The accompanying notes are an integral part of
these unaudited financial statements.
(1) This number for the period from February 19, 2021 (Inception)
through March 31, 2021 excludes an aggregate of up to 375,000 shares of Class B common stock subject to forfeiture if the over-allotment
option was not exercised in full by the underwriters (see Note 5).
Notes to Financial Statements (Unaudited)
NOTE 1 — DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Organization and General:
G3 VRM Acquisition Corp. (the “Company”)
was incorporated in Delaware for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization,
or similar business combination with one or more businesses (the “Business Combination”). The Company will focus initially
on transactions with companies and/or assets within the technology industry, specifically within software, technology-enabled and business
services sector, and related sectors. However, the Company is not limited to the technology industry, or these sectors therein, and the
Company may pursue a Business Combination opportunity in any business or industry it chooses, and it may pursue a company with operations
or opportunities outside of the United States.
Financing
As of March 31, 2022, the Company had not commenced
any revenue-generating operations. All activities through March 31, 2022 relate to the Company’s formation, the initial public offering
(“Initial Public Offering”) of units at $10.00 per unit (each, a “Unit” and collectively, the “Units”)
described below, and, since the closing of the Initial Public Offering, the search for a prospective initial Business Combination. The
Company will not generate any operating revenues until after completion of the Business Combination, at the earliest. The Company will
generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.
The registration statement for the Company’s
IPO (as described in Note 3) was declared effective on June 30, 2021. On July 6, 2021, the Company consummated the IPO consisting of 10,626,000
Units, including 626,000 Units pursuant to the partial exercise of the underwriter’s over-allotment option described below. Simultaneously
with the IPO, the Company completed the sale of 569,410 units (the “Private Placement Units”) at a price of $10.00
per unit in a private placement to G3 VRM Holdings LLC, a Delaware limited liability company and the Company’s sponsor (the “Sponsor”)
and Maxim Group LLC (“Maxim”) and their designees, that closed simultaneously with the Initial Public Offering. Each Unit
consists of one share of Class A common stock, and one right to receive one-tenth (1/10) of one share of Class A common stock upon consummation
of our initial Business Combination. The Company’s management has broad discretion with respect to the specific application of the
net proceeds of the Initial Public Offering and the Private Placement Units, although substantially all of the net proceeds are intended
to be generally applied toward consummating the Business Combination. Of the Class A common stock sold, 10,626,000 shares are subject
to redemption at $10.15 per share. On July 6, 2021, the Company issued Maxim, as representative
of the underwriters in the IPO, and/or its designees, 106,260 shares of Series A common stock. The Company estimated the fair
value of the stock to be $1,000 based on the price of the Founder Shares issued to the Sponsor. The stock was treated as underwriters’
compensation and charged directly to stockholders’ equity.
Trust Account
Offering will be held in a trust account (“Trust
Account”) and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company
Act, with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund meeting
the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company. Except with respect to interest earned on the
funds held in the Trust Account that may be released to the Company to pay its franchise and income tax obligations (less up to $100,000
of interest to pay dissolution expenses), the proceeds from the Initial Public Offering and the sale of the Private Placement Units will
not be released from the Trust Account until the earliest of: (a) the completion of the Business Combination; (b) the redemption of any
public shares properly submitted in connection with a stockholder vote to amend the Company’s certificate of incorporation; and
(c) the redemption of the Company’s public shares if the Company is unable to complete the Business Combination within 12 months
from the closing of the Initial Public Offering (or 15 or 18 months if the Company extends the period of time to consummate a Business
Combination, as described in more detail in this filing), subject to applicable law. The proceeds deposited in the Trust Account could
become subject to the claims of the Company’s creditors, if any, which could have priority over the claims of the Company’s
public stockholders.
Business Combination
The Company’s Business Combination must
be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account
(as defined above) (net of taxes payable) at the time of the signing an agreement to enter into the Business Combination. However, the
Company will only complete the Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding
voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register
as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). There is no
assurance that the Company will be able to successfully effect the Business Combination.
