Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
No ☒
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐
No ☒
Indicate by check mark whether the registrant
(1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
☒ No ☐
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the
best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. ☒
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☐
If securities are registered pursuant to Section 12(b)
of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of
an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒
No ☐
On June 30, 2022, the aggregate market value of
the Registrant’s shares of common stock held by non-affiliates of the Registrant was $0.
The number of shares outstanding of the Registrant’s
shares of common stock as of March 31, 2023 was 7,511,125.
None.
PLUTONIAN ACQUISITION CORP.
Annual Report on Form 10-K for the Fiscal Year
Ended December 31, 2022
FORWARD LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, or the Securities Act, and Section 21E of the Securities Exchange
Act of 1934, or the Exchange Act. The statements contained in this report that are not purely historical are forward-looking statements.
Our forward-looking statements include, but are not limited to, statements regarding our or our management’s expectations, hopes,
beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations
of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipates,”
“believe,” “continue,” “could,” “estimate,” “expect,” “intend,”
“may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,”
“should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words
does not mean that a statement is not forward-looking. Forward-looking statements in this report may include, for example, statements
about our:
| ● | ability to complete our initial
business combination; |
| ● | success in retaining or recruiting,
or changes required in, our officers, key employees or directors following our initial business combination; |
| ● | officers and directors allocating
their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination,
as a result of which they would then receive expense reimbursements; |
| ● | potential ability to obtain
additional financing to complete our initial business combination; |
| ● | pool of prospective target
businesses; |
| ● | the ability of our officers
and directors to generate a number of potential investment opportunities; |
| ● | potential change in control
if we acquire one or more target businesses for stock; |
| ● | the potential liquidity and
trading of our securities; |
| ● | the lack of a market for our
securities; |
| ● | use of proceeds not held in
the trust account or available to us from interest income on the trust account balance; or |
| ● | financial performance following
our initial public offering. |
The forward-looking statements contained in this
report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be
no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a
number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance
to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include,
but are not limited to, those factors described under the heading “Risk Factors.” Should one or more of these risks or uncertainties
materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these
forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required under applicable securities laws and/or if and when management knows
or has a reasonable basis on which to conclude that previously disclosed projections are no longer reasonably attainable.
PART
I
ITEM 1. BUSINESS
In this Annual Report on Form 10-K (the “Form
10-K”), references to the “Company” and to “we,” “us,” and “our” refer to Plutonian
Acquisition Corp.
Introduction
Plutonian Acquisition Corp. is a blank check company
formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization
or other similar business combination with one or more businesses or entities. Our efforts to identify a target business will not be limited
to a particular industry or geographic region, although we intend to focus our search for a target business on companies engaged in metaverse
technologies, tourism and e-commerce related industries in the Asia-Pacific, or APAC, region. We affirmatively exclude as an initial business
combination target any company of which financial statements are audited by an accounting firm that the United States Public Company Accounting
Oversight Board (“PCAOB”) is unable to inspect for two consecutive years beginning in 2021 and any target company with China
operations consolidated through a VIE structure.
On
November 15, 2022, we consummated our initial public offering (“IPO”) of 5,750,000
units at an offering price of $10.00 per unit (the “Public Units’), which includes
the full exercise of the over-allotment option of 750,000 Public Units issued to EF Hutton, division of Benchmark Investments,
LLC (“EF Hutton”). Each Public Unit consists of one share of common stock (“Common
Stock”), one redeemable warrant entitling its holder to purchase one share of Common Stock at a price of $11.50 per whole share
(“Warrant”), and one right to receive one-sixth (1/6) of a share of Common Stock upon the consummation of an initial business
combination (“Right”). The Public Units were sold at an offering price of $10.00 per Public Unit, generating gross proceeds
of $57,500,000.
Simultaneously
with the closing of the IPO on November 15, 2022, we consummated a private placement with Plutonian Investments LLC (the “Sponsor”),
purchasing 266,125 units at $10.00 per unit (the “Private Units”), generating
total proceeds of $2,661,250. The Private Units (and the underlying securities) are identical to the Public Units sold in the IPO, except
as otherwise disclosed in the IPO registration statement. No underwriting discounts or commissions were paid with respect to such
sale.
A total of $58,506,250
of the net proceeds from the sale of the Public Units in the IPO (including the Over-Allotment Option Units) and the Private Placements
on November 15, 2022, were deposited in a trust account with Continental Stock Transfer & Trust Company acting as trustee.
All of the proceeds we
receive from these purchases have been placed in the trust account described above and, together with the interests earned on the funds
held in the trust account and except for payment of our franchise and income taxes if any, shall not be released to us until the earlier
of the completion of our initial business combination and our redemption of the shares of common stock sold in the IPO upon our failure
to consummate a business combination within the required period.
With these exceptions, expenses incurred by us
may be paid prior to a business combination only from the net proceeds of our IPO not held in the trust account; provided, however, that
in order to meet our working capital needs following the consummation of our IPO, if the funds not held in the trust account are insufficient,
our insiders, officers and directors or their affiliates may, but are not obligated to, loan us funds, from time to time or at any time,
in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note. The notes would either
be paid upon consummation of our initial business combination, without interest, or, at the lender’s discretion, up to $600,000
of the notes may be converted upon consummation of our business combination into private units at a price of $10.00 per unit (which, for
example, would result in the holders being issued units to acquire 70,000 shares of Common Stock (which includes 10,000 shares of Common
Stock issuable upon conversion of rights) and 60,000 Warrants). If we do not complete a business combination, the loans would be repaid
out of funds not held in the trust account, and only to the extent available.
Background and Competitive Strengths
We will seek to leverage our management team’s
network of relationships with corporate executives, private equity, venture and growth capital funds, investment banking firms, consultants,
family offices, and large corporations in order to source, acquire, and support the operations of the business combination target. Members
of our management team and board have significant experience investing in and acquiring both private and public companies in China and
the United States. We believe that this combination of relationships and expertise will make us a preferred partner for and allow
us to source high-quality business combination targets.
Wei Kwang Ng, our CEO, has more than 10 years
of work experience in American or Singaporean companies. Currently he serves as the chief operating officer of Parcel Santa Pte Ltd, a
Singaporean technology company facilitating and value-adding in the logistics space of last mile delivery. Mr. Ng currently also serves
the independent director of Redwood Acquisition Corp. (Nasdaq: RWOD). Ke Wang, our CFO, currently serves as the head of quantitative research
at Allstate Insurance Company. Our independent director Sze Wai Lee is the former executive director of Forbes Global Media Holdings Company
Limited. Our independent director Harry Harnett served as the chief operating officer and president at ADF Companies, a franchised restaurant
operator of Pizza Hut, from August 1999 to June 2020. Our independent director Robert M. Annis currently serves as the
founder and chief executive officer of The Art of Admissions, a boutique admissions consulting company, since 2016 after his 8 years
at Simpson Thacher & Bartlett LLP. We believe their advantages about combined network, experience and exposure to industries
would prove to be beneficial for our team’s success. We believe that:
| ● | our team’s networks and relationships from sourcing,
evaluating, due diligence, and executing transactions will provide us with a significant pipeline of opportunities; |
| ● | our team’s unique background and experience in completing
a variety of large-scale domestic and cross-border transactions between the U.S. and Asia will be attractive to leading Asia-based
companies; and |
| ● | our team’s extensive operational and investment management
experience will enable a highly focused approach to idea generation, analysis and transaction execution. |
However, none of our management team is obligated
to remain with the company after an acquisition transaction, and we cannot provide assurance that the resignation or retention of our
current management will not be a term or condition in any agreement relating to an acquisition transaction. Moreover, despite the competitive
advantages we believe we have, we remain subject to significant competition with respect to identifying and executing an acquisition transaction.
Acquisition Strategy and Industry Opportunity
We are not limited to a particular industry or
geographic region for purposes of consummating an initial business combination, although we intend to focus our search for a target business
on companies engaged in metaverse technologies, tourism and e-commerce related industries in the Asia-Pacific, or APAC, region. We affirmatively
exclude as an initial business combination target any company of which financial statements are audited by an accounting firm that the
PCAOB is unable to inspect for two consecutive years beginning in 2021 and any target company with China operations consolidated
through a VIE structure. We believe that our experience and networks will enable us to identify potential business combination opportunities
efficiently and productively. In addition, we believe the target business will benefit from our involvement, through the potential strategic
relationships we can introduce, as well as by assisting the target in areas such as intellectual property management and corporate strategy.
Despite our intended focus, we may attempt to acquire a target in another industry if an attractive acquisition opportunity is identified
in such other industry prior to the time we identify an acquisition opportunity within our primary industry focus and if we believe that
such opportunity is in the best interest of our stockholders.
Investment Criteria
We have identified the following general criteria
that we believe are important in evaluating candidates for our initial business combination.
The main ambition of our management is to create
the value-added for our stockholders though our experience to shift the operating efficiency of the business while implementing the revenue-driven
and/or profit-engagement strategies and gain the profits through acquisitions. Consistent with our strategy, we have identified the following
general criteria and guidelines that we believe are essential in evaluating prospective target businesses. While we intend to use these
criteria and guidelines in evaluating prospective businesses, we may deviate from these criteria and guidelines should we consider well-fit
to do so:
| ● | Industries that are Not Heavily Regulated or Related to
National Security |
We will not acquire an operating business
that is highly regulated by its home country or related to national security, including companies that collect and process large amounts
of public information and data, companies related to artificial intelligence, telecommunications companies, companies involved in semiconductor
industries, rare natural resource companies, unmanned aerial vehicle, geological survey companies or any other enterprises that may relate
to a country’s strategic reserve, resources critical to national security, human stem cells, or development or application of gene
diagnosis and treatment technology.
We intend to acquire companies which
enterprise values of between $150 million and $300 million that are preferably already cash-generative. We believe we have greater
access to companies within this range and the negotiation process is expected comparable time-saving.
| ● | Long-term Revenue Visibility with Defensible Market Position |
In the management view, the target companies
should appropriate at an inflection point, such as those requiring additional management expertise, are able to innovate by developing
new products or services, or where we believe we have the ability to achieve improved profitability performance and where an acquisition
may help facilitate growth.
| ● | Benefits from Being a U.S. Public Company (Value
Creation and Marketing Opportunities) |
We have intention to seek target companies
that should offer attractive risk-adjusted equity returns for our stockholders. We intend to seek to acquire a target on terms and in
a manner that leverages our experience. Among other criteria, we expect to evaluate financial returns based on (i) the potential
for organic growth in cash flows, (ii) the ability to achieve cost savings, (iii) the ability to accelerate growth, including
through the opportunity for follow-on acquisitions and (iv) the prospects for creating value through other value creation initiatives.
Potential upside from future growth in the target business’ earnings and an improved capital structure will be prior than any identified
downside risks.
We will seek to identify one or more
companies that have a leadership position in their industry or a defensible niche within a target market as a result of differentiated
technology or other competitive advantages.
These criteria are not intended to be exhaustive.
Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general
guidelines as well as other considerations, factors and criteria that our management may deem relevant.
Effecting Our Initial Business Combination
General
We
are not presently engaged in, and we will not engage in, any substantive commercial business for an indefinite period of time following
the IPO. We intend to utilize cash derived from the proceeds of the
IPO and the private placement of private units, our capital stock, debt or a
combination of these in effecting our initial business combination. Although substantially all of the net proceeds of the IPO and
the private placement of private units are intended to be applied generally toward effecting a business combination as described in our
IPO prospectus, the proceeds are not otherwise being designated for any more specific purposes. Accordingly, investors in the IPO
are investing without first having an opportunity to evaluate the specific merits
or risks of any one or more business combinations. Our initial business combination may involve the acquisition of, or merger with, a
company which does not need substantial additional capital but which desires to establish a public trading market for its shares. In the
alternative, we may seek to consummate a business combination with a company that may be financially unstable or in its early stages of
development or growth. While we may seek to effect simultaneous business combinations with more than one target business, we will probably
have the ability, as a result of our limited resources, to effect only a single business combination.
We Have Not Identified a Target Business
To date, we have not selected any target business
on which to concentrate our search for a business combination. Our officers, directors, insiders and other affiliates are currently engaging
in discussions on our behalf with representatives of other companies regarding the possibility of a potential merger, share exchange,
asset acquisition or other similar business combination with us.
Subject to the limitations that a target business
has a fair market value of at least 80% of the balance in the trust account (excluding any deferred underwriting discounts and commissions
and taxes payable on the income earned on the trust account) at the time of the execution of a definitive agreement for our initial business
combination, as described below in more detail, we will have virtually unrestricted flexibility in identifying and selecting a prospective
acquisition candidate. We have not established any other specific attributes or criteria (financial or otherwise) for prospective target
businesses. Accordingly, there is no basis for investors in the IPO to evaluate the possible merits or risks of the target business with
which we may ultimately complete a business combination. To the extent we effect a business combination with a company or an entity in
its early stage of development or growth, including entities without established records of sales or earnings, we may be affected by numerous
risks inherent in the business and operations of early stage or potential emerging growth companies. Although our management will endeavor
to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant
risk factors.
Sources of Target Businesses
While we have not yet identified any initial business
combination candidates, we believe based on our management’s business knowledge and past experience that there are numerous business
combination candidates. We anticipate that target business candidates will be brought to our attention from various unaffiliated sources,
including investment bankers, venture capital funds, private equity funds, leveraged buyout funds, management buyout funds and other members
of the financial community. Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited
by us through calls or mailings. These sources may also introduce us to target businesses in which they think we may be interested on
an unsolicited basis, since many of these sources will have read our IPO prospectus and know what types of businesses we are targeting.
Our officers and directors, as well as their affiliates, may also bring to our attention target business candidates that they become aware
of through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade
shows or conventions. We may engage professional firms or other individuals that specialize in business acquisitions or mergers in the
future, in which event we may pay a finder’s fee, consulting fee or other compensation to be determined in an arm’s length
negotiation based on the terms of the transaction. In no event, however, will our insiders or any of the members of our management team
be paid any finder’s fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate,
the consummation of our initial business combination (regardless of the type of transaction that it is). We have no present intention
to enter into a business combination with a target business that is affiliated with any of our officers, directors, director nominees,
or insiders. However, we are not restricted from entering into any such transactions and may do so if (1) such transaction is approved
by a majority of our disinterested and independent directors (if we have any at that time) and (2) we obtain an opinion from an independent
investment banking firm that the business combination is fair to our unaffiliated stockholders from a financial point of view. As of the
date of this annual report, there are no affiliated entities that we would consider as a business combination target.
Selection of a Target Business and Structuring of Our Initial Business
Combination
Subject to our management team’s fiduciary
duties and the limitation that one or more target businesses have an aggregate fair market value of at least 80% of the value of the trust
account (excluding any deferred underwriting discounts and commissions and taxes payable on the income earned on the trust account) at
the time of the execution of a definitive agreement for our initial business combination, as described below in more detail, our management
will have virtually unrestricted flexibility in identifying and selecting a prospective target business. Additionally, there is no limitation
on our ability to raise funds privately or through loans in connection with our initial business combination. We have not established
any specific attributes or criteria (financial or otherwise) for prospective target businesses.
Accordingly,
there is no basis for investors in the IPO to evaluate the possible merits
or risks of the target business with which we may ultimately complete a business combination. To the extent we effect our initial business
combination with a financially unstable company or an entity in its early stage of development or growth, including entities without established
records of sales or earnings, we may be affected by numerous risks inherent in the business and operations of financially unstable and
early stage or potential emerging growth companies. The valuation of a financially unstable company or early stage company can be more
complicated than the calculation of a mature, stable company, and any valuation we make on such a company would be based, in part, on
its prospects and how successful we believe the business will be once the company matures or is stabilized. Although our management will
endeavor to evaluate the risks inherent in a particular target business, we may not properly ascertain or assess all significant risk
factors. In evaluating a prospective target business, our management may consider a variety of factors, including one or more of the following:
| ● | financial condition and results of operation; |
| ● | brand recognition and potential; |
| ● | return on equity or invested capital; |
| ● | market capitalization or enterprise value; |
| ● | experience and skill of management and availability of additional
personnel; |
| ● | stage of development of the products, processes or services; |
| ● | existing distribution and potential for expansion; |
| ● | degree of current or potential market acceptance of the products,
processes or services; |
| ● | proprietary aspects of products and the extent of intellectual
property or other protection for products or formulas; |
| ● | impact of regulation on the business; |
| ● | regulatory environment of the industry; |
| ● | costs associated with effecting the business combination; |
| ● | industry leadership, sustainability of market share and attractiveness
of market industries in which a target business participates; and |
| ● | macro competitive dynamics in the industry within which the
company competes. |
These criteria are not intended to be exhaustive.
Our management may not consider any of the above criteria in evaluating a prospective target business. The retention of our officers and
directors following the completion of any business combination will not be a material consideration in our evaluation of a prospective
target business.
Any evaluation relating to the merits of a particular
business combination will be based, to the extent relevant, on the above factors as well as other considerations deemed relevant by our
management in effecting a business combination consistent with our business objective. In evaluating a prospective target business, we
will conduct an extensive due diligence review which will encompass, among other things, meetings with incumbent management and inspection
of facilities, as well as review of financial and other information which is made available to us. This due diligence review will be conducted
either by our management or by unaffiliated third parties we may engage, although we have no current intention to engage any such third
parties.
The time and costs required to select and evaluate
a target business and to structure and complete our initial business combination remain to be determined. Any costs incurred with respect
to the identification and evaluation of a prospective target business with which a business combination is not ultimately completed will
result in a loss to us and reduce the amount of capital available to otherwise complete a business combination.
