The accompanying notes are an integral part of
the unaudited condensed financial statements.
The accompanying notes are an integral part of
the unaudited condensed financial statements.
The accompanying notes are an integral part of
the unaudited condensed financial statements.
The accompanying notes are an integral part of
the unaudited condensed financial statements.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Mountain Crest Acquisition Corp. V (the “Company”)
is a newly organized blank check company that was incorporated in Delaware on April 8, 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 (the “Business Combination”). Although the Company is not limited to a particular industry or sector for
purposes of consummating a Business Combination, the Company intends to focus its search on private companies in North America and Asia
Pacific regions that have positive operating cash flow or compelling economics and clear paths to positive operating cash flow, significant
assets, and successful management teams that are seeking access to the U.S. public capital markets. The Company is an early stage and
emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of March 31, 2022, the Company had not commenced
any operations. All activity for the period from April 8, 2021 (inception) through March 31, 2022 relates to the Company’s formation,
the initial public offering (“Initial Public Offering”), which is described below, and subsequent to the Initial Public Offering,
identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion
of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from
the proceeds derived from the Initial Public Offering.
The registration statement for the Company’s
Initial Public Offering was declared effective on November 12, 2021. On November 16, 2021, the Company consummated the Initial Public
Offering of 6,000,000 units (the “Units”) and, with respect to the shares of common stock included in the Units sold, the
Public Shares at $10.00 per Unit, generating gross proceeds of $60,000,000, which is described in Note 3.
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the sale of units (the “Private Units”) at a price of $ per Private
Unit in a private placement to Mountain Crest Global Holdings LLC (the “Sponsor”) generating gross proceeds of $,
which is described in Note 4.
Following the closing of the Initial Public Offering
on November 16, 2021, an amount of $60,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public
Offering and the sale of the Private Units was placed in a trust account (the “Trust Account”), which may be invested in U.S.
government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended, (the “Investment
Company Act”), with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market
fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the consummation
of a Business Combination or (ii) the distribution of the funds in the Trust Account as described below.
On November 18, 2021, the underwriters fully exercised
their over-allotment option, resulting in an additional 900,000 Units issued for an aggregate amount of $9,000,000. In connection with
the underwriters’ full exercise of their over-allotment option, the Company also consummated the sale of an additional 18,000 Private
Units at $10.00 per Private Unit, generating total proceeds of $180,000. A net total of $9,000,000 was deposited into the Trust Account,
bringing the aggregate proceeds held in the Trust Account to $69,000,000.
Transaction costs amounted to $5,090,361 consisting
of $1,380,000 of underwriting fees, $2,070,000 of deferred underwriting fees and $1,640,361 of other offering costs (which includes $1,383,617
of Representative Shares at fair value See Note 6).
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Units, although
substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. The Company’s
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 balance in the Trust Account (as defined below) (less any deferred underwriting commissions and net of amounts previously released
to the Company to pay its tax obligations) at the time of the signing of an agreement to enter into a Business Combination. The Company
will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding voting
securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as
an investment company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business
Combination.
The Company will provide its holders of the outstanding
Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the
completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or
(ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct
a tender offer will be made by the Company, solely in its discretion. The stockholders will be entitled to redeem their shares for a pro
rata portion of the amount then on deposit in the Trust Account (initially $10.00 per share, plus any pro rata interest earned on the
funds held in the Trust Account and not previously released to the Company to pay its tax obligations). The per-share amount to be distributed
to stockholders who redeem their shares will not be reduced by the deferred underwriting commission the Company will pay to the underwriters
(as discussed in Note 6).
MOUNTAIN CREST ACQUISITION CORP. V
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
The Company will proceed with a Business Combination
if the Company has net tangible assets of at least $5,000,001 immediately prior to or upon such consummation of a Business Combination
and, if the Company seeks stockholder approval, a majority of the outstanding shares voted are voted in favor of the Business Combination.
