NOTES
TO UNAUDITED FINANCIAL STATEMENTS
Note
1 — Description of Organization and Business Operations
FutureTech
II Acquisition Corp.(the “Company”) is a blank check company incorporated in Delaware on August 19, 2021. The Company was
formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar
business combination with one or more businesses (the “Business Combination”). The Company is an early stage and emerging
growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As
of June 30, 2022, the Company had not yet commenced any operations. All activity for the period August 19, 2021 (inception) through June
30, 2022, relates to the Company’s formation and the initial public offering (the “Initial Public Offering”), and,
since the closing of the initial public offering, the Company has entered into a merger agreement (as described below), and continued
a search for a Business Combination candidate. The Company has selected December 31 as its fiscal year end.
The
registration statement for the Company’s Initial Public Offering was declared effective on February 14, 2022. On February 18, 2022,
the Company consummated the Initial Public Offering of 11,500,000 units (“Units” and, with respect to the shares of Class
A Common Stock included in the Units offered, the “Public Shares”), generating gross proceeds of $115,000,000, which is described
in Note 3.
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the sale of private placement units (the “Private
Placement Units”) at a price of $ per unit in a private placement to the Sponsor, generating gross proceeds of $,
which is described in Note 4.
Following
the closing of the Initial Public Offering on February 18, 2022, an amount of $117,300,000 ($10.00 per Unit) from the net proceeds of
the sale of the Units in the Initial Public Offering and the Private Placement Units was placed in a trust account (“Trust Account”)
which may be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of
1940, as amended (the “Investment Company Act”), with a maturity of 185 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 Trust Account to the Company’s
stockholders, as described below.
Transaction
costs of the Initial Public Offering with the exercise of the overallotment amounted to $5,688,352 consisting of $1,725,000 of cash underwriting
fees, $3,450,000 of deferred underwriting fees and $513,352 of other costs.
Following
the closing of the Initial Public Offering $700,000 of cash was held outside of the Trust Account available for working capital purposes.
As of June 30, 2022, we have available to us $331,500 of cash on our balance sheet and working capital of $244,537.
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 Placement Units, although substantially all of the net proceeds are intended to be applied generally toward
consummating a Business Combination. NASDAQ rules provide that the 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 (as defined below) (less any deferred underwriting
commissions and taxes payable on interest earned on the Trust Account) at the time of the signing of a definitive agreement to enter
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. There is no assurance that the Company
will be able to successfully effect a Business Combination.
FUTURETECH
II ACQUISITION CORP.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
Note
1 — Description of Organization and Business Operations (Continued)
The
Company will have until February 18, 2023 (or up to May 18, 2023, or August 18, 2023, as applicable) to consummate a Business Combination.
If the Company is unable to complete a Business Combination within 12 months from the closing of this offering (or up to 18 months from
the closing of this offering at the election of the Company in two separate three month extensions subject to satisfaction of certain
conditions, including the deposit of up to $1,000,000, or $1,150,000 if the underwriters’ over-allotment option is exercised in
full ($0.10 per unit in either case) for each three month extension, into the trust account, or as extended by the Company’s stockholders
in accordance with our certificate of incorporation), 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 us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses), divided
by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders
(including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate,
subject in the case of clauses (ii) and (iii) above to our obligations under Delaware law to provide for claims of creditors and the
requirements of other applicable law. Accordingly, it is our intention to redeem our public shares as soon as reasonably possible following
our 12th month (or up to 18 months from the closing of this offering at the election of the Company in two separate three month extensions
subject to satisfaction of certain conditions, including the deposit of up to $1,000,000, or $1,150,000 if the underwriters’ over-allotment
option is exercised in full ($0.10 per unit in either case) for each three month extension, into the trust account, or as extended by
the Company’s stockholders in accordance with our certificate of incorporation) and, therefore, we do not intend to comply with
those procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them
(but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.
The
Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products
sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality
or similar agreement or Business Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.20
per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the day of liquidation of the Trust Account,
if less than $10.20 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will
not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to monies held in
the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of
the underwriter of Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended
(the “Securities Act”). However, the Company has not asked the Sponsor to reserve for such indemnification obligations, nor
has the Company independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believe that
the Sponsor’s only assets are securities of the Company. Therefore, the Company cannot assure its stockholders that the Sponsor
would be able to satisfy those obligations. None of the Company’s officers or directors will indemnify the Company for claims by
third parties including, without limitation, claims by vendors and prospective target businesses. 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.
