NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2023
(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS
OPERATIONS
Mountain Crest Acquisition Corp. V (the “Company”)
is a newly organized blank check company that was incorporated in Delaware on April 8, 2021. The Company was formed for the purpose
of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with
one or more businesses (the “Business Combination”). Although the Company is not limited to a particular industry or sector
for purposes of consummating a Business Combination, the Company intends to focus its search on private companies in North America and
Asia Pacific regions that have positive operating cash flow or compelling economics and clear paths to positive operating cash flow, significant
assets, and successful management teams that are seeking access to the U.S. public capital markets. 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 March 31, 2023, the Company had not
commenced any operations. All activity for the period from April 8, 2021 (inception) through March 31, 2023 relates to the Company’s
formation, the initial public offering (“Initial Public Offering”), which is described below, and subsequent to the Initial
Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after
the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest
income from the proceeds derived from the Initial Public Offering.
The registration statement for the Company’s
Initial Public Offering was declared effective on November 12, 2021. On November 16, 2021, the Company consummated the Initial
Public Offering of 6,000,000 units (the “Units”) and, with respect to the shares of common stock included in the Units sold,
the Public Shares at $10.00 per Unit, generating gross proceeds of $60,000,000, which is described in Note 3.
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the sale of units (the “Private Units”) at a price of $10.00 per Private
Unit in a private placement to Mountain Crest Global Holdings LLC (the “Sponsor”) generating gross proceeds of $,
which is described in Note 4.
Following the closing of the Initial Public Offering
on November 16, 2021, an amount of $60,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public
Offering and the sale of the Private Units was placed in a trust account (the “Trust Account”), 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 180 days or less or in any open-ended investment company that holds itself out as a money market
fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the
consummation of a Business Combination or (ii) the distribution of the funds in the Trust Account as described below.
On November 18, 2021, the underwriters fully
exercised their over-allotment option, resulting in an additional 900,000 Units issued for an aggregate amount of $9,000,000. In connection
with the underwriters’ full exercise of their over-allotment option, the Company also consummated the sale of an additional 18,000
Private Units at $10.00 per Private Unit, generating total proceeds of $180,000. A net total of $9,000,000 was deposited into the Trust
Account, bringing the aggregate proceeds held in the Trust Account to $69,000,000.
Transaction costs amounted to $5,090,361 consisting
of $1,380,000 of underwriting fees, $2,070,000 of deferred underwriting fees and $1,640,361 of other offering costs (which includes $1,383,617
of Representative Shares at fair value See Note 6).
MOUNTAIN CREST ACQUISITION CORP. V
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2023
(Unaudited)
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Units, although
substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. The Company’s
initial Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of
the balance in the Trust Account (as defined below) (less any deferred underwriting commissions and net of amounts previously released
to the Company to pay its tax obligations) at the time of the signing of an agreement to enter into a Business Combination. The Company
will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding voting
securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as
an investment company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business
Combination.
The Company will provide its holders of the outstanding
Public Shares (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 stockholders will be entitled to redeem their shares for a pro
rata portion of the amount then on deposit in the Trust Account (initially $10.00 per share, plus any pro rata interest earned on the
funds held in the Trust Account and not previously released to the Company to pay its tax obligations). The per-share amount to be distributed
to stockholders who redeem their shares will not be reduced by the deferred underwriting commission the Company will pay to the underwriters
(as discussed in Note 6).
The Company will proceed with a Business Combination
if a majority of the outstanding 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, conduct the redemptions pursuant to the tender offer rules of the 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 other
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. If the Company seeks stockholder approval in connection with a Business Combination, the Company’s Sponsor
has agreed to (a) vote its Insider Shares (as defined in Note 5), Private Shares (as defined in Note 4) and any Public Shares held by
it in favor of a Business Combination and (b) not to redeem any shares in connection with a stockholder vote to approve a Business Combination
or sell any such shares to the Company in a tender offer in connection with a Business Combination. Additionally, each public stockholder
may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction.
Notwithstanding the above, if the Company seeks
stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Amended and
Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other
person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more
than an aggregate of 20% or more of the Public Shares, without the prior consent of the Company.
MOUNTAIN CREST ACQUISITION CORP. V
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2023
(Unaudited)
The Sponsor has agreed to (i) waive its redemption
rights with respect to Insider Shares, Private Shares and any Public Shares it may acquire during or after the Initial Public Offering
in connection with the consummation of a Business Combination and (ii) not to propose an amendment to the Company’s 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 an opportunity
to redeem their Public Shares in conjunction with any such amendment. However, the Sponsor will be entitled to liquidating distributions
with respect to any Public Shares acquired if the Company fails to consummate a Business Combination or liquidates within the Combination
Period (defined below).
The Company had until November 16, 2022
(or until February 16, 2023 if the Company has executed a definitive agreement for a Business Combination by November 16, 2022
but has not completed the Business Combination by such date) to consummate a Business Combination. However, if the Company anticipates
that it may not be able to consummate a Business Combination within 12 months, and the Company has not entered into a definitive agreement
for a Business Combination by such date, the Company may extend the period of time to consummate a Business Combination up to two times,
each by an additional three months for a total of 18 months to complete a Business Combination (the “Combination Period”).
