NOTES
TO FINANCIAL STATEMENTS
AUGUST 31,
2022
(Unaudited)
NOTE
1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Aura
Fat Projects Acquisition Corp (the “Company”) was incorporated as a Cayman Islands exempted company on December 6,
2021. The Company was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization
or similar Business Combination with one or more businesses (the “Business Combination”). The Company has not selected
any specific Business Combination target and the Company has not, nor has anyone on its behalf, initiated any substantive discussions,
directly or indirectly, with any Business Combination target. The Company will not be limited to a particular industry or geographic
region in its identification and acquisition of a target company.
As
of August 31, 2022, the Company had not commenced any operations. All activity for the period from December 6, 2021
(inception) through August 31, 2022 relates to the Company’s formation, the initial public offering (“Initial
Public Offering”), which is 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 Initial Public Offering. The
Company has selected November 30 as its fiscal year end.
The
Company’s sponsor is Aura FAT Projects Capital LLC, a Cayman Islands limited liability company (the “Sponsor”).
The
registration statement for the Company’s Initial Public Offering was declared effective on April 12, 2022. On April 18,
2022, the Company consummated the Initial Public Offering of 11,500,000 units (“Units”), which includes the exercise
of the over-allotment option in full of 1,500,000 Units, generating gross proceeds of $115,000,000, which is described in Note
3.
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the private sale of 5,000,000 warrants (the “Private
Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to Aura FAT Projects Capital
LLC generating gross proceeds to the Company in the amount of $5,000,000.
Transaction
costs amounted to $5,724,785 consisting of $1,150,000 of underwriting fees paid in cash, $4,025,000 of deferred underwriting fees
payable (which are held in a trust account with Continental Stock Transfer & Trust Company acting as trustee (the “Trust
Account”)), and $549,785 of costs related to the Initial Public Offering. Cash of $531,309 was held outside of the Trust
Account on August 31, 2022 and was available for working capital purposes. As described in Note 6, the $4,025,000 deferred
underwriting fees are contingent upon the consummation of the Business Combination.
The
Company must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the net
assets held in the Trust Account (as defined below) (excluding the deferred underwriting commissions and taxes payable on the
interest earned on the Trust Account) at the time of signing a definitive agreement in connection with the initial Business Combination.
However, the Company will complete the initial Business Combination only if the post-Business Combination company in which its
public shareholders own shares will own or acquire 50% or more of the outstanding voting securities of the target or is otherwise
not required to register as an investment company under the Investment Company Act. There is no assurance that the Company will
be able to complete a Business Combination successfully.
Upon
the closing of the Initial Public Offering, an amount of $117,300,000 ($10.20 per Unit) from the net proceeds of the sale of the
Units in the Initial Public Offering and the Private Placement was placed in a trust account (“Trust Account”) and
may only be invested in United States “government securities” within the meaning set forth in Section 2(a)(16)
of the Investment Company Act of 1940, as amended (the “Investment Company Act”), 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. Except with respect to interest earned on the funds held in the Trust
Account that may be released to the Company to pay its tax obligations and up to $100,000 of interest that may be used for its
dissolution expenses, the proceeds from the Initial Public Offering and the sale of the Private Placement Warrants held in the
Trust Account will not be released from the Trust Account until the earliest to occur of: (a) the completion of the initial Business
Combination, (b) the redemption of any public shares properly submitted in connection with a shareholder vote to amend the Company’s
amended and restated memorandum and articles of association (i) to modify the substance or timing of the Company’s obligation
to allow redemption in connection with the initial Business Combination or certain amendments to the memorandum and articles of
association prior thereto or 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 Initial Public Offering (or as extended by the Company’s shareholders in accordance
with the Company’s amended and restated memorandum and articles of association) (the “Combination Period”) or
(ii) with respect to any other provision relating to shareholders’ 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, 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 its public shareholders.
AURA
FAT PROJECTS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
AUGUST 31,
2022
(Unaudited)
The
Company will provide its public shareholders 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 shareholder meeting called to approve the initial Business
Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a proposed
initial Business Combination or conduct a tender offer will be made by the Company, solely in its discretion, and will be based
on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require the Company
to seek shareholder approval under applicable law or share exchange listing requirements.
