SPK ACQUISITION CORP.
CONDENSED BALANCE SHEETS
(Unaudited)
| |
| | | |
| | |
| |
March
31, 2022 | |
December 31,
2021 |
ASSETS |
CURRENT
ASSETS | |
| | | |
| | |
Cash | |
$ | 98,216 | | |
$ | 259,228 | |
Prepaid
expenses and other current assets | |
| 64,457 | | |
| 108,198 | |
Marketable
securities held in trust account | |
| 50,912,228 | | |
| 50,913,517 | |
Total
current assets | |
| 51,074,901 | | |
| 51,280,943 | |
TOTAL
ASSETS | |
$ | 51,074,901 | | |
$ | 51,280,943 | |
| |
| | | |
| | |
LIABILITIES
AND STOCKHOLDERS’ DEFICIT |
CURRENT
LIABILITIES | |
| | | |
| | |
Accounts
payable | |
$ | 353,619 | | |
$ | 103,175 | |
Due
to related party | |
| — | | |
| 2,883 | |
Franchise
taxes payable | |
| 7,800 | | |
| 20,800 | |
Deferred
underwriting fee payable | |
| 1,527,358 | | |
| 1,527,358 | |
Total
current liabilities | |
| 1,888,777 | | |
| 1,654,216 | |
TOTAL
LIABILITIES | |
| 1,888,777 | | |
| 1,654,216 | |
| |
| | | |
| | |
COMMITMENTS
AND CONTINGENCIES | |
| | | |
| | |
Redeemable
Common Stock | |
| | | |
| | |
Common
stock subject to possible redemption, $0.0001
par value, 5,091,196
shares at redemption value of $10.00
per share) | |
| 50,911,960 | | |
| 50,911,960 | |
| |
| | | |
| | |
STOCKHOLDERS’
DEFICIT | |
| | | |
| | |
Common
Stock; $0.0001
par value; 10,000,000
shares authorized; 1,505,079
shares issued and outstanding (excluding 5,091,196
shares subject to possible redemption) | |
| 151 | | |
| 151 | |
Additional
paid-in capital | |
| — | | |
| — | |
Accumulated
deficit | |
| (1,725,987 | ) | |
| (1,285,384 | ) |
Total
stockholders’ deficit | |
| (1,725,836 | ) | |
| (1,285,233 | ) |
TOTAL
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |
$ | 51,074,901 | | |
$ | 51,280,943 | |
The accompanying notes are an integral part of these
unaudited financial statements.
SPK ACQUISITION CORP.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
| |
| | | |
| | |
| |
For
the Three Months Ended March 31, 2022 | |
For
the Three Months Ended March 31, 2021 |
OPERATING
EXPENSES | |
| | | |
| | |
General
and administrative | |
$ | 433,514 | | |
$ | 2,205 | |
Franchise
tax | |
| 7,800 | | |
| — | |
Total
expenses | |
| 441,314 | | |
| 2,205 | |
| |
| | | |
| | |
LOSS
FROM OPERATIONS | |
| (441,314 | ) | |
| (2,205 | ) |
| |
| | | |
| | |
OTHER
INCOME | |
| | | |
| | |
Interest
income | |
| 711 | | |
| — | |
Total
other income | |
| 711 | | |
| — | |
NET
LOSS | |
$ | (440,603 | ) | |
$ | (2,205 | ) |
| |
| | | |
| | |
Weighted
average shares outstanding of redeemable common stock | |
| 5,091,196 | | |
| — | |
Basic
and diluted net loss per share | |
$ | (0.07) | | |
$ | — | |
| |
| | | |
| | |
Weighted
average shares outstanding of non-redeemable common stock | |
| 1,505,079 | | |
| 1,250,000 | (1) |
Basic
and diluted net income (loss) per share, non-redeemable common stock | |
$ | (0.07 | ) | |
| — | |
(1) | | This
number excludes up to 187,500 shares of common stock subject to forfeiture if the over-allotment
option is not exercised in full or in part by the underwriters |
The accompanying notes
are an integral part of these unaudited financial statements.
SPK ACQUISITION CORP.
STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY (DEFICIT)
(Unaudited)
| |
| | | |
| | | |
| | | |
| | | |
| | |
| |
Common
Stock | |
Additional Paid-In | |
Accumulated | |
Total Stockholders’ |
| |
Shares | |
Amount | |
Capital | |
Deficit | |
Deficit |
Balance as
of January 1, 2022 | |
| 1,505,079 | | |
$ | 151 | | |
| — | | |
$ | (1,285,384 | ) | |
$ | (1,285,233 | ) |
Net loss | |
| — | | |
| — | | |
| — | | |
| (440,603 | ) | |
| (440,603 | ) |
Balance as of March 31,
2022 | |
| 1,505,079 | | |
$ | 151 | | |
$ | — | | |
$ | (1,725,987 | ) | |
$ | (1,725,836 | ) |
| |
Common
Stock | |
Additional
Paid-In | |
Accumulated | |
Total
Stockholders’ |
| |
Shares | |
Amount | |
Capital | |
Deficit | |
Equity |
| |
| — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
Issuance
of common stock to Sponsor (1) | |
| | |
| 144 | | |
| 24,856 | | |
| — | | |
| 25,000 | |
Net
loss | |
| — | | |
| — | | |
| — | | |
| (2,205 | ) | |
| (2,205 | ) |
Balance
as of March 31, 2021 | |
| 1,437,500 | | |
$ | 144 | | |
$ | 24,856 | | |
$ | (2,205 | ) | |
$ | 22,795 | |
(1) |
This
number includes an aggregate of up to 187,500 shares of common stock subject to forfeiture if the overallotment option is not exercised
in full or in part by the underwriter. |
The accompanying notes
are an integral part of these unaudited financial statements.
SPK ACQUISITION CORP.
STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2022 |
|
For the Three Months Ended March 31, 2021 |
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(440,603 |
) |
|
$ |
(2,205 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Interest earned in trust account |
|
|
(711 |
) |
|
|
— |
|
Due to related party |
|
|
(2,883 |
) |
|
|
— |
|
Prepaid expenses and other assets |
|
|
43,742 |
|
|
|
— |
|
Accounts payable accrued expenses |
|
|
250,444 |
|
|
|
2,190 |
|
Franchise tax Payable |
|
|
(13,000 |
) |
|
|
— |
|
Net cash used in operating activities |
|
|
(163,012 |
) |
|
|
(15 |
) |
Cash
Flows from Investing Activities: |
|
|
|
|
|
|
|
|
Proceeds
from Trust to pay franchise tax |
|
|
2,000 |
|
|
|
— |
|
Net
cash provided by investing activities |
|
|
2,000 |
|
|
|
— |
|
Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
|
Proceeds from issuance of insider shares to the initial stockholders |
|
$ |
— |
|
|
|
25,000 |
|
Proceeds from issuance of promissory note to related party |
|
|
— |
|
|
|
200,000 |
|
Payment of deferred offering costs |
|
|
— |
|
|
|
(87,500 |
) |
Proceeds from Trust to pay franchise tax |
|
|
— |
|
|
|
— |
|
Net cash provided by financing activities |
|
|
— |
|
|
|
137,500 |
|
Net change in cash |
|
|
(161,012 |
) |
|
|
137,485 |
|
Cash, beginning of the period |
|
|
259,228 |
|
|
|
— |
|
Cash, end of the period |
|
$ |
98,216 |
|
|
$ |
137,485 |
|
Supplemental Disclosure of Cash Flow Information: |
|
|
|
|
|
|
|
|
Deferred offering costs in accrued offering costs and expenses |
|
$ |
— |
|
|
$ |
40,494 |
|
The accompanying notes
are an integral part of these unaudited financial statements.
SPK ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Note
1 — Organization and Business Operation
SPK Acquisition Corp.
(the “Company”) is a newly organized blank check company incorporated pursuant to the General Corporation Law of the State
of Delaware on December 31, 2020 that was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase,
reorganization or similar business combination with one or more businesses (the “initial business combination”). The Company’s
efforts to identify a prospective target business will not be limited to a particular industry or geographic region, although the Company
intends to focus on operating businesses in the sectors of telecommunications, media, and technology (“TMT”) in Asia. The
Company did not any specific business combination target with respect to the initial business combination.
As of March 31, 2022,
the Company had not commenced any operations. All activity through March 31, 2022 relates to the Company’s formation and initial
public offering (the “Initial Public Offering”), which is described below, and, since the offering, the search for a prospective
initial Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business
Combination, at the earliest. The Company will generate non-operating income in the form of interest income earned on investments from
the proceeds derived from the Initial Public Offering. The registration statement for the Company’s Initial Public Offering was
declared effective on June 7, 2021. On June 10, 2021, the Company consummated the Initial Public Offering of 5,000,000
units (the “Units”) with respect to the Common Stock (the “Common Stock”)
included in the Units being offered (the “Public Shares”) at $10.00
per Unit generating gross proceeds of $50,000,000,
which is discussed in Note 3.
