The accompany notes are an integral part of these
unaudited condensed financial statements.
The accompany notes are an integral part of these
unaudited condensed financial statements.
The accompany notes are an integral part of these
unaudited condensed financial statements.
The accompany notes are an integral part of these
unaudited condensed financial statements.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1 — Organization and Business Operation
Arisz Acquisition Corp. (the “Company”)
is a newly organized blank check company incorporated as a Delaware corporation on July 21, 2021. The Company 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 or entities (“Business Combination”). The Company has not identified any specific business combination, nor has
anyone on the Company’s behalf initiated or engaged in any substantive discussions, formal or otherwise, related to such a transaction.
The Company has selected September 30 as its fiscal year end.
As of June 30, 2022, the Company had not commenced
any operations. For the period from July 21, 2021 (inception) through June 30, 2022, the Company’s efforts have been limited to
organizational activities as well as activities related to the Initial Public Offering (“IPO” as defined below in Note 3).
The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company
will generate non-operating income in the form of interest income from the proceeds derived from the IPO.
The Company’s sponsor is Arisz Investments
LLC (the “Sponsor”), a Delaware limited liability company affiliated with the Company’s Chairman and Chief Executive
Officer.
On January 21, 2022, Arisz entered into a merger
agreement with Finfront Holding Company, a Cayman Islands exempted company (the “Company”), pursuant to which (a) Arisz agreed
to form BitFuFu Inc., a Cayman Islands exempted company, as its wholly owned subsidiary (“Purchaser” or “PubCo”),
(b) Purchaser would form Boundary Holding Company, a Cayman Islands exempted company, as its wholly owned subsidiary (“Merger Sub”),
(c) Arisz will be merged with and into Purchaser (the “Redomestication Merger”), with Purchaser surviving the Redomestication
Merger, and (d) Merger Sub will be merged with and into the Company (the “Acquisition Merger”), with the Company surviving
the Acquisition Merger as a direct, wholly owned subsidiary of Purchaser (collectively, the “Business Combination”). Following
the Business Combination, Purchaser will be a publicly traded company listed on a stock exchange in the United States. On April 4,
2022, each of Arisz and the Company entered into that certain Amendment to the Merger Agreement pursuant to which, among other things,
the parties clarified certain Cayman Island corporate law matters by mutual agreement.
On July 14, 2022, each of Arisz , the Company, the Purchaser and Arisz’s
Sponsor (along with any assignee of Arisz’s Sponsor, the “Buyer”) entered into a backstop agreement (the “Backstop
Agreement”) whereby, in connection with the Business Combination, the Buyer has agreed to subscribe for and purchase no less than
US$1.25 million worth of shares of Arisz common stock par value $0.0001 per share or Purchaser’s Class A ordinary shares.
Financing
The registration statement for the Company’s
IPO became effective on November 17, 2021. On November 22, 2021 the Company consummated the IPO of 6,000,000 units (which does not include
the exercise of the over-allotment option by the underwriters in the IPO) at an offering price of $10.00 per unit (the “Public Units’),
generating gross proceeds of $60,000,000. Simultaneously with the IPO, the Company sold to its Sponsor and Chardan Capital Markets LLC
(“Chardan”) (and/or their designees) 253,889 units at $10.00 per unit (the “Private Units”) in a private placement
generating total gross proceeds of $2,538,886, which is described in Note 4.
Concurrently, the Company repaid $105,000 to the
Sponsor, under related party loan evidenced by promissory note issued on August 5, 2021.
The Company granted the underwriters a 45-day
option to purchase up to 900,000 additional Units to cover over-allotments, if any. On November 24, 2021, the underwriters fully exercised
the over-allotment option and purchased 900,000 units (the “Over-allotment Units”) at a price of $10.00 per Unit, generating
gross proceeds of $9,000,000. Upon the closing of the Over-allotment on November 24, 2021, the Company consummated the sale of additional
22,500 Private Units (the “Additional Private Units”) with the Sponsor and Chardan at a price of $10.00 per Private Unit,
generating total proceeds of $225,000.