Fair Market Value of Target Business
Pursuant to Nasdaq listing rules, our initial
business combination must occur with one or more target businesses having an aggregate fair market value equal to at least 80% of the
value of the funds in the trust account (excluding any deferred underwriting discounts and commissions and taxes payable on the income
earned on the trust account), which we refer to as the 80% test, at the time of the execution of a definitive agreement for our initial
business combination, although we may structure a business combination with one or more target businesses whose fair market value significantly
exceeds 80% of the trust account balance. If we are no longer listed on Nasdaq, we will not be required to satisfy the 80% test.
We currently anticipate structuring a business
combination to acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure a business
combination where we merge directly with the target business or where we acquire less than 100% of such interests or assets of the target
business in order to meet certain objectives of the target management team or stockholders or for other reasons, but we will only complete
such business combination if the post-transaction company owns 50% or more of the outstanding voting securities of the target or otherwise
owns a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment
Company Act. Even if the post-transaction company owns 50% or more of the voting securities of the target, our stockholders prior to the
business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the
target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number
of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest
in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial
business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less
than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company,
the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% test. In order to
consummate such an acquisition, we may issue a significant amount of our debt or equity securities to the sellers of such businesses and/or
seek to raise additional funds through a private offering of debt or equity securities. Since we have no specific business combination
under consideration, we have not entered into any such fund raising arrangement and have no current intention of doing so. The fair market
value of the target will be determined by our board of directors based upon one or more standards generally accepted by the financial
community (such as actual and potential sales, earnings, cash flow and/or book value). We are not required to obtain an opinion from an
unaffiliated third party that the target business we select has a fair market value in excess of at least 80% of the balance of the trust
account unless our board of directors cannot make such determination on its own. The board of directors, in light of its fiduciary obligation
to stockholders, would be required to determine whether it is capable of valuing the target company based on the experience of its members
in valuing companies and whether the board was actually able to reach a determination of value with respect to the particular target company.
Lack of Business Diversification
For an indefinite period of time after consummation
of our initial business combination, the prospects for our success may depend entirely on the future performance of a single business.
Unlike other entities that have the resources to complete business combinations with multiple entities in one or several industries, it
is probable that we will not have the resources to diversify our operations and mitigate the risks of being in a single line of business.
By consummating our initial business combination with only a single entity, our lack of diversification may:
| ● | subject us to negative economic, competitive and regulatory
developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after our initial
business combination, and |
| ● | result in our dependency upon the performance of a single
operating business or the development or market acceptance of a single or limited number of products, processes or services. |
Limited Ability to Evaluate the Target Business’ Management
Team
Although we intend to scrutinize the management
team of a prospective target business when evaluating the desirability of effecting our initial business combination, our assessment of
the target business’ management team may not prove to be correct. In addition, the future management team may not have the necessary
skills, qualifications or abilities to manage a public company. Furthermore, the future role of our officers and directors, if any, in
the target business following our initial business combination remains to be determined. While it is possible that some of our key personnel
will remain associated in senior management or advisory positions with us following our initial business combination, it is unlikely that
they will devote their full time efforts to our affairs subsequent to our initial business combination. Moreover, they would only be able
to remain with the company after the consummation of our initial business combination if they are able to negotiate employment or consulting
agreements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the
business combination and could provide for them to receive compensation in the form of cash payments and/or our securities for services
they would render to the company after the consummation of the business combination. While the personal and financial interests of our
key personnel may influence their motivation in identifying and selecting a target business, their ability to remain with the company
after the consummation of our initial business combination will not be the determining factor in our decision as to whether or not we
will proceed with any potential business combination. Additionally, our officers and directors may not have significant experience or
knowledge relating to the operations of the particular target business.
Following our initial business combination, we
may seek to recruit additional managers to supplement the incumbent management of the target business. We may not have the ability to
recruit additional managers, or that any such additional managers we do recruit will have the requisite skills, knowledge or experience
necessary to enhance the incumbent management.
Stockholders May Not Have the Ability to Approve an Initial Business
Combination
In connection with any proposed business combination,
we will either (1) seek stockholder approval of our initial business combination at a meeting called for such purpose at which public
stockholders may seek to redeem their public shares, regardless of whether they vote for or against the proposed business combination,
into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable) or (2) provide
our public stockholders with the opportunity to sell their public shares to us by means of a tender offer (and thereby avoid the need
for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust
account (net of taxes payable), in each case subject to the limitations described herein. Notwithstanding the foregoing, our insiders
have agreed, pursuant to written letter agreements with us, not to redeem any public shares held by them into their pro rata share
of the aggregate amount then on deposit in the trust account. If we determine to engage in a tender offer, such tender offer will be structured
so that each stockholder may tender any or all of his, her or its public shares rather than some pro rata portion of
his, her or its shares. The decision as to whether we will seek stockholder approval of a proposed business combination or will allow
stockholders to sell their shares to us in a tender offer will be made by us based on a variety of factors such as the timing of the transaction
and whether the terms of the transaction would otherwise require us to seek stockholder approval. If we so choose and we are legally permitted
to do so, we have the flexibility to avoid a stockholder vote and allow our stockholders to sell their shares pursuant to Rule 13e-4
and Regulation 14E of the Exchange Act which regulate issuer tender offers. In that case, we will file tender offer documents with
the SEC which will contain substantially the same financial and other information about the initial business combination as is required
under the SEC’s proxy rules. We will consummate our initial business combination only if we have net tangible assets of at least
$5,000,001 upon such consummation and, solely if we seek stockholder approval, a majority of the issued and outstanding shares of common
stock voted are voted in favor of the business combination.
We
chose our net tangible asset threshold of $5,000,001 to ensure that we would avoid being subject to Rule 419 promulgated under the
Securities Act. However, if we seek to consummate an initial business combination with a target business that imposes any type of working
capital closing condition or requires us to have a minimum amount of funds available from the trust account upon consummation of such
initial business combination, our net tangible asset threshold may limit our ability to consummate such initial business combination (as
we may be required to have a lesser number of shares converted or sold to us) and may force us to seek third party financing which may
not be available on terms acceptable to us or at all. As a result, we may not be able to consummate such initial business combination
and we may not be able to locate another suitable target within the applicable time period, if at all. Public stockholders may therefore
have to wait 18 months from the closing of the IPO in order to be able
to receive a pro rata share of the trust account.
Our
insiders and our officers and directors have agreed (1) to vote any shares of common stock owned by them in favor of any proposed
business combination, (2) not to redeem any shares of common stock in connection with a stockholder vote to approve a proposed initial
business combination and (3) not sell any shares of common stock in any tender offer in connection with a proposed initial business
combination. As a result, if we sought stockholder approval of a proposed transaction, we would need only 116,657 of our public shares
(or approximately 2.33% of our public shares) to be voted in favor of the transaction in order to have such transaction approved (assuming
that only a quorum was present at the meeting, that EF Hutton votes for the transaction, and that the insiders do not purchase any units
in the IPO or units or shares in the after-market).
None
of our officers, directors, insiders or their affiliates has indicated any intention to purchase units or shares of common stock in the
IPO or from persons in the open market or in private transactions. However, if
we hold a meeting to approve a proposed business combination and a significant number of stockholders vote, or indicate an intention to
vote, against such proposed business combination, our officers, directors, insiders, or their affiliates could make such purchases in
the open market or in private transactions in order to influence the vote. Notwithstanding the foregoing, our officers, directors, insiders,
and their affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of
the Exchange Act, which are rules designed to stop potential manipulation of a company’s stock.
Tendering share certificates in connection with a tender offer or
redemption rights
At any meeting called to approve an initial business
combination, public stockholders may seek to redeem their public shares, regardless of whether they vote for or against the proposed business
combination, into their pro rata share of the aggregate amount then on deposit in the trust account, less any taxes then
due but not yet paid. Notwithstanding the foregoing, our insiders have agreed, pursuant to written letter agreements with us, not to redeem
any public shares held by them into their pro rata share of the aggregate amount then on deposit in the trust account.
If we hold a meeting to approve an initial business combination, a holder will always have the ability to vote against a proposed business
combination and not seek redemption of his, her or its shares.
Alternatively, if we engage in a tender offer,
each public stockholder will be provided the opportunity to sell his, her or its public shares to us in such tender offer. The tender
offer rules require us to hold the tender offer open for at least 20 business days. Accordingly, this is the minimum amount of time we
would need to provide holders to determine whether they want to sell their public shares to us in the tender offer or remain an investor
in our company.
Our
insiders, officers, and directors will not have redemption rights with respect to any shares of common stock owned by them, directly or
indirectly, whether acquired prior to the IPO or purchased by them in
the IPO or in the aftermarket.
We may also require public stockholders, whether
they are a record holder or hold their shares in “street name,” to either tender their certificates (if any) to our transfer
agent or to deliver their shares to the transfer agent electronically using Depository Trust Company’s DWAC (Deposit/Withdrawal
At Custodian) System, at the holder’s option, at any time at or prior to the vote on the business combination. The proxy solicitation
materials that we will furnish to stockholders in connection with the vote for any proposed business combination will indicate whether
we are requiring stockholders to satisfy such delivery requirements. Accordingly, a stockholder would have from the time our proxy statement
is mailed through the vote on the business combination to deliver his shares if he wishes to seek to exercise his redemption rights. Under
Delaware law and our bylaws, we are required to provide at least 10 days’ advance notice of any stockholder meeting, which
would be the minimum amount of time a stockholder would have to determine whether to exercise redemption rights. As a result, if we require
public stockholders who wish to redeem their shares of common stock to receive a pro rata portion of the funds in the trust
account to comply with the foregoing delivery requirements, holders may not have sufficient time to receive the notice and deliver their
shares for redemption. Accordingly, investors may not be able to exercise their redemption rights and may be forced to retain our securities
when they otherwise would not want to.
There is a nominal cost associated with this tendering
process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will typically charge the
tendering broker $45 and it would be up to the broker whether or not to pass this cost on to the redeeming holder. However, this fee would
be incurred regardless of whether or not we require holders seeking to exercise redemption rights. The need to deliver shares is a requirement
of exercising redemption rights regardless of the timing of when such delivery must be effectuated. However, in the event we require stockholders
seeking to exercise redemption rights to deliver their shares prior to the consummation of the proposed business combination and the proposed
business combination is not consummated, this may result in an increased cost to stockholders.
Any request to redeem or tender such shares once
made, may be withdrawn at any time up to the vote on the proposed business combination or expiration of the tender offer. Furthermore,
if a holder of a public share delivered his, her or its certificate in connection with an election of their redemption or tender and subsequently
decides prior to the vote on the business combination or the expiration of the tender offer not to elect to exercise such rights, he,
she or it may simply request that the transfer agent return the certificate (physically or electronically).
If the initial business combination is not approved
or completed for any reason, then our public stockholders who elected to exercise their redemption or tender rights would not be entitled
to redeem their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any shares
delivered by public holders.
Automatic Liquidation of Trust Account if No
Business Combination
If we do not complete a business combination within nine months,
we 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 100% of the outstanding public shares 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 (ii) and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements
of other applicable law. However, if we anticipate that we may not be able to consummate our initial business combination within nine
months, we may, by resolution of our board if requested by our sponsor, extend the period of time to consummate a business combination
up to nine times, each by an additional one month (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 our amended and restated certificate
of incorporation and the trust agreement entered into between us and Continental Stock Transfer & Trust Company, in order for the
time available for us to consummate our initial business combination to be extended, our sponsor or its affiliates or designees, upon
five days advance notice prior to the applicable deadline, must deposit into the trust account $189,750 (or $0.033 per public share per
month), on or prior to the date of the applicable deadline, for each monthly extension, up to an aggregate of $1,707,750, or $0.297 per
public share (for an aggregate of nine months). In the event that they elect to extend the time to consummate our initial business combination
and deposit the applicable amount of money into trust, our sponsor or its affiliates or designees will receive a non-interest bearing,
unsecured promissory note equal to the amount of any such deposit that will not be repaid in the event that we are unable to close a business
combination unless there are funds available outside the trust account to do so. Such notes would either be paid upon consummation of
our initial business combination, or, at the lender’s discretion, converted upon consummation of our business combination into additional
private units at a price of $10.00 per unit. Our stockholders have approved the issuance of the private units upon conversion of such
notes, to the extent the holder wishes to so convert such notes at the time of the consummation of our initial business combination. In
the event that we receive notice from our sponsor five days prior to the applicable deadline of its wish for us to effect an extension,
we intend to issue a press release announcing such intention at least three days prior to the applicable deadline. In addition, we intend
to issue a press release the day after the applicable deadline announcing whether or not the funds have been timely deposited. Our sponsor
and its affiliates or designees are not obligated to fund the trust account to extend the time for us to complete our initial business
combination. If we do extend the period of time to consummate our initial business combination as described above, we would follow the
same liquidation procedures described above if we do not complete a business combination by the end of the extended period. At such time,
the warrants and rights will expire and holders of warrants and rights will receive nothing upon a liquidation with respect to such warrants
or rights, and the warrants and rights will be worthless.
Under the Delaware General Corporation Law, stockholders
may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution.
The pro rata portion of our trust account distributed to our public stockholders upon the redemption of 100% of our outstanding public
shares in the event we do not complete our initial business combination within the required time period may be considered a liquidation
distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the Delaware General
Corporation Law intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during
which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims
brought, and an additional 150-day waiting period before any redemptions are made to stockholders, any liability of stockholders with
respect to a redemption is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to
the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
Furthermore, if the pro rata portion of our trust
account distributed to our public stockholders upon the redemption of 100% of our public shares in the event we do not complete our initial
business combination within the required time period is not considered a liquidation distribution under Delaware law and such redemption
distribution is deemed to be unlawful, then pursuant to Section 174 of the Delaware General Corporation Law, the statute of limitations
for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of
a liquidation distribution. It is our intention to redeem our public shares as soon as reasonably possible and, therefore, we do not intend
to comply with the above 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.
Because we will not be complying with Section 280
of the Delaware General Corporation Law, Section 281(b) of the Delaware General Corporation Law requires us to adopt a plan, based
on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially
brought against us within the subsequent 10 years. However, because we are a blank check company, rather than an operating company,
and our operations will be limited to seeking to complete an initial business combination, the only likely claims to arise would be from
our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses.
We
will seek to have all third parties (including any vendors or other entities we engage after the IPO)
and any prospective target businesses enter into valid and enforceable agreements with us waiving any right, title, interest or claim
of any kind they may have in or to any monies held in the trust account.
As
a result, the claims that could be made against us will be limited, thereby lessening the likelihood that any claim would result in any
liability extending to the trust. We therefore believe that any necessary provision for creditors will be reduced and should not have
a significant impact on our ability to distribute the funds in the trust account to our public stockholders. Nevertheless, there is no
guarantee that vendors, service providers and prospective target businesses will execute such agreements. In the event that a potential
contracted party was to refuse to execute such a waiver, we will execute an agreement with that entity only if our management first determines
that we would be unable to obtain, on a reasonable basis, substantially similar services or opportunities from another entity willing
to execute such a waiver. Examples of instances where we may engage a third party that refused to execute a waiver would be the engagement
of a third party consultant who cannot sign such an agreement due to regulatory restrictions, such as our auditors who are unable to sign
due to independence requirements, or whose particular expertise or skills are believed by management to be superior to those of other
consultants that would agree to execute a waiver or a situation in which management does not believe it would be able to find a provider
of required services willing to provide the waiver. There is also no guarantee that, even if they execute such agreements with us, they
will not seek recourse against the trust account. Our sponsor has agreed that it will be liable to us if and to the extent any claims
by a vendor for services rendered or products sold to us, or a prospective target business with which we have discussed entering into
a transaction agreement, reduce the amount of funds in the trust account to below $10.175 per public share, except as to any claims by
a third party who executed a valid and enforceable agreement with us waiving any right, title, interest or claim of any kind they may
have in or to any monies held in the trust account and except as to any claims under our indemnity of the underwriters of the IPO
against certain liabilities, including liabilities under the Securities Act.
However, the sponsor may not be able to satisfy its indemnification obligations, as we have not required it to retain any assets to provide
for its indemnification obligations, nor have we taken any further steps to ensure that it will be able to satisfy any indemnification
obligations that arise. Moreover, our sponsor will not be liable to our public stockholders and instead will only have liability to us.
As a result, if we liquidate, the per-share distribution from the trust account could be less than approximately $10.175 due to claims
or potential claims of creditors. We will distribute to all of our public stockholders, in proportion to their respective equity interests,
an aggregate sum equal to the amount then held in the trust account, inclusive of any interest not previously released to us, subject
to our obligations under Delaware law to provide for claims of creditors as described below.
If we are unable to consummate an initial business
combination and are forced to redeem 100% of our outstanding public shares for a portion of the funds held in the trust account, we anticipate
notifying the trustee of the trust account to begin liquidating such assets promptly after such date and anticipate it will take no more
than 10 business days to effectuate the redemption of our public shares. Our insiders have waived their rights to participate in any redemption
with respect to their insider shares. We will pay the costs of any subsequent liquidation from our remaining assets outside of the trust
account and from the interest income on the balance of the trust account (net income and other tax obligations) that may be released to
us to fund our working capital requirements. If such funds are insufficient, our sponsor has agreed to pay the funds necessary to complete
such liquidation (currently anticipated to be no more than approximately $18,500) and has agreed not to seek repayment of such expenses.
