NOTES
TO UNAUDITED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2022
NOTE
1 — NATURE OF THE ORGANIZATION AND BUSINESS
Hudson
Acquisition I Corp. (“Hudson” or the “Company”) was incorporated in the State of Delaware on January 13, 2021.
The Company’s business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization
or similar business combination with one or more businesses (our “Initial Business Combination”). The Company has selected
December 31 as its fiscal year end.
Throughout
this report, the terms “our,” “we,” “us,” and the “Company” refer to Hudson Acquisition
I Corp.
As of September 30, 2022, the Company had not
commenced core operations. All activity for the period from January 13, 2021 (inception) through September 30, 2022, relates to the Company’s
formation and raising funds through the proposed initial public offering (“Proposed Public Offering”), which is described
below. The Company will not generate any operating revenues until after the completion of an Initial Business Combination, at the earliest.
The Company will generate non-operating income in the form of interest income from the proceeds derived from the Proposed Public Offering.
The
Company’s ability to commence operations is contingent upon obtaining adequate financial resources through a Proposed Public Offering,
as further discussed in Note 4.
The
registration statement pursuant to which the Company is registering its securities offered in the Proposed Public Offering contemplated
the sale of 6,000,000 units (the “Units”) at a price to the public of $10.00 per Unit, resulting in total gross proceeds
of $60,000,000 (before underwriting discounts and commissions and offering expenses). Each Unit consists of one share of common stock
of the Company, par value $0.0001 per share (“Common Stock”) and one right to receive one-fifth (1/5) of a share of the Common
Stock upon the consummation of an Initial Business Combination (“Right”).
Net proceeds in the amount of $60,000,000,
or $69,000,000 if the over-allotment option is exercised in full, of which the Company received gross proceeds of $8,453,000
(before deducting certain underwriting discount and fees), part of which, or $8,283,940, was received on October 21, 2022, from the
Proposed Public Offering will be placed in a trust account in the United States maintained by Continental Stock Transfer & Trust
Company, as trustee. The funds held in the trust account will be invested only in United States government Treasury bills, bonds or
notes having a maturity of 185 days or less, or in money market funds meeting the applicable conditions under Rule 2a-7 promulgated
under the Investment Company Act and that invest solely in U.S. treasuries, so that we are not deemed to be an investment company
under the Investment Company Act. Except with respect to interest earned on the funds held in the trust account that may be released
to us to pay our income or other tax obligations, the proceeds will not be released from the trust account until the earlier of the
completion of a business combination or our liquidation. The proceeds held in the trust account may be used as consideration to pay
the sellers of a target business with which we complete our Initial Business Combination to the extent not used to pay converting
stockholders. Any amounts not paid as consideration to the sellers of the target business may be used to finance operations of the
target business.
No compensation of any kind (including finder’s,
consulting or other similar fees) will be paid to any of our existing officers, directors, stockholders, or any of their affiliates, prior
to, or for any services they render in order to effectuate, the consummation of the 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. Since the role of present management after our Initial Business Combination is uncertain, we have no ability to determine
what remuneration, if any, will be paid to those persons after our Initial Business Combination.
We
intend to use the excess working capital available for miscellaneous expenses such as paying fees to consultants to assist us with our
search for a target business and for director and officer liability insurance premiums, with the balance being held in reserve in the
event due diligence, legal, accounting and other expenses of structuring and negotiating business combinations exceed our estimates,
as well as for reimbursement of any out-of-pocket expenses incurred by our insiders, officers and directors in connection with activities
on our behalf as described below.