On October 19, 2022, upon the upon the execution of a Business Combination Agreement, the period of time for the Company to complete
a Business Combination under its amended and restated certificate of incorporation is extended for a period of 3 months from November 16,
2022 to February 16, 2023. Subsequently, as approved by its stockholders at the special meeting of Stockholders held on December 20,
2022 (the “Special Meeting”), the Company entered into an amendment to the Investment Management Trust Agreement, dated as
of November 12, 2021, with Continental Stock Transfer & Trust Company, on December 20, 2022 (the “Trust Amendment”).
Pursuant to the Trust Amendment, the Company has the right to extend the time for the Company to complete its business combination (the
“Business Combination Period”) under the Trust Agreement for a period of 3 months from February 16, 2023 to May 16,
2023 and to the extent the Company’s Amended and Restated Certificate of Incorporation is amended to extend the Business Combination
Period, by depositing $300,000 into the Company’s trust account (“Trust Account”). The Company extended the time it
has to complete its initial business combination from February 16, 2023, to May 16, 2023 by depositing $300,000
into the trust account on February 15, 2023 (Note 6).
In connection with the stockholders’
vote at the Special Meeting of Stockholders held by the Company on December 20, 2022, 4,965,892
shares were tendered for redemption.
On May 12, 2023, the Company held a special meeting
of stockholders, at which the Company’s stockholders approved an amendment (the “Extension Amendment”) to the Company’s
amended and restated certificate of incorporation, giving the Company the right to extend the time to complete its business combination
from May 16, 2023 to February 16, 2024. In connection with the Extension Amendment, stockholders holding 1,405,134 shares of redeemable
common stock exercised their right to redeem such shares for a pro rata portion of the funds in the Trust Account (Note 9).
If the Company is unable to complete a Business
Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly
as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash,
equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and
not previously released to the Company to pay taxes, divided by the number of then outstanding Public Shares, which redemption will completely
extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any),
subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s
remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii)
to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
The Sponsor has agreed to waive its liquidation
rights with respect to the Private Shares if the Company fails to complete a Business Combination within the Combination Period. However,
if the Sponsor or any of its respective affiliates acquire Public Shares after the Initial Public Offering, such Public Shares will be
entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination
Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account
in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will
be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the
event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than
the Initial Public Offering price per Unit ($10.00).
MOUNTAIN CREST ACQUISITION CORP. V
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2023
(Unaudited)
In order to protect the amounts held in the Trust
Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a vendor for services rendered or products
sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce
the amounts in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in
the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per Public Share due to reductions in the
value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party who executed
a waiver of any and all rights to the monies held in the Trust Account nor will it apply to any claims under the Company’s indemnity
of the underwriters of Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as
amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third
party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce
the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors,
service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the Company
waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Risks and Uncertainties
Management continues to evaluate the impact of
the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s
financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as
of the date of these unaudited condensed financial statements. The unaudited condensed financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
In February 2022, the Russian Federation
and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United
States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related
sanctions on the world economy are not determinable as of the date of these unaudited condensed financial statements. The specific impact
on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these unaudited
condensed financial statements.
On August 16, 2022, the Inflation Reduction
Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1%
excise tax on certain repurchases (including redemptions) of stock by publicly traded domestic (i.e., U.S.) corporations and certain domestic
subsidiaries of publicly traded foreign corporations. The excise tax is imposed on the repurchasing corporation itself, not its shareholders
from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at
the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair
market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition,
certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority
to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax. The IR Act applies only to
repurchases that occur after December 31, 2022.
Any redemption or other repurchase that occurs
after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax.
Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote or
otherwise would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with
the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any “PIPE”
or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination
but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury.
In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment
of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business
Combination and in the Company’s ability to complete a Business Combination.
MOUNTAIN CREST ACQUISITION CORP. V
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2023
(Unaudited)
Going Concern
In connection with the Company’s assessment
of going concern considerations in accordance with Financial Accounting Standard Board (“FASB”) Accounting Standards Update
(“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,”
the Company has until February 16, 2024 to consummate the proposed Business Combination. It is uncertain that the Company will be
able to consummate the proposed Business Combination by this time. If a business combination is not consummated by this date, there will
be a mandatory liquidation and subsequent dissolution of the Company. Management has determined that the liquidity condition and mandatory
liquidation, should a business combination not occur, and potential subsequent dissolution, raises substantial doubt about the Company’s
ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company
be required to liquidate after February 16, 2024. The Company intends to complete the proposed Business Combination before the mandatory
liquidation date. However, there can be no assurance that the Company will be able to consummate any business combination by February
16, 2024.
Liquidity and Capital Resources
As of March 31, 2023, the Company had $122,523
of cash held outside its Trust Account for use as working capital (the “Working Capital”).
In addition, in order to finance transaction costs
in connection with a business combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors
may, but are not obligated to, provide the Company working capital loans, as defined below (see Note 5). To date, there were no amounts
outstanding under any working capital loans.
The Company will need to raise additional capital
through loans or additional investments from its Sponsor, stockholders, officers, directors, or third parties. The Company’s officers,
directors and Sponsor may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they
deem reasonable in their sole discretion, to meet the Company’s working capital needs. Accordingly, the Company may not be able
to obtain additional financing. If the Company is unable to raise additional capital, it may be required to take additional measures to
conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential
transaction, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially
acceptable terms, if at all.