Each holder of public shares will receive a full pro rata portion of the amount then in the trust account, plus any pro rata interest
earned on the funds held in the trust account and not previously released to us or necessary to pay our taxes. The proceeds deposited
in the trust account could, however, become subject to claims of our creditors that are in preference to the claims of public stockholders.
Our public stockholders shall be entitled to receive
funds from the trust account only in the event of our failure to complete our initial business combination in the required time period
or if the stockholders seek to have us redeem their respective shares of common stock upon a business combination which is actually completed
by us. In no other circumstances shall a stockholder have any right or interest of any kind to or in the trust account.
If we are forced to file a bankruptcy case or
an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds held in the trust account could be subject to
applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over
the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, the per share redemption amount received
by public stockholders may be less than $10.175.
If, after we distribute the proceeds in the trust
account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not
dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either
a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover
all amounts received by our stockholders. In addition, our board of directors may be viewed as having breached its fiduciary duty to our
creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by paying public stockholders
from the trust account prior to addressing the claims of creditors. Claims may be brought against us for these reasons.
Certificate of Incorporation
Our
certificate of incorporation contains certain requirements and restrictions relating to the IPO that
will apply to us until the consummation of our initial business combination. If we hold a stockholder vote to amend any provisions of
our certificate of incorporation relating to stockholder’s rights or pre-business combination activity (including the substance
or timing within which we have to complete a business combination), we will provide our public stockholders with the opportunity to redeem
their shares of common stock upon approval of any such amendment 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 franchise and income taxes, divided by the number of then outstanding public shares, in connection with any such vote. Our
insiders and EF Hutton have agreed to waive any redemption rights with respect to any insider shares, private shares and any public shares
they may hold in connection with any vote to amend our certificate of incorporation. Specifically, our certificate of incorporation provides,
among other things, that:
| ● | prior to the consummation of our initial business combination,
we shall either (1) seek stockholder approval of our initial business combination at a meeting called for such purpose at which
public stockholders may seek to redeem their shares of common stock, regardless of whether they vote for or against the proposed business
combination, into a portion of the aggregate amount then on deposit in the trust account, or (2) provide our stockholders with the
opportunity to sell their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal
to their pro rata share of the aggregate amount then on deposit in the trust account, in each case subject to the limitations described
herein; |
| ● | we will consummate our initial business combination only
if public stockholders do not exercise redemption rights in an amount that would cause our net tangible assets to be less than $5,000,001
and a majority of the outstanding shares of common stock voted are voted in favor of the business combination; |
| ● | if
our initial business combination is not consummated within nine months (or up to 18 months) of the closing of the IPO,
then our existence will terminate and we will distribute all amounts in the trust account to all of our public holders of shares of common
stock; |
| ● | we may not consummate any other business combination, merger,
capital stock exchange, asset acquisition, stock purchase, reorganization or similar transaction prior to our initial business combination;
and |
| ● | prior to our initial business combination, we may not issue
additional shares of capital stock that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote
on any initial business combination. |
Potential Revisions to Agreements with Insiders
Each of our insiders has entered into letter agreements
with us pursuant to which each of them has agreed to do certain things relating to us and our activities prior to a business combination.
We could seek to amend these letter agreements without the approval of stockholders, although we have no intention to do so. In particular:
| ● | Restrictions relating to liquidating the trust account if
we failed to consummate a business combination in the time-frames specified above could be amended, but only if we allowed all stockholders
to redeem their shares in connection with such amendment; |
| ● | Restrictions relating to our insiders being required to vote
in favor of a business combination or against any amendments to our organizational documents could be amended to allow our insiders to
vote on a transaction as they wished; |
| ● | The requirement of members of the management team to remain
our officer or director until the closing of a business combination could be amended to allow persons to resign from their positions
with us if, for example, the current management team was having difficulty locating a target business and another management team had
a potential target business; |
| ● | The restrictions on transfer of our securities could be amended
to allow transfer to third parties who were not members of our original management team; |
| ● | The obligation of our management team to not propose amendments
to our organizational documents could be amended to allow them to propose such changes to our stockholders; |
| ● | The obligation of insiders to not receive any compensation
in connection with a business combination could be modified in order to allow them to receive such compensation; |
| ● | The requirement to obtain a valuation for any target business
affiliated with our insiders, in the event it was too expensive to do so. |
Except as specified above, stockholders would
not be required to be given the opportunity to redeem their shares in connection with such changes. Such changes could result in:
| ● | Our having an extended period of time to consummate a business
combination (although with less in trust as a certain number of our stockholders would certainly redeem their shares in connection with
any such extension); |
| ● | Our insiders being able to vote against a business combination
or in favor of changes to our organizational documents; |
| ● | Our operations being controlled by a new management team
that our stockholders did not elect to invest with; |
| ● | Our insiders receiving compensation in connection with a
business combination; and |
| ● | Our insiders closing a transaction with one of their affiliates
without receiving an independent valuation of such business. |
We will not agree to any such changes unless we
believed that such changes were in the best interests of our stockholders (for example, if we believed such a modification were necessary
to complete a business combination). Each of our officers and directors have fiduciary obligations to us requiring that they act in our
best interests and the best interests of our stockholders.
Competition
In identifying, evaluating and selecting a target
business for our initial business combination, we may encounter intense competition from other entities having a business objective similar
to ours, including other blank check companies, private equity groups and leveraged buyout funds, and operating businesses seeking strategic
acquisitions. Many of these entities are well established and have significant experience identifying and effecting business combinations
directly or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than
us. Our ability to acquire larger target businesses will be limited by our available financial resources. This inherent limitation gives
others an advantage in pursuing the acquisition of a target business. Furthermore, the requirement that we acquire a target business or
businesses having a fair market value equal to at least 80% of the value of the trust account (excluding any taxes payable) at the time
of the agreement to enter into the business combination, and our obligation to pay cash in connection with our public stockholders who
exercise their redemption rights, may not be viewed favorably by certain target businesses. Any of these factors may place us at a competitive
disadvantage in successfully negotiating our initial business combination.
Employees
We have two executive officers. They are not obligated
to devote any specific number of hours to our matters and intend to devote only as much time as they deem necessary to our affairs. The
amount of time they will devote in any time period will vary based on whether a target business has been selected for the business combination
and the stage of the business combination process the company is in. Accordingly, once management locates a suitable target business to
acquire, they will spend more time investigating such target business and negotiating and processing the business combination (and consequently
spend more time to our affairs) than they would prior to locating a suitable target business. We presently expect our executive officers
to devote such amount of time as they reasonably believe is necessary to our business (which could range from only a few hours a week
while we are trying to locate a potential target business to a majority of their time as we move into serious negotiations with a target
business for a business combination). We do not intend to have any full time employees prior to the consummation of a business combination.
Periodic Reporting and Audited Financial Statements
We have registered our units, common stock and
rights under the Exchange Act and have reporting obligations, including the requirement that we file annual, quarterly and current reports
with the SEC. In accordance with the requirements of the Exchange Act, our annual report will contain financial statements audited and
reported on by our independent registered public accountants.
We will provide stockholders with audited financial
statements of the prospective target business as part of any proxy solicitation materials or tender offer documents sent to stockholders
to assist them in assessing the target business. These financial statements will need to be prepared in accordance with or reconciled
to United States GAAP or IFRS as issued by the IASB. A particular target business identified by us as a potential business combination
candidate may not have the necessary financial statements. To the extent that this requirement cannot be met, we may not be able to consummate
our initial business combination with the proposed target business.
We may be required by the Sarbanes-Oxley Act to
have our internal control over financial reporting audited for the fiscal year ending December 31, 2023. A target company may not be in
compliance with the provisions of the Sarbanes-Oxley Act regarding the adequacy of their internal control over financial reporting. The
development of the internal control over financial reporting of any such entity to achieve compliance with the Sarbanes-Oxley Act may
increase the time and costs necessary to complete any such initial business combination.
We are an emerging growth company as defined in
the JOBS Act and will remain such for up to five years. However, if our non-convertible debt issued within a three-year period or our
total revenues exceed $1.07 billion or the market value of our shares of common stock that are held by non-affiliates exceeds $700 million
on the last day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth company as of the following
fiscal year. As an emerging growth company, we have elected, under Section 107(b) of the JOBS Act, to take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.
ITEM 1A. RISK FACTORS
As a smaller reporting company, we are not required to make disclosures
under this Item.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. PROPERTIES
We currently maintain our principal executive offices
at 1441 Broadway 3rd, 5th & 6th Floors, New York, NY 10018. The space is provided by our Sponsor Plutonian Investments LLC for free.
We consider our current office space, combined with the other office space otherwise available to our executive officers, adequate for
our current operations.
ITEM 3. LEGAL PROCEEDINGS
We may be subject to legal proceedings, investigations
and claims incidental to the conduct of our business from time to time. We are not currently a party to any material litigation or other
legal proceedings brought against us. We are also not aware of any legal proceeding, investigation or claim, or other legal exposure that
has a more than remote possibility of having a material adverse effect on our business, financial condition or results of operations.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
PART
II
ITEM 5. MARKET FOR REGISTRANT’S COMMON
EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our Public Units began to trade on The Nasdaq
Capital Market, or Nasdaq, under the symbol “PLTNU” on November 10, 2022. The shares of Common Stock, Warrants and Rights
comprising the Public Units began separate trading on Nasdaq on January 11, 2023, under the symbols “PLTN,” “PLTNW,”
and “PLTNR,” respectively.
Holders of Record
As of December 31, 2022, there were 7,511,125 of our shares of Common
Stock issued and outstanding held by seven (7) stockholders of record. The number of record holders was determined from the records of
our transfer agent and does not include beneficial owners of shares of Common Stock whose shares are held in the names of various security
brokers, dealers, and registered clearing agencies.
Dividends
We have not paid any cash dividends on our Common
Stock to date and do not intend to pay cash dividends prior to the completion of an initial business combination. The payment of cash
dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition
subsequent to completion of a business combination. The payment of any dividends subsequent to a business combination will be within the
discretion of our board of directors at such time. It is the present intention of our board of directors to retain all earnings, if any,
for use in our business operations and, accordingly, our board of directors does not anticipate declaring any dividends in the foreseeable
future. In addition, our board of directors is not currently contemplating and does not anticipate declaring any share dividends in the
foreseeable future. Further, if we incur any indebtedness, our ability to declare dividends may be limited by restrictive covenants we
may agree to in connection therewith.
Securities Authorized for Issuance Under Equity Compensation Plans
None.
Recent Sales of Unregistered Securities
None.
Use of Proceeds
On November 15, 2022,
we consummated our IPO of 5,750,000 Public Units, which includes the full exercise of the underwriter’s over-allotment option of
750,000 Public Units. Each Public Unit consists of one share of Common Stock, one redeemable Warrant entitling its holder to purchase
one share of Common Stock at a price of $11.50 per whole share, and one Right to receive one-sixth (1/6) of a share of Common Stock upon
the consummation of an initial business combination. The Public Units were sold at an offering price of $10.00 per Public Unit, generating
gross proceeds of $57,500,000.
Simultaneously with the
closing of the IPO on November 15, 2022, we consummated the Private Placement with the Sponsor, purchasing 266,125 Private Units at a
price of $10.00 per Private Unit, generating total proceeds of $2,661,250. The Private Units (and the underlying securities) are identical
to the Units sold in the IPO, except as otherwise disclosed in the IPO registration statement. No underwriting discounts or commissions
were paid with respect to such sale.
As of November 15, 2022,
a total of $58,506,250 of the net proceeds from the IPO and the Private Placement were deposited in a trust account established for the
benefit of the Company’s public stockholders and maintained by Continental Stock Transfer & Trust Company, acting as trustee.
All of the proceeds we
receive from these purchases have been placed in the trust account described above and, together with the interests earned on the funds
held in the trust account and except for payment of our franchise and income taxes if any, shall not be released to us until the earlier
of the completion of our initial business combination and our redemption of the shares of common stock sold in the IPO upon our failure
to consummate a business combination within the required period.
With these exceptions, expenses incurred by us
may be paid prior to a business combination only from the net proceeds of our IPO not held in the trust account; provided, however, that
in order to meet our working capital needs following the consummation of our IPO, if the funds not held in the trust account are insufficient,
our insiders, officers and directors or their affiliates may, but are not obligated to, loan us funds, from time to time or at any time,
in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note. The notes would either
be paid upon consummation of our initial business combination, without interest, or, at the lender’s discretion, up to $600,000
of the notes may be converted upon consummation of our business combination into private units at a price of $10.00 per unit (which, for
example, would result in the holders being issued units to acquire 70,000 shares of Common Stock (which includes 10,000 shares of Common
Stock issuable upon conversion of rights) and 60,000 Warrants). If we do not complete a business combination, the loans would be repaid
out of funds not held in the trust account, and only to the extent available.
We paid a total of $575,000 in underwriting discounts
and commissions (not including the 3.5% deferred underwriting commission payable at the consummation of business combination) and $533,449
for other costs and expenses related to the IPO.
For a description of the use of the proceeds generated
in our IPO, see below Part II, Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations of
this Form 10-K.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
ITEM 6. [RESERVED]
As a smaller reporting company, we are not required
to make disclosures under this Item.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial
condition and results of operations should be read in conjunction with our audited financial statements and the notes related thereto
which are included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. Certain information
contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially
from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Special
Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors” and elsewhere in this Annual Report on Form 10-K.
Overview
We are a blank check company formed under the
laws of the State of Delaware in March 2021. We were formed for the purpose of entering into a merger, share exchange, asset acquisition,
stock purchase, recapitalization, reorganization or other similar business combination. Our efforts to identify a target business will
not be limited to a particular industry or geographic region, although we intend to focus our search for a target business on companies
engaged in metaverse technologies, tourism and e-commerce related industries in the Asia-Pacific, or APAC, region. We affirmatively exclude
as an initial business combination target any company of which financial statements are audited by an accounting firm that the PCAOB is
unable to inspect for two consecutive years beginning in 2021 and any target company with China operations consolidated through a VIE
structure. We intend to utilize cash derived from the proceeds of our IPO and the private placement of Private Units, our securities,
debt or a combination of cash, securities and debt, in effecting our initial Business Combination.
We expect to continue to incur significant costs
in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.
Results of Operations
We have neither engaged
in any operations nor generated any operating revenues to date except the preparation and completion of the IPO and search for target
candidate following the consummation of the IPO. Our only activities from inception through December 31, 2022 were organizational activities
and those necessary to prepare for the IPO, and subsequent to the IP, including identifying a target company for an initial business combination.
We do not expect to generate any operating revenues until after the completion of our initial Business Combination. We expect to generate non-operating income
in the form of interest income on marketable securities held after the IPO. We expect that we will incur increased expenses as a result
of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses
in connection with searching for, and completing, a Business Combination.
For the fiscal year ended
December 31, 2022, we had a net income of $126,217 which consists of interest earned on marketable securities of approximately $271,803
net of loss of approximately $90,054 derived from general and administrative expenses of approximately $82,691 and franchise tax expense
of $7,363, and income tax expense of $55,532.
For the period from February 25,
2021 (inception) through the year ended December 31, 2021, we had a net loss of $4,088, all of which consisted of formation and operating
costs.
Liquidity and Capital Resources
On November 15, 2022,
we consummated our IPO of 5,750,000 Public Units, which includes the full exercise of the underwriter’s over-allotment option of
750,000 Public Units. Each Public Unit consists of one share of Common Stock, one redeemable Warrant entitling its holder to purchase
one share of Common Stock at a price of $11.50 per whole share, and one Right to receive one-sixth (1/6) of a share of Common Stock upon
the consummation of an initial business combination. The Public Units were sold at an offering price of $10.00 per Public Unit, generating
gross proceeds of $57,500,000.
Simultaneously with the
closing of the IPO on November 15, 2022, we consummated the Private Placement with the Sponsor, purchasing 266,125 Private Units at a
price of $10.00 per Private Unit, generating total proceeds of $2,661,250.
A total of $58,506,250
of the net proceeds from the IPO and the Private Placement were deposited in a trust account established for the benefit of the Company’s
public stockholders and maintained by Continental Stock Transfer & Trust Company, acting as trustee.
As of December 31, 2022,
we had $293,569 in cash and working capital of $429,565(excluding income taxes and franchise taxes payable). The Company’s liquidity
needs prior to the consummation of the IPO had been satisfied through a payment from the Sponsor of $25,000 for the Founder Shares and
the loan under an unsecured promissory note from the Sponsor of $200,000.
The Company has 9 months
(or up to 18 months if the time to complete a business combination is extended as) from the closing of the IPO to consummate a Business
Combination. It is uncertain that the Company will be able to consummate a Business Combination by this time. If a Business Combination
is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution. The Company expects to continue to
incur significant professional costs to remain as a publicly traded company and to incur significant transaction costs in pursuit of the
consummation of a Business Combination. The Company may need to obtain additional financing either to complete its Business Combination
or because it becomes obligated to redeem a significant number of public shares upon consummation of its Business Combination, in which
case the Company may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with
applicable securities laws, the Company would only complete such financing simultaneously with the completion of our Business Combination.
If the Company is unable to complete its Business Combination because it does not have sufficient funds available, it will be forced to
cease operations and liquidate the Trust Account. In addition, following the Business Combination, if cash on hand is insufficient, the
Company may need to obtain additional financing in order to meet its obligations.