Simultaneously with
the closing of the Initial Public Offering, the Company consummated the sale of 205,000
units (“Private Placement Units”) at a price of $10.00
per Private Placement Unit in a private placement to the Company’s sponsor SPK Acquisition,
LLC (the “Sponsor”) generating gross proceeds of $2,050,000,
which is described in Note 4.
On July 20, 2021, the
underwriters notified the Company of their intention to partially exercise their over-allotment option. On July 22, 2021, the Company
consummated the sale of an additional 91,196
Units, at $10.00
per Unit, and the sale of an additional 1,824
Private Placement Units, at $10.00
per Private Placement Unit, generating total gross proceeds of $930,200.
Offering costs for
the Initial Public Offering and underwriters’ partial exercise of the over-allotment option amounted to $3,211,839,
consisting of $1,018,240
of underwriting fees, $1,527,358
of deferred underwriting fees payable (which are held in the Trust Account (defined below)),
and $666,241
of other costs. As described in Note 6, the $1,527,358
of deferred underwriting fee payable is contingent upon the consummation of a Business Combination
by June 10, 2022, subject to the terms of the underwriting agreement.
Following the closing
of the Initial Public Offering on June 10, 2021, an amount of $50,000,000
($10.00
per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and
the sale of the Private Units was placed in a trust account (the “Trust Account”). On July 22, 2021, an additional $($per Unit) was placed in the Trust Account from proceeds received from the Overallotment Units.
These proceeds may be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment
Company Act, with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market
fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the
consummation of a Business Combination or (ii) the distribution of the funds in the Trust Account as described below.
The Company’s
management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale
of the Private Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business
Combination. The Company’s initial Business Combination must be with one or more target businesses that together have a fair market
value equal to at least 80%
of the balance in the Trust Account (less any deferred underwriting commissions and net of amounts previously released to the Company
to pay its tax obligations) at the time of the signing of an agreement to enter into a Business Combination. The Company will only complete
a Business Combination if the post-Business Combination 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, or the Investment Company
Act. There is no assurance that the Company will be able to successfully effect a Business Combination.
The Company will provide
its holders of the outstanding Public Shares with the opportunity to redeem all or a portion of their Public Shares upon the completion
of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by
means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a
tender offer will be made by the Company, solely in its discretion. The stockholders will be entitled to redeem their shares for a pro
rata portion of the amount then on deposit in the Trust Account (initially $10.00 per share, plus any pro rata interest earned on the
funds held in the Trust Account and not previously released to the Company to pay its tax obligations). The per-share amount to be distributed
to stockholders who redeem their shares will not be reduced by the deferred underwriting commission the Company will pay to the underwriters
(as discussed in Note 6).
All of the Public Shares
contain a redemption feature which allows for the redemption of such Public Shares in connection with the Company’s liquidation,
if there is a shareholder vote or tender offer in connection with the Company’s Business Combination and in connection with certain
amendments to the Company’s amended and restated certificate of incorporation (the “Certificate of Incorporation”).
In accordance with the rules of the U.S. Securities and Exchange Commission (the “SEC”) and its guidance on redeemable equity
instruments, which has been codified in Accounting Standards Codification (“ASC”) 480-10-S99, redemption provisions not solely
within the control of a company require ordinary shares subject to redemption to be classified outside of permanent equity. Given that
the Public Shares will be issued with other freestanding instruments (i.e., public rights), the initial carrying value of the Public
Shares classified as temporary equity will be the allocated proceeds determined in accordance with ASC 470-20. The Public Shares are
subject to ASC 480-10-S99. If it is probable that the equity instrument will become redeemable, the Company has the option to either
(i) 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 (ii) 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 has elected to recognize the changes immediately. The accretion or remeasurement will be treated as a deemed dividend
(i.e., a reduction to retained earnings, or in absence of retained earnings, additional paid-in capital).