On February 15, 2023, the Company issued
a non-interest bearing, unsecured promissory note in the aggregate principal amount of $300,000 (the “Note”) to the Sponsor.
Pursuant to the Note, the Sponsor loaned the Company an aggregate amount of $300,000 that is due and payable upon the Company’s
consummation of an initial business combination with a target business. The Note will either be paid upon consummation of the Company’s
initial business combination, or, at the Sponsor’s discretion, converted upon consummation of the Company’s business combination
into private units at a price of $10.00 per unit. The loan will be forgiven, except to the extent of any funds held outside of the trust
account, by the Sponsor or its affiliates if the Company is unable to consummate an initial business combination during the Business Combination
Period.
On March 31, 2023, the Company and UHY Advisors/UHY
LLP, the Company’s independent registered public accounting firm, entered into an unsecured promissory note for services rendered
and unpaid in the principal sum of one hundred eight thousand one dollars and ninety cents ($108,001.90), plus interest applied monthly
on any un-paid balance at the rate of eight (8%) percent per year until such sum is fully paid. If $108,001.90 is paid in full on this
promissory note no later than July 31, 2023, all accrued finance charges on this promissory note will be forgiven. The promissory
note is payable by the Company in advance without penalty. $5,125 of the balance was waived as agreed with UHY LLP. As of March 31, 2023, there was $102,877 outstanding under this Note.
MOUNTAIN CREST ACQUISITION CORP. V
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2023
(Unaudited)
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial
statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC.
Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed
or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the
information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion
of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature,
which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed financial
statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the period ended December 31,
2022, as filed with the SEC on March 31, 2023. The interim results for the three months ended March 31, 2023 are not necessarily
indicative of the results to be expected for the year ending December 31, 2023 or for any future periods.
Emerging Growth Company
The Company is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS
Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies
that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public
accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive
compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote
on executive compensation and 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 unaudited condensed 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 the unaudited condensed financial
statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial
statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Making estimates requires management to exercise
significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances
that existed at the date of the 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.
MOUNTAIN CREST ACQUISITION CORP. V
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2023
(Unaudited)
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. At March 31, 2023 and December 31,
2022, the Company had no cash equivalents.
Investment Held in Trust Account
The Company’s portfolio of investments held
in the Trust Account is comprised of investments in money market funds that invest in U.S. treasury securities and generally have a readily
determinable fair value, or a combination thereof. Gains and losses resulting from the change in fair value of these securities are included
in interest earned on marketable securities held in Trust Account in the accompanying statements of operations. The estimated fair values
of investments held in the Trust Account are determined using available market information.
Interest income earned on these investments is
fully reinvested into the Investments held in Trust Account and therefore considered as an adjustment to reconcile net profit/(loss) to
net cash used in operating activities in the Statements of Cash Flows. Such interest income reinvested will be used to redeem all or a
portion of the ordinary shares upon the completion of business combination.
Common Stock Subject to Possible Redemption
The Company accounts for its common stock subject
to possible redemption in accordance with the guidance in FASB Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity.” Common stock subject to mandatory redemption is classified as a liability instrument and is measured at
fair value. Conditionally redeemable common stock (including common stock that features 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.
In connection with the stockholders’ vote
at the Special Meeting of Stockholders held by the Company on December 20, 2022, 4,965,892 shares were tendered for redemption.
Accordingly, at March 31, 2023 and December 31,
2022, 1,934,108 common stock subject to possible redemption is presented at redemption value of $10.35 and $10.11, respectively, as temporary
equity, outside of the stockholders’ deficit section of the Company’s balance sheets.
At March 31, 2023 and December 31, 2022,
the common stock reflected in the balance sheets are reconciled in the following table:
| Scheduled of common stock subject to possible redemption | |
| | |
| Gross proceeds | |
$ | 69,000,000 | |
| Less: | |
| | |
| Allocation of offering costs related to redeemable shares | |
| (4,657,681 | ) |
| Proceeds allocated to Public Rights | |
| (5,865,000 | ) |
| Redemptions of Common stock on December 20, 2022 | |
| (50,129,447 | ) |
| Plus: | |
| | |
| Accretion of carrying value to redemption value | |
| 11,202,163 | |
| Common stock subject to possible redemption, December 31, 2022 | |
| 19,550,035 | |
| Plus: | |
| | |
| Accretion of carrying value to redemption value | |
| 459,894 | |
| Common stock subject to possible redemption, March 31, 2023 | |
$ | 20,009,929 | |
MOUNTAIN CREST ACQUISITION CORP. V
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2023
(Unaudited)
Offering Costs
Offering costs consisted of legal, accounting
and other expenses incurred through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs
were allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared
to total proceeds received. Offering costs associated with the common stock issued were initially charged to temporary equity and then
accreted to common stock subject to redemption upon the completion of the Initial Public Offering. Offering costs amounted to $5,090,361
consisting of $1,380,000 of underwriting fees, $2,070,000 of deferred underwriting fees and $1,640,361 of other offering costs. These
were charged to stockholders’ deficit upon the completion of the Initial Public Offering. $4,657,681 was allocated to Public Shares
and charged to temporary equity, and $432,681 was allocated to public rights and charged to stockholders’ deficit.
