NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1
- Description of Organization and Business Operations
NorthView
Acquisition Corporation (the “Company” or “Northview”) is a blank check company incorporated in Delaware on April
19, 2021. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization
or similar business combination with one or more businesses (“Business Combination”). The Company has not selected any specific
Business Combination target. While the Company may pursue an initial Business Combination target in any business, industry or geographical
location, it intends to focus its search on businesses that are focused on healthcare innovation.
The
Company has a wholly-owned subsidiary, NV Profusa Merger Sub Inc. (“Merger Sub”), a Delaware corporation incorporated on
October 13, 2022, formed solely in contemplation of the Merger with Profusa (See Note 6). Merger Sub has not commenced any operations
and has only nominal assets and no liabilities or contingent liabilities, nor any outstanding commitments other than in connection with
the Merger.
On
December 22, 2021, the Company consummated its Initial Public Offering (“IPO”) of 18,975,000 units (the “Units”),
which included 2,475,000 Units issued pursuant to the full exercise of the over-allotment option granted to the underwriters. Each Unit
consists of one share of common stock of the Company, par value $0.0001 per share, one right (the “Rights”), and one-half
of one redeemable warrant of the Company (the “Warrants”). Each Right entitles the holder thereof to receive one-tenth (1/10)
of one share of common stock. Each Warrant entitles the holder thereof to purchase one share of common stock for $11.50 per share, subject
to adjustment. The Units were sold at a price of $10.00 per Unit, generating gross proceeds to the Company of $189,750,000.
Simultaneously
with the closing of the IPO, the Company completed the private sale of an aggregate of 7,347,500 warrants (the “Private Placement
Warrants”), which included 697,500 Private Placement Warrants issued pursuant to the full exercise of the over-allotment option
granted to the underwriters, to NorthView Sponsor I, LLC (“the Sponsor”), I-Bankers Securities, Inc., and Dawson James Securities,
Inc. at a purchase price of $1.00 per Private Placement Warrant, generating gross proceeds to the Company of $7,347,500, which is discussed
in Note 4.
Transaction
costs amounted to $7,959,726 consisting of $3,450,000 of underwriting discount, $3,570,576 of Representative’s Shares cost, $259,527
of Representative’s Warrants cost and $679,623 of other offering costs.
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 value of the assets held in the Trust Account (as defined below) (excluding taxes payable on the interest earned on the Trust
Account) at the time of the signing a definitive agreement in connection with 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 that the Company will be able to successfully effect a Business Combination.
Following
the closing of the Public Offering on December 22, 2021, an amount of $191,647,500 ($10.10 per Unit), excluding $741,228 that was wired
to the Company’s operating bank account on December 31, 2021 for working capital purposes, from the net proceeds of the sale of
the public units in the IPO and the sale of the Private Placement Warrants was placed in a Trust Account (“Trust Account”)
and invested in United States government treasury bills with a maturity of 185 days or less or in money market funds investing solely
in United States Treasuries and meeting certain conditions under Rule 2a-7 under 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 taxes, if
any, the proceeds from the IPO will not be released from the Trust Account until the earliest of (i) the completion of the Company’s
initial Business Combination, (ii) the redemption of any public shares properly tendered in connection with a stockholder vote to amend
the Company’s amended and restated certificate of incorporation (A) to modify the substance or timing of the Company’s obligation
to redeem 100% of the public shares if the Company does not complete the initial Business Combination within the extended period (or
any additional extension from the closing of our IPO if we extend the period of time to consummate a business combination) (the “Combination
Period”), or (B) with respect to any other provision relating to stockholders’ rights or pre-Business Combination activity,
and (iii) the redemption of all of the Company’s public shares if the Company is unable to complete the Business Combination within
the Combination Period, 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.
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 initial Business Combination either (i) in connection with a stockholder meeting called to approve the
initial Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder
approval of a proposed initial Business Combination or conduct a tender offer will be made by the Company, solely in its discretion.
The stockholders will be entitled to redeem all or a portion of their public shares upon the completion of the initial Business
Combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account as of two
business days prior to the consummation of the initial Business Combination, including interest (which interest shall be net of
taxes payable) divided by the number of then outstanding public shares, subject to the limitations described herein. The per share
amount the Company will distribute to investors who properly redeem their shares will not be reduced by the fee payable to
I-Bankers and Dawson James pursuant to the Business Combination Marketing Agreement (see Note 6).
If
the Company is unable to complete an initial Business Combination within the Combination Period, it will: (i) cease all operations except
for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public
shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest
(which interest shall be net of taxes payable, and less up to $100,000 of interest to pay dissolution expenses) divided by the number
of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including
the right to receive further liquidation 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 its 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. There will be no redemption rights or liquidating distributions with respect to the Company’s
rights and warrants, which will expire worthless if the Company fails to complete the Business Combination within the Combination Period.
All
of the Public Shares, or shares of our common stock sold as part of the IPO, contain a redemption feature which allows for the redemption
of such Public Shares in connection with our liquidation, if there is a stockholder vote or tender offer in connection with our initial
business combination and in connection with certain amendments to our amended and restated certificate of incorporation. In accordance
with SEC and its guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely
within the control of a company require common stock subject to redemption to be classified outside of permanent equity. Given that the
Public Shares were issued with other freestanding instruments (i.e., public warrants), the initial carrying value of common stock classified
as temporary equity was the allocated proceeds determined in accordance with ASC 470-20. The common stock is subject to ASC 480-10-S99.
If it is probable that the equity instrument will become redeemable, we have 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. We have 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 will be classified as such on the condensed consolidated balance sheets until such date that a redemption
event takes place.