In connection with the Company’s assessment of going concern
considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”) 2014-15,
“Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that
if the Company is unable to complete a Business Combination by August 15, 2023 (unless the Company extends the time to complete a Business
Combination), then the Company will cease all operations except for the purpose of liquidating. The date for liquidation and subsequent
dissolution raises substantial doubt about the Company’s ability to continue as a going concern. The financial statement does not
include any adjustments that might result from the outcome of this uncertainty.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities,
which would be considered off-balance sheet arrangements as of December 31, 2022. We do not participate in transactions that create relationships
with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established
for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term
debt, capital lease obligations, operating lease obligations or long-term liabilities, other than described below.
The holders of the founder
shares, the Private Placement Shares, and any common stock that may be issued upon conversion of working capital loans (and any underlying
securities) will be entitled to registration rights pursuant to a registration and shareholder rights agreement entered into in connection
with the IPO. The holders of these securities are entitled to make up to three demands, excluding short form demands, that we register
such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements
filed subsequent to our completion of our initial Business Combination.
Upon closing of a business
combination, the underwriters will be entitled to a deferred fee of $0.35 per public share, or $2,012,500 in the aggregate. The deferred
fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that we complete a business
combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies
The preparation of financial statements and related
disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date
of the financial statements, and income and expenses during the period reported. Actual results could materially differ from those estimates.
We have identified the following critical accounting policies:
Common stock Subject to Possible Redemption
We account for our common stock subject to possible
redemption in accordance with the guidance in 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 feature redemption rights that is either within the control of the
holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as
temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock features
certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future
events. Accordingly, common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the
stockholders’ equity section of the Company’s balance sheet.
We have made a policy election in accordance with
ASC 480-10-S99-3A and recognizes changes in redemption value in additional paid-in capital (or accumulated deficit in the absence of additional
paid-in capital) over an expected 9-month period leading up to a Business Combination.
Warrants
The Company accounts for warrants (Public Warrants
or Private Warrants) as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific
terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC
815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition
of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including
whether the warrants are indexed to the Company’s own common shares and whether the warrant holders could potentially require “net
cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This
assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly
period end date while the warrants are outstanding.
For issued warrants that meet all of the criteria
for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance. For issued or modified
warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their
initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants
are recognized as a non-cash gain or loss on the statements of operations.
Net Income (Loss) per Share
The Company complies with accounting and disclosure
requirements of FASB ASC 260, Earnings Per Share. The audited statements of operations include a presentation of income (loss) per redeemable
share and income (loss) per non-redeemable share following the two-class method of income per share. In order to determine the net income
(loss) attributable to both the redeemable shares and non-redeemable shares, the Company first considered the undistributed income (loss)
allocable to both the redeemable shares and non-redeemable shares and the undistributed income (loss) is calculated using the total net
loss less any dividends paid. The Company then allocated the undistributed income (loss) ratably based on the weighted average number
of shares outstanding between the redeemable and non-redeemable shares. Any remeasurement of the accretion to redemption value of the
common shares subject to possible redemption was considered to be dividends paid to the public shareholders.
Offering Costs
Offering costs consist of underwriting, legal, accounting, registration
and other expenses incurred through the balance sheet date that are directly related to the IPO. The Company complies with the requirements
of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A - “Expenses of Offering”. Offering costs are allocated between
public shares, public warrants and public rights based on the estimated fair values of public shares, public warrants and public rights
at the date of issuance.
Recent Accounting Standards
In August 2020, the FASB issued ASU No. 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): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”),
which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 removes
certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies
the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023,
including interim periods within those fiscal years, with early adoption permitted. 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 standards, if currently adopted, would have a material effect on our financial statements.
ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk
As of December 31, 2022, we were not subject to
any market or interest rate risk. Following the consummation of our IPO, the net proceeds of our IPO, including amounts in the Trust Account,
have been invested in U.S. government treasury obligations with a maturity of 185 days or less or in certain money market funds that invest
solely in U.S. treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure
to interest rate risk.
ITEM 8. Financial Statements and Supplementary Data
This information appears following Item 15 of this Report and is included
herein by reference.
ITEM 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
ITEM 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls are procedures that are designed
with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Report,
is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls
are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the
chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management
evaluated, with the participation of our current chief executive officer and chief financial officer (our “Certifying Officers”),
the effectiveness of our disclosure controls and procedures as of December 31, 2022, pursuant to Rule 13a-15(b) under the Exchange Act.
Based upon that evaluation, our Certifying Officers concluded that, as of December 31, 2022, our disclosure controls and procedures were
effective.
We do not expect that our disclosure controls
and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met.
Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits
must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation
of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances
of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of
future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Management’s Report on Internal Controls
Over Financial Reporting
This Annual Report on Form 10-K does not include
a report of management’s assessment regarding internal control over financial reporting or an attestation report of our independent
registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control
over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal
quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. Other Information.
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS.
Not applicable.
PART
III
ITEM 10. Directors, Executive Officers and Corporate Governance.
The following table sets forth information about our directors and
executive officers as of March 31, 2023.
| Name |
|
Age |
|
Position |
| Wei Kwang Ng |
|
42 |
|
Chief Executive Officer, Chairman and President |
| Ke Wang |
|
47 |
|
Chief Financial Officer and Director |
| Sze Wai Lee |
|
53 |
|
Independent Director |
| Robert M. Annis |
|
40 |
|
Independent Director |
| Harry Harnett |
|
71 |
|
Independent Director |
Below is a summary of the business experience
of each our executive officers and directors:
Wei Kwang Ng has been our Chairman, President
and Chief Executive Officer since August 2022. Mr. Ng has been the independent director of Redwoods Acquisition Corp (Nasdaq: RWOD) since
January 2022. Mr. Ng is currently holding the position of assistant vice president of Singapore Post Ltd since April 2022. He has held
the position of chief operating officer of Parcel Santa Pte Ltd, a Singaporean technology company facilitating and value-adding in the
logistics space of last mile delivery, since July 2017. Mr. Ng was the director of operations of World Marketing Group Pte Ltd. from March
2019 to March 2020. He was the managing director of LegalFocus Consultants, Inc. from 2011 to 2018. He worked at Merrill Brink International
as a project manager from May 2008 to March 2011. Mr. Ng received his bachelor’s degree in Business Management with a concentration
in Finance and in Economics from Stony Brook State University in 2007. We believe Mr. Ng is qualified to serve on our board of directors
because of his extensive entrepreneurial and management experience, as well as his contacts and relationships.
Ke Wang has been our Chief Financial Officer
and a director since February 2022. Mr. Wang currently serves as the head of quantitative research at Allstate Insurance Company
starting from August 2021. Previously, he served as the global head of quantamental solutions in investment management segment at
S&P Global Inc. from October 2016 to April 2021 and its senior director from May 2008 to October 2016, where he was in charge
of the quantitative solutions business globally and managed a team of product managers, researchers and technologists to deliver the quantitative
solutions to the company’s global clients. Mr. Wang received his MBA degree from University of Chicago Booth Business School
in 2008 and master’s degree in Computer Science from DePaul University in 2001. He graduated from University of Science and Technology
in China with a bachelor’s degree in Computer Science in 1998. We believe Mr. Wang is qualified to serve on our board of directors
because of his extensive investment and management experience, as well as his contacts and relationships.
Sze Wai Lee has served as our independent
director since February 2022. Mr. Lee has more than 28 years of experience in accounting, finance and investment. Mr. Lee has
served as chairman of the board of directors and the chief executive officer of Shanghai Yingli Investment Management Co., Ltd, a PRC
registered company engaged in media business in China under the brand name “Forbes China,” since 2018 and also the executive
director and chief executive officer of Shanghai Capital Resources Investment Management Company Ltd, a PRC registered company engaged
in commodities trading, since April 2015. He also served as the executive director and general manager of Shenzhen Yingli Investment
Management Co., Ltd from December 2019 to October 2021 and a member of the board of directors of Forbes Global Media Holdings Inc. and
Forbes Media LLC from May 2017 to November 2020. Mr. Lee received his bachelor’s degree in Commerce in Accounting
from University of Wollongong in 1992. Mr. Lee is also a CPA of CPA Australia and a fellow member of Hong Kong Institute of
CPA. We believe Mr. Lee is qualified to serve on our board of directors due to his extensive financial, commercial, corporate
strategy, investment and transaction experience.
Robert M. Annis has served as our
independent director since February 2022. He has served as the founder and the management partner of The Art of Admissions since
2016. Previously, he served as a litigation associate at Simpson Thacher & Bartlett LLP from September 2008 to February 2016.
Mr. Annis received his bachelor’s degree in Social Studies from Harvard University in 2004. He received his Juris Doctor Degree
in Law from Cornell University in 2008. We believe Mr. Annis is qualified to serve on our board of directors due to his extensive
commercial, legal and business development experience.
Harry Harnett has served as our independent
director since February 2022. Mr. Harnett served as the chief operating officer and president at ADF Companies, a franchised
restaurant operator of Pizza Hut, from August 2016 to June 2020. Mr. Harnett received his bachelor’s degree in Business
Administration from Shorter University in 1998. We believe Mr. Harnett is qualified to serve on our board of directors due to his
commercial, business development and transaction experience, as well as his contacts and relationships.
Officer and Director Qualifications
Our officers and board of directors are composed
of a diverse group of leaders with a wide array of professional roles. In these roles, they have gained experience in core management
skills, such as strategic and financial planning, financial reporting, compliance, risk management, and leadership development. Many of
our officers and directors also have experience serving on boards of directors and board committees of other companies, and have an understanding
of corporate governance practices and trends, which provides an understanding of different business processes, challenges, and strategies.
Further, our officers and directors also have other experience that makes them valuable, managing and investing assets or facilitating
the consummation of business combinations.
We, along with our officers and directors, believe
that the above-mentioned attributes, along with the leadership skills and other experiences of our officers and board members described
below, provide us with a diverse range of perspectives and judgment necessary to facilitate our goals of consummating an acquisition transaction.
Board Committees
The board has a standing audit, nominating and
compensation committee. The independent directors oversee director nominations. Each audit committee (the “Audit Committee”),
nominating committee (the “Nominating Committee”) and compensation committee (the “Compensation Committee”) has
a charter, which was filed with the SEC as exhibits to the Registration Statement on Form S-1 on October 14, 2022.
Audit Committee
The Audit Committee, which is established in accordance
with Section 3(a)(58)(A) of the Exchange Act, engages Company’s independent accountants, reviewing their independence and performance;
reviews the Company’s accounting and financial reporting processes and the integrity of its financial statements; the audits of
the Company’s financial statements and the appointment, compensation, qualifications, independence and performance of the Company’s
independent auditors; the Company’s compliance with legal and regulatory requirements; and the performance of the Company’s
internal audit function and internal control over financial reporting. The Audit Committee held no formal meetings during 2022 as
the Company does not have any underlying business or employees, relying on monthly reports and written approvals as required.
The members of the Audit Committee are Sze
Wai Lee, Robert M. Annis, and Harry Harnett, each of whom is an independent director under Nasdaq’s listing standards. Sze
Wai Lee is the Chairperson of the Audit Committee. The board has determined that Sze
Wai Lee qualifies as an “audit committee financial expert,” as defined under the rules and regulations of the SEC.
Nominating Committee
The Nominating Committee is responsible for overseeing
the selection of persons to be nominated to serve on our board. Specifically, the Nominating Committee makes recommendations to the board
regarding the size and composition of the board, establishes procedures for the director nomination process and screens and recommends
candidates for election to the board. On an annual basis, the Nominating Committee recommends for approval by the board certain desired
qualifications and characteristics for board membership. Additionally, the Nominating Committee establishes and administers a periodic
assessment procedure relating to the performance of the board as a whole and its individual members. The Nominating Committee will consider
a number of qualifications relating to management and leadership experience, background and integrity and professionalism in evaluating
a person’s candidacy for membership on the board. The Nominating Committee may require certain skills or attributes, such as financial
or accounting experience, to meet specific board needs that arise from time to time and will also consider the overall experience and
makeup of its members to obtain a broad and diverse mix of board members. The Nominating Committee does not distinguish among nominees
recommended by shareholders and other persons. The Nominating Committee was not established until the closing of the IPO and therefore
held no meetings in 2022.
The members of the Nominating Committee are Sze
Wai Lee, Robert M. Annis, and Harry Harnett, each of whom is an independent director under NASDAQ’s listing standards. Robert
M. Annis is the Chairperson of the Nominating Committee.
Compensation Committee
The Compensation Committee reviews annually the
Company’s corporate goals and objectives relevant to the officers’ compensation, evaluates the officers’ performance
in light of such goals and objectives, determines and approves the officers’ compensation level based on this evaluation; makes
recommendations to the board regarding approval, disapproval, modification, or termination of existing or proposed employee benefit plans,
makes recommendations to the board with respect to non-CEO and non-CFO compensation and administers the Company’s incentive-compensation
plans and equity-based plans. The Compensation Committee has the authority to delegate any of its responsibilities to subcommittees as
it may deem appropriate in its sole discretion. The chief executive officer of the Company may not be present during voting or deliberations
of the Compensation Committee with respect to his compensation. The Company’s executive officers do not play a role in suggesting
their own salaries. Neither the Company nor the Compensation Committee has engaged any compensation consultant who has a role in determining
or recommending the amount or form of executive or director compensation. The Compensation Committee did not meet during 2022.
Notwithstanding the foregoing, as indicated above,
no compensation of any kind, including finders, consulting or other similar fees, will be paid to any of our existing stockholders, including
our directors, or any of their respective affiliates, prior to, or for any services they render in order to effectuate, the consummation
of a business combination. Accordingly, it is likely that prior to the consummation of an initial business combination, the Compensation
Committee will only be responsible for the review and recommendation of any compensation arrangements to be entered into in connection
with such initial business combination.
The members of the Compensation Committee are
Sze Wai Lee, Robert M. Annis, and Harry Harnett, each of whom is an independent
director under Nasdaq’s listing standards. Harry Harnett is the Chairperson of the Compensation Committee.
Conflicts of Interest
Investors should be aware of the following potential
conflicts of interest:
| |
● |
None of our officers and directors is required to commit their full time to our affairs and, accordingly, they may have conflicts of interest in allocating their time among various business activities. |
| |
● |
In the course of their other business activities, our officers and directors may become aware of investment and business opportunities which may be appropriate for presentation to our company as well as the other entities with which they are affiliated. Our management has pre-existing fiduciary duties and contractual obligations and may have conflicts of interest in determining to which entity a particular business opportunity should be presented. |
| |
● |
Our officers and directors may in the future become affiliated with entities, including other blank check companies, engaged in business activities similar to those intended to be conducted by our company. |
| |
● |
Unless we consummate our initial business combination, our officers, directors and insiders will not receive reimbursement for any out-of-pocket expenses incurred by them to the extent that such expenses exceed the amount of available proceeds not deposited in the trust account and the amount of interest income from the trust account that may be released to us as working capital. |
| |
● |
The insider shares beneficially owned by our officers and directors will be released from escrow only if our initial business combination is successfully completed. Additionally, if we are unable to complete an initial business combination within the required time frame, our officers and directors will not be entitled to receive any amounts held in the trust account with respect to any of their insider shares or private units. Furthermore, our insiders (and/or their designees) have agreed that the private units will not be sold or transferred by them until after we have completed our initial business combination. For the foregoing reasons, our board may have a conflict of interest in determining whether a particular target business is an appropriate business with which to affect our initial business combination. |
In general, officers and directors of a corporation
incorporated under the laws of the State of Delaware are required to present business opportunities to a corporation if:
| |
● |
the corporation could financially undertake the opportunity; |
| |
● |
the opportunity is within the corporation’s line of business; and |
| |
● |
it would not be fair to the corporation and its stockholders for the opportunity not to be brought to the attention of the corporation. |
Accordingly, as a result of multiple business
affiliations, our officers and directors may have similar legal obligations relating to presenting business opportunities meeting the
above-listed criteria to multiple entities. Furthermore, our certificate of incorporation provides that the doctrine of corporate opportunity
will not apply with respect to any of our officers or directors in circumstances where the application of the doctrine would conflict
with any fiduciary duties or contractual obligations they may have. In order to minimize potential conflicts of interest which may arise
from multiple affiliations, our officers and directors (other than our independent directors) have agreed to present to us for our consideration,
prior to presentation to any other person or entity, any suitable opportunity to acquire a target business, until the earlier of: (1)
our consummation of an initial business combination and (2) 9 months (or up to 18 months, as applicable) from the date of our IPO. This
agreement is, however, subject to any pre-existing fiduciary and contractual obligations such officer or director may from time to time
have to another entity. Accordingly, if any of them becomes aware of a business combination opportunity which is suitable for an entity
to which he or she has pre-existing fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations
to present such business combination opportunity to such entity, and only present it to us if such entity rejects the opportunity. We
do not believe, however, that the pre-existing fiduciary duties or contractual obligations of our officers and directors will materially
undermine our ability to complete our business combination because in most cases the affiliated companies are closely held entities controlled
by the officer or director or the nature of the affiliated company’s business is such that it is unlikely that a conflict will arise.