Income Taxes
The Company accounts for income taxes under ASC
740, “Income Taxes.” ASC 740, Income Taxes, requires the recognition of deferred tax assets and liabilities for both the expected
impact of differences between the unaudited condensed financial statements 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. As of March 31, 2023
and December 31, 2022, the Company’s deferred tax asset had a full valuation allowance recorded against it.
ASC 740-270-25-2 requires that an annual effective
tax rate be determined and such annual effective rate applied to year to date income in interim periods under ASC 740-270-30-5. The Company’s
effective tax rate was 5,102.40% and 0.00% for the three months ended March 31, 2023 and 2022, respectively. The effective tax rate
differs from the statutory tax rate of 21% for the three months ended March 31, 2023 and 2022, due to merger and acquisition costs
treated as permanent difference and expenditures, other than franchise taxes, treated as startup costs prior to operations which a valuation
allowance on the deferred tax assets is applied.
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 March 31, 2023 and December 31, 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 is subject to income taxation by major taxing authorities since inception.
These 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.
MOUNTAIN CREST ACQUISITION CORP. V
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2023
(Unaudited)
Net Income (Loss) per Common Share
The Company complies with accounting and disclosure
requirements of FASB ASC 260, Earnings Per Share. The statement of operations includes a presentation of income (loss) per redeemable
public share and income (loss) per non-redeemable share following the two-class method of loss per share. In order to determine the net
income (loss) attributable to both the public redeemable shares and non-redeemable shares, the Company first considered the total income
(loss) allocable to both sets of shares. This is calculated using the total net income (loss) less any dividends paid. For purposes of
calculating net income (loss) per share, any remeasurement of the accretion to redemption value of the redeemable shares subject to possible
redemption was considered to be dividends paid to the public stockholders. Subsequent to calculating the total income (loss) allocable
to both sets of shares, the Company split the amount to be allocated using a ratio of 48% for the redeemable Public Shares and 52% for
the non-redeemable shares for the three months ended March 31, 2023, reflective of the respective participation rights.
The earnings per share presented in the statement
of operations is based on the following:
| Scheduled of basic and diluted net loss per share | |
| | | |
| | | |
| | | |
| | |
| | |
For the Three Months Ended
March 31, | |
| | |
2023 | | |
2022 | |
| | |
| | |
Non- | | |
| | |
Non- | |
| | |
Redeemable | | |
Redeemable | | |
Redeemable | | |
Redeemable | |
| | |
Shares | | |
Shares | | |
Shares | | |
Shares | |
| Basic and diluted net income (loss) per share: | |
| | | |
| | | |
| | | |
| | |
| Numerators: | |
| | | |
| | | |
| | | |
| | |
| Allocation of net loss including accretion of temporary equity | |
$ | (239,729 | ) | |
| (263,501 | ) | |
$ | (93,173 | ) | |
| (28,707 | ) |
| Accretion of temporary equity to redemption value | |
| 459,894 | | |
| - | | |
| - | | |
| - | |
| Allocation of net income (loss) | |
$ | 220,165 | | |
$ | (263,501 | ) | |
$ | (93,173 | ) | |
$ | (28,707 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Denominator: | |
| | | |
| | | |
| | | |
| | |
| Weighted-average shares outstanding | |
| 1,934,108 | | |
| 2,125,900 | | |
| 6,900,000 | | |
| 2,125,900 | |
| | |
| | | |
| | | |
| | | |
| | |
| Basic and diluted net income (loss) per share | |
$ | 0.11 | | |
$ | (0.12 | ) | |
$ | (0.01 | ) | |
$ | (0.01 | ) |
As of March 31, 2023 and 2022, the Company
did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into common shares and then
share in the Company’s earnings. As a result, diluted income (loss) per share is the same as basic income (loss) per share for the
periods presented.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal
Depository Insurance Coverage of $250,000. At March 31, 2023 and December 31, 2022, the Company has not experienced losses on
these accounts and management believes the Company is not exposed to significant risks on such accounts.
Fair Value of Financial Instruments
The fair value of the Company’s assets and
liabilities approximates the carrying amounts represented in the balance sheets, primarily due to their short-term nature.
MOUNTAIN CREST ACQUISITION CORP. V
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2023
(Unaudited)
Recent Accounting Standards
In August 2020, the FASB issued ASU 2020-06,
Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own
Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates
the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies
the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard
also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s
own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all
convertible instruments. As a smaller reporting company, ASU 2020-06 is effective December 1, 2024 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. The Company has not adopted this guidance as of March 31, 2023.
The Company’s management does not believe
that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the
Company’s unaudited condensed financial statements.
NOTE 3. INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company
sold 6,000,000 Units, at a purchase price of $10.00 per Unit. Each Unit consisted of one share of common stock and one right (“Public
Right”). Each Public Right entitled the holder to receive one-tenth of one share of common stock at the closing of a Business Combination
(see Note 7). On November 18, 2021, the underwriters fully exercised their over-allotment option, resulting in an additional 900,000
Units issued for an aggregate amount of $9,000,000.
In connection with the stockholders’ vote
at the Special Meeting of Stockholders held by the Company on December 20, 2022, 4,965,892 shares were tendered for redemption.