If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons,
the Company will, pursuant to its Amended and Restated Certificate of Incorporation, conduct the redemptions pursuant to the tender offer
rules of the Securities and Exchange Commission (“SEC”), and file tender offer documents with the SEC prior to completing
a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder
approval for business or other legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant
to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business
Combination, the Company’s Sponsor has agreed to (a) vote its Insider Shares (as defined in Note 5), Private Shares (as defined
in Note 5) and any Public Shares held by it in favor of a Business Combination and (b) not to redeem any shares in connection with a stockholder
vote to approve a Business Combination or sell any such shares to the Company in a tender offer in connection with a Business Combination.
Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed
transaction.
The Sponsor has agreed to (i) waive its redemption
rights with respect to Insider Shares, Private Shares and any Public Shares it may acquire during or after the Initial Public Offering
in connection with the consummation of a Business Combination and (ii) not to propose an amendment to the Company’s Amended and
Restated Certificate of Incorporation that would affect the substance or timing of the Company’s obligation to redeem 100% of its
Public Shares if the Company does not complete a Business Combination, unless the Company provides the public stockholders an opportunity
to redeem their Public Shares in conjunction with any such amendment. However, the Sponsor will be entitled to liquidating distributions
with respect to any Public Shares acquired if the Company fails to consummate a Business Combination or liquidates within the Combination
Period (defined below).
The Company will have until November 16, 2022
(or until February 16, 2023 if the Company has executed a definitive agreement for a Business Combination by November 16, 2022 but has
not completed the Business Combination by such date) to consummate a Business Combination. However, if the Company anticipates that it
may not be able to consummate a Business Combination within 12 months, and the Company has not entered into a definitive agreement for
a Business Combination by such date, the Company may extend the period of time to consummate a Business Combination up to two times, each
by an additional three months for a total of 18 months to complete a Business Combination (the “Combination Period”).
If the Company is unable to complete a Business
Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly
as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash,
equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and
not previously released to the Company to pay taxes, 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),
subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s
remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii)
to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
The Sponsor has agreed to waive its liquidation
rights with respect to the Private Shares if the Company fails to complete a Business Combination within the Combination Period. However,
if the Sponsor or any of its respective affiliates acquire Public Shares after the Initial Public Offering, such Public Shares will be
entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination
Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account
in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will
be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the
event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than
the Initial Public Offering price per Unit ($10.00).
In order to protect the amounts held in the Trust
Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a vendor for services rendered or products
sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce
the amounts in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in
the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per Public Share due to reductions in the
value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party who executed
a waiver of any and all rights to the monies held in the Trust Account nor will it apply to any claims under the Company’s indemnity
of the underwriters of Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as
amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third
party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce
the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors,
service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the Company
waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
MOUNTAIN CREST ACQUISITION CORP. V
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
Risks and Uncertainties
Management continues to evaluate the impact of
the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus 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 condensed financial statements. The condensed financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Going Concern
In connection with the Company’s assessment
of going concern considerations in accordance with Financial Accounting Standard Board (“FASB”) Accounting Standards Update
(“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,”
the Company has until November 16, 2022 to consummate the proposed Business Combination. It is uncertain that the Company will be able
to consummate the proposed Business Combination by this time. If a business combination is not consummated by this date, there will be
a mandatory liquidation and subsequent dissolution of the Company. Management has determined that the mandatory liquidation, should a
business combination not occur, and potential subsequent dissolution, raises substantial doubt about the Company’s ability to continue
as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate
after November 16, 2022. The Company intends to complete the proposed Business Combination before the mandatory liquidation date. However,
there can be no assurance that the Company will be able to consummate any business combination by November 16, 2022.
Liquidity and Capital Resources
As of March 31, 2022, the Company had $347,243
of cash held outside its Trust Account for use as working capital (the “Working Capital”). The Company’s liquidity needs
prior to the consummation of the IPO had been satisfied through a payment from the Sponsor of $25,000 (see Note 5) for the Insider Shares
and the loan under an unsecured promissory note from the Sponsor of $ (see Note 5).
The promissory note from the Sponsor was paid
in full at November 16, 2021. In addition, in order to finance transaction costs in connection with a business combination, the Sponsor
or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, provide the Company
working capital loans, as defined below (see Note 5). To date, there were no amounts outstanding under any working capital loans.
