The accompanying notes are an integral part of
the unaudited condensed financial statements.
The accompanying notes are an integral part of
the unaudited condensed financial statements.
The accompanying notes are an integral part of
the unaudited condensed financial statements.
The accompanying notes are an integral part of
the unaudited condensed financial statements.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS
OPERATIONS
Nocturne Acquisition Corporation (the “Company”)
is a blank check company incorporated as a Cayman Islands exempted company on October 28, 2020. The Company was formed for the purpose
of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or
more businesses (“Business Combination”).
The Company is not limited to a particular industry
or geographic region for purposes of completing a Business Combination. While we may pursue an acquisition or a Business Combination target
in any business or industry, we intend to concentrate our efforts in identifying a target in the disruptive technology market with an
equity value of approximately $300 million to $1 billion. The Company is an early stage and emerging growth company and,
as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of March 31, 2022, the Company had not commenced
any operations. All activity through March 31, 2022 relates to the Company’s formation and initial public offering (the “Initial
Public Offering”), which is described below, and subsequent to the Initial Public Offering, identifying a target company for a
Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination,
at the earliest. The Company generates non-operating income in the form of interest income from the marketable securities held in the
Trust Account (as defined below).
The registration statement for the Company’s
Initial Public Offering was declared effective on March 29, 2021. On April 5, 2021, the Company consummated the Initial Public Offering
of 10,000,000 units at $10.00 per unit (the “Units” and, with respect to the ordinary shares included in the Units sold,
the “Public Shares”) generating gross proceeds of $100,000,000, which is described in Note 3.
Simultaneously with the closing of the
Initial Public Offering, the Company consummated the sale of 450,000 units (the “Private Placement Units”) at a price of
$10.00 per Private Placement Unit in a private placement (the “Private Placement”) to Nocturne Sponsor, LLC (the
“Sponsor”), generating gross proceeds of $4,500,000, which is described in Note 4.
Following the closing of the Initial Public
Offering on April 5, 2021, an amount of $101,000,000 ($10.10 per Unit) from the net proceeds of the sale of the Units in the Initial
Public Offering and the sale of the Private Placement Units was placed in a trust account (the “Trust Account”),
and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of
1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less, or in any open-ended
investment company that holds itself out as a money market fund meeting certain conditions of Rule 2a-7 of the Investment
Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the
distribution of the funds in the Trust Account to the Company’s shareholders, as described below.
On April 14, 2021, the underwriters exercised
their over-allotment option in full and purchased an additional 1,500,000 Units (the “Over-Allotment Units”), generating
gross proceeds of $15,000,000. In connection with the sale of the Over-Allotment Units, the underwriters agreed to waive the underwriting
commission equal to 2% of gross proceeds. On April 14, 2021, simultaneously with the sale of the Over-Allotment Units and in connection
with the underwriters’ waiver of the underwriting commission described above, the Company consummated a private sale of an additional
15,000 Private Placement Units to the Sponsor, generating gross proceeds of $150,000. The additional proceeds of $15,150,000 was
placed in the Trust Account bringing the grand total placed in the Trust Account to $116,150,000.
Transaction costs amounted to $6,597,115, consisting
of $2,000,000 of underwriting fees, $4,025,000 of deferred underwriting fees and $572,115 of other offering costs.
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Units,
although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There
is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete its initial
Business Combination with one or more target businesses that together have a fair market value equal to at least 80% of the net assets
held in the Trust Account (excluding any deferred underwriting commissions held in the Trust Account and taxes payable on the interest
earned on the Trust Account) at the time of the agreement to enter into a Business Combination. The Company will only complete a Business
Combination if the post-transaction company owns or acquires 50% or more of the issued and outstanding voting securities of the target
or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment
company under the Investment Company Act.