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial
Public Offering, on November 16, 2021, the Sponsor purchased an aggregate of Private Units at a price of $10.00 per Private
Unit, for an aggregate purchase price of $, in a private placement. In connection with the underwriters’ full exercise
of their over-allotment option, on November 18, 2021, the Company also consummated the sale of an additional 18,000 Private Units
at $ per Private Unit, generating total proceeds of $180,000. Each Private Unit consists of one share of common stock (“Private
Share”) and one right (“Private Right”). Each Private Right entitles the holder to receive one-tenth of one share of
common stock at the closing of a Business Combination. The proceeds from the Private Units were be added to the proceeds from the Initial
Public Offering 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.
MOUNTAIN CREST ACQUISITION CORP. V
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2023
(Unaudited)
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On April 8, 2021, the Company issued
shares of common stock (the “Insider Shares”) to the Sponsor for an aggregate purchase price of $. The 1,437,500 Insider
Shares include an aggregate of up to 187,500 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 Initial Public Offering (assuming the Sponsor does not purchase any Public Shares in the Initial Public Offering and excluding
the Private Shares). In connection with the increase in the size of the offering, on November 2, 2021, the company declared a 20%
stock dividend on each insider share thereby increasing the number of issued and outstanding Insider Shares to 1,725,000, including up
to an aggregate of 225,000 shares of common stock subject to forfeiture by our insiders to the extent that the underwriters’ over-allotment
option is not exercised in full or in part. The stock dividend was considered in substance a recapitalization transaction, which was recorded
and presented retroactively. As a result of the underwriters’ election to fully exercise their over-allotment option on November 18,
2021, no Insider Shares are currently subject to forfeiture.
Administrative Services Agreement
The Company agreed, commencing on November 12,
2021, to pay the Sponsor, affiliates, or advisors a total of up to $10,000 per month for office space, utilities, out of pocket expenses,
and secretarial and administrative support. The arrangement will terminate upon the earlier of the Company’s consummation of a Business
Combination or its liquidation. For the three months ended March 31, 2023 and 2022, the Company incurred and paid $30,000 in fees
for these services, respectively.
Related Party Loans
In order to finance transaction costs in connection
with a Business Combination, the Sponsor, an affiliate of the Sponsor, or the Company’s officers and directors may, but are not
obligated to, loan the Company funds from time to time or at any time, as may be required (“Working Capital Loans”). Each
Working Capital Loan would be evidenced by a promissory note. The Working Capital Loans would either be paid upon consummation of a Business
Combination, without interest, or, at the holder’s discretion, up to $1,500,000 of the Working Capital Loans may be converted into
Private Units at a price of $10.00 per unit. The Private Units would be identical to the Private Units. In the event that a Business Combination
does not close, the Company may use a portion of the 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.
On February 15, 2023, the Company issued a non-interest bearing,
unsecured promissory note in the aggregate principal amount of $300,000 (the “Note”) to the Sponsor. Pursuant to the Note,
the Sponsor loaned the Company an aggregate amount of $300,000 that is due and payable upon the Company’s consummation of an initial
business combination with a target business. The Note will either be paid upon consummation of the Company’s initial business combination,
or, at the Sponsor’s discretion, converted upon consummation of the Company’s business combination into private units at a
price of $10.00 per unit. The loan will be forgiven, except to the extent of any funds held outside of the trust account, by the Sponsor
or its affiliates if the Company is unable to consummate an initial business combination during the Business Combination Period. As of
March 31, 2023 and December 31, 2022, there were $300,000 and $0, respectively, outstanding under this Note.
MOUNTAIN CREST ACQUISITION CORP. V
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2023
(Unaudited)
NOTE 6. COMMITMENTS & CONTINGENCIES
Professional Fee
The Company paid legal counsel a retainer of $25,000
upon filing the registration statement and $100,000 upon the closing of the Initial Public Offering and agreed to pay $50,000 upon closing
of a business combination.
The Company entered into an agreement with its legal counsel relating
to business combination services. The Company has accrued fees to its legal counsel in the amount of $25,000 upon execution of the agreement,
$50,000 upon the execution of the business combination agreement with the target, and $25,000 upon the filing of a proxy statement or
S-4 registration statement relating to the Company Merger with the SEC. In the event that the Company Merger does not close, and the Company
receives a break-up fee or similar payment from the target company, the Company agrees to pay its legal counsel the balance of their fees,
up to the amount of $300,000, from the payment, in which case the total fee shall not exceed $400,000 inclusive of the accrued payments
set forth above. If the Company Merger is consummated, at closing legal counsel shall receive $400,000, inclusive of the accrued payments
set forth above.
Underwriting Agreement
The Company paid an underwriting fee of $0.20
per Unit (6,900,000 Units), or $1,380,000, in total which includes the fee due upon the full exercise of the underwriters’ over-allotment
option.
The underwriters are entitled to a deferred fee
of $0.30 per unit, or $2,070,000 in the aggregate will be payable to the underwriters for deferred underwriting commissions. The deferred
fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes
a Business Combination, subject to the terms of the underwriting agreement.
Representative Shares
The Company issued to the underwriter and/or its
designees 177,900 shares of common stock (the “Representative Shares”). The Company accounted for the Representative Shares
as an expense of the Initial Public Offering, resulting in a charge directly to stockholder’s equity. The Company estimates the
fair value of Representative Shares to be $1,383,617 based upon the offering price of the shares of $7.78 per share. The Representative
Shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following the
effective date of the registration statement related to the Initial Public Offering pursuant to Rule 5110(g)(1) of FINRA’s
NASD Conduct Rules. Pursuant to FINRA Rule 5110(g)(1), these securities will not be the subject of any hedging, short sale, derivative,
put or call transaction that would result in the economic disposition of the securities by any person for a period of 180 days immediately
following the effective date of the registration statements related to the Initial Public Offering, nor may they be sold, transferred,
assigned, pledged or hypothecated for a period of 180 days immediately following the effective date of the registration statements related
to the Initial Public Offering except to any underwriter and selected dealer participating in the Initial Public Offering and their bona
fide officers or partners.
