The accompanying notes are an integral part of
these financial statements.
The accompanying notes are an integral part of
these financial statements.
The accompanying notes are an integral part of
these financial statements.
The accompanying notes are an integral part of
these financial statements.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2022 AND FOR
THE PERIOD MARCH 18, 2021
(INCEPTION) THROUGH DECEMBER 31, 2021
NOTE 1 – NATURE OF THE ORGANIZATION AND
BUSINESS
Abri SPAC I, Inc (“Abri” or the “Company”)
was incorporated in the State of Delaware on March 18, 2021. The Company’s business purpose is to effect a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (our “Initial
Business Combination”). Throughout this report, the terms “our,” “we,” “us,” and the “Company”
refer to Abri SPAC I, Inc.
As of December 31, 2022, and
the date of this filing, the Company had not commenced core operations. All activity for the period
from March 18, 2021 (inception) through December 31, 2022 related to organizational activities, those necessary to consummate the initial
public offering (“IPO”) and identify a target company for a business combination. The Company will not generate any
operating revenues until after the completion of the Initial Business Combination, at the earliest. The Company generates non-operating
income in the form of interest income and gains from the marketable securities held in the Trust Account (as defined below), and gains
or losses from the change in fair value of the warrant liabilities.
The registration statement pursuant to which the Company registered
its securities offered in the IPO was declared effective on August 9, 2021. On August 12, 2021, the Company consummated its IPO of 5,000,000
units (each, a “Unit” and collectively, the “Units”), at $10.00 per Unit, generating gross proceeds of $50,000,000
and incurring offering costs of $973,988. The Company granted the underwriter a 45-day option to purchase up to an additional 750,000
Units at the IPO price to cover over-allotments.
Simultaneously with the consummation of the closing of the Initial
Public Offering, the Company completed the private sale of 276,250 units (the “Private Units”) to Abri Ventures I, LLC (“Abri
Ventures”), the Company’s sponsor (the “Sponsor”) at a purchase price of $10.00 per Private Unit, generating gross
proceeds to the Company of $2,762,500.
Following the closing of the IPO on August 12, 2021, an amount of $50,000,000
net proceeds from the IPO and sale of the Private Units was placed in a trust account in the United States maintained by Continental Stock
Transfer & Trust Company, as trustee (the “Trust Account”). The funds held in the Trust Account were invested only in
U.S. government securities with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under
the Investment Company Act which invest only in direct U.S. government treasury obligations so that we are not deemed to be an investment
company under the Investment Company Act. Except with respect to interest earned on the funds held in the Trust Account, the Trust Account
is intended as a holding place for funds pending the earliest to occur of: (i) the completion of the Initial Business Combination; (ii)
the redemption of any public shares properly submitted 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 12 months from the closing of the IPO (or up to 18 months
from the closing of this offering with the mandatory extensions of the period of time to consummate an Initial Business Combination) or
(B) with respect to any other provision relating to stockholders’ rights or pre-Initial Business Combination activity; or (iii)
absent an Initial Business Combination within 12 months from the closing of the IPO (or up to 18 months from the closing of this offering
with the mandatory extensions of the period of time to consummate an Initial Business Combination), the return of the funds held in the
Trust Account to the public stockholders as part of redemption of the public shares.
On August 19, 2021, the underwriters
notified the Company of their intent to exercise of the over-allotment option in part and, on August 23, 2021, the underwriters purchased
733,920 additional Units (the “Additional Units”) at $10.00 per Additional Unit upon the closing of the over-allotment option,
generating additional gross proceeds of $7,339,200. On August 23, 2021, simultaneously with the sale of the Additional Units, the Company
consummated the sale of an additional 18,348 Private Units at $10.00 per additional Private Unit (the “Additional Private Units”),
generating additional gross proceeds of $183,480. A total of $7,339,200 of the net proceeds from the sale of the Additional Units and
the Additional Private Units was deposited in the Trust Account, bringing the aggregate proceeds held in the Trust Account on that date
to $57,339,200.
The stock exchange listing
rules provide that the Initial 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 the deferred underwriting commissions
and taxes payable) at the time of the Company signing a definitive agreement in connection with the Initial Business Combination. The
Company will only complete an Initial Business Combination if the post-Initial 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 an Initial Business Combination.
The payment to the Company’s Sponsor of a monthly fee of $10,000
is for general and administrative services including office space, utilities and secretarial support, which the Company records as operating
expense on its statements of operations. However, pursuant to the terms of such agreement, we may delay payment of such monthly fee upon
a determination by our audit committee that we lack sufficient funds held outside the trust to pay actual or anticipated expenses in connection
with our Initial Business Combination. Any such unpaid amount will accrue without interest and be due and payable no later than the date
of the consummation of our Initial Business Combination. This arrangement is being agreed to by its Sponsor for our benefit. We believe
that the fee charged by our Sponsor is at least as favorable as we could have obtained from an unaffiliated person. This arrangement will
terminate upon completion of our Initial Business Combination or the distribution of the Trust Account to our public stockholders. Other
than the $10,000 per month fee, no compensation of any kind (including finder’s fees, consulting fees or other similar compensation)
will be paid to our insiders, members of our management team or any of our or their respective affiliates, for services rendered to us
prior to or in connection with the consummation of our Initial Business Combination (regardless of the type of transaction that it is).
However, such individuals will receive reimbursement for any out-of-pocket expenses incurred by them in connection with activities on
our behalf, such as identifying potential target businesses, performing business due diligence on suitable target businesses and business
combinations, as well as traveling to and from the offices, plants or similar locations of prospective target businesses to examine their
operations. Since the role of present management after our Initial Business Combination is uncertain, we have no ability to determine
what remuneration, if any, will be paid to those persons after our Initial Business Combination.
The funds outside of the Trust
Account are for our working capital requirements in searching for our Initial Business Combination. The allocation such funds represents
our best estimate of the intended uses of these funds. If our estimate of the costs of undertaking due diligence and negotiating our Initial
Business Combination is less than the actual amount necessary to do so, we may be required to raise additional capital, the amount, availability
and cost of which is currently unascertainable. In this event, we could seek such additional capital through loans or additional investments
from our insiders, members of our management team or third parties, but our insiders, members of our management team or third parties
are not under any obligation to advance funds to, or invest in, us.
We will likely use substantially all of the net proceeds of this offering,
including the funds held in the Trust Account, in connection with our Initial Business Combination and to pay our expenses relating thereto,
including the deferred underwriting commissions payable to the underwriter in an amount equal to 3.0% of the total gross proceeds raised
in the offering upon consummation of our Initial Business Combination. To the extent that our capital stock is used in whole or in part
as consideration to effect our Initial Business Combination, the proceeds held in the Trust Account which are not used to consummate an
Initial Business Combination will be disbursed to the combined company and will, along with any other net proceeds not expended, be used
as working capital to finance the operations of the target business. Such working capital funds could be used in a variety of ways, including
continuing or expanding the target business’ operations, for strategic acquisitions and for marketing, research and development
of existing or new products.
To the extent we are unable to consummate an Initial Business Combination,
we will pay the costs of liquidation from our remaining assets outside of the Trust Account. If such funds are insufficient, our insiders
have agreed to pay the funds necessary to complete such liquidation and have agreed not to seek repayment of such expenses.