The Company will provide its holders of the outstanding
Public Shares (the “public shareholders”) with the opportunity to redeem all or a portion of their Public Shares upon the
completion of a Business Combination either (i) in connection with a shareholder meeting called to approve the Business Combination
or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination
or conduct a tender offer will be made by the Company. The shareholders will be entitled to redeem their shares for a pro rata portion
of the amount held in the Trust Account (initially $10.10 per share), calculated as of two business days prior to the completion of a
Business Combination, including any pro rata interest earned on the funds held in the Trust Account and not previously released to the
Company to pay its tax obligations.
NOCTURNE ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
The Company will proceed with a Business Combination
only if the Company has net tangible assets of at least $5,000,001 either immediately prior to or upon consummation of the initial Business
Combination and after payment of underwriters’ fees and commissions and, if the Company seeks shareholder approval in connection
with a Business Combination, it receives an ordinary resolution under Cayman Islands law approving a Business Combination, which requires
the affirmative vote of a majority of the shareholders who vote at a general meeting of the Company. If a shareholder vote is not required
under applicable law or stock exchange listing requirements and the Company does not decide to hold a shareholder vote for business or
other reasons, the Company will, pursuant to its Amended and Restated Memorandum and Articles of Association, conduct the redemptions
pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”), and file tender offer documents containing
substantially the same information as would be included in a proxy statement with the SEC prior to completing a Business Combination.
If the Company seeks shareholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares
(as defined in Note 5), Private Placement Shares (as defined in Note 4) and any Public Shares purchased in or after the Initial Public
Offering in favor of approving a Business Combination and to waive its redemption rights with respect to any such shares in connection
with a shareholder vote to approve a Business Combination. However, in no event will the Company redeem its Public Shares in an amount
that would cause its net tangible assets to be less than $5,000,001. Additionally, each public shareholder may elect to redeem its Public
Shares irrespective of whether they vote for or against a Business Combination.
Notwithstanding the foregoing, if the Company
seeks shareholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Company’s
Amended and Restated Memorandum and Articles of Association provides that a public shareholder, together with any affiliate of such shareholder
or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with
respect to more than an aggregate of 15% of the Public Shares without the Company’s prior written consent.
The Sponsor has agreed (a) to waive its
redemption rights with respect to any Founder Shares, Private Placement Shares and Public Shares held by it in connection with the completion
of a Business Combination and (b) not to propose an amendment to the Amended and Restated Memorandum and Articles of Association
(i) to modify the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company does
not complete a Business Combination within the Combination Period (as defined below) or (ii) with respect to any other provision
relating to shareholders’ rights or pre-initial business combination activity, unless the Company provides the public shareholders
with the opportunity to redeem their Public Shares in conjunction with any such amendment and (iii) to waive its rights to liquidating
distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business Combination.
The Company will have until July 5, 2022, the
extended liquidation date (the “Combination Period”) to complete a Business Combination. An aggregate of $1,150,000 was deposited
by Mindfulness Capital Management Limited into the trust account of the Company which enables the Company to extend the period of time
it has to consummate its initial business combination from the original liquidation date of April 5, 2022 to the extended liquidation
date of July 5, 2022. The Company may, by resolution of the Company’s board of directors if requested by our Sponsor, extend the
Combination Period by an additional three months, or October 5, 2022, subject to the Sponsor depositing additional funds into the Trust
Account. Pursuant to the terms of the Amended and Restated Memorandum and Articles of Association, in order for the Combination Period
to be extended, our Sponsor or its affiliates or designees, upon five days advance notice prior to October 5, 2022, must deposit into
the Trust Account $1,150,000 ($0.10 per unit) on or prior to the date of the applicable deadline. If the Company is unable to complete
a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding
up, (ii) as promptly as reasonably possible but no more than 10 business days thereafter, redeem 100% of the outstanding Public Shares,
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned (less
up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will
completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions,
if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders
and the Company’s board of directors, dissolve and liquidate, subject in each case to its obligations under Cayman Islands law to
provide for claims of creditors and the requirements of other applicable law.
The Sponsor has agreed to waive its liquidation
rights with respect to the Founder Shares and Private Placement Shares if the Company fails to complete a Business Combination within
the Combination Period. However, if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares will
be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination
Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account
in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will
be included with the funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event
of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the
Initial Public Offering price per Unit ($10.00).