The
Sponsor, officers and directors have agreed to (i) waive their redemption rights with respect to their Founder Shares and public shares
in connection with the completion of the initial Business Combination, (ii) waive their rights to liquidating distributions from the
Trust Account with respect to their Founder Shares if the Company fails to complete the initial Business Combination within the Combination
Period (although they will be entitled to liquidating distributions from the Trust Account with respect to any public shares they hold
if the Company fails to complete the Business Combination within such time period); and (iii) vote their Founder Shares and any public
shares purchased during or after the IPO in favor of the initial Business Combination.
The
Company’s Sponsor has agreed that it will 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 to below (i) $10.10 per public share or (ii) such lesser amount per public share held
in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in value of the trust assets, in each case
net of the amount of interest which may be released to the Company to pay taxes, except as to any claims by a third party who executed
a waiver of any and all rights to seek access to the Trust Account and except as to any claims under indemnity of the underwriters of
the IPO against certain liabilities, including liabilities under 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.
Liquidity
and Going Concern
As
of March 31, 2023, the Company had $55,610 in cash and a working capital deficit of $1,947,395. Prior to the completion of
the Company’s IPO, the Company’s liquidity needs had been satisfied through a capital contribution from the Sponsor of $25,000
for the founder shares to cover certain of the offering costs and the loan under an unsecured promissory note from the Sponsor of $204,841,
which was fully paid upon the IPO. Subsequent to the consummation of the Initial Public Offering and Private Placement, the Company’s
liquidity needs have been satisfied through the proceeds from the consummation of the Private Placement not held in the Trust Account.
In
addition, in order to finance transaction costs in connection with an intended Business Combination, the initial stockholders or an affiliate
of the initial stockholders or certain of the Company’s officers and directors may, but are not obligated to, provide the Company
Working Capital Loans (see Note 5). As of March 31, 2023 and December 31, 2022, there were no amounts outstanding under any
Working Capital Loans.
The
Company has until May 22, 2023 or as late as December 22, 2023 to consummate a Business Combination. It is uncertain that the Company
will be able to consummate a Business Combination by May 22, 2023 or as late as December 22, 2023. If a Business Combination is not consummated
by the required date, there will be an option to either extend the time available for us to consummate our initial business combination
or execute a mandatory liquidation and subsequent dissolution. In connection with the Company’s assessment of going concern considerations
in accordance with the authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Update
(“ASU”) 2014-15, “Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern,”
management has determined that mandatory liquidation, and subsequent dissolution, should the Company be unable to complete a business
combination, raises substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from
the issuance of these condensed consolidated financial statements. No adjustments have been made to the carrying amounts of assets and
liabilities should the Company be required to liquidate after May 22, 2023 or as late as December 22, 2023.
The
Company held a meeting on March 10, 2023 to vote on the proposal to amend the Company’s amended and restated certificate of incorporation
to extend the date by which the Company must consummate a business combination or, if it fails to do so, cease its operations and redeem
or repurchase 100% of the shares of the Company’s common stock issued in the Company’s initial public offering, from March 22,
2023, monthly for up to nine additional months at the election of the Company, ultimately until as late as December 22, 2023 (the
“Extension”, and such extension date the “Extended Date”). On March 21, 2023, the Company paid an extension fee
of $48,707. On March 22, 2023, 18,000,868 shares of the Company’s common stock were redeemed with a total redemption payment of
$184,845,836.
Risks
and Uncertainties
Management
is continuing to evaluate the impact of the COVID-19 pandemic and the Russia-Ukraine war and has concluded that while it is reasonably
possible that it could have a negative effect on the Company’s financial position, results of its operations and/or search for
a target company, the specific impact is not readily determinable as of the date of these unaudited condensed consolidated financial
statements. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome
of this uncertainty.
On
August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for,
among other things, a new U.S. federal 1% excise tax on certain repurchases of stock occurring on or after January 1, 2023, by publicly
traded U.S. domestic corporations, by certain U.S. domestic subsidiaries of publicly traded foreign corporations, by “covered surrogate
foreign corporations” (as defined in the IR Act) and by certain affiliates of the foregoing. The excise tax is imposed on the repurchasing
corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair
market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing
corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases
during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”)
has been given authority to provide regulations and other guidance to carry out, and to prevent the avoidance of the excise tax.
Any
redemption or other repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise,
may be subject to the excise tax. Whether and to what extent the Company would be subject to the excise tax in connection with a Business
Combination, extension vote or otherwise would depend on a number of factors, including (i) the fair market value of the redemptions
and repurchases in connection with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii)
the nature and amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued
not in connection with a Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content
of regulations and other guidance from the Treasury. In addition, because the excise tax would be payable by the Company and not by the
redeeming holder, the mechanics of any required payment of the excise tax have not been determined. The foregoing could cause a reduction
in the cash available on hand to complete a Business Combination and in the Company’s ability to complete a Business Combination.
On March 22, 2023, the Company’s stockholders redeemed 18,000,868 shares for a total of $184,845,836. The Company determined that an excise tax liability should be recorded due to the redeemed shares. As of March 31, 2023, the Company recorded a charge to stockholders’ deficit of $1,848,455 of excise tax liability calculated as 1% of shares redeemed.
Note 2
- Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited condensed consolidated financial statements are presented in U.S. dollars in conformity with accounting principles
generally accepted in the United States of America (“GAAP”) for financial information and pursuant to the rules and regulations
of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, the
unaudited condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments necessary
for the fair statement of the balances and results for the periods presented. The interim results for the three months ended March 31,
2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any future periods.
The
accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial
statements and notes thereto included in the Form 10-K annual report filed by the Company with the SEC on March 6, 2023.
