NOTES
TO CONDENSED FINANCIAL STATEMENTS
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 (“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 June 30, 2022, the Company had not commenced core operations. All activity for the period from March 1, 2021 (inception) through June
30, 2022 relates to the Company’s formation, raising funds through the initial public offering (“IPO”) and its search
for a target company, 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 will generate non-operating income in the form of interest income from the
proceeds derived from the IPO.
The
registration statement pursuant to which the Company registered its securities offered in the IPO was declared effective on September
14, 2021. On September 17, 2021, the Company consummated its IPO 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 IPO 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 its 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. 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 IPO 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 IPO 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 IPO 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.
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 the excess working capital available 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. If 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 based on prevailing interest rates, 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 IPO, 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.
We
will have until December 17, 2022, 15 months from the closing of the IPO, to consummate our initial business combination. However, if
we anticipate that we may not be able to consummate our initial business combination within 15 months, we may, by resolution of our board
of directors if requested by our Sponsor, extend the period of time to consummate an initial business combination up to two times, each
by an additional three months (for a total of up to 21 months to complete an initial business combination), subject to the deposit of
additional funds into the Trust Account by our Sponsor or its affiliates or designees as set out below. Our stockholders will not be
entitled to vote or redeem their shares in connection with any such extension. Pursuant to the terms of our amended and restated certificate
of incorporation, in order for the time available for us to consummate our initial business combination to be extended, our Sponsor or
its affiliates or designees, upon five days’ advance notice prior to the applicable deadline, must deposit into the Trust Account
$1,150,000 ($0.10 per unit, up to an aggregate of $2,300,000), on or prior to the date of the applicable deadline, for each three 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 the event that we receive notice from our Sponsor five days prior to the
applicable deadline of its wish for us to effect an extension, we intend to issue a press release announcing such intention at least
three days prior to the applicable deadline. In addition, we intend to issue a press release the day after the applicable deadline announcing
whether or not the funds had been timely deposited. Our Sponsor is not obligated to fund the Trust Account to extend the time for us
to complete our initial business combination. If we are unable to consummate an initial business combination within such time period,
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 Warrants will expire and will be worthless.
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.
Going
Concern and Management Liquidity Plans
As
of June 30, 2022, the Company had $214,155 in its operating bank account and working capital of $472,771. The Company’s liquidity
needs prior to the consummation of the IPO had been satisfied through proceeds from advances from a related party and from the issuance
of common stock. Although the Company believes that its current cash balance will provide the needed liquidity over the next few quarters
to satisfy current obligations, due to the reasons below, the Company may not have sufficient liquidity through the date of a business
combination.
The
accompanying unaudited condensed financial statements have been prepared on the basis that the Company 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 June 30, 2022, the
Company had not commenced any operations. All activity for the period from March 1, 2021 (inception) through June 30, 2022 related to
the Company’s formation, the IPO, and its search for a target company. 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 on cash and cash equivalents from the proceeds derived from its IPO. The Company’s ability to commence operations
is contingent upon consummating a business combination. The Company’s management has broad discretion with respect to the specific
application of the net proceeds of the IPO, 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, the Company’s ability to consummate its initial
business combination within the contractual time period is uncertain. The Company has until December 17, 2022, 15 months from the closing
of its IPO, to consummate its business combination. If the Company anticipates that it may not be able to consummate its initial business
combination by December 17, 2022, it may, by resolution of the Company’s board of directors and if requested by its Sponsor, extend
the period of time to consummate a business combination up to two times, each by an additional three months (for a total of up to 21
months to complete a business combination), subject to the deposit of additional funds into the Trust Account by the Company’s
Sponsor or its affiliates or designees. There is no assurance the Company will obtain the two three-month extensions beyond December
17, 2022, if needed. There is no assurance that the Company will successfully consummate a business combination by December 17, 2022,
or within the two three-month extension periods, if granted. Based on these circumstances, management has determined that these conditions
raise substantial doubt about the Company’s ability to continue as a going concern.