NOCTURNE ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
The Sponsor has agreed that it will be liable
to the Company, if and to the extent any claims by a third party for services rendered or products sold to the Company, or by a prospective
target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account
to below (1) $10.10 per Public Share or (2) such lesser amount per Public Share held in the Trust Account as of the date of
the liquidation of the Trust Account due to reductions in the value of trust assets, in each case net of the amount of interest which
may be withdrawn to pay taxes. This liability will not apply with respect to any claims by a third party who executed a waiver of any
and all rights to seek access to the Trust Account nor will it apply to any claims under the Company’s indemnity of the underwriters
of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities
Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not
be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor
will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (other than
the Company’s independent auditors), prospective target businesses or other entities with which the Company does business, execute
agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Risks and Uncertainties
Management continues to evaluate the impact of
the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s
financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as
of the date of the financial statements. The financial statements do not include any adjustments that might result from the outcome of
this uncertainty.
In February 2022, the Russian Federation commenced
a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted
economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy
are not determinable as of the date of these unaudited condensed financial statements and the specific impact on the Company’s financial
condition, results of operations, and cash flows is also not determinable as of the date of these unaudited condensed financial statements.
Liquidity; Going Concern
As of March 31, 2022, the Company had approximately
$0.1 million in its operating bank account.
The Company’s liquidity needs to date have
been satisfied through a payment of $25,000 from the Sponsor to cover certain expenses on behalf of the Company in exchange for the issuance
of the Founder Shares and the proceeds from the consummation of the Private Placement not held in the Trust Account to provide working
capital needed to identify and seek to consummate a Business Combination.
On October 27, 2021, the Sponsor committed to
provide the Company with an aggregate of $150,000 in loans through July 5, 2022, the liquidation date which was extended from April 5,
2022 in connection with the extension of the Combination Period. The loans, if issued, will be non-interest bearing, unsecured and will
be repaid upon the consummation of a Business Combination. If the Company does not consummate a Business Combination, all amounts loaned
to the Company will be forgiven except to the extent that the Company has funds available outside of the Trust Account to repay such loans.
In order to finance transaction costs in connection
with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may,
but are not obligated to, provide the Company Working Capital Loans (as defined in Note 5). As of March 31, 2022 and December 31, 2021,
the Company had no borrowings under the Working Capital Loans.
If the Company’s estimate of the costs
of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual
amount necessary to do so, the Company may have insufficient funds available to operate our business prior to our initial Business Combination.
Moreover, the Company may need to obtain additional financing either to complete its Business Combination or because the Company has
become obligated to redeem a significant number of its Public Shares upon completion of its Business Combination, in which case the Company
may issue additional securities or incur debt in connection with such Business Combination.
In connection with the Company’s assessment
of going concern considerations in accordance with ASC Subtopic 205-40, Presentation of Financial Statements – Going Concern, pursuant
to its Amended and Restated Certificate of Incorporation, the Company has until July 5, 2022 to consummate a Business Combination. If
a Business Combination is not consummated by this date, or its stockholders have not approved an additional extension, there will be
a mandatory liquidation and subsequent dissolution of the Company. Although the Company intends to consummate a Business Combination
on or before July 5, 2022, and may seek an extension, it is uncertain that the Company will be able to consummate a Business Combination,
or obtain an extension, by this time. This, as well as its current liquidity condition, raise substantial doubt about the Company’s
ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company
be required to liquidate after July 5, 2022.
NOCTURNE ACQUISITION
CORPORATION
NOTES TO CONDENSED
FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
NOTE 2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying
unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United
States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article
8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance
with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly,
they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations,
or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting
of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows
for the periods presented.
The accompanying
unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K as filed with
the SEC on March 31, 2022. The interim results for the three months ended March 31, 2022 are not necessarily indicative of the results
to be expected for the year ending December 31, 2022 or for any future 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, 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 shareholder 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.