We believe that we will not
have sufficient available funds to operate for up to the next 12 months, assuming that our Initial Business Combination is not consummated
during that time. However, if necessary, in order to meet our working capital needs following the consummation of this offering, our insiders
may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole
discretion. Each loan would be evidenced by a promissory note. The notes would either be paid upon consummation of our Initial Business
Combination, without interest, or, at the lender’s discretion, up to $750,000 of the notes may be converted upon consummation of
our Initial Business Combination into additional Private Warrants at a price of $1.00 per warrant. Notwithstanding, there is no guarantee
that the Company will receive such funds. Our stockholders have approved the issuance of the Private Warrants upon conversion of such
notes, to the extent the holder wishes to so convert such notes at the time of the consummation of our Initial Business Combination. If
we do not complete an Initial Business Combination, any loans and advances from our insiders or their affiliates, will be repaid only
from amounts remaining outside our Trust Account, if any.
The Company’s Sponsor,
officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights
with respect to their insider shares and any public shares they may hold in connection with the completion of our Initial Business Combination.
In addition, our Sponsor and its officers and directors have agreed to waive their rights to liquidating distributions from the Trust
Account with respect to their insider shares if we fail to complete our Initial Business Combination within the prescribed time frame.
However, if its Sponsor or any of its officers, directors or affiliates acquire public shares in or after this offering, they will be
entitled to liquidating distributions from the Trust Account with respect to such public shares if we fail to complete our Initial Business
Combination within the prescribed time frame.
The Company will provide its
public stockholders with the opportunity to redeem all or a portion of their shares of common stock 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 the Company’s discretion. The public stockholders will be entitled
to redeem their shares 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 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 the limitations. As of December 31, 2022, the amount in the Trust Account is approximately $10.25 per public share.
The shares of common stock subject to redemption was classified as
temporary equity upon the completion of the IPO and will subsequently be accreted to redemption value, in accordance with Financial Accounting
Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 480, “Distinguishing Liabilities
from Equity”, (“ASC 480”). In such case, the Company will proceed with an Initial Business Combination if the Company
has net tangible assets of at least $5,000,001 upon such consummation of an Initial Business Combination and, if the Company seeks
stockholder approval, a majority of the issued and outstanding shares voted are voted in favor of the Initial Business Combination.
The Company had 12
months from the closing of the IPO (the “Combination Period”) on August 9, 2021 to complete the Initial Business
Combination. On August 5, 2022, pursuant to the Company’s certificate of incorporation and investment trust agreement, the
Company deposited $573,392 into the Trust Account to extend the time to complete its Initial Business Combination for an
additional three months, or until November 12, 2022. On November 1, 2022, in connection with a second extension, Abri deposited
$573,392 (or $0.10 for each share of common stock issued in the IPO) into the Trust Account to extend the time to complete a
business combination to February 12, 2023. If the Company is unable to complete its Initial Business Combination within such
18-month period from the closing of the IPO or during any mandatory extension period, the Company will: (i) cease all operations
except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem
the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account,
including interest earned on the funds held in the Trust Account and not previously released to us to pay our taxes (less up to
$100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will
completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating
distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our
remaining stockholders and the Company’s board of directors, liquidate and dissolve, 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 warrants, which will expire worthless
if the Company fails to complete its Initial Business Combination prior to February 12, 2023, unless the Company extends the time to
complete its Initial Business Combination. On February 6, 2023, Abri deposited an additional $87,500 into the Trust Account to
extend the time to complete a business combination to March 12, 2023. On March 10, 2023,
Abri deposited an additional $87,500 into the Trust Account to extend the time to complete a business combination to
April 12, 2023.
Trust Account Redemptions
On December 9, 2022, the
Company held a special meeting of stockholders at which such stockholders voted to amend the Company’s amended and restated
certificate of incorporation and its investment trust agreement, giving the Company the right to extend the date by which the
Company must complete its Initial Business Combination up to six times for an additional one month each time, from February 12, 2023
to August 12, 2023, by depositing $87,500 into the Trust Account for each one-month extension. In connection with the special
meeting, 4,481,548 shares of common stock were tendered for redemption, resulting in redemption payments of $45,952,278 out of the
Trust Account. On February 6, 2023, Abri deposited an additional $87,500 into the Trust
Account to extend the time to complete a business combination to March 12, 2023. On March 10, 2023, Abri deposited an
additional $87,500 into the Trust Account to extend the time to complete a business combination to April 12, 2023.
Risks and Uncertainties
Management continues to evaluate
the impact of the COVID-19 pandemic and Russia-Ukraine war on the economy and the capital markets and has concluded that, while it is
reasonably possible that such events could have negative effects on the Company’s financial position, results of its operations,
and/or search for a target company, the specific impacts are not readily determinable as of the date of these financial statements. The
financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Going Concern and Management Liquidity Plans
As of December 31, 2022, the
Company had cash of $381,293 and working capital deficiency of $1,921,061. Our liquidity needs through the date of this filing had been
satisfied through proceeds from notes payable and advances from a related party and from the issuance of common stock. Our liquidity needs
consist of paying existing accounts payable, identifying and evaluating prospective 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 an Initial Business Combination. Although certain of our initial stockholders, officers and directors or
their affiliates have committed to loan us funds from time to time or at any time, in whatever amount they deem reasonable in their sole
discretion, there is no guarantee that we will receive such funds.
Accordingly, the accompanying
financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S.
GAAP”), which contemplate continuation of the Company as a going concern and the realization of assets and the satisfaction of liabilities
in the normal course of business. These financial statements do not include any adjustments that might result from the outcome of this
uncertainty. Further, we have incurred and expect to continue to incur significant costs in pursuit of our financing and acquisition plans.
Management plans to address this uncertainty during period leading up to the Initial Business Combination. The Company cannot provide
any assurance that its plans to raise capital or to consummate an Initial Business Combination will be successful. Based on the foregoing,
management believes that the Company will not have sufficient working capital and borrowing capacity to meet its needs through the earlier
of the consummation of the Initial Business Combination or one year from this filing. These factors, among others, raise substantial doubt
about our ability to continue as a going concern.
NOTE 2 – ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying audited financial statements have been prepared in
accordance with U.S. GAAP and in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”).
The summary of significant accounting policies presented below is designed to assist in understanding the Company’s financial statements.
Such consolidated financial statements and accompanying notes are the representations of the Company’s management, who is responsible
for their integrity and objectivity.
Emerging Growth Company
The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our
Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not emerging growth companies. 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 U.S. GAAP
requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible
that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements,
which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly,
the actual results could differ significantly from those estimates.
Cash and cash equivalents
The Company considers all short-term investments outside of the Trust Account
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 December 31, 2022 or 2021.
Marketable Securities Held in Trust Account
The Company has marketable
securities held in the Trust Account consisting of securities held in a money market fund that invests in U. S. governmental securities
with a maturity of 180 days or less which meet certain conditions under Rule 2a-7 under the Investment Company Act. Marketable securities
held in the Trust Account are classified as trading securities. Trading securities are presented on the balance sheets at fair value
at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities is included in interest
income in the consolidated statements of operations. The estimated fair values of the investments held in the Trust Account are determined
using available market information. During the year ended December 31, 2022, the Company withdrew $400,000 of interest income from the
Trust Account to pay its tax obligations. There was no withdrawal from the Trust Account during the period from March 18, 2021 (inception)
to December 31, 2021.