The allocation of the net proceeds available to
us outside of the trust account, along with the interest earned on the funds held in the trust account available to us to pay our income
and other tax liabilities, represents our best estimate of the intended uses of these funds. In the event that our assumptions prove to
be inaccurate, we may reallocate some of such proceeds within the above-described categories. If our estimate of the costs of undertaking
due diligence and negotiating our Initial Business Combination is less than the actual amount necessary to do so, or the amount of interest
available to us from the trust account is insufficient as a result of the current low interest rate environment, we may be required to
raise additional capital, the amount, availability and cost of which is currently unascertainable. In this event, we could seek such additional
capital through loans or additional investments from our Sponsor or third parties. Our Sponsor has agreed to loan us up to an aggregate
of $1,000,000 to be used for a portion of the expenses of the Proposed Public Offering pursuant to a Promissory Note. As of September
30, 2022 and December 31, 2021, we had borrowed $500,000 and $300,000, respectively, under the Promissory Note. These loans are non-interest
bearing, unsecured and are due at the earlier of June 30, 2023 or the closing of the Initial Business Combination. The loan may be prepaid
at any time out of the Proposed Public Offering proceeds not held in the trust account. Up to $1,000,000 of such loans may be convertible
into shares of common stock, at a price of $10.00 per share at the option of the lender. If we are unable to obtain the necessary funds,
we may be forced to cease searching for a target business and liquidate without completing our Initial Business Combination.
We will likely use substantially all of the net
proceeds of the Proposed Public Offering, including the funds held in the trust account, in connection with our Initial Business Combination
and to pay our expenses relating thereto, including the deferred underwriting discounts and commissions payable to the underwriters in
an amount equal to 5.5% of the total gross proceeds raised or $3,300,000 in the aggregate (or $3,795,000 if the underwriters’ over-allotment
option is exercised in full) in the Proposed Public Offering upon consummation of our Initial Business Combination. To the extent that
our capital stock is used in whole or in part as consideration to effect our Initial Business Combination, the proceeds held in the trust
account which are not used to consummate a business combination will be disbursed to the combined company and will, along with any other
net proceeds not expended, be used as working capital to finance the operations of the target business. Such working capital funds could
be used in a variety of ways including continuing or expanding the target business’ operations, for strategic acquisitions.
To
the extent we are unable to consummate a business combination, we will pay the costs of liquidation from our remaining assets outside
of the trust account. If such funds are insufficient, our Sponsor has agreed to pay the funds necessary to complete such liquidation
and has agreed not to seek repayment of such expenses.
Furthermore,
the Inflation Reduction Act of 2022 imposes a 1% excise tax on the repurchase of corporate stock (the “Excise Tax”) by a
publicly traded U.S. corporation following December 31, 2022. For purposes of the Excise Tax, a repurchase will generally include redemptions,
corporate buy-backs and other transactions in which the corporation acquires its stock from a shareholder in exchange for cash or property,
subject to exceptions for de minimis transactions and certain reorganizations. As a result, subject to certain rules, the Excise Tax
will apply to any redemption by a U.S.-domiciled special purpose acquisition company (“SPAC”) taking place after December
31, 2022, including redemptions (i) by shareholders in connection with the SPAC’s initial business combination or a proxy vote
to extend the lifespan of the SPAC, (ii) by SPACs if the SPAC does not complete a de-SPAC transaction within the required time set forth
in its constituent documents, or (iii) in connection with the wind-up and liquidation of the SPAC. The financial responsibility for such
Excise Tax resides with the Company and the Sponsor. This amount of 1% has not been included in this financial statement.
If no business combination is completed within
9 months from the closing of the Proposed Public Offering (or up to 15 months from the closing of the Proposed Public Offering if we
extend the period of time to consummate a business combination by the maximum amount), the proceeds then on deposit in the trust account
including interest earned on the funds held in the trust account and not previously released to us to pay our taxes (less $100,000 of interest
to pay dissolution expenses), will be used to fund the redemption of our public shares. Our Sponsor, directors, director nominees and
officers will enter into a letter agreement with us, pursuant to which they have agreed to waive their rights to liquidating distributions
from the trust account with respect to any founder shares held by them if we fail to complete our Initial Business Combination within
such time period.
In connection with the shares purchased by our
founders, the founders waive any and all right, title, interest or claim of any kind in or to any distributions by the Company from the
trust account which will be established for the benefit of the Company’s public stockholders and into which substantially all of
the proceeds of the Proposed Public Offering will be deposited (the “Trust Account”), in the event of a liquidation of the
Company upon the Company’s failure to timely complete an Initial Business Combination.
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 of 2002, 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 shareholder approval of any golden parachute payments not previously approved. Further, Section
102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards
until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a
class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.