Transaction costs amounted to $5,587,733, consisting
of $1,725,000 of underwriting fees, $2,587,500 of deferred underwriting fees (payable only upon completion of a Business Combination)
and $1,275,233 of other offering costs.
Trust Account
Upon closing of the IPO, the Private Units, the
sale of the Over-allotment Units and the sale of the Additional Private Units, a total of $69,000,000 ($10.00 per Unit) was placed in
a U.S.-based trust account (the “Trust Account”) with Continental Stock Transfer& Trust acting as trustee and can be invested
only in U.S. government treasury bills with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule
2a-7 under the Investment Company Act and that invest only in direct U.S. government treasury obligations. These funds will not be released
until the earlier of the completion of the initial Business Combination and the liquidation due to the Company’s failure to complete
a Business Combination within the applicable period of time. The proceeds deposited in the Trust Account could become subject to the claims
of the Company’s creditors, if any, which could have priority over the claims of the Company’s public stockholders. In addition,
interest income earned on the funds in the Trust account may be released to the Company to pay its income or other tax obligations. With
these exceptions, expenses incurred by the Company may be paid prior to a business combination only from the net proceeds of the IPO and
private placement not held in the Trust Account.
Business Combination
Pursuant to NASDAQ listing rules, the Company’s
initial Business Combination must occur with one or more target businesses having an aggregate fair market value equal to at least 80%
of the value of the funds in the Trust account (excluding any taxes payable on the income earned on the Trust account), which the Company
refers to as the 80% test, at the time of the execution of a definitive agreement for its initial business combination, although the Company
may structure a business combination with one or more target businesses whose fair market value significantly exceeds 80% of the trust
account balance. If the Company is no longer listed on NASDAQ, it will not be required to satisfy the 80% test.
The Public Shares subject to redemption will be
recorded at a redemption value and classified as temporary equity upon the completion of the IPO in accordance with the Accounting Standards
Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case, the Company will proceed
with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination
and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder
vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company
will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”),
conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file
tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is
required by law, or the Company decides to obtain stockholder approval for business or legal 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. Additionally,
each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction.
If the Company seeks stockholder approval in connection with a Business Combination, the Company’s Sponsor and any of the Company’s
officers or directors that may hold Insider Shares (as defined in Note 5) (the “Initial Stockholders”) and Chardan have agreed
(a) to vote their Insider Shares, Private Shares (as defined in Note 4), and any Public Shares purchased during or after the IPO in favor
of approving a Business Combination and (b) not to convert any shares (including the Insider Shares) in connection with a stockholder
vote to approve, or sell the shares to the Company in any tender offer in connection with, a proposed Business Combination.
The Company will provide its holders of the outstanding
Public Shares (the “Public Stockholders”) 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 Public Stockholders will be entitled to redeem their Public
Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.00 per Public 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 franchise and income
tax obligations). 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 Initial Stockholders and Chardan have agreed
(a) to waive their redemption rights with respect to the Insider Shares, Private Shares, Underwriter Shares and Public Shares held by
them in connection with the completion of a Business Combination and (b) not to propose, or vote in favor of, an amendment to the Amended
and Restated Certificate of Incorporation that would affect the substance or timing of the Company’s obligation to redeem 100% of
its Public Shares if the Company does not complete a Business Combination, unless the Company provides the public stockholders with the
opportunity to redeem their Public Shares in conjunction with any such amendment.
The Company will have until 12 months (or up to
18 months if the time to complete a business combination is extended as described herein) from the closing of the IPO to consummate a
Business Combination. In addition, if the Company anticipates that it may not be able to consummate initial business combination within
12 months, the Company’s insiders or their affiliates may, but are not obligated to, extend the period of time to consummate a business
combination two times by an additional three months each time (for a total of 18 months to complete a business combination) (the “Combination
Period”).
