Item
1. Financial Statements
RELATIVITY
ACQUISITION CORP.
CONDENSED BALANCE SHEETS
| |
June 30, 2022 | | |
December 31, 2021 | |
Assets | |
(Unaudited) | | |
| |
Current assets: | |
| | |
| |
Cash | |
$ | 1,012,388 | | |
$ | 42,194 | |
Deferred offering costs | |
| — | | |
| 2,154,011 | |
Prepaid expense | |
| 305,464 | | |
| 5,000 | |
Due from sponsor | |
| 3,047 | | |
| — | |
Total current assets | |
| 1,320,899 | | |
| 2,201,205 | |
Investment held in Trust Account | |
| 146,836,819 | | |
| — | |
Total Assets | |
$ | 148,157,718 | | |
$ | 2,201,205 | |
| |
| | | |
| | |
Liabilities, Redeemable Common Stock, and Stockholders’ (Deficit) Equity | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Due to related party | |
$ | — | | |
$ | 25,000 | |
Accrued costs and expenses | |
| 75,000 | | |
| 87,641 | |
Income tax payable | |
| 23,482 | | |
| — | |
Franchise tax payable | |
| 100,000 | | |
| 1,505 | |
Promissory note – related party | |
| — | | |
| 96,763 | |
Total current liabilities | |
| 198,482 | | |
| 210,909 | |
Warrant liabilities | |
| 1,353,119 | | |
| — | |
Total Liabilities | |
| 1,551,601 | | |
| 210,909 | |
| |
| | | |
| | |
Commitments and Contingencies (Note 6) | |
| | | |
| | |
Class A common stock, $0.0001 par value; 100,000,000 shares authorized; 14,375,000 and 0 shares subject to possible redemption as of June 30, 2022 and December 31, 2021, respectively, at a redemption value of $10.21 per share | |
| 146,713,337 | | |
| — | |
| |
| | | |
| | |
Stockholders’ (Deficit) Equity: | |
| | | |
| | |
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding as of June 30, 2022 and December 31, 2021 | |
| — | | |
| — | |
Class A common stock, $0.0001 par value; 100,000,000 shares authorized; 653,750 and 0 shares issued and outstanding as of June 30, 2022 and December 31, 2021 (excluding 14,375,000 shares subject to possible redemption), respectively | |
| 65 | | |
| — | |
Class B common stock, $0.0001 par value; 10,000,000 shares authorized; 3,593,750 shares issued and outstanding as of June 30, 2022 and December 31, 2021 | |
| 359 | | |
| 359 | |
Additional paid-in capital | |
| — | | |
| 1,999,509 | |
Share subscription receivable | |
| — | | |
| (2,470 | ) |
Accumulated deficit | |
| (107,644 | ) | |
| (7,102 | ) |
Total Stockholder’s (Deficit) Equity | |
| (107,220 | ) | |
| 1,990,296 | |
Total Liabilities, Redeemable Common Stock and Stockholders’ (Deficit) Equity | |
$ | 148,157,718 | | |
$ | 2,201,205 | |
The
accompanying notes are an integral part of these unaudited condensed financial statements.
RELATIVITY
ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
| |
For the three months ended June 30, | | |
For the six
months ended June 30, | | |
For the period
from April 13,
2021 (inception) through June 30, | |
| |
2022 | | |
2022 | | |
2021 | |
Formation and operating costs | |
$ | 225,293 | | |
$ | 619,041 | | |
$ | 5,497 | |
Loss from operations | |
| (225,293 | ) | |
| (619,041 | ) | |
| (5,497 | ) |
Other income (expense): | |
| | | |
| | | |
| | |
Change in fair value of warrant liabilities | |
| 1,562,005 | | |
| 3,456,769 | | |
| — | |
Interest income on investment held in Trust Account | |
| 197,992 | | |
| 211,819 | | |
| — | |
Warrant issuance cost | |
| — | | |
| (125,175 | ) | |
| — | |
Total Other income (expense),
net | |
| 1,759,997 | | |
| 3,543,413 | | |
| — | |
| |
| | | |
| | | |
| | |
Income before provision for income taxes | |
| 1,534,704 | | |
| 2,924,372 | | |
| (5,497 | ) |
Provision for income taxes | |
| (23,482 | ) | |
| (23,482 | ) | |
| — | |
Net income (loss) | |
$ | 1,511,222 | | |
$ | 2,900,890 | | |
$ | (5,497 | ) |
| |
| | | |
| | | |
| | |
Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption | |
| 15,028,750 | | |
| 11,209,289 | | |
| — | |
Basic and diluted net income (loss) per common stock, Class A common stock subject to possible redemption | |
$ | 0.08 | | |
$ | 0.20 | | |
$ | — | |
Basic and diluted weighted average shares outstanding, Class B common stock | |
| 3,593,750 | | |
| 3,474,620 | | |
| 3,125,000 | |
Basic and diluted net income (loss) per common stock, Class B common stock | |
$ | 0.08 | | |
$ | 0.20 | | |
$ | (0.00 | ) |
Diluted weighted average shares outstanding, Class A common stock subject to possible redemption | |
| 3,593,750 | | |
| 3,593,750 | | |
| — | |
Diluted net income (loss) per common stock, Class B common stock | |
$ | 0.08 | | |
$ | 0.19 | | |
$ | — | |
The
accompanying notes are an integral part of these unaudited condensed financial statements.
RELATIVITY
ACQUISITION CORP.
UNAUDITED
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ (DEFICIT) EQUITY
FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2022
| |
Class A Common Stock | | |
Class B Common Stock | | |
Additional Paid-in | | |
Share Subscription | | |
Accumulated | | |
Total
Stockholders’
(Deficit) | |
| |
Share | | |
Amount | | |
Share | | |
Amount | | |
Capital | | |
Receivable | | |
Deficit | | |
Equity | |
Balance as of December 31, 2021 | |
| — | | |
$ | — | | |
| 3,593,750 | | |
$ | 359 | | |
$ | 1,999,509 | | |
$ | (2,470 | ) | |
$ | (7,102 | ) | |
$ | 1,990,296 | |
Sale of 653,750 private placement units, net of private warrants liability | |
| 653,750 | | |
| 65 | | |
| — | | |
| — | | |
| 6,327,803 | | |
| — | | |
| — | | |
| 6,327,868 | |
Payment of subscription receivable | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 2,470 | | |
| — | | |
| 2,470 | |
Accretion for Class A common stock to redemption amount | |
| — | | |
| — | | |
| — | | |
| — | | |
| (8,327,312 | ) | |
| — | | |
| (2,913,095 | ) | |
| (11,240,407 | ) |
Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 1,389,668 | | |
| 1,389,668 | |
Balance as of March 31, 2022 | |
| 653,750 | | |
$ | 65 | | |
| 3,593,750 | | |
$ | 359 | | |
$ | — | | |
$ | — | | |
$ | (1,530,529 | ) | |
$ | (1,530,105 | ) |
Remeasurement for Class A common stock to redemption amount | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (88,337 | ) | |
| (88,337 | ) |
Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 1,511,222 | | |
| 1,511,222 | |
Balance as of June 30, 2022 | |
| 653,750 | | |
$ | 65 | | |
| 3,593,750 | | |
$ | 359 | | |
$ | — | | |
$ | — | | |
$ | (107,644 | ) | |
$ | (107,220 | ) |
FOR
THE PERIOD FROM APRIL 13, 2021 (INCEPTION) THROUGH JUNE 30, 2021
| |
Class A Common Stock | | |
Class B Common Stock | | |
Additional Paid-in | | |
Share Subscription | | |
Accumulated | | |
Total
Stockholders’ | |
| |
Share | | |
Amount | | |
Share | | |
Amount | | |
Capital | | |
Receivable | | |
Deficit | | |
Equity | |
Balance as of April 13, 2021 (inception) | |
| — | | |
$ | — | | |
| — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
Class B common stock issued to the initial stockholder | |
| — | | |
| — | | |
| 3,593,750 | | |
| 359 | | |
| 24,641 | | |
| — | | |
| — | | |
| 25,000 | |
Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (5,497 | ) | |
| (5,497 | ) |
Balance as of June 30, 2021 | |
| — | | |
$ | — | | |
| 3,593,750 | | |
$ | 359 | | |
$ | 24,641 | | |
$ | — | | |
$ | (5,497 | ) | |
$ | 19,503 | |
The
accompanying notes are an integral part of these unaudited condensed financial statements.
