SPK
ACQUISITION CORP.
CONDENSED CONSOLIDATED BALANCE
SHEETS
| |
June
30, 2022 | |
December 31,
2021 |
ASSETS |
CURRENT
ASSETS | |
| | | |
| | |
Cash | |
$ | 52,269 | | |
$ | 259,228 | |
Prepaid
expenses and other current assets | |
| 67,500 | | |
| 108,198 | |
Marketable
securities held in trust account | |
| 51,428,661 | | |
| 50,913,517 | |
Total
current assets | |
| 51,548,430 | | |
| 51,280,943 | |
TOTAL
ASSETS | |
$ | 51,548,430 | | |
$ | 51,280,943 | |
| |
| | | |
| | |
LIABILITIES
AND STOCKHOLDERS’ DEFICIT |
CURRENT
LIABILITIES | |
| | | |
| | |
Accounts
payable | |
$ | 454,023 | | |
$ | 103,175 | |
Due
to related party | |
| 8,366 | | |
| 2,883 | |
Franchise
taxes payable | |
| 15,600 | | |
| 20,800 | |
Deferred
underwriting fee payable | |
| 1,527,358 | | |
| 1,527,358 | |
Total
current liabilities | |
| 2,005,347 | | |
| 1,654,216 | |
TOTAL
LIABILITIES | |
| 2,005,347 | | |
| 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 $10.10 and $10.00 per share as of June 30, 2022 and December 31, 2021, respectively | |
| 51,427,105 | | |
| 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 | |
| (1,884,173 | ) | |
| (1,285,384 | ) |
Total
stockholders’ deficit | |
| (1,884,022 | ) | |
| (1,285,233 | ) |
TOTAL
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |
$ | 51,548,430 | | |
$ | 51,280,943 | |
The
accompanying notes are an integral part of these unaudited condensed consolidated
financial statements.
SPK
ACQUISITION CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
For
the Three Months
Ended June 30, | |
For
the Six Months
Ended June 30, |
| |
2022 | |
2021 | |
2022 | |
2021 |
OPERATING
EXPENSES | |
| | | |
| | | |
| | | |
| | |
General
and administrative | |
$ | 182,007 | | |
$ | 29,484 | | |
$ | 615,522 | | |
$ | 31,689 | |
Franchise
tax | |
| 8,100 | | |
| 7,700 | | |
| 15,900 | | |
| 7,700 | |
Total
expenses | |
| 190,107 | | |
| 37,184 | | |
| 631,422 | | |
| 39,389 | |
| |
| | | |
| | | |
| | | |
| | |
LOSS
FROM OPERATIONS | |
| (190,107 | ) | |
| (37,184 | ) | |
| (631,422 | ) | |
| (39,389 | ) |
| |
| | | |
| | | |
| | | |
| | |
OTHER
INCOME | |
| | | |
| | | |
| | | |
| | |
Interest
income | |
| 37,945 | | |
| — | | |
| 38,657 | | |
| — | |
Total
other income | |
| 37,945 | | |
| — | | |
| 38,657 | | |
| — | |
| |
| | | |
| | | |
| | | |
| | |
Income
taxes provision | |
| — | | |
| — | | |
| — | | |
| — | |
NET
INCOME ( LOSS) | |
$ | (152,162 | ) | |
$ | (37,184 | ) | |
$ | (592,765 | ) | |
$ | (39,389 | ) |
| |
| | | |
| | | |
| | | |
| | |
Basic
and diluted weighted average shares outstanding of redeemable common stock | |
| 5,091,196 | | |
| 1,153,846 | | |
| 5,091,196 | | |
| 580,110 | |
| |
| | | |
| | | |
| | | |
| | |
Basic
and diluted net income (loss) per share outstanding of redeemable common stock | |
$ | (0.02 | ) | |
$ | 1.53 | | |
$ | (0.09 | ) | |
$ | 3.96 | |
| |
| | | |
| | | |
| | | |
| | |
Basic
and diluted weighted average shares outstanding of non-redeemable common stock | |
| 1,505,079 | | |
| 1,297,308 | | |
| 1,505,079 | | |
| 1,276,685 | |
| |
| | | |
| | | |
| | | |
| | |
Basic
and diluted net loss per share of non-redeemable common stock | |
$ | (0.02 | ) | |
$ | (1.39 | ) | |
$ | (0.09 | ) | |
$ | (1.83 | ) |
The
accompanying notes are an integral part of these unaudited condensed consolidated financial
statements.