Liquidity
and Management’s Plans
At
June 30, 2022, the Company had cash of $331,500, and working capital of $244,537.
Prior
to the completion of the Initial Public Offering, the Company lacked the liquidity it needed to sustain operations for a reasonable period
of time, which is considered to be one year from the issuance date of the financial statements. The Company has since completed its Initial
Public Offering at which time capital in excess of the funds deposited in the Trust Account and/or used to fund offering expenses was
released to the Company for general working capital purposes. Accordingly, management has since re-evaluated the Company’s liquidity
and financial condition and determined that sufficient capital exists to sustain operations through the earlier of the consummation of
a Business Combination or one year from this filing and therefore substantial doubt has been alleviated. There is no assurance that the
Company’s plans to consummate an initial Business Combination will be successful within the Combination Period. The financial statements
do not include any adjustments that might result from the outcome of this uncertainty.
FUTURETECH
II ACQUISITION CORP.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
Note
1 — Description of Organization and Business Operations (Continued)
In
order to fund working capital deficiencies or finance transaction costs in connection with our initial Business Combination, our Sponsor
or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required.
If we complete our initial Business Combination, we would repay such loaned amounts. In the event that our initial Business Combination
does not close, we may use a portion of the working capital held outside the Trust Accounts to repay such loaned amounts but no proceeds
from our Trust Accounts would be used for such repayment. Up to $1,500,000 of such loans may be convertible into units identical to the
Placement Units, at a price of $10.00 per unit at the option of the lender.
Risks
and Uncertainties
Management
is currently evaluating the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could
have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific
impact is not readily determinable as of the date of the financial statement. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Additionally,
as a result of the military action commenced in February 2022 by the Russian Federation and Belarus in the country of Ukraine and related
economic sanctions, the Company’s ability to consummate a Business Combination, including the proposed Business Combination with
the Target, or the operations of a target business with which the Company ultimately consummates a Business Combination, including the
Target, may be materially and adversely affected. Further, the Company’s ability to consummate a transaction may be dependent on
the ability to raise equity and debt financing which may be impacted by these events, including as a result of increased market volatility,
or decreased market liquidity in third-party financing being unavailable on terms acceptable to the Company or at all. The impact of
this action and related sanctions on the world economy and the specific impact on the Company’s financial position, results of
operations and/or ability to consummate a Business Combination are not yet determinable. The consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
FUTURETECH
II ACQUISITION CORP.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
Note
2 — Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States
of America (“US GAAP”) and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange
Commission.
Emerging
Growth Company
The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our
Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required
to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements
of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously
approved.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do
not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of
such extended transition period, which means that when a standard is issued or revised and it has different application dates for public
or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies
adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company,
which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period
difficult or impossible because of the potential differences in accounting standards used.
Use
of Estimates
The
preparation of financial statements in conformity with 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 revenues and expenses during the reporting period.
Making
estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of
a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating
its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ
significantly from those estimates.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution
which, at times may exceed the Federal depository insurance coverage of $250,000. At June 30, 2022, the Company had not experienced losses
on this account and management believes the Company is not exposed to significant risks on such account.
Cash
and Cash Equivalents
The
Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash
equivalents are carried at cost, which approximates fair value. As of June 30, 2022 and December 31, 2021, the Company had cash of $331,500
and $5,000, respectively. The Company had no cash equivalents as of June 30, 2022 and December 31, 2021.
FUTURETECH
II ACQUISITION CORP.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
Note
2 — Summary of Significant Accounting Policies (Continued)
Trust
Account
Upon
the closing of the Initial Public Offering and the Private Placement, $117,300,000 ($10.00 per Unit) of the net proceeds of the Initial
Public Offering and certain of the proceeds of the Private Placement was held in a trust account (“Trust Account”) located
in the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only in U.S. government treasury
obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment
Company Act 1940, as amended (the “Investment Company Act”), which will be invested only in direct U.S. government treasury
obligations, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution
of the Trust Account as described below.