The following table summarizes the current pre-existing
fiduciary or contractual obligations of our officers and directors:
| Name of Individual |
|
Name of Affiliated Company |
|
Entity’s Business |
|
Affiliation |
| Wei Kwang Ng |
|
Parcel Santa Pte Ltd
Redwoods Acquisition Corp. |
|
Technology
SPAC |
|
Chief Financial Officer
Independent Director |
| |
|
|
|
|
|
|
| Sze Wai Lee |
|
Shanghai Yingli Investment Management Co., Ltd, Shanghai Capital Resources Investment Management Company Ltd |
|
Investment |
|
Chief Executive Officer and Director |
| |
|
|
|
|
|
|
| Robert M. Annis |
|
The Art of Admissions |
|
Admissions Consulting |
|
Founder and Chief Executive Officer |
Our insiders and EF Hutton have agreed to vote
any shares of Common Stock held by them in favor of our initial business combination. In addition, they have agreed to waive their respective
rights to receive any amounts held in the trust account with respect to their insider shares and private shares if we are unable to complete
our initial business combination within the required time frame. If they purchase shares of Common Stock in the open market, however,
they would be entitled to receive their pro rata share of the amounts held in the trust account if we are unable to complete our initial
business combination within the required time frame, but have agreed not to redeem such shares in connection with the consummation of
our initial business combination.
All ongoing and future transactions between us
and any of our officers and directors or their respective affiliates will be on terms believed by us to be no less favorable to us than
are available from unaffiliated third parties. Such transactions will require prior approval by our Audit Committee and a majority of
our uninterested “independent” directors, or the members of our board who do not have an interest in the transaction, in either
case who had access, at our expense, to our attorneys or independent legal counsel. We will not enter into any such transaction unless
our Audit Committee and a majority of our disinterested “independent” directors determine that the terms of such transaction
are no less favorable to us than those that would be available to us with respect to such a transaction from unaffiliated third parties.
To further minimize conflicts of interest, we
have agreed not to consummate our initial business combination with an entity that is affiliated with any of our officers, directors or
insiders, unless we have obtained (i) an opinion from an independent investment banking firm that the business combination is fair to
our unaffiliated stockholders from a financial point of view and (ii) the approval of a majority of our disinterested and independent
directors (if we have any at that time). Furthermore, in no event will our insiders or any of the members of our management team be paid
any finder’s fee, consulting fee or other similar compensation prior to, or for any services they render in order to effectuate,
the consummation of our initial business combination (regardless of the type of transaction that it is).
Code of Ethics
We adopted a code of conduct and ethics applicable
to our directors, officers and employees in accordance with applicable federal securities laws. The code of ethics codifies the business
and ethical principles that govern all aspects of our business.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our
executive officers, directors and persons who beneficially own more than 10% of a registered class of our equity securities to file with
the SEC initial reports of ownership and reports of changes in ownership of our shares of Common Stock and other equity securities. These
executive officers, directors, and greater than 10% beneficial owners are required by SEC regulation to furnish us with copies of all
Section 16(a) forms filed by such reporting persons.
Based solely on our review of such forms furnished
to us and written representations from certain reporting persons, we believe that all filing requirements applicable to our executive
officers, directors and greater than 10% beneficial owners were filed in a timely manner.
ITEM 11. Executive Compensation.
Employment Agreements
We have not entered into any employment agreements
with our executive officers and have not made any agreements to provide benefits upon termination of employment.
Executive Officers and Director Compensation
No executive officer has received any cash compensation
for services rendered to us and no compensation of any kind, including finders, consulting or other similar fees, will be paid to any
of our existing stockholders, including our directors, or any of their respective affiliates, prior to, or for any services they render
in order to effectuate, the consummation of a business combination. However, such individuals will be reimbursed for any out-of-pocket
expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence
on suitable business combinations. There is no limit on the amount of these out-of-pocket expenses and there will be no review of the
reasonableness of the expenses by anyone other than our board of directors and Audit Committee, which includes persons who may seek reimbursement,
or a court of competent jurisdiction if such reimbursement is challenged.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters.
The following table sets forth as of March 31,
2023 the number of shares of Common Stock beneficially owned by (i) each person who is known by us to be the beneficial owner of more
than five percent of our issued and outstanding shares of Common Stock (ii) each of our officers and directors; and (iii) all of our officers
and directors as a group. As of March 31, 2023, we had 7,511,125 shares of Common Stock issued and outstanding.
Unless otherwise indicated, we believe that all
persons named in the table have sole voting and investment power with respect to all shares of Common Stock beneficially owned by them.
The following table does not reflect record of beneficial ownership of any shares of Common Stock issuable upon conversion of Rights or
the exercise of the Warrants as the Rights are not convertible and the Warrants are not exercisable within 60 days of March 31, 2023.
| Name and Address of Beneficial Owner(1) | |
Amount and Nature of Beneficial Ownership of Common Stock | | |
Approximate
Percentage of
Outstanding
Shares of
Common Stock | |
| Plutonian Investments LLC(2) | |
| 1,538,625 | | |
| 20.48 | % |
| Wei Kwang Ng | |
| 50,000 | | |
| * | % |
| Ke Wang | |
| 30,000 | | |
| * | % |
| Sze Wai Lee | |
| 40,000 | | |
| * | % |
| Robert M. Annis | |
| 25,000 | | |
| * | % |
| Harry Harnett | |
| 20,000 | | |
| * | % |
| All current directors and executive officers as a group (five individuals) | |
| 1,703,625 | | |
| 22.68 | % |
| Harraden Circle Investors, LP (3) | |
| 456,842 | | |
| 6.08 | % |
| Harraden Circle Investors GP, LP (3) | |
| 456,842 | | |
| 6.08 | % |
| Harraden Circle Investors GP, LLC (3) | |
| 456,842 | | |
| 6.08 | % |
| Harraden Circle Investments, LLC(3) | |
| 473,398 | | |
| 6.30 | % |
| Frederick V. Fortmiller, Jr.(3) | |
| 488,500 | | |
| 6.50 | % |
| Space Summit Capital LLC (4) | |
| 550,000 | | |
| 7.32 | % |
| (1) |
Unless otherwise indicated, the business address of each of the individuals is c/o Plutonian Acquisition Corp., 1441 Broadway 3rd, 5th & 6th Floors, New York, NY 10018. |
| (2) |
Plutonian Investments LLC, our sponsor, is controlled by Mr. Guojian Zhang. |
| (3) |
Based on a Schedule 13G filed by the reporting person. The address for the reporting person is 299 Park Avenue, 21st Floor, New York, NY 10171. |
| (4) |
Based on a Schedule 13G filed by the reporting person. The address for the reporting person is 15455 Albright Street, Pacific Palisades, CA 90272. |
All of the insider shares outstanding have been
placed in escrow with Continental Stock Transfer & Trust Company, as escrow agent. Subject to certain limited exceptions, 50%
of these shares will not be transferred, assigned, sold or released from escrow until the earlier of six months after the date of the
consummation of our initial business combination and the date the closing price of our common stock equals or exceeds $12.50 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 our initial business combination and the remaining 50% of the insider shares will not be transferred, assigned,
sold or released from escrow until six months after the date of the consummation of our initial business combination or earlier in either
case if, subsequent to our initial business combination, we complete a liquidation, merger, stock exchange or other similar transaction
which results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property.
During the escrow period, the holders of these
shares will not be able to sell or transfer their securities except (1) transfers among the insiders, to our officers, directors,
advisors and employees, (2) transfers to an insider’s affiliates or its members upon its liquidation, (3) transfers to
relatives and trusts for estate planning purposes, (4) transfers by virtue of the laws of descent and distribution upon death, (5) transfers
pursuant to a qualified domestic relations order, (6) private sales made at prices no greater than the price at which the securities
were originally purchased or (7) transfers to us for cancellation in connection with the consummation of an initial business combination,
in each case (except for clause 7) where the transferee agrees to the terms of the escrow agreement and forfeiture, as the case may be,
as well as the other applicable restrictions and agreements of the holders of the insider shares. If dividends are declared and payable
in shares of common stock, such dividends will also be placed in escrow. If we are unable to effect a business combination and liquidate,
there will be no liquidation distribution with respect to the insider shares.
Our insiders, officers and directors may, but
are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion.
Each loan would be evidenced by a promissory note. The notes would either be paid upon consummation of our initial business combination,
without interest, or, at the lender’s discretion, up to $600,000 of the notes may be converted upon consummation of our business
combination into private units at a price of $10.00 per unit (which, for example, would result in the holders being issued units to acquire
70,000 shares of Common Stock (which includes 10,000 shares of Common Stock issuable upon conversion of rights) and 60,000 Warrants).
Our pre-IPO stockholders have approved the issuance of the private units upon conversion of such notes, to the extent the holder wishes
to so convert such notes at the time of the consummation of our initial business combination. If we do not complete a business combination,
any outstanding loans from our insiders, officers and directors or their affiliates, will be repaid only from amounts remaining outside
our trust account, if any.
ITEM 13. Certain Relationships and Related Transactions, and Director
Independence.
In February 2022, we sold an aggregate of 1,437,500
shares of our Common Stock for $25,000, or approximately $0.02 per share, to our insiders.
Simultaneously with the closing of the IPO on
November 15, 2022, we consummated the Private Placement with Plutonian Investments LLC, our sponsor, purchasing 266,125 Private Units,
at a price of $10.00 per Private Unit, generating gross proceeds of $2,562,500.00. The Private Units
(and the underlying securities) are identical to the Public Units sold in the IPO, except as otherwise disclosed in the registration statement. No
underwriting discounts or commissions were paid with respect to such sale. Additionally, the initial purchasers in the Private
Placement agreed not to transfer, assign or sell any of the Private Units or underlying securities (except in limited circumstances, as
described in the Registration Statement) until the completion of our initial business combination. Such initial purchasers were granted
certain demand and piggyback registration rights in connection with the purchase of the Private Units.
In order to meet our working capital needs following
the consummation of our IPO, our insiders, officers, and directors may, but are not obligated to, loan us funds, from time to time or
at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note. The
notes would either be paid upon consummation of our initial business combination, without interest, or, at the lender’s discretion,
up to $600,000 of the notes may be converted upon consummation of our business combination into private units at a price of $10.00 per
unit (which, for example, would result in the holders being issued units to acquire 70,000 shares of Common Stock (which includes 10,000
shares of Common Stock issuable upon conversion of rights) and 60,000 Warrants). Our pre-IPO stockholders have approved the issuance of
the private units upon conversion of such notes, to the extent the holder wishes to so convert such notes at the time of the consummation
of our initial business combination. If we do not complete a business combination, any outstanding loans from our insiders, officers and
directors or their affiliates, will be repaid only from amounts remaining outside our trust account, if any.
The holders of our insider shares issued and outstanding
on the date of our IPO, as well as the holders of the private units (and underlying securities) and any shares our insiders, officers,
directors, or their affiliates may be issued in payment of working capital loans made to us, will be entitled to registration rights pursuant
to an agreement to be signed prior to or on the effective date of our IPO. The holders of a majority of these securities are entitled
to make up to two demands that we register such securities. 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 Stock are to be released from
escrow. The holders of a majority of the private units or shares issued in payment of working capital loans made to us can elect to exercise
these registration rights at any time after we consummate a business combination. In addition, the holders have certain “piggy-back”
registration rights with respect to registration statements filed subsequent to our consummation of our initial business combination.
We will bear the expenses incurred in connection with the filing of any such registration statements.
We will reimburse our officers and directors for
any reasonable out-of-pocket business expenses incurred by them in connection with certain activities on our behalf such as identifying
and investigating possible target businesses and business combinations. There is no limit on the amount of out-of-pocket expenses reimbursable
by us; provided, however, that to the extent such expenses exceed the available proceeds not deposited in the trust account and the interest
income earned on the amounts held in the trust account, such expenses would not be reimbursed by us unless we consummate an initial business
combination. Our Audit Committee will review and approve all reimbursements and payments made to any initial stockholder or member of
our management team, or our or their respective affiliates, and any reimbursements and payments made to members of our Audit Committee
will be reviewed and approved by our board of directors, with any interested director abstaining from such review and approval.
No compensation or fees of any kind, including
finder’s fees, consulting fees, or other similar compensation, will be paid to our insiders or any of the members of our management
team, for services rendered to us prior to, or in connection with the consummation of our initial business combination (regardless of
the type of transaction that it is). However, such individuals will receive reimbursement for any out-of-pocket expenses incurred by them
in connection with activities on our behalf, such as identifying potential target businesses, performing business due diligence on suitable
target businesses and business combinations as well as traveling to and from the offices, plants or similar locations of prospective target
businesses to examine their operations. There is no limit on the amount of out-of-pocket expenses reimbursable by us; provided, however,
that to the extent such expenses exceed the available proceeds not deposited in the trust account and the interest income earned on the
amounts held in the trust account, such expenses would not be reimbursed by us unless we consummate an initial business combination.
All ongoing and future transactions between us
and any of our officers and directors or their respective affiliates will be on terms believed by us to be no less favorable to us than
are available from unaffiliated third parties. Such transactions will require prior approval by our Audit Committee and a majority of
our uninterested independent directors, in either case who had access, at our expense, to our attorneys or independent legal counsel.
We will not enter into any such transaction unless our Audit Committee and a majority of our disinterested independent directors determine
that the terms of such transaction are no less favorable to us than those that would be available to us with respect to such a transaction
from unaffiliated third parties.
Related Party Policy
Our Code of Ethics requires us to avoid, wherever
possible, all related party transactions that could result in actual or potential conflicts of interests, except under guidelines approved
by the board of directors (or the Audit Committee). Related-party transactions are defined as transactions in which (1) the aggregate
amount involved will or may be expected to exceed $120,000 in any calendar year, (2) we or any of our subsidiaries is a participant, and
(3) any (a) executive officer, director or nominee for election as a director, (b) greater than 5% beneficial owner of our shares of Common
Stock, or (c) immediate family member, of the persons referred to in clauses (a) and (b), has or will have a direct or indirect material
interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). A conflict of interest
situation can arise when a person takes actions or has interests that may make it difficult to perform his or her work objectively and
effectively. Conflicts of interest may also arise if a person, or a member of his or her family, receives improper personal benefits as
a result of his or her position.
We also require each of our directors and executive
officers to annually complete a directors’ and officers’ questionnaire that elicits information about related party transactions.
Our Audit Committee, pursuant to its written charter,
will be responsible for reviewing and approving related-party transactions to the extent we enter into such transactions. All ongoing
and future transactions between us and any of our officers and directors or their respective affiliates will be on terms believed by us
to be no less favorable to us than are available from unaffiliated third parties. Such transactions will require prior approval by our
Audit Committee and a majority of our uninterested “independent” directors, or the members of our board who do not have an
interest in the transaction, in either case who had access, at our expense, to our attorneys or independent legal counsel. We will not
enter into any such transaction unless our Audit Committee and a majority of our disinterested “independent” directors determine
that the terms of such transaction are no less favorable to us than those that would be available to us with respect to such a transaction
from unaffiliated third parties. Additionally, we require each of our directors and executive officers to complete a directors’
and officers’ questionnaire that elicits information about related party transactions.
These procedures are intended to determine whether
any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director,
employee or officer.
To further minimize potential conflicts of interest,
we have agreed not to consummate a business combination with an entity which is affiliated with any of our insiders unless we obtain an
opinion from an independent investment banking firm that the business combination is fair to our unaffiliated stockholders from a financial
point of view. Furthermore, in no event will any of our existing officers, directors or insiders, or any entity with which they are affiliated,
be paid any finder’s fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate,
the consummation of a business combination.
Director Independence
Nasdaq listing standards require that a majority
of our board of directors be independent. For a description of the director independence, see above Part III, Item 10 - Directors, Executive
Officers and Corporate Governance.
ITEM 14. Principal Accountant Fees and
Services.
The following is a summary of fees paid or to
be paid to Marcum LLP (“Marcum”) and Friedman LLP (“Friedman”), prior to the acquisition of certain assets of
Friedman by Marcum effective September 1, 2022, for services rendered.
Audit Fees. Audit fees consist of fees
billed for professional services rendered for the audit of our year-end financial statements and services that are normally provided by
Friedman and Marcum in connection with regulatory filings. The aggregate fees billed by Friedman and Marcum for professional services
rendered for the audit of our annual financial statements, review of the financial information included in our Forms 10-Q for the respective
periods and other required filings with the SEC for the year ended December 31, 2022 and for the period from March 11, 2021 (inception)
through December 31, 2021 totaled $65,000 and $0, respectively. The above amounts include interim procedures and audit fees, as well as
attendance at audit committee meetings.
Audit-Related Fees. Audit-related services
consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our financial
statements and are not reported under “Audit Fees.” These services include attest services that are not required by statute
or regulation and consultations concerning financial accounting and reporting standards. We did not pay Marcum for consultations concerning
financial accounting and reporting standards for the year ended December 31, 2022 and for the period from March 11, 2021 (inception) through
December 31, 2021.
Tax Fees. During the year ended December 31, 2022, our independent registered
public accounting firms did not render services to us for tax compliance, tax advice and tax planning.
All Other Fees. During the period from
March 11, 2021 (inception) through December 31, 2022, there were no fees billed for products and services provided by our independent
registered public accounting firm other than those set forth above.
Pre-Approval Policy
Our Audit Committee was formed upon the consummation
of our IPO. As a result, the Audit Committee did not pre-approve all of the foregoing services, although any services rendered prior to
the formation of our Audit Committee were approved by our board of directors. Since the formation of our Audit Committee, and on a going-forward
basis, the Audit Committee has and will pre-approve all auditing services and permitted non-audit services to be performed for us by our
auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange
Act which are approved by the Audit Committee prior to the completion of the audit).
PART
IV
ITEM 15. Exhibits, Financial Statement Schedules
(a) The following documents are filed as part of this Form 10-K:
| |
(2) |
Financial Statement Schedules: |
None.