Redemptions of the
Company’s Public Shares may be subject to the satisfaction of conditions, including minimum cash conditions, pursuant to an agreement
relating to the Company’s Business Combination. If the Company seeks shareholder approval of the Business Combination, the Company
will proceed with a Business Combination if a majority of the shares voted are voted in favor of the Business Combination, or such other
vote as required by law or share exchange rule. If a shareholder vote is not required by applicable law or share exchange listing requirements
and the Company does not decide to hold a shareholder vote for business or other reasons, the Company will, pursuant to its Certificate
of Incorporation, conduct the redemptions pursuant to the tender offer rules of the SEC and file tender offer documents with the SEC
prior to completing a Business Combination. If, however, shareholder approval of the transaction is required by applicable law or share
exchange listing requirements, or the Company decides to obtain shareholder approval for business or other reasons, the Company will
offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules.
If the Company seeks shareholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares
(as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination.
Additionally, each Public Stockholder may elect to redeem their Public Shares without voting, and if they do vote, irrespective of whether
they vote for or against the proposed transaction.
Notwithstanding the
above, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender
offer rules, the Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of
such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section
13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares
with respect to more than an aggregate of 20% or more of the Public Shares, without the prior consent of the Company.
The Sponsor has agreed
to waive its liquidation rights with respect to the Private Shares if the Company fails to complete a Business Combination within the
Combination Period. However, if the Sponsor or any of its respective affiliates acquire Public Shares after the Initial Public Offering,
such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination
within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6)
held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such
event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of
the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution
will be less than the Initial Public Offering price per Unit ($10.00).
In order to protect
the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a vendor
for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering
into a transaction agreement, reduce the amounts in the Trust Account to below the lesser of (i) $10.00 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 $10.00
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 who executed a waiver of any and all rights to the monies held in the Trust Account nor will it apply
to any claims under the Company’s indemnity of the underwriters of Initial Public Offering against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed
waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such
third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to
claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which
the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies
held in the Trust Account.
If the Company is unable
to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose
of winding up, (ii) as promptly as reasonably possible but 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 taxes, 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 the case of clauses (ii) and (iii) to the Company’s obligations under Delaware law to provide
for claims of creditors and the requirements of other applicable law.
On February 11, 2022,
SPK entered into a Merger Agreement (the “Merger Agreement”) by and among Varian Biopharmaceuticals, Inc., a Florida
corporation (“Varian”), SPK, and SPK Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of SPK
(“Merger Sub”). These entities had not commenced any operations as of March 31,
2022. Pursuant to the terms of the Merger Agreement, a business combination between SPK and
Varian will be effected through the merger of Merger Sub with and into Varian with Varian surviving the merger as a wholly owned subsidiary
of SPK (the “Merger”). The board of directors of SPK has (i) approved and declared advisable the Merger Agreement,
the Additional Agreements (as defined in the Merger Agreement) and the transactions contemplated thereby and (ii) resolved to recommend
approval of the Merger Agreement and related transactions by the stockholders of SPK.
Risks and
Uncertainties
In March 2020, the
World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) as a pandemic which continues to spread
throughout the United States and the world. As of the date the financial statements were issued, there was considerable uncertainty around
the expected duration of this pandemic. Management continues to evaluate the impact of the COVID-19 pandemic and the Company has concluded
that while it is reasonably possible that COVID-19 could have a negative effect on completing the Proposed Public Offering and subsequently
identifying a target company for a Business Combination, the specific impact is not readily determinable as of the date of the financial
statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Going Concern and
Liquidity
As of March 31, 2022,
the Company had $ 98,216
in its operating bank accounts, $50,912,228
in securities held in the Trust Account to be used for a Business Combination or to repurchase
or redeem its common stock in connection there with and working capital deficit of $198,746.
The Company’s business plan is dependent on the completion of a Business Combination within the Combination Period. If the Company
is unable to compete a Business Combination within the Combination Period, it must liquidate. These conditions raise substantial doubt
about the Company’s ability to continue as a going concern within a reasonable period of time, which is considered to be one year
from the issuance date of the financial statement.
Until the consummation
of a Business Combination, the Company will be using funds held outside of the Trust Account for paying existing accounts payable, identifying
and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and
from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements
of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the business
combination. If the Company’s estimates 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 a Business Combination.
These factors, among
others, raise substantial doubt about the Company’s ability to continue as a going concern one year from the date the financial
statement is issued. The financial statement does not include any adjustments that might result from its inability to consummate a Business
Combination or its inability to continue as a going concern.
Note
2 — Significant Accounting Policies
Basis
of Presentation
The accompanying financial
statements of the Company are presented in conformity with accounting principles generally accepted in the United States of America
(“US GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).