Principles
of Consolidation
The
accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant
intercompany balances and transactions have been eliminated in consolidation.
Emerging
Growth Company Status
The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our
Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required
to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements
of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously
approved.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do
not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of
such extended transition period, which means that when a standard is issued or revised and it has different application dates for public
or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies
adopt the new or revised standard. This may make comparison of the Company’s unaudited condensed consolidated 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 these unaudited condensed consolidated financial statements in conformity with 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 unaudited condensed consolidated financial statements.
Making
estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of
a condition, situation or set of circumstances that existed at the date of the unaudited condensed consolidated financial statements,
which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly,
the actual results could differ significantly from those estimates.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution,
which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on this 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 did not have any cash equivalents as of March 31, 2023 and December 31, 2022.
Cash
and Marketable Securities Held in Trust Account
At
March 31, 2023 and December 31, 2022, the assets held in the Trust Account were held in U.S. Treasury Bills with a maturity of 185 days
or less and in money market funds which invest in U.S. Treasury securities.
During the three months ended March 31, 2023, pursuant to the trust
agreement dated as of December 20, 2021 between the Company and Continental Stock Transfer & Trust Company (“CST”), the
trustee of the Trust Account, $877,438 of interest income from the Trust Account was withdrawn by the Company for the payment of its taxes.
At December 31, 2022 the Company classified its US Treasury bills as
held-to-maturity in accordance with FASB ASC Topic 320 “Investments - Debt and Equity Securities.” Held-to-maturity securities
are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities are recorded
at amortized cost and adjusted for the amortization or accretion of premiums or discounts.
A
decline in the market value of held-to-maturity securities below cost that is deemed to be other than temporary, results in an impairment
that reduces the carrying costs to such securities’ fair value. The impairment is charged to earnings and a new cost basis for
the security is established. To determine whether an impairment is other than temporary, the Company considers whether it has the ability
and intent to hold the investment until a market price recovery and considers whether evidence indicating the cost of the investment
is recoverable outweighs evidence to the contrary. Evidence considered in this assessment includes the reasons for the impairment, the
severity and the duration of the impairment, changes in value subsequent to year-end, forecasted performance of the investee, and the
general market condition in the geographic area or industry in which the investee operates.
Premiums
and discounts are amortized or accreted over the life of the related held-to-maturity security as an adjustment to yield using the effective-interest
method. Such amortization and accretion are included in the “interest income” line item in the unaudited condensed consolidated
statements of operations. Interest income is recognized when earned.
The
carrying value, excluding gross unrealized holding (gain) loss, and fair value of held to maturity securities on and December 31, 2022
are as follows:
| | |
Carrying
Value as of
December 31,
2022 | | |
Gross
Unrealized
Gains | | |
Gross
Unrealized
Losses | | |
Fair
Value
as of
December 31,
2022 | |
| Cash | |
$ | 1,034 | | |
$ | — | | |
$ | — | | |
$ | 1,034 | |
| U.S.
Treasury Bills | |
| 194,223,748 | | |
| 43,626 | | |
| — | | |
| 194,267,374 | |
| | |
$ | 194,224,782 | | |
$ | 43,626 | | |
$ | — | | |
$ | 194,268,408 | |
Effective January 1, 2023, the Company changed its accounting policy
for the investments in trust to the fair value method.
As of March 31, 2023, substantially all of the assets held in the Trust
Account were held in mutual funds that invest in U.S Treasury Securities. The Company’s investments held in the Trust Account are
now 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 in the statement
of operations for the three months ended March 31, 2023. The estimated fair values of investments held in Trust Account are determined
using available market information.
Fair Value
of Financial Instruments
The fair value of the Company’s assets and liabilities approximates
the carrying amounts represented in the accompanying condensed consolidated balance sheets, primarily due to their short-term nature,
except for the warrant liabilities and investments in the Trust Account.
Income
Taxes
The Company accounts for income taxes under ASC 740, “Income Taxes.”
ASC 740, Income Taxes, requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between
the unaudited condensed consolidated financial statements and tax basis of assets and liabilities and for the expected future tax benefit
to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when
it is more likely than not that all or a portion of deferred tax assets will not be realized. As of March 31, 2023 and December 31, 2022,
the Company’s deferred tax asset had a full valuation allowance recorded against it. Our effective tax rate was 46.49% and 0.00%
for the three months ended March 31, 2023 and 2022, respectively. The effective tax rate differs from the statutory tax rate of 21% for
the three months ended March 31, 2023 and 2022, due to changes in fair of warrant liabilities, and the valuation allowance on the deferred
tax assets.
ASC
740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes
a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected
to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination
by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim
period, disclosure and transition.
The
Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized
tax benefits and no amounts accrued for interest and penalties as of March 31, 2023 and December 31, 2022. The Company is currently not
aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The
Company has identified the United States as its only “major” tax jurisdiction. The Company is subject to income taxation
by major taxing authorities since inception. These examinations may include questioning the timing and amount of deductions, the nexus
of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s management does not expect
that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Derivative
Financial Instruments
The
Company evaluates its financial instruments, such as warrants, to determine if such instruments are derivatives or contain features that
qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. Derivative instruments are initially
recorded at fair value on the grant date and re-valued at each reporting date, with changes in the fair value reported in the unaudited
condensed consolidated statements of operations. Derivative assets and liabilities are classified in the condensed consolidated balance
sheets as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required
within 12 months of the balance sheet date.