As
of June 30, 2022, the Company had $117,417,290 in marketable securities held in the Trust Account.
Offering
Costs Associated with the Initial Public Offering
The
Company complies with the requirements of the Financial Accounting Standards Board ASC 340-10-S99-1 and SEC Staff Accounting Bulletin
(“SAB”) Topic 5A, “Expenses of Offering.” Offering costs of $513,352 consist principally of costs
incurred in connection with formation of the Company and preparation for the Initial Public Offering. These costs, together with the
underwriter discount of $1,725,000 were charged to additional paid-in capital upon completion of the Initial Public Offering.
Class
A Common Stock Subject to Possible Redemption
The
Company accounts for its common stocks subject to possible redemption in accordance with the guidance enumerated in ASC 480 “Distinguishing
Liabilities from Equity”. Common stocks subject to mandatory redemption are classified as a liability instrument and are measured
at fair value. Conditionally redeemable common stocks (including common stocks that feature redemption rights that are either within
the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control)
are classified as temporary equity. At all other times, common stocks are classified as stockholders’ equity. The Company’s
Class A common stocks feature certain redemption rights that are considered by the Company to be outside of the Company’s control
and subject to the occurrence of uncertain future events. Accordingly, at June 30, 2022, the Class A common stocks subject to possible
redemption in the amount of $117,300,000 are presented as temporary equity, outside of the stockholders’ equity section of the
Company’s balance sheets.
FUTURETECH
II ACQUISITION CORP.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
Note
2 — Summary of Significant Accounting Policies (Continued)
Net
Loss Per Share
Net
loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period.
The Company applies the two-class method in calculating earnings per share. Earnings and losses are shared pro rata between the two classes
of shares. The calculation of diluted loss per share of common stock does not consider the effect of the warrants issued in connection
with the (i) Public Offering and (ii) Private Placement, because the warrants are contingently exercisable, and the contingencies have
not yet been met. As a result, diluted earnings per ordinary share is the same as basic earnings per ordinary share for the periods presented.
The
following table reflects the calculation of basic and diluted net loss per common share (in dollars, except per share amounts):
Schedule of Calculation of Basic and Diluted Net Income Per Common Share
| | |
Three months | |
| | |
ended | |
| | |
June 30, | |
| | |
2022 | |
| | |
| |
| Class A common stock | |
| | |
| Numerator: Loss allocable to Class A common stock | |
$ | (100,885 | ) |
| Denominator: Basic and diluted weighted average shares outstanding | |
| 11,500,000 | |
| Basic and diluted net loss per share, Class A Common Stock | |
$ | (0.01 | ) |
| | |
| | |
| Class B common stock | |
| | |
| Numerator: Loss allocable to Class B common stock | |
$ | (25,221 | ) |
| Denominator: Basic and diluted weighted average shares outstanding | |
| 2,875,000 | |
| Basic and diluted net loss per share, Class B Common Stock | |
$ | (0.01 | ) |
| | |
Six months | |
| | |
ended | |
| | |
June 30, | |
| | |
2022 | |
| | |
| |
| Class A common stock | |
| | |
| Numerator: Loss allocable to Class A common stock | |
$ | (149,671 | ) |
| Denominator: Basic and diluted weighted average shares outstanding | |
| 8,688,889 | |
| Basic and diluted net loss per share, Class A Common Stock | |
$ | (0.02 | ) |
| | |
| | |
| Class B common stock | |
| | |
| Numerator: Loss allocable to Class B common stock | |
$ | (47,945 | ) |
| Denominator: Basic and diluted weighted average shares outstanding | |
| 2,783,333 | |
| Basic and diluted net loss per share, Class B Common Stock | |
$ | (0.02 | ) |
FUTURETECH
II ACQUISITION CORP.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
Note
2 — Summary of Significant Accounting Policies (Continued)
Fair
Value of Financial Instruments
The
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction
between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets
or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
●
Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets. This is the level
that the Marketable Securities Held in Trust Account are considered (being $117,417,290 as of June 30, 2022);
●
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted
prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active;
and
●
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
In
some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In
those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input
that is significant to the fair value measurement.
