NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2022
Note
1 – Description of Organization and Business Operations and Liquidity
Globalink
Investment Inc. (the “Company”) was incorporated in Delaware on March 24, 2021. The Company 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 (the “Business Combination”).
The
Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination. The Company
is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and
emerging growth companies.
As
of March 31, 2022, the Company had not commenced any operations. All activity through March 31, 2022, relates to the Company’s
formation and Initial Public Offering (“IPO”), which is described below and, since the offering, the search for a prospective
initial Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business
Combination, at the earliest. The Company will generate non-operating income in the form of interest income earned on investments from
the proceeds derived from the IPO. The registration statement for the Company’s IPO was declared effective on December 6, 2021.
On December 9, 2021, the Company consummated the IPO of 10,000,000
units (“Units”) at $10.00
per Unit generating gross proceeds of $100,000,000,
which is discussed in Note 3. The Company has selected December 31 as its fiscal year end.
Simultaneously
with the closing of the IPO, the Company consummated the sale of 517,500
units (“Private Placement Units”)
at a price of $10.00
per Private Placement Unit in a private placement
to Public Gold Marketing Sdn. Bhd, a Malaysian private limited company, an entity not affiliated with the Company, the sponsor or the
underwriters, generating gross proceeds of $5,175,000,
which is described in Note 4.
Additionally
with the closing of the IPO, the Company granted the underwriters a 45-day option to purchase up to 1,500,000
Units to cover over-allotment. On December
13, 2021, the underwriters fully exercised the option and purchased 1,500,000
additional Units (the “Over-allotment Units”),
generating additional gross proceeds of $15,000,000.
Simultaneously
with the exercise of the over-allotment, the Company consummated a private sale of an additional 52,500
Private Placement Units at a price of $10.00
per Private Placement Unit, generating additional
gross proceeds of $525,000.
Since the underwriters’ over-allotment was exercised in full, the sponsor did not forfeit any Founder Shares (as defined
in Note 5).
Offering
costs for the IPO and the exercise of the underwriters’ over-allotment option amounted to $6,887,896, consisting of $2,300,000
of underwriting fees, $4,025,000 of deferred underwriting fees payable (which are held in the Trust Account (defined below)) and
$562,896 of other costs. As described in Note 6, the $4,025,000 of deferred underwriting fee payable is contingent upon the
consummation of a Business Combination by March 9, 2023, subject to the terms of the underwriting agreement.
Following
the closing of the IPO, $116,725,000 ($10.15 per Unit) from the net proceeds of the sale of the Units in the IPO and the Private Placement
Units was placed in a trust account (“Trust Account”) and will be invested in U.S. government securities, within the meaning
set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity
of 180 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting
the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined by the Company, until
the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account, as described below.
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering
and the sale of the Private Placement Units, although substantially all of the net proceeds are intended to be applied generally toward
consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully.
The Company must complete one or more initial Business Combinations having an aggregate fair market value of at least 80%
of the assets held in the Trust Account excluding the deferred underwriting discounts and taxes payable on income earned on the
Trust Account at the time of the agreement to enter into the initial Business Combination. However, 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. There is no assurance the Company will be
able to successfully effect a Business Combination.
The
Company will provide the holders (the “Public Stockholders”) of the outstanding shares of common stock included
in the Units, or the Public Shares with the opportunity to redeem all or a portion of their
Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the
Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business
Combination or conduct a tender offer will be made by the Company. 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 $10.15
per Public Share, plus any pro rata interest
then in the Trust Account, net of taxes payable). There will be no redemption rights with respect to the Company’s warrants.
All
of the Public Shares contain a redemption feature which allows for the redemption of such Public Shares in connection with the Company’s
liquidation, if there is a stockholder vote or tender offer in connection with the Company’s Business Combination and in connection
with certain amendments to the Company’s amended and restated certificate of incorporation. In accordance with Financial Accounting
Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480-10-S99, redemption provisions not solely
within the control of a company require the Public Shares subject to redemption to be classified outside of permanent equity. Given that
the Public Shares will be issued with other freestanding instruments (i.e., public warrants and rights), the initial carrying value of
common stock classified as temporary equity will be the allocated proceeds determined in accordance with ASC 470-20. The Public Shares
are subject to ASC 480-10-S99. If it is probable that the equity instrument will become redeemable, the Company has the option to either
(i) accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that
the instrument will become redeemable, if later) to the earliest redemption date of the instrument or (ii) recognize changes in the redemption
value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting
period. The Company has elected to recognize the changes immediately. While redemptions cannot cause the Company’s net tangible
assets to fall below $5,000,001, the Public Shares are redeemable and are classified as such on the balance sheet until such date that
a redemption event takes place.