Business Combination Agreement
On October 19, 2022, the Company entered
into a Business Combination Agreement (as it may be amended, supplemented or otherwise modified from time to time, the “Business
Combination Agreement”) with AUM Biosciences Pte. Ltd., a private company limited by shares incorporated in Singapore, with company
registration 201810204D (the “Target”).
Based upon the execution of the Business Combination
Agreement, the period of time for the Company to complete a business combination under its certificate of incorporation is extended for
a period of three months from November 16, 2022 to February 16, 2023. Additionally, the Company may elect to extend the time
to complete the business combination for another three-month period to May 16, 2023 by depositing certain funds into its trust account
as set forth in its certificate of incorporation and its investment management trust agreement with Continental Stock Transfer & Trust
Company.
Pursuant to the terms of the Business Combination
Agreement, the Target will promptly incorporate a Cayman Islands exempted company as a direct wholly owned subsidiary of the Target (“Holdco”).
Holdco upon incorporation will form a private company limited by shares incorporated in Singapore as a direct wholly owned subsidiary
of Holdco (“Amalgamation Sub”) and a Delaware corporation as a direct wholly owned subsidiary of Holdco (“Merger Sub”
and, together with Holdco and Amalgamation Sub, each, individually, an “Acquisition Entity” and, collectively, the “Acquisition
Entities”). Each Acquisition Entity upon formation will become a party to the Business Combination Agreement as if a party on the
date of execution thereof by signing a joinder agreement.
MOUNTAIN CREST ACQUISITION CORP. V
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2023
(Unaudited)
Pursuant to the Business Combination Agreement,
subject to the terms and conditions set forth therein, (i) Amalgamation Sub will amalgamate with and into the Target (the “Amalgamation”)
whereby the separate existence of Amalgamation Sub will cease and the Target will be the surviving corporation of the Amalgamation and
become a direct wholly owned subsidiary of Holdco, and (ii) following confirmation of the effective filing of the Amalgamation but on
the same day, Merger Sub will merge with and into the Company (the “SPAC Merger” and together with the Amalgamation, the “Mergers”),
the separate existence of Merger Sub will cease and the Company will be the surviving corporation of the SPAC Merger and a direct wholly
owned subsidiary of Holdco.
As a result of the Mergers, among other things,
(i) all outstanding Company Shares will be cancelled in exchange for approximately 40 million Holdco Ordinary Shares valued at $10 per
Holdco share, on a fully-diluted basis (as described below in more detail), subject to closing adjustments, (ii) each outstanding SPAC
Unit will be automatically detached, (iii) each unredeemed outstanding share of the Company’s Common Stock will be cancelled in
exchange for the right to receive one (1) Holdco Ordinary Share, and (iv) every ten (10) outstanding Company Rights will be cancelled
and cease to exist in exchange for one (1) Holdco Ordinary Share.
Pursuant to the Business Combination Agreement,
each AUM ordinary share issued and paid-up in the share capital of AUM shall be automatically cancelled and each AUM shareholder shall
be entitled to receive, as consideration for such AUM ordinary share, such number of newly issued Holdco Ordinary Shares equal to the
Company Exchange Ratio. The Company Exchange Ratio means the quotient obtained by dividing the Price per Company Share by $10.00 (ten
dollars). The Price per Company Share is a dollar number, dividing the Purchase Price by the Fully-Diluted Company Shares. The Purchase
Price is $400,000,000 plus the Post-Signing Investment Amount. Post-Signing Investment Amount means the amount of proceeds received by
the AUM Companies from the sale of AUM Company Interests for not more than $10,000,000 in the aggregate after the Business Combination
Agreement was signed and before the Closing. The number of Fully-Diluted Company Shares is the sum of (a) the total number of outstanding
AUM ordinary shares and (b) the total number of AUM ordinary shares subject to issuance pursuant to the vested AUM options, in each case,
as of immediately prior to the Closing.
On January 27, 2023, the Company, the Target,
AUM Biosciences Limited, a Cayman Islands exempted company (“Holdco”), AUM Biosciences Subsidiary Pte. Ltd., a private company
limited by shares incorporated in Singapore, with company registration number 202238778Z and a direct wholly-owned subsidiary of Holdco
(“Amalgamation Sub”), and AUM Biosciences Delaware Merger Sub, Inc., a Delaware corporation and a direct wholly-owned subsidiary
of Holdco (“Merger Sub”) entered into a joinder agreement pursuant to which Holdco, Amalgamation Sub, and Merger Sub joined
the Business Combination Agreement as parties.
On February 10, 2023, the Company, the Target,
Holdco, Amalgamation Sub, and Merger Sub entered into an amendment to Business Combination Agreement (the “Amendment”) to
extend the Outside Date in the Business Combination Agreement from February 15, 2023 to May 15, 2023. No other changes were
made to the Business Combination Agreement.