RELATIVITY
ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
| |
For the six
months ended
June 30, | | |
For the period
from April 13,
2021 (inception) through June 30, | |
| |
2022 | | |
2021 | |
Cash flows from operating activities: | |
| | |
| |
Net income (loss) | |
$ | 2,900,890 | | |
$ | (5,497 | ) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |
| | | |
| | |
Formation and operating costs paid by related party | |
| — | | |
| 2,119 | |
Interest income on investment held in Trust Account | |
| (211,819 | ) | |
| — | |
Warrant issuance cost | |
| 125,175 | | |
| — | |
Change in fair value of derivative warrant liabilities | |
| (3,456,769 | ) | |
| — | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Prepaid expense | |
| (300,464 | ) | |
| — | |
Due from sponsor | |
| (3,047 | ) | |
| — | |
Accrued costs and expenses | |
| 75,000 | | |
| — | |
Income tax payable | |
| 121,977 | | |
| — | |
Net cash used in operating activities | |
| (749,057 | ) | |
| (3,378 | ) |
Cash flows from investing activities: | |
| | | |
| | |
Investment of cash in Trust Account | |
| (146,625,000 | ) | |
| — | |
Net cash used in investing activities | |
| (146,625,000 | ) | |
| — | |
Cash flows from financing activities: | |
| | | |
| | |
Proceeds from initial public offering, net of underwriters’ discount | |
| 142,312,500 | | |
| — | |
Proceeds from private placement units | |
| 6,537,500 | | |
| — | |
Proceeds from issuance of promissory note – related party | |
| 111,800 | | |
| 100,000 | |
Proceeds from payment of share subscription receivable | |
| 2,470 | | |
| — | |
Payment of promissory note – related party | |
| (208,563 | ) | |
| (5,356 | ) |
Payment of offering costs | |
| (411,456 | ) | |
| — | |
Net cash provided by financing activities | |
| 148,344,251 | | |
| 94,644 | |
Net change in cash | |
| 970,194 | | |
| 91,266 | |
Cash, beginning of the period | |
| 42,194 | | |
| — | |
Cash, end of the period | |
$ | 1,012,388 | | |
$ | 91,266 | |
| |
| | | |
| | |
Supplemental disclosure of cash flow information: | |
| | | |
| | |
Deferred offering costs paid by Sponsor in exchange for issuance of Class B common stock | |
$ | — | | |
$ | 21,662 | |
Deferred offering costs paid by Sponsor under the promissory note | |
$ | — | | |
$ | 25,000 | |
Deferred offering costs included in accrued offerings costs and expenses | |
$ | — | | |
$ | 12,500 | |
The excess of fair value of AGP shares that were included in deferred offering costs | |
$ | 1,972,398 | | |
$ | — | |
The
accompanying notes are an integral part of these unaudited condensed financial statements.
RELATIVITY
ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1
— Organization, Business Operations
Relativity
Acquisition Corp. (the “Company”) is a blank check company incorporated as a Delaware corporation on April 13, 2021,
for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses (the “Business Combination”). The Company may pursue an initial Business Combination
target in any business or industry.
As
of June 30, 2022,
the Company had not commenced any operations. All activity for the period from April 13, 2021 (inception) through June 30,
2022 relates to the Company’s formation and the Initial Public Offering (“IPO”), described below, and 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 proceeds
derived from the IPO.
The
Company has selected December 31 as its fiscal year end.
The
Sponsor is Relativity Acquisition Sponsor LLC, a Delaware limited liability company (the “Sponsor”).
The
registration statement for the Company’s IPO was declared effective on February 10, 2022 (the “Effective Date”). On
February 15, 2022, the Company consummated the IPO of 14,375,000 units at $10.00 per unit (the “Units”), including
the issuance of 1,875,000 Units as a result of the full exercise of the underwriters’ over-allotment option, which is
discussed in Note 3. Each Unit consists of one share of Class A common stock and one redeemable warrant (“Public Warrant”).
Each whole warrant entitles the holder to purchase one share of the Company’s Class A common stock at a price of $11.50 per
share.
Simultaneously
with the consummation of the IPO, including 1,875,000 Units sold pursuant to the full exercise of the underwriter’s option
to purchase additional units to cover over-allotments, the Company consummated the private placement of 653,750 units (the
“Private Placement Units”) to the Sponsor, at a price of $10.00 per Private Placement Unit in a private placement. Each
Private Placement Unit consists of one share of Class A common stock and one warrant (“Private Placement Warrant”).
Transaction
costs amounted to $3,890,326 consisting of $1,437,500 of underwriting commissions, $1,972,398 of the excess of the fair
value of Class B common stock issued to underwriter over the share subscription receivable and $480,428 of other offering costs.
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO and the sale
of Private Placement Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a
Business Combination.
The
initial Business Combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80%
of the assets held in the Trust Account (as defined below) (excluding the amount of the business combination fee held in trust and taxes
payable on the income earned on the Trust Account) at the time of the Company’s signing a definitive agreement in connection with
the initial Business Combination. However, the Company will only complete an initial Business Combination if the post-transaction company
owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in
the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940,
as amended (the “Investment Company Act”). There is no assurance that the Company will be able to successfully effect a Business
Combination.