Redemptions
of the Company’s Public Shares may be subject to the satisfaction of conditions, including minimum cash conditions, pursuant to
an agreement relating to the Company’s Business Combination. If the Company seeks stockholder approval of the Business Combination,
the Company will proceed with a Business Combination if a majority of the shares voted are voted in favor of the Business Combination,
or such other vote as required by law or stock exchange rule. If a stockholder vote is not required by applicable law or stock exchange
listing requirements and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant
to its Certificate of Incorporation, conduct the redemptions pursuant to the tender offer rules of the 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 applicable law or stock exchange listing requirements, or the Company decides
to obtain stockholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation
pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with
a Business Combination, the sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased
during or after the IPO in favor of approving a Business Combination. Additionally, each Public Stockholder may elect to redeem their
Public Shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction.
Notwithstanding
the foregoing, the amended and restated certificate of incorporation of the Company (the “Certificate of Incorporation”)
provides that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder
is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15%
or more of the common stock sold in the Initial Public Offering, without the prior consent of the Company.
The
Company’s sponsor, officers and directors (the “Initial Stockholders”) have agreed not to propose an amendment
to the 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 shares of common stock in conjunction with any such amendment.
If
the Company is unable to complete a Business Combination by March 9, 2023, 15 months from the closing of the IPO (“Combination
Period”), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible
but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released
to us to pay the Company’s franchise and income taxes (less up to $100,000
of interest to pay dissolution expenses), divided
by the number of then outstanding Public Shares, which redemption will completely extinguish the 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 Founder Shares if the Company fails to complete
a Business Combination within the Combination Period. However, if the Initial Stockholders should acquire Public Shares in or after the
Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares
if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights
to deferred underwriting discounts (see Note 6) held in the Trust Account in the event the Company does not complete a Business
Combination within the Combination Period, and, in such event, such amounts will be included with the other funds held in the Trust Account
that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share
value of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.15
per share held in the Trust Account. In order
to protect the amounts held in the Trust Account, the sponsor has agreed to be liable to the Company if and to the extent any
claims by a vendor for services rendered or products sold to the Company, or a prospective target business with which the Company has
discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account. This liability will not apply with
respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held
in the Trust Account or to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against
certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover,
in the event that an executed waiver is deemed to be unenforceable against a third party, the sponsor will not be responsible
to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the sponsor will
have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except the Company’s
independent registered public accounting firm), prospective target businesses or other entities with which the Company does business,
execute agreements waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
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 still
considerable uncertainty around the expected duration of this pandemic. 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 this financial statement. The financial statement does not include any adjustments that might result from
the outcome of this uncertainty.
In
February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action,
various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further,
the impact of this action and related sanctions on the world economy are not determinable as of the date of these financial statements
and the specific impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as
of the date of these financial statements.
Liquidity
and Capital Resources
As
of March 31, 2022, the Company had $636,216 of cash held in escrow which is available to meet working capital needs, $116,726,356 in
securities held in the Trust Account to be used for a Business Combination or to repurchase or redeem its common stock in connection
therewith and working capital of $648,992.
Until
the consummation of a Business Combination, the Company will be using the funds not held in the Trust Account for identifying and evaluating
prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting
the target business to acquire, and structuring, negotiating and consummating the Business Combination. The Company will need to raise
additional capital through loans or additional investments from its sponsor, shareholders, officers, directors, or third parties.
The Company’s officers, directors and sponsor may, but are not obligated to, loan the Company funds, from time to time or
at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs. Accordingly,
the Company may not be able to obtain additional financing.
Note
2 — Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying financial statements of the Company are presented in conformity with accounting principles generally accepted in the United
States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC. Certain information or footnote disclosures
normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and
regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary
for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying
unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a
fair presentation of the financial position, operating results and cash flows for the periods presented. The accompanying unaudited condensed
consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, as filed with the
SEC on April 1, 2022. The interim results for the period presented are not necessarily indicative of the results to be expected for the
year ending December 31, 2022 or for any future interim periods.
Emerging
Growth Company
The
Company is an emerging growth company as defined in Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS
Act”), which 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 an emerging growth 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 that
is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult
or impossible because of the potential differences in accounting standards used.