SPK
ACQUISITION CORP.
CONDENSED CONSOLIDATED STATEMENTS
OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
) |
Net
loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(152,162 |
) |
|
|
(152,162 |
) |
Subsequent
measurement of common stock subject to redemption (interest earned on trust account) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,024 |
) |
|
|
(6,024 |
) |
Balance
as of June 30, 2022 |
|
|
1,505,079 |
|
|
$ |
151 |
|
|
$ |
|
|
|
$ |
(1,884,173 |
) |
|
$ |
(1,884,022 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock |
|
Additional |
|
|
|
Total |
|
|
|
|
|
|
Paid-In |
|
Accumulated |
|
Stockholders |
|
|
Shares |
|
Amount |
|
Capital |
|
Deficit |
|
Deficit |
Balance
as of January 1, 2021 |
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Net
loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,205 |
) |
|
|
(2,205 |
) |
Balance
as of March 31, 2021 |
|
|
1,437,500 |
|
|
$ |
144 |
|
|
$ |
24,856 |
|
|
$ |
(2,205 |
) |
|
$ |
22,795 |
|
Sale
of public units in initial public offering |
|
|
5,000,000 |
|
|
|
500 |
|
|
|
49,999,500 |
|
|
|
|
|
|
|
50,000,000 |
|
Issuance
of shares to underwriter |
|
|
25,000 |
|
|
|
3 |
|
|
|
249,997 |
|
|
|
|
|
|
|
250,000 |
|
Sale
of private units to insiders |
|
|
|
|
|
20 |
|
|
|
2,049,980 |
|
|
|
|
|
|
|
2,050,000 |
|
Underwriters
compensation |
|
|
|
|
|
|
|
|
|
|
(2,500,000 |
) |
|
|
|
|
|
|
(2,500,000 |
) |
Initial
measurement of Common Stock Subject to Redemption under ASC 480-10-S99 against additional paid-in capital |
|
|
(5,000,000 |
) |
|
|
(500 |
) |
|
|
(49,784,500 |
) |
|
|
|
|
|
|
(49,785,000 |
) |
Offering
costs |
|
|
|
|
|
|
|
|
|
|
(661,681 |
) |
|
|
|
|
|
|
(661,681 |
) |
Deduction
for increase of carrying value of redeemable shares |
|
|
|
|
|
|
|
|
|
|
(2,526,237 |
) |
|
|
(836,848 |
) |
|
|
(3,363,085 |
) |
Allocation
of offering costs to common stock subject to redemption |
|
|
|
|
|
|
|
|
|
|
3,148,085 |
|
|
|
|
|
|
|
3,148,085 |
|
Net
loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(37,184 |
) |
|
|
(37,184 |
) |
Balance
as of June 30, 2021 |
|
|
1,667,500 |
|
|
$ |
167 |
|
|
$ |
|
|
|
$ |
(876,237 |
) |
|
$ |
(876,070 |
) |
The
accompanying notes are an integral part of these unaudited condensed consolidated
financial statements.