Following
the closing of the IPO and full exercise of the over-allotment by the underwriters on February 15, 2022, $146,625,000 ($10.20 per Unit)
from the net proceeds of the sale of the Units in the IPO and the sale of the Private Placement Units was deposited into a trust account
(the “Trust Account”) and will 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. Except with respect to interest earned on the funds held in the Trust Account that may be
released to the Company to pay the Company’s franchise and income tax obligations (less up to $100,000 of interest to pay dissolution
expenses), the proceeds from the IPO and the sale of the Private Placement Units will not be released from the Trust Account until
the earliest of (a) the completion of the initial Business Combination, (b) 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 (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 the initial
Business Combination within the Combination Period (as defined below) or (ii) with respect to any other provision relating to stockholders’
rights or pre-Business Combination activity, and (c) the redemption of the public shares if the Company is unable to complete the
initial Business Combination within the Combination Period (as defined below), subject to applicable law. The proceeds deposited in the
Trust Account could become subject to the claims of the Company’s creditors, if any, which could have priority over the claims
of the public stockholders.
The
Company will provide its public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion
of the initial Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination
or (ii) without a stockholder vote by means of a tender offer. The decision as to whether the Company will seek stockholder approval
of a proposed Business Combination or conduct a tender offer will be made by the Company, solely in the Company’s discretion.
The
Company will provide its public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion
of the initial Business Combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust
Account as of two business days prior to the consummation of the initial Business Combination, including interest earned on the
funds held in the Trust Account and not previously released to the Company to pay the Company’s franchise and income taxes, divided
by the number of then outstanding public shares, subject to the limitations described herein. The amount in the Trust Account initially
was $10.20 per public share. The per-share amount the Company will distribute to investors who properly redeem their shares will
not be reduced by the business combination fee the Company will pay to the underwriters. There will be no redemption rights upon the
completion of the initial Business Combination with respect to the Company’s warrants.
The
shares of common stock subject to redemption will be recorded at a redemption value and classified as temporary equity upon the completion
of the IPO, in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”)
Topic 480 “Distinguishing Liabilities from Equity.” In such case, the Company will proceed with a Business Combination
if the Company’s Class A common stock is not a “penny stock” upon such consummation of a Business Combination
and, if the Company seeks stockholder approval, a majority of the issued and outstanding shares voted are voted in favor of the Business
Combination.
The
Company will have only 12 months from the closing of the IPO to complete the initial Business Combination, except that the Sponsor
has 2 3-month extensions available to it for a total of up to 18 months to complete the initial Business Combination (as set out below)
(the “Combination Period”). If the Company is unable to complete the initial 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 not more than ten business days thereafter, redeem the 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 on the funds held in the Trust Account and not previously released
to the Company to pay the Company’s franchise and income taxes (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 stockholders’ rights
as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as
promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and
the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware
law to provide for claims of creditors and the requirements of other applicable law.
The
Sponsor may extend the period of time to consummate a business combination for up to two times without stockholder approval, each for
an additional three months (for a total of up to 18 months to complete a business combination (each such three-month period, a “Funded
Extension Period”), so long as the Sponsor or its affiliates or designees deposit into the trust account: (i) with respect to a
single Funded Extension Period, an additional $0.10 per share (for an aggregate of $1,437,500) (an “Extension Payment”),
and (ii) with respect to two consecutive Funded Extension Periods, an Extension Payment prior to each Funded Extension Period, or $0.20
per share in the aggregate (for an aggregate of $2,875,000), upon five days advance notice prior to the applicable deadline pursuant
to the terms of the amended and restated certificate of incorporation and the trust agreement that was entered into between the Company
and Continental Stock Transfer & Trust Company. The public stockholders will not be entitled to vote or redeem their shares
in connection with any Funded Extension Periods.
The
Sponsor, officers and directors of the Company have entered into a letter agreement with the Company, pursuant to which they have agreed
to (i) waive their redemption rights with respect to their Founder Shares, private placement shares and public shares in connection
with the completion of the initial Business Combination, (ii) waive their redemption rights with respect to their Founder Shares
and public shares in connection with a stockholder vote to approve an amendment to 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 the Combination Period; or (B) with respect to any other
provision relating to stockholders’ rights or pre-initial Business Combination activity and (iii) waive their rights to liquidating
distributions from the Trust Account with respect to their Founder Shares and private placement shares if the Company fails to complete
the initial Business Combination within the Combination Period, although they will be entitled to liquidating distributions from the
Trust Account with respect to any public shares they hold if the Company fails to complete the initial Business Combination within the
prescribed time frame; and (iv) vote any Founder Shares held by them and any public shares purchased during or after the IPO (including
in open market and privately-negotiated transactions) in favor of the initial Business Combination.
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 a prospective target business with which the Company has entered into a written letter of intent, confidentiality
or similar agreement or Business Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.20
(or up to $10.40 if available extensions are utilized) per public share and (ii) the actual amount per public share held in the
Trust Account as of the date of the liquidation of the Trust Account, if less than $10.20 (or up to $10.40 if available extensions are
utilized) per public share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will
not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held
in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity
of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act. However, the Company
has not asked the Sponsor to reserve for such indemnification obligations, nor has the Company independently verified whether the Sponsor
has sufficient funds to satisfy its indemnity obligations, and the Company believes that the Sponsor’s only assets are securities
of the Company. Therefore, the Company cannot assure you that the Sponsor would be able to satisfy those obligations.
Risks
and Uncertainties
Management
is continuing to evaluate the impact of the COVID-19 pandemic and the Russia-Ukraine war and has concluded, that while it is reasonably
possible that the virus and the war could have a negative effect on the Company’s financial position, results of its operations,
search for a target company and/or ability to complete a business combination, the specific impact is not readily determinable as of
the date of these unaudited condensed financial statements. The unaudited condensed financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Liquidity,
Capital Resources and Going Concern
As
of June 30, 2022,
the Company had $1,012,388 in its operating bank account and working capital, excluding franchise and income tax payable, net of
interest income from trust account, of $1,245,899.
The
Company does not believe it will need to raise additional funds in order to meet the expenditures required for operating the business.
However, if the 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
its business prior to the Business Combination.
In
order to finance transaction costs in connection with an intended initial 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, loan the Company funds as may be required (the
“Working Capital Loans”). If the Company completes the initial Business Combination, the Company would repay the Working
Capital Loans out of the proceeds of the Trust Account released to the Company. In the event that the initial Business Combination does
not close, the Company may use a portion of the working capital held outside the Trust Account to repay the Working Capital Loans, but
no proceeds from the Trust Account would be used to repay the Working Capital Loans. Up to $1,500,000 of such working capital loans may
be convertible into private placement-equivalent units at a price of $10.00 per unit (which, for example, would result in the holders
being issued 150,000 units if $1,500,000 of notes were so converted) at the option of the lender. Such units would be identical to the
Private Placement Units. The terms of such working capital loans by the Sponsor or its affiliates, or the Company’s officers and
directors, if any, have not been determined and no written agreements exist with respect to the Working Capital Loans. The Company does
not expect to seek loans from parties other than the Sponsor or an affiliate of the Sponsor as the Company does not believe third parties
will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in the Trust Account. At June
30, 2022 and December 31, 2021, no such Working Capital Loans were outstanding.
Based
on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity to meet its needs
through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, the Company will
be using these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates,
performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with
or acquire and structuring, negotiating and consummating the Business Combination.