Liquidation
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 (which interest shall be net of taxes payable, and
less certain amount of interest to pay dissolution expenses) divided by the number of then outstanding Public Shares, which redemption
will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions,
if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of
the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to
the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
The Sponsor and Chardan have agreed to waive their
liquidation rights with respect to the Insider Shares and Private Shares if the Company fails to complete a Business Combination within
the Combination Period. However, if the Sponsor or underwriters acquires Public Shares in or after the IPO, 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 in 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
$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 amount of funds in the Trust Account to below $10.00 per Public Share, except as to any claims by a third party who executed a valid
and enforceable agreement with the Company waiving any right, title, interest or claim of any kind they may have in or to any monies held
in the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of IPO 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.
Going Concern Consideration
As of June 30, 2022, cash of $220,545 were held outside of the Trust
Account. Until consummation of the Business Combination, we intend to use the funds held outside the Trust Account for 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.
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, the Company’s board of directors would proceed to commence a voluntary liquidation and thereby a
formal dissolution of the Company. 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. The financial
statement does not include any adjustments that might result from the outcome of this uncertainty.
Note 2 — Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed 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. Accordingly, they do not include all of the information and
footnotes required by GAAP. In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentation
have been included. Operating results for the three months ended June 30, 2022 are not necessarily indicative of the results that may
be expected for the year ending September 30, 2022 or 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 stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means
that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging
growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison
of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth
company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting
standards used.
Use of Estimates
In preparing these unaudited condensed financial
statements in conformity with U.S. GAAP, the Company’s management makes estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements
and the reported expenses during the reporting period.
Making estimates requires management to exercise
significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances
that existed at the date of the unaudited condensed financial statements, which management considered in formulating its estimate, could
change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those
estimates.
Cash and Cash Equivalents
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents
as of June 30, 2022.
Investments held in Trust Account
At June 30, 2022, the assets held in the Trust
Account were held in money market funds, which are invested in U.S. Treasury securities.
The Company classifies its U.S. Treasury and equivalent
securities as held-to-maturity in accordance with ASC Topic 320 “Investments — Debt and Equity Securities.” Held-to-maturity
securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities
are recorded at amortized cost on the accompanying unaudited condensed balance sheet and adjusted for the amortization or accretion of
premiums or discounts.
Offering Costs
The Company complies with the requirements of
ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A – “Expenses of Offering”. Offering costs $5,587,733 consisting
primarily of underwriting, legal, accounting, registration and other expenses incurred through the balance sheet date that are directly
related to the IPO and charged to shareholders’ equity upon the completion of the IPO.
Warrants
The Company accounts for warrants as either equity-classified
or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance
in Financial Accounting Standards Board (“FASB”) ASC 480 “Distinguishing Liabilities from Equity” (“ASC
480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding
financial instruments pursuant to ASC 480, whether they meet the definition of a liability pursuant to ASC 480, and whether the warrants
meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s
own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside
of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional
judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all
of the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance.
For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded
as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair
value of the warrants are recognized as a non-cash gain or loss on the statements of operations.
Common Stock Subject to Possible Redemption
The Company accounts for its common stock subject
to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Common stock
subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable
common stock (including common stock that feature redemption rights that is either within the control of the holder or subject to redemption
upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other
times, common stock is classified as stockholders’ equity. The Company’s common stock features certain redemption rights that
are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, as of June
30, 2022, shares of common stock 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. The Company recognizes changes in redemption
value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end
of each reporting period. Increases or decreases in the carrying amount of shares of redeemable common stock are affected by charges
against additional paid in capital or accumulated deficit if additional paid in capital equals to zero.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentration of credit risk consist of a cash account in a financial institution and money market funds held in the
Trust Account. The Company has not experienced losses on this account and management believes the Company is not exposed to significant
risks on such account.