The Company will provide its public stockholders
with the opportunity to redeem all or a portion of their public shares upon the completion of the 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 proposed Business Combination or conduct a tender offer will be made by the
Company, solely in its discretion. The stockholders will be entitled to redeem their shares for a pro rata portion of the amount then
on deposit in the Trust Account (initially approximately $10.15 per share, plus any pro rata interest earned on the funds held in the
Trust Account and not previously released to the Company to pay its tax obligations).
The shares of common stock subject to redemption
will be recorded at a redemption value and classified as temporary equity upon the completion of the Initial Public Offering, in accordance
with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case,
the Company will proceed with the Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation
of the Business Combination and, if the Company seeks stockholder approval, a majority of the issued and outstanding shares voted are
voted in favor of the Business Combination.
The Company will have 12 months from the closing
of the Initial Public Offering (or 15 or 18 months if the Company extends the period of time to consummate a Business Combination, as
described in more detail in this filing) to consummate the Business Combination (the “Combination Period”). However, if the
Company is unable to complete the Business Combination within the Combination Period, the Company will redeem 100% of the outstanding
public shares for a pro rata portion of the funds held in the Trust Account, equal to the aggregate amount then on deposit in the Trust
Account including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its franchise
and income taxes, divided by the number of then outstanding public shares, subject to applicable law and as further described in this
registration statement of which this filing forms a part, and then seek to dissolve and liquidate.
The Sponsor, officers, and directors have agreed:
(i) to waive their redemption rights with respect to their founder shares and public shares in connection with the completion of the Business
Combination; (ii) to waive their redemption rights with respect to their founder shares and public shares in connection with a stockholder
vote to approve an amendment to the Company’s certificate of incorporation; and (iii) to waive their rights to liquidating distributions
from the Trust Account with respect to their founder shares if the Company fails to complete the Business Combination within the Combination
Period.
The Sponsor has agreed that it will be liable
to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective
target business with which the Company has entered into a written letter of intent, confidentiality or similar agreement, or business-combination
agreement, reduce the amount of funds in the Trust Account to below the lesser of: (i) $10.15 per public share; and (ii) the actual amount
per public share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.15 per share due to
reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third
party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not
such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriters of the Initial Public
Offering against certain liabilities, including liabilities under the Securities Act. However, the Company has not asked its Sponsor to
reserve for such indemnification obligations, nor has the Company independently verified whether its Sponsor has sufficient funds to satisfy
its indemnity obligations and believe that the Sponsor’s only assets are securities of the Company. Therefore, the Company cannot
assure that its Sponsor would be able to satisfy those obligations.
Liquidity and Capital Resources
As of March
31, 2022, the Company had cash outside the Trust Account of $605,010 available for its working capital needs. All remaining cash and securities
were held in the Trust Account and is generally unavailable for the Company’s use prior to an initial Business Combination and is
restricted for use either in a Business Combination or to redeem Class A shares. As of March 31, 2022, none of the amount on deposit in
the Trust Account was available to be withdrawn as described above.
Prior to
the completion of the IPO, the Company’s liquidity needs had been satisfied through receipt of $25,000 from the sale of Founder
Shares (see Note 5), advances from the Sponsor in an aggregate amount of $268,309 under an unsecured promissory note, which were
repaid upon the IPO (see Note 5). Subsequent to the consummation of the IPO and Private Placement, the Company’s liquidity needs
have been satisfied through the net proceeds from the IPO and Private Placement held outside of the Trust Account.
In addition,
in order to finance transaction costs in connection with a Business Combination, the Company’s Sponsor, initial stockholders, officers,
directors and their affiliates may, but are not obligated to, provide the Company Working Capital Loans, as defined below (see Note 5).
To date, there were no amounts outstanding under any Working Capital Loans.
Based on
the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity to meet its needs through
the earlier of the consummation of a Business Combination or one year from the issuance date of these financial statements. Over this
time period, the Company will be using these funds for paying existing accounts payable, identifying and evaluating prospective initial
Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting
the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.