Warrant
Liabilities
The
Company accounts for the 17,404,250 warrants issued in connection with the IPO (the 9,487,500 Public Warrants, the 7,347,500 Private
Placement Warrants, and the 569,250 Representative Warrants inclusive of the underwriters’ over-allotment option)
in accordance with the guidance contained in ASC 815-40. Such guidance provides that because the warrants do not meet the criteria for
equity treatment thereunder, each warrant must be recorded as a liability. Accordingly, the Company has classified each warrant as a
liability at its fair value. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement,
the warrant liabilities will be adjusted to fair value, with the change in fair value recognized in the Company’s unaudited condensed
consolidated statements of operations (See Note 8).
Offering
Costs associated with the Initial Public Offering
The
Company complies with the requirements of ASC 340-10-S99-1, SEC Staff Accounting bulletin Topic 5A – “Expenses of Offering”,
and SEC Staff Accounting bulletin Topic 5T – “Accounting for Expenses or Liabilities Paid by Principal Stockholder(s)”.
Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to
the IPO. Offering costs directly attributable to the issuance of an equity contract to be classified in equity are recorded as a reduction
of equity. Offering costs for equity contracts that are classified as assets and liabilities are expensed immediately. The Company incurred
offering costs amounting to $7,959,726 as a result of the IPO (consisting of $3,450,000 of underwriting fees, $3,570,576 of
Representative’s Shares cost, $259,527 of Representative’s Warrants cost and $679,623 of other offering costs).
The Company recorded $7,701,178 of offering costs as a reduction of temporary equity in connection with the common stock included
in the Units. The Company immediately expensed $258,548 of offering costs in connection with the Public Warrants, Private Placement
Warrants and Representative’s Warrants that were classified as liabilities.
Net
Income (Loss) Per Common Stock
The
Company has two categories of shares, which are referred to as common stock subject to possible redemption and common stock. Earnings
and losses are shared pro rata between the two categories of shares. The 17,404,250 potential shares of common stock for outstanding
warrants to purchase the Company’s shares were excluded from diluted earnings per share for the three months ended March 31, 2023
and 2022 because the warrants are contingently exercisable, and the contingencies have not yet been met. As a result, diluted net income
(loss) per share of common stock is the same as basic net income (loss) per share of common stock for the periods presented. The
table below presents a reconciliation of the numerator and denominator used to compute basic and diluted net income per share for each
category of common stock:
| | |
For
the three months ended
March 31, 2023 | | |
For
the three months ended
March 31, 2022 | |
| | |
Common
stock
subject to
possible
redemption | | |
Common
stock | | |
Common
stock
subject to
possible
redemption | | |
Common
stock | |
| Basic and diluted net income per share: | |
| | |
| | |
| | |
| |
| Numerator: | |
| | |
| | |
| | |
| |
| Allocation
of net income | |
$ | 336,660 | | |
$ | 104,235 | | |
$ | 2,911,967 | | |
$ | 797,050 | |
| | |
| | | |
| | | |
| | | |
| | |
| Denominator: | |
| | | |
| | | |
| | | |
| | |
| Weighted-average
shares outstanding | |
| 16,774,894 | | |
| 5,193,750 | | |
| 18,975,000 | | |
| 5,193,750 | |
| Basic and diluted net income per share | |
$ | 0.02 | | |
$ | 0.02 | | |
$ | 0.15 | | |
$ | 0.15 | |
Common
Stock Subject to Possible Redemption
The
Company’s common stock sold as part of the Units in the IPO (“public common stock”) contain a redemption feature which
allows for the redemption of such public shares in connection with the Company’s liquidation, or if there is a stockholder vote
or tender offer in connection with the Company’s initial Business Combination. In accordance with ASC 480-10-S99, the Company classifies
public common stock outside of permanent equity as the redemption provisions are not solely within the control of the Company. The public
common stock was issued with other freestanding instruments (i.e., Public Warrants) and as such, the initial carrying value of public
common stock classified as temporary equity was the allocated proceeds determined in accordance with ASC 470-20.
As
of March 31, 2023 and December 31, 2022, the amount of public common stock reflected on the condensed consolidated balance sheet is reconciled
in the following table:
| Gross proceeds | |
$ | 189,750,000 | |
| Less: | |
| | |
| Proceeds allocated to Public Warrants | |
| (4,204,248 | ) |
| Common stock issuance costs | |
| (7,701,178 | ) |
| Plus: | |
| | |
| Accretion of redeemable
common stock | |
| 15,680,910 | |
| Contingently redeemable
common stock, December 31, 2022 | |
| 193,525,484 | |
| Less: | |
| | |
| Partial redemption | |
| (184,845,836 | ) |
| Plus: | |
| | |
| Accretion of redeemable
common stock | |
| 1,279,617 | |
| Contingently
redeemable common stock, March 31, 2023 | |
$ | 9,959,265 | |
Recently
Issued Accounting Standards
In
June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13 – Financial Instruments – Credit Losses
(Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This update requires financial assets
measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses
is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable
forecasts that affect the collectability of the reported amount. Since June 2016, the FASB issued clarifying updates to the new standard
including changing the effective date for smaller reporting companies. The guidance is effective for fiscal years beginning after December 15,
2022, and interim periods within those fiscal years, with early adoption permitted. The Company adopted ASU 2016-13 on January 1, 2023.
The adoption of ASU 2016-13 did not have a material impact on its financial statements.
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 unaudited condensed consolidated financial statements.
Note
3 – Initial Public Offering
Public
Units
On
December 22, 2021, the Company sold 18,975,000 Units, (which included 2,475,000 Units issued pursuant to the full exercise of the over-allotment
option) at a purchase price of $10.00 per Unit. Each unit that the Company is offering has a price of $10.00 and consists of one share
of common stock, one right, and one-half of one redeemable warrant. Each right entitles the holder thereof to receive one-tenth (1/10)
of one share of common stock upon the consummation of an initial business combination. Each whole warrant entitles the holder thereof
to purchase one share of common stock at a price of $11.50 per share, subject to adjustment as described herein.