As previously reported, pursuant to the stockholders’
approval at the special meeting of stockholders held on December 20, 2022 (the “Special Meeting”), the Company, (1) filed
an amendment to its Amended and Restated Certificate of Incorporation with the Delaware Secretary of State on December 20, 2022,
giving the Company the right to extend the date by which it has to complete a business combination (the “Business Combination Period”)
from February 16, 2023 to May 16, 2023 and (2) entered into an amendment to the Investment Management Trust Agreement, dated
as of November 12, 2021, with Continental Stock Transfer & Trust Company, on December 20, 2022 (the “Trust Amendment”).
The Trust Amendment provides that Company may extend the Business Combination Period by depositing $300,000 into the trust account.
On March 30, 2023, AUM, Mountain Crest, Holdco,
Amalgamation Sub and Merger Sub signed an amendment No. 2 to Business Combination Agreement (the “Amendment No. 2”) to consent
to the termination of the Stock Escrow Agreement, eliminate Mountain Crest’s right to designate a director of the Holdco Board,
remove the Closing condition that Mountain Crest shall have net tangible assets of at least $5,000,001 on its pro forma consolidated balance
sheet after giving effect to the Closing, and update the Company Interests issued and paid-up as of the Amalgamation Effective Time from
8,779,752 AUM ordinary shares to 9,841,118 AUM ordinary shares.
MOUNTAIN CREST ACQUISITION CORP. V
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2023
(Unaudited)
Additional Agreements Executed In Connection
With the Business Combination Agreement
Shareholder Support Agreement
Contemporaneously with the execution of the Business
Combination Agreement, the Company, the Target and Key Target Shareholders entered into a voting and support agreement (the “Shareholder
Support Agreement”), pursuant to which, among other things, certain Target Shareholders agreed not to transfer and will vote their
Shares in the Target in favor of the Business Combination Agreement (including by execution of written resolutions), the Mergers and the
other Transactions, effective at Closing. The Target Shareholders party to the Shareholder Support Agreement collectively have a sufficient
number of votes to approve the Merger. The Shareholder Support Agreement and all of its provisions will terminate and be of no further
force or effect upon the earlier of the Closing or the termination of the Business Combination Agreement.
Sponsor Support Agreement
Contemporaneously with the execution of the Business
Combination Agreement, the Company, Sponsor, and the Target entered into a Sponsor Support Agreement, pursuant to which they agree that,
among other things, Sponsor (i) will not transfer and will vote its shares of the Company’s Common Stock or any additional shares
of the Company’s Common Stock it acquires prior to the Company Stockholder Meeting in favor of the Business Combination Agreement,
the Mergers and the other Transactions and each of the Transaction Proposals, (ii) will not redeem any shares of the Company’s Common
Stock in connection with the SPAC Merger, and (iii) waives its anti-dilution rights under the Company Charter. The Sponsor Support Agreement
and all of its provisions will terminate and be of no further force or effect upon the earlier of the Closing or the termination of the
Business Combination Agreement.
NOTE 7. STOCKHOLDERS’ DEFICIT
Common Stock
The Company is authorized to issue 30,000,000
shares of common stock with a par value of $0.0001 per share. At May 27, 2021, there were 1,437,500 shares of common stock issued
and outstanding, of which up to an aggregate of 187,500 shares are subject to forfeiture to the extent that the underwriters’ over-allotment
option is not exercised in full so that the Sponsor will own 20% of the issued and outstanding shares after the Initial Public Offering
(assuming the Sponsor does not purchase any Public Shares in the Initial Public Offering and excluding the Private Shares). In connection
with the increase in the size of the offering, on November 2, 2021, the Company declared a 20% stock dividend on each insider share
thereby increasing the number of issued and outstanding Insider Shares to 1,725,000, including up to an aggregate of 225,000 shares of
common stock subject to forfeiture by our insiders to the extent that the underwriters’ over-allotment option is not exercised in
full or in part. According to ASC 260-10-55, the stock dividend was considered in substance a recapitalization transaction, which was
recorded and presented retroactively.
As a result of the underwriters’ election
to fully exercise their over-allotment option on November 18, 2021, no Insider Shares are currently subject to forfeiture. At March 31,
2023 and December 31, 2022, there were 2,125,900 shares of common stock issued and outstanding, excluding 1,934,108 of common stock
subject to possible redemption which are presented as temporary equity.
MOUNTAIN CREST ACQUISITION CORP. V
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2023
(Unaudited)
Rights
Except in cases where the Company is not the surviving
company in a Business Combination, each holder of a Public Right will automatically receive one-tenth (1/10) of one share of common stock
upon consummation of a Business Combination, even if the holder of a Public Right converted all shares held by him, her or it in connection
with a Business Combination or an amendment to the Company’s Amended and Restated Certificate of Incorporation with respect to its
pre-business combination activities. In the event that the Company will not be the surviving company upon completion of a Business Combination,
each holder of a Public Right will be required to affirmatively convert his, her or its rights in order to receive the one-tenth (1/10)
of a share underlying each Public Right upon consummation of the Business Combination.
The Company will not issue fractional shares in
connection with an exchange of Public Rights. Fractional shares will either be rounded down to the nearest whole share or otherwise addressed
in accordance with the applicable provisions of the Delaware General Corporation Law. As a result, the holders of the Public Rights must
hold rights in multiples of 10 in order to receive shares for all of the holders’ rights upon closing of a Business Combination.