Offering Costs
Offering costs consist of professional fees, filing, regulatory and other
costs incurred through the balance sheet date that are directly related to the IPO. Offering costs are charged against the carrying value
of the ordinary shares or the statements of operations based on the relative value of the common shares and the Public Warrants to the
proceeds received from the Units sold upon the completion of the IPO. Accordingly, on August 12, 2021, offering costs in the aggregate
of $973,988 were recognized (including $359,900 for the fair value of the Representative’s unit purchase option), all of which was
allocated to the common shares, reducing the carrying amount of such shares as of such date.
Warrant Liabilities
The Company accounts for the Private Warrants in accordance with the guidance
contained in ASC 480, under which the Private Warrants do not meet the criteria for equity treatment and must be recorded as derivative
liabilities. Accordingly, upon issuance, the Company will classify the Private Warrants as liabilities at their fair value and will adjust
the Private Warrants to fair value at each reporting period. These liabilities are subject to re-measurement at each balance sheet date
until the Private Warrants are exercised or expire, and any change in fair value is recognized in the Company’s statements of operations.
The fair value of the Private Warrants will be initially and subsequently measured at the end of each reporting period using a Black-Scholes
option pricing model.
The Company’s Public
Warrants were accounted for and are presented as equity and measured using a Monte Carlo simulation model.
Common Stock Subject to Possible Redemption
The Company accounts for its
common stock subject to possible redemption in accordance with the guidance in ASC 480. Common stock subject to mandatory redemption is
classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that
feature redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events
not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’
equity. The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s control
and subject to occurrence of uncertain future events. Accordingly, common stock subject to possible redemption will be presented at redemption
value and as temporary equity, outside of the stockholders’ equity (deficit) section of the Company’s balance sheets.
The
Company has made a policy election in accordance with ASC 480 and will accrete changes in redemption value in additional paid-in capital
(or accumulated deficit in the absence of additional paid-in capital) through the time period to complete the Initial Business Combination.
In connection with a redemption of shares, any unrecognized accretion will be fully recognized for shares that are redeemed. As of December
31, 2022, the Company had recorded accretion of $8,203,829, with no unrecognized accretion .
As of December 31, 2021, the Company had recorded accretion of $1,733,440 with unrecognized accretion of $5,015,911.
Income Taxes
The Company follows the asset and liability method of accounting for
income taxes under ASC 740, Income Taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition
threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be
taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination
by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense.
There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2022 and 2021. The Company
is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The Company is subject to income tax examinations by taxing authorities since inception.
Concentration of Credit Risk
Financial instruments that
potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times,
may exceed the Federal Depository Insurance Coverage. As of December 31, 2022 and 2021, the Company has not experienced losses on this
account and management believes the Company is not exposed to significant risks on such account.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which
qualify as financial instruments under ASC 820, Fair Value Measurement, approximates the carrying amounts represented in the accompanying
balance sheet, primarily due to their short-term nature.
Fair Value Measurements
Fair value is defined as the
price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants
at the measurement date. U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair
value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level
1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
|
● |
Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
|
|
|
|
● |
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
|
|
|
|
● |
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
In some circumstances, the
inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair
value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the
fair value measurement.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such
instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC 815, Derivatives and Hedging.
For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair
value on the issuance date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of
operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity,
is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet 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.
Net Loss Per Share
Net loss per share is computed
by dividing net loss by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share
is computed similar to basic earnings per share, except the weighted average number of common shares outstanding are increased to include
additional shares from the assumed exercise of share options, if dilutive. All outstanding convertible notes are considered common stock
at the beginning of the period or at the time of issuance, if later, pursuant to the if-converted method. Since the effect of common stock
equivalents is anti-dilutive with respect to losses, the shares issuable upon conversion have been excluded from the Company’s computation
of net loss per common share for the year ended December 31, 2022.
The following table summarizes
the securities that would be excluded from the diluted per share calculation because the effect of including these potential shares was
antidilutive due to the Company’s net loss position, even though the exercise price could be less than the most recent fair value
of the common shares:
| |
As of
December 31,
2022 | |
| |
| |
Potential shares from convertible debt | |
| 125,000 | |
Total | |
| 125,000 | |
The Company complies with accounting and disclosure requirements of
ASC 260, “Earnings Per Share”. The statements of operations include a presentation of income (loss) per redeemable
share and income (loss) per non-redeemable share following the two-class method of income per share. In order to determine the Net income
(loss) attributable to both the redeemable shares and non-redeemable shares, the Company first considered the total income (loss) allocable
to both sets of shares. This is calculated using the total net income (loss) less any dividends paid. For purposes of calculating net
income (loss) per share, any remeasurement of the ordinary shares subject to possible redemption was considered to be dividends paid to
holders of redeemable common stock. For the year ended December 31, 2022, this had an antidilutive effect on earnings per share for the
non-redeemable shares. Therefore, the Company did not allocate any portion of the loss to the redeemable shares subject to redemption.
For the year ended December 31, 2022, the net loss per share included
within the statements of operations is based on the following:
Net loss | |
$ | (2,500,184 | ) |
Less: Accretion of temporary equity to redemption value | |
| (6,470,389 | ) |
Net loss including accretion of temporary equity to redemption value | |
$ | (8,970,573 | ) |
|
|
Common
Shares
Subject to
Redemption |
|
|
Non-redeemable
Common Shares |
|
Basic and diluted net loss per share: |
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
Allocation of net loss including accretion of temporary equity |
|
$ |
(6,815,107 |
) |
|
$ |
(2,155,466 |
) |
Accretion of temporary equity to redemption value |
|
|
6,470,389 |
|
|
|
- |
|
Allocation of net loss |
|
$ |
(344,718 |
) |
|
|
(2,155,466 |
) |
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
|
Weighted-average shares outstanding |
|
|
5,463,799 |
|
|
|
1,728,078 |
|
Basic and diluted net loss per share |
|
$ |
(0.06 |
) |
|
$ |
(1.25 |
) |
For the period from March 18, 2021 (inception) to December 31, 2021,
the net loss per share included within the statements of operations is based on the following:
For the period from March 18, 2021 (inception) through December
31, 2021
Net loss | |
$ | (1,127,612 | ) |
Accretion of temporary equity to redemption value | |
| (1,733,440 | ) |
Net loss including accretion of temporary equity to redemption value | |
$ | (2,861,052 | ) |
| |
Common
Shares Subject to
Redemption | | |
Non-redeemable Common
Shares | |
Basic and diluted net income (loss) per share: | |
| | |
| |
Numerator: | |
| | |
| |
Allocation of net loss including accretion of temporary equity | |
$ | (2,157,043 | ) | |
$ | (704,009 | ) |
Accretion of temporary equity to redemption value | |
| 1,733,440 | | |
| — | |
Allocation of net loss | |
$ | (423,603 | ) | |
$ | (704,009 | ) |
| |
| | | |
| | |
Denominator: | |
| | | |
| | |
Weighted-average shares outstanding | |
| 2,789,393 | | |
| 1,447,964 | |
Basic and diluted net loss per share | |
$ | (0.15 | ) | |
$ | (0.49 | ) |
In connection with the underwriters’
exercise of the over-allotment option on August 19, 2021, a total of 187,500 Founder Shares were no longer subject to forfeiture.
