NOTES
TO CONDENSED FINANCIAL STATEMENTS
Note
1 - Organization and Business Operations
Parsec
Capital Acquisitions Corp. (the “Company”) is a blank check company incorporated on February 11, 2021 as a Delaware corporation
whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses (the “Business Combination”). The Company has not selected any specific Business
Combination target and the Company has not, nor has anyone on its behalf, initiated any substantive discussions, directly or indirectly,
with any Business Combination target.
As
of September 30, 2022, the Company has neither engaged in any operations nor generated any revenues. All activity through September 30,
2022 relates to the Company’s formation and preparation for the Initial Public Offering (the “Public Offering” or “IPO”)
as described below and identifying a target company for an initial 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 on cash and cash equivalents from the proceeds derived from the IPO.
The
Company’s sponsor is Parsec Acquisitions Sponsor, LLC, a Delaware limited liability company (the “Sponsor”). The registration
statement for the Company’s IPO was declared effective on October 5, 2021 (the “Effective Date”). On October 8, 2021,
the Company consummated the IPO of 8,625,000 units at $10.00 per unit (the “Units”), including the full exercise of the underwriters’
over-allotment of 1,125,000 units, generating gross proceeds to the Company of $86,250,000, which is discussed in Note 3.
Simultaneously
with the consummation of the IPO, the Company consummated the private placement of 4,518,750 warrants (the “Private Placement Warrants”)
to the Sponsor, at a price of $1.00 per Private Placement Warrant in a private placement, generating gross proceeds to the Company of
$4,518,750, which is described in Note 4. The excess of fair market value over gross proceeds for the Private Placement Warrants was
$632,625 and was recorded in the statements of operations for the period from February 11, 2021 (inception) though December 31, 2021.
Transaction
costs amounted to $5,174,429 consisting of $1,725,000 of underwriting commissions, $3,018,750 of deferred underwriting commissions, and
$430,679 of other offering costs.
Following
the closing of the IPO on October 8, 2021, $87,543,750 ($10.15 per Unit) from the net proceeds of the sale of the Units in the IPO and
the sale of the Private Placement Warrants was deposited into a trust account (the “Trust Account”), located in the United
States with Continental Stock Transfer & Trust Company acting as trustee, and was invested only in U.S. government securities, within
the meaning set forth in Section 2(a)(16) of the Investment Company Act, having a maturity of 185 days or less or in money market funds
meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury
obligations. Except with respect to interest earned on the funds held in the Trust Account that may be released to the Company to pay
its tax obligations and up to $100,000 of interest that may be used for the Company’s dissolution expenses, the proceeds from the
Initial Public Offering and the sale of the placement warrants held in the Trust Account will not be released from the Trust Account
until the earliest to occur of: (a) the completion of the initial Business Combination, (b) the redemption of any public shares properly
submitted in connection with a stockholder vote to amend the Company’s certificate of incorporation (i) to modify the substance
or timing of the Company’s obligation to allow redemption in connection with the initial Business Combination or certain amendments
to the Company’s charter prior thereto or to redeem 100% of the public shares if the Company does not complete its initial Business
Combination within 12 months from the closing of the Initial Public Offering (or up to 18 months from the closing of the IPO at the election
of the Company subject to satisfaction of certain conditions or as extended by the Company’s stockholders in accordance with the
Company’s amended and restated certificate of incorporation) or (ii) with respect to any other provision relating to stockholders’
rights or pre-Business Combination activity, and (c) the redemption of the public shares if the Company is unable to complete its initial
Business Combination within 12 months from the closing of the Initial Public Offering (or up to 18 months from the closing of the IPO
at the election of the Company subject to satisfaction of certain conditions or as extended by the Company’s stockholders in accordance
with the Company’s amended and restated certificate of incorporation), subject to applicable law. The proceeds deposited in the
Trust Account could become subject to the claims of the Company’s creditors, if any, which could have priority over the claims
of the Company’s public stockholders.