Going Concern Consideration
The Company expects to incur significant costs in pursuit of its financing
and acquisition plans. In connection with the Company’s assessment of going concern considerations in accordance with Accounting
Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going
Concern,” management has determined that if the Company is unsuccessful in consummating an initial business combination within the
prescribed period of time from the closing of the IPO, the requirement that the Company cease all operations, redeem the public shares
and thereafter liquidate and dissolve raises substantial doubt about the ability to continue as a going concern. The balance sheet does
not include any adjustments that might result from the outcome of this uncertainty. Management has determined that the Company has funds
that are sufficient to fund the working capital needs of the Company until the consummation of an initial business combination or the
winding up of the Company as stipulated in the Company’s amended and restated memorandum of association. The accompanying financial
statement has been prepared in conformity with generally accepted accounting principles in the United States of America (“US GAAP”),
which contemplate continuation of the Company as a going concern.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements are presented
in conformity with accounting principles generally accepted in the US GAAP and pursuant to the rules and regulations of the U.S. Securities
and Exchange Commission (the “SEC”).
Emerging Growth Company Status
The Company is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart
our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting
requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being
required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations
regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding
advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that
when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging
growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison
of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth
company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting
standards used.
Use of Estimates
The preparation of financial statements in conformity
with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting
period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents
as of March 31, 2022.
Marketable Securities Held in the Trust
Account
As of March 31, 2022, the $107,867,715 held in the Trust Account were money market funds that invest in cash, U.S. Treasury bills,
notes, and other obligations issued or guaranteed as to principal and interest by the U.S. Treasury (See Note 6).
Class A Common Stock Ordinary Shares Subject
to Possible Redemption
The Company accounts
for its Class A common stock ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing
Liabilities from Equity.” Ordinary shares subject to mandatory redemption (if any) are classified as a liability instrument and
are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are
either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s
control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s
public shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence
of uncertain future events. Accordingly, as of March 31, 2022, a total of 10,626,000 Class A ordinary shares subject to possible redemption
are presented at redemption value of $10.15 per share as temporary equity, outside of the shareholders’ equity section of the
Company’s balance sheet. The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value
of redeemable ordinary shares to equal the redemption value at the end of each reporting period with a corresponding offset to accumulated
deficit.
Fair Value of Financial Instruments
The fair value of the Company’s assets and
liabilities approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.
Net Loss Per Common Share
Net loss per common share is computed by dividing
net loss by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares subject to forfeiture.
At March 31, 2022, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted
into shares and then share in the earnings of the Company. As a result, diluted loss per common share is the same as basic loss per common
share for the periods presented.
Recent Accounting Pronouncements
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
statements.
NOTE 3 — INITIAL PUBLIC OFFERING
On July 6, 2021, the Company consummated the Initial
Public Offering of 10,626,000 Units, including 626,000 Units pursuant to the partial exercise of the underwriter’s over-allotment
option described below. Each Unit consists of one share of Class A common stock, $0.0001 par value, and one right (“Right”)
to receive one-tenth (1/10) of a share of Class A common stock upon the consummation of an initial Business Combination. The Units were
sold at an offering price of $10.00 per Unit, generating gross proceeds of $106,260,000. The Company granted the underwriters a 45-day
option to purchase up to 1,500,000 additional Units to cover over-allotments, the unexercised portion of the over-allotment option expired.
As of July 6, 2021, a total of $107,853,900 of the net proceeds from the Initial Public Offering and the Private Placement were deposited
in a trust account established for the benefit of the Company’s public shareholders. The Company incurred a total of $6,199,570
of offering costs, including $3,719,100 of deferred underwriting payable, $2,217,589 paid by the Company including underwriter fees, and
$262,881 of offering costs paid by the Sponsor on the Company’s behalf and reimbursed by the Company following the IPO.