The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply
to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended
transition period which means that when a standard is issued or revised and it has different application dates for public or private
companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the
new or revised standard. This may make comparison of the Company’s unaudited condensed financial statements with another public
company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition
period difficult or impossible because of the potential differences in accounting standards used.
Risks
and Uncertainties
Management continues to evaluate the impact of
the COVID-19 pandemic and Russia-Ukraine war on the economy and the capital markets and has concluded that, while it is reasonably possible
that such events could have negative effects on the Company’s financial position and outlook for an Initial Business Combination,
the specific impacts are not readily determinable as of the date of these financial statements. The financial statements do not include
any adjustments that might result from the outcome of these uncertainties
The current challenging economic climate may lead
to adverse changes in cash flows, working capital levels and/or debt balances, which may also have a direct impact on the Company’s
future operating results and financial position after any such Initial Business Combination in the future. The ultimate duration and magnitude
of the impact and the efficacy of government interventions on the economy and the financial effect on the Company is not known at this
time. The extent of such impact will depend on future developments, which are highly uncertain and not in the Company’s control.
NOTE
2 — BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying audited financial statements of the Company have been prepared in accordance with accounting principles generally accepted
in the United States of America (“U.S. GAAP”) for interim financial information and are unaudited. Certain information and
disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted. The unaudited
condensed balance sheets as of September 30, 2022, was derived from our audited financial statements but does not include all disclosures
required by US GAAP. Accordingly, these unaudited condensed financial statements should be read in conjunction with the Company’s
audited financial statements and related notes included in its Form S-1 Registration Statement, as amended, as filed with the Securities
and Exchange Commission on May 9, 2022. The results of operations for the three and nine months ended September 30, 2022, are not necessarily
indicative of the results for the year ending December 31, 2022 or for any future period.
These
financial statements are presented in U.S Dollars.
Significant
Accounting Policies
Use
of Estimates
The
preparation of financial statement in conformity with 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
statement and the reported amounts of revenues and expenses during the reporting period.
Making
estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of
a condition, situation or set of circumstances that existed at the date of the financial statement, 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.
As of September 30, 2022, we had no cash balances in bank deposit accounts that exceeded federally insured limits.
Deferred
Offering Costs
Deferred offering costs consist of professional
fees, filing, regulatory and other costs incurred through the balance sheet date that are directly related to the Proposed Public Offering.
As of September 30, 2022, $0.6 million in deferred offering costs were capitalized in anticipation of the Proposed Public Offering. These
costs will be charged to expense if the Proposed Public Offering is unsuccessful.
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 statement
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 September 30,
2022. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation
from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
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. As of September 30, 2022, the Company has not experienced
losses on this account and management believes the Company is not exposed to significant risks on such account.
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements
and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term
nature.
Fair
Value Measurements
Fair
value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction
between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets
or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
| ● | Level
1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments
in active markets; |
| ● | Level
2, defined as inputs other than quoted prices in active markets that are either directly
or indirectly observable such as quoted prices for similar instruments in active markets
or quoted prices for identical or similar instruments in markets that are not active; and |
| ● | Level
3, defined as unobservable inputs in which little or no market data exists, therefore requiring
an entity to develop its own assumptions, such as valuations derived from valuation techniques
in which one or more significant inputs or significant value drivers are unobservable. |
In
some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In
those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input
that is significant to the fair value measurement.
Common
Stock Subject to Possible Redemption
The
Company will account for its common stock subject to possible redemption in accordance with the guidance in ASC 480. 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. Upon the occurrence of the Company’s Proposed Public Offering the Company’s
common stock will feature 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 will be presented at redemption value and as temporary
equity, outside of the stockholders’ equity section of the Company’s balance sheets.
Net
Loss Per Share
Net
loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the reporting period.
Diluted earnings per share is computed similar to basic earnings per share, except the weighted average number of common shares outstanding
are increased to include additional shares from the assumed exercise of share options, if dilutive. There are no outstanding dilutive
or potentially dilutive instruments for all periods presented.
Recent
Accounting Pronouncements
In
June 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-03,
Fair Value Measurement (Topic 820) (“ASU 2022-03”). The amendments in ASU 2022-03 clarify that a contractual restriction
on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered
in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual
sale restriction. The amendments in this Update also require additional disclosures for equity securities subject to contractual sale
restrictions. The provisions in this Update are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted.