FUTURETECH
II ACQUISITION CORP.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
Note
2 — Summary of Significant Accounting Policies (Continued)
Income
Taxes
The
Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset
and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed
for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible
amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income.
Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC
Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax
positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not
to be sustained upon examination by taxing authorities. The Company’s management determined the United States is the Company’s
only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income
tax expense. There were no unrecognized tax benefits as of June 30, 2022 and December 31, 2021 and no amounts accrued for interest and
penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material
deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
The
provision for income taxes was deemed to be immaterial for the three and six months ended June 30, 2022.
Recently
Issued Accounting Standards
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 accounting for certain financial instruments. ASU2020-06 eliminates
the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies
the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard
also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s
own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for
all convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023 and should be applied on a full
or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company is currently assessing the impact,
if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.
Management
does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a
material effect on the Company’s financial statements.
Note
3 —Public Offering
Pursuant
to the Initial Public Offering and full exercise underwriter’s overallotment option, the Company sold 11,500,000 Units at a purchase
price of $10.00 per Unit. Each Unit consists of one common stock and one redeemable warrant (“Public Warrant”). Each Public
Warrant will entitle the holder to purchase one common stock at an exercise price of $11.50 per whole share (see Note 7).
Note
4 — Private Placement
Simultaneously
with the closing of the Initial Public Offering, the Sponsor has purchased an aggregate of Placement Units at a price of $
per Placement Unit, (or $ in the aggregate), from the Company in a private placement that occurred simultaneously with the closing
of the Initial Public Offering. The Sponsor transferred $ to the Trust Account on February 16, 2022.
The
proceeds from the sale of the Private Placement Warrants were added to the net proceeds from the Initial Public Offering held in the
Trust Account. The Private Placement Warrants are identical to the warrants sold in the Initial Public Offering, except as described
in Note 7. If the Company does not complete a Business Combination within the Combination Period, the Private Placement Warrants will
expire worthless.
FUTURETECH
II ACQUISITION CORP.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
Note
5 — Related Party Transactions
Class
B Common Stock
On
October 8, 2021, the Company issued an aggregate of shares of Class B common stock (the “Founder Shares”) to the
Sponsor for an aggregate purchase price of $ in cash, or approximately $per share. Such Class B common stock includes an
aggregate of up to shares subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment is not
exercised in full or in part, so that the Sponsor will collectively own 20% of the Company’s issued and outstanding shares after
the Proposed Public Offering (assuming the initial stockholders do not purchase any Public Shares in the Proposed Public Offering and
excluding the Placement Units and underlying securities).
The
initial stockholders have agreed not to transfer, assign or sell any of the Class B common stock (except to certain permitted transferees)
until, with respect to any of the Class B common stock, the earlier of (i) six months after the date of the consummation of a Business
Combination, or (ii) the date on which the closing price of the Company’s common stock equals or exceeds $12.00 per share (as adjusted
for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing
after a Business Combination, with respect to the remaining any of the Class B common stock, upon six months after the date of the consummation
of a Business Combination, or earlier, in each case, if, subsequent to a Business Combination, the Company consummates a subsequent liquidation,
merger, stock exchange or other similar transaction which results in all of the Company’s stockholders having the right to exchange
their common stock for cash, securities or other property.
Promissory
Note — Related Party
On
August 19, 2021, the Sponsor issued an unsecured promissory note to the Company, pursuant to which the Company may borrow up to an aggregate
principal amount of $300,000 to be used for payment of costs related to the Initial Public Offering. The note is non-interest bearing
and payable on the earlier of (i) June 30, 2022 or (ii) the consummation of the Initial Public Offering. These amounts will be repaid
upon completion of this offering out of the $700,000 of offering proceeds that has been allocated for the payment of offering expenses.
As of June 30, 2022 and December 31, 2021, there was $144,443 and $100,893 outstanding pursuant to the promissory note, respectively.