SPK
ACQUISITION CORP.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
| |
| |
|
| |
For
the Six Months Ended June 30, 2022 | |
For
the Six Months Ended June 30, 2021 |
Cash
flows from operating activities: | |
| | | |
| | |
Net
loss | |
$ | (592,765 | ) | |
$ | (39,389 | ) |
Adjustments
to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
Interest
earned in trust account | |
| (38,657 | ) | |
| — | |
Due
to related party | |
| 5,483 | | |
| (201,957 | ) |
Prepaid
expenses and other assets | |
| 40,698 | | |
| — | |
Accounts
payable accrued expenses | |
| 350,849 | | |
| 2,455 | |
Franchise
tax Payable | |
| (5,200 | ) | |
| 7,700 | |
Net
cash used in operating activities | |
| (239,592 | ) | |
| (231,191 | ) |
Cash
Flows from Investing Activities: | |
| | | |
| | |
Cash
remitted to Trust Account | |
| — | | |
| (50,000,000 | ) |
Proceeds
from Trust Account to pay franchise tax | |
| 32,633 | | |
| — | |
Net
cash provided by (used in) investing activities | |
| 32,633 | | |
| (50,000,000 | ) |
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 | |
Proceeds
from sale of private units | |
| | | |
| 2,050,000 | |
Proceeds
from initial public offering | |
| — | | |
| 50,000,000 | |
Payment
of underwriter compensation | |
| | | |
| (1,000,000 | ) |
Payment
of offering costs | |
| — | | |
| (411,681 | ) |
Net
cash provided by financing activities | |
| — | | |
| 50,788,319 | |
Net
change in cash | |
| (206,959 | ) | |
| 557,128 | |
Cash,
beginning of the period | |
| 259,228 | | |
| — | |
Cash,
end of the period | |
$ | 52,269 | | |
$ | 557,128 | |
Supplemental
Disclosure of Cash Flow Information: | |
| | | |
| | |
Cash
remitted to Trust Account for term extension | |
$ | 509,120 | | |
$ | — | |
Deferred
underwriting compensation | |
$ | 1,527,358 | | |
$ | 1,500,000 | |
Representative
shares issued and charged to offering costs | |
$ | — | | |
$ | 250,000 | |
The
accompanying notes are an integral part of these unaudited condensed consolidated
financial statements.
SPK
ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED
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.
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 June 30, 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”).
As
of June 30, 2022, the Company had not commenced any operations. All activity through June 30, 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
by and among Varian , SPK, and SPK Merger Sub, Inc. 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 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.
On
March 1, 2022, SPK filed Form S-4 Registration Statement with the SEC regarding the proposed Merger between SPK and Varian.
On April 25, 2022 and
June 17, the Company filed Form S-4A containing Amendment No. 1 and Amendment No. 2, respectively,
to the Registration Statement to address comments SPK received from the SEC regarding the Registration Statement.
On
June 6, 2022, pursuant to the Merger Agreement, Varian remitted a cash payment of $509,120 to the Trust Account for the cost to extend
the time for SPK to complete the Business Combination by three months until September 10, 2022.
On June 17, 2022,
the Company filed Amendment No. 2 to the Current Report on Form 8-K/A regarding non-reliance on previously issued financial statements
and restated the Company’s balance sheet as of June 10, 2021.
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 June 30, 2022, the Company had $52,269 in its operating bank accounts, $51,428,661 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 $358,220.
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
unaudited condensed consolidated financial statements are presented in U.S. Dollars and in conformity with accounting principles generally
accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. The accompanying
unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries as outlined
in Note 1 where the Company has the ability to exercise control. All significant intercompany balances and transactions have been eliminated
in consolidation. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments,
consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and
cash flows for the periods presented.
The accompanying unaudited condensed
consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the period
ended December 31, 2021, as filed with the SEC on March 31, 2022. The interim results for the three and six months ended June
30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any future
periods.
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 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.
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 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 $52,269 and did not have any cash equivalents at June 30, 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
June 30, 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. Trust Account
activities during six months ended June 30, 2022 included interest income of $38,657, a cash withdrawal $32,633 to the Company for
franchise tax payment and a cash receipt of $509,120 for the three month extension of SPK’s business combination until
September 10, 2022.
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 June 30, 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. The Company
recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable ordinary shares to equal
the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable ordinary shares
are affected by charges against additional paid-in capital and accumulated deficit if additional paid in capital equals to zero.