The Company does not expect to early adopt this ASU. The Company is currently evaluating the impact of adopting this guidance on the
consolidated balance sheets, results of operations and financial condition.
On
August 5, 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and
Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40, which simplifies the accounting for certain financial instruments
with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The
ASU’s amendments are effective for public business entities that are not smaller reporting companies in fiscal years beginning
after December 15, 2021, and interim periods within those fiscal years. For all other entities, fiscal years beginning after December
15, 2023, and interim periods within those fiscal years. The guidance may be early adopted for fiscal years beginning after December
15, 2020, and interim periods within those fiscal years. The Company is currently evaluating the impact of adopting this guidance and
does not expect to early adopt the provisions of this ASU.
Management
does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a
material effect on the Company’s financial statement.
NOTE
3 — GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS
As of September 30, 2022, the Company had cash
of $0.1 million and a working capital deficit of $0.6 million, exclusive of deferred offering costs. The Company’s liquidity needs
as of September 30, 2022, had been satisfied through proceeds from the issuance of common stock, related party payables and a related
party note payable.
The accompanying financial statements have been
prepared on the basis that the Company will continue as a going concern, which assumes the realization of assets and the satisfaction
of liabilities in the normal course of business. As of September 30, 2022, the Company had not commenced any operations. All activity
for the period from January 13, 2021 (inception) through September 30, 2022, relates to the Company’s formation and the Proposed
Public Offering. 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 on cash and cash equivalents from the proceeds
derived from its Proposed Public Offering. The Company’s ability to commence operations is contingent upon obtaining adequate financial
resources through the Proposed Public Offering. The Company’s management has broad discretion with respect to the specific application
of the net proceeds of the Proposed Public Offering, although substantially all of the net proceeds are intended to be applied generally
toward consummating a business combination. Although management has been successful to date in raising necessary funding, there can be
no assurance that any required future financing can be successfully completed. Based on these circumstances, management has determined
that these conditions raise substantial doubt about the Company’s ability to continue as a going concern.
Accordingly,
the accompanying financial statements have been prepared in conformity with U.S. GAAP, which contemplates continuation of the Company
as a going concern and the realization of assets and the satisfaction of liabilities in the normal course of business. The financial
statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE
4 — INITIAL PUBLIC OFFERING
Pursuant
to the Proposed Public Offering, the Company intends to offer for sale 6,000,000 units at a price of $10.00 per Unit for a total of
$60,000,000, or $69,000,000 if the over-allotment option is exercised in full, of which the Company received gross proceeds of
$8,453,000 (before deducting certain underwriting discount and fees), part of which, or $8,283,940, was received on October 21,
2022. Each Unit consists of one share of common stock and one right to receive 1/5 of a share of common stock (see Note
6).
NOTE
5 — RELATED PARTY TRANSACTIONS
Sponsor
Shares
On March 18, 2021, the Company’s sponsor,
Hudson SPAC Holding LLC (the “Sponsor”) was issued 2,875,000 shares (the “Founder Shares”) of the Company’s
common stock for an aggregate price of $25,000, which included up to 375,000 shares subject to forfeiture if the over-allotment option
was not exercised in full or in part by the underwriters (See Note 7).
The number of founder shares issued and outstanding
was determined based on the expectation that the founder shares would represent 20% of the outstanding shares after this Proposed Public
Offering. As such, our initial stockholders will collectively own 20% of our issued and outstanding shares after this Proposed Public
Offering (assuming they do not purchase any units in this Proposed Public Offering). Neither our Sponsor, officers or directors have expressed
an intention to purchase any units in this Proposed Public Offering. Up to an aggregate 375,000 Founder Shares were subject to forfeiture
by our Sponsor depending on the extent to which the underwriters’ over-allotment option is exercised so that our initial stockholders
will maintain ownership of 20% of our common stock after this Proposed Public Offering. We will effect a stock dividend or share contribution
prior to this Proposed Public Offering should the size of the Proposed Public Offering change, in order to maintain such ownership percentage.