The
Company will provide its public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion
of the initial Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or
(ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a proposed initial Business
Combination or conduct a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors
such as the timing of the transaction and whether the terms of the transaction would require the Company to seek stockholder approval
under applicable law or stock exchange listing requirements. The stockholders will be entitled to redeem all or a portion of their public
shares upon the completion of the initial Business Combination at a per-share price, payable in cash, equal to the aggregate amount then
on deposit in the Trust Account as of two business days prior to the consummation of the initial Business Combination, including interest
earned on the funds held in the Trust Account and not previously released to the Company to pay its taxes, divided by the number of then
outstanding public shares, subject to the limitations described herein. The amount in the Trust Account is $10.15 per public share, however,
there is no guarantee that investors will receive $10.15 per share upon redemption. The per-share amount the Company will distribute
to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions the Company will pay to the
underwriters.
The
Company had 12 months from the closing of the IPO (or up to 18 months from the closing of the IPO at the election of the Company subject
to satisfaction of certain conditions or as extended by the Company’s stockholders in accordance with the Company’s amended
and restated certificate of incorporation) to complete the initial Business Combination (the “Combination Period”). However,
if the Company is unable to complete the initial Business Combination within the Combination Period (and the Company’s stockholders
have not approved an amendment to the Company’s charter extending this time 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 its 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), 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 to our obligations under Delaware law to provide for claims of creditors and the requirements
of other applicable law.
The
Sponsor, officers and directors have entered into a letter agreement with the Company, pursuant to which they have agreed to (i) waive
their redemption rights with respect to any founder shares and public shares held by them in connection with the completion of the initial
Business Combination, (ii) waive their redemption rights with respect to any founder shares and public shares held by them in connection
with a stockholder vote to approve an amendment to the Company’s certificate of incorporation (A) to modify the substance or timing
of the Company’s obligation to allow redemption in connection with the initial Business Combination or certain amendments to the
Company’s charter prior thereto or to redeem 100% of the public shares if the Company does not complete its initial Business Combination
within the Combination Period or (B) with respect to any other provision relating to stockholders’ rights or pre-initial Business
Combination activity, (iii) waive their rights to liquidating distributions from the Trust Account with respect to any founder shares
held by them if the Company fails to complete its initial Business Combination within the Combination Period, although they will be entitled
to liquidating distributions from the Trust Account with respect to any public shares they hold if the Company fails to complete its
initial Business Combination within the prescribed time frame, and (iv) vote any founder shares held by them and any public shares purchased
during or after the Initial Public Offering (including in open market and privately-negotiated transactions) in favor of the initial
Business Combination.
The
Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products
sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality
or similar agreement or Business Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.15
per public share and (ii) the actual amount per public share held in the Trust Account as of the date of the liquidation of the Trust
Account, if less than $10.15 per 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 or prospective target business who executed a waiver of any and all rights
to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s
indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities
Act. However, the Company has not asked the Sponsor to reserve for such indemnification obligations, nor has the Company independently
verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believe that the Sponsor’s only assets
are securities of the Company. Therefore, the Company cannot assure you that the Sponsor would be able to satisfy those obligations.
None of the Company’s officers or directors will indemnify the Company for claims by third parties including, without limitation,
claims by vendors and prospective target businesses.
Going
Concern
In
connection with the Company’s assessment of going concern considerations in accordance with the authoritative guidance in 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,” management has determined that the mandatory liquidation
date and subsequent dissolution, should the Company be unable to complete a Business Combination, raises substantial doubt about the
Company’s ability to continue as a going concern. The Company had until October 8, 2022 to consummate a Business Combination. The
Company will be unable to consummate a Business Combination by the Liquidation Date and intends to dissolve and liquidate in accordance
with the provisions of the Amended and Restated Certificate of Incorporation. No adjustments have been made to the carrying amounts of
assets or liabilities should the Company be required to liquidate after October 8, 2022. (see Note 9)
Risks
and Uncertainties
Management
is continuing to evaluate the impact of the COVID-19 pandemic and the Russia-Ukraine war and has concluded that while it is reasonably
possible that it could have a negative effect on the Company’s financial position, results of its operations and/or search for
a target company, the specific impact is not readily determinable as of the date of these unaudited condensed financial statements. The
unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
In
February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action,
various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further,
the impact of this action and related sanctions on the world economy is not determinable as of the date of these unaudited condensed
financial statements, and the specific impact on the Company’s financial condition, results of operations, and cash flows is also
not determinable as of the date of these unaudited condensed financial statements.