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 June 30, 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 |
|
For the
six months ended |
|
|
June
30, |
|
June
30, |
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Net
loss |
|
$ |
(152,162 |
) |
|
$ |
(37,184 |
) |
|
$ |
(592,765 |
) |
|
$ |
(39,389 |
) |
Accretion
of temporary equity to redemption value |
|
|
(6,024 |
) |
|
|
(3,363,085 |
) |
|
|
(6,024 |
) |
|
|
(3,363,085 |
) |
Net
loss including accretion of temporary equity to redemption value |
|
$ |
(158,186 |
) |
|
$ |
(3,400,269 |
) |
|
$ |
(598,789 |
) |
|
$ |
(3,402,474 |
) |
Schedule of net income (loss) per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
three months ended June 30, 2022 |
|
For the
three months ended June 30,2021 |
|
|
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 |
|
$ |
(122,093 |
) |
|
$ |
(36,095 |
) |
|
$ |
(1,600,629 |
) |
|
$ |
(1,799,640 |
) |
Accretion
of temporary equity to redemption value |
|
|
6,024 |
|
|
|
— |
|
|
|
3,363,085 |
|
|
|
— |
|
Allocation
of net income (loss) |
|
$ |
(116,069 |
) |
|
$ |
(36,095 |
) |
|
$ |
1,762,456 |
|
|
$ |
(1,799,640 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominators: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding |
|
|
5,091,196 |
|
|
|
1,505,079 |
|
|
|
1,153,846 |
|
|
|
1,297,308 |
|
Basic
and diluted net income (loss) per share |
|
$ |
(0.02 |
) |
|
|
(0.02 |
) |
|
$ |
1.53 |
|
|
$ |
(1.39 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
the six months ended June 30, 2022 |
|
For
the six months ended June
30, 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 |
|
$ |
(462,163 |
) |
|
$ |
(136,626 |
) |
|
$ |
(1,063,020) |
|
|
$ |
(2,339,454 |
) |
Accretion
of temporary equity to redemption value |
|
|
6,024 |
|
|
|
— |
|
|
|
3,363,085 |
|
|
|
|
|
Allocation
of net income (loss) |
|
$ |
(456,139 |
) |
|
$ |
(136,626 |
) |
|
$ |
2,300,065 |
|
|
$ |
(2,339,454 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominators: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding |
|
|
5,091,196 |
|
|
|
1,505,079 |
|
|
|
580,110 |
|
|
|
1,276,685 |
|
Basic
and diluted net income (loss) per share |
|
$ |
(0.09 |
) |
|
$ |
(0.09 |
) |
|
$ |
3.96 |
|
|
$ |
(1.83 |
) |
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 June 30, 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 June 30, 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 June 30, 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 June 30,
2022, there were no amounts outstanding under this arrangement.
Other
As of June 30,
2022 and December 31, 2021, the Company had a balance due to related party of $8,366 and $2,883, respectively, which were expenses paid
by management in search for a target company. The amount of $2,883 was repaid on January 3, 2022 while $8,366 was outstanding as of June
30, 2022.
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 $50,000 upon closing of the initial business combination. In the event that no business combination
is completed, no amounts will be due.
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 June 30, 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 June 30, 2022, there were 5,091,196
common shares subject to possible redemption
are presented at redemption value of $10.10
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 June 30, 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
June 30, 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 June 30,
2022 and December 31, 2021 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair
value.
Schedule of Fair value of assets measured on recurring basis
| |
June 30, 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 | |
| 51,428,661 | | |
| 51,428,661 | | |
| — | | |
| — | |
| |
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 August 15, 2022 were available to be issued. Other than described
below, the Company did not identify any other subsequent events that would have required adjustment or disclosure in the unaudited
condensed financial statements.
On July 13,
2022, the Company filed a Form 10-K/A Amendment No. 1 to its Annual Report to amend its
Annual Report on Form 10-K for the year ended December 31, 2021, restating Note 9 and Note 10 to the financial statements to update
their conclusion to restate the Form 8-K IPO closing balance sheet.
On August 1,
2022, the Company filed a preliminary proxy statement for general meeting of stockholders to consider and vote on proposals to
amend the Company’s Charter and Trust agreement, and allow the Board to extend the date to business combination from September
10, 2022 to December 10, 2022. On August 8, 2022, the Company received a letter from the SEC in relation to this filing.