On December 10, 2021, the Company entered into
an amended engagement agreement with the underwriter (the “Underwriter Addendum”) pursuant to which the Founder Shares were
reduced to 1,725,000, including over-allotment, with up to an aggregate 225,000 Founder Shares subject to forfeiture by our Sponsor depending
on the extent to which the underwriter’s over-allotment option is exercised so that our initial stockholders will maintain 20% of
our common stock after the Proposed Public Offering (see Note 6).
The
Founder Shares are identical to the shares of common stock included in the units being sold in the Proposed Public Offering, except that
the founder shares are subject to certain transfer restrictions.
Holders
of record of shares of the common stock and holders of founder shares will vote together on all matters submitted to a vote of our stockholders,
with each share of common stock entitling the holder to one vote except as required by law.
Related
Party Payables
The Company’s founders have paid expenses on behalf of the Company
totaling $122,645 as of September 30, 2022, and December 31, 2021, respectively. A total of $22,645 and $122,645 remained outstanding
as of September 30, 2022 and December 31, 2021, respectively. The payables bear no interest and have no specified repayment terms.
Promissory
Note — Related Party
On
April 5, 2021, the Company entered into a promissory note with Hudson SPAC Holding, LLC (its Sponsor) for principal amount up to $1,000,000.
The promissory note is non-interest bearing and matures on the earlier of: (i) June 30, 2023, or (ii) the date the Company consummates
an Initial Business Combination. The principal balance may be prepaid at any time. A maximum of $1,000,000 of such loans may be converted
into units, each unit comprised of one share of common stock and one right to receive one-fifth (1/5) of a share of the common stock,
at the price of $10.00 per share at the option of the lender.
On
May 6, 2021, the Company made a drawdown of $300,000 on the promissory note, which remained outstanding as of December 31, 2021.
On
April 15, 2022, the Company approved an additional drawdown of $100,000 on the promissory note to be applied as a payment to the related
party payable.
On
August 19, 2022, the Company made an additional drawdown of $100,000 on the related party promissory note.
Private
Placement Units — Related Party
Our
Sponsor, Hudson SPAC Holding, LLC, has agreed to purchase from us an aggregate of 340,000 units, each consisting of one share of our
common stock and a right to receive one-fifth (1/5) of one share of common stock, (the “Private Placement Units”) (or 371,500
units if the over-allotment option is exercised in full) at a price of $10 per unit ($3,400,000 in the aggregate, or $3,715,000 if the
over-allotment option is exercised in full), each Unit identical to the public unit except not being registered herein, in a private
placement that will close simultaneously with the closing of this Proposed Public Offering.
Administrative
Support Agreement
Commencing on the date of this prospectus, we
have agreed to pay our Sponsor or its affiliate a total of $20,000 per month for office space, utilities, and secretarial and administrative
support. Upon completion of our Initial Business Combination or our liquidation, we will cease paying these monthly fees.
NOTE
6 — COMMITMENTS AND CONTINGENCIES
Registration
Rights
The
holders of the (i) the founder shares, which were issued in a private placement prior to the closing of the Proposed Public Offering,
and (ii) private placement units, which will be issued in a private placement simultaneously with the closing of this the Proposed Public
Offering, will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective
date of the Proposed Public Offering. The holders of the majority of these securities are entitled to make up to three demands that the
Company register such securities. The holders of the majority of the founder shares can elect to exercise these registration rights at
any time commencing three months prior to the date on which the Founder Shares are to be released from escrow. 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.
Underwriting
Agreement
The
Company will grant the underwriters a 45-day option from the date of this prospectus to purchase up to 900,000 additional Units to
cover over-allotments, if any, at the Proposed Public Offering price less the underwriting discounts.
The underwriters will be entitled to a cash underwriting
discount of $0.55 per Unit, or $3,300,000 in the aggregate (or $3,795,000 in the aggregate if the underwriters’ over-allotment option
is exercised in full), payable upon the closing of the Proposed Public Offering. A total of $0.35 per unit sold in this Proposed Public
Offering, or $2,100,000 in the aggregate (or $2,415,000 in the aggregate if the underwriters’ option to purchase additional units
is exercised in full) payable to the Underwriter for deferred underwriting discounts will be placed in the Trust Account. The deferred
discounts will be released to the Underwriter only on and concurrently with completion of an Initial Business Combination.