In
connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s
Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue
as a Going Concern,” the Company has until February 15, 2023 (absent any extensions of such period by the Sponsor, pursuant to
the terms described above) to consummate the proposed Business Combination. It is uncertain whether the Company will be able to consummate
the proposed Business Combination by this date. If a Business Combination is not consummated by this date, then, unless that time is
extended (as provided above, or pursuant to a stockholder vote), there will be a mandatory liquidation and subsequent dissolution of
the Company. Management has determined that the mandatory liquidation, should a business combination not occur, and potential subsequent
dissolution, raises 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 February 15, 2023. The Company intends
to complete the proposed Business Combination before the mandatory liquidation date. However, there can be no assurance that the Company
will be able to consummate any business combination by the end of the Combination Period.
Note 2
— Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited condensed financial statements are presented in U.S. dollars in conformity with accounting principles generally
accepted in the United States of America (“U.S. GAAP”) for financial information and pursuant to the rules and regulations
of the SEC. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP. In the opinion of management,
the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the
fair statement of the balances and results for the periods presented. The interim results for the three and six months ended June
30, 2022 are not necessarily indicative of the results to be expected for the year ending December
31, 2022 or for any future interim periods. The accompanying unaudited condensed financial statements should be read in conjunction with
the Company’s audited financial statements and notes thereto included in the Form 10-K filed by the Company with the SEC on March
31, 2022.
Emerging
Growth Company Status
The
Company is an “emerging growth company,” as defined in Section2 (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 stockholder approval of any golden parachute payments not previously approved.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective
or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial
accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the
requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected
not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application
dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time
private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another
public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition
period difficult or impossible because of the potential differences in accounting standards used.
Use
of Estimates
The
preparation of unaudited condensed financial statements in conformity with U.S. GAAP requires 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 unaudited
condensed financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those
estimates.
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 unaudited 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.
As of June 30,
2022 and December 31, 2021, the Company had cash of $1,012,388 and $42,194, respectively. The Company did not have any cash equivalents
as of June 30, 2022 and December 31, 2021.
Investment
held in Trust Account
As
of June 30, 2022
and December 31, 2021, the Company had $146,836,819 and $0, respectively, in investments held in the Trust Account which were held in
money market funds which are primarily invested in U.S treasury securities. Net proceeds of the sale of the Units in the Initial Public
Offering and the sale of the Private Placement Units were placed in the Trust Account which will only be invested in United States “government
securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money
market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S.
government treasury obligations. The Company’s investments held in the Trust Account are classified as trading securities. Trading
securities are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the
Change in fair value of warrant liability is included in interest on investments held in trust account in the accompanying statements
of operations. The estimated fair values of investments held in the Trust Account are determined using available market information.
Deferred
Offering Costs
Offering
costs consist of accounting and legal expenses incurred through the balance sheet date that are directly related to the IPO, and the
excess of the fair value of Class B common stock issued to underwriter over the share subscription receivable. Offering costs will be
allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared
to total proceeds received. Upon completion of the IPO, offering costs associated with warrant liabilities were expensed and offering
costs associated with the Class A common stock were charged to temporary equity.
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC 820, “Fair
Value Measurements and Disclosures,” approximates the carrying amounts represented in the condensed balance sheets, primarily due
to its short-term nature.
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). The Company’s financial
instruments are classified as either Level 1, Level 2 or Level 3. 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. |
Derivative
Financial Instruments
The
Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded
derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. For derivative financial instruments that are
accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued
at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments,
including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period.
Derivative liabilities are classified in the condensed balance sheets as current or non-current based on whether or not net-cash settlement
or conversion of the instrument could be required within 12 months of the balance sheet date.
Net
Income (Loss) Per Common Stock
The
Company has two classes of shares, which are referred to as Class A common stock and Class B common stock. Earnings and losses are shared
pro rata between the two classes of shares. The 15,028,750 common stock for outstanding warrants to purchase the Company’s
shares were excluded from diluted earnings per share for the three and six months ended June
30, 2022 because the warrants are contingently exercisable, and the contingencies have not yet
been met. As a result, diluted net income (loss) per share is the same as basic net income (loss) per share for the period. The table
below presents a reconciliation of the numerator and denominator used to compute basic and diluted net income (loss) per share for each
class of common stock:
| |
For the three months ended June 30, 2022 | | |
For the six months ended June 30, 2022 | |
| |
Class A | | |
Class B | | |
Class A | | |
Class B | |
Basic and diluted net income per share: | |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| |
Allocation of net income | |
$ | 1,219,588 | | |
$ | 291,634 | | |
$ | 2,214,459 | | |
$ | 686,431 | |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Weighted-average shares outstanding including shares subject to redemption | |
| 15,028,750 | | |
| 3,593,750 | | |
| 11,209,289 | | |
| 3,474,620 | |
Basic and diluted net income per share | |
$ | 0.08 | | |
$ | 0.08 | | |
$ | 0.20 | | |
$ | 0.20 | |
| |
For the period from
April 13, 2021
(inception) through
June 30, 2021 | |
| |
Class A | | |
Class B | |
Basic and diluted net loss per share: | |
| | |
| |
Numerator: | |
| | |
| |
Allocation of net loss | |
$ | — | | |
$ | (5,497 | ) |
Denominator: | |
| | | |
| | |
Weighted-average shares outstanding including shares subject to redemption | |
| — | | |
| 3,125,000 | |
Basic and diluted loss per share | |
$ | — | | |
$ | (0.00 | ) |
Income
Taxes
The
Company accounts for income taxes under ASC 740, “Income Taxes.” ASC 740, Income Taxes, requires the recognition of deferred
tax assets and liabilities for both the expected impact of differences between the unaudited condensed financial statements 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. As of June 30, 2022 and December 31, 2021, the Company’s deferred tax asset had a full valuation allowance
recorded against it. Our effective tax rate was 1.53% and 0.00% for the three months ended June 30, 2022 and 2021, respectively, and
0.80% and 0.00% for the six months ended June 30, 2022 and 2021, respectively. The effective tax rate differs from the statutory tax
rate of 21% for the three and six months ended June 30, 2022, due to changes in fair value in warrant liability and the valuation allowance
on the deferred tax assets.
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. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim
period, disclosure and transition.
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 June 30, 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 has identified the United States as its only “major” tax jurisdiction. The Company is subject to income taxation
by major taxing authorities since inception. These examinations may include questioning the timing and amount of deductions, the nexus
of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s management does not expect
that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Common
stock Subject to Possible Redemption
The
Company’s Class A common stock that was sold as part of the Units in the IPO contains a redemption feature which allows for the
redemption of such public shares in connection with the Company’s liquidation, or if there is a stockholder vote or tender offer
in connection with the Company’s initial Business Combination. In accordance with ASC 480-10-S99, the Company classifies the 14,375,000 shares
subject to redemption outside of permanent equity as the redemption provisions are not solely within the control of the Company. The
public shares sold as part of the Units in the IPO was issued with other freestanding instruments (i.e., Public Warrants) and as such,
the initial carrying value of public shares classified as temporary equity, and the Public Warrants are considered a derivative liability
and as such the fair value of the Public Warrants is bifurcated and presented as a liability.