Public
Warrants
Each
whole warrant entitles the holder to purchase one share of common stock at a price of $11.50 per share, subject to adjustment as
discussed herein. In addition, if (x) the Company issues additional shares of common stock or equity-linked securities for
capital raising purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price
of less than $9.20 per share of common stock (with such issue price or effective issue price to be determined in good faith by the
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 such stockholders or their affiliates, as applicable, prior to such issuance (the “Newly Issued Price”)),
(y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon,
available for funding the initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of
the common stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummates the Business
Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price shall be adjusted (to the
nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption
trigger price described in the section “Redemption of warrants” will be adjusted (to the nearest cent) to be equal to 180%
of the higher of the Market Value and the Newly Issued Price.
The
warrants will become exercisable on the later of 12 months from the closing of the IPO or 30 days after the completion of its
initial Business Combination, and will expire five years after the completion of the Company’s initial Business Combination, at
5:00 p.m., New York City time, or earlier upon redemption or liquidation.
The
Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of the initial Business
Combination, the Company will use its reasonable best efforts to file, and within 60 business days after the closing of the initial Business
Combination, to have declared effective, a registration statement relating to those shares of common stock, and to maintain a current
prospectus relating to such shares of common stock until the warrants expire or are redeemed. Notwithstanding the foregoing, if a registration
statement covering the shares of common stock issuable upon exercise of the warrants is not effective within the above specified period
following the consummation of the initial 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 of 1933, as amended, or 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.
Redemption
of Warrants
Once
the warrants become exercisable, the Company may redeem the outstanding warrants:
| | ● | in whole and not in part; |
| |
● |
at a price of $0.01 per
warrant; |
| |
● |
upon a minimum of 30 days’
prior written notice of redemption (the “30-day redemption period”); |
| |
● |
if, and only if, the last
sale price of the common stock equals or exceeds $18.00 per share 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. |
If
the Company calls the warrants for redemption as described above, management will have the option to require all holders that wish to
exercise warrants to do so on a “cashless basis.” In determining whether to require all holders to exercise their warrants
on a “cashless basis,” management will consider, among other factors, the Company’s cash position, the number of warrants
that are outstanding and the dilutive effect on the stockholders of issuing the maximum number of shares of common stock issuable upon
the exercise of the warrants. In such event, each holder would pay the exercise price by surrendering the warrants for that number of
shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying
the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined
below) by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of the
common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the
holders of warrants.
Note 4
– Private Placement
The
Company’s Sponsor, I-Bankers and Dawson James have purchased an aggregate of 7,347,500 Private Placement Warrants (which included
697,500 Private Placement Warrants issued pursuant to the full exercise of the over-allotment option) at a price of $1.00 per warrant
($7,347,500 in the aggregate) in a private placement that closed simultaneously with the closing of the IPO. Of such amount, 5,162,500
Private Placement Warrants were purchased by the Sponsor and 2,185,000 Private Placement Warrants were purchased by I-Bankers and Dawson
James.
The
Private Placement Warrants are identical to the warrants included in the units sold in the IPO, except that the Private Placement Warrants:
(i) will not be redeemable by the Company and (ii) may be exercised for cash or on a cashless basis, in each case so long as they are
held by the initial purchasers or any of their permitted transferees. If the Private Placement Warrants are held by holders other than
the initial purchasers or any of their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable
by the holders on the same basis as the warrants included in the Units being sold in the IPO.
Note 5
– Related Party Transactions
Founder
Shares
In
April 2021, the Sponsor paid $25,000, or approximately $0.005 per share, to cover certain of the offering costs in exchange for an aggregate
of 5,175,000 shares of common stock, par value $0.0001 per share (the “Founder Shares”). In October 2021, the Sponsor irrevocably
surrendered to the Company for cancellation and for no consideration 862,500 shares of common stock. On December 20, 2021, the Company
effected a 1.1- for-1 stock dividend of its common stock, resulting in the Sponsor holding an aggregate of 4,743,750 shares of common
stock. The Founder Shares include an aggregate of up to 618,750 shares subject to forfeiture if the over-allotment option is not exercised
by the underwriters in full. On December 22, 2021, the over-allotment option was fully exercised and such shares are no longer subject
to forfeiture.
The
Sponsor has agreed not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (A) one year after the
completion of the initial Business Combination or (B) the date on which the Company completes a liquidation, merger, stock exchange or
other similar transaction after the initial Business Combination that results in all of the Company’s public stockholders having
the right to exchange their shares of common stock for cash, securities or other property (the “Lock-up”). Notwithstanding
the foregoing, if the last sale price of the Company’s 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
at least 150 days after the initial Business Combination, the Founder Shares will be released from the Lock-up.
Promissory
Note – Related Party
On
April 19, 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 $150,000 to be used for a portion of the expenses of the IPO. This loan is non-interest bearing, unsecured and was
to be due at the earlier of September 30, 2021 or the closing of the IPO. On November 5, 2021, the Company amended the promissory note
to increase the principal amount up to $200,000 with a due date at the earlier of April 30, 2022 or the closing of the IPO.
Through
the IPO, the Company borrowed $200,000 under the promissory note and an additional $4,841 was advanced from the Sponsor. These amounts
were repaid in full upon the closing of the IPO out of the offering proceeds that had been allocated to the payment of offering expenses
(other than underwriting commissions). The Company paid $25,000 in excess which was owed back to the Company upon the closing of the
IPO, and was returned by the Sponsor on June 15, 2022.