Inflation Reduction Act of 2022
On August 16, 2022, the Inflation
Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S.
federal 1% excise tax on certain repurchases (including redemptions) of stock by publicly traded domestic (i.e., U.S.) corporations and
certain domestic subsidiaries of publicly traded foreign corporations. The excise tax is imposed on the repurchasing corporation itself,
not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares
repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted
to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable
year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been
given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax. The IR Act
applies only to repurchases that occur after December 31, 2022.
Any redemption or other repurchase
that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise
tax. Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote
or otherwise would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection
with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any
“PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business
Combination but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance
from the Treasury. In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics
of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand
to complete a Business Combination and in the Company’s ability to complete a Business Combination.
Note
2 - 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 unaudited condensed
financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the Securities
and Exchange Commission (“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 interim
results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year
ending December 31, 2022 or for any future interim periods. The accompanying unaudited condensed financial statements should be read
in conjunction with the Company’s audited financial statements and notes thereto included in the Form 10-K annual report filed
by the Company with the SEC on April 14, 2022.
Emerging
Growth Company Status
The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities
Act”), as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage
of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth
companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the
Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and
exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden
parachute payments not previously approved.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do
not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of
such extended transition period which means that when a standard is issued or revised and it has different application dates for public
or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies
adopt the new or revised standard. This may make comparison of the Company’s unaudited condensed financial statements with another
public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition
period difficult or impossible because of the potential differences in accounting standards used.
Use
of Estimates
The
preparation of the unaudited condensed financial statements in conformity with US GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited
condensed financial statements. Making estimates requires management to exercise significant judgement. It is at least reasonably possible
that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed
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.
The Company did not have any cash equivalents as of September 30, 2022 and December 31, 2021.
Cash
and Investment Held in Trust Account
At
September 30, 2022 and December 31, 2021, substantially all of the assets held in the Trust Account were held in money market funds and
U.S. Treasury securities, respectively. All of the Company’s investments held in the Trust Account are classified as trading securities.
Trading securities are presented on the balance sheet at fair value at the end of each reporting period. Gains and losses resulting from
the change in fair value of investments held in Trust Account are included in interest earned on marketable securities held in Trust
Account in the accompanying condensed statements of operations. The estimated fair values of investments held in Trust Account are determined
using available market information. The Company has not withdrawn any amounts from the Trust Account.
As
of September 30, 2022, investments in the Company’s Trust Account consisted of $88,073,560 invested in money market funds. As of
December 31, 2021, investments in the Company’s Trust Account consisted of $496 in cash and $87,549,787 in U.S. Treasury Securities.
The Company considers all investments with original maturities of more than three months but less than one year to be short-term investments.
The carrying value approximates the fair value due to its short-term maturity. The marketable securities held in the Trust Account at
September 30, 2022 were recorded at fair market value of $88,073,560. The carrying value, excluding gross unrealized holding losses and
fair value of held to maturity securities on September 30, 2022 and December 31, 2021 are as follows:
Schedule of Fair Value of Maturity Securities
| |
Amortized Cost and Carrying Value | | |
Gross Unrealized Gains | | |
Gross Unrealized Losses | | |
Fair Value as of September 30, 2022 | |
Money Market | |
$ | 88,073,560 | | |
$ | — | | |
$ | — | | |
$ | 88,073,560 | |
| |
$ | 88,073,560 | | |
$ | — | | |
$ | — | | |
$ | 88,073,560 | |
| |
Amortized Cost and Carrying Value | | |
Gross Unrealized Gains | | |
Gross Unrealized Losses | | |
Fair Value as of December 31, 2021 | |
Cash | |
$ | 496 | | |
$ | — | | |
$ | — | | |
$ | 496 | |
U.S. Treasury Securities | |
| 87,549,787 | | |
| 1,941 | | |
| — | | |
| 87,551,728 | |
| |
$ | 87,550,283 | | |
$ | 1,941 | | |
$ | — | | |
$ | 87,552,224 | |
A
decline in the market value of held-to-maturity securities below cost that is deemed to be other than temporary, results in an impairment
that reduces the carrying costs to such securities’ fair value. The impairment is charged to earnings and a new cost basis for
the security is established. To determine whether an impairment is other than temporary, the Company considers whether it has the ability
and intent to hold the investment until a market price recovery and considers whether evidence indicating the cost of the investment
is recoverable outweighs evidence to the contrary. Evidence considered in this assessment includes the reasons for the impairment, the
severity and the duration of the impairment, changes in value subsequent to year-end, forecasted performance of the investee, and the
general market condition in the geographic area or industry the investee operates in.