NOCTURNE
ACQUISITION CORPORATION
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2022
(Unaudited)
Use of Estimates
The preparation
of the condensed financial statements in conformity with 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 condensed
financial statements and the reported amounts of revenues and expenses during the reporting periods.
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 condensed 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, 2022 and December 31, 2021.
Offering Costs
Offering costs consist
of legal, accounting and other expenses incurred through the Initial Public Offering that were directly related to the Initial Public
Offering Upon completion of the Initial Public Offering, offering costs of $6,574,881 allocated to the Public Shares were initially charged
to temporary equity and then accreted to ordinary shares subject to redemption; offering costs of $22,234 allocated to the Private Placement
Units were charged to additional paid-in capital.
Marketable
Securities Held in Trust Account
At March 31, 2022
and December 31, 2021, substantially all of the assets held in the Trust Account were held in money market funds, which are invested
primarily in U.S. Treasury securities. The Company’s investments held in the Trust Account are classified as trading securities.
Trading securities are presented on the balance sheet at fair value at the end of each reporting period. Gains and losses resulting from
the change in fair value of investments held in Trust Account are included in interest earned on marketable securities held in Trust
Account in the accompanying condensed statements of operations. The estimated fair values of investments held in Trust Account are determined
using available market information.
Ordinary Shares
Subject to Possible Redemption
The Company accounts
for its ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”)
Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption are classified as a liability
instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption
rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within
the Company’s control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’
equity. The Company’s Ordinary shares feature certain redemption rights that are considered to be outside of the Company’s
control and subject to occurrence of uncertain future events. Accordingly, Ordinary shares subject to possible redemption are presented
at redemption value as temporary equity, outside of the shareholders’ deficit section of the Company’s balance sheets.
The Company recognizes
changes in redemption value immediately as they occur and adjusts the carrying value of redeemable ordinary shares to equal the redemption
value at the end of each reporting period. Immediately upon the closing of the Initial Public Offering, the Company recognized the remeasurement
from initial book value to redemption value. The change in the carrying value of redeemable ordinary shares resulted in charges against
additional paid-in capital and accumulated deficit.
At March 31, 2022 and December 31, 2021,
the ordinary shares subject to redemption reflected in the condensed balance sheet are reconciled in the following table:
Gross proceeds | |
$ | 115,000,000 | |
Less: | |
| | |
Ordinary shares issuance costs | |
| (6,574,881 | ) |
Plus: | |
| | |
Remeasurement of carrying value
to redemption value | |
| 7,732,488 | |
Ordinary shares subject to possible
redemption, December 31, 2021 | |
$ | 116,157,607 | |
Plus: | |
| | |
Remeasurement of carrying value
to redemption value | |
| 11,697 | |
Ordinary shares subject to possible
redemption, March 31, 2022 | |
$ | 116,169,304 | |
NOCTURNE ACQUISITION
CORPORATION
NOTES TO CONDENSED
FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
Income Taxes
The Company accounts
for income taxes under ASC 740, “Income Taxes” (“ASC 740”). ASC 740 requires the recognition of deferred tax
assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities
and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation
allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC 740 also clarifies
the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition
threshold and measurement process for financial statement recognition and measurement of a tax position 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, 2022 and December 31, 2021.
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.
The Company is considered
an exempted Cayman Islands Company and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands
or the United States. As such, the Company’s tax provision was zero for the periods presented.
Net Loss per
Ordinary Share
The Company complies
with accounting and disclosure requirements of ASC Topic 260, “Earnings Per Share”. Net loss per ordinary share is computed
by dividing net loss by the weighted average number of ordinary shares outstanding for the period. The remeasurement associated with
the redeemable ordinary shares is excluded from loss per ordinary share as the redemption amount approximates fair value.
The calculation
of diluted loss per ordinary share does not consider the effect of the rights issued in connection with the (i) Initial Public Offering,
and (ii) the private placement that convert into 1,196,500 ordinary shares since the conversion of the rights into ordinary shares
is contingent upon the occurrence of future events. As of March 31, 2022 and 2021, the Company did not have any dilutive securities or
other contracts that could, potentially, be exercised or converted into ordinary shares and then share in the earnings of the Company.