Based on the foregoing, management believes that
the Company will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of a
business combination or one year from this filing. Over this time period, the Company will be using these funds for paying existing accounts
payable, identifying and evaluating prospective initial business combination candidates, performing due diligence on prospective target
businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating
the business combination.
MOUNTAIN CREST ACQUISITION CORP. V
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial
statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain
information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or
omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information
and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management,
the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are
necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed financial
statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the period ended December 31, 2021, as
filed with the SEC on March 31, 2022. The interim results for the three months ended March 31, 2022 are not necessarily indicative of
the results to be expected for the year ending December 31, 2022 or for any future periods.
Emerging Growth Company
The Company is an “emerging growth company”,
as defined in Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) which exempts emerging
growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those
that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the
Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth
company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies
but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means
that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging
growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
This may make comparison of the Company’s
condensed financial statements with another public company that is neither an emerging growth company nor an emerging growth company that
has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards
used.
Use of Estimates
The preparation of the condensed 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 condensed financial statements and the
reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
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
with an original maturity of three months or less when purchased to be cash equivalents. At March 31, 2022 and December 31, 2021, the
Company had no cash equivalents.
Investment Held in Trust Account
At March 31, 2022 and December 31, 2021, substantially
all of the assets held in the Trust Account were held in money market funds which are invested primarily in U.S. Treasury securities.
All of the Company’s investments held in the Trust Account are classified as trading securities. Trading securities are presented
on the condensed balance sheets at fair value at the end of each reporting period.
MOUNTAIN CREST ACQUISITION CORP. V
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
Class A Common Stock Subject to Possible
Redemption
The Company accounts for its common stock subject
to possible redemption in accordance with the guidance in FASB Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity.” 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 features 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, at March 31, 2022 and December 31, 2021, common stock subject to possible redemption is presented at redemption value
as temporary equity, outside of the stockholders’ deficit section of the Company’s condensed balance sheets.
At March 31, 2022 and December 31, 2021, the common
stock reflected in the condensed balance sheets are reconciled in the following table:
Scheduled of common stock subject to possible redemption | |
| | |
Gross proceeds | |
$ | 69,000,000 | |
Less: | |
| | |
Allocation of offering costs related to redeemable shares | |
| (4,657,681 | ) |
Proceeds allocated to Public Rights | |
| (5,865,000 | ) |
Plus: | |
| | |
Accretion of carrying value to redemption value | |
| 10,522,681 | |
Common stock subject to possible redemption | |
$ | 69,000,000 | |
Offering Costs
Offering costs consisted of legal, accounting
and other expenses incurred through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs
were allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared
to total proceeds received. Offering costs associated with the common stock issued were initially charged to temporary equity and then
accreted to common stock subject to redemption upon the completion of the Initial Public Offering. Offering costs amounted to $5,090,361
consisting of $1,380,000 of underwriting fees, $2,070,000 of deferred underwriting fees and $1,640,361 of other offering costs. These
were charged to stockholders’ deficit upon the completion of the Initial Public Offering. $4,657,681 was allocated to Public Shares
and charged to temporary equity, and $432,681 was allocated to public rights and charged to stockholders’ deficit.
Income Taxes
The Company follows the asset and liability method
of accounting for income taxes under FASB 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. As of March 31, 2022 and December
31, 2021, the Company had a deferred tax asset of approximately $59,000 and $32,000, which had a full valuation allowance recorded against
it, respectively.
The Company’s current taxable income primarily
consists of interest earned on the Trust Account. The Company’s general and administrative costs are generally considered start-up
costs and are not currently deductible. During the three months ended March 31, 2022, the Company recorded no income tax expense. The
Company’s effective tax rate for three months ended March 31, 2022 was approximately 0%, which differs from the expected income
tax rate due to a full valuation allowance recorded.
FASB ASC 740 prescribes a recognition threshold
and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in
a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing
authorities. There were no unrecognized tax benefits as of March 31, 2022 and December 31, 2021. The Company recognizes accrued interest
and penalties related to unrecognized tax benefits as income tax expense. The Company is currently not aware of any issues under review
that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations
by major taxing authorities since inception.