These shares were excluded from the calculation of weighted average shares outstanding until they were no longer subject to forfeiture.
At December 31, 2022 and 2021,
any securities and other contracts that could, potentially, be exercised or converted into ordinary shares would be antidilutive due to
the Company’s loss position. As a result, diluted loss per share is the same as basic loss per 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 August 12, 2021, the Company consummated its IPO of 5,000,000 Units
at $10.00 per Unit, generating gross proceeds of $50,000,000 and incurred offering costs of $2,223,988, consisting of $1,250,000 of underwriting
fees and expenses and $973,988 of costs related to the IPO. Additionally, the Company recorded deferred underwriting commissions of $1,500,000
(increasing up to $1,725,000 if the underwriter’s over-allotment option is exercised in full) payable only upon completion of our
Initial Business Combination.
Simultaneously with the consummation of the closing of the IPO, the
Company completed the private sale of 276,250 Private Units to its Sponsor at a purchase price of $10.00 per Private Unit, generating
gross proceeds to the Company of $2,762,500.
On August 19, 2021, the underwriters
notified the Company of their intent to exercise of the over-allotment option in part and, on August 23, 2021, the underwriters purchased
733,920 Additional Units at $10.00 per Additional Unit upon the closing of the over-allotment option, generating additional gross proceeds
of $7,339,200. On August 23, 2021, simultaneously with the sale of the Additional Units, the Company consummated the sale of an additional
18,348 Additional Private Units, generating additional gross proceeds of $183,480. A total of $7,339,200 of the net proceeds from the
sale of the Additional Units and the Additional Private Units was deposited in the Trust Account.
Since the underwriters did
not exercise their over-allotment option in full, 4,020 shares of common stock issued to the sponsor prior to the IPO and the Private
Placement, were forfeited for no consideration.
The Private Units were issued
pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, as the transactions did not involve a public offering.
NOTE 4 – RELATED PARTY TRANSACTIONS
Sponsor Shares
On April 12, 2021, the Company’s
sponsor, Abri Ventures purchased 1,437,500 shares (the “Founder Shares”) of the Company’s
common stock for an aggregate price of $25,000.
Private Units
On August 12, 2021, our Sponsor
purchased an aggregate of 276,250 Private Units in a private placement that closed simultaneously with the closing of IPO.
The Private Units are comprised of one share of common stock and one redeemable warrant, each exercisable to purchase one share of common
stock at $11.50 per share and are otherwise identical to the public warrants in the IPO.
On August 23, 2021, simultaneously
with the sale of the Additional Units, the Company consummated the sale of an additional 18,348 Additional Private Units, generating additional
gross proceeds of $183,480.
All of the proceeds we received
from this private placement of units were added to the proceeds from the IPO to pay for the expenses of the IPO and to be held in the Trust Account. If we do not complete our Initial Business Combination within 12 months from the
closing of this IPO (or up to 18 months), the proceeds of the sale of the Private Units will be used to fund the redemption
of our public shares (subject to the requirements of applicable law) and the Private Units and underlying warrants will be worthless.
Promissory Note — Related Party
On April 20, 2021, the Company
entered a promissory note with its Sponsor for principal amount received of $300,000 to be used for a portion of the expenses of the IPO. The note was non-interest bearing, unsecured and payable on the earlier of: (i) December 31, 2022 or (ii) the date on
which the Company consummated the IPO. As of December 31, 2022, there was a zero balance outstanding under the note.
On August 5, 2022, the Company
entered a promissory note with its Sponsor of principal amount received of $573,392 to extend the time available for the company to consummate
its initial business combination. The note was non-interest bearing, unsecured and payable on the date the Company consummates an Initial
Business Combination.
On November 1, 2022, the Company
entered a promissory note with its Sponsor of principal amount received of $573,392 to extend the time available for the company to consummate
its initial business combination. The note was non-interest bearing, unsecured and payable on the date the Company consummates an Initial
Business Combination.
In the event that an
Initial Business Combination does not close prior to April 12, 2023 (or later if the period of time to consummate an Initial
Business Combination is extended), both notes shall be deemed terminated and no amounts will be owed. As of December 31, 2022, there
was $1,146,784 outstanding in the aggregate under both notes.
Convertible Promissory Notes — Related
Party
On March 8, 2022, the Company
entered a convertible promissory note with its Sponsor for principal amount received of $300,000 to be used for a portion of the expenses
of the IPO. The note was non-interest bearing, unsecured and payable on the date the Company consummates a Business
Combination. In the event that a Business Combination did not close prior to April 12, 2023 (or up to later if the period
of time to consummate an Initial Business Combination is extended), the note shall be deemed terminated and no amounts will be owed. At
any time, up to a day prior to the closing of an Initial Business Combination, the holder may convert the principal amount into private
units of the Company at a conversion price of $10.00 per unit. As of December 31, 2022, there was $300,000 outstanding under the note.
On April 4, 2022, the Company
entered a convertible promissory note with its Sponsor of principal amount received of $500,000 to be used for operating expenses. The
note was non-interest bearing, unsecured and payable on the date the Company consummates a Business Combination. In the event that a Business
Combination did not close prior to August 12, 2022 (or up to February 12, 2023, if the period of time to consummate an Initial Business
Combination is extended), the note shall be deemed terminated and no amounts will be owed. At any time, up to a day prior to the closing
of an Initial Business Combination, the holder may convert the principal amount into private units of the Company at a conversion price
of $10.00 per unit. As of December 31, 2022, there was $500,000 outstanding under the note.
On August 26, 2022, the Company
entered a convertible promissory note with its Sponsor of principal amount received of $300,000 to be used for operating expenses. The
note was non-interest bearing, unsecured and payable on the date the Company consummates an Initial Business Combination. In the event
that an Initial Business Combination does not close prior to February 12, 2023 (or up to August 12, 2023, if the period of time to consummate
an Initial Business Combination is extended), the note shall be deemed terminated and no amounts will be owed. At any time, up to a day
prior to the closing of an Initial Business Combination, the holder may convert the principal amount into private units of the Company
at a conversion price of $10.00 per unit. As of December 31, 2022, there was $300,000 outstanding under the note.
On November 22, 2022, the
Company entered a convertible promissory note with its Sponsor of principal amount received of $150,000 to be used for operating expenses.
The note was non-interest bearing, unsecured and payable on the date the Company consummates an Initial Business Combination. In the event
that an Initial Business Combination does not close prior to February 12, 2023 (or up to August 12, 2023, if the period of time to consummate
an Initial Business Combination is extended), the note shall be deemed terminated and no amounts will be owed. At any time, up to a day
prior to the closing of an Initial Business Combination, the holder may convert the principal amount into private units of the Company
at a conversion price of $10.00 per unit. As of December 31, 2022, there was $150,000 outstanding under the note.