Concentration
of credit risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution
which, at times may exceed the Federal Deposit Insurance Corporation coverage limit of $250,000. At June 30, 2022 and December 31, 2021,
the Company had not experienced losses on this account and management believes the Company is not exposed to significant risks on such
account.
Recent
Accounting Standards
In
August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 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) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates
the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies
the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard
also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s
own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted
method for all convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim
periods within those fiscal years, with early adoption permitted. The Company early adopted ASU 2020-06 effective as of January 1, 2021.
The adoption of ASU 2020-06 did not have an impact on the Company’s unaudited condensed financial statements.
Management
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 unaudited condensed financial statements.
Note 3
— Initial Public Offering
On
February 15, 2022, the Company consummated its IPO of 14,375,000 Units, including 1,875,000 Units sold pursuant to
the full exercise of the underwriter’s option to purchase additional units to cover over-allotments, at a purchase price of $10.00 per
Unit. Each Unit consists of one share of Class A common stock and one redeemable Public Warrant. Each whole Public Warrant will
entitle the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 8).
Following
the closing of the IPO on February 15, 2022, $146,625,000 ($10.20 per Unit) from the net proceeds of the sale of the Units
in the IPO and the sale of the Private Placement Units was placed in a Trust Account and will 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.
All
of the 14,375,000 Class A common stock sold as part of the Units in the IPO contain a redemption feature which allows for the
redemption of such public shares in connection with the Company’s liquidation, if there is a stockholder vote or tender offer in
connection with the Business Combination and in connection with certain amendments to the Company’s certificate of incorporation.
In accordance with SEC guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not
solely within the control of the Company require common stock subject to redemption to be classified outside of permanent equity.
The
shares of Class A common stock are accounted for in accordance with the guidance in ASC 480-10-S99. If it is probable that the equity
instrument will become redeemable, the Company has the option to either accrete changes in the redemption value over the period from
the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest
redemption date of the instrument or to recognize changes in the redemption value immediately as they occur and adjust the carrying amount
of the instrument to equal the redemption value at the end of each reporting period. The Company recognizes changes in redemption value
immediately as they occur. Immediately upon the closing of the IPO, the Company recognized the accretion from initial book value to redemption
amount value. The change in the carrying value of redeemable common stock resulted in charges against additional paid-in capital and
accumulated deficit.
As
of June 30, 2022, the common stock subject to possible redemption reflected on the condensed balance sheets are reconciled in the following
table:
Gross proceeds from IPO | |
$ | 143,750,000 | |
Less: | |
| | |
Proceeds allocated to Public Warrants | |
| (4,600,256 | ) |
Class A common stock issuance cost | |
| (3,765,151 | ) |
Plus: | |
| | |
Accretion of carrying value to redemption value | |
| 11,240,407 | |
Remeasurement of carrying value to redemption value | |
| 88,337 | |
Common stock subject to possible redemption | |
$ | 146,713,337 | |
Note 4
— Private Placement
Simultaneously
with the closing of the IPO, the Company’s Sponsor purchased an aggregate of 653,750 Private Placement Units at a price
of $10.00 per Unit, or $6,537,500 in the aggregate, in a private placement. Each Private Placement Unit consists of one
share of Class A common stock and one Private Placement Warrant.
The
Private Placement Warrants will be non-redeemable and exercisable on a cashless basis so long as they are held by the sponsor or its
permitted transferees. If the Private Placement Warrants are held by holders other than the Sponsor or its permitted transferees, the
Private Placement Warrants will be redeemable by the Company and exercisable by the holders on the same basis as the warrants included
in the units being sold in the IPO.
Note 5
— Related Party Transactions
Founder
Shares
In May 2021, the Sponsor
paid $25,000 of deferred offering costs on behalf of the Company in exchange for 3,750,000 shares of Common stock (the
“Founder Shares”). On December 14, the Sponsor returned to the Company, at no cost, an aggregate of 511,250 founder
shares, which the Company cancelled. On December 14, 2021, an aggregate of 355,000 shares of Class B common stock
were issued to A.G.P. (the “Representative”), resulting in an aggregate of 3,593,750 shares of Class B common
stock outstanding. On January 12, 2022, the Sponsor transferred 176,094 founder shares to George Syllantavos, and 28,750 founder
shares to Anastasios Chrysostomidis. The number of Founder Shares outstanding was determined based on the expectation that the total size
of the IPO would be a maximum of 14,375,000 Units if the underwriter’s over-allotment option were exercised in full,
and therefore that such Founder Shares would represent 20% of the outstanding shares after the IPO. The underwriter’s over-allotment
option was exercised in full, and no Founder Shares were forfeited.
The
initial stockholders have agreed not to transfer, assign or sell any of their Founder Shares until the earlier to occur of (i) six months
after the date of the consummation of the initial Business Combination or (ii) the date on which the Company consummates a liquidation,
merger, stock exchange or other similar transaction which results in all of the stockholders having the right to exchange their shares
of Class A common stock for cash, securities or other property. Any permitted transferees will be subject to the same restrictions
and other agreements of the initial stockholders with respect to any Founder Shares. Notwithstanding the foregoing, if the closing price
of the shares of Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 90 days after
the initial Business Combination, the Founder Shares will no longer be subject to such transfer restrictions.
Promissory
Note — Related Party
On
July 2, 2021, the Sponsor agreed to loan the Company up to $300,000 to cover expenses related to the IPO pursuant to a promissory
note (the “Note”). This loan was non-interest bearing and payable on the earlier of March 31, 2022 or the completion of the
IPO. The outstanding balance under the promissory note of $208,563 was paid in full and as a result, the credit facility is no longer
available.
Working
Capital Loans
In
order to finance transaction costs in connection with an intended initial 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, loan the Company funds as may be required (the
“Working Capital Loans”). If the Company completes the initial 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 the initial Business Combination does not close, the Company may
use a portion of the working capital held outside the Trust Account to repay the Working Capital Loans, but no proceeds from the Trust
Account would be used to repay the Working Capital Loans. Up to $1,500,000 of such working capital loans may be convertible into
private placement-equivalent units at a price of $10.00 per unit (which, for example, would result in the holders being issued 150,000 units
if $1,500,000 of notes were so converted) at the option of the lender. Such units would be identical to the Private Placement Units.
The terms of such working capital loans by the Sponsor or its affiliates, or the Company’s officers and directors, if any, have
not been determined and no written agreements exist with respect to the Working Capital Loans. The Company does not expect to seek loans
from parties other than the Sponsor or an affiliate of the Sponsor as the Company does not believe third parties will be willing to loan
such funds and provide a waiver against any and all rights to seek access to funds in the Trust Account. At June 30, 2022 and December
31, 2021, no such Working Capital Loans were outstanding.