Related
Party Loans
In
order to finance transaction costs in connection with an intended initial Business Combination, the initial stockholders or an affiliate
of the initial stockholders or certain of the Company’s officers and directors may, but are not obligated to, loan the Company
funds as may be required (the “Working Capital Loans”). If the Company completes the initial Business Combination, the Company
would repay such loaned amounts out of the proceeds of the Trust Account released to the Company. Otherwise, such loans would be repaid
only out of funds held outside the Trust Account. In the event that the initial Business Combination does not close, the Company may
use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from the Trust Account
would be used to repay such loaned amounts. Up to $1,500,000 of such loans may be convertible, at the option of the lender, into warrants
at a price of $1.00 per warrant of the post Business Combination entity. The warrants would be identical to the Private Placement Warrants,
including as to exercise price, exercisability and exercise period. At March 31, 2023 and December 31, 2022, the Company had no borrowings
under the Working Capital Loans.
As
disclosed in the subsequent events footnote, on April 27, 2023, the Company signed a Convertible Working Capital Promissory Note (“the
Note”) with the Sponsor for $1,200,000. The Note is non-interest bearing and is due the earlier of the consummation of a business
combination or the date of liquidation. The Sponsor may elect to convert all or any portion of the unpaid principal balance of this Note
into warrants, at a price of $1.00 per warrant. On April 27, 2023, the Company drew $168,589 against the Note.
Administrative
Service Fee
Commencing
on the effective date of the IPO, the Company began paying its Sponsor a total of $5,000 per month for office space, utilities,
secretarial support and other administrative and consulting services. Upon completion of the Company’s Business Combination or
its liquidation, the Company will cease paying these monthly fees. For the three months ended March 31, 2023 and 2022, $15,000 had been
incurred and billed relating to the administrative service fee. As of March 31, 2023 and December 31, 2022, $40,000 and $25,000, respectively.
relating to the administrative service fee was not paid and recorded as due to related party.
Note 6
- Commitments and Contingencies
Registration
Rights
The
holders of the Founder Shares, the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans
(and any underlying securities) are entitled to registration rights pursuant to a registration rights agreement signed on the closing
date of the IPO requiring the Company to register such securities for resale. The holders of these securities are entitled to make up
to three demands, excluding short form demands, that the Company registers such securities. In addition, the holders have certain “piggy-back”
registration rights with respect to registration statements filed subsequent to the completion of the initial Business Combination. However,
the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act
to become effective until termination of the applicable Lock-up period described in Note 5. The Company will bear the expenses incurred
in connection with the filing of any such registration statements.
Underwriters
Agreement
The
underwriters had a 30-day option from the date of IPO to purchase up to an additional 2,475,000 units to cover over-allotments,
if any. On December 22, 2021, the over-allotment was fully exercised.
The
underwriters received a cash underwriting discount of approximately 1.82% of the gross proceeds of the IPO, or $3,450,000.
Business
Combination Marketing Agreement
Under
a Business Combination marketing agreement, the Company engaged I-Bankers and Dawson James as advisors in connection with the Business
Combination to assist the Company in holding meetings with the stockholders to discuss the potential Business Combination and the target
business’s attributes, introduce the Company to potential investors that are interested in purchasing the Company’s securities
in connection with the potential Business Combination, assist the Company in obtaining stockholder approval for the Business Combination
and assist the Company with its press releases and public filings in connection with the Business Combination. The Company was obligated
to pay I-Bankers and Dawson James a cash fee for such marketing services upon the consummation of the initial Business Combination in
an amount of 3.68% of the gross proceeds of the IPO, or $6,986,250. The agreement was amended on November 7, 2022 and calls for
the 3.68% business combination fee to be paid as (a) 27.5% cash and (b) 72.5% to be rolled into equity at closing.
Representative’s
Shares
On
December 22, 2021, the Company issued 450,000 shares (Representative Shares) of common stock (which included 37,500 Representative
Shares issued pursuant to the full exercise of the over-allotment option) at the consummation of the IPO to I-Bankers and Dawson
James (and/or their designees). I-Bankers and Dawson James (and/or their designees) have agreed not to transfer, assign or sell
any such shares until the completion of the initial Business Combination. In addition, I-Bankers and Dawson James (and/or their
designees) have agreed (i) to waive their redemption rights with respect to such shares in connection with the completion of the
initial Business Combination and (ii) to waive their rights to liquidating distributions from the Trust Account with respect to
such shares if the Company fails to complete its initial Business Combination within the Combination Period. The fair value of the Representative’s
Shares issued are recognized as offering costs directly attributable to the issuance of an equity contract to be classified in equity
and are recorded as a reduction of equity (see Note 1). The fair value of the Representative’s Shares of $3,570,576 was
determined utilizing a Monte Carlo simulation with the following inputs at December 22, 2021:
| | |
December 22,
2021 | |
| Input | |
| |
| Risk-free interest rate | |
| 0.76 | % |
| Expected term (years) | |
| 2.27 | |
| Expected volatility | |
| 11.4 | % |
| Stock price | |
$ | 10.00 | |
| Fair value of Representative’s Shares | |
$ | 7.93 | |
Representative’s
Warrants
The
Company granted to I-Bankers and Dawson James (and/or their designees) 569,250 warrants (which included 74,250 warrants
issued pursuant to the full exercise of the over-allotment option) exercisable at $11.50 per share (or an aggregate exercise price
of $6,546,375) at the closing of the IPO. The Representative Warrants issued are recognized as derivative liabilities in accordance with
ASC 815-40 and recorded as liabilities at fair value each reporting period (see Notes 1 and 8). The warrants may be exercised for cash
or on a cashless basis, at the holder’s option, at any time during the period commencing on the later of the first anniversary
of the effective date of the registration statement of which the IPO forms a part and the closing of the initial Business Combination
and terminating on the fifth anniversary of such effectiveness date. Notwithstanding anything to the contrary, I-Bankers and Dawson
James have agreed that neither they nor their designees will be permitted to exercise the warrants after the five year anniversary
of the effective date of the registration statement of which the IPO forms a part. The warrants and such shares purchased pursuant to
the warrants 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 of which the IPO forms a part pursuant to FINRA Rule 5110I(1).