MOUNTAIN CREST ACQUISITION CORP. V
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
Net
(Loss) per Common Share
The Company complies with accounting and disclosure
requirements of FASB ASC 260, Earnings Per Share. The statement of operations includes a presentation of loss per redeemable public share
and loss per non-redeemable share following the two-class method of loss per share. In order to determine the net loss attributable to
both the public redeemable shares and non-redeemable shares, the Company first considered the total loss allocable to both sets of shares.
This is calculated using the total net loss less any dividends paid. For purposes of calculating net loss per share, any remeasurement
of the accretion to redemption value of the redeemable shares subject to possible redemption was considered to be dividends paid to the
public stockholders. Subsequent to calculating the total loss allocable to both sets of shares, the Company split the amount to be allocated
using a ratio of 76% for the redeemable Public Shares and 24% for the non-redeemable shares for the three months ended March 31, 2022,
reflective of the respective participation rights.
The earnings per share presented in the statement
of operations is based on the following:
Scheduled of basic and diluted net loss per share | |
| | | |
| | |
| |
Three Months Ended March 31, 2022 | |
| |
Redeemable | | |
Non-redeemable | |
Basic and diluted net loss per share: | |
| | | |
| | |
Numerator: | |
| | | |
| | |
Allocation of net loss | |
$ | (93,173 | ) | |
$ | (28,707 | ) |
| |
| | | |
| | |
Denominator: | |
| | | |
| | |
Weighted-average shares outstanding | |
| 6,900,000 | | |
| 2,125,900 | |
Basic and diluted net loss per share | |
$ | (0.01 | ) | |
$ | (0.01 | ) |
As of March 31, 2022, the Company did not have
any dilutive securities and other contracts that could, potentially, be exercised or converted into common shares and then share in the
Company’s earnings. As a result, diluted loss per share is the same as basic loss per share for the periods presented.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal
Depository Insurance Coverage of $250,000. At March 31, 2022 and December 31, 2021, the Company has not experienced losses on these accounts
and management believes the Company is not exposed to significant risks on such accounts.
Fair Value of Financial Instruments
The fair value of the Company’s assets and
liabilities approximates the carrying amounts represented in the condensed balance sheets, primarily due to their short-term nature.
Recent Accounting Standards
In August 2020, the FASB issued ASU 2020-06, Debt
-- Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic
815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models
that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative
scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces
additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity.
ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible
instruments. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption
permitted beginning on January 1, 2021. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial
position, results of operations or cash flows.
The Company’s management does not believe
that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the
Company’s condensed financial statements.
MOUNTAIN CREST ACQUISITION CORP. V
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
NOTE 3. PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company
sold 6,000,000 Units, at a purchase price of $10.00 per Unit. Each Unit consisted of one share of common stock and one right (“Public
Right”). Each Public Right entitled the holder to receive one-tenth of one share of common stock at the closing of a Business Combination
(see Note 7). On November 18, 2021, the underwriters fully exercised their over-allotment option, resulting in an additional 900,000 Units
issued for an aggregate amount of $9,000,000.
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial
Public Offering, on November 16, 2021, the Sponsor purchased an aggregate of Private Units at a price of $ per Private Unit,
for an aggregate purchase price of $, in a private placement. In connection with the underwriters’ full exercise of their
over-allotment option, on November 18, 2021, the Company also consummated the sale of an additional 18,000 Private Units at $10.00 per
Private Unit, generating total proceeds of $180,000. Each Private Unit consists of one share of common stock (“Private Share”)
and one right (“Private Right”). Each Private Right entitles the holder to receive one-tenth of one share of common stock
at the closing of a Business Combination. The proceeds from the Private Units were added to the proceeds from the Initial Public Offering
held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the
sale of the Private Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law), and
the Private Units and all underlying securities will expire worthless.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On April 8, 2021, the Company issued
shares of common stock (the “Insider Shares”) to the Sponsor for an aggregate purchase price of $. The 1,437,500 Insider
Shares include an aggregate of up to 187,500 shares subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment
is not exercised in full or in part, so that the Sponsor will collectively own 20% of the Company’s issued and outstanding shares
after the Initial Public Offering (assuming the Sponsor does not purchase any Public Shares in the Initial Public Offering and excluding
the Private Shares). In connection with the increase in the size of the offering, on November 2, 2021, the company declared a 20% stock
dividend on each insider share thereby increasing the number of issued and outstanding Insider Shares to 1,725,000, including up to an
aggregate of 225,000 shares of common stock subject to forfeiture by our insiders to the extent that the underwriters’ over-allotment
option is not exercised in full or in part. The stock dividend was considered in substance a recapitalization transaction, which was recorded
and presented retroactively. As a result of the underwriters’ election to fully exercise their over-allotment option on November
18, 2021, no Insider Shares are currently subject to forfeiture.