Fair Value of Financial Instruments
The fair value of the Company’s assets and
liabilities, which qualify as financial instruments under ASC 825, “Financial Instruments,” approximates the carrying amounts
represented in the accompanying balance sheet, primarily due to their short-term nature.
Net Income (Loss) per Share
The Company complies with accounting and disclosure
requirements of FASB ASC 260, Earnings Per Share. The unaudited condensed statements of operations include a presentation of income (loss)
per redeemable share and income (loss) per non-redeemable share following the two-class method of income per share. In order to determine
the net income (loss) attributable to both the redeemable shares and non-redeemable shares, the Company first considered the 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. The Company 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
unaudited condensed statement of operations is based on the following:
| |
Three months ended | | |
Nine months ended | |
| |
June 30, 2022 | | |
June 30, 2022 | |
Net Loss | |
$ | (66,275 | ) | |
$ | (430,649 | ) |
Accretion of common stock to redemption value | |
| (14,145,764 | ) | |
| (14,145,764 | ) |
Net loss including accretion of common stock to redemption value | |
$ | (14,212,039 | ) | |
$ | (14,576,413 | ) |
| |
Three months ended June 30, 2022 | |
| |
Redeemable shares | | |
Non-redeemable shares | |
Basic and diluted net income/(loss) per share: | |
| | |
| |
Numerators: | |
| | |
| |
Allocation of net loss including accretion of common stock | |
$ | (11,016,604 | ) | |
$ | (3,195,435 | ) |
Accretion of common stock to redemption value | |
| 14,145,764 | | |
| — | |
Allocation of net income (loss) | |
$ | 3,129,160 | | |
$ | (3,195,435 | ) |
| |
| | | |
| | |
Denominators: | |
| | | |
| | |
Weighted-average shares outstanding | |
| 6,900,000 | | |
| 2,001,389 | |
Basic and diluted net income/(loss) per share | |
$ | 0.45 | | |
$ | (1.60 | ) |
| |
Nine months ended June 30, 2022 | |
| |
Redeemable shares | | |
Non-redeemable shares | |
Basic and diluted net income/(loss) per share: | |
| | |
| |
Numerators: | |
| | |
| |
Allocation of net loss including accretion of common stock | |
$ | (10,791,989 | ) | |
$ | (3,784,424 | ) |
Accretion of common stock to redemption value | |
| 14,145,764 | | |
| — | |
Allocation of net income (loss) | |
$ | 3,353,775 | | |
$ | (3,784,424 | ) |
| |
| | | |
| | |
Denominators: | |
| | | |
| | |
Weighted-average shares outstanding | |
| 5,553,846 | | |
| 1,947,566 | |
Basic and diluted net income/(loss) per share | |
$ | 0.60 | | |
$ | (1.94 | ) |
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.
ASC 740 also clarifies the accounting for uncertainty
in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process
for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits
to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides
guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
The Company recognizes accrued interest and penalties
related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest
and penalties as of June 30, 2022. The Company is currently not aware of any issues under review that could result in significant payments,
accruals or material deviation from its position.
The Company has identified the United States
as its only “major” tax jurisdiction.
The Company may be subject to potential examination
by federal and state taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing
and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s
management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
The provision for income taxes was deemed to
be immaterial for the period ended June 30, 2022.
Recent Accounting Pronouncements
Management does not believe that any recently
issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited
condensed financial statements.
Note 3 — Initial Public Offering
Pursuant to the IPO on November 22, 2021, the
Company sold 6,000,000 Units at $10.00 per Public Unit, generating gross proceeds of $60,000,000. The Company granted the underwriters
a 45-day option to purchase up to 900,000 additional Units to cover over-allotments, if any. On November 24, 2021, the underwriters fully
exercised the over-allotment option and purchased 900,000 units at a price of $10.00 per Unit, generating gross proceeds of $9,000,000.