Administrative and Support Services
The Company entered into an
administrative services agreement pursuant to which the Company will pay the Sponsor a total of $10,000 per month for office space, administrative
and support services, which the Company records as operating expense on its statements of operations. Upon the completion of the Initial
Business Combination or our liquidation, the Company will cease paying these monthly fees. The Company recorded $120,000 and $90,000 related
to these fees during the year ended December 31, 2022 and the period from March 18, 2021 (inception) to December 31, 2021, respectively.
As of December 31, 2022 and 2021, the Company owed the Sponsor $10,000 and zero, respectively, under this agreement.
NOTE 5 – COMMITMENTS AND CONTINGENCIES
Merger
Agreement and Termination with Apifiny
On January 27, 2022, the Company
entered into a Merger Agreement (the “Merger Agreement”) by and among Apifiny Group Inc., a Delaware corporation (“Apifiny”),
the Company, Abri Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”), Erez
Simha, solely in his capacity as representative, agent and attorney-in-fact of the Apifiny security holders, and the Sponsor, solely in
its capacity as representative, agent and attorney-in-fact of the Indemnified Party (as defined in the Merger Agreement) (collectively,
the “Parties”).
On July 22, 2022, the Parties
entered into a termination of merger letter agreement (the “Termination Agreement”). Pursuant to the Termination Agreement,
the Parties agreed to mutually terminate the Merger Agreement, subject to the representations, warranties, conditions and covenants set
forth in the Termination Agreement. In conjunction with the termination of the Merger Agreement, the Additional Agreements (as defined
in the Merger Agreement) (including the Parent and Company Stockholder Support Agreements) have also been terminated in accordance with
their respective terms as of July 22, 2022.
The Termination Agreement
contains mutual releases by all parties thereto, for all claims known and unknown, relating and arising out of, or relating to, among
other things, the Merger Agreement, or the transactions contemplated by the Merger Agreement, subject to certain exceptions with respect
to claims for indemnity or contribution.
Merger Agreement with DLQ
On September 9, 2022, the
Company, entered into a Merger Agreement (the “Merger Agreement”) by and among Abri Merger Sub, Inc., a Delaware corporation
and a wholly owned subsidiary of Abri (“Merger Sub”), Logiq, Inc., a Delaware corporation (“DLQ Parent”) whose
common stock is quoted on the OTCQX Market under the ticker symbol, “LGIQ”, and DLQ, Inc., a Nevada corporation (“DLQ”)
and wholly owned subsidiary of DLQ Parent. Pursuant to the terms of the Merger Agreement, a business combination between the Company and
DLQ will be effected through the merger of Merger Sub with and into DLQ, with DLQ surviving the merger as a wholly owned subsidiary of
the Company (the “Merger”). The board of directors of the Company has (i) approved and declared advisable the Merger Agreement,
the Additional Agreements (as defined in the Merger Agreement) and the transactions contemplated thereby and (ii) resolved to recommend
approval of the Merger Agreement and related transactions by the stockholders of the Company.
The Merger is expected to
be consummated after obtaining the required approval by the stockholders of the Company, DLQ and DLQ Parent and the satisfaction of certain
other customary closing conditions.
The
total consideration to be paid at Closing (the “Merger Consideration”) by the Company to DLQ security holders will be an
amount equal to $114,000,000. The Merger Consideration will be
payable in shares of common stock, par value $0.0001 per share, of the Company (“Abri Common Stock”).
DLQ Management Earnout Agreement
In
connection with the execution of the Merger Agreement, Abri and the Sponsor will enter into a management earnout agreement (the “Management
Earnout Agreement”), pursuant to which certain members of the management team of DLQ (the
“Management”) will have the contingent right to earn the Management Earnout Shares (as defined in the Management Earnout
Agreement). The Management Earnout Shares consist of 2,000,000 shares of Abri Common Stock (the “Management Earnout Shares”).
The release of the Management Earnout Shares shall occur as follows:
| ● | 500,000 Management Earnout Shares will be earned and released upon satisfaction of the First Milestone Event (as defined in the Management Earnout Agreement); |
| ● | 650,000 Management Earnout Shares will be earned and released upon satisfaction of the Second Milestone Event (as defined in the Management Earnout Agreement); and |
| ● | 850,000 Management Earnout Shares will be earned and released upon satisfaction of the Third Milestone Event (as defined in the Management Earnout Agreement). |
If the Company has not
consummated an initial business combination by April 12, 2023 (or up to August 12, 2023 if the time period to consummate the Initial
Business Combination is extended), the Company will be required to dissolve and liquidate. If the Company anticipates that it may
not be able to consummate its initial business combination on or before April 12, 2023, the Company may, but is not obligated to,
extend the period of time to consummate an Initial Business Combination, for another four times by an additional one month each
time through August 12, 2023.
Registration Rights
The holders of the Founder
Shares are entitled to registration rights pursuant to a registration rights agreement that was signed as of the effective date of the
IPO. The holders of the majority of these securities are entitled to make up to three demands that the Company register
such securities. The holders of the majority of the Founder Shares can elect to exercise these registration rights at any time commencing
three months prior to the date on which the Founder Shares are to be released from escrow. In addition, the holders have certain “piggy-back”
registration rights with respect to registration statements filed subsequent to our consummation of our Initial Business Combination.
The holders of the Founder Shares have agreed not to transfer, assign or sell any of the such shares (except to certain permitted transferees)
until, with respect to 50% of such shares, the earlier of six months after the date of the consummation of our Initial Business Combination
and the date on which the closing price of our common stock equals or exceeds $12.50 per share for any 20 trading days within a 30-trading
day period following the consummation of our Initial Business Combination and, with respect to the remaining 50% of such shares, six months
after the date of the consummation of our Initial Business Combination, or earlier in each case if, subsequent to our Initial Business
Combination, we complete a liquidation, merger, stock exchange or other similar transaction which results in all of our stockholders having
the right to exchange their shares of common stock for cash, securities or other property. The Founder Shares will be held in escrow with
Continental Stock Transfer & Trust Company during the period in which they are subject to the transfer restrictions described above.
Unit Purchase Option
We sold to the underwriters,
for $100, an option to purchase up to a total of 300,000 units (increased to 344,035 units after the over-allotment was exercised in part)
exercisable, in whole or in part, at $11.50 per unit, commencing on the consummation of our Initial Business Combination. The purchase
option may be exercised for cash or on a cashless basis, at the holder’s option, and expires five years from the commencement of
sales in this offering. The option and the 300,000 units, as well as the 300,000 shares of common stock, and the warrants to purchase
300,000 shares of common stock that may be issued upon exercise of the option, have been deemed compensation by FINRA and are therefore
subject to a lock-up for a period of 180 days immediately following the effective date of the registration statement or the commencement
of sales in the IPO pursuant to Rule 5110(e)(1) of FINRA’s Rules, during which time the option may not be sold,
transferred, assigned, pledged or hypothecated, or be subject of any hedging, short sale, derivative or put or call transaction that would
result in the economic disposition of the securities. Additionally, the option may not be sold, transferred, assigned, pledged or hypothecated
for a one-year period (including the foregoing 180-day period) following the date of the Company’s initial prospectus except to
any underwriter and selected dealer participating in the offering and their bona fide officers or partners. The option grants to holders
demand and “piggy-back” rights of the securities directly and indirectly issuable upon exercise of the option. Notwithstanding
the foregoing, the underwriters and their related persons may not (i) have more than one demand registration right at our expense, (ii)
exercise their demand registration rights more than five (5) years from the effective date of the registration statement, and (iii) exercise
their “piggy-back” registration rights more than seven (7) years from the effective date of the registration statement. We
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 units issuable upon exercise of the option may be adjusted in certain circumstances
including in the event of a stock dividend, or our recapitalization, reorganization, merger or consolidation. However, the option will
not be adjusted for issuances of shares of common stock at a price below its exercise price. We will have no obligation to net cash settle
the exercise of the purchase option or the warrants underlying the purchase option. The holder of the purchase option will not be entitled
to exercise the purchase option or the warrants underlying the purchase option unless a registration statement covering the securities
underlying the purchase option is effective or an exemption from registration is available. If the holder is unable to exercise the purchase
option or underlying warrants, the purchase option or warrants, as applicable, will expire worthless.