The
public shareholders are entitled 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 (which interest shall be net of taxes payable), divided by the number of then outstanding public shares, subject
to the limitations described herein. The amount in the Trust Account is initially anticipated to be $10.20 per public share, however,
there is no guarantee that investors will receive $10.20 per share upon redemption.
The
shares of ordinary share subject to redemption were recorded at a redemption value and classified as temporary equity upon the
completion of the Initial Public Offering, 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 ordinary shares are not classified as
a “penny stock” upon such consummation of a Business Combination and, if the Company seeks shareholder approval, a
majority of the issued and outstanding shares voted are voted in favor of the Business Combination.
The
Company will have only 15 months (or up to a 21-month if the Company chooses to extend such period, as described in more detail
in the final prospectus, or as extended by the Company’s shareholders in accordance with the amended and restated memorandum
and articles of association) from the closing of the Initial Public Offering to consummate the initial Business Combination. 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 its 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 shareholders’ rights as shareholders (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 shareholders and its board of directors, dissolve and
liquidate, subject in the case of clauses (ii) and (iii) above to the Company’s obligations under the laws of Cayman Islands
to provide for claims of creditors and the requirements of other applicable law.
The
Sponsor, officers and directors will enter into a letter agreement with Company, pursuant to which they will agree to (i) waive
their redemption rights with respect to any founder shares and public shares held by them in connection with the completion of
the initial Business Combination, (ii) waive their redemption rights with respect to any founder shares and public shares held
by them in connection with a shareholder vote to approve an amendment to the Company’s amended and restated memorandum and
articles of association (A) to modify the substance or timing of the Company’s obligation to allow redemption in connection
with the initial Business Combination or certain amendments to the Company’s amended and restated memorandum and articles
of association prior thereto or to redeem 100% of the public shares if the Company does not complete the initial Business Combination
within the Combination Period for each three month extension, into the Trust Account, or as extended by the Company’s shareholders
in accordance with the Company’s amended and restated memorandum and articles of association), or (B) with respect to any
other provision relating to any other provision relating to the rights of holders of the Class A ordinary shares and (iii) waive
their rights to liquidating distributions from the Trust Account with respect to any founder shares held by them if the Company
fails to complete the initial Business Combination within the Combination Period although the Company 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.
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 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 per 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 Initial Public Offering 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 believe 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.
AURA
FAT PROJECTS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
AUGUST 31,
2022
(Unaudited)
Going
Concern Consideration
As
of August 31, 2022, the Company had $531,309 in its operating bank accounts and working capital of $605,433, which excludes
$567,008 of income earned on the Trust Account, which may be used to pay tax obligations.
Until
the consummation of a Business Combination, the Company will be using the funds not held in the Trust Account for identifying
and evaluating prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel
expenditures, selecting the target business to acquire, and structuring, negotiating and consummating the Business Combination.
The
Company expects to incur significant costs in pursuit of its acquisition plans and will not generate any operating revenues until
after the completion of its initial business combination. The Company will need to raise additional capital through loans or additional
investments from its Sponsor, shareholders, officers, directors, or third parties. The Company’s officers, directors and
Sponsor may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they deem
reasonable in their sole discretion, to meet the Company’s working capital needs. Accordingly, the Company may not be able
to obtain additional financing. If the Company is unable to raise additional capital, it may be required to take additional measures
to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of
a potential transaction, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available
to it on commercially acceptable terms, if at all. If the Company is unable to complete the Business Combination because it does
not have sufficient funds available, the Company will be forced to cease operations and liquidate the Trust Account. In connection
with the Company’s assessment of going concern considerations in accordance with Accounting Standards Update (“ASU”)
2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management
has determined that if the Company is unable to raise additional funds to alleviate liquidity needs as well as complete an Initial
Business Combination by July 18, 2023, then the Company will cease all operations, except for the purpose of liquidating.
The liquidity condition and the date for mandatory liquidation and subsequent dissolution raise substantial doubt about the Company’s
ability to continue as a going concern. Management plans to consummate a business combination prior to the mandatory liquidation
date. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate
after July 18, 2023.
Risks
and Uncertainties
Management
continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus
could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company,
the specific impact is not readily determinable as of the date of this financial statement. The financial statement does not include
any adjustments that might result from the outcome of this uncertainty.