NOTE 4 — PRIVATE PLACEMENT
Simultaneous with the closing of the Initial Public
Offering on July 6, 2021, the Sponsor and Maxim and their designees purchased an aggregate of 569,410 units, of which Maxim and/or its
designees have purchased 53,130 private placement units, at a price of $10.00 per unit, for an aggregate purchase price of $5,694,100.
The Private Placement Units are identical to the units sold in the Initial Public Offering, except that the Private Placement Units (and
the underlying securities), so long as they are held by the Sponsor, Maxim or their permitted transferees: (i) may not, subject to certain
limited exceptions, be transferred, assigned, or sold by the holders until 30 days after the completion of the Business Combination; and
(ii) will be entitled to registration rights.
The Company’s Sponsor has agreed: (i) to
waive its redemption rights with respect to its founder shares and public shares in connection with the completion of the Business Combination;
(ii) to waive its redemption rights with respect to its founder shares and public shares in connection with a stockholder vote to approve
an amendment to the Company’s certificate of incorporation: (A) to modify the substance or timing of the Company’s obligation
to redeem 100% of its public shares if the Company does not complete its Business Combination within 12 months from the closing of the
Initial Public Offering (or 15 or 18 months if the Company extends the period of time to consummate a Business Combination, as described
in more detail in this filing); or (B) with respect to any other provision relating to stockholders’ rights or pre-initial Business
Combination activity; and (iii) to waive its rights to liquidating distributions from the Trust Account with respect to its founder shares
if the Company fails to complete its Business Combination within 12 months from the closing of the Initial Public Offering (or 15 or 18
months if the Company extends the period of time to consummate a business combination, as described in more detail in this filing). In
addition, the Company’s Sponsor has agreed to vote any founder shares and private placement shares held by them and any public shares
purchased during or after the Initial Public Offering (including in open market and privately negotiated transactions) in favor of the
Business Combination.
NOTE 5 — RELATED PARTY TRANSACTIONS
Related Party Payables
On April 12, 2021, the Company issued an unsecured
promissory note to the Sponsor, pursuant to which the Company may borrow up to an aggregate principal amount of $300,000 to be used for
a portion of the expenses of the Initial Public Offering. This loan was non-interest bearing, unsecured and due at the earlier of December
31, 2021 or the closing of the Initial Public Offering. Through July 6, 2021, the Company had drawn down an aggregate of $268,309 of the
funds available to it under the promissory note with the Sponsor, with $600 of cash transferred to the Company, and $267,709 being expenses
paid on behalf of the Company by the Sponsor. The outstanding balance under the promissory note was repaid at the closing of the Initial
Public Offering on July 6, 2021 out of the offering proceeds not held in the Trust Account, and the promissory note was terminated.
Related Party Loans
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"). Such Working Capital Loans would
be convertible into private placement-equivalent units at a price of $10.00 per unit (which, for example, would result in the holders
being issued 150,000 units if $1,500,000 of notes were so converted), at the option of the lender. Such units would be identical to the
private placement units. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside
the Trust account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital
Loans.
Related Party Extension Loans
The Company will have until 12 months from the
closing of the Initial Public Offering to consummate a Business Combination. However, if the Company anticipates that it may not be able
to consummate a Business Combination within 12 months, the Company will, by resolution of the Company’s board of directors, extend
the period of time to consummate a Business Combination by an additional three months up to twice (for a total of 18 months to complete
a Business Combination) if such extension is requested by the Sponsor. Pursuant to the terms of the Company’s certificate of incorporation
and the trust agreement to be entered into between the Company and Continental Stock Transfer & Trust Company on the date of the Initial
Public Offering, in order to extend the time available for the Company to consummate a Business Combination for an additional three months,
the Sponsor or its affiliates or designees must deposit into the trust account $1,000,000, or up to $1,150,000 if the underwriters’
over-allotment option is exercised in full ($0.10 per share in either case) on or prior to the date of the deadline. The Company will
only be able to extend the period of time to consummate a Business Combination by an additional three months twice (for a total of six
months). Each such payment would be made in the form of a loan. Such loan will be non-interest bearing and payable upon the consummation
of the Company’s Business Combination. If the Company completes a Business Combination, the Company would repay such loaned amount
out of the proceeds of the trust account released to the Company. If the Company does not complete a Business Combination, the Company
will not repay such loan. Furthermore, the letter agreement with the Company’s initial stockholders contains a provision pursuant
to which the Sponsor has agreed to waive its right to be repaid for such loan out of the funds held in the trust account in the event
that the Company does not complete a Business Combination. The Sponsor and its affiliates or designees are obligated to fund the trust
account in order to extend the time for the Company to complete a Business Combination, but the Sponsor is not obligated to extend such
time.