On August 12, 2021, the Company
accounted for the unit purchase option, inclusive of the receipt of $100 cash payment, as an expense of the Initial Public Offering resulting
in a charge directly to stockholders’ equity.
NOTE 6 – STOCKHOLDERS’ EQUITY
(DEFICIT)
Common Stock
The Company is authorized
to issue an aggregate of 5,000,000 shares of common stock having a par value of $0.0001 per share. On April 12, 2021, the Company issued
1,437,500 founder shares of common stock at a price of $0.0001 per share for total receivable of $25,000. These Founder
Shares held by our Sponsor included up to 187,500 shares which were subject to forfeiture by the stockholder if the underwriters of the
Company’s IPO did not fully or in part exercise their over-allotment option. On August 19, 2021, the underwriters
notified the Company of their intent to exercise of the over-allotment option in part and, on August 23, 2021, the underwriters purchased
733,920 Additional Units at $10.00 per Additional Unit upon the closing of the over-allotment option, generating additional gross proceeds
of $7,339,200. On August 23, 2021, simultaneously with the sale of the Additional Units, the Company consummated the sale of an additional
18,348 Additional Private Units, generating additional gross proceeds of $183,480. The balance of the Additional Private Units, or 402
Private Units, including 4,020 Founder Shares, were forfeited by the Sponsor.
Authorized Stock
Upon the effectiveness of
the Company’s registration statement on August 9, 2021, the Company amended and restated its certificate of incorporation to authorize
the issuance of up to 100,000,000 shares of common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value
$0.0001 per share.
Public and Private Warrants
Each whole warrant entitles
the registered holder to purchase one common stock at a price of $11.50 per share, subject to adjustment as discussed below, at any time
commencing on the later of the completion of an Initial Business Combination and one year from the consummation of the Company’s
IPO. The warrants will expire five years after the completion of our Initial Business Combination, or earlier upon
redemption.
No public warrants will be
exercisable for cash unless we have an effective and current registration statement covering the shares of common stock issuable upon
exercise of the warrants and a current prospectus relating to such shares. It is our current intention to have an effective and current
registration statement covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to
such shares in effect promptly following consummation of an Initial Business Combination. Notwithstanding the foregoing, if a registration
statement covering the shares of common stock issuable upon exercise of the public warrants is not effective within 90 days following
the consummation of our Initial Business Combination, public warrant holders may, until such time as there is an effective registration
statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless
basis.
We may redeem the outstanding
warrants, in whole and not in part, at a price of $0.01 per warrant:
|
● |
at any time while the warrants are exercisable; |
|
● |
upon a minimum of 30 days’ prior written notice of redemption; |
|
● |
if, and only if, the last sales price of our shares of common stock equals or exceeds $16.50 per share for any 20 trading days within a 30-trading day period ending three business days before we send the notice of redemption; and |
|
● |
if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption. |
If the foregoing conditions
are satisfied and we issue a notice of redemption, each warrant holder can exercise his, her or its warrant prior to the scheduled redemption
date. However, the price of the shares of common stock may fall below the $16.50 trigger price as well as the $11.50 warrant exercise
price per share after the redemption notice is issued and not limit our ability to complete the redemption.
The redemption criteria for
our warrants have been established at a price which is intended to provide warrant holders a reasonable premium to the initial exercise
price and provide a sufficient differential between the then-prevailing share price and the warrant exercise price so that if the share
price declines as a result of our redemption call, the redemption will not cause the share price to drop below the exercise price of the
warrants.
If we call the warrants for
redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a
“cashless basis.” In such event, each holder would pay the exercise price by surrendering the whole 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 shares
of 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. Whether we will exercise our option to require all holders to exercise their warrants on a “cashless basis”
will depend on a variety of factors including the price of our shares of common stock at the time the warrants are called for redemption,
our cash needs at such time and concerns regarding dilutive share issuances.
Common Stock Subject to Redemption
The Company’s common
stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence
of future events. The Company is authorized to issue 100,000,000 shares of common stock with a par value of $0.0001 per share. Holders
of the Company’s common stock are entitled to one vote for each share. As of December 31, 2022 and 2021, there were 1,252,372 and
5,733,920 shares of common stock outstanding, respectively, subject to possible redemption and are classified outside of permanent equity
in the balance sheets.
The balances of common stock
subject to possible redemption reflected on the balance sheets are reconciled in the following table:
Gross proceeds from IPO | |
$ | 57,339,200 | |
Less: | |
| | |
Fair value of public warrants at issuance | |
| (3,201,883 | ) |
Offering Costs allocated to common stock subject to possible redemption | |
| (3,547,468 | ) |
Plus: | |
| | |
Accretion of common stock subject to possible redemption | |
| 1,733,440 | |
Common stock subject to possible redemption as of December 31, 2021 | |
| 52,323,289 | |
Plus: | |
| | |
Accretion of common stock subject to possible redemption | |
| 6,332,332 | |
Less: | |
| | |
Common stock redeemed on December 19, 2022 | |
| (45,952,279 | ) |
Common stock subject to possible redemption as of December 31, 2022 | |
$ | 12,703,342 | |
During
the year ended December 31, 2022 and the period from March 18, 2021 (inception) to December 31, 2021, there was accretion cost recorded
in the statements of stockholders’ equity (deficit )
and redeemable common stock of $6,332,332 and $1,733,440, respectively.
NOTE 7 – WARRANTS
On August 12, 2021, the Company
consummated its IPO of 5,000,000 Units at $10.00 per Unit, generating gross proceeds of $50,000,000, with each Unit
consisting of one share of common stock, $0.0001 par value, and one redeemable warrant. The Company granted the underwriter a 45-day option
to purchase up to an additional 750,000 Units at the IPO price to cover over-allotments.
Simultaneously with the consummation
of the closing of the IPO, the Company completed the private sale of 276,250 Private Units to its Sponsor at a purchase
price of $10.00 per Private Unit, generating gross proceeds to the Company of $2,762,500, with each Private Unit consisting of one share
of common stock, $0.0001 par value, and one redeemable warrant.