Additionally,
as a result of the military action commenced in February 2022 by the Russian Federation and Belarus in the country of Ukraine
and related economic sanctions, the Company’s ability to consummate a Business Combination, or the operations of a target
business with which the Company ultimately consummates a Business Combination, may be materially and adversely affected. Further,
the Company’s ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which
may be impacted by these events, including as a result of increased market volatility, or decreased market liquidity in third-party
financing being unavailable on terms acceptable to the Company or at all. The impact of this action and related sanctions on the
world economy and the specific impact on the Company’s financial position, results of operations and/or ability to consummate
a Business Combination are not yet determinable. The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
AURA
FAT PROJECTS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
AUGUST 31,
2022
(Unaudited)
NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in
the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to
Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial
statements prepared in accordance with GAAP have been omitted, pursuant to the rules and regulations of the SEC for interim financial
reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial
position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited financial statements
include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial
position, operating results and cash flows for the periods presented.
The
accompanying unaudited financial statements should be read in conjunction with the Company’s prospectus for its Initial
Public Offering, as filed with the SEC on April 14, 2022, as well as the Company’s Current Reports on Form 8-K,
as filed with the SEC on April 22, 2022. The interim results for the period from December 6, 2021 (inception) through
August 31, 2022 are not necessarily indicative of the results to be expected for the period ending November 30, 2022
or for any future periods.
Emerging
Growth Company
The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the
Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from
various reporting requirements that are applicable to other public companies that are not emerging growth companies including,
but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements
of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic
reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation
and shareholder approval of any golden parachute payments not previously approved.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared
effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and
comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The
Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and
it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the
new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s
financial statement 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 the financial statements in conformity with GAAP requires the Company’s management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the 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 August 31, 2022.
AURA
FAT PROJECTS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
AUGUST 31,
2022
(Unaudited)
Marketable
Securities Held in Trust Account
At
August 31, 2022, substantially all of the assets held in the Trust Account were held in U. S. Treasury Bills. All the Company’s
investments held in the Trust Account are classified as trading securities. Trading securities are presented on the balance sheet
at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of investments held
in Trust Account are included in interest earned on marketable securities held in Trust Account in the accompanying statements
of operations. The estimated fair values of investments held in Trust Account are determined using available market information.
Offering
Costs associated with an Initial Public Offering
The
Company complies with the requirements of the Financial Accounting Standards Board ASC 340-10-S99-1 and SEC Staff Accounting Bulletin
(“SAB”) Topic 5A, “Expenses of Offering.” Offering costs of $549,784 consist principally of costs incurred
in connection with formation of the Company and preparation for the Initial Public Offering. These costs, together with the underwriter
discount of $5,175,000, were charged to additional paid-in capital upon completion of the Initial Public Offering.
Class
A Ordinary Shares Subject to Possible Redemption
The
Company accounts for its Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC 480 “Distinguishing
Liabilities from Equity”. Class A ordinary shares subject to mandatory redemption are classified as a liability instrument
and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights
that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within
the Company’s control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’
equity. The Company’s Class A ordinary shares feature certain redemption rights that are considered to be outside of the
Company’s control and subject to occurrence of uncertain future events. Accordingly, at August 31, 2022, Class A ordinary
shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’
deficit section of the Company’s balance sheets.
The
Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable Class A
Ordinary Shares to equal the redemption value at the end of each reporting period. Increase or decreases in the carrying amount
of redeemable Class A Ordinary Shares are affected by charges against additional paid in capital and accumulated deficit.
As
of August 31, 2022, the Class A ordinary shares reflected on the balance sheet are reconciled in the following table:
| Schedule of the Class A ordinary shares reflected on balance sheet | |
| | |
| | |
As of
August 31,
2022 | |
| Gross proceeds | |
$ | 115,000,000 | |
| Less: | |
| | |
| Class A ordinary shares issuance costs | |
| (5,724,785 | ) |
| Plus: | |
| | |
| Adjustment of carrying value to initial redemption value | |
| 8,024,785 | |
| Accretion of carrying value to redemption value | |
| 567,008 | |
| Class A ordinary shares subject to possible redemption | |
$ | 117,867,008 | |
Income
Taxes
The
Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.”
ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement
of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more
likely than not to be sustained upon examination by taxing authorities. The Company’s management determined that the Cayman
Islands is the Company’s major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized
tax benefits as income tax expense. As August 31, 2022, there were no unrecognized tax benefits and no amounts accrued for
interest and penalties. 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 considered to be an exempted Cayman Islands company with no connection to any other taxable jurisdiction and is presently
not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States. As such, the Company’s
tax provision was zero for the period presented. The Company’s management does not expect that the total amount of unrecognized
tax benefits will materially change over the next twelve months.
AURA
FAT PROJECTS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
AUGUST 31,
2022
(Unaudited)
Net
Income per Ordinary Share
The
Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net income
per ordinary share is computed by dividing net income by the weighted average number of ordinary share outstanding for the period.
Accretion associated with the redeemable shares of Class A ordinary shares is excluded from earnings per share as the redemption
value approximates fair value.
The
calculation of diluted income per share does not consider the effect of the warrants issued in connection with the (i) Initial
Public Offering, and (ii) the private placement since the exercise of the warrants is contingent upon the occurrence of future
events. The warrants are exercisable to purchase 16,500,000 Class A ordinary shares in the aggregate. For the respective periods
ending August 31, 2022, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised
or converted into ordinary shares and then share in the earnings of the Company. As a result, diluted net income per ordinary
share is the same as basic net income per ordinary shares for the periods presented.
The
following table reflects the calculation of basic and diluted net income per ordinary share (in dollars, except per share amounts):
| Schedule of basic and diluted net loss per ordinary share | |
| | | |
| | | |
| | | |
| | |
| | |
Three Months Ended
August 31,
2022 | | |
For the
Period from
December 6, 2021
(Inception) Through
August 31,
2022 | |
| | |
Class A | | |
Class B | | |
Class A | | |
Class B | |
| Basic and diluted net income per ordinary share | |
| | | |
| | | |
| | | |
| | |
| Numerator: | |
| | | |
| | | |
| | | |
| | |
| Allocation of net income, as adjusted | |
$ | 222,477 | | |
$ | 55,068 | | |
$ | 104,405 | | |
$ | 42,821 | |
| Denominator: | |
| | | |
| | | |
| | | |
| | |
| Basic and diluted weighted average shares outstanding | |
| 11,615,000 | | |
| 2,875,000 | | |
| 5,850,840 | | |
| 2,399,720 | |
| Basic and diluted net income per ordinary share | |
$ | 0.02 | | |
$ | 0.02 | | |
$ | 0.02 | | |
$ | 0.02 | |
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution
which, at times, may exceed the Federal Depository Insurance Corporation coverage limit of $250,000. The Company has not experienced
losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair
Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet, primarily due to
its short-term nature.
Recent
Accounting Standards
In
August 2020, the Financial Accounting Standards Board (“FASB”) issued 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)
(“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 January 1, 2024 and should be applied on
a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company continues
to evaluate the impact of ASU 2020-06 on its 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 financial statements.
AURA
FAT PROJECTS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
AUGUST 31,
2022
(Unaudited)
NOTE
3. INITIAL PUBLIC OFFERING
Pursuant
to the Initial Public Offering, the Company sold 11,500,000 Units at a price of $10.00 per Unit. Each Unit consists of one Class
A ordinary share and one redeemable warrant. Only whole warrants are exercisable. Each whole warrant is exercisable to purchase
one Class A ordinary share at $11.50 per share.
NOTE
4. PRIVATE PLACEMENT
Simultaneously
with the closing of the Initial Public Offering, the Company’s Sponsor purchased an aggregate of 5,000,000 warrants, at
a price of $1.00 per Private Placement Warrant, for an aggregate purchase price of $5,000,000.
Each
Private Placement Warrant is identical to the warrants offered by the Initial Public Offering, except as described below. There
will be no redemption rights or liquidating distributions from the Trust Account with respect to the Private Placement Warrants,
which will expire worthless if the Company does not consummate a Business Combination within the Combination Period. The Private
Placement Warrants (including the Class A ordinary shares issuable upon exercise of the placement warrants) are identical to the
warrants sold in the Initial Public Offering except that (a) the placement warrants and their component securities will not be
transferable, assignable or saleable until 30 days after the consummation of our initial Business Combination, except to permitted
transferees, and (b) will be entitled to registration rights.