Use
of Estimates
The
preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements. Making estimates requires management to exercise significant judgment. Such estimates may be subject to change as more current
information becomes available and accordingly the actual results could differ significantly from those estimates. 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. Actual results could differ from those estimates.
Cash
held in escrow
The
Company had $636,216 and $812,232 held in escrow on March 31, 2022 and December 31, 2021 respectively. This balance will be transferred
in whole as soon as practicable to the Company’s operating account.
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 no cash and did not have any cash equivalents as of March 31, 2022 and December 31, 2021.
Investments
Held in Trust Account
At
March 31, 2022 and December 31, 2021, substantially all of the assets held in the Trust Account were held in U.S. Treasury 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 values of investments held in Trust Account are determined using available market information.
Offering
Costs associated with the Initial Public Offering
Offering
costs consist principally of legal, accounting, underwriting fees and other costs directly related to the IPO and the over- allotment.
Offering costs amounted to $6,887,896 which was charged against additional paid-in capital upon the completion of the IPO in December
2021.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution,
which, at times, may exceed the Federal Depository Insurance Corporation coverage limit. At March 31, 2022 and December 31, 2021, the
Company has not experienced losses on these accounts.
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities which qualify as financial instruments under the FASB ASC 820, “Fair Value
Measurements and Disclosures,” approximate the carrying amounts represented in the accompanying balance sheet, primarily due to
their short-term nature.
Income
Taxes
The
Company complies with the accounting and reporting requirements of ASC 740, “Income Taxes,” which requires an asset and liability
approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences
between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based
on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances
are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
FASB
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. There were no unrecognized tax benefits as of March 31, 2022 or December
31, 2021. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts
were accrued for the payment of interest and penalties for the period March 24, 2021 (inception) to December 31, 2021 or for the three
months ended March 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
total provision (benefit) for income taxes is comprised of the following:
The
Company is incorporated in the State of Delaware and is required to pay franchise taxes to the State of Delaware on an annual basis.
The
total provision (benefit) for income taxes is comprised of the following:
Schedule of Income Tax Provision Benefit
| |
|
March 31, 2022 | | |
|
December 31, 2021 | |
| |
March 31, 2022 | | |
December 31, 2021 | |
Current expense | |
$ | - | | |
$ | - | |
Deferred expense | |
| (42,474 | ) | |
| (28,465 | ) |
Change in valuation allowance | |
| (42,474 | ) | |
| (28,465 | ) |
Total income tax expense (benefit) | |
$ | - | | |
$ | - | |
The
net deferred tax assets and liabilities in the accompanying balance sheets included the following components:
Schedule of Deferred Tax Assets And Liabilities Table
| |
|
March 31, 2022 | | |
|
December 31,2021 | |
| |
March 31, 2022 | | |
December 31,2021 | |
Deferred tax assets | |
| | | |
| | |
Start-up costs | |
$ | 43,032 | | |
$ | 10,793 | |
Net operating loss | |
| 27,907 | | |
| 17,672 | |
Total Deferred tax assets | |
| 70,939 | | |
| 28,465 | |
Deferred tax liabilities | |
| - | | |
| - | |
Valuation allowance for deferred tax assets | |
| (70,939 | ) | |
| (28,465 | ) |
Net deferred tax assets | |
$ | - | | |
$ | - | |
In
assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or 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 assets, projected future taxable income and tax planning strategies in making this assessment.
For the period ended March 31, 2022, the change in valuation allowance was $42,474.
A
reconciliation of the statutory federal income tax rate (benefit) to the Company’s effective tax rate is as follows:
Schedule of Effective Income Tax Rate Reconciliation
| |
|
March 31, 2022 | | |
|
December 31, 2021 | |
| |
March 31, 2022 | | |
December 31, 2021 | |
Statutory federal income tax rate | |
| 21.00 | % | |
| 21.00 | % |
State taxes, net of federal tax benefit | |
| 0.00 | % | |
| 0.00 | % |
Valuation allowance | |
| -21.00 | % | |
| -21.00 | % |
Income tax provision expense | |
| 0 | % | |
| 0 | % |
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.” Shares of common stock subject to mandatory redemption (if any) is classified as a liability instrument
and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are
either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s
control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s
common stock sold in the IPO and as a result of the exercise by the underwriters of their over-allotment option features certain
redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events.
Accordingly, on March 31, 2022 and December 31, 2021, 11,500,000
shares of common stock subject to possible redemption
were presented as temporary equity, outside of the stockholders’ deficit section of the Company’s balance sheet.