Accordingly,
the accompanying unaudited condensed financial statements have been prepared in conformity with accounting principles generally accepted
in the United States of America (“U.S. GAAP”) and contemplates continuation of the Company as a going concern and the realization
of assets and the satisfaction of liabilities in the normal course of business. The unaudited condensed financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS
Basis
of Presentation
The
accompanying unaudited condensed financial statements for the three and six months ended June 30, 2022, and the three months ended June
30, 2021, and the period from March 1, 2021 (inception) through June 30, 2021, have been prepared in accordance with U.S. GAAP and pursuant
to the rules and regulations of the Securities and Exchange Commission, and are presented on the same basis as the financial statements
included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “Annual Report”),
filed with the Securities and Exchange Commission on April 15, 2022. 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 for the interim periods presented, and the adjustments are of a normal and recurring nature. The financial results for any
interim period are not necessarily indicative of the results for the full year. The balance sheet information as of December 31, 2021,
was derived from the audited consolidated financial statements, but does not include all disclosures required by U.S. GAAP. The unaudited
condensed financial statements should be read in conjunction with the financial statements and notes thereto included in the Annual Report
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 unaudited condensed 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 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 June 30, 2022 or December 31, 2021.
Marketable
Securities Held in Trust Account
Following
the closing of the IPO 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 IPO 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 15 months from the closing of the IPO 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 15 months from the closing
of the IPO, the return of the funds held in the Trust Account to the public stockholders as part of redemption of the public shares.
The
Company classifies its Marketable Securities as held-to-maturity in accordance with ASC Topic 320 “Investments - Debt and Equity
Securities.” Held-to-maturity securities are those securities which the Company has the ability and intent to hold until maturity.
Held-to-maturity treasury securities are recorded at amortized cost on the accompanying condensed balance sheet and adjusted for the
amortization or accretion of premiums or discounts. When the Company’s investments held in the Trust Account are comprised of money
market securities, the investments are classified as trading securities. Gains and losses resulting from the change in fair value of
these securities is included in interest earned on investments held in the Trust Account in the accompanying unaudited condensed statement
of operations. The estimated fair values of investments held in the Trust Account are determined using available market information.
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
The
Company accounts for its 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 IPO.
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
IPO 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. For those tax positions deemed to be uncertain, the Company recognizes accrued interest
and penalties related to the associated unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and
no amounts accrued for interest and penalties as of June 30, 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.
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 June 30, 2022, the Company has not experienced
losses on this account. Additionally, the Company maintains cash balances with major financial institutions. Accordingly, the Company
does not believe it is exposed to significant risks on such amounts.
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 as of June
30, 2022 and December 31, 2021 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 June 30, 2022 | |
$ | 116,321,157 | | |
$ | 116,321,157 | | |
$ | - | | |
$ | - | |
Marketable securities held in Trust Account at December 31, 2021 | |
$ | 116,152,616 | | |
$ | 116,152,616 | | |
$ | - | | |
$ | - | |
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 similar to 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 80% for the redeemable public shares
and 20% for the non-redeemable shares, reflective of the respective participation rights, for the three and six months ended June 30,
2022.
The
loss per share presented in the statement of operations is based on the following:
SCHEDULE OF EARNINGS PER SHARE
| |
For the Three Months Ending June
30, 2022 | | |
For the Six Months Ending June
30, 2022 | |
Basic and diluted net loss per share: | |
| | | |
| | |
Numerator: | |
| | | |
| | |
Net loss applicable to Common Shares Subject to Redemption Including Accretion of Temporary Equity | |
$ | (152,272 | ) | |
$ | (344,350 | ) |
Denominator: | |
| | | |
| | |
Weighted-average common shares outstanding, basic and diluted, redeemable shares subject to redemption | |
| 11,500,000 | | |
| 11,500,000 | |
Basic and diluted net loss per share, redeemable shares subject to redemption | |
$ | (0.01 | ) | |
$ | (0.02 | ) |
Numerator: | |
| | | |
| | |
Net loss applicable to Non-redeemable Common Shares Including Accretion of Temporary Equity | |
$ | (38,068 | ) | |
$ | (86,088 | ) |
Denominator: | |
| | | |
| | |
Weighted-average common shares outstanding, basic and diluted, non-redeemable shares | |
| 2,875,000 | | |
| 2,875,000 | |
Basic and diluted net loss per share, non-redeemable shares | |
$ | (0.01 | ) | |
$ | (0.03 | ) |
| |
For the Three Months Ending
June
30, 2021 | | |
From
the Period of
March 1, 2021
(Inception) through
June 30, 2021 | |
Basic and diluted net loss per share: | |
| | | |
| | |
Numerator: | |
| | | |
| | |
Net loss | |
$ | (191 | ) | |
$ | (528 | ) |
Denominator: | |
| | | |
| | |
Weighted-average common shares outstanding, basic and diluted | |
| 2,500,000 | | |
| 2,500,000 | |
Basic and diluted net loss per share | |
$ | (0.00 | ) | |
$ | (0.00 | ) |
The
Company has not considered the effect of warrants and Rights sold in the IPO 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 periods 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.