NOTE
5. RELATED PARTY TRANSACTIONS
Founder
Shares
On
January 7, 2022, the Sponsor paid $25,000, or approximately $0.009 per share, to cover certain offering costs in consideration
for 2,875,000 Class B ordinary shares, par value $0.0001 (the “Founder Shares”). Up to Founder Shares were
subject to forfeiture by the Sponsor depending on the extent to which the underwriters’ over-allotment option is exercised.
The Founder Shares are no longer subject to forfeiture due to full exercise of the over-allotment by the underwriter.
The
Company’s initial shareholders have agreed not to transfer, assign or sell any of their Founder Shares (or ordinary shares
issuable upon conversion thereof) until the earlier to occur of: (A) 180 days after the completion of the initial Business Combination
and (B) the date on which the Company complete a liquidation, merger, capital share exchange, reorganization or other similar
transaction that results in all of the Company’s shareholders having the right to exchange their ordinary shares for cash,
securities or other property (the “Lock-up”). Any permitted transferees will be subject to the same restrictions and
other agreements of the Company’s initial shareholders with respect to any Founder Shares. Notwithstanding the foregoing,
the converted Class A ordinary shares will be released from the Lock-up if (i) the last reported sale price of the Class A ordinary
share equals or exceeds $12.00 per share (as adjusted for share subdivisions, share capitalizations, reorganizations, recapitalizations
and other transactions) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial
Business Combination or (ii) if the Company completes a transaction after the initial Business Combination which results in all
of the Company’s shareholders having the right to exchange their shares for cash, securities or other property.
Administrative
Services Fee
The
Company pays an affiliate of the Sponsor $ per month for office space, utilities and secretarial and administrative support
and to reimburse the Sponsor for any out-of-pocket expenses related to identifying, investigating, and completing an initial Business
Combination commencing on the filing of the initial draft registration statement, which was January 27, 2022. Upon completion
of the initial Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees. For
the three months ended August 31, 2022 and for the period from December 6, 2021 (inception) through August 31,
2022, the Company incurred $60,000 and $140,000, respectively, in fees for these services. As of August 31, 2022, $20,000
was owed to the affiliate and is presented in accounts payable and accrued expenses on the balance sheet.
Promissory
Note — Related Party
On
January 7, 2022, the Sponsor agreed to loan the Company up to $ to be used for a portion of the expenses of the Initial
Public Offering. These loans are non-interest bearing, unsecured and are due at the earlier of or the closing
of the Initial Public Offering. On June 22, 2022 the Company paid the balance due on the promissory note of $83,954. As of
August 31, 2022, there was no outstanding under the Promissory Note. Borrowings under the Promissory Note are no longer available.
AURA
FAT PROJECTS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
AUGUST 31,
2022
(Unaudited)
Working
Capital Loans
In
order to finance transaction costs in connection with an intended 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 may repay the
Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans may
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 warrants of the post-Business Combination entity at a price of $1.00 per warrant at the option of the
lender. The warrants would be identical to the Private Placement Warrants. As of August 31, 2022, the Company had no borrowings
under the Working Capital Loans.
NOTE
6. COMMITMENTS
Registration
Rights
The
holders of the Founder Shares, the representative shares, Private Placement Warrants (including component securities contained
therein) and warrants (including securities contained therein) that may be issued upon conversion of Working Capital Loans, any
Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and any Class A ordinary shares and warrants
(and underlying Class A ordinary share) that may be issued upon exercise of the warrants as part of the Working Capital Loans
and Class A ordinary share issuable upon conversion of the Founder Shares, will be entitled to registration rights pursuant to
a registration rights agreement to be signed prior to or on the effective date of the Initial Public Offering, requiring the Company
to register such securities for resale (in the case of the Founder Shares, only after conversion to the Company’s Class
A ordinary share). The holders of the majority of these securities are entitled to make up to three demands, excluding short form
demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration
rights with respect to registration statements filed subsequent to the Company’s completion of the initial Business Combination
and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. The
registration rights agreement does not contain liquidated damages or other cash settlement provisions resulting from delays in
registering the securities. The Company will bear the expenses incurred in connection with the filing of any such registration
statements. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting
Agreement
The
Company granted the underwriters a 45-day option from the date of the Initial Public Offering to purchase up to an additional
1,500,000 units to cover over-allotments. This option was exercised on the date of the Initial Public Offering, April 18,
2022.