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 registration statement of which the IPO forms a part, nor may they be sold, transferred, assigned, pledged
or hypothecated for a period of 180 days immediately following the effective date of the registration statement of which the IPO
forms a part except to any underwriter and selected dealer participating in the offering and their bona fide officers or partners. The
warrants grant to holders demand and “piggy back” rights for periods of five and seven years, respectively, from the effective
date of the registration statement of which the IPO forms a part with respect to the registration under the Securities Act of the shares
issuable upon exercise of the warrants. The Company will bear all fees and expenses attendant to registering the securities, other than
underwriting commissions, which will be paid for by the holders themselves. The exercise price and number of shares issuable upon exercise
of the warrants may be adjusted in certain circumstances including in the event of a share dividend, or the Company’s recapitalization,
reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of shares at a price below its exercise
price. The Company will have no obligation to net cash settle the exercise of the warrants. The holder of the warrants will not be entitled
to exercise the warrants for cash unless a registration statement covering the securities underlying the warrants is effective or an
exemption from registration is available.
Merger
Agreement
On
November 7, 2022, NorthView entered into a Merger Agreement and Plan of Reorganization (the “Merger Agreement”), by and among
Merger Sub., and Profusa, Inc., a California corporation (“Profusa”). The Merger Agreement provides that, among other things,
at the closing of the transactions contemplated by the Merger Agreement, Merger Sub will merge with and into Profusa (the “Merger”),
with Profusa surviving as a wholly-owned subsidiary of NorthView. In connection with the Merger, NorthView will change its name to “Profusa,
Inc.”
The
Business Combination is subject to customary closing conditions, including the satisfaction of the minimum available cash condition of
$15,000,000, the receipt of certain governmental approvals and the required approval by the stockholders of NorthView and Profusa. There
is no assurance that the Business Combination will be completed.
The
aggregate consideration to be received by the Profusa stockholders is based on a pre-transaction equity value of $155,000,000. The exchange
ratio will be equal to (a) $155,000,000, divided by an assumed value of NorthView Common Stock of $10.00 per share. Subject to certain
future revenue and stock-price based milestones, Profusa stockholders will have the right to receive an aggregate of up to an additional
3,875,000 shares of NorthView Common Stock.
Note 7
- Stockholders’ Deficit
Preferred
stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 and
with such designations, rights and preferences as may be determined from time to time by the Company’s board of directors. As
of March 31, 2023 and December 31, 2022, there was no preferred stock issued or outstanding.
Common
Stock — The Company is authorized to issue a total of 100,000,000 shares of common stock at par value of
$0.0001 each. In April 2021, the Company issued 5,175,000 shares of common stock to its Sponsor for $25,000, or approximately
$0.005 per share. In October 2021, the Sponsor irrevocably surrendered to the Company for cancellation and for no consideration 862,500 shares
of common stock. On December 20, 2021, the Company effected a 1.1- for-1 stock dividend of its common stock, resulting
in an aggregate of 4,743,750 Founder Shares issued and outstanding. On December 22, 2021, the Company has also issued 450,000 shares
(Representative’s Shares) of common stock (which included 37,500 Representative Shares issued pursuant to the full exercise
of the over-allotment option) at the consummation of the IPO to I-Bankers and Dawson James (and/or their designees). As of
March 31, 2023 and December 31, 2022, there were 5,193,750 shares of common stock issued and outstanding, excluding 974,132
and 18,975,000 shares of common stock subject to redemption, respectively.
Common
stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Unless specified in
the Company’s amended and restated certificate of incorporation or bylaws, or as required by applicable provisions of the DGCL
or applicable stock exchange rules, the affirmative vote of a majority of the Company’s common stock that are voted is required
to approve any such matter voted on by the stockholders. There is no cumulative voting with respect to the election of directors, with
the result that the holders of more than 50% of the shares voted for the election of directors can elect all of the directors (prior
to consummation of the initial Business Combination). The Company’s stockholders are entitled to receive ratable dividends when,
as and if declared by the board of directors out of funds legally available therefor.
Note 8
- 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). The Company’s financial
instruments are classified as either Level 1, Level 2 or Level 3. 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. |
The following tables present information about the Company’s
assets and liabilities that are measured at fair value on March 31, 2023 and December 31, 2022, and indicates the fair value hierarchy
of the valuation inputs the Company utilized to determine such fair value:
| | |
March
31,
2023 | | |
Quoted
Prices In
Active
Markets
(Level 1) | | |
Significant
Other
Observable
Inputs
(Level 2) | | |
Significant
Other
Unobservable
Inputs
(Level 3) | |
| Assets: | |
| | |
| | |
| | |
| |
| Cash and marketable securities
held in trust | |
$ | 10,392,055 | | |
$ | 10,392,055 | | |
| — | | |
| — | |
| Liabilities: | |
| | | |
| | | |
| | | |
| | |
| Warrant liabilities – Public Warrants | |
$ | 759,000 | | |
$ | 759,000 | | |
$ | — | | |
$ | — | |
| Warrant liabilities – Private Placement
Warrants | |
| 624,538 | | |
| — | | |
| — | | |
| 624,538 | |
| Warrant liabilities
– Representative’s Warrants | |
| 48,386 | | |
| — | | |
| — | | |
| 48,386 | |
| Total | |
$ | 1,431,924 | | |
$ | 759,000 | | |
$ | — | | |
$ | 672,924 | |
| | |
December 31,
2022 | | |
Quoted
Prices In
Active
Markets
(Level 1) | | |
Significant
Other
Observable
Inputs
(Level 2) | | |
Significant
Other
Unobservable
Inputs
(Level 3) | |
| Liabilities: | |
| | |
| | |
| | |
| |
| Warrant
liabilities – Public Warrants | |
$ | 450,656 | | |
$ | 450,656 | | |
$ | — | | |
$ | — | |
| Warrant
liabilities – Private Placement Warrants | |
| 377,857 | | |
| — | | |
| — | | |
| 377,857 | |
| Warrant
liabilities – Representative’s Warrants | |
| 29,274 | | |
| — | | |
| — | | |
| 29,274 | |
| Total | |
$ | 857,787 | | |
$ | 450,656 | | |
$ | — | | |
$ | 407,131 | |
The
Company did not have any assets in the Trust Account measured at fair value as of December 31, 2022.