The accompanying unaudited
financial statements as of March 31, 2022 have been prepared in accordance with U.S. GAAP for interim financial information and Article
8 of Regulation S-X. In the opinion of management, all
adjustments (consisting of normal accruals) considered for a fair presentation have been included. Operating results for the year ended
March 31, 2022 are not necessarily indicative of the results that may be expected for any future period.
Emerging
Growth Company Status
The Company is an “emerging
growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified
by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from
various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not
limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements
of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously
approved.
Further, Section 102(b)(1)
of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until
private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class
of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS
Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging
growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition
period which means that when a standard is issued or revised and it has different application dates for public or private companies,
the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised
standard. This may make comparison of the Company’s financial statements with another public company that is neither an emerging
growth company nor an emerging growth company that 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 financial statements in conformity with US 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 financial statements and the
reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Cash
and Cash Equivalents
The Company considers
cash equivalents to be highly liquid investments with a maturity at the date of purchase of three months or less. The Company had cash
of $ $98,216
and did not
have any cash equivalents at March 31, 2022.
Concentration
of Credit Risk
Financial instruments
that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at
times, may exceed the Federal Depository Insurance Coverage of $250,000.
The Company has not experienced losses on this account.
Investments
Held in Trust Account
At March 31, 2022,
substantially all of the assets held in the Trust Account are comprised of investments in money market funds that invest in U.S. government
securities. The Company’s investments held in the Trust Account are classified as trading securities. Trading securities are presented
on the balance sheet at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of investments
held in Trust Account are included in interest earned on marketable securities held in Trust Account in the accompanying condensed statements
of operations. The estimated fair values of investments held in Trust Account are determined using available market information.
Offering
Costs
Offering costs were
$3,161,681
consisting principally of underwriting, legal, accounting and other expenses incurred through
the balance sheet date that are related to the Initial Public Offering and are charged to stockholders’ equity upon the completion
of the Public Offering. The Company complies with the requirements of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”)
Topic 5A - “Expenses of Offering”. The Company allocated offering costs between public shares and public rights based on
the relative fair values of public shares and public rights. Accordingly, $3,025,729
was allocated to public shares and charged to temporary equity, and $135,952
was allocated to public rights and charged to stockholders’ equity.
Offering costs related
to the underwriters’ partial exercise of their over-allotment option totaled $50,158
of which $48,001
was allocated and charged to temporary equity and $2,157
was allocated to public rights and charged to stockholders’ equity.
Common
stock subject to possible redemption
The Company accounts
for its common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”)
Topic 480 “Distinguishing Liabilities from Equity.” Shares of common stock subject to mandatory redemption (if any) is classified
as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features
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) is classified as temporary equity. At all other times, common stock is classified as stockholders’
equity. The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s
control and subject to occurrence of uncertain future events. Accordingly, at March 31, 2022, 5,091,196
shares of common stock subject to possible redemption is presented as temporary equity, outside
of the stockholders’ equity section of the Company’s balance sheet.
Net
Income (Loss) per Share
The Company complies
with accounting and disclosure requirements of FASB ASC 260, Earnings Per Share. In order to determine the net income (loss) attributable
to both the redeemable shares and non-redeemable shares, the Company first considered the undistributed income (loss) allocable to both
the redeemable shares and non-redeemable shares and the undistributed income (loss) is calculated using the total net loss less any dividends
paid. We then allocated the undistributed income (loss) ratably based on the weighted average number of shares outstanding between the
redeemable and non-redeemable shares. Any remeasurement of the accretion to redemption value of the common shares subject to possible
redemption was considered to be dividends paid to the public shareholders. As of March 31, 2022, the Company did not have any dilutive
securities and 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 loss per share is the same as basic loss per share for the period presented.