The
underwriters were paid a cash underwriting discount of 1% of the gross proceeds, which aggregated to $1,150,000 at the Initial
Public Offering. Additionally, the underwriters will be entitled to a deferred underwriting discount of 3.5% of the gross proceeds
of the IPO, which aggregates to $4,025,000, upon the completion of the Company’s initial Business Combination.
NOTE
7. STOCKHOLDERS’ DEFICIT
Preference
Shares — The Company is authorized to issue 1,000,000 preferred shares with a par value of $0.0001 and with such
designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors.
As of August 31, 2022, there were no preference shares issued or outstanding.
Class
A Ordinary Shares — The Company is authorized to issue 300,000,000 Class A ordinary shares with a par value of $0.0001
per share. At August 31, 2022, there were 115,000 Class A ordinary shares issued and outstanding (excluding 11,500,000 shares
subject to possible redemption that were classified as temporary equity in the accompanying balance sheet).
Class
B Ordinary Shares — The Company is authorized to issue 30,000,000 Class B ordinary shares with a par value of $0.0001
per share. Holders are entitled to one vote for each share of Class B ordinary shares. At August 31, 2022, there were 2,875,000
Class B ordinary shares issued and outstanding.
AURA
FAT PROJECTS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
AUGUST 31,
2022
(Unaudited)
Only
holders of the Founder Shares will have the right to vote on the appointment of directors. Holders of the public shares will not
be entitled to vote on the appointment of directors during such time. In addition, prior to the completion of an initial Business
Combination, holders of a majority of the Company’s Founder Shares may remove a member of the board of directors for any
reason by ordinary resolution. These provisions of the Company’s amended and restated memorandum and articles of association
may only be amended by a special resolution passed by not less than 90% of the ordinary shares who attend and vote at the Company’s
general meeting. Additionally, in a vote to continue the company in a jurisdiction outside the Cayman Islands (which a special
resolution), holders of the Company’s Founder Shares will have ten votes for every founder share and holders of the Class
A ordinary shares will have one vote for every Class A ordinary share. With respect to any other matter submitted to a vote of
the Company’s shareholders, including any vote in connection without initial Business Combination, except as required by
law, holders of the Company’s Founder Shares and holders of the public shares will vote together as a single class, with
each share entitling the holder of one vote.
The
Class B ordinary shares will automatically convert into Class A ordinary shares at the time of the consummation of the initial
Business Combination on a one-for-one basis, subject to adjustment for share subdivisions, share dividends, reorganizations, recapitalizations
and the like, and subject to further adjustment as provided herein. In the case that additional Class A ordinary shares, or equity-linked
securities, are issued or deemed issued in excess of the amounts offered in this prospectus and related to the closing of the
initial Business Combination, the ratio at which Class B ordinary shares shall convert into Class A ordinary shares will be adjusted
(unless the holders of a majority of the outstanding Class B ordinary shares agree to waive such adjustment with respect to any
such issuance or deemed issuance) so that the number of Class A ordinary shares issuable upon conversion of all Class B ordinary
shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all ordinary shares outstanding
upon the completion of the Initial Public Offering (excluding the Private Placement Warrants and underlying securities and the
representative shares) plus all Class A ordinary shares 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 or any private placement-equivalent units and their underlying securities issued to the Sponsor or
its affiliates upon conversion of Working Capital Loans made to the Company). The term “equity-linked securities”
refers to any debt or equity securities that are convertible, exercisable or exchangeable for Class A ordinary shares issued 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. Any conversion of Class
B ordinary shares described herein will take effect as a compulsory redemption of Class B ordinary shares and an issuance of Class
A ordinary shares as a matter of Cayman Islands law. In no event will the Class B ordinary shares convert into Class A ordinary
shares at a rate of less than one-to-one.
Warrants
— Each whole warrant entitles the holder to purchase one Class A ordinary share at a price of $11.50 per share,
subject to adjustment as discussed herein. In addition, if (x) the Company issue additional Class A ordinary shares 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 Class A ordinary share (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 such affiliates, as applicable, 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 Company’s
Class A ordinary share during the 20 trading day period starting on the trading day prior to the day on which the Company consummate
the initial Business Combination (such price, the “Market Value”) is below $9.20 per share, then the exercise price
of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the greater of the Market Value and the Newly Issued
Price, and the $18.00 per share redemption trigger price described below under “Redemption of warrants” will be adjusted
(to the nearest cent) to be equal to 180% of the greater of the Market Value and the Newly Issued Price.