Upon consummation of our IPO, we sold to the underwriters, for $100, an option to purchase up to a total of 300,000 units (increased to 344,035 units
after the over-allotment was exercised in part) exercisable, in whole or in part, at $11.50 per unit, commencing on the consummation of
our Initial Business Combination. The purchase option may be exercised for cash or on a cashless basis, at the holder’s option,
and expires five years from the commencement of sales in this offering. The option and the 300,000 units, as well as the 300,000 shares
of common stock, and the warrants to purchase 300,000 shares of common stock that may be issued upon exercise of the option have been
deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following the effective date
of our registration statement, or August 9, 2021. As of August 12, 2021, the Company accounted for the unit purchase option, inclusive
of the receipt of $100 cash payment, as an expense of the IPO resulting in a charge directly to stockholders’
equity.
On August 19, 2021, the underwriters
notified the Company of their intent to exercise of the over-allotment option in part and, on August 23, 2021, the underwriters purchased
733,920 Additional Units at $10.00 per Additional Unit upon the closing of the over-allotment option, generating additional gross proceeds
of $7,339,200. On August 23, 2021, simultaneously with the sale of the Additional Units, the Company consummated the sale of an additional
18,348 Additional Private Units, generating additional gross proceeds of $183,480, with each Additional Private Unit consisting of one
share of common stock, $0.0001 par value, and one redeemable warrant.
On April 13, 2022, the Company
and Continental Stock Transfer & Trust Company (the “Warrant Agent”), entered into a supplement (the “Supplement
to Warrant Agreement”) to the Warrant Agreement, dated as of August 9, 2021 by and between the Company and the Warrant Agent in
connection with the Company’s IPO (see Note 3). The Supplement to Warrant Agreement clarifies that the lock-up period for the Private
Warrants extends to 30 days after the completion of the Company’s Initial Business Combination.
Each Private Unit, Additional
Unit and Additional Private Unit are identical to the Unit from our IPO except as described below.
The Sponsor has agreed to
waive its redemption rights with respect to any shares underlying the Private Units (i) in connection with the consummation of a business
combination, (ii) in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance
or timing of our obligation to allow redemption in connection with our Initial Business Combination or certain amendments to our charter
prior thereto, to redeem 100% of our public shares if we do not complete our Initial Business Combination within 12 months from the completion
of this offering (or up to 18 months from the closing of this offering if extended) or with respect to any other provision relating to
stockholders’ rights or pre-Initial Business Combination activity and (iii) if we fail to consummate a business combination within
12 months from the completion of this offering (or up to 18 months from the closing of this offering if extended) or if we liquidate prior
to the expiration of the 18 month period. However, the Sponsor will be entitled to redemption rights with respect to any public shares
it holds if we fail to consummate a business combination or liquidate within the 18-month period.
The Private Units and their
component securities will not be transferable, assignable or saleable until 30 days after the consummation of our Initial Business Combination
except to permitted transferees.
The Company evaluated the
Public and Private Warrants as either equity-classified or liability-classified instruments based on an assessment of the warrants’
specific terms and ASC 480 and ASC 815. The assessment considers whether the warrants are freestanding financial instruments pursuant
to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification
under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification.
Pursuant to such evaluation, the Company further evaluated the Public and Private Warrants under ASC 815-40, “Derivatives and Hedging
— Contracts in Entity’s Own Equity” and concluded that the Private Warrants do not meet the criteria to be classified
in stockholders’ equity (deficit).
Certain adjustments to the
settlement amount of the Private warrants are based on a variable that is not an input to the fair value of an option as defined under
ASC 815 — 40, and thus the warrants are not considered indexed to the Company’s own stock and not eligible for an exception
from derivative accounting. The accounting treatment of derivative financial instruments requires that the Company record a derivative
liability upon issuance of the warrants at the closing of the IPO. Accordingly, the Company classified each Private
Warrant as a liability at its fair value, with subsequent changes in their respective fair values recognized in the statements of operations
and comprehensive income (loss) at each reporting date.
The Company accounted for
the Public Warrants as equity based on its initial evaluation that the Public Warrants are indexed to the Company’s own stock. The
fair value of the Public Warrants was approximately $0.60 per Public Warrant, which was determined by the Monte Carlo simulation model.
The Public Warrants will be recorded at the amount of allocated proceeds and will not be remeasured every reporting period.
NOTE 8 – FAIR VALUE MEASUREMENTS
The Company carries marketable
investments, Private Warrants, at fair value. Fair value is based on the price that would be received from selling an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying
the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within
the hierarchy upon the lowest level of input that is available and significant to the fair value measurement.
The Company determined the
fair value of its Level 1 financial instruments, which are traded in active markets, using quoted market prices for identical instruments.
The Company’s marketable securities held in Trust Account is classified within Level 1 of the fair value hierarchy.
The Company’s Private Warrants are valued
as Level 2 instruments.
The estimated fair value of
the Private Warrants is determined using Level 2 inputs for the year ended December 31, 2022. The estimated fair value of the Private
Warrants was transferred from Level 3 to Level 2 during the year ended December 31, 2022. Inherent in a Black-Scholes pricing model
are assumptions related to dividend yield, term, volatility and risk-free rate. The Company estimates the volatility of its common shares
based on management’s understanding of the volatility associated with instruments of other similar entities. The risk-free interest
rate is based on the U.S. Treasury rate matching the expected term of the warrants. The expected life of the warrants is simulated based
on management assumptions regarding the timing and likelihood of completing our Initial Business Combination. The dividend rate is based
on the historical rate, which the Company anticipates remaining at zero.
The
fair value of the Private Warrants from the private placement that closed simultaneously with the closing of the IPO was $176,759, which
was determined by the Black-Scholes Pricing Model with the following assumptions: dividend yield of 0%, term of 5 years, volatility of
13.5%, exercise price of $11.50 and risk-free rate of 0.81%. The fair value was $170,867 as of December 31, 2021, using the following
assumptions: dividend yield of 0%, term of 4.5 years, volatility of 11.8%, exercise price of $11.50 and risk-free rate of 1.19%. The fair
value was $17,676 as of December 31, 2022, using the following assumptions: dividend yield of 0%, term of 2.75 years, volatility of 0.7%%,
exercise price of $11.50 and risk-free rate of 4.27%, resulting in a gain on change in fair value of warrant liabilities of $153,191 for
the year ended December 31, 2022.
The following table presents
information about the transfer from Level 3 to Level 2 within the fair value hierarchy during the year ended December 31, 2022:
| |
Warrant liabilities | | |
Total Level 3 Financial Instruments | |
Level 3 financial instruments as of December 31, 2021 | |
$ | 170,867 | | |
$ | 170,867 | |
Change in fair value | |
| (153,191 | ) | |
| (153,191 | ) |
Transfer to Level 2 | |
| (17,676 | ) | |
| (17,676 | ) |
Level 3 financial instruments as of December 31, 2022 | |
$ | - | | |
$ | - | |
The following table presents
information about the Company’s assets that are measured at fair value on a recurring basis at December 31, 2022 and indicates the
fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
| |
| | |
Fair
value measurements at reporting date using: | |
Description | |
Fair
Value | | |
Quoted
prices in
active markets
for identical
liabilities
(Level 1) | | |
Significant
other
observable
inputs
(Level 2) | | |
Significant
unobservable
inputs
(Level 3) | |
Assets: | |
| | |
| | |
| | |
| |
Marketable securities held in Trust
Account | |
$ | 12,841,399 | | |
$ | 12,841,399 | | |
$ | - | | |
$ | - | |
| |
| | | |
| | | |
| | | |
| | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Warrant liabilities | |
$ | 17,676 | | |
$ | - | | |
$ | 17,676 | | |
$ | - | |
The following table presents
information about the Company’s assets that are measured at fair value on a recurring basis at December 31, 2021 and indicates the
fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
| |
| | |
Fair value measurements at reporting date using: | |
Description | |
Fair Value | | |
Quoted
prices in
active markets
for identical
liabilities
(Level 1) | | |
Significant
other
observable
inputs
(Level 2) | | |
Significant
unobservable
inputs
(Level 3) | |
Assets: | |
| | |
| | |
| | |
| |
Marketable securities held in Trust Account | |
$ | 57,340,207 | | |
$ | 57,340,207 | | |
$ | - | | |
$ | - | |
| |
| | | |
| | | |
| | | |
| | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Warrant liabilities | |
$ | 170,867 | | |
$ | - | | |
$ | - | | |
$ | 170,867 | |
In some circumstances, the
inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair
value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the
fair value measurement.