We hereby file as part of this Report the exhibits
listed in the attached Exhibit Index. Exhibits which are incorporated herein by reference can be inspected and copied at the public reference
facilities maintained by the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Copies of such material can also be obtained
from the Public Reference Section of the SEC, 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates or on the SEC website at
www.sec.gov.
| Exhibit No. |
|
Description |
| 1.1 |
|
Underwriting Agreement, dated November 9, 2022, by and between the Registrant and EF Hutton (incorporated by reference to Exhibit 1.1 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on November 15, 2022) |
| 3.1 |
|
Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on October 14, 2022) |
| 3.2 |
|
Certificate of Amendment (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on October 14, 2022) |
| 3.3 |
|
Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on November 15, 2022) |
| 3.4 |
|
Bylaws (incorporated by reference to Exhibit 3.4 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on October 14, 2022) |
| 3.5 |
|
Amended and Restated Bylaws (incorporated by reference to Exhibit 3.5 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on October 14, 2022) |
| 4.1 |
|
Specimen Unit Certificate (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on October 14, 2022) |
| 4.2 |
|
Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on October 14, 2022) |
| 4.3 |
|
Specimen Rights Certificate (incorporated by reference to Exhibit 4.3 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on October 14, 2022) |
| 4.4 |
|
Specimen Warrants Certificate (incorporated by reference to Exhibit 4.4 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on October 14, 2022) |
| 4.5 |
|
Rights Agreement, dated November 9, 2022, by and between Continental Stock Transfer & Trust Company and the Registrant (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on November 15, 2022) |
| 4.6 |
|
Warrants Agreement, dated November 9, 2022, by and between Continental Stock Transfer & Trust Company and the Registrant (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on November 15, 2022) |
| 4.7* |
|
Description of Securities |
| 10.1 |
|
Letter Agreements, dated November 9, 2022, by and between the Registrant and each of the initial stockholders, officers and directors of the Registrant (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on November 15, 2022) |
| 10.2 |
|
Investment Management Trust Agreement, dated November 9, 2022, by and between Continental Stock Transfer & Trust Company and the Registrant (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on November 15, 2022) |
| 10.3 |
|
Stock Escrow Agreement, dated November 9, 2022, among the Registrant, Continental Stock Transfer & Trust Company and the initial shareholders (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on November 15, 2022) |
| 10.4 |
|
Registration Rights Agreement, dated November 9, 2022, among the Registrant, Continental Stock Transfer & Trust Company and the initial shareholders (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on November 15, 2022) |
| 10.5 |
|
Indemnity Agreements, dated November 9, 2022, among the Registrant, and the directors and officers of the Registrant (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on November 15, 2022) |
| 10.6 |
|
Subscription Agreement, dated November 9, 2022, by and between the Company and Plutonian Investments LLC (incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on November 15, 2022) |
| 14 |
|
Code of Ethics (incorporated by reference to Exhibit 14 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on October 14, 2022) |
| 31.1* |
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to § 302 of the Sarbanes-Oxley Act of 2002 |
| 31.2* |
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to § 302 of the Sarbanes-Oxley Act of 2002 |
| 32.1* |
|
Certifications of Chief Executive Officer pursuant to 18 U.S.C 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 |
32.2* |
|
Certifications of Chief Financial Officer pursuant to 18 U.S.C 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 |
| 99.1 |
|
Form of Audit Committee Charter (incorporated by reference to Exhibit 99.1 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on October 14, 2022) |
| 99.2 |
|
Form of Nominating Committee Charter (incorporated by reference to Exhibit 99.2 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on October 14, 2022) |
| 99.3 |
|
Form of Compensation Committee Charter (incorporated by reference to Exhibit 99.3 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on October 14, 2022) |
| 101.INS* |
|
Inline XBRL Instance Document. |
| 101.SCH* |
|
Inline XBRL Taxonomy Extension Schema Document. |
| 101.CAL* |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.DEF* |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| 101.LAB* |
|
Inline XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE* |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| 104* |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
ITEM 16. FORM 10-K SUMMARY
Not Applicable.
SIGNATURES
Pursuant to the requirements of Section 13 or
15(d) of the Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| |
Plutonian Acquisition Corp. |
| |
|
|
| Dated: April 14, 2023 |
By: |
/s/ Wei Kwang Ng |
| |
Name: |
Wei Kwang Ng |
| |
Title: |
Chief Executive Officer |
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
Pursuant to the requirements of the Securities
Act of 1933, this report has been signed below by the following persons in the capacities and on the dates indicated.
| Signature |
|
Title |
|
Date |
| |
|
|
|
|
| /s/ Wei Kwang Ng |
|
Chief Executive Officer. President and Director |
|
April 14, 2023 |
| Wei Kwang Ng |
|
(Principal Executive Officer) |
|
|
| |
|
|
|
|
| /s/ Ke Wang |
|
Chief Financial Officer |
|
April 14, 2023 |
| Ke Wang |
|
(Principal Accounting and Financial Officer) |
|
|
| |
|
|
|
|
| /s/ Sze Wai Lee |
|
Director |
|
April 14, 2023 |
| Sze Wai Lee |
|
|
|
|
| |
|
|
|
|
| /s/ Robert M. Annis |
|
Director |
|
April 14, 2023 |
| Robert M. Annis |
|
|
|
|
| |
|
|
|
|
| /s/ Harry Harnett |
|
Director |
|
April 14, 2023 |
| Harry Harnett |
|
|
|
|
EXHIBIT INDEX
| Exhibit No. |
|
Description |
| 1.1 |
|
Underwriting Agreement, dated November 9, 2022, by and between the Registrant and EF Hutton (incorporated by reference to Exhibit 1.1 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on November 15, 2022) |
| 3.1 |
|
Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on October 14, 2022) |
| 3.2 |
|
Certificate of Amendment (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on October 14, 2022) |
| 3.3 |
|
Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on November 15, 2022) |
| 3.4 |
|
Bylaws (incorporated by reference to Exhibit 3.4 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on October 14, 2022) |
| 3.5 |
|
Amended and Restated Bylaws (incorporated by reference to Exhibit 3.5 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on October 14, 2022) |
| 4.1 |
|
Specimen Unit Certificate (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on October 14, 2022) |
| 4.2 |
|
Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on October 14, 2022) |
| 4.3 |
|
Specimen Rights Certificate (incorporated by reference to Exhibit 4.3 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on October 14, 2022) |
| 4.4 |
|
Specimen Warrants Certificate (incorporated by reference to Exhibit 4.4 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on October 14, 2022) |
| 4.5 |
|
Rights Agreement, dated November 9, 2022, by and between Continental Stock Transfer & Trust Company and the Registrant (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on November 15, 2022) |
| 4.6 |
|
Warrants Agreement, dated November 9, 2022, by and between Continental Stock Transfer & Trust Company and the Registrant (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on November 15, 2022) |
| 4.7* |
|
Description of Securities |
| 10.1 |
|
Letter Agreements, dated November 9, 2022, by and between the Registrant and each of the initial stockholders, officers and directors of the Registrant (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on November 15, 2022) |
| 10.2 |
|
Investment Management Trust Agreement, dated November 9, 2022, by and between Continental Stock Transfer & Trust Company and the Registrant (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on November 15, 2022) |
| 10.3 |
|
Stock Escrow Agreement, dated November 9, 2022, among the Registrant, Continental Stock Transfer & Trust Company and the initial shareholders (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on November 15, 2022) |
| 10.4 |
|
Registration Rights Agreement, dated November 9, 2022, among the Registrant, Continental Stock Transfer & Trust Company and the initial shareholders (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on November 15, 2022) |
| 10.5 |
|
Indemnity Agreements, dated November 9, 2022, among the Registrant, and the directors and officers of the Registrant (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on November 15, 2022) |
| 10.6 |
|
Subscription Agreement, dated November 9, 2022, by and between the Registrant and Plutonian Investments LLC (incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on November 15, 2022) |
| 14 |
|
Code of Ethics (incorporated by reference to Exhibit 14 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on October 14, 2022) |
| 31.1* |
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to § 302 of the Sarbanes-Oxley Act of 2002 |
| 31.2* |
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to § 302 of the Sarbanes-Oxley Act of 2002 |
| 32.1* |
|
Certifications of Chief Executive Officer pursuant to 18 U.S.C 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 |
32.2* |
|
Certifications of Chief Financial Officer pursuant to 18 U.S.C 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 |
| 99.1 |
|
Form of Audit Committee Charter (incorporated by reference to Exhibit 99.1 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on October 14, 2022) |
| 99.2 |
|
Form of Nominating Committee Charter (incorporated by reference to Exhibit 99.2 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on October 14, 2022) |
| 99.3 |
|
Form of Compensation Committee Charter (incorporated by reference to Exhibit 99.3 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on October 14, 2022) |
| 101.INS* |
|
Inline XBRL Instance Document. |
| 101.SCH* |
|
Inline XBRL Taxonomy Extension Schema Document. |
| 101.CAL* |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.DEF* |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| 101.LAB* |
|
Inline XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE* |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| 104* |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
PLUTONIAN ACQUISITION CORP.
INDEX TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Shareholders and Board of Directors of
Plutonian Acquisition Corp.
Opinion on the Financial Statements
We have audited the accompanying balance sheet
of Plutonian Acquisition Corp. (the “Company”) as of December 31, 2022, the related statements of operations, changes in stockholders’
equity (deficit) and cash flows for the year ended December 31, 2022, and the related notes (collectively referred to as the “financial
statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company
as of December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with
accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company believes that it will
not have sufficient working capital and borrowing capacity to complete a business combination. If the Company does not complete a business
combination by August 15, 2023 (unless the Company extends the time to complete a Business Combination), it will be required to cease
all operations, except for the purpose of liquidating. These conditions raise substantial doubt about the Company's ability to continue
as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We
are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ Marcum llp
Marcum llp
We have served as the Company’s auditor since 2022 (such date
takes into account the acquisition of certain assets of Friedman LLP by Marcum LLP effective September 1, 2022)
East Hanover, New Jersey
April 14, 2023
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Board of Directors and Stockholder of
Plutonian Acquisition Corporation
Opinion on the Financial Statements
We have audited the accompanying balance sheet
of Plutonian Acquisition Corporation (the “Company”) as of December 31, 2021, the related statements of operations, changes
in stockholder’s equity and cash flows for the period from March 11, 2021 (inception) through December 31, 2021, and the related
notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in
all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows
for the period from March 11, 2021 (inception) through December 31, 2021, in conformity with accounting principles generally accepted
in the United States of America.
Explanatory Paragraph — Going Concern
The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, its business
plan is dependent on the completion of a financing and the Company’s cash and working capital are not sufficient to complete its
planned activities. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s
plans in regard to these matters are also described in Notes 1 and 3. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our
audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, the audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/Friedman LLP
Friedman LLP
We have served as the Company’s auditor
from 2022 through 2022.
New York, NY
May 19, 2022
PLUTONIAN ACQUISITION CORP.
BALANCE SHEETS
| | |
December 31,
2022 | | |
December 31,
2021 | |
| Assets | |
| | |
| |
| Current Assets | |
| | |
| |
| Cash | |
$ | 293,569 | | |
$ | 4,952 | |
| Prepaid expenses | |
| 178,713 | | |
| — | |
| Total Current Assets | |
| 472,282 | | |
| 4,952 | |
| | |
| | | |
| | |
| Prepaid expenses- non current | |
| 54,982 | | |
| — | |
| Investments held in Trust Account | |
| 58,778,053 | | |
| — | |
| Total Assets | |
$ | 59,305,317 | | |
$ | 4,952 | |
| | |
| | | |
| | |
| Liabilities, Temporary Equity, and Stockholders’ Equity (Deficit) | |
| | | |
| | |
| Current Liabilities | |
| | | |
| | |
| Accrued expenses | |
$ | 42,717 | | |
$ | — | |
| Franchise tax payable | |
| 7,138 | | |
| — | |
| Income tax payable | |
| 55,532 | | |
| — | |
| Due to related party | |
| — | | |
| 9,040 | |
| Total Current Liabilities | |
| 105,387 | | |
| 9,040 | |
| | |
| | | |
| | |
| Deferred underwriting fee payable | |
| 2,012,500 | | |
| — | |
| Total Liabilities | |
| 2,117,887 | | |
| 9,040 | |
| | |
| | | |
| | |
| Commitments and Contingencies | |
| | | |
| | |
| | |
| | | |
| | |
Common stock subject to possible redemption, $0.0001 par value; 15,000,000 shares authorized;
5,750,000 shares issued and outstanding at redemption value | |
| 53,564,527 | | |
| — | |
| | |
| | | |
| | |
| Stockholders’ Equity | |
| | | |
| | |
| Common stock, $0.0001 par value; 15,000,000 shares authorized; 1,761,125 (excluding 5,750,000 shares subject to possible redemption) and 0 shares issued and outstanding at December 31, 2022 and 2021, respectively | |
| 176 | | |
| — | |
| Additional paid-in capital | |
| 3,500,598 | | |
| — | |
| Retained earnings (Accumulated deficit) | |
| 122,129 | | |
| (4,088 | ) |
| Total Stockholders’ Equity (Deficit) | |
| 3,622,903 | | |
| (4,088 | ) |
| Total Liabilities, Temporary Equity, and Stockholders’ Equity (Deficit) | |
$ | 59,305,317 | | |
$ | 4,952 | |
The accompanying notes are an integral part of
these financial statements.
PLUTONIAN
ACQUISITION CORP.
STATEMENTS OF OPERATIONS
| | |
For
the
year ended
December 31, | | |
For the period from
March
11,
2021
(inception) through December 31, | |
| | |
2022 | | |
2021 | |
| | |
| | |
| |
| General and administrative expenses | |
$ | 82,691 | | |
$ | 4,088 | |
| Franchise tax expense | |
| 7,363 | | |
| — | |
| Loss from operations | |
| (90,054 | ) | |
| (4,088 | ) |
| | |
| | | |
| | |
| Interest earned on investment held in Trust Account | |
| 271,803 | | |
| — | |
| Income (loss) before income taxes | |
| 181,749 | | |
| (4,088 | ) |
| | |
| | | |
| | |
| Income taxes provision | |
| (55,532 | ) | |
| — | |
| Net income (loss) | |
$ | 126,217 | | |
$ | (4,088 | ) |
| | |
| | | |
| | |
Basic and diluted weighted average shares outstanding, redeemable common stock | |
| 724,658 | | |
| — | |
| | |
| | | |
| | |
Basic and diluted net income per share, redeemable common stock | |
| 1.45 | | |
| — | |
| | |
| | | |
| | |
Basic and diluted weighted average shares outstanding, non-redeemable common stock | |
| 1,277,429 | | |
| — | |
| | |
| | | |
| | |
Basic and diluted net loss per share, non-redeemable common stock | |
$ | (0.72 | ) | |
$ | — | |
The accompanying notes are an integral part of
these financial statements.
PLUTONIAN
ACQUISITION CORP.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
For the Year Ended December 31, 2022
| | |
Common stock | | |
Additional
Paid-in | | |
Retained | | |
Total
Stockholders’ | |
| | |
Shares | | |
Amount | | |
Capital | | |
Earnings | | |
Equity | |
| Balance, January 1, 2022 | |
| — | | |
$ | — | | |
$ | — | | |
$ | (4,088 | ) | |
$ | (4,088 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Common stock issued to initial stockholders | |
| 1,437,500 | | |
| 144 | | |
| 24,856 | | |
| — | | |
| 25,000 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Sale of public units in initial public offering | |
| 5,750,000 | | |
| 575 | | |
| 57,499,425 | | |
| — | | |
| 57,500,000 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Sale of private placement units | |
| 266,125 | | |
| 26 | | |
| 2,661,224 | | |
| — | | |
| 2,661,250 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Issuance of representative shares | |
| 57,500 | | |
| 6 | | |
| 555,444 | | |
| — | | |
| 555,450 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Underwriter commissions | |
| — | | |
| — | | |
| (2,587,500 | ) | |
| — | | |
| (2,587,500 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Offering costs | |
| — | | |
| — | | |
| (1,088,899 | ) | |
| — | | |
| (1,088,899 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Reclassification of common stock subject to redemption | |
| (5,750,000 | ) | |
| (575 | ) | |
| (51,993,024 | ) | |
| — | | |
| (51,993,599 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Accretion of common stock to redemption value | |
| — | | |
| — | | |
| (1,570,929 | ) | |
| — | | |
| (1,570,929 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income for the year | |
| — | | |
| — | | |
| — | | |
| 126,217 | | |
| 126,217 | |
| Balance as of December 31, 2022 | |
| 1,761,125 | | |
$ | 176 | | |
$ | 3,500,598 | | |
$ | 122,129 | | |
$ | 3,622,903 | |
For the Period From March 11, 2021 (Inception) Through December
31, 2021
| | |
Common Stock | | |
Additional
Paid-In | | |
Accumulated | | |
Total
Stockholder’s | |
| | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Equity | |
| Balance as of March 11, 2021 (inception) | |
| — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net loss | |
| — | | |
| — | | |
| — | | |
| (4,088 | ) | |
| (4,088 | ) |
| Balance as of December 31, 2021 | |
| — | | |
$ | — | | |
$ | — | | |
$ | (4,088 | ) | |
$ | (4,088 | ) |
The accompanying notes are an integral part of
these financial statements.
PLUTONIAN
ACQUISITION CORP.