Immediately
upon the closing of the IPO and the over-allotment, the Company recognized the accretion from the initial book value to redemption
amount value. The change in the carrying value of redeemable shares of common stick resulted in charges against additional paid-in capital
and accumulated deficit.
At
March 31, 2022, and December 31, 2021, the common stock subject to possible redemption reflected in the balance sheet is reconciled
in the following table:
Schedule of Subject To Possible Redemption
| |
| | |
Gross proceeds | |
$ | 115,000,000 | |
Less: | |
| | |
Proceeds allocated to Public Warrants | |
| (11,695,950 | ) |
Common stock issuance costs | |
| (6,190,074 | ) |
Plus: Accretion of carrying value to redemption value | |
| 19,611,024 | |
Common stock subject to possible redemption | |
$ | 116,725,000 | |
Net
income (loss) per common stock
The
Company has one class of shares. Public Warrants (see Note 3) and Private Placement Warrants (see Note 4) to purchase 7,242,000 Common
Stock at $10 per share were issued on December 9, 2021. At March 31, 2022, no Public Warrants or Private Placement Warrants have been
exercised. The 7,242,000 potential shares of common stock for outstanding Public Warrants and Private Placement Warrants to purchase
the Company’s stock were excluded from diluted earnings per share for the period ended March 31, 2022 because they are contingently
exercisable, and the contingencies have not yet been met. As a result, diluted net loss per common stock is the same as basic net loss
per common stock for the period. The table below presents a reconciliation of the numerator and denominator used to compute basic and
diluted net loss per share for each class of stock.
Schedule of Net Loss Basic and Diluted Per Share
Basic and diluted net loss per share: | |
Redeemable | | |
Non-redeemable | |
For the three months ended March 31, 2022 | |
Common Stock | |
Basic and diluted net loss per share: | |
Redeemable | | |
Non-redeemable | |
NUMERATOR | |
| | | |
| | |
Allocation of net loss | |
$ | (155,638 | ) | |
$ | (46,623 | ) |
DENOMINATOR | |
| | | |
| | |
Weighted Average Shares Outstanding including common stock subject to redemption | |
| 11,500,000 | | |
| 3,445,000 | |
EPS | |
| | | |
| | |
Basic and diluted net income (loss) per share | |
$ | (0.01 | ) | |
$ | (0.01 | ) |
Accounting
for Warrants
The
Company accounts for the Public Warrants and Private Placement Warrants (as defined in Note 3 and Note 4) as either equity-classified
or liability-classified instruments based on an assessment of the instruments’ specific terms and applicable authoritative guidance
in ASC 480 and ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the instruments
are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the instruments
meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to the Company’s
own common shares and whether the instrument 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 instruments are
outstanding. As discussed in Note 7, the Company determined that upon further review of the warrant agreement the Public Warrants and Private Placement Warrants issued pursuant to the warrant agreement qualify for equity accounting treatment.
Recent
Accounting Pronouncements
The
Company’s management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently
adopted, would have a material effect on the Company’s financial statement.
Note
3 — Initial Public Offering and Over-allotment
Pursuant
to the IPO and the over-allotment in December 2021, the Company sold 11,500,000 units at a price of $10.00 per Unit. Each Unit consists
of one share of common stock, one redeemable warrant (each, a “Public Warrant”) and one right (“Public Right”).
Each Public Warrant entitles the holder to purchase one-half (1/2) of one share of common stock at a price of $11.50 per share, subject
to adjustment. Each Public right entitles the holder to receive one-tenth (1/10) of one share of common stock at the closing of a Business
Combination (see Note 7).
Note
4 — Private Placement
On
December 9, 2021 and December 13 2021, simultaneously with the consummation of the IPO and the underwriters’ exercise of
their over-allotment option, the Company consummated the issuance and sale (“Private Placement”) of 570,000
Private Placement Units in a private placement
transaction at a price of $10.00
per Private Placement Unit, generating gross
proceeds of $5,700,000.
Each whole Private Placement Unit consists of one share, one redeemable warrant (“Private Placement Warrant”)
and one right to receive one-tenth (1/10) of one share of common stock at the closing of a Business Combination. Each
whole Private Placement Warrant will be exercisable to purchase one-half of one share of common stock at a price of $11.50 per share. A portion of the proceeds from the Private Placement Units were added to the proceeds from the IPO to be held in the Trust Account.
If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement
Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law), and the Private Placement
Units and all underlying securities will be worthless.
Note
5 — Related Party Transactions
Founder
Shares
On
August 19, 2021, our sponsor purchased 2,875,000
shares (the “Founder Shares”) of
the Company’s common stock, par value $0.001,
for an aggregate price of $25,000.