Each Public Unit consists of one share of common stock (“Public Share”), one right (“Public Right”) and one redeemable
warrant (“Public Warrant”). Each Public Right will convert into one-twentieth (1/20) of one share of common stock upon the
consummation of a Business Combination. Each whole Public Warrant entitles the holder to purchase three-fourths (3/4) of one share of
common stock at a price of $11.50 per whole share, subject to adjustment. The warrants will become exercisable on the later of 30 days
after the completion of the Company’s initial Business Combination or 12 months from the closing of the IPO, and will expire five
years after the completion of the Company’s initial Business Combination or earlier upon redemption or liquidation.
All of the 6,900,000 Public Shares
sold as part of the Public Units in the IPO contain a redemption feature which allows for the redemption of such Public Shares if there
is a stockholder vote or tender offer in connection with the Business Combination and in connection with certain amendments to the Company’s
amended and restated certificate of incorporation, or in connection with the Company’s liquidation. In accordance with the SEC
and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not
solely within the control of the Company require common stock subject to redemption to be classified outside of permanent equity.
The Company’s redeemable common stock is
subject to SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99. If it is probable
that the equity instrument will become redeemable, the Company has the option to either accrete changes in the redemption value over
the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later)
to the earliest redemption date of the instrument or to recognize changes in the redemption value immediately as they occur and adjust
the carrying amount of the instrument to equal the redemption value at the end of each reporting period. The Company has elected to recognize
the changes immediately. The accretion or remeasurement is treated as a deemed dividend (i.e., a reduction to retained earnings, or in
absence of retained earnings, additional paid-in capital).
As of November 24, 2021, the shares of common
stock reflected on the balance sheet are reconciled in the following table.
| |
As of November 24,
2021 | |
Gross proceeds | |
$ | 69,000,000 | |
Less: | |
| | |
Proceeds allocated to Public Warrants | |
| (6,658,288 | ) |
Proceeds allocated to Public Rights | |
| (2,726,727 | ) |
Offering costs of Public Shares | |
| (4,760,749 | ) |
Plus: | |
| | |
Accretion of carrying value to redemption value | |
| 14,145,764 | |
Class A Common stock subject to possible redemption | |
$ | 69,000,000 | |
Note 4 — Private Placement
Simultaneously with the closing of the IPO, the
Sponsor and Chardan (and/or their designees) purchased an aggregate of 253,889 Private Units at a price of $10.00 per Private Unit for
an aggregate purchase price of $2,538,886 in a private placement. Upon the closing of the Over-allotment on November 24, 2021, the Company
consummated the sale of additional 22,500 Private Units with the Sponsor and Chardan at a price of $10.00 per Private Unit, generating
total proceeds of $225,000. The Private Units are identical to the Public Units except with respect to certain registration rights and
transfer restrictions. The proceeds from the Private Units were added to the proceeds from the IPO to be held in the Trust Account. If
the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Units will
be used to fund the redemption of the Public Shares (subject to the requirements of applicable law), and the Private Units and all underlying
securities will expire worthless.
Note 5 — Related Party Transactions
Insider Shares
On August 5, 2021, the Company issued 1,437,500
shares of common stock to the Initial Stockholders (the “Insider Shares”) for an aggregated consideration of $25,000. On October
29, 2021, the Company effected a 1.2-for-1.0 stock split of common stock, resulting in the Sponsor holding an aggregate of 1,725,000 Insider
Shares, for approximately $0.014 per share, of which, up to 225,000 shares subject to forfeiture by the Initial Stockholders to the extent
that the underwriters’ over-allotment is not exercised in full, so that the Initial Stockholders will collectively own 20% of the
Company’s issued and outstanding shares after the IPO. As the over-allotment option was fully exercised on September 24, 2021, no
portion of the Insider Shares are subject to forfeiture.