As a result, diluted net loss per ordinary share is the same as basic net income loss per ordinary share for the periods presented.
The following table
reflects the calculation of basic and diluted net loss per ordinary share (in dollars, except per share amounts):
| |
Three
Months Ended March 31, | |
| |
2022 | | |
2021 | |
Basic and diluted net loss per ordinary share | |
| | |
| |
Numerator: | |
| | |
| |
Allocation of net loss | |
$ | (193,922 | ) | |
$ | — | |
Denominator: | |
| | | |
| | |
Basic and diluted weighted average
shares outstanding | |
| 14,840,000 | | |
| 2,500,000 | 2 |
Basic and diluted net loss per ordinary
share | |
$ | (0.01 | ) | |
$ | — | |
Concentration
of Credit Risk
Financial instruments
that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at
times may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on these accounts.
Fair Value
of Financial Instruments
The fair value of
the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,”
approximates the carrying amounts represented in the accompanying condensed balance sheets, primarily due to their short-term nature.
2 | Excludes
375,000 ordinary shares that were subject to forfeiture as a result of the full exercise of the over-allotment option by the underwriters. |
NOCTURNE ACQUISITION
CORPORATION
NOTES TO CONDENSED
FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
Fair Value
Measurements
The Company follows
the guidance in ASC Topic 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting
period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The fair value of
the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received
in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between
market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks
to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs
(internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to
classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
Level 1: |
Quoted prices
in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions
for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. |
|
|
Level 2: |
Observable inputs other
than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities
and quoted prices for identical assets or liabilities in markets that are not active. |
|
|
Level 3: |
Unobservable inputs based
on our assessment of the assumptions that market participants would use in pricing the asset or liability. |
Recent Accounting
Standards
Management does
not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material
effect on the Company’s condensed financial statements.
NOTE 3. PUBLIC
OFFERING
Pursuant to the
Initial Public Offering, the Company sold 11,500,000 Units, inclusive of 1,500,000 Units sold to underwriters on April 14, 2021 upon
the underwriters’ election to fully exercise their over-allotment option, at a purchase price of $10.00 per Unit. Each Unit consists
of one ordinary share and one right (“Public Right”). Each Public Right entitles the holder to receive one-tenth of one ordinary
share at the closing of a Business Combination (see Note 7).
NOTE 4. PRIVATE
PLACEMENT
Simultaneously with
the closings of the Initial Public Offering and the sale over the Over-Allotment Units, the Sponsor purchased an aggregate of 465,000
Private Placement Units at a price of $10.00 per Private Placement Unit, for an aggregate purchase price of $4,650,000. Each Private
Placement Unit consists of one ordinary share (“Private Placement Share”) and one right (“Private Placement Right”).
Each Private Placement Right entitles the holder to receive one-tenth of one ordinary share at the closing of a Business Combination.
A portion of the proceeds from the sale of the Private Placement Units were added to the net proceeds from the Initial Public Offering
held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the
sale of the Private Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law), and
the Private Placements Units and all underlying securities will expire worthless.
NOCTURNE ACQUISITION
CORPORATION
NOTES TO CONDENSED
FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
NOTE 5. RELATED
PARTY TRANSACTIONS
Founder Shares
In November 2020,
the Sponsor paid $25,000 to cover certain offering costs of the Company in consideration for 2,875,000 of the Company’s ordinary
shares (the “Founder Shares”). The Founder Shares included an aggregate of up to 375,000 shares subject to forfeiture by
the Sponsor to the extent that the underwriters’ over-allotment was not exercised in full or in part, so that the Sponsor would
collectively own 20% of the Company’s issued and outstanding shares after the Initial Public Offering (assuming the Sponsor did
not purchase any Public Shares in the Initial Public Offering and excluding the Private Placement Shares). As a result of the underwriters’
election to fully exercise their over-allotment option on April 14, 2021, no Founder Shares are currently subject to forfeiture.