Founder Shares
On March 9, 2021, the Company issued 2,875,000
shares of common stock to the Sponsor for $25,000 in cash, or approximately $0.0087 per share, in connection with formation, and later
transferred a total of 210,000 founder shares to our officers and directors leaving our Sponsor with 2,665,000 founder shares.
On August 14, 2021, the Sponsor forfeited, and the Company cancelled, an aggregated of 218,500 founder shares upon expiration
of the unexercised portion of the over-allotment option.
The holders of the founder shares have agreed
not to transfer, assign or sell the founder shares until the earlier of: (i) one year after the date of the consummation of the Business
Combination; or (ii) the date on which the Company consummates a liquidation, merger, stock exchange, or other similar transaction that
results in all of its stockholders having the right to exchange their shares of Class A common stock for cash, securities, or other property.
Notwithstanding the foregoing, if the closing price of the Company’s Class A common stock equals or exceeds $12.00 per share (as
adjusted for stock splits, stock dividends, reorganizations, recapitalizations, and the like) for any 20 trading days within any 30-trading
day period commencing 60 days after the Business Combination, the founder shares will no longer be subject to such transfer restrictions.
Administrative Service Fee
Upon closing of the Initial Public Offering, the
Company commenced paying the Sponsor $10,000 per month for office space, secretarial and administrative services provided to members of
the Company’s management team. Upon completion of the initial Business Combination or the Company’s liquidation, the Company
will cease paying these monthly fees. During the three months ended March 31, 2022, the Company paid a total of $30,000 under this arrangement.
NOTE 6 — COMMITMENTS AND REGISTRATION RIGHTS
The holders of the founder shares, Private Placement
Units, units that may be issued upon conversion of working capital loans (including in each case the underlying securities) and the representative
shares will have registration rights to require the Company to register a sale of any of its securities held by them pursuant to a registration
rights agreement signed on the effective date of the Initial Public Offering. These holders will be entitled to make up to three demands,
excluding short form registration demands, that the Company registers such securities for sale under the Securities Act. In addition,
these holders will have “piggy-back” registration rights to include their securities in other registration statements filed
by the Company.
Notwithstanding the foregoing, the underwriters
may not exercise their demand and “piggyback” registration rights after five and seven years, respectively, after the effective
date of the Initial Public Offering and may not exercise their demand rights on more than one occasion.
Underwriters Agreement
The underwriters had a 45-day option from the
date of the Initial Public Offering to purchase up to an additional 1,500,000 units to cover over-allotments, if any. The option was exercised
with respect to 626,000 units at the time of the closing of the IPO, and the remaining unexercised portion expired.
The underwriters were paid an underwriting discount
of $0.19 per Unit, or $2,018,940 in the aggregate upon the closing of the Initial Public Offering. An additional fee of $0.35 per Unit,
or $3,719,100 in the aggregate will be payable to the underwriters for deferred underwriting commissions. The deferred fee will become
payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination,
subject to the terms of the underwriting agreement. The Company issued Maxim, as representative of the underwriters in the IPO, and/or
its designees, 106,260 shares of Series A common stock. The stock was treated as underwriters’ compensation and charged
directly to stockholders’ equity.