The Initial Stockholders have agreed, subject
to certain limited exceptions, not to transfer, assign or sell any of their Insider Shares until, with respect to 50% of the Insider
Shares, the earlier of six months after the consummation of a Business Combination and the date on which the closing price of the
common stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and
the like) for any 20 trading days within a 30-trading day period commencing after a Business Combination and, with respect
to the remaining 50% of the Insider Shares, until the six months after the consummation of a Business Combination, or earlier, in
either case, if, subsequent to a Business Combination, the Company completes a liquidation, merger, stock exchange or other similar transaction
which results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities
or other property.
Promissory Note — Related Party
On August 5, 2021, the Sponsor agreed to
loan the Company up to an aggregate amount of $300,000 to be used, in part, for transaction costs incurred in connection with the IPO
(the “Promissory Note”). The Promissory Note is unsecured, interest-free and due on the earlier of March 31, 2022 or
the closing the IPO. Concurrently with the IPO, the Company repaid the outstanding balance of $105,000 to the Sponsor.
Administrative Services Agreement
The Company entered into an administrative services
agreement with the Sponsor pursuant to which the Company pays a total of $10,000 per month for office space, administrative and support
services. Upon completion of the initial Business Combination or liquidation, the Company will cease paying these monthly fees. However,
pursuant to the terms of such agreement, the Sponsor agreed to defer the payment of such monthly fee. Any such unpaid amount will accrue
without interest and be due and payable no later than the date of the consummation of the initial Business Combination. For the three
months and nine months ended June 30, 2022, the Company incurred $30,000 and $70,000, respectively, in fees for these services, of which
$70,000 and none are included in accounts payable and accrued expenses in the accompanying condensed unaudited balance sheets June 30,
2022 and September 30, 2021, respectively.
Note 6 — Commitments
and Contingencies 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 virus could have a negative
effect on the Company’s future financial position, results of its operations and/or search for a target company, there has not
been a significant impact as of the date of these unaudited condensed financial statements. The unaudited condensed financial statements
do not include any adjustments that might result from the future outcome of this uncertainty.
Registration Rights
The holders of the insider shares, the private
units, securities underlying the Unit Purchase Option and any units that may be issued upon conversion of working capital loans or extension
loans (and any securities underlying the private units or units issued upon conversion of the working capital loans or extension loans)
will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of
this offering requiring the Company to register such securities for resale. The holders of these securities are entitled to make up to
two demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back”
registration rights with respect to registration statements filed subsequent to the completion of the initial business combination and
rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. Furthermore, notwithstanding
the foregoing, pursuant to FINRA Rule 5110 the underwriters may not exercise their demand and “piggyback” registration rights
after five and seven years, respectively, after the effective date of the registration statement of which this prospectus forms a part
and may not exercise their demand rights on more than one occasion.
Right of First Refusal
The Company has granted Chardan for a period
of 24 months after the date of the consummation of the Company’s Business Combination, a right of first refusal to act as
book-running manager, with at least 30% of the economics, for any and all future public and private equity and debt offerings.
Underwriting Agreement
The Company has granted Chardan, the representative
of the underwriters, a 45-day option from the date of this prospectus to purchase up to 900,000 additional Units to cover over-allotments,
if any, at the IPO price less the underwriting discounts and commissions.
The underwriters were paid a cash underwriting
discount of 2.5% of the gross proceeds of the IPO (including the exercise of the over-allotment option), or $1,725,000. In addition, the
underwriters will be entitled to a deferred fee of 3.75% of the gross proceeds of the IPO (including the exercise of the over-allotment
option), or $2,587,500, which will be paid upon the closing of a Business Combination from the amounts held in the Trust Account, subject
to the terms of the underwriting agreement. The underwriters will also be entitled to 0.75% of the gross proceeds of the IPO in the form
of common stock of the Company at a price of $10.00 per share, to be issued if the Company closes a Business Combination.