Administrative Services Agreement
The Company agreed, commencing on November 12,
2021, to pay the Sponsor, affiliates, or advisors a total of up to $10,000 per month for office space, utilities, out of pocket expenses,
and secretarial and administrative support. The arrangement will terminate upon the earlier of the Company’s consummation of a Business
Combination or its liquidation. For the three months ended March 31, 2022, the Company incurred and paid $30,000 in fees for these services.
Promissory Note — Related Party
On April 9, 2021, the Sponsor agreed to loan the
Company an aggregate of up to $500,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the “Note”).
This Note was non-interest bearing and payable on the completion of the closing of the Initial Public Offering. The Note was paid in full
on November 16, 2021. The Company can no longer borrow against this note.
Related Party Loans
In order to finance transaction costs in connection
with a Business Combination, the Sponsor, an affiliate of the Sponsor, or the Company’s officers and directors may, but are not
obligated to, loan the Company funds from time to time or at any time, as may be required (“Working Capital Loans”). Each
Working Capital Loan would be evidenced by a promissory note. The Working Capital Loans would either be paid upon consummation of a Business
Combination, without interest, or, at the holder’s discretion, up to $1,500,000 of the Working Capital Loans may be converted into
Private Units at a price of $10.00 per unit. The Private Units would be identical to the Private Units. In the event that a Business
Combination does not close, the Company may use a portion of the proceeds held outside the Trust Account to repay the Working Capital
Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. As of March 31, 2022 and December
31, 2021, no Working Capital Loans were outstanding.
MOUNTAIN CREST ACQUISITION CORP. V
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
NOTE
6. COMMITMENTS & CONTINGENCIES
Professional Fee
The Company paid legal counsel a retainer of $25,000
upon filing the registration statement and $100,000 upon the closing of the Initial Public Offering and agreed to pay $50,000 upon closing
of a business combination.
Underwriting
Agreement
The Company paid an underwriting fee of $0.20
per Unit (6,900,000 Units), or $1,380,000, in total which includes the fee due upon the full exercise of the underwriters’ over-allotment
option.
The underwriters are entitled to a deferred fee
of $0.30 per unit, or $2,070,000 in the aggregate will be payable to the underwriters for deferred underwriting commissions. The deferred
fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes
a Business Combination, subject to the terms of the underwriting agreement.
Representative Shares
The Company issued to the underwriter and/or its
designees 177,900 shares of common stock (the “Representative Shares”). The Company accounted for the Representative Shares
as an expense of the Initial Public Offering, resulting in a charge directly to stockholder’s equity. The Company estimates the
fair value of Representative Shares to be $1,383,617 based upon the offering price of the shares of $7.78 per share. The Representative
Shares 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 related to the Initial Public Offering pursuant to Rule 5110(g)(1) of FINRA’s NASD
Conduct Rules. Pursuant to FINRA Rule 5110(g)(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 statements related to the Initial Public Offering, nor may they be sold, transferred,
assigned, pledged or hypothecated for a period of 180 days immediately following the effective date of the registration statements related
to the Initial Public Offering except to any underwriter and selected dealer participating in the Initial Public Offering and their bona
fide officers or partners.