On
December 10, 2021, the Company entered into the Underwriter Addendum to the March 14, 2021, underwriter engagement agreement. Pursuant
to the Underwriter Addendum the following material changes were put into effect:
| ● | The
engagement period between the Company and the underwriter was extended to the earlier of
(i) the close of the Initial Public Offering, (ii) the date that the underwriter ceases proceeding
in good faith with preparations for the Initial Public Offering, or (iii) December 1, 2022; |
| ● | The
Sponsor and the Company have decided to reduce the Initial Public Offering size to 6,000,000
Units at $10.00 per Unit for gross proceeds of $60,000,000 with the over-allotment option
equal to 15% of the total number of Units initially offered; |
| ● | The
Founders Shares will be reduced to 1,725,000, including over-allotment and the Sponsor will
forfeit up to 225,000 shares if the over-allotment is not exercised in full; |
| ● | The
underwriting discount will be 5.5% of the gross proceeds of the Initial Public Offering payable
in cash, of which 2% shall be paid at closing. In addition, the Company will issue at the
closing of the Initial Public Offering 138,000 additional representative shares (“Representative
Shares”), including over-allotment. If the over-allotment option is not exercised in
full, the Representative Shares will be reduced pro rata. Payment of 3.5% shall be deferred
until the consummation of an Initial Business Combination involving the Company; and |
| ● | The
Company will also sell to the underwriter at the time of the closing of the Initial Public
Offering for an aggregate of $100.00, an option (the “UPO”) to purchase 50,000
Units (or up to 57,500 Units if the underwriters exercise their over-allotment option in
full). The UPO will be exercisable at any time, in whole or in part, between the close of
the Initial Business Combination and fifth anniversary of the date of the Initial Public
Offering at a price per Unit equal to $11.50. The Company shall register the UPOs and the
securities underlying the UPOs with the registration statement for the Initial Public Offering. |
NOTE 7 — STOCKHOLDER’S EQUITY (DEFICIT)
Authorized
Shares
The
total number of shares of capital stock, par value of $0.0001 per share, which the Company is authorized to issue is 200,000,000 shares
of common stock. Except as otherwise required by law, the holders of the Common Stock shall exclusively possess all voting power with
respect to the Company.
Founder’s
Shares
At
inception, January 13, 2021, the Company issued 2,875,000 founder shares of common stock at a price of $0.01 per share for total receivable
of approximately of $25,000. These founder shares include up to 375,000 shares of which are subject to forfeiture by the stockholder
if the underwriters of the proposed initial public offering (“IPO”) of the Company, pursuant to the registration statement
on Form S-1 expected to be filed by the Company in connection with the IPO, do not fully exercise their over-allotment option.
On
May 11, 2021, the Company received the payment of $25,000 related to the stock subscriptions receivable from the Sponsor.
On
December 10, 2021, pursuant to the Underwriter Addendum, the aggregate number of Founder Shares were reduced to 1,725,000, including
over-allotment, with up to an aggregate 225,000 Founder Shares will be subject to forfeiture by our Sponsor depending on the extent to
which the underwriter’s over-allotment option is exercised so that our initial stockholders will maintain 20% of our common stock
after this offering (see Note 6).
Rights
Except in cases where we are not the surviving
company in a business combination, each holder of a public right will automatically receive one-fifth (1/5) of a share of common stock
upon consummation of our Initial Business Combination. In the event we will not be the surviving company upon completion of our Initial
Business Combination, each holder of a right will be required to affirmatively convert his, her or its rights in order to receive the
one-fifth (1/5) of a share underlying each right upon consummation of the business combination. We 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, you must hold rights in multiples of
10 in order to receive shares for all of your rights upon closing of a business combination. If we are unable to complete an Initial Business
Combination within the required time period and we redeem the public shares for the funds held in the trust account, holders of rights
will not receive any of such funds for their rights and the rights will expire worthless.
NOTE
8 — INCOME TAXES
The
Company accounts for income taxes under ASC 740 - Income Taxes (“ASC 740”), which provides for an asset and liability approach
of accounting for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax
consequences, using currently enacted tax laws, attributed to temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts calculated for income tax purposes.