Administrative
Service Fee
The
Company entered into an administrative services agreement on the effective date of the registration statement for the IPO pursuant to
which the Company will pay an affiliate of the Sponsor a total of $10,000 per month, for up to 18 months, for office space, utilities
and secretarial and administrative support. Upon completion of the Company’s initial Business Combination or its liquidation, the
Company will cease paying these monthly fees. For the three and six months ended June 30, 2022, the Company incurred $30,000 and $45,000
of administrative service fees, respectively, all of which were fully paid. For the period from April 13, 2021 (inception) through June
30, 2021, no administrative service fees were incurred.
Due
to Related Party
At
June 30, 2022, the Company has no borrowings due to related party. At December 31, 2021, the Sponsor paid the deferred offering costs
of $25,000 for the Company.
Due
from Sponsor
Due
from Sponsor is a non-interest-bearing advance and is due on demand. At June 30, 2022 and December 31, 2021, $3,047 and $0, respectively,
are included in due from sponsor in the accompanying condensed balance sheets.
Note 6
— Commitments and Contingencies
Registration
and Stockholder Rights
The
holders of the Founder Shares, Private Placement Units, the Private Placement Warrants, and the shares of Class A common stock underlying
the Private Placement Warrants will have registration rights to require the Company to register a sale of any of the Company’s
securities held by them pursuant to a registration rights agreement that was signed prior to or on the effective date of the IPO. These
holders will be entitled to make up to three demands, excluding short form registration demands, that the Company registers such securities
for sale under the Securities Act. In addition, these holders will have “piggy-back” registration rights to include their
securities in other registration statements filed by the Company. Notwithstanding the foregoing, the underwriters may not exercise
their demand and “piggyback” registration rights after five and seven years, respectively, after the effective date
of the registration statement of which the IPO forms a part and may not exercise their demand rights on more than one occasion.
Underwriting
Agreement
The
underwriters had a 45-day option from the date of the IPO to purchase up to an additional 1,875,000 Units to cover over-allotments,
if any. As of February 15, 2022, the underwriters had fully exercised the over-allotment option.
On
December 14, 2021, the Company sold an aggregate of 355,000 shares of Class B common stock to A.G.P. at $0.007 per share, for a total
consideration of $2,470, which has not been funded as of February 15, 2022 and was recorded as share subscription receivable. The
subscription receivable was paid on February 18, 2022.
The
fair value of Class B common stock sold to A.G.P. was $1,974,868. The Company accounted for $1,972,398 of the excess of the fair
value of Class B common stock issued to underwriter over the share subscription receivable as an offering cost of the IPO and allocated
between the warrants, equity and temporary equity based on the relative fair values.
On
February 15, 2022, the Company paid cash underwriting commissions of $1,437,500 to the underwriters.
Business
Combination Marketing Agreement
The
Company engaged A.G.P. as an advisor in connection with the Business Combination to assist the Company in holding meetings with its stockholders
to discuss the potential Business Combination and the target business’ attributes, introduce the Company to potential investors
that are interested in purchasing its securities in connection with the initial Business Combination, and assist the Company with its
press releases and public filings in connection with the Business Combination. The Company will pay A.G.P. a fee in cash for such services
upon the consummation of the initial Business Combination in an amount equal to 3.5% of the gross proceeds of the IPO, or $5,031,250 in
the aggregate. Pursuant to the terms of the Business Combination marketing agreement, no fee will be due if the Company does not complete
an initial Business Combination.
Note 7
— Fair Value Measurement
The
following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring
basis as of June 30, 2022 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair
value. The Company uses inputs such as actual trade data, benchmark yields, quoted market prices from dealers or brokers, and other similar
sources to determine the fair value of its investments in the Mutual Fund. There were no assets and liabilities measured at fair value
as of December 31, 2021.
| |
June 30, 2022 | | |
Quoted Prices In Active Markets (Level 1) | | |
Significant Other Observable Inputs (Level 2) | | |
Significant Other Unobservable Inputs (Level 3) | |
Assets: | |
| | |
| | |
| | |
| |
Mutual Fund held in Trust Account | |
$ | 146,836,819 | | |
$ | 146,836,819 | | |
$ | — | | |
$ | — | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Public Warrants | |
$ | 1,293,750 | | |
$ | — | | |
$ | 1,293,750 | | |
$ | — | |
Private Warrants | |
| 59,369 | | |
| — | | |
| — | | |
| 59,369 | |
Warrant Liabilities | |
$ | 1,353,119 | | |
$ | — | | |
$ | 1,293,750 | | |
$ | 59,369 | |
Transfers to/from Levels
1, 2 and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs. The estimated
fair value of the Public Warrants transferred from a Level 3 measurement to a Level 2 fair value measurement during the three and six
months ended June 30, 2022 was approximately $1,293,750.
The
warrants were initially classified within Level 3 of the fair value hierarchy due to the use of unobservable inputs. In June 2022, the
Public Warrants were reclassified to Level 1 as valuation were based on a traded market. The estimated fair value of the private warrants
at June 30, 2022 was determined using Level 3 inputs. Inherent in a Monte Carlo options pricing model are assumptions related to expected
stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common
stock based on projected volatility of comparable public companies that matches the expected remaining life of the warrants. The risk-free
interest rate is based on the U.S. treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining
life of the warrants. The expected life of the warrants is based on management assumptions regarding the timing and likelihood of completing
a business combination. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero.
The
following table provides quantitative information regarding Level 3 fair value measurements as of February 15, 2022 (initial recognition)
and June 30, 2022:
| |
February 15, 2022 | | |
June 30, 2022 | |
Strike price | |
$ | 11.50 | | |
$ | 11.50 | |
Share price | |
$ | 9.68 | | |
$ | 10.07 | |
Volatility | |
| 5.70 | % | |
| 6.30 | % |
Risk-free rate | |
| 2.00 | % | |
| 3.02 | % |
Expected term (years) | |
| 6.33 | | |
| 5.47 | |
The
change in the fair value of the warrant liabilities, measured using Level 3 inputs, for the three and six months ended June 30, 2022
is summarized as follows:
| |
Warrant | |
| |
Liability | |
Warrant liabilities at December 31, 2021 | |
$ | — | |
Issuance of Public and Private Placement Warrants | |
| 4,809,888 | |
Change in fair value of warrant liabilities | |
| (1,894,764 | ) |
Warrant liabilities at March 31, 2022 | |
$ | 2,915,124 | |
Change in fair value of warrant liabilities | |
| (1,562,005 | ) |
Transfer to Level 2 | |
| (1,293,750 | ) |
Warrant liabilities at June 30, 2022 | |
$ | 59,369 | |
Note 8
— Warrant Liability
As
of June 30, 2022 and December 31, 2021, there were 15,028,750 and 0 warrants outstanding, respectively. The Company
accounted for the 15,028,750 warrants issued in connection with the IPO (14,375,000 Public Warrants and 653,750 Private
Placement Warrants) in accordance with the guidance contained in ASC 815-40. Such guidance provides that because the warrants do
not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability. Accordingly, the Company classifies
each warrant as a liability at its fair value. This liability is subject to re-measurement at each balance sheet date. With each such
re-measurement, the warrant liability is adjusted to fair value, with the change in fair value recognized in the Company’s statements
of operations.