Right of First Refusal
Subject to certain conditions, the Company granted
Maxim, for a period beginning on the closing of the Initial Public Offering and ending 12 months after the date of the consummation of
the Business Combination, a right of first refusal to act as book-running managing underwriter or placement agent for any and all future
public and private equity, equity-linked, convertible and debt offerings for the Company or any of its successors or subsidiaries. In
accordance with FINRA Rule 5110(g)(6), such right of first refusal shall not have a duration of more than three years from the effective
date of the registration statement for the Initial Public Offering.
Representative Shares
On July 6, 2021, the Company issued Maxim and/or
its designees, 106,260 shares of Series A common stock. The Company estimated the fair value of the stock to be $1,000 based on the price
of the Founder Shares issued to the Sponsor. The stock was treated as underwriters’ compensation and charged directly to stockholders’
equity.
Maxim has agreed not to transfer, assign, or sell
any such shares until the completion of the Business Combination. In addition, Maxim has agreed: (i) to waive its redemption rights with
respect to such shares in connection with the completion of the Business Combination; and (ii) to waive its rights to liquidating distributions
from the Trust Account with respect to such shares if the Company fails to complete its Business Combination within 12 months from the
closing of the Initial Public Offering (or 15 or 18 months if the Company extends the period of time to consummate a Business Combination,
as described in more detail in the prospectus for the Initial Public Offering).
The shares have been deemed compensation by FINRA
and are therefore subject to a lock-up for a period of 180 days immediately following the date of the effectiveness of the registration
statement with respect to the Initial Public Offering pursuant to Rule 5110(e)(1) of FINRA’s NASD Conduct Rules. Pursuant to FINRA
Rule 5110(e)(1), these securities will not be the subject of any hedging, short sale, derivative, put, or call transaction that would
result in the economic disposition of the securities by any person for a period of 180 days immediately following the effective date of
the Company’s registration statement, nor may they be sold, transferred, assigned, pledged, or hypothecated for a period of 180
days immediately following the effective date of the Company’s initial registration statement except to any underwriter and selected
dealer participating in the offering and their bona fide officers or partners.
NOTE 7 — STOCKHOLDERS’ EQUITY
Preferred Stock — The Company
is authorized to issue a total of 1,000,000 shares of preferred stock at par value of $0.0001 each. At March 31, 2022, there were no shares
of preferred stock issued or outstanding.
Class A Common Stock — The
Company is authorized to issue a total of 100,000,000 shares of Class A common stock at par value of $0.0001 each. At March 31, 2022,
there were 11,301,670 total shares of Class A outstanding, of which 10,626,000 were subject to possible redemption. In accordance with
FASB ASC 480-10, the Class A shares subject to possible redemption are accounted for as mezzanine equity at a redemption value of $10.15
per share.
Class B Common Stock — The
Company is authorized to issue a total of 20,000,000 shares of Class B common stock at par value of $0.0001 each. At March 9, 2021, the
Company issued 2,875,000 shares of Class B common stock to its initial stockholder, the Sponsor, for $25,000, or approximately $0.0087
per share in connection with formation, and later transferred a total of 210,000 founder shares to our officers and directors leaving
our Sponsor with 2,665,000 founder shares. On August 14, 2021, the Sponsor forfeited, and the Company cancelled, an aggregated of 218,500 founder
shares upon expiration of the unexercised portion of the over-allotment option. At March 31, 2022, there were 2,656,500 shares of Class
B common stock issued and outstanding.
The Company’s initial stockholders have
agreed not to transfer, assign, or sell any of their founder shares until the earlier of: (i) one year after the date of the consummation
of the Business Combination; or (ii) the date on which the Company consummates a liquidation, merger, stock exchange, or other similar
transaction that results in all of its stockholders having the right to exchange their shares of Class A common stock for cash, securities,
or other property. Any permitted transferees will be subject to the same restrictions and other agreements of the initial stockholders
with respect to any founder shares. Notwithstanding the foregoing, if the closing price of the Company’s Class A common stock equals
or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations, and the like) for any
20 trading days within any 30-trading day period commencing 60 days after the Business Combination, the founder shares will no longer
be subject to such transfer restrictions. Any permitted transferees will be subject to the same restrictions and other agreements of the
Company’s initial stockholders with respect to any founder shares.