The net income (loss)
per share presented in the statement of operations is based on the following:
Schedule of net income (loss) | |
| |
|
| |
For
the Three months ended January 1, 2022 to March 31, 2022 | |
For
the Three months ended January 1, 2021 to March 31, 2021 |
Net
loss | |
$ | (440,603 | ) | |
$ | (2,205 | ) |
Schedule of net income (loss) per share | |
| | | |
| | | |
| | | |
| | |
| |
For
the Three months ended January 1, 2022 to March 31, 2022 | |
For
the Three months end from January 1, 2021 to March 31, 2021 |
| |
Redeemable
shares | |
Non-redeemable
shares | |
Redeemable
shares | |
Non-redeemable
shares |
Basic and Diluted net income
(loss) per share: | |
| | | |
| | | |
| | | |
| | |
Numerators: | |
| | | |
| | | |
| | | |
| | |
Allocation
of net losses included accretion | |
$ | (340,070 | ) | |
$ | (100,533 | ) | |
$ | | | |
$ | | |
Allocation
of net income (loss) | |
$ | (340,070 | ) | |
$ | (100,533 | ) | |
$ | | | |
$ | | |
| |
| | | |
| | | |
| | | |
| | |
Denominators: | |
| | | |
| | | |
| | | |
| | |
Weighted-average shares outstanding | |
| 5,091,196 | | |
| 1,505,079 | | |
| | | |
| 1,250,000 | |
Basic
and diluted net income (loss) per share | |
$ | (0.07 | ) | |
$ | (0.07 | ) | |
$ | | | |
$ | | |
Fair
Value of Financial Instruments
The fair value of the
Company’s assets and liabilities approximates the carrying amounts represented in the accompanying balance sheet, primarily due
to their short-term nature.
Income
Taxes
The Company accounts
for income taxes under ASC 740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities
for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected
future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to
be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. Deferred tax assets
were offset entirely by a valuation allowance as of March 31, 2022.
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 may be
subject to potential examination by federal, state and city 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, state and city 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. The Company is subject to income tax examinations by major taxing authorities since inception.
Recent
Accounting Pronouncements
In August 2020, the
Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt —
Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic
815-40) (“ASU 2020-06”) to simplify 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 for fiscal
years beginning after December 15, 2023, and should be applied on a full or modified retrospective basis. Early adoption is permitted,
but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company
adopted ASU 2020-06 effective January 1, 2021. The adoption of ASU 2020-06 did not have a material impact on the Company’s financial
statement. Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted,
would have a material effect on the Company’s financial statement.
Note
3 — Public Offering
Pursuant to the Initial
Public Offering , the Company sold 5,000,000
units at a price of $10
per unit (the “public units”) for gross proceeds of $50,000,000. The
units consist of one share of common stock and the right to receive one-tenth (1/10) of a share of common stock upon consummation of
an initial business combination. The underwriting agreement called for an over-allotment option equal to 15% of the total number of units
initially offered to the public. On June 10, 2021, the Company completed the Initial Public Offering (See Note 7) and on July 22, 2021
the underwriters’ over-allotment option was partially exercised resulting in an additional 91,196
units being sold at $10.00
per unit generating gross proceeds of $.
Note
4 — Private Placement
Concurrently with the
closing of the Initial Public Offering, the Sponsor purchased an aggregate of 205,000
Private Placement Units at a price of $10.00
per Private Placement Units for an aggregate purchase price of $2,050,000.
The proceeds from the Private Placement Units at the Initial Public Offering are held in the Trust Account. If the Company does not complete
a Business Combination within the Combination Period, the Private Placement Units will become worthless.
On July 20, 2021, the
underwriters notified the Company of their intention to partially exercise their over-allotment. On July 22, 2021, the Company consummated
the sale of an additional 1,824
Private Placement Units, at $10.00
per Private Placement Unit for an aggregate purchase price of $18,240.
Note
5 — Related Party Transactions
Founder Shares
Pursuant to a subscription
agreement dated January 28, 2021, the Company issued 1,437,500 shares of common stock to the Sponsor for $25,000, or approximately $0.017
per share (“insider shares”). The 1,437,500 founder shares held or controlled by the insiders include an aggregate of up
to 187,500 shares subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised in full or
in part. Since the underwriters did not exercise the over-allotment option in full, on July 22, 2021, 164,701 founder shares were forfeited
for no consideration. Accordingly, there were 1,272,799
founder shares outstanding as of March 31, 2022.
Sponsor Promissory
Note
On February 10, 2021,
the Company issued an unsecured promissory note to the Sponsor, pursuant to which the Company may borrow up to an aggregate principal
amount of $to be used for a portion of the expenses of the offering. This loan is non-interest bearing,
unsecured, and is due at the consummation of a initial public offering of the Company’s securities or the date on which the Company
determines not to conduct a initial public offering of its securities. The outstanding principal balance of the Sponsor promissory was
paid in full on July 20, 2021.
Additionally, if the
funds held outside the trust account after the consummation of the initial public offering are insufficient to meet the Company’s
working capital needs, the Company’s Sponsor or their affiliates may, but are not obligated to loan the Company funds, from time
to time or at any time in an amount they deem reasonable at their sole discretion. Each loan would be evidenced by a promissory note.