Each
whole warrant entitles the holder to purchase one share of the Company’s Class A common stock at a price of $11.50 per share,
subject to adjustment as described herein. In addition, if (x) the Company issues additional shares of Class A 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 $9.20 per share of Class A common stock (with such issue price or effective issue price
to be determined in good faith by the Company’s board of directors and, in the case of any such issuance to the Sponsor or its
affiliates, without taking into account any Founder Shares held by the Sponsor or its affiliates, prior to such issuance) (the “Newly
Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds,
and interest thereon, available for the funding of the initial Business Combination on the date of the consummation of 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 $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest
cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price
described below under “Redemption of warrants when the price per share of Class A common stock equals or exceeds $18.00”
will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
The
warrants will become exercisable on the later of 30 days after the completion of the initial Business Combination or 12 months
from the closing of this offering and will expire at 5:00 p.m., New York City time on the warrant expiration date, which is five years
after the completion of the initial Business Combination or earlier upon redemption or liquidation. On the exercise of any warrant, the
warrant exercise price will be paid directly to the Company and not placed in the Trust Account.
The
Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have
no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the shares of
Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company’s
satisfying the Company’s obligations described below with respect to registration. No warrant will be exercisable and the Company
will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless Class A common stock issuable
upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence
of the registered holder of the warrants. In the event that the conditions in the two immediately preceding sentences are not satisfied
with respect to a warrant, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value
and expire worthless. In no event will the Company be required to net cash settle any warrant. In the event that a registration statement
is not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for
the unit solely for the share of Class A common stock underlying such unit.
The
Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of the initial Business
Combination, the Company will use its best efforts to file with the SEC a registration statement covering the shares of Class A
common stock issuable upon exercise of the warrants, to cause such registration statement to become effective and to maintain a current
prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed, as specified in the warrant
agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not
effective by the 52nd day after the closing of the initial Business Combination, warrant holders may, until such time
as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration
statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or
another exemption. Notwithstanding the above, if the Class A common stock is at the time of any exercise of a warrant not listed
on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of
the Securities Act, the Company may, at its option, require holders of public warrants who exercise their warrants to do so on a “cashless
basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elect, it will not be
required to file or maintain in effect a registration statement, and in the event the Company does not so elect, the Company will use
its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
Redemption
of warrants when the price per share of Class A common stock equals or exceeds $18.00.
Once
the warrants become exercisable, the Company may redeem the outstanding warrants (except as described herein with respect to the Private
Placement Warrants):
|
● |
in
whole and not in part; |
|
● |
at
a price of $0.01 per warrant; |
|
● |
upon
not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant
holder; and |
| ● | if, and only if, the reported last sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending three business days before the Company sends the notice of redemption to the warrant holders. |
Note 9
— Stockholders’ (Deficit) Equity
Preferred
Stock
The
Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share. At June 30,
2022 and December 31, 2021, there were no shares of preferred stock issued or outstanding.
Class A
Common Stock
The
Company is authorized to issue 100,000,000 shares of Class A common stock with a par value of $0.0001 per share.
Holders of Class A common stock are entitled to one vote for each share. At June 30, 2022 and December 31, 2021, there were 653,750 and 0 shares
of Class A common stock issued or outstanding, respectively, excluding 14,375,000 shares subject to possible redemption.
Class B
Common Stock
The
Company is authorized to issue 10,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders
of the Class B common stock are entitled to one vote for each share. At June 30, 2022 and December 31, 2021, there were 3,593,750 shares
of Class B common stock issued and outstanding, of which 468,750 shares were subject to forfeiture to the extent that
the underwriter’s over-allotment option was not exercised in full so that the Founder Shares would represent, on an as-converted
basis, 20% of the Company’s issued and outstanding shares after the IPO (assuming the Sponsor did not purchase any public
shares in the IPO). As of February 15, 2022, the over-allotment option was fully exercised and such shares were no longer subject to
forfeiture.
The
shares of Class B common stock will automatically convert into shares of Class A common stock at the time of the initial Business
Combination on a one-for-one basis (subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the
like), and subject to further adjustment as provided herein. In the case that additional shares of Class A common stock, or equity-linked
securities, are issued or deemed issued in excess of the amounts offered in the IPO and related to the closing of the initial Business
Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted
(unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect
to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares
of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares
of common stock outstanding upon completion of the IPO (not including the shares of Class A common stock issuable to the Representative)
plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the initial Business
Combination (excluding any shares or equity-linked securities issued, or to be issued, to any seller in the initial Business Combination,
any private placement-equivalent securities issued to the Sponsor or its affiliates upon conversion of loans made to the Company). The
Company cannot determine at this time whether a majority of the holders of the Class B common stock at the time of any future issuance
would agree to waive such adjustment to the conversion ratio. They may waive such adjustment due to (but not limited to) the following:
(i) closing conditions which are part of the agreement for the initial Business Combination; (ii) negotiation with Class A
stockholders on structuring an initial Business Combination; or (iii) negotiation with parties providing financing which would trigger
the anti-dilution provisions of the Class B common stock. If such adjustment is not waived, the issuance would not reduce the percentage
ownership of holders of the Class B common stock, but would reduce the percentage ownership of holders of the Class A common
stock. If such adjustment is waived, the issuance would reduce the percentage ownership of holders of both classes of the Company’s
common stock. Holders of Founder Shares may also elect to convert their shares of Class B common stock into an equal number of shares
of Class A common stock, subject to adjustment as provided above, at any time. The term “equity-linked securities” refers
to any debt or equity securities that are convertible, exercisable or exchangeable for shares of Class A common stock issues in
a financing transaction in connection with the initial Business Combination, including but not limited to a private placement of equity
or debt. Securities could be “deemed issued” for purposes of the conversion rate adjustment if such shares are issuable upon
the conversion or exercise of convertible securities, warrants or similar securities.
Note 10
— Subsequent Events
The
Company 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 on this review, the Company did not identify any subsequent events that would have required adjustment
or disclosure in the unaudited condensed financial statements.
Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of Operations.
References
to the “Company,” “us,” “our” or “we” refer to Relativity Acquisition Corp. The following
discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed
financial statements and notes thereto contained elsewhere in this Quarterly Report.
Cautionary Note Regarding
Forward-Looking Statements
All
statements other than statements of historical fact included in this Report including, without limitation, statements under this “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and
the plans and objectives of management for future operations, are forward-looking statements. When used in this Report, words such as
“anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions,
as they relate to us or our management, identify forward-looking statements. Such forward-looking statements are based on the beliefs
of management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially
from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC. All subsequent
written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this
paragraph.
The
following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited
condensed financial statements and the notes thereto contained elsewhere in this Report. Certain information contained in the discussion
and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Overview
We
are a blank-check company incorporated as a Delaware corporation on April 13, 2021, for the purposes of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We may pursue
an initial business combination target in any business or industry.