On
August 5, 2020, the FASB issued Accounting Standards Update (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, which simplifies the accounting
for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on
an entity’s own equity. The ASU’s amendments are effective for public business entities that are not smaller reporting companies
for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. For all other entities, the amendments
are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The guidance may be
early adopted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company is currently
evaluating the impact of adopting this guidance.
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 IPO, 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).
As
of December 31, 2021, 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 IPO. Additionally, the Condensed Unaudited Balance Sheets at June 30, 2022, reflect deferred underwriting
commissions of $4,025,000 payable only upon completion of the Company’s initial business combination.
NOTE
4 – RELATED PARTY TRANSACTIONS
Sponsor
Shares
On
March 16, 2021, the Company’s Sponsor purchased 2,875,000 shares (the “Founder Shares”) of the Company’s common
stock for an aggregate price of $25,000.
Prior
to the effective date of the registration statement in connection with our IPO, 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, and vested immediately, with no impact on the Company’s
net loss. The Founder Shares do not have redemption rights and will be worthless unless the Company consummates its initial business
combination.
Private
Placement Warrants
The
Company’s 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 IPO. 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 IPO is held in trust.
Promissory
Note – Related Party
On
March 16, 2021, the Company issued an unsecured promissory note to the Sponsor, which was amended on March 27, 2022 (the “Promissory
Note”), pursuant to which the Company may borrow up to an aggregate principal amount of $300,000. 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. As of June 30, 2022, no amounts have been borrowed under the
Promissory Note and no such conversions have yet occurred.
Administrative
Support Agreement
The
Company entered into an agreement to pay the 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 a Business
Combination or the Company’s liquidation. During the three and six months ended June 30, 2022, the Company recognized expense related
to this agreement of $30,000 and $60,000, respectively. At June 30, 2022, $50,000 remained unpaid and is recorded as a component
of current liabilities on the Company’s Condensed Balance Sheet.
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 IPO. 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.
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 June 30, 2022 and December 31,
2021.
SCHEDULE OF COMMON STOCK REDEMPTION
| |
Common Shares Subject to Possible Redemption | |
| |
| |
Gross proceeds from IPO | |
$ | 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 on common stock subject to possible redemption | |
| 68,086 | |
Balance, June 30, 2022 | |
$ | 116,218,086 | |
NOTE
7 – STOCKHOLDERS’ DEFICIT
Preferred
and 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, par value $0.0001.
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 June 30, 2022 and December 31, 2021.
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
15 months from the closing of the IPO. 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 IPO.
NOTE
8 – INCOME TAXES
The
Company accounts for income taxes under ASC 740 – Income Taxes (“ASC 740”), which provides for an asset and liability
approach of accounting for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated
future tax consequences, using currently enacted tax laws, attributed to temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts calculated for income tax purposes.
The
Company had no material deferred tax assets as of June 30, 2022 and December 31, 2021. The Company’s effective income tax rate
for 2021 and 2022 was 27.3%
The
Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making
such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable
temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. The Company assessed
the need for a valuation allowance against its net deferred tax assets and determined a full valuation allowance is required as it is
more likely than not that all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent
upon the generation of future taxable income during the periods in which those temporary differences become deductible.
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 is subject to franchise tax filing requirements in the State of Delaware.
NOTE
9 – SUBSEQUENT EVENTS
Management
evaluated subsequent events and transactions that occurred after the balance sheet date, up to the date that the unaudited condensed
financial statements were issued. Based upon this review, other than the event(s) disclosed below, management did not identify any subsequent
events that would have required adjustment or disclosure in the unaudited condensed financial statements.
In
July 2022, the Company entered into finder’s agreements with two separate service providers to help identify targets for an initial
business combination. In connection with each agreement, the Company will be required to pay a finder’s fee, contingent on the
consummation of an initial business combination with a target that is introduced by the respective service provider. The finder’s
fees for the two agreements are 1.0% for one service provider, and 1.5% for the other service provider, of the sum of the consideration
delivered and paid to the target by the Company in connection with an initial business combination.