The
warrants will become exercisable on the later of 12 months from closing of the Initial Public Offering and the date of the consummation
of the initial Business Combination and will expire five years after the completion of the Company’s initial Business Combination,
at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.
The
Company is not registering the Class A ordinary shares issuable upon exercise of the warrants at this time. However, the Company
has agreed the Company will use its best efforts to file with the SEC a registration statement covering the issuance of the Class
A ordinary shares issuable upon exercise of the warrants, to cause such registration statement to become effective within 60 business
days following the initial Business Combination and to maintain a current prospectus relating to those Class A ordinary shares
until the warrants expire or are redeemed, as specified in the warrant agreement. If a registration statement covering the issuance
of the Class A ordinary shares issuable upon exercise of the warrants is not effective by the 60th business 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. If that exemption,
or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis.
AURA
FAT PROJECTS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
AUGUST 31,
2022
(Unaudited)
Redemption
of warrants when the price per Class A ordinary share equals or exceeds $18.00. Once the warrants become exercisable, the
Company may redeem the outstanding 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 given after the warrants become exercisable (the “30-day
redemption period”) to each warrant holder; and |
| |
|
|
| |
● |
if,
and only if, the reported last sale price of the Class A ordinary share equals or exceeds $18.00 per share (as adjusted for
share subdivisions, share dividends, rights issuances, reorganizations, recapitalizations and the like) for any 20 trading
days within a 30-trading day period commencing once the warrants become exercisable and ending 3 business days before the
Company send the notice of redemption to the warrant holders. |
If
holders of Private Placement Warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering
the warrants for that number of Class A ordinary shares equal to the quotient obtained by dividing (x) the product of the number
of Class A ordinary shares underlying the warrants, multiplied by the excess of the “fair market value” (defined below)
over the exercise price, by (y) the fair market value. The “fair market value” for this purpose shall mean the average
reported last sale price of the Class A ordinary share for the 10 trading days ending on the third trading day prior to the date
on which the notice of redemption is sent to the holders of warrants.
Representative
Shares
The
Company issued to the representative or its designees 115,000 shares of Class A ordinary shares upon the consummation of the Initial
Public Offering. These shares are referred to as the “representative shares”. The holders of the representative shares
have agreed not to transfer, assign or sell any such ordinary shares until the completion of the initial Business Combination.
In
addition, the holders of the representative’s shares have agreed (i) that they will not transfer, assign or sell any such
shares without the Company’s prior consent until the completion of the initial Business Combination, (ii) to waive their
redemption rights (or right to participate in any tender offer) with respect to such shares in connection with the completion
of the initial Business Combination and (iii) to waive their rights to liquidating distributions from the Trust Account with respect
to such shares if the Company fails to complete the initial Business Combination within the Combination Period. The representative’s
shares are deemed to be underwriters’ compensation by FINRA pursuant to FINRA Rule 5110.
NOTE
8. FAIR VALUE MEASUREMENTS
The
Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value
at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The
fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company
would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an
orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets
and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and
to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities).
The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable
inputs used in order to value the assets and liabilities:
| |
Level
1: |
Quoted
prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which
transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing
basis. |
| |
Level
2: |
Observable
inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or
liabilities and quoted prices for identical assets or liabilities in markets that are not active. |
| |
Level
3: |
Unobservable
inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. |
AURA
FAT PROJECTS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
AUGUST 31,
2022
(Unaudited)
At
August 31, 2022, assets held in the Trust Account were comprised of $561 in cash and $117,866,447 in U.S. Treasury securities.
During the three months ended August 31, 2022, the Company did not withdraw any interest income from the Trust Account.
The
following table presents information about the Company’s assets that are measured at fair value on a recurring basis at
August 31, 2022 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair
value:
| Schedule of Fair Value, Assets Measured on Recurring Basis | |
| | |
| | |
| Description | |
Level | | |
August 31,
2022 | |
| Assets: | |
| | |
| | |
| Investments held in Trust Account – U.S. Treasury Securities Money Market Fund | |
1 | | |
$ | 117,867,008 | |
NOTE
9. SUBSEQUENT EVENTS
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial
statements were available to be issued. Based upon this review, other than the below, the Company did not identify any subsequent
events that would have required adjustment or disclosure in the financial statements.