The notes would either be paid upon consummation of the Company’s initial business combination without interest, or at the discretion
of the holder up to $of the notes may be converted upon consummation of the Company’ initial business combination
into private units at a price of $per unit. If the Company does not complete a business combination, the loans will only be
repaid with funds not held in the trust account, to the extent available. As of March 31, 2022, there were no amounts outstanding under
this arrangement.
Related Party Extension
Loans
As discussed in Note
1, the Company may extend the period of time to consummate a Business Combination up to two times, each by an additional three months
(for a total of 15 months to complete a Business Combination). In order to extend the time available for the Company to consummate a
Business Combination, the Sponsor or its affiliates or designees must deposit into the Trust Account $500,000, or $575,000 if the underwriters’
over-allotment option is exercised in full ($0.10 per Public Share in either case, or an aggregate of $1,000,000 (or $1,150,000 if the
over-allotment option is exercised in full)), on or prior to the date of the applicable deadline, for each three month extension. Any
such payments would be made in the form of a non-interest bearing, unsecured promissory note. Such notes would either be paid upon consummation
of a Business Combination, or, at the relevant insider’s discretion, converted upon consummation of a Business Combination into
additional Private Units at a price of $10.00 per Private Unit. The Sponsor and its affiliates or designees are not obligated to fund
the Trust Account to extend the time for the Company to complete a Business Combination. As of March 31, 2022, there were no amounts
outstanding under this arrangement.
Note
6 — Commitments and Contingencies
Registration Rights
Pursuant to a registration
rights agreement entered into on January 28, 2021, the holders of the Founder Shares, the Private Units, and any shares that may be issued
in payment of Working Capital Loans (and all underlying securities) will be entitled to registration rights pursuant to a registration
rights agreement requiring the Company to register such securities for resale. The holders of a majority of these securities are entitled
to make up to two demands that the Company register such securities. The holders of the majority of the Founders Shares can elect to
exercise these registration rights at any time commencing three months prior to the date on which these shares of common stock are to
be released from escrow. The holders of a majority of the Private Units (and underlying securities) and securities issued in payment
of Working Capital Loans can elect to exercise these registration rights at any time commencing on the date that the Company consummates
a Business Combination. In addition, the holders have certain “piggy-back” registration rights with respect to registration
statements filed subsequent to the consummation of a Business Combination. Notwithstanding the foregoing, Chardan may not exercise its
demand and “piggyback” registration rights after five (5) and seven (7) years, respectively, after the effective date
of the Initial Public Offering and may not exercise its demand rights on more than one occasion. The registration rights agreement does
not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s securities.
The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Risks and Uncertainties
Management is currently
evaluating the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the pandemic
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 these financial statements. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Legal Fees
The Company has agreed
to pay its counsel $250,000 upon closing of the initial business combination. In the event that no business combination is completed,
no amounts will be due other than the retainers.
Underwriter’s
Agreement
The Company granted
the underwriters a 45-day option from the final prospectus relating to the Initial Public Offering to purchase up to 750,000 additional
Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions.
On July 20, 2021, the
underwriters notified the Company of their intention to partially exercise their over-allotment option. On July 22, 2021, the Company
consummated the sale of an additional 91,196 Units, at $10.00 per Unit.
On January 21, 2021,
the Company entered into an agreement with an underwriter who acted as lead managing underwriter of the Initial Public Offering. Pursuant
to this agreement, in addition to the above noted compensation, the Company issued to the underwriter shares of its common stock valued
at $10.00 per share in an amount equal to 0.5% of the gross proceeds of the offering.
The underwriters were paid a cash underwriting
discount of $0.20 per unit, or $1,018,240 in the aggregate at the closing of the Initial Public Offering (which includes amounts related
to the partial exercise of the over-allotment option). In addition, the underwriters are entitled to a deferred underwriting commissions
of $0.35 per unit, or $1,527,358 in the aggregate from the closing of the Initial Public Offering (which includes amounts related to
the partial exercise of the over-allotment option). The deferred fee will become payable to the underwriters from the amounts held in
the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
Representative Shares
In June and July 2021,
the Company issued to the designees of the underwriter 25,456 shares of common stock (the “Representative Shares”). The Company
accounted for the Representative Shares as an offering cost of the Initial Public Offering, with a corresponding credit to shareholders’
equity. The Company estimated the fair value of the Representative Shares to be $10.00 per share ($254,560 in the aggregate) based upon
the price of the Public Shares sold at the IPO. The holders of the Representative Shares have agreed not to transfer, assign, or sell
any such shares until the completion of a Business Combination. In addition, the holders have agreed (i) to waive their conversion rights
(or right to participate in any tender offer) with respect to such shares in connection with the completion of a Business Combination
and (ii) to waive their rights to liquidating distributions from the Trust Account with respect to such shares if the Company fails to
complete a Business Combination within the Combination Period.