The
Company has no deferred tax assets as of September 30, 2022 and December 31, 2021, respectively.
The
Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making
such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable
temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. The Company assessed
the need for a valuation allowance against its net deferred tax assets and determined a full valuation allowance is required because
it is more likely than not that 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 those temporary differences become deductible.
The
Company has evaluated its income tax positions and has determined that it does not have any uncertain tax positions. The Company will
recognize interest and penalties related to any uncertain tax positions through its income tax expense.
NOTE
9 — SUBSEQUENT EVENTS
The
Company has evaluated subsequent events through the date the financial statements are available to be issued. Other than below, there
are no subsequent events identified that would require disclosure in the financial statements.
Initial
Public Offering
On
October 18, 2022, the Company consummated its Initial Public Offering (“IPO”) and sold 6,000,000 units (the “Units”)
at a price to the public of $10.00 per Unit, resulting in total gross proceeds of $60,000,000 (before underwriting discounts and commissions
and offering expenses). Each Unit consisted of one share of common stock of the Company, par value $0.0001 per share (“Common Stock”)
and one right to receive one-fifth (1/5) of a share of the Common Stock upon the consummation of an Initial Business Combination (“Right”).
Private
Placement
Simultaneously
with the closing of the IPO, the Sponsor should have purchased a total of 340,000 units (the “Initial Private Placement Units”)
at a price of $10.00 per the Initial Private Placement Unit (the “Private Placement”). However, on October 18, 2022, simultaneously
with the consummation of the IPO, the Sponsor partially consummated the Private Placement by subscribing to 238,500 units (the “Purchased
Private Placement Units”) instead of the full Initial Private Placement Units, generating gross proceeds of approximately $2,385,000
instead of the full $3,400,000, part of the proceeds of which were placed in the Trust Account. The Trust Account was nonetheless fully-funded
as described in the prospectus filed in connection with the Offering. No underwriting discounts or commissions were paid with respect
to the Private Placement. The Purchased Private Placement Units are identical to the Units, except that (a) the Purchased Private Placement
Units and their component securities will not be transferable, assignable or saleable until 30 days after the consummation of the Company’s
Initial Business Combination except to permitted transferees and (b) the shares and rights included as a component of the Purchased Private
Placement Units, so long as they are held by the Sponsor or its permitted transferees, will be entitled to registration rights, respectively.
If we do not complete our Initial Business Combination within 15 months from the closing of the Initial Public Offering, the proceeds
from the sale of the Private Placement Units held in the Trust Account will be used to fund the redemption of our public shares (subject
to the requirements of applicable law) and the rights included as part of the Private Placement Units will expire worthless.
Subsequent to the IPO, on November 30, 2022, the
Company received an additional remittance of $515,000 underlying the Sponsor’s purchase of the Private Placement Units. On December
1, 2022, the Sponsor also confirmed their intent to convert the balance of the related party note held by the Sponsor, or $500,000 into
the balance of the amount needed for the Private Placement Units, resulting in the Sponsor’s payment of additional total consideration
of $1,015,000 to the Company for the Private Placement Units.
Overallotment Offering
On October 21, 2022, the Company closed the sale
of 845,300 Units at $10.00 per Unit as a result of the underwriters’ partial exercise of their over-allotment option (the “Overallotment
Offering”) in connection with the IPO and pursuant to the underwriting agreement by and between the Company and Chardan Capital
Markets, LLC dated October 14, 2022. As a result of the Overallotment Offering, the Company received gross proceeds of $8,453,000 (before
deducting certain underwriting discount and fees), part of which, or $8,283,940, was placed in the Trust Account.
On October 21, 2022, simultaneously with the consummation
of the Overallotment Offering, the Company completed the private placement of additional 31,500 units (the “Overallotment Private
Placement Units”) pursuant to the Unit Private Placement Agreement dated October 14, 2022 by and between the Company and the Sponsor,
in connection with the underwriters’ partial exercise of the over-allotment option, at a purchase price of $10.00 per Overallotment
Private Placement Unit, generating gross proceeds of $315,000, a portion of which, or $295,855, was placed in the Trust Account.