STATEMENTS OF CASH FLOWS
| | |
For the
year ended
December 31,
2022 | | |
For the
period
from
March 11,
2021
(inception)
through
December 31,
2021 | |
| Cash flows from operating activities: | |
| | |
| |
| Net income (loss) | |
$ | 126,217 | | |
$ | (4,088 | ) |
| Adjustments to reconcile net income (loss) to cash used in operating
activities: | |
| | | |
| | |
| Interest earned on investment held in Trust Account | |
| (271,803 | ) | |
| — | |
| Changes in current assets and current liabilities: | |
| | | |
| | |
| Prepaid expenses | |
| (233,695 | ) | |
| — | |
| Accrued expenses | |
| 42,717 | | |
| — | |
| Franchise tax payable | |
| 7,138 | | |
| | |
| Income tax payable | |
| 55,532 | | |
| | |
| Net cash used in operating activities | |
| (273,894 | ) | |
| (4,088 | ) |
| | |
| | | |
| | |
| Cash Flows from Investing Activities: | |
| | | |
| | |
| Purchase of investment held in Trust Account | |
| (58,506,250 | ) | |
| — | |
| Net cash used in investing activities | |
| (58,506,250 | ) | |
| — | |
| | |
| | | |
| | |
| Cash Flows from Financing Activities: | |
| | | |
| | |
| Proceeds from issuance of founder shares to the initial stockholders | |
| 25,000 | | |
| — | |
| Proceeds from sale of public units through public offering | |
| 57,500,000 | | |
| — | |
| Proceeds from sale of private placement units | |
| 2,661,250 | | |
| — | |
| Proceeds from issuance of promissory note | |
| 200,000 | | |
| — | |
| Advance from related party | |
| — | | |
| 9,040 | |
| Repayment of advance from related party | |
| (9,040 | ) | |
| — | |
| Prepayment of promissory note | |
| (200,000 | ) | |
| — | |
| Payment of underwriters’ commissions | |
| (575,000 | ) | |
| — | |
| Payment of deferred offering costs | |
| (533,449 | ) | |
| — | |
| Net cash provided by financing activities | |
| 59,068,761 | | |
| 9,040 | |
| | |
| | | |
| | |
| Net change in cash | |
| 288,617 | | |
| 4,952 | |
| Cash, beginning of the period | |
| 4,952 | | |
| — | |
| Cash, end of the period | |
$ | 293,569 | | |
$ | 4,952 | |
| Supplemental Disclosure of Non-cash Financing Activities | |
| | | |
| | |
| Initial classification of common stock subject to redemption | |
$ | 51,993,599 | | |
$ | — | |
| Deferred underwriting fee payable | |
$ | 2,012,500 | | |
$ | — | |
| Accretion of Common stock to redemption value | |
$ | 1,570,929 | | |
$ | — | |
The accompanying notes are an integral part of
these financial statements.
PLUTONIAN ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Note 1 — Description of Organization and Business Operations
Plutonian Acquisition Corp. (the “Company”)
is a newly organized blank check company incorporated as a Delaware corporation on March 11, 2021. The Company was formed for the purpose
of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or
more businesses or entities (“Business Combination”). The Company is not limited to a particular industry or geographic region
for purposes of consummating a Business Combination.
As of December 31, 2022, the Company had not
commenced any operations. All activities through December 31, 2022 are related to the Company’s formation and the initial public
offering (“IPO” as defined below) and, subsequent to the IPO, identifying a target company for a Business Combination. The
Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will
generate non-operating income in the form of interest income from the proceeds derived from the IPO. The Company has selected December
31 as its fiscal year end.
The Company’s sponsor is Plutonian Investments
LLC, a Delaware limited liability company which is controlled by Mr. Guojian Zhang (the “Sponsor”).
The registration statement for the Company’s
IPO became effective on November 9, 2022. On November 15, 2022, the Company consummated the IPO of 5,750,000 units (the “Public
Units’), including the full exercise of the over-allotment option of 750,000 Units granted to the underwriters. The Public Units
were sold at an offering price of $10.00 per unit generating gross proceeds of $57,500,000. Simultaneously with the IPO, the Company
sold to its Sponsor 266,125 units at $10.00 per unit (the “Private Units”) in a private placement generating total gross
proceeds of $2,661,250, which is described in Note 5. Each Unit consists of one share of common stock of the Company, par value $0.0001
per share (the “Shares”), one redeemable warrant entitling its holder to purchase one Share at a price of $11.50 per Share,
and one right to receive one-sixth (1/6) of one share upon the consummation of the Company’s initial business combination.
Transaction costs amounted to $3,676,399,
consisted of $575,000 of underwriting fees, $2,012,500 of deferred underwriting fees (payable only upon completion of a Business
Combination) and $1,088,899 of other offering costs. Upon the closing of the IPO and the private placement on November 15, 2022, a
total of $58,506,250 was placed in a trust account (the “Trust Account”) maintained by Continental Stock Transfer &
Trust Company as a trustee and will be invested only in U.S. government treasury bills 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 of 1940, as amended (the
“Investment Company Act”), and that invest only in direct U.S. government treasury obligations. These funds will not be
released until the earlier of the completion of the initial Business Combination and the liquidation due to the Company’s
failure to complete a Business Combination within the applicable period of time. The proceeds deposited in the Trust Account could
become subject to the claims of the Company’s creditors, if any, which could have priority over the claims of the
Company’s public stockholders. In addition, interest income earned on the funds in the Trust Account may be released to the
Company to pay its income or other tax obligations. With these exceptions, expenses incurred by the Company may be paid prior to a
business combination only from the net proceeds of the IPO and private placement not held in the Trust Account.
Pursuant to Nasdaq listing rules, the Company’s
initial Business Combination must occur with one or more target businesses having an aggregate fair market value equal to at least 80%
of the value of the funds in the Trust account (excluding any deferred underwriting discounts and commissions and taxes payable on the
income earned on the Trust Account), which the Company refers to as the 80% test, at the time of the execution of a definitive agreement
for its initial Business Combination, although the Company may structure a Business Combination with one or more target businesses whose
fair market value significantly exceeds 80% of the trust account balance. If the Company is no longer listed on Nasdaq, it will not be
required to satisfy the 80% test. The Company will only complete a Business Combination if the post-transaction 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.
The Company will provide its holders of the outstanding
Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the
completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or
(ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct
a tender offer will be made by the Company, solely in its discretion. The Public Stockholders will be entitled to redeem their Public
Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.175 per Public Share, plus any
pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its franchise and income
tax obligations). The Public Shares subject to redemption will be recorded at a redemption value and classified as temporary equity upon
the completion of the IPO in accordance with the Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity.”
The Company will proceed with a Business Combination
if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and, if the Company seeks
stockholder approval, a majority of the shares of common stock voted are voted in favor of the Business Combination. If a stockholder
vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company
will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”),
conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file
tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction
is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem
shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally,
each Public Stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction.
If the Company seeks stockholder approval in connection with a Business Combination, the Company’s Sponsor and any of the Company’s
officers or directors that may hold Insider Shares (as defined in Note 5) (the “Initial Stockholders”) and the underwriters
have agreed (a) to vote their Insider Shares, Private Shares (as defined in Note 4), and any Public Shares purchased during or after
the IPO in favor of approving a Business Combination and (b) not to convert any shares (including the Insider Shares) in connection with
a stockholder vote to approve, or sell the shares to the Company in any tender offer in connection with, a proposed Business Combination.
The Initial Stockholders have agreed (a) to waive
their redemption rights with respect to the Insider Shares, Private Shares and Public Shares held by them in connection with the completion
of a Business Combination and (b) not to propose, or vote in favor of, an amendment to the Amended and Restated Certificate of Incorporation
that would affect the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company does not
complete a Business Combination, unless the Company provides the public stockholders with the opportunity to redeem their Public Shares
in conjunction with any such amendment.
The Company will have nine months (or up to 18
months) from the closing of the IPO to consummate a Business Combination (the “Combination Period”). If the Company anticipates
that it may not be able to consummate its initial Business Combination within nine months, it may, by resolution of the board if requested
by the Sponsor, extend the period of time to consummate a Business Combination up to nine times, each by an additional one month (for
a total of up to 18 months to complete a Business Combination), subject to the Sponsor depositing additional funds into the Trust Account
in the amount of $189,750 (or $0.033 per public share per month), up to an aggregate of $1,707,750 or $0.297 per public share (for an
aggregate of nine months), on or prior to the date of the applicable deadline, for each extension.
If the Company is unable to complete a Business
Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly
as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash,
equal to the aggregate amount then on deposit in the Trust Account including interest (which interest shall be net of taxes payable,
and less certain amount of interest to pay dissolution expenses) divided by the number of then outstanding Public Shares, which redemption
will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions,
if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of
the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to
the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
The Initial Stockholders have agreed to waive
their liquidation rights with respect to the Insider Shares and Private Shares if the Company fails to complete a Business Combination
within the Combination Period. However, if the Initial Stockholders acquire Public Shares in or after the IPO, such Public Shares will
be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination
Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account
in the event the Company does not complete a Business Combination within in the Combination Period and, in such event, such amounts will
be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the
event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than
$10.175.
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 third party (excluding the Company’s
independent registered public accounting firm) 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) $10.175 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 $10.175 per share due to reductions
in the value of the trust assets, in each case 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 the 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 underwriters of the IPO against
certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover,
in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the
extent of any liability for such third-party claims.
Going Concern Consideration
As of December 31, 2022, the Company had cash of $293,569 and a working
capital of $429,565 (excluding franchise tax and income tax payable). The Company has nine months (or up to 18 months if the time to complete
a business combination is extended as described herein) from the closing of the IPO to consummate a Business Combination. It is uncertain
that the Company will be able to consummate a Business Combination by this time. If a Business Combination is not consummated by this
date, there will be a mandatory liquidation and subsequent dissolution.
The Company expects to continue to incur significant
professional costs to remain as a publicly traded company and to incur significant transaction costs in pursuit of the consummation of
a Business Combination. The Company may need to obtain additional financing either to complete its Business Combination or because it
becomes obligated to redeem a significant number of public shares upon consummation of its Business Combination, in which case the Company
may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities
laws, the Company would only complete such financing simultaneously with the completion of our Business Combination. If the Company is
unable to complete its Business Combination because it does not have sufficient funds available, it will be forced to cease operations
and liquidate the Trust Account. In addition, following the Business Combination, if cash on hand is insufficient, the Company may need
to obtain additional financing in order to meet its obligations.
In connection with the Company’s assessment
of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”)
2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined
that if the Company is unable to complete a Business Combination by August 15, 2023 (unless the Company extends the time to complete a
Business Combination), then the Company will cease all operations except for the purpose of liquidating. The date for liquidation and
subsequent dissolution raises substantial doubt about the Company’s ability to continue as a going concern for a period of 12 months
from the issuance date of these financial statements. The financial statement does not include any adjustments that might result from
the outcome of this uncertainty.
Risks and Uncertainties
In March 2020, the World Health Organization
declared the outbreak of a novel coronavirus (“COVID-19”) as a pandemic which continues to spread throughout the United States
and the world. As of the date the financial statements were issued, there was considerable uncertainty around the expected duration of
this pandemic. Management continues to evaluate the impact of the COVID-19 pandemic and the Company has concluded that while it is reasonably
possible that COVID-19 could have a negative effect on identifying a target company for a Business Combination, the specific impact is
not readily determinable as of the date of the financial statements. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
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, or the operations of a target business with which the Company ultimately consummates a
Business Combination, may be materially and adversely affected. In addition, 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 financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Inflation Reduction Act of 2022
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.
At this time, it has been determined that none
of the IR Act tax provisions have an impact on the Company’s fiscal 2022 tax provision. The Company will continue to monitor for
updates to the Company’s business along with guidance issued with respect to the IR Act to determine whether any adjustments are
needed to the Company’s tax provision in future periods.
Note 2 — Significant Accounting Policies
Basis of Presentation
The accompanying financial statements are presented
in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to
the rules and regulations of the SEC. Accordingly, they include all of the information and footnotes required by GAAP. In the opinion
of management, all adjustments (consisting of normal accruals) considered for a fair presentation have been included.
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 auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and
proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder
approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means
that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an
emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This
may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company
nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential
differences in accounting standards used.
Use of Estimates
In preparing these financial statements in conformity
with U.S. GAAP, the Company’s management makes estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported expenses during the reporting
period.
Making estimates requires management to exercise
significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances
that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near
term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. The Company had $293,569 and $4,952 in cash
and none in cash equivalents as of December 31, 2022 and December 31, 2021, respectively.
Investments 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. government securities. The Company’s
investments held in the Trust Account are classified as trading securities. Trading securities are presented on the balance sheet at fair
value at the end of each reporting period. Gains and losses resulting from the change in fair value of investments held in Trust Account
are included in interest earned on marketable securities held in Trust Account in the accompanying statements of operations. The estimated
fair value of investments held in the Trust Account is determined using available market information.
Offering Costs
The Company complies with the requirements of FASB ASC Topic 340-10-S99-1,
“Other Assets and Deferred Costs – SEC Materials” (“ASC 340-10-S99”) and SEC Staff Accounting Bulletin Topic
5A, “Expenses of Offering”. Offering costs were $3,676,399 consisting principally of underwriting, legal, accounting and other
expenses that are directly related to the IPO and charged to stockholders’ equity upon the completion of the IPO on November 15,
2022.
Income Taxes
The Company follows the asset and liability method
of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the
estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances
are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. ASC 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 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 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 is subject to income tax examinations by major taxing authorities since inception.
The Company has identified the United States
as its only “major” tax jurisdiction.
The Company may be subject to potential examination
by federal and state taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing
and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s
management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Net Income (Loss) Per Share
The Company complies with accounting and disclosure
requirements of FASB ASC 260, Earnings Per Share. The statements of operations include a presentation of income (loss) per redeemable
share and income (loss) per non-redeemable share following the two-class method of income per share. In order to determine the net income
(loss) attributable to both the redeemable shares and non-redeemable shares, the Company first considered the undistributed income (loss)
allocable to both the redeemable shares and non-redeemable shares and the undistributed income (loss) is calculated using the total net
loss less any dividends paid. The Company then allocated the undistributed income (loss) ratably based on the weighted average number
of shares outstanding between the redeemable and non-redeemable shares. Any remeasurement of the accretion to redemption value of the
common shares subject to possible redemption was considered to be dividends paid to the public shareholders. As of December 31, 2022,
the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary
shares and then share in the earnings of the Company. As a result, diluted loss per share is the same as basic loss per share for the
period presented.
The net income (loss) per share presented in
the statements of operations is based on the following:
| | |
For
the
year ended
December 31,
2022 | | |
For the
period from
March 11,
2021
(inception) to December 31,
2021 | |
| Net income (loss) | |
$ | 126,217 | | |
$ | (4,088 | ) |
| Accretion of common stock to redemption value | |
| (1,570,929 | ) | |
| — | |
| Net loss including accretion of common stock to redemption value | |
$ | (1,444,712 | ) | |
$ | (4,088 | ) |
| | |
For the Year Ended | | |
For the Period
from March 11, 2021
(Inception)
through | |
| | |
December 31, 2022 | | |
December 31, 2021 | |
| | |
Redeemable
shares | | |
Non- redeemable
shares | | |
Redeemable
shares | | |
Non- redeemable
shares | |
| Basic and diluted net income (loss) per common stock | |
| | |
| | |
| | |
| |
| Numerator: | |
| | |
| | |
| | |
| |
| Allocation of net loss | |
$ | (522,915 | ) | |
$ | (921,797 | ) | |
$ | — | | |
$ | (4,088 | ) |
| Accretion of common stock to redemption value | |
| 1,570,929 | | |
| — | | |
| — | | |
| — | |
| Allocation of net income (loss) | |
$ | 1,048,014 | | |
$ | (921,797 | ) | |
$ | — | | |
$ | (4,088 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Denominator: | |
| | | |
| | | |
| | | |
| | |
Basic and diluted weighted average shares outstanding | |
| 724,658 | | |
| 1,277,429 | | |
| — | | |
| — | |
Basic and diluted net income (loss) per common stock | |
$ | 1.45 | | |
$ | (0.72 | ) | |
$ | — | | |
$ | — | |
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal
Depository Insurance Coverage of $250,000. The Company is not exposed to significant risks on such account as of December 31, 2022 and
December 31, 2021. As of 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
FASB ASC Topic 820 “Fair Value Measurements
and Disclosures” defines fair value, the methods used to measure fair value and the expanded disclosures about fair value measurements.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between the
buyer and the seller at the measurement date. In determining fair value, the valuation techniques consistent with the market approach,
income approach and cost approach shall be used to measure fair value. FASB ASC Topic 820 establishes a fair value hierarchy for inputs,
which represent the assumptions used by the buyer and seller in pricing the asset or liability. These inputs are further defined as observable
and unobservable inputs. Observable inputs are those that buyer and seller would use in pricing the asset or liability based on market
data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the inputs that
the buyer and seller would use in pricing the asset or liability developed based on the best information available in the circumstances.
The fair value hierarchy is categorized into
three levels based on the inputs as follows:
| |
Level 1 |
— |
Valuations based on unadjusted quoted
prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and
block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an
active market, valuation of these securities does not entail a significant degree of judgment. |
| |
Level 2 |
— |
Valuations based on (i) quoted prices in active markets
for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs
other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from or corroborated by market
through correlation or other means. |
| |
Level 3 |
— |
Valuations based on inputs that are unobservable and significant
to the overall fair value measurement. |
The fair value of the Company’s certain
assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures,”
approximates the carrying amounts represented in the consolidated balance sheet. The fair values of cash and cash equivalents, and other
current assets, accrued expenses, due to sponsor are estimated to approximate the carrying values as of December 31, 2022 and December 31,
2021 due to the short maturities of such instruments. See Note 8 for the disclosure of the Company’s assets and liabilities that
were measured at fair value on a recurring basis.