Premiums
and discounts are amortized or accreted over the life of the related held-to maturity security as an adjustment to yield using the effective-interest
method. Such amortization and accretion are included in the “interest income” line item in the statements of operations.
Interest income is recognized when earned.
Offering
Costs associated with the Initial Public Offering
The
Company complies with the requirements of the ASC 340-10-S99-1. Offering costs consisted of legal, accounting, underwriting fees and
other costs incurred through the IPO that were directly related to the Public Offering. Offering costs amounted to $5,174,429 and were
charged to temporary equity upon the completion of the IPO.
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value
Measurement,” approximates the carrying amounts represented in the accompanying balance sheets primarily due to their short-term
nature.
Common
Stock Subject to Possible Redemption
The
Company accounts for its common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing
Liabilities from Equity.” Common stock subject to mandatory redemption (if any) is classified as a liability instrument and measured
at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the
control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control)
is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s
Class A common stock features certain redemption rights that are considered to be outside of the Company’s control and subject
to the occurrence of uncertain future events. Accordingly, all shares of Class A common stock subject to possible redemption are presented
at redemption value as temporary equity, outside of the stockholders’ deficit section of the Company’s balance sheets.
The
Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to
equal the redemption value at the end of each reporting period. The following table represents Class A Common stock subject to redemption
at September 30, 2022 and December 31, 2021.
Schedule of Class A Common Stock Subject to Redemption
Gross proceeds | |
$ | 86,250,000 | |
Less: Proceeds Allocated to Public Warrants | |
| (9,832,500 | ) |
Less: Class A Common stock issuance costs | |
| (4,565,548 | ) |
Remeasurement of carrying value to redemption value | |
| 15,691,798 | |
Class A Common stock subject to possible redemption, December 31, 2021 | |
$ | 87,543,750 | |
Remeasurement of carrying value to redemption value | |
| 159,572 | |
Class A Common stock subject to possible redemption, September 30, 2022 | |
$ | 87,703,322 | |
Warrants
The
Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s
specific terms and applicable authoritative guidance in FASB ASC 480, Distinguishing Liabilities from Equity (“ASC 480”)
and ASC 815, Derivatives and Hedging (“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 and whether
the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control,
among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the
time warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For
issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component
of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all of the criteria for equity
classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet
date thereafter. The Company accounts for its outstanding warrants as equity-classified instruments.
Net
Income (Loss) Per Common Stock
The
Company complies with the accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net income
(loss) per common stock is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding
during the period, excluding common stock subject to forfeiture. At September 30, 2022 and December 31, 2021, the Company did not have
any dilutive securities and other contracts that could, potentially, be exercised or converted into common stock and then share in the
earnings of the Company. The Company has not considered the effect of the warrants sold in the IPO and the Private Placement to purchase
an aggregate of 13,143,750 of the Company’s Class A common stock in the calculation of diluted loss per share, since the exercise
of the warrants is contingent upon the consummation of a business combination. In addition, the Company has a net loss, and any securities
would be anti-dilutive. As a result, diluted loss per common stock is the same as basic loss per common stock for the periods presented.
The
table below presents a reconciliation of the numerator and denominator used to compute basic and diluted net income (loss) per share
for each class of common stock.
