proposal. The removal from the Trust Account of such amounts
would reduce the amount remaining in the Trust Account and increase the percentage interest of the Company held by the Sponsor.