The Representative
Shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following the
effective date of the registration statement related to the Initial Public Offering pursuant to FINRA Rule 5110(e)(1). Pursuant to FINRA
Rule 5110(e)(1), these securities will not be the subject of any hedging, short sale, derivative, put or call transaction that would
result in the economic disposition of the securities by any person for a period of 180 days immediately following the effective date
of the registration statements related to the Initial Public Offering, nor may they be sold, transferred, assigned, pledged or hypothecated
for a period of 180 days immediately following the effective date of the registration statements related to the Initial Public Offering
except to any underwriter and selected dealer participating in the Initial Public Offering and their officers or partners, associated
persons or affiliates.
Right of First Refusal
The Company has granted
the underwriter, subject to certain conditions for a period of 18 months after the date of the consummation of the initial business combination,
a right of first refusal to act as a co-manager or placement agent, with at least 25% of the economics, for any and all future public
and private equity and debt offerings. The duration of such right of first refusal is limited not more than three years by certain regulatory
rules.
Note
7 — Stockholders’
Deficit
Common Stock
The Company is authorized
to issue 10,000,000
shares of common stock with a par value of $0.0001
per share. As of March 31, 2022, there were 1,505,079
shares issued and outstanding (excluding 5,091,196 shares subject to possible redemption),
after giving effect to the forfeiture of 164,701 shares to the Company by the Sponsor for no consideration since the underwriters’
45-day over-allotment option was not exercised in full, so that the Sponsor owns 20% of the Company’s issued and outstanding Common
Stock after the Initial Public Offering.
Common Stock Subject to Possible
Redemption
As of March 31, 2022,
there were 5,091,196
common shares subject to possible redemption are presented at redemption value of $10.00 per
share as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheet (see Note 2).
Rights
Except in cases where
the Company is not the surviving Company in a business combination, the holders of the rights will automatically receive 1/10 of a share
of common stock upon consummation of the Company’s initial business combination. In the event the Company will not be the surviving
company upon completion of the initial business combination, each holder of a right will be required to affirmatively convert his, her
or its rights in order to receive the 1/10 of a share underlying each right upon consummation of the business combination. The Company
will not issue fractional shares in connection with an exchange of rights. Fractional shares will either be rounded down to the nearest
whole share or otherwise addressed in accordance with the applicable provisions of the Delaware General Corporation Law. As of March
31, 2022, no rights had been issued.
Note
8 — Fair Value Measurements
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. |
At March 31, 2022,
assets held in the Trust Account were entirely comprised of marketable securities.
The following table presents information
about the Company’s assets that are measured at fair value on a recurring basis at March 31, 2022 and
December 31, 2021 and indicates the fair value hierarchy of the valuation inputs the Company
utilized to determine such fair value.
Schedule of Fair value of assets measured on recurring basis | |
| | | |
| | | |
| | | |
| | |
| |
March 31, 2022 | |
Quoted Prices in Active Markets (Level 1) | |
Significant Other Observable Inputs (Level 2) | |
Significant Other Unobservable Inputs (Level 3) |
Assets | |
| | | |
| | | |
| | | |
| | |
Marketable Securities in the Trust Account | |
| 50,912,228 | | |
| 50,912,228 | | |
| — | | |
| — | |
| |
| | | |
| | | |
| | | |
| | |
| |
December
31, 2021 | |
Quoted
Prices in Active Markets (Level 1) | |
Significant
Other Observable Inputs (Level 2) | |
Significant
Other Unobservable Inputs (Level 3) |
Assets | |
| | | |
| | | |
| | | |
| | |
Marketable Securities
in the Trust Account | |
| 50,913,517 | | |
| 50,913,517 | | |
| — | | |
| — | |
Note
9 — Subsequent
Events
The Company evaluated
subsequent events and transactions that occurred after the balance sheet date up to May 17,
2022 were available to be issued. The Company did not identify any other subsequent events that
would have required adjustment or disclosure in the unaudited condensed financial statements.