NOTE 7. STOCKHOLDERS’ DEFICIT
Common Stock
The Company is authorized to issue 30,000,000
shares of common stock with a par value of $0.0001 per share. At May 27, 2021, there were 1,437,500 shares of common stock issued and
outstanding, of which up to an aggregate of 187,500 shares are subject to forfeiture to the extent that the underwriters’ over-allotment
option is not exercised in full so that the Sponsor will own 20% of the issued and outstanding shares after the Initial Public Offering
(assuming the Sponsor does not purchase any Public Shares in the Initial Public Offering and excluding the Private Shares). In connection
with the increase in the size of the offering, on November 2, 2021, the Company declared a 20% stock dividend on each insider share thereby
increasing the number of issued and outstanding Insider Shares to 1,725,000, including up to an aggregate of 225,000 shares of common
stock subject to forfeiture by our insiders to the extent that the underwriters’ over-allotment option is not exercised in full
or in part. According to ASC 260-10-55, the stock dividend was considered in substance a recapitalization transaction, which was recorded
and presented retroactively. As a result of the underwriters’ election to fully exercise their over-allotment option on November
18, 2021, no Insider Shares are currently subject to forfeiture. At March 31, 2022 and December 31, 2021, there were 2,125,900 shares
of common stock issued and outstanding, excluding 6,900,000 of common stock subject to possible redemption which are presented as temporary
equity.
Rights
Except in cases where the Company is not the surviving
company in a Business Combination, each holder of a Public Right will automatically receive one-tenth (1/10) of one share of common stock
upon consummation of a Business Combination, even if the holder of a Public Right converted all shares held by him, her or it in connection
with a Business Combination or an amendment to the Company’s Amended and Restated Certificate of Incorporation with respect to its
pre-business combination activities. In the event that the Company will not be the surviving company upon completion of a Business Combination,
each holder of a Public Right will be required to affirmatively convert his, her or its rights in order to receive the one-tenth (1/10)
of a share underlying each Public Right upon consummation of the Business Combination.
The Company will not issue fractional shares in
connection with an exchange of Public Rights. Fractional shares will either be rounded down to the nearest whole share or otherwise addressed
in accordance with the applicable provisions of the Delaware General Corporation Law. As a result, the holders of the Public Rights must
hold rights in multiples of 10 in order to receive shares for all of the holders’ rights upon closing of a Business Combination.
MOUNTAIN CREST ACQUISITION CORP. V
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
NOTE 8. FAIR VALUE MEASUREMENTS
The fair value of the Company’s financial
assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale
of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the
measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of
observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions
about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities
based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
|
Level 1: |
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. |
|
Level 2: |
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. |
|
Level 3: |
Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. |
The Company classifies its securities in the Trust
Account that are invested in funds, such as Mutual Funds or Money Market Funds, that primarily invest in U.S. Treasury and equivalent
securities as Trading Securities in accordance with ASC Topic 320 “Investments - Debt and Equity Securities. Trading Securities
are recorded at fair market value on the accompanying condensed balance sheets.
At March 31, 2022, assets held in the Trust Account
were comprised of $69,006,649 in a mutual fund that is invested primarily in U.S. Treasury Securities. Through March 31, 2022, the Company
has withdrawn $1,142 of the interest earned on the Trust Account.
At December 31, 2021, assets held in the Trust
Account were comprised of $69,000,843 in a mutual fund that is invested primarily in U.S. Treasury Securities. Through December 31, 2021,
the Company did not withdraw any of the interest earned on the Trust Account.
The following table presents information about
the Company’s assets that are measured at fair value on a recurring basis at March 31, 2022 and December 31, 2021 and indicates
the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Scheduled of fair value measurements |
|
|
|
|
|
|
|
|
|
|
|
|
Trading Securities |
|
Level |
|
|
Fair Value |
|
March 31, 2022 |
|
Investments held in Trust Account - Mutual Fund |
|
|
1 |
|
|
$ |
69,006,649 |
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2021 |
|
Investments held in Trust Account - Mutual Fund |
|
|
1 |
|
|
$ |
69,000,843 |
|
NOTE 9. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that the condensed financial statements were issued. Based upon this review,
the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial statements.