The Sponsor has
agreed not to transfer, assign or sell any of the Founder Shares (except to certain permitted transferees) until, with respect to 50%
of the Founder Shares, the earlier of nine months after the date of the consummation of a Business Combination and the date on which
the closing price of the Company’s ordinary shares equals or exceeds $12.50 per share for any 20 trading days within a 30-trading
day period following the consummation of a Business Combination and, with respect to the remaining 50% of the Founder Shares, nine months
after the date of the consummation of a Business Combination, or earlier in each case if, subsequent to a Business Combination, the Company
completes a liquidation, merger, stock exchange or other similar transaction which results in all of the shareholders having the right
to exchange their ordinary shares for cash, securities or other property.
Administrative
Services Agreement
The Company entered
into an agreement, commencing on March 30, 2021 through the earlier of the Company’s consummation of a Business Combination
and its liquidation, to pay the Sponsor a total of $10,000 per month for office space, administrative and support services. The accrued
balance of these fees totaled $120,000 as of March 31, 2022 and $90,000 as of December 31, 2021.
Promissory
Note — Related Party
On November 16,
2020, the Sponsor issued an unsecured promissory note to the Company (the “Promissory Note”), pursuant to which the Company
could borrow up to an aggregate principal amount of $300,000. The Promissory Note was non-interest bearing and payable on the earlier
of (i) June 30, 2021 or (ii) the consummation of the Initial Public Offering. The outstanding balance under the Promissory
Note was repaid in its entirety at the closing of the Initial Public Offering. Borrowings are no longer available under the Promissory
Note.
Related Party
Loans
In order to finance
transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s
directors and officers may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”).
If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account
released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the
event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the
Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing,
the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans.
The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s
discretion, up to $1,500,000 of such Working Capital Loans may be convertible into units of the post-Business Combination entity at a
price of $10.00 per unit. The units would be identical to the Private Placement Units. As of March 31, 2022 and December 31, 2021, there
were no amounts outstanding under the Working Capital Loans.
On October 27, 2021,
the Sponsor committed to provide the Company with an aggregate of $150,000 in loans through July 5, 2022, the extended liquidation date.
The loans, if issued, will be non-interest bearing, unsecured and will be repaid upon the consummation of a Business Combination. If
the Company does not consummate a Business Combination, all amounts loaned to the Company will be forgiven except to the extent that
the Company has funds available outside of the Trust Account to repay such loans. As of March 31, 2022 and December 31, 2021, there were
no loans issued under this commitment.
NOCTURNE ACQUISITION
CORPORATION
NOTES TO CONDENSED
FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
NOTE 6. COMMITMENTS AND
CONTINGENCIES
Registration
Rights
Pursuant to a registration
rights agreement entered into on March 30, 2021, the holders of the Founder Shares, Private Placement Units (and their underlying securities)
and any Units that may be issued upon conversion of the Working Capital Loans (and underlying securities) are entitled to registration
rights requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to the
ordinary shares). The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company
register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration
statements filed subsequent to the completion of a Business Combination and rights to require the Company to register for resale such
securities pursuant to Rule 415 under the Securities Act. The registration rights agreement does not contain liquidated damages
or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company will bear the expenses
incurred in connection with the filing of any such registration statements.
Underwriting
Agreement
The Company granted the underwriters a 45 day
option to purchase up to 1,500,000 additional Units to cover over-allotment at the Initial Public Offering price, less the underwriter
discounts and commissions. On April 14, 2021, the underwriters elected to fully exercise the over-allotment option to purchase an additional
1,500,000 Units at a price of $10.00 per Unit.
Consulting
Agreement
In January 2021, the Company entered into a consulting
arrangement for investor relations and other consulting services. The agreement provided for an up-front fee of $10,000 which was paid
at the closing of the Initial Public Offering, and an aggregate fee of $100,000 payable upon completion of a Business Combination. $50,000
is payable if the agreement is terminated prior to the Business Combination. For the three months ended March 31, 2021, the Company did
not incur any fees for these services.