The Founder Shares are
subject to certain transfer restrictions, as described in Note 7.
The
Initial Stockholders have agreed, subject to limited exceptions, that 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 the Company’s initial
Business Combination and the date on which 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 Founder 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.
Related
Party Loans
On
October 7, 2021, Lin Ding Jie, a member of the sponsor agreed to loan the Company an aggregate of up to $300,000
to cover expenses related to the IPO pursuant
to a promissory note (the “Note”). As of March 31, 2022 and December 31, 2021, the Company had no
borrowings under the Note.
In
addition, in order to finance transaction costs in connection with a Business Combination, the sponsor or an affiliate of the
sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may
be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company will repay the Working
Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid
only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion
of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used
to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined
and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business
Combination, without interest, or, at the lender’s discretion, up to $1.5
million of such Working Capital Loans may be
convertible into units of the post Business Combination entity at a price of $10.00
per unit. The units would be identical to the
Private Placement Units. As of March 31, 2022 and December 31, 2021, there were no
Working Capital Loans outstanding.
Support
Services
The
Company has entered into an administrative services agreement pursuant to which the Company will pay our sponsor a total of $ per
month for office space, administrative and support services. Upon completion of our initial Business Combination or our liquidation,
the Company will cease paying these monthly fees. As of March 31, 2022 and December 31, 2021, $37,000 and $7,000 respectively, have been
accrued under this arrangement and shown under “Due to affiliate” in the accompanying balance sheet.
Note
6 — Commitments and Contingencies
Registration
Rights
The
holders of Founder Shares, Private Placement Units and warrants that may be issued upon conversion of Working Capital Loans, if any,
will be entitled to registration rights (in the case of the Founder Shares, only after conversion of such shares to shares of common
stock) pursuant to a registration rights signed on the date of the prospectus for the IPO. These holders are entitled to certain
demand and “piggyback” registration rights. However, the registration rights agreement provides that the Company will not
permit any registration statement filed under the Securities Act to become effective until the termination of the applicable lock-up
period for the securities to be registered. The Company will bear the expenses incurred in connection with the filing of any such registration
statements.
Underwriting
Agreement
The
Company granted the underwriters a 45-day option from the final prospectus relating to the IPO to purchase up to 1,500,000 additional
Units to cover over-allotments, if any, at the IPO price less the underwriting discounts.
The
underwriters were paid a cash underwriting discount of $0.20
per unit on the offering including the Units
issued with the underwriter’s exercise of their over-allotment option, or $2,300,000
in the aggregate at the closing of the IPO. In
addition, the underwriters are entitled to deferred underwriting discounts of $0.35
per unit, or $4,025,000
from the closing of the IPO and the exercise
of the over-allotment option. The deferred discounts will become payable to the underwriters from the amounts held in the Trust
Account solely if the Company completes a Business Combination, subject to the terms of the underwriting agreement.
Note
7 — Stockholders’ Deficit
Common
stock
The
Company is authorized to issue 500,000,000 shares of common stock with a par value of $0.001 per share. As of March 31, 2022, and December
31, 2021, there were 3,445,000 (excluding 11,500,000 shares of common stock subject to possible redemption) shares of common stock issued
and outstanding.
Warrants:
As
of March 31, 2022 and December 31, 2021, the Company had 11,500,000 Public Warrants and 570,000 Private Placement Warrants outstanding.
The
Public Warrants are accounted for as an equity instrument in the Company’s financial statements. Public Warrants may only be exercised
for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants will become
exercisable on the later of the completion of an initial Business Combination and will expire five years after the completion of an initial
Business Combination, or earlier upon redemption. No Public Warrants will be exercisable for cash unless the Company has an effective
and current registration statement covering the common stock issuable upon exercise of the Public Warrants and a current prospectus relating
to such common stock. Notwithstanding the foregoing, if a registration statement covering the common stock issuable upon exercise of
the Public Warrants is not effective within a specified period following the consummation of a Business Combination, Warrant holders
may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain
an effective registration statement, exercise Warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the
Securities Act, provided that such exemption is available. If that exemption, or another exemption, is not available, holders will not
be able to exercise their Warrants on a cashless basis. The Public Warrants will expire five years after the completion of a Business
Combination or earlier upon redemption or liquidation.