Related
Party Loans
In
order to finance transaction costs in connection with a Business Combination, the Company’s Sponsor, an affiliate of the Sponsor,
or the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (the “Working
Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes would either be repaid upon consummation
of a Business Combination, without interest, or, at the lender’s discretion, up to $ of notes may be converted upon consummation
of a Business Combination into units at a price of $ per unit. The Units will be identical to the Private Placement Units. In the
event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the
Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. To date, the Company
has no working capital loans outstanding.
FUTURETECH
II ACQUISITION CORP.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
Note
5 — Related Party Transactions (Continued)
If
the Company anticipates that it may not be able to consummate a Business Combination within 12 months, the Company may, by resolution
of the Company’s board if requested by the Sponsor, extend the period of time to consummate a Business Combination up to two times,
each by an additional three months (for a total of up to 18 months to complete a Business Combination), subject to the Sponsor depositing
additional funds into the Trust Account as set out below. Pursuant to the terms of the Company’s amended and restated certificate
of incorporation and the trust agreement entered into between the Company and Continental Stock Transfer & Trust Company, in order
for the time available for the Company to consummate the initial Business Combination to be extended, the Sponsor or its affiliates or
designees, upon five business days advance notice prior to the applicable deadline, must deposit into the Trust Account $ since
the underwriters’ over-allotment option is exercised in full ($ per unit), on or prior to the date of the applicable deadline,
for each of the available three month extensions, providing a total possible Business Combination period of 18 months at a total payment
value of $ since the underwriters’ over-allotment option is exercised in full ($ per unit) (the “Extension Loans”).
Any such payments would be made in the form of non-interest-bearing loans. If the Company completes its initial Business Combination,
the Company will, at the option of the Sponsor, repay the Extension Loans out of the proceeds of the Trust Account released to the Company
or convert a portion or all of the total loan amount into units at a price of $ per unit, which units will be identical to the Private
Placement Units. If the Company does not complete a Business Combination, the Company will repay such loans only from funds held outside
of the Trust Account. Furthermore, the letter agreement among the Company and the Company’s officers, directors, and the Sponsor
contains a provision pursuant to which the Sponsor will agree to waive its right to be repaid for such loans to the extent there is insufficient
funds held outside of the Trust Account in the event that the Company does not complete a Business Combination. The Sponsor and its affiliates
or designees are not obligated to fund the Trust Account to extend the time for the Company to complete the initial Business Combination.
The public stockholders will not be afforded an opportunity to vote on the extension of time to consummate an initial Business Combination
from 12 months to 18 months described above or redeem their shares in connection with such extensions. As of June 30, 2022 and December
31, 2021, there were no amounts understanding under the related party loans.
Administrative
Support Agreement
Commencing
on the date the Units are first listed on the Nasdaq, the Company has agreed to pay the Sponsor a total of $10,000 per month for office
space, utilities and secretarial and administrative support for up to 18 months. Upon completion of the Initial Business Combination
or the Company’s liquidation, the Company will cease paying these monthly fees. During the three and six months ended June 30,
2022, the Company recorded $30,000 and $40,000 to the statement of operations pursuant to the agreement, respectively.
FUTURETECH
II ACQUISITION CORP.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
Note
5 — Related Party Transactions (Continued)
Representative
Shares
The
Company issued to EF Hutton and/or its designees, 115,000 shares of Class A common stock upon the Initial Public Offering. EF Hutton
has agreed not to transfer, assign or sell any such ordinary shares until the completion of our initial business combination. In addition,
EF Hutton has agreed (i) to waive its redemption rights with respect to such ordinary shares in connection with the completion of our
initial business combination and (ii) to waive its rights to liquidating distributions from the trust account with respect to such ordinary
shares if we fail to complete our initial business combination within 12 months (or 15 months if the Company has filed a proxy statement,
registration statement or similar filing for an initial business combination within 12 months from the consummation of this offering
but has not completed the initial business combination within such 12-month period, or up to 18 months if the Company extends the period
of time to consummate a business combination, as described in more detail in the Prospectus) from the closing of this offering.