In order to calculate the
fair value of the Public Warrants at the IPO date for purposes of establishing the initial allocation of costs, the
Company utilized the following inputs to the Monte Carlo simulation model for the initial measurement:
Underlying common stock price | |
$ | 9.48 | |
Risk free rate | |
| 0.82 | % |
Unit purchase price | |
$ | 10.00 | |
Estimated term | |
| 5 Years | |
Volatility | |
| 13.5 | % |
The Company is not required
to re-measure the fair value of the Public Warrants since they are an equity-classified instrument.
NOTE 9 – INCOME TAXES
The Company accounts for income
taxes under ASC 740, which provides for an asset and liability approach of accounting for
income taxes.
The income tax provision for the year ended December
31, 2022 and for the period from March 18, 2021 (inception) to December 31, 2021 was as follows:
| |
December 31, | |
| |
2022 | | |
2021 | |
Current: | |
| | |
| |
U.S. federal | |
$ | 119,000 | | |
$ | - | |
State and local | |
| - | | |
| - | |
| |
| 119,000 | | |
| - | |
Deferred: | |
| | | |
| | |
U.S. federal | |
| (648,000 | ) | |
| 238,000 | |
State and local | |
| 78,000 | | |
| 78,000 | |
| |
| (570,000 | ) | |
| 316,000 | ) |
Change in valuation allowance | |
| 570,000 | | |
| (316,000 | ) |
Provision for income taxes | |
$ | 119,000 | | |
$ | - | |
A reconciliation of the federal
income tax rates to the Company’s effective tax rates for the year ended December 31, 2022 and for the period from March 18, 2021
(inception) to December 31, 2021 consist of the following:
| |
2022 | | |
2021 | |
U.S. federal statutory rate | |
| 21.0 | % | |
| 21.0 | % |
Effects of: | |
| | | |
| | |
State taxes, net of federal benefit | |
| - | % | |
| - | % |
Change in warrant liabilities | |
| 1.4 | % | |
| - | % |
Tax return to provision adjustment | |
| (3.6 | )% | |
| - | % |
Change in valuation allowance | |
| (23.8) | % | |
| (21.0 | )% |
Effective rate | |
| (5.0) | % | |
| - | % |
Significant components of
the Company’s deferred tax assets as of December 31, 2022 and 2021 are summarized below.
| |
December 31, 2022 | | |
December 31, 2021 | |
Deferred tax assets: | |
| | |
| |
Net operation loss carryforwards | |
$ | - | | |
$ | 21,000 | |
Startup costs | |
| 886,000 | | |
| 295,000 | |
Total deferred tax asset | |
| 886,000 | | |
| 316,000 | |
Valuation allowance | |
| (886,000 | ) | |
| (316,000 | ) |
| |
$ | - | | |
$ | - | |
The Company recognizes deferred
tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the
Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences,
projected future taxable income, tax-planning strategies, and results of recent operations. The Company assessed the need for a valuation
allowance against its net deferred tax assets and determined a full valuation allowance is required the Company has no history of generating
taxable income. Therefore, a valuation allowance of $886,000 and $316,000 was recorded as of December 31, 2022 and 2021 respectively.
The
Company’s ability to utilize net operating loss carryforwards will depend on its ability to generate adequate future taxable income.
Future utilization of the net operating loss carry forwards is subject to certain limitations under Section 382 of the Internal Revenue
Code. As of December 31, 2022 and 2021, the Company had federal net operating loss carryforwards available to offset future taxable income
in the amounts of $0 and $76,000, respectively, with no state net operating loss carryforwards available to offset future taxable income
as of December 31, 2022 and 2021. The federal net operating loss carryforwards generated do not expire.
The Company has evaluated
its income tax positions and has determined that it does not have any uncertain tax positions. The Company will recognize interest and
penalties related to any uncertain tax positions through its income tax expense.
NOTE 10 – SUBSEQUENT EVENTS
Nasdaq Deficiency Notice
On March 23, 2023, the Company
received a letter (the “MVLS Notice”) from the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock
Market LLC (“Nasdaq”) notifying it that, for the last 30 consecutive business days prior to the date of the MVLS Notice, the
Minimum Value of Listed Securities (“MVLS”) was less than $35.0 million, which does not meet the requirement for continued
listing on The Nasdaq Capital Market, as required by Nasdaq Listing Rule 5550(b)(2) (the “MVLS Rule”). In accordance with
Nasdaq Listing Rule 5810(c)(3)(C), the Staff has provided the Company with 180 calendar days, or until September 19, 2023, to regain compliance
with the MVLS Rule. The MVLS Notice has no immediate effect on the listing of the Company’s securities on The Nasdaq Capital Market.
If the Company regains compliance
with the MVLS Rule, the Staff will provide written confirmation to it and close the matter. To regain compliance with the MVLS Rule, the
Company’s MVLS must meet or exceed $35.0 million for a minimum of ten consecutive business days during the 180-day compliance period
ending on September 19, 2023. In the event the Company does not regain compliance with the MVLS Rule prior to the expiration of the compliance
period, it will receive written notification that its securities, including the Units, Common Stock and Warrants, are subject to delisting.
At that time, the Company may appeal the delisting determination to a Hearings Panel.
Convertible Promissory Note with Sponsor
On January 17, 2023, the Company
entered a convertible promissory note with its Sponsor and received $200,000 of proceeds to be used for operating expenses. The note was
non-interest bearing, unsecured and payable on the date the Company consummates an Initial Business Combination. In the event that an
Initial Business Combination does not close prior to April 12, 2023 (or up to August 12, 2023, if the period of time to consummate
an Initial Business Combination is extended), the note shall be deemed terminated and no amounts will be owed. At any time, up to a day
prior to the closing of an Initial Business Combination, the holder may convert the principal amount into private units of the Company
at a conversion price of $10.00 per unit. As of the date that the financial statements were issued, there was $200,000 outstanding under
the note.
On
February 6, 2023, Abri received proceeds of $87,500 upon entering into a non-convertible promissory note with a related party.
Abri deposited all proceeds into the Trust Account to extend the time to complete a business combination to March 12, 2023. On March
10, 2023, Abri deposited an additional $87,500 into the Trust Account to extend the time to complete a business combination to April
12, 2023.
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