Redemption
of warrants when the price per common stock equals or exceeds $16.50
Once
the warrants become exercisable, the Company may redeem the outstanding warrants (except as described herein with respect to the private
placement 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”;
and |
|
● |
if,
and only if, the last reported sale price (the “closing price”) of our common stock equals or exceeds $16.50 per share
(as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described under
the heading “Description of Securities—Warrants”) 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 warrant holders. |
The
Company will not redeem the warrants as described above unless an effective registration statement under the Securities Act covering
the common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those common stock is available
throughout the 30-day redemption period. If and when the warrants become redeemable by us, the Company may exercise our redemption right
even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
If
the Company calls the Public Warrants for redemption, 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.
The
Private Warrants will be identical to the Public Warrants underlying the Units being sold in the IPO, except that the Private Warrants
and the common stock issuable upon the exercise of the Private Warrants will not be transferable, assignable or saleable until after
the completion of a Business Combination, subject to certain limited exceptions.
The
exercise price and number of common stock issuable on exercise of the warrants may be adjusted in certain circumstances including in
the event of a share dividend, extraordinary dividend or our recapitalization, reorganization, merger or consolidation. However, the
warrants will not be adjusted for issuances of common stock at a price below their respective exercise prices. Additionally, in no event
will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the
Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds
with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account
with the respect to such warrants. Accordingly, the warrants may expire worthless.
In
addition, if the Company issues additional common stock or equity-linked securities for capital raising purposes in connection with the
closing of a Business Combination at an issue price or effective issue price of less than $9.50 per share of common stock (with such
issue price or effective issue price to be determined in good faith by the Company’s board of directors, and in the case of any
such issuance to the initial stockholders or their affiliates, without taking into account any Founder Shares held by them prior to such
issuance), (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 a Business Combination on the date of the consummation of a 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 Business Combination (such price, the “Market Value”) is below $9.50
per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 165% of the greater of (i) the Market
Value or (ii) the price at which the Company issues the additional common stock or equity-linked securities.
Rights
Except
in cases where the Company is not the surviving company in a Business Combination, each holder of a Public Right will automatically receive
one-tenth of one share of common stock upon consummation of a Business Combination, even if the holder of a Public Right converted all
shares held by him, her or it in connection with a Business Combination or an amendment to the Company’s Amended and Restated Certificate
of Incorporation with respect to its pre-business combination activities. In the event that the Company will not be the surviving company
upon completion of a Business Combination, each holder of a Public Right will be required to affirmatively convert his, her or its rights
in order to receive the one-tenth of a share underlying each Public Right upon consummation of the Business Combination.
The
Company will not issue fractional shares in connection with an exchange of Public Rights. Fractional shares will either be rounded down
to the nearest whole share or otherwise addressed in accordance with the applicable provisions of the Delaware General Corporation Law.
As a result, the holders of the Public Rights must hold rights in multiples of 10 in order to receive shares for all of the holders’
rights upon closing of a Business Combination.
Note
8 — Fair Value Measurements
The
fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would
have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction
between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company
seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable
inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is
used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and
liabilities:
Level
1: Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which
transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level
2: Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets
or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
Level
3: Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
At
March 31, 2022 and December 31, 2021, the assets held in the Trust Account were held in U.S. Treasury Securities. All of the Company’s
investments held in the Trust Account are classified as trading securities.
The
following table presents information about the Company’s liabilities that are measured at fair value on a recurring basis at March
31, 2022 and December 31, 2021 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such
fair value.
Schedule of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis
March
31, 2022
| |
| | |
Quoted Prices in Active Markets | | |
Significant Other Observable Inputs | | |
Significant Other Unobservable Inputs | |
| |
Level | | |
(Level 1) | | |
(Level 2) | | |
(Level 3) | |
| |
| | |
| | |
| | |
| |
Assets: | |
| | | |
| | | |
| | | |
| | |
U.S. Treasury Securities | |
| 1 | | |
$ | 116,726,356 | | |
| — | | |
| — | |
December
31, 2021
| |
| | |
Quoted Prices in Active Markets | | |
Significant Other Observable Inputs | | |
Significant Other Unobservable Inputs | |
| |
Level | | |
(Level 1) | | |
(Level 2) | | |
(Level 3) | |
| |
| | |
| | |
| | |
| |
Assets: | |
| | | |
| | | |
| | | |
| | |
U.S. Treasury Securities | |
| 1 | | |
$ | 116,725,099 | | |
| — | | |
| — | |
Note
9 — Subsequent Events
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to May xx, 2022, the date that
the financial statements were available to be issued has determined that there have been no events that have occurred that would require
adjustments to the disclosures of the financial statements.