Unit Purchase Option
The Company sold to Chardan (and/or its designees),
for $100, an option (the “Unit Purchase Option”) to purchase 100,000 Units (or 115,000 units if the over-allotment option
is exercised in full) exercisable at $11.50 per Unit (or an aggregate exercise price of $1,150,000, or $1,322,500 if the over-allotment
option is exercised in full) commencing on the later of six months from the effective date of the registration statement related to the
IPO and the consummation of a Business Combination. The Unit Purchase Option may be exercised for cash or on a cashless basis, at the
holder’s option, and expires five years from the effective date of the registration statement related to the IPO. The Units issuable
upon exercise of the Unit Purchase Option are identical to those offered in the IPO. The Company accounts for the Unit Purchase Option,
inclusive of the receipt of $100 cash payment, as an expense of the IPO resulting in a charge directly to stockholders’ equity.
The option and the underlying securities that may be issued upon exercise of the option, have been deemed compensation by FINRA and are
therefore subject to a 180-day lock-up pursuant to Rule 5110(e)(1) of FINRA’s NASDAQ Conduct Rules. Additionally, the option
may not be sold, transferred, assigned, pledged or hypothecated for a one-year period (including the foregoing 180-day period) following
the date of IPO except to any underwriter and selected dealer participating in the IPO and their bona fide officers or partners. The Unit
Purchase Option grants to holders demand and “piggy back” rights for periods of five and seven years, respectively, from the
effective date of the registration statement with respect to the registration under the Securities Act of the securities directly and
indirectly issuable upon exercise of the Unit Purchase Option. The Company will bear all fees and expenses attendant to registering the
securities, other than underwriting commissions which will be paid for by the holders themselves. The exercise price and number of units
issuable upon exercise of the Unit Purchase Option.
Note 7 — Stockholders’ Equity
Common Stock — The
Company is authorized to issue 15,000,000 shares of common stock with a par value of $0.0001 per share. Holders of the common stock are
entitled to one vote for each share. On October 29, 2021, the Company effected a 1.2-for-1.0 stock split of common stock, resulting in
the Sponsor holding an aggregate of 1,725,000 Insider Shares, for approximately $0.014 per share. At June 30, 2022, there were 2,001,389
shares of common stock issued and outstanding (excluding 6,900,000 shares subject to possible redemption).
Rights — Each holder
of a right will receive one-twentieth (1/20) of one share of common stock upon consummation of a Business Combination, even if the holder
of such right redeemed all shares held by it in connection with a Business Combination. No fractional shares will be issued upon conversion
of the rights. No additional consideration will be required to be paid by a holder of rights in order to receive its additional
shares upon consummation of a Business Combination, as the consideration related thereto has been included in the Unit purchase price
paid for by investors in the Initial Public Offering. If the Company enters into a definitive agreement for a Business Combination in
which the Company will not be the surviving entity, the definitive agreement will provide for the holders of rights to receive the same
per share consideration the holders of the common stock will receive in the transaction on an as-converted into common stock basis and
each holder of a right will be required to affirmatively covert its rights in order to receive 1/20 share underlying each right (without
paying additional consideration). The shares issuable upon conversion of the rights will be freely tradable (except to the extent held
by affiliates of the Company).
If the Company is unable to complete a Business
Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of rights will not
receive any of such funds with respect to their rights, nor will they receive any distribution from the Company’s assets held outside
of the Trust Account with respect to such rights, and the rights will expire worthless. Further, there are no contractual penalties for
failure to deliver securities to the holders of the rights upon consummation of a Business Combination. Additionally, in no event will
the Company be required to net cash settle the rights. Accordingly, holders of the rights might not receive the shares of common stock
underlying the rights.
Warrants — Each
redeemable warrant entitles the holder thereof to purchase three-fourths (3/4) of one share of common stock at a price of $11.50 per
full share, subject to adjustment as described in this prospectus. The warrants will become exercisable on the later of the completion
of an initial Business Combination and 12 months from the closing of the IPO. However, no public warrants will be exercisable for
cash unless the foregoing, if a registration statement covering the issuance of the common stock issuable upon exercise of the public
warrants is not effective within 90 days from the closing of the Company’s initial Business Combination, warrant holders may,
until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective
registration statement, exercise warrants on a cashless basis pursuant to an available exemption from registration under the Securities
Act. If an exemption from registration is not available, holders will not be able to exercise their warrants on a cashless basis. The
warrants will expire five years from the closing of the Company’s initial Business Combination at 5:00 p.m., New York
City time or earlier redemption.