Results of Operations
As
of June 30, 2022, we had not commenced any operations. All activity for the period from April
13, 2021 (inception) through June 30, 2022, relates to our formation and initial public offering
and identifying a target company for a business combination. We will not generate any operating revenues until after the completion of
a business combination, at the earliest. We will generate non-operating income in the form of interest income from the proceeds derived
from the initial public offering and placed in the trust account.
For
the three months ended June 30, 2022, we had net income of $1,511,222, which consists of income from investment in trust account of $197,992
and change in fair value of warrant liability of $1,562,005, offset by formation and operating costs of $225,293 and provision for income
taxes of $23,482.
For
the six months ended June 30, 2022, we had net income of $2,900,890, which consists of income from investment in trust account of $211,819
and change in fair value of warrant liability of $3,456,769, offset by formation and operating costs of $619,041, warrant issuance cost
of $125,175 and provision for income taxes of $23,482.
For
the period from April 13, 2021 (inception) through June 30, 2021, we had a net loss of $5,497 which consists solely of formation and operating
costs.
Liquidity and Capital Resources
As
of June 30, 2022, we had $1,012,388 in cash and working capital, excluding franchise tax payable, and net of interest income from trust
account, of $1,245,899.
On
February 15, 2022, we consummated the initial public offering of 14,375,000 units, including 1,875,000 units pursuant to the exercise
of the underwriters’ over-allotment option in full, at $10.00 per unit, generating gross proceeds of $143,750,000.
Simultaneously
with the closing of the initial public offering, we consummated the sale of 653,750 private placement unit at a price of $10.00 per private
placement units in a private placement to the sponsor, generating total gross proceeds of $6,537,500.
Transaction
costs amounted to $3,890,326 consisting of $1,437,500 of underwriting commissions, $1,972,398 of the excess of the fair value of Class
B common stock issued to underwriter over the share subscription receivable, and $480,428 of other offering costs.
Following
the closing of our initial public offering, $146,625,000 from the net proceeds of the sale of the units in our initial public offering
and the sale of the private placement units was placed in the trust account maintained by Continental, as trustee.
We
intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust
account to complete our initial business combination. We may withdraw interest to pay our taxes and liquidation expenses if we are unsuccessful
in completing a business combination. We may pay our franchise tax from funds from the initial public offering held outside of the trust
account or from interest earned on the funds held in the trust account and released to us for this purpose. Our annual income tax obligations
will depend on the amount of interest and other income earned on the amounts held in the trust account reduced by our operating expense
and franchise taxes. We expect the interest earned on the amount in the trust account will be sufficient to pay our income taxes. To the
extent that our equity or debt is used, in whole or in part, as consideration to complete our initial business combination, the remaining
proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses, make
other acquisitions and pursue our growth strategies.
Further,
our sponsor or an affiliate of the sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may
be required. If we complete a business combination, we would repay the working capital loans out of the proceeds of the trust account
released to us. 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, we may use a portion of the working capital held outside the trust account to repay the working
capital loans but no proceeds from the trust account would be used to repay the working capital loans. Up to $1,500,000 of such working
capital loans may be convertible into units at a price of $10.00 per unit at the option of the lender. The units would be identical to
the private placement units. At June 30, 2022 and December 31, 2021, no such working capital loans were outstanding.
We
do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business upon the consummation
of the initial public offering. However, if our 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, we may have insufficient funds available to
operate our business prior to our business combination. Moreover, we may need to obtain additional financing either to complete our business
combination or because we become obligated to redeem a significant number of our public shares upon consummation of our business combination,
in which case we may issue additional securities or incur debt in connection with such business combination. Subject to compliance with
applicable securities laws, we would only complete such financing simultaneously with the completion of our business combination. If we
are unable to complete our business combination because we do not have sufficient funds available to us, we will be forced to cease operations
and liquidate the trust account. In addition, following our business combination, if cash on hand is insufficient, we may need to obtain
additional financing in order to meet our obligations.
Critical Accounting Policies
Emerging Growth Company Status
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by 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 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. We have 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, we
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 our 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.
Derivative Financial
Instruments
We
evaluate our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives
in accordance with ASC Topic 815, “Derivatives and Hedging”. For derivative financial instruments that are accounted for as
liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting
date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including
whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative
liabilities are classified in the condensed balance sheets as current or non-current based on whether or not net-cash settlement or conversion
of the instrument could be required within 12 months of the balance sheet date.
Income Taxes
We
account 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. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim
period, disclosure and transition.
We
recognize accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits
as of June 30, 2022 and December 31, 2021. For the three and six months ended June 30, 2022 and for the period from April 13, 2021 (inception)
through June 30, 2021, no amounts were accrued for interest and penalties. We are currently not aware of any issues under review that
could result in significant payments, accruals or material deviation from its position.
We
have identified the United States as the Company’s only “major” tax jurisdiction.
We
may be subject to potential examination by federal and state taxing authorities in the areas of income taxes. These potential examinations
may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal
and state tax laws. Our management does not expect that the total amount of unrecognized tax benefits will materially change over the
next twelve months.
The
provision for income taxes was deemed to be immaterial for the three and six months ended June 30, 2022.
Common stock Subject to Possible Redemption
Our
Class A common stock that was sold as part of the units in the initial public offering contains a redemption feature which allows for
the redemption of such public shares in connection with our liquidation, or if there is a stockholder vote or tender offer in connection
with our initial business combination. In accordance with ASC 480-10-S99, we classify such public shares subject to redemption outside
of permanent equity as the redemption provisions are not solely within our control. The public shares sold as part of the units in the
initial public offering was issued with other freestanding instruments (i.e., warrants) and as such, the initial carrying value of public
shares classified as temporary equity was the allocated proceeds determined in accordance with ASC 470-20. The public shares are subject
to ASC 480-10-S99 and are currently not redeemable as the redemption is contingent upon the occurrence of events mentioned above. According
to ASC 480-10-S99-15, no subsequent adjustment is needed if it is not probable that the instrument will become redeemable.
Recent Accounting Standards
In
August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 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) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates
the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies
the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard
also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s
own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted
method for all convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim
periods within those fiscal years, with early adoption permitted. We early adopted ASU 2020-06 effective as of January 1, 2021. The adoption
of ASU 2020-06 did not have an impact on our unaudited condensed financial statements.
Management
does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a
material effect on our unaudited condensed financial statements.
Off-Balance Sheet
Arrangements
As
of June 30, 2022 and December 31, 2021, we did not have any off-balance sheet arrangements.
Factors That May Adversely
Affect Our Results of Operations
Our
results of operations and our ability to complete an initial business combination may be adversely affected by various factors that could
cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. Our business could be impacted
by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, increases in
interest rates, supply chain disruptions, declines in consumer confidence and spending, the ongoing effects of the COVID-19 pandemic,
including resurgences and the emergence of new variants, and geopolitical instability, such as the military conflict in the Ukraine. We
cannot at this time fully predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which
they may negatively impact our business and our ability to complete an initial business combination.