The
Public Warrants, the Private Placement Warrants and the Representative’s Warrants were accounted for as liabilities in accordance
with ASC 815-40 and are presented within liabilities on the condensed consolidated balance sheets. The warrant liabilities are measured
at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities
in the unaudited condensed consolidated statements of operations.
The
Company utilized a Monte Carlo simulation model for the initial valuation of the Public Warrants. The subsequent measurement of the Public
Warrants at March 31, 2023 and December 31, 2022 was classified as Level 1 due to the use of an observable market quote in an active
market. As of March 31, 2023 and December 31, 2022, the aggregate value of Public Warrants was $759,000 and $450,656, respectively.
The
Company uses a Monte Carlo simulation model to value the Private Placement Warrants and the Representative’s Warrants. The Company
allocated the proceeds received from (i) the sale of Units (which is inclusive of one shares of Common Stock and one-half of one Public
Warrant) and (ii) the sale of Private Placement Warrants, first to the warrants based on their fair values as determined at initial measurement,
with the remaining proceeds allocated to Common Stock subject to possible redemption (temporary equity) based on their relative fair
values at the initial measurement date. The Private Placement Warrants and the Representative’s Warrants were classified within
Level 3 of the fair value hierarchy at the measurement dates due to the use of unobservable inputs. Inherent in pricing models are assumptions
related to expected share-price volatility, expected life and risk-free interest rate. The Company estimates the volatility of its common
stock based on historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on
the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The
expected life of the warrants is assumed to be equivalent to their remaining contractual term.
The
key inputs into the Monte Carlo simulation model for the warrant liabilities were as follows at March 31, 2023 and December 31, 2022:
| |
|
March
31,
2023 |
|
|
December 31,
2022 |
|
| Input |
|
|
|
|
|
|
| Risk-free interest rate |
|
|
4.76 |
% |
|
|
4.74 |
% |
| Expected term (years) |
|
|
.80 |
|
|
|
.90 |
|
| Expected volatility |
|
|
8.4 |
% |
|
|
7.7 |
% |
| Exercise price |
|
$ |
11.50 |
|
|
$ |
11.50 |
|
| Fair value of Common stock |
|
$ |
10.34 |
|
|
$ |
10.13 |
|
The
following table provides a summary of the changes in the fair value of the Company’s Level 3 financial instruments that are measured
at fair value on a recurring basis for the three months ended March 31, 2023 and 2022:
| | |
Private
Placement
Warrants | | |
Public
Warrants | | |
Representative’s
Warrants | | |
Warrant
Liability | |
| Fair value
at December 31, 2022 | |
$ | 377,857 | | |
$ | — | | |
$ | 29,274 | | |
$ | 407,131 | |
| Change
in fair value of warrant liabilities | |
| 246,681 | | |
| — | | |
| 19,112 | | |
| 265,793 | |
| Fair
value at March 31, 2023 | |
$ | 624,538 | | |
$ | — | | |
$ | 48,386 | | |
$ | 672,924 | |
| | |
Private
Placement
Warrants | | |
Public
Warrants | | |
Representative’s
Warrants | | |
Warrant
Liability | |
| Fair value
at December 31, 2021 | |
$ | 3,086,701 | | |
$ | 3,890,177 | | |
$ | 239,144 | | |
$ | 7,216,022 | |
| Change
in fair value of warrant liabilities | |
| (1,660,759 | ) | |
| (2,088,501 | ) | |
| (128,669 | ) | |
| (3,877,929 | ) |
| Transfer
out of Level 3 to Level 1 | |
| — | | |
| (1,801,676 | ) | |
| — | | |
| (1,801,676 | ) |
| Fair
value at March 31, 2022 | |
$ | 1,425,942 | | |
$ | — | | |
$ | 110,475 | | |
$ | 1,536,417 | |
Transfers
to/from Levels 1, 2 and 3 are recognized at the end of the reporting period. There was a transfer out of Level 3 to Level 1
for the fair value of the Public Warrants when they began to trade separately from the Units during the three months ended March 31,
2022.
Note
9 - Subsequent Events
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the unaudited condensed
consolidated financial statements were issued. Based on the Company’s review, except as set forth below, the Company did not identify
any subsequent events that would have required adjustment or disclosure in the unaudited condensed consolidated financial statements.
On
April 27, 2023, the Company signed the Note with the Sponsor for $1,200,000. The Note is non-interest bearing and is due the earlier
of the consummation of a business combination or the date of liquidation. The Sponsor may elect to convert all or any portion of the
unpaid principal balance of this Note into warrants, at a price of $1.00 per warrant. On April 27, 2023, the Company drew $168,589 against
the Note.