In addition, if (x) the Company issues additional
shares of common stock or equity-linked securities for capital raising purposes in connection with the closing of the Company’s
initial Business Combination at an issue price or effective issue price of less than $9.50 per share (with such issue price or effective
issue price to be determined in good faith by our board of directors), (y) the aggregate gross proceeds from such issuances represent
more than 60% of the total equity proceeds, and interest thereon, available for the funding of the Company’s initial Business Combination,
and (z) the volume weighted average trading price of the Company’s common stock during the 20 trading day period starting
on the trading day prior to the day on which the Company consummates its initial Business Combination (such price, the “Market
Price”) is below $9.50 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115%
of the Market Price, and the $16.50 per share redemption trigger price described below will be adjusted (to the nearest cent) to be equal
to 165% of the Market Value.
The Company may redeem the outstanding warrants:
| ● | in
whole and not in part; |
| ● | at
a price of $0.01 per warrant; |
| ● | upon
a minimum of 30 days’ prior written notice of redemption, which the Company refers
to as the 30-day redemption period; |
| ● | if, and only if, the last reported sale price of the Company’s common stock equals or exceeds $16.50 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the to the warrant holders. |
If the Company calls the Public Warrants for
redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless
basis,” as described in the warrant agreement. In such event, each holder would pay the exercise price by surrendering the whole
warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares
of common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair
market value” (defined below) by (y) the fair market value. The “fair market value” shall mean the average reported
last sale price of the common stock for the 10 trading days ending on the third trading day prior to the date on which the
notice of redemption is sent to the holders of warrants.
Except as described above, no warrants will be
exercisable and the Company will not be obligated to issue common stock unless at the time a holder seeks to exercise such warrant, a
prospectus relating to the common stock issuable upon exercise of the warrants is current and the common stock have been registered or
qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants. Under the terms of
the warrant agreement, the Company has agreed to use its best efforts to meet these conditions and to maintain a current prospectus relating
to the common stock issuable upon exercise of the warrants until the expiration of the warrants. However, the Company cannot assure that
it will be able to do so and, if the Company does not maintain a current prospectus relating to the common stock issuable upon exercise
of the warrants, holders will be unable to exercise their warrants and the Company will not be required to settle any such warrant exercise.
If the prospectus relating to the common stock issuable upon the exercise of the warrants is not current or if the common stock is not
qualified or exempt from qualification in the jurisdictions in which the holders of the warrants reside, the Company will not be required
to net cash settle or cash settle the warrant exercise, the warrants may have no value, the market for the warrants may be limited and
the warrants may expire worthless.
The private warrants have terms and provisions
that are identical to those of the warrants being sold as part of the units in the IPO except that the private warrants will be entitled
to registration rights. The private warrants (including the common stock issuable upon exercise of the private warrants) will not be
transferable, assignable or salable until 30 days after the completion of our initial business combination except to permitted transferees.
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. |
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 indicates the fair value hierarchy
of the valuation inputs the Company utilized to determine such fair value.
| |
June 30, 2022 | | |
Quoted Prices in
Active Markets (Level 1) | | |
Significant Other Observable
Inputs (Level 2) | | |
Significant Other Unobservable
Inputs (Level 3) | |
Assets | |
| | | |
| | | |
| | | |
| | |
Trust Account - U.S. Treasury Securities Money Market
Fund | |
| 69,051,429 | | |
| 69,051,429 | | |
| — | | |
| — | |
Note 9 — Subsequent Events
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date through August 12, 2022 when the unaudited condensed financial statements were issued. The Company
did not identify any other subsequent events that would have required adjustment or disclosure in the unaudited condensed financial statements.