The shares of Class B common stock will automatically
convert into shares of the Company’s Class A common stock at the time of its Business Combination on a one-for-one basis, subject
to adjustment for stock splits, stock dividends, reorganizations, recapitalizations, and the like, and subject to further adjustment as
provided herein. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued
in excess of the amounts offered in the Company’s registration statement and related to the closing of the Business Combination,
the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders
of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed
issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal,
in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion
of the Initial Public Offering (excluding the private placement shares and representative shares) plus all shares of Class A common stock
and equity-linked securities issued or deemed issued in connection with the Business Combination (excluding any shares or equity-linked
securities issued, or to be issued, to any seller in the Business Combination or any private placement-equivalent units issued to the
Sponsor, its affiliates, or certain of officers and directors upon conversion of working capital loans made to the Company).
Holders of the Class A common stock and holders
of the Class B common stock will vote together as a single class on all matters submitted to a vote of the Company’s stockholders,
with each share of common stock entitling the holder to one vote.
Rights — Each holder of a
right will automatically receive one-tenth (1/10) of one share of Class A common stock upon consummation of a Business Combination, except
in cases where we are not the surviving company in a Business Combination, and even if the holder of such right redeemed all shares of
Class A common stock held by it in connection with a Business Combination. No additional consideration will be required to be paid by
a holder of Public Rights in order to receive its additional shares upon consummation of a Business Combination, as the consideration
related thereto has been included in the unit purchase price paid for by investors in the Initial Public Offering. If the Company enters
into a definitive agreement for a Business Combination in which the Company will not be the surviving entity, the definitive agreement
will provide for the holders of Public Rights to receive the same per share consideration the holders of shares of Class A common stock
will receive in the transaction on an as-exchanged for Class A common stock basis, and each holder of a Public Right will be required
to affirmatively exchange its Public Rights in order to receive the 1/10 share underlying each Public Right (without paying any additional
consideration) upon consummation of a Business Combination. More specifically, the Public Rights holder will be required to indicate its
election to exchange the Public Right for the underlying shares within a fixed period of time after which period the rights will expire
worthless.
Pursuant to the rights agreement, a rights holder
may exchange rights only for a whole number of shares of Class A common stock. This means that the Company will not issue fractional shares
in connection with an exchange of rights and rights may be exchanged only in multiples of 10 rights (subject to adjustment for stock splits,
stock dividends, reorganizations, recapitalizations and the like). 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.
If the Company is unable to complete a Business
Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Public Rights will
not receive any such funds with respect to their Public Rights, nor will they receive any distribution from the Company’s assets
held outside of the Trust Account with respect to such Public Rights, and the Public Rights will expire worthless. Further, there are
no contractual penalties for failure to deliver securities to holders of the Public Rights upon consummation of a Business Combination.
Additionally, in no event will the Company be required to net cash settle the rights. Accordingly, the rights may expire worthless.
NOTE 8 — FAIR VALUE MEASUREMENTS
The Company follows the
guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period,
and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the
Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received
in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between
market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks
to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs
(internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to
classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
Level
1:Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which
transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level
2:Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or
liabilities and quoted prices for identical assets or liabilities in markets that are not active.
Level
3:Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
The following
table presents information about the Company’s assets that are measured at fair value on a recurring basis at 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:
Description | |
Level | | |
March 31, 2022 | |
Assets: | |
| | | |
| | |
Marketable securities held in Trust Account | |
| 1 | | |
$ | 107,867,715 | |
Description | |
Level | | |
December 31, 2021 | |
Assets: | |
| | | |
| | |
Marketable securities held in Trust Account | |
| 1 | | |
$ | 107,857,461 | |