Warrants
The Company accounts for warrants (Public Warrants
or Private Warrants) as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific
terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC
815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition
of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including
whether the warrants are indexed to the Company’s own common shares and whether the warrant holders could potentially require “net
cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This
assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly
period end date while the warrants are outstanding.
For issued warrants that meet all of the criteria
for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance. For issued or modified
warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their
initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants
are recognized as a non-cash gain or loss on the statements of operations.
Common Stock Subject to Possible Redemption
The Company accounts for its common stock subject
to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Common
stock subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally
redeemable common stock (including common stock that feature redemption rights that is either within the control of the holder or subject
to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity.
At all other times, common stock is classified as stockholders’ equity. The Company’s common stock features certain redemption
rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly,
common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’
equity section of the Company’s balance sheet.
The Company has made a policy election in accordance
with ASC 480-10-S99-3A and recognizes changes in redemption value in additional paid-in capital (or accumulated deficit in the absence
of additional paid-in capital) over an expected 9-month period leading up to a Business Combination. As of December 31, 2022, the Company
recorded $1,570,929 total accretion of common stock to redemption value.
At December 31, 2022, the amount of common stock
subject to possible redemption reflected in the balance sheet are reconciled in the following table:
| Gross proceeds | |
$ | 57,500,000 | |
| Less: | |
| | |
| Proceeds allocated to public warrants | |
| (632,500 | ) |
| Proceeds allocated to public rights | |
| (1,322,500 | ) |
| Allocation of offering costs related to redeemable shares | |
| (3,551,402 | ) |
| Plus: | |
| | |
| Accretion of carrying value to redemption value | |
| 1,570,929 | |
| Common stock subject to possible redemption | |
$ | 53,564,527 | |
Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other
Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”)
to simplify 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. ASU 2020-06 is effective
January 1, 2024 for the Company 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 recently
issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial
statements.
Note 3 — Initial Public Offering
On November 15, 2022, the Company sold 5,750,000
Units at a price of $10.00 per Units (including the full exercise of the over-allotment option of 750,000 Units granted to the underwriters),
generating gross proceeds of $57,500,000. Each Unit consists of one share of common stock, one right (“Public Right”), and
one redeemable warrant (“Public Warrant”). Each Public Right will convert into one-sixth (1/6) of a share of common stock
upon the consummation of an initial Business Combination. Each Public Warrant entitles the holder to purchase one share of common stock
at a price of $11.50 per share, subject to adjustment, and each six rights entitle the holder thereof to receive one share of common
stock at the closing of an initial Business Combination. The Company will not issue fractional shares. As a result, Public Rights may
only be converted in multiples of six. The Warrants will become exercisable on the later of the 30 days after completion of the Company’s
initial Business Combination or 12 months from the closing of the IPO, and will expire five years after the completion of the Company’s
initial Business Combination or earlier upon redemption or liquidation.
Note 4 — Private Placement
Simultaneously with the closing of the IPO, The
Sponsor purchased an aggregate of 266,125 Private Units at a price of $10.00 per Private Unit for an aggregate purchase price of $2,661,250
in a private placement. The Private Units are identical to the Public Units except with respect to certain registration rights and transfer
restrictions. The Private Warrants will be identical to the Public Warrants, except that the Private Warrants will be entitled to registration
rights, and the Private Warrants (including the common shares issuable upon the exercise of the Private Warrants) will not be transferable,
assignable or salable until after the completion of a Business Combination, except to permitted transferees. The proceeds from the Private
Units were added to the proceeds from the IPO to be held in the Trust Account. If the Company does not complete a Business Combination
within nine months (or up to 18 months, as described in more detail in this prospectus), the proceeds from the sale of the Private Units
will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law), and the Private Units and all
underlying securities will expire worthless.
Note 5 — Related Party Transactions
Insider Shares
On February 20, 2022, the Company issued 1,437,500
shares of common stock to the Initial Stockholders (the “Insider Shares”) for an aggregated consideration of $25,000, or
approximately $0.017 per share. The Initial Stockholders have agreed to forfeit up to 187,500 Insider Shares to the extent that
the over-allotment option is not exercised in full so that the Initial Stockholders collectively own 20% of the Company’s issued
and outstanding shares after the IPO (assuming the Initial Stockholders do not purchase any Public Shares in the IPO and excluding the
Private Units). As a result of the underwriters’ full exercise of the over-allotment option on November 15, 2022, no Insider Share
were forfeited. As of December 31, 2022, 1,437,500 Insider Shares were issued and outstanding.
The Initial Stockholders have agreed not to transfer,
assign or sell any of their Insider Shares (except to certain permitted transferees) until the earlier of (1) 150 calendar days after
the date of the consummation of the Company’s initial Business Combination and the date on which the closing price of the Company’s
shares equals or exceeds $12.00 per share (as adjusted for share splits, share capitalizations, reorganizations and recapitalizations)
for any 20 trading days within any 30-trading day period commencing after the Company’s initial Business Combination or (2) six
months after the date of the consummation of the Company’s initial Business Combination, or earlier, in either case, if, subsequent
to the Company’s initial Business Combination, the Company consummates a liquidation, merger, stock exchange or other similar transaction
which results in all of the Company’s shareholders having the right to exchange their ordinary shares for cash, securities or other
property.
Promissory Note — Related Party
On February 20, 2022, the Sponsor agreed to loan
the Company up to an aggregate amount of $200,000 to be used, in part, for transaction costs incurred in connection with the IPO (the
“Promissory Note”). The Promissory Note is unsecured, interest-free and due on the closing of the IPO. The Company repaid
the outstanding balance of $200,000 to the Sponsor on November 29, 2022. As of December 31, 2022 and 2021, no amount was outstanding
under the Promissory Note.
Related Party Loans
In addition, in order to finance transaction costs
in connection with searching for a target business or consummating an intended initial Business Combination, the initial stockholders,
officers, directors or their affiliates may, but are not obligated to, loan us funds as may be required. In the event that the initial
Business Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay such
loaned amounts, but no proceeds from the Trust Account would be used for such repayment. Such loans would be evidenced by promissory notes.
The notes would either be paid upon consummation of the Company’s initial Business Combination, without interest, or, at the lender’s
discretion, up to $600,000 of the notes may be converted upon consummation of the Company’s Business Combination into Private Units
at a price of $10.00 per unit.
As of December 31, 2022, the Company had no borrowings
under the working capital loans.
Note 6 — Commitments and Contingencies
Registration Rights
The holders of the Company’s Insider Shares
issued and outstanding on the date of this prospectus, as well as the holders of the Private Units and any Private Units the Company’s
insiders, officers, directors, or their affiliates may be issued in payment of working capital loans and extension loans made to the
Company (and the securities underlying the Private Units) will be entitled to registration rights pursuant to an agreement. The holders
of a majority of these securities are entitled to make up to two demands that the Company register such securities. The holders of the
majority of the 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 stock are to be released from certain transfer restrictions. The holders of a majority of the Private
Units (including the Private Units issued in payment of working capital loans and extension loans made to the Company) 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 the initial Business Combination.
The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company has granted EF Hutton, division of
Benchmark Investments, LLC, the representative of the underwriters a 45-day option from the date of this offering to purchase up to 750,000
additional Units to cover over-allotments, if any, at the IPO price less the underwriting discounts and commissions. On November 15,
2022, the underwriters fully exercised the over-allotment option to purchase 750,000 units, generating gross proceeds to the Company
of $7,500,000 (see Note 3).
The underwriters were paid a cash underwriting
discount of 1.0% of the gross proceeds of the IPO, or $575,000. In addition, the underwriters are entitled to a deferred underwriting
fee of 3.5% of the gross proceeds of the IPO, or $2,012,500, which will be paid upon the closing of a Business Combination from the amounts
held in the Trust Account, subject to the terms of the underwriting agreement.
Additionally, the Company has committed to issue
the underwriters and/or its designees 57,500 shares of common stock or the representative shares, at the closing of the IPO as part of
representative compensation. As of November 15, 2022, 57,500 representative shares were issued.
Note 7 — Stockholders’ Equity
Common Stock — The Company
is authorized to issue 15,000,000 shares of common stock with a par value of $0.0001 per share. Holders of the common stock are entitled
to one vote for each share. At December 31, 2022, there were 1,761,125 shares of common stock issued and outstanding (excluding 5,750,000
shares subject to possible redemption).
Rights — Except in cases
where the Company is not the surviving company in a Business Combination, each holder of a right will automatically receive one-sixth
(1/6) of a share of common stock upon consummation of the Company’s initial Business Combination, even if the holder of such right
redeemed all shares of common stock held by it in connection with the initial Business Combination or an amendment to the Company’s
certificate of incorporation with respect to the Company’s pre-business combination activities. In the event the Company will not
be the surviving company upon completion of its initial Business Combination, each holder of a right will be required to affirmatively
convert its rights in order to receive the one-sixth (1/6) of a share underlying each right upon consummation of the Business Combination.
No additional consideration will be required to be paid by a holder of rights in order to receive its additional shares of common stock
upon consummation of an initial Business Combination. The shares issuable upon exchange of the rights will be freely tradable (except
to the extent held by affiliates of the Company). If the Company enters into a definitive agreement for a Business Combination in which
it will not be the surviving entity, the definitive agreement will provide for the holders of rights to receive the same per share consideration
the holders of the common stock will receive in the transaction on an as-converted into common stock basis.
The Company will not issue fractional shares
in connection with an exchange of rights. Fractional shares will either be rounded down to the nearest whole share or otherwise addressed
in accordance with the applicable provisions of the Delaware General Corporation Law. As a result, a holder must hold rights in multiples
of six in order to receive shares for all of its rights upon closing of a Business Combination. If the Company is unable to complete
an initial Business Combination within the required time period and it liquidates the funds held in the Trust Account, holders of warrants
and rights will not receive any of such funds with respect to their warrants and rights, nor will they receive any distribution from
the Company’s assets held outside of the Trust Account with respect to such warrants and rights, and the warrants and rights will
expire worthless. Further, there are no contractual penalties for failure to deliver securities to the holders of the rights upon consummation
of an initial Business Combination. Additionally, in no event will the Company be required to net cash settle the rights. Accordingly,
holders of the rights might not receive the shares of common stock underlying the rights.
Warrants — Each redeemable
warrant entitles the holder thereof to purchase one share of common stock at a price of $11.50 per share, subject to adjustment as described
in this prospectus. The warrants will become exercisable on the later of 30 days after the completion of an initial Business Combination
and 12 months from the closing of the IPO. However, no public warrants will be exercisable for cash unless the Company has an effective
and current registration statement covering the issuance of the common stock issuable upon exercise of the warrants and a current prospectus
relating to such common stock. Notwithstanding the foregoing, if a registration statement covering the issuance of the common stock issuable
upon exercise of the Public Warrants is not effective within 90 days from the closing of the Company’s initial Business Combination,
warrant holders may, until such time as there is an effective registration statement and during any period when we shall have failed
to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to an available exemption from registration
under the Securities Act. If an exemption from registration is not available, holders will not be able to exercise their warrants on
a cashless basis. In the event that holders are able to exercise their warrants on a “cashless basis,” each holder would
pay the exercise price by surrendering the warrants in exchange for that number of shares of common stock equal to the quotient obtained
by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied by the excess of the “fair
market value” (defined below) over the exercise price of the warrants by (y) the fair market value. The “fair market value”
for this purpose shall mean the average last reported sale price of the common stock for the 10 trading days ending on the third trading
day prior to the exercise date. The warrants will expire five years from the closing of the Company’s initial Business Combination
at 5:00 p.m., New York City time or earlier redemption.
In addition, if (x) the Company issues additional
shares of common stock or equity-linked securities for capital raising purposes in connection with the closing of the Company’s
initial Business Combination at an issue price or effective issue price of less than $9.20 per share (with such issue price or effective
issue price to be determined in good faith by the board of directors) (the “Newly Issued Price”), (y) the aggregate gross
proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of
the Company’s initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s
common stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummates its initial
Business Combination (such price, the “Market Price”) is below $9.20 per share, then the exercise price of the warrants will
be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Price and the Newly Issued Price, and the $18.00 per
share redemption trigger price described below will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market
Value and the Newly Issued Price.
The Company may redeem the outstanding warrants:
| |
● |
in whole and not in part; |
| | ● | at a price of $0.01 per warrant; |
| |
● |
upon a minimum of 30 days’ prior written notice of redemption,
which the Company refers to as the 30-day redemption period; |
| | ● | if, and only if, the last reported sale price of the Company’s common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the to the warrant holders. |
If the Company calls the Public Warrants for
redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless
basis,” as described in the warrant agreement. In such event, each holder would pay the exercise price by surrendering the warrants
in exchange for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares
of common stock underlying the warrants, multiplied by the excess of the “fair market value” (defined below) over the exercise
price of the warrants by (y) the fair market value. The “fair market value” for this purpose shall mean the average reported
last sale price of the common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of
redemption is sent to the holders of warrants.
Except as described above, no warrants will be
exercisable and the Company will not be obligated to issue common stock unless at the time a holder seeks to exercise such warrant, a
prospectus relating to the common stock issuable upon exercise of the warrants is current and the common stock has been registered or
qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants. Under the terms of
the warrant agreement, the Company has agreed to use its best efforts to meet these conditions and to maintain a current prospectus relating
to the common stock issuable upon exercise of the warrants until the expiration of the warrants. However, the Company cannot assure that
it will be able to do so and, if the Company does not maintain a current prospectus relating to the common stock issuable upon exercise
of the warrants, holders will be unable to exercise their warrants and the Company will not be required to settle any such warrant exercise.
If the prospectus relating to the common stock issuable upon the exercise of the warrants is not current or if the common stock is not
qualified or exempt from qualification in the jurisdictions in which the holders of the warrants reside, the Company will not be required
to net cash settle or cash settle the warrant exercise, the warrants may have no value, the market for the warrants may be limited and
the warrants may expire worthless.
The Private Warrants will be identical to the
Public Warrants, except that the Private Warrants will be entitled to registration rights, and the Private Warrants (including the common
shares issuable upon the exercise of the Private Warrants) will not be transferable, assignable or salable until after the completion
of a Business Combination, except to permitted transferees.
Note 8 — Fair Value Measurements
The fair value of the Company’s financial
assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale
of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the
measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of
observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions
about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and
liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
|
Level 1: |
Quoted prices in active markets for identical
assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur
with sufficient frequency and volume to provide pricing information on an ongoing basis. |
| |
|
|
|
Level 2: |
Observable inputs other than Level 1 inputs.
Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical
assets or liabilities in markets that are not active. |
| |
|
|
|
Level 3: |
Unobservable inputs based on our assessment of
the assumptions that market participants would use in pricing the asset or liability. |
The following table presents information about
the Company’s assets that are measured at fair value on a recurring basis at December 31, 2022 and indicates the fair value hierarchy
of the valuation inputs the Company utilized to determine such fair value. There were no marketable securities held in trust account at
December 31, 2021.
| | |
December 31,
2022 | | |
Quoted
Prices in
Active
Markets
(Level 1) | | |
Significant
Other
Observable
Inputs
(Level 2) | | |
Significant
Other
Unobservable
Inputs
(Level 3) | |
| Assets | |
| | |
| | |
| | |
| |
| Marketable securities held in trust account | |
| 58,778,053 | | |
| 58,778,053 | | |
| — | | |
| — | |
Note 9 — Income Taxes
The Company’s net deferred tax assets are
as follows:
| | |
December 31, | |
| | |
2022 | |
| Deferred tax asset | |
| |
| Net operating loss carryforward | |
$ | — | |
| Startup/Organization Expenses | |
| 17,365 | |
| Total deferred tax asset | |
| 17,365 | |
| Valuation allowance | |
| (17,365 | ) |
| Deferred tax asset, net of allowance | |
$ | — | |
The income tax provision consists of the following:
| | |
For the
Year
ended
December 31,
2022 | |
| Federal | |
| |
| Current | |
$ | 55,532 | |
| Deferred | |
| (17,365 | ) |
| State | |
| | |
| Current | |
$ | — | |
| Deferred | |
| — | |
| Change in valuation allowance | |
| 17,365 | |
| Income tax provision | |
$ | 55,532 | |
A reconciliation of the Company’s statutory
income tax rate to the Company’s effective income tax rate is as follows:
| | |
For the
Year
ended
December 31,
2022 | |
| Income at U.S. statutory rate | |
| 21.00 | % |
| State taxes, net of federal benefit | |
| 0.00 | % |
| Change in valuation allowance | |
| 9.55 | % |
| | |
| 30.55 | % |
As of December 31, 2022, the Company did not
have any U.S. federal and state net operating loss carryovers available to offset future taxable income.
In assessing the realization of the deferred
tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which
temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred
tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of
the information available, management believes that significant uncertainty exists with respect to future realization of the deferred
tax assets and has therefore established a full valuation allowance. The change in the valuation allowance was $17,365 for the year ended
December 31, 2022.
The provisions for U.S. federal and state income
taxes were $55,532 and $0 for the year ended December 31, 2022 and for the period from March 11, 2021 (inception) to December 31, 2021,
respectively. The Company’s tax returns for the years ended December 31, 2022 and 2021 remain open and subject to examination.
Note 10 — Subsequent Events
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that the financial statements were issued. Based on this review, the Company
did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.
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