Service Provider
Agreements
From time to time
the Company has entered into and may enter into agreements with various services providers and advisors, including investment banks,
to help identify targets, negotiate terms of potential Business Combinations, consummate a Business Combination and/or provide other
services. In connection with these agreements, the Company may be required to pay such service providers and advisors fees in connection
with their services to the extent that certain conditions, including the closing of a potential Business Combination, are met. If a Business
Combination does not occur, the Company would not expect to be required to pay these contingent fees. There can be no assurance that
the Company will complete a Business Combination.
Right of First
Refusal
Subject to certain
conditions, the Company will grant Chardan Capital Markets, for a period of 12 months after the date of the consummation of a Business
Combination, a right of first refusal to act as book running manager, with at least 30% of the economics, for any and all future public
and private equity and debt offerings. In accordance with FINRA Rule 5110(f)(2)(E)(i), such right of first refusal shall not have
a duration of more than three years from the effective date of the registration statement.
NOCTURNE ACQUISITION
CORPORATION
NOTES TO CONDENSED
FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
NOTE 7. SHAREHOLDERS’
DEFICIT
Preference
Shares — The Company is authorized to issue 5,000,000 preference shares with a par value of $0.0001 per share, with such
designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors.
As of March 31, 2022 and December 31, 2021, there were no preference shares issued or outstanding.
Ordinary Shares
— The Company is authorized to issue 500,000,000 ordinary shares, with a par value of $0.0001 per share. Holders of ordinary
shares are entitled to one vote for each share. At March 31, 2022 and December 31, 2021, there were 3,340,000 ordinary shares issued
and outstanding, excluding 11,500,000 ordinary shares subject to possible redemption which are presented as temporary equity.
Rights — Each
holder of a right will receive one-tenth (1/10) of one ordinary share upon consummation of a Business Combination, even if the holder
of such right redeemed all ordinary shares held by it in connection with a Business Combination. No additional consideration will be
required to be paid by a holder of Public Rights in order to receive its additional shares upon consummation of a Business Combination,
as the consideration related thereto has been included in the unit purchase price paid for by investors in the Initial Public Offering.
If the Company enters into a definitive agreement for a Business Combination in which the Company will not be the surviving entity, the
definitive agreement will provide for the holders of Public Rights to receive the same per share consideration the holders of the ordinary
shares will receive in the transaction on an as-converted into ordinary share basis, and each holder of a Public Right will be required
to affirmatively convert its Public Rights in order to receive the 1/10 share underlying each Public Right (without paying any additional
consideration) upon consummation of a Business Combination. More specifically, the Public Right holder will be required to indicate its
election to convert the Public Rights into underlying shares as well as to return the original rights certificates to the Company.
If the Company is
unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account,
holders of Public Rights will not receive any of such funds with respect to their Public Rights, nor will they receive any distribution
from the Company’s assets held outside of the Trust Account with respect to such Public Rights, and the Public Rights will expire
worthless. Further, there are no contractual penalties for failure to deliver securities to the holders of the Public Rights upon consummation
of a Business Combination. Additionally, in no event will the Company be required to net cash settle the rights. Accordingly, the rights
may expire worthless.
NOTE 8. FAIR
VALUE MEASUREMENTS
The following table
presents information about the Company’s assets that are measured at fair value on a recurring basis at March 31, 2022 and December
31, 2021 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
| |
| | |
March
31, | | |
December
31, | |
Description | |
Level | | |
2022 | | |
2021 | |
Assets: | |
| | |
| | |
| |
Marketable securities held in Trust Account | |
| 1 | | |
$ | 116,169,304 | | |
$ | 116,157,607 | |
NOTE 9. SUBSEQUENT
EVENTS
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that the condensed financial statements were issued. On April 5, 2022, the Company
entered into a $1,150,000 promissory note with Mindfulness Capital Management Limited, a Cayman Islands exempted company for the purpose
of extending the period of time the Company has to consummate its initial business combination to July 5, 2022. There were no other subsequent
events identifies that would have required adjustment or disclosure in the condensed financial statements.