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
Company classifies its securities in the Trust Account that are invested in funds, such as Mutual Funds or Money Market Funds, that primarily
invest in U.S. Treasury and equivalent securities as Trading Securities in accordance with ASC Topic 320 “Investments - Debt and
Equity Securities. Trading Securities are recorded at fair market value on the accompanying balance sheets.
At
March 31, 2023, assets held in the Trust Account were comprised of $20,038,974 in a mutual fund that is invested primarily in U.S.
Treasury Securities. Through March 31, 2023, the Company withdrew $282,075 of the interest earned on the Trust Account to pay franchise
and income taxes.
At
December 31, 2022, assets held in the Trust Account were comprised of $19,572,432 in a mutual fund that is invested primarily in
U.S. Treasury Securities. Through December 31, 2022, the Company withdrew $231,220 of the interest earned on the Trust Account to
pay franchise and income taxes and $50,129,447 in connection with the redemption of shares.
The
following table presents information about the Company’s assets that are measured at fair value on a recurring basis at March 31,
2023 and December 31, 2022 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such
fair value:
| Scheduled of fair value measurements | |
| |
| | |
| | |
| | |
Trading Securities | |
Level | | |
Fair
Value | |
| March 31, 2023 | |
Investments held in Trust Account - Mutual Fund | |
1 | | |
$ | 20,038,974 | |
| | |
| |
| | |
| | |
| December 31, 2022 | |
Investments held in Trust Account - Mutual Fund | |
1 | | |
$ | 19,572,432 | |
MOUNTAIN CREST ACQUISITION CORP. V
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2023
(Unaudited)
NOTE
9. SUBSEQUENT EVENTS
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the unaudited condensed
financial statements were issued. Based upon this review, other than as described below, the Company did not identify any subsequent
events that would have required adjustment or disclosure in the unaudited condensed financial statements.
Notice
of Delisting or Failure to Satisfy a Continued Listing rule or Standard; Transfer of Listing
On
April 3, 2023, the Company, received a notice (the “Notice”) from the Nasdaq Stock Market LLC (“Nasdaq”),
stating that the Company’s listed securities failed to comply with the $50,000,000 market value of listed securities (“MVLS”)
requirement for continued listing on The Nasdaq Global Market in accordance with Nasdaq Listing Rule 5450(b)(2)(A) based upon the
Company’s MVLS for the 30 consecutive business days prior to the date of the Notice.
The
Notice has no immediate effect on the listing of the Company’s securities on Nasdaq and in accordance with Nasdaq Listing Rule 5810(c)(3)(A),
the Company has been provided a period of 180 calendar days, or until October 2, 2023, in which to regain compliance. In order to
regain compliance, the MVLS of the Company must close at $50,000,000 or more for a minimum of ten consecutive days during this 180-day
period.
Alternatively,
the Company may consider applying for a transfer to The Nasdaq Capital Market before the expiry of the 180-day period. In order to transfer,
the Company must submit an on-line transfer application, pay the $5,000 application fee, and meet The Nasdaq Capital Market’s continued
listing requirement.
The
Company has submitted its application for the transfer to The Nasdaq Capital Market. There can be no assurance that the Company will
be able to regain compliance with the MVLS requirement, maintain compliance with the other Nasdaq continued listing requirements or transfer
to The Nasdaq Capital Market.
Amendment
No. 3 to the Business Combination Agreement
On
April 19, 2023, the Company, the Target, Holdco, Amalgamation Sub, and Merger Sub entered into an Amendment No. 3 to Business Combination
Agreement (the “Amendment No. 3”) to (1) amend the definition of “Fully-Diluted Company Shares” and (2) update
the Company Interests issued and paid-up as of the Amalgamation Effective Time from 9,841,118 Company Ordinary Shares to 9,125,538 Company
Ordinary Shares. No other changes were made to the Business Combination Agreement.
Special meeting of stockholders
On May 12, 2023, the Company held a special meeting
of stockholders, at which the Company’s stockholders approved an amendment (the “Extension Amendment”) to the Company’s
Amended and Restated Certificate of Incorporation, giving the Company the right to extend Business Combination Period from May 16, 2023
to February 16, 2024. In connection with the Extension Amendment, stockholders holding 1,405,134 shares of redeemable common stock exercised
their right to redeem such shares for a pro rata portion of the funds in the Trust Account. On May 12, 2023, the Company filed the Extension
Amendment with the Delaware Secretary of State, by which the Company extended the Business Combination Period from May 16, 2023 to February
16, 2024.
Filing of Registration statement on Form
F-4
The Company and the Target have prepared and had
Holdco file with the SEC a registration statement on Form F-4 (filed No. 333-270483) (as amended, the “Registration Statement”)
in connection with the registration under the Securities Act of the Holdco’s ordinary shares pursuant to the Business Combination
Agreement, and containing a proxy statement/prospectus for the purpose of the Company soliciting proxies from the Company’s stockholders
to approve the Business Combination Agreement, the transactions and related matters at a special meeting of the Company’s stockholders
and providing such stockholders an opportunity, in accordance with the Company’s organizational documents and initial public offering
prospectus, to have their shares of the Company’s common stock redeemed. On May 12, 2023, the Registration Statement the Holdco
was declared effective by the SEC.