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 commencement of sales of the registration statement of which this prospectus forms a part pursuant to Rule 5110(e)(1) of
FINRA’s NASD Conduct Rules. Pursuant to FINRA Rule 5110(e)(1), these securities may not be sold, transferred, assigned, pledged
or hypothecated or 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 statement of which
this prospectus forms a part, nor may they be sold, transferred, assigned, pledged or hypothecated for a period of 180 days immediately
following the commencement of sales of this offering except to any underwriter and selected dealer participating in the offering and
their bona fide officers or partners, registered persons or affiliates or as otherwise permitted under Rule 5110(e)(2), and only if any
such transferee agrees to the foregoing lock-up restrictions.
Note
6 — Commitments and Contingencies
Registration
Rights
The
holders of the insider shares, as well as the holders of the Placement Units (and underlying securities) and any securities issued in
payment of working capital loans made to the Company, will be entitled to registration rights pursuant to an agreement signed on the
effective date of Proposed Public Offering. The holders of a majority of these securities are entitled to make up to two demands that
the Company register such securities. Notwithstanding anything to the contrary, the underwriters (and/or their designees) may only make
a demand registration (i) on one occasion and (ii) during the five-year period beginning on the effective date of the Proposed Public
Offering. The holders of the majority of the insider shares can elect to exercise these registration rights at any time commencing three
months prior to the date on which these shares of common stocks are to be released from escrow. The holders of a majority of the Placement
Units (and underlying securities) and securities issued in payment of working capital loans (or underlying securities) can elect to exercise
these registration rights at any time after 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
anything to the contrary, the underwriters (and/or their designees) may participate in a “piggy-back” registration only during
the seven-year period beginning on the effective date of the Proposed Public Offering. The Company will bear the expenses incurred in
connection with the filing of any such registration statements. Notwithstanding anything to the contrary, under FINRA Rule 5110, the
underwriters and/or their designees may only make a demand registration (i) on one occasion and (ii) during the five-year period beginning
on the effective date of the registration statement relating to the Proposed Public Offering, and the underwriters and/or their designees
may participate in a “piggy-back” registration only during the seven-year period beginning on the effective date of the registration
statement relating to the Proposed Public Offering.
Underwriters
Agreement
The
Company granted the underwriter a 45-day option to purchase up to 1,500,000 additional Units to cover over-allotments at the Initial
Public Offering price, less the underwriting discounts and commissions. The aforementioned option was exercised on February 18, 2022.
The
underwriter was paid a cash underwriting discount of two percent (1.50%) of the gross proceeds of the Initial Public Offering, or $1,725,000.
In addition, the underwriter is entitled to a deferred fee of three-point five percent (3.50%) of the gross proceeds of the Initial Public
Offering, or $3,450,000. The deferred fee was placed in the Trust Account and will be paid in cash upon the closing of a Business Combination,
subject to the terms of the underwriting agreement. In addition, the Company issued EF Hutton and/or its designees, 115,000 shares of
Class A common stock upon the consummation of the offering.
Right
of First Refusal
For
a period beginning on the closing of this offering and ending twelve (12) months from the closing of a business combination, we have
granted EF Hutton, division of Benchmark Investments, LLC a right of first refusal to act as lead-left book running manager and lead
left manager for any and all future private or public equity, convertible and debt offerings during such period. In accordance with FINRA
Rule 5110(f)(2)(E)(i), such right of first refusal shall not have a duration of more than two years from the effective date of the registration
statement of which this prospectus forms a part.
FUTURETECH
II ACQUISITION CORP.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
Note
7 – Stockholders’ Equity
Preferred
Shares — The Company is authorized to issue 1,000,000 preferred shares with a par value of $0.0001 per share with such
designation, rights and preferences as may be determined from time to time by the Company’s Board of Directors. At June 30, 2022
and December 31, 2021, there were no preferred shares issued or outstanding.
Class
A Common Stock — The Company is authorized to issue 100,000,000 shares of Class A common stock with a par value of $0.0001
per share. Holders of the Company’s Class A common stock are entitled to one vote for each share. At June 30, 2022 and December
31, 2021, there were 635,075 and none Class A common stock issued and outstanding, respectively, which included 115,000 representative
shares. As of June 30, 2022 and December 31, 2021, there were 11,500,000 and none shares, respectively, of Class A common stock that
were classified as temporary equity in the accompanying balance sheets.
Class
B Common Stock — The Company is authorized to issue 10,000,000 shares of Class B common stock with a par value of $0.0001
per share. Holders of the Company’s Class B common stock are entitled to one vote for each share. At June 30, 2022 and December
31, 2021, there were 2,875,000 Class B common stock issued and outstanding. Upon exercise of the over-allotment option, 375,000 shares
of Class B common stock are no longer subject to forfeiture.
Only
holders of the Class B ordinary shares will have the right to vote on the election of directors prior to the Business Combination. Holders
of Class A ordinary shares and holders of Class B ordinary shares will vote together as a single class on all matters submitted to a
vote of our shareholders except as otherwise required by law. In connection with our initial business combination, the Company may enter
into a shareholders agreement or other arrangements with the shareholders of the target or other investors to provide for voting or other
corporate governance arrangements that differ from those in effect upon completion of the IPO.
The
shares of Class B ordinary shares will automatically convert into Class A ordinary shares at the time of a Business Combination, or earlier
at the option of the holder, on a one-for-one basis, subject to adjustment. In the case that additional shares of Class A ordinary shares,
or equity-linked securities, are issued or deemed issued in excess of the amounts issued in the Initial Public Offering and related to
the closing of a Business Combination, the ratio at which shares of Class B ordinary shares shall convert into shares of Class A ordinary
shares will be adjusted (unless the holders of a majority of the then-outstanding shares of Class B ordinary shares agree to waive such
adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A ordinary shares issuable upon
conversion of all shares of Class B ordinary shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total
number of all shares of ordinary shares outstanding upon the completion of Initial Public Offering plus all shares of Class A ordinary
shares and equity-linked securities issued or deemed issued in connection with a Business Combination (net of the number of shares of
Class A ordinary shares redeemed in connection with a Business Combination), excluding any shares or equity-linked securities issued
or issuable to any seller of an interest in the target to us in a Business Combination.
Warrants
— Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of
the Units and only whole warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the
completion of a Business Combination and (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will
expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
The
Company will not be obligated to deliver any shares of Class A ordinary shares pursuant to the exercise of a warrant and will have no
obligation to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares
of Class A ordinary shares issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares
of Class A ordinary shares is available, subject to the Company satisfying its obligations with respect to registration, or a valid exemption
from registration is available. No warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated
to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered
or qualified under the securities laws of the state of residence of the exercising holder, or an exemption from registration is available.
The
Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of a Business Combination,
the Company will use its commercially reasonable efforts to file, and within 60 business days following a Business Combination to have
declared effective, a registration statement covering the issuance of the shares of Class A ordinary shares issuable upon exercise of
the warrants and to maintain a current prospectus relating to those shares of Class A ordinary shares until the warrants expire or are
redeemed. Notwithstanding the above, if the Class A ordinary shares is at the time of any exercise of a warrant not listed on a national
securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities
Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis”
in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to
file or maintain in effect a registration statement, but will use its commercially reasonable efforts to register or qualify the shares
under applicable blue sky laws to the extent an exemption is not available.
Redemption
of Warrants When the Price per Share of Class A Common Stock Equals or Exceeds $18.00 — Once the warrants become exercisable, the
Company may redeem the outstanding Public Warrants:
| |
● |
in
whole and not in part; |
| |
|
|
| |
● |
at
a price of $0.01 per Public Warrant; |
| |
|
|
| |
● |
upon
a minimum of 30 days’ prior written notice of redemption, or the 30-day redemption period to each warrant holder; and |
| |
|
|
| |
● |
if,
and only if, the last reported sale price of the Class A Common Stock equals or exceeds $18.00 per share (as adjusted for stock splits,
stock dividends, reorganization, 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 warrant holders. |
If
and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register
or qualify the underlying securities for sale under all applicable state securities laws.
If
the Company calls the Public Warrants for redemption, as described above, its management will have the option to require any holder that
wishes to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise
price and number of ordinary shares issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including
in the event of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except
as described below, the Public Warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally,
in no event will the Company be required to net cash settle the Public Warrants. 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 Public Warrants will not receive
any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held
outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.
The
Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering.
Note
8 – Subsequent Events
In
accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure
of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events or
transactions that occurred up to the date the audited financial statements were available to issue. Based upon this review, the Company
did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.