Schedule of Earnings (Loss) Per Share
|
|
Three
Months Ended September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
|
Class A
(redeemable) |
|
|
Class B
(non-redeemable) |
|
|
Class A
(redeemable) |
|
|
Class B
(non-redeemable) |
|
Basic
and diluted net income (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation
of net income (loss) |
|
$ |
70,404 |
|
|
$ |
17,601 |
|
|
$ |
— |
|
|
$ |
(24 |
) |
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares Outstanding |
|
|
8,625,000 |
|
|
|
2,156,250 |
|
|
|
— |
|
|
|
1,875,000 |
|
Basic
and diluted net income (loss) per share |
|
$ |
0.01 |
|
|
$ |
0.01 |
|
|
$ |
— |
|
|
$ |
(0.00 |
) |
For
the three months ended September 30, 2021, Class B common stock excluded 281,250 shares subject to forfeiture.
|
|
Nine
Months Ended September 30, |
|
|
For the period from February 11,
2021 (inception) through
September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
|
Class A
(redeemable) |
|
|
Class B
(non-redeemable) |
|
|
Class A
(redeemable) |
|
|
Class B
(non-redeemable) |
|
Basic
and diluted net loss per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation
of net loss |
|
$ |
(237,313
|
) |
|
$ |
(59,328
|
) |
|
$ |
— |
|
|
$ |
(582 |
) |
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares Outstanding |
|
|
8,625,000 |
|
|
|
2,156,250 |
|
|
|
— |
|
|
|
1,875,000 |
|
Basic
and diluted net loss per share |
|
$ |
(0.03 |
) |
|
$ |
(0.03 |
) |
|
$ |
— |
|
|
$ |
(0.00 |
) |
For
the period from February 11, 2021 (inception) through September 30, 2021, Class B common stock excluded 281,250 shares subject to forfeiture.
Income
Taxes
The Company accounts for income
taxes under ASC Topic 740, “Income Taxes.” ASC Topic 740, Income Taxes, requires the recognition of deferred tax assets and
liabilities for both the expected impact of differences between the unaudited condensed financial statements and tax basis of assets and
liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC Topic 740 additionally
requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not
be realized. As of September 30, 2022 and December 31, 2021, the Company’s deferred tax asset had a full valuation allowance recorded
against it.
While ASC 740 identifies usage
of an effective annual tax rate for purposes of an interim provision, it does allow for estimating individual elements in the current
period if they are significant, unusual or infrequent. Computing the effective tax rate for the Company is complicated due to the potential
impact of the timing of any Business Combination expenses and the actual interest income that will be recognized during the year. The
Company has taken a position as to the calculation of income tax expense in a current period based on ASC 740-270-25-3 which states, “If
an entity is unable to estimate a part of its ordinary income (or loss) or the related tax (benefit) but is otherwise able to make a reasonable
estimate, the tax (or benefit) applicable to the item that cannot be estimated shall be reported in the interim period in which the item
is reported.” The Company believes its calculation to be a reliable estimate and allows it to properly take into account the usual
elements that can impact its annualized book income and its impact on the effective tax rate. As such, the Company is computing its taxable
income (loss) and associated income tax provision based on actual results through September 30, 2022. The Company’s effective tax
rate was 32.67% and 0% for the three months ended September 30, 2022 and 2021, respectively, and -16.82% and 0% for the nine months ended
September 30, 2022 and for the period from February 11, 2021 (Inception) through September 30, 2021, respectively. The effective tax rate
differs from the statutory tax rate of 21% for the three months ended September 30, 2022 and 2021, for the nine months ended September
30, 2022 and for the period from February 11, 2021 (Inception) through September 30, 2021, primarily due to changes in unrealized losses
related to the U.S. government treasury bill investments that matured in September 2022, the fair value in warrant liabilities, and the
valuation allowance on the deferred tax assets.
ASC Topic 740 also clarifies
the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold
and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.
For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.
ASC Topic 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure
and transition.
The Company recognizes accrued
interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts
accrued for interest and penalties as of September 30, 2022 and December 31, 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 has identified the United States as its only “major”
tax jurisdiction. The Company is subject to income taxation by major taxing authorities since inception. These examinations may include
questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state
tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over
the next twelve months.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution
which, at times may exceed the Federal depository insurance coverage of $250,000. As of September 30, 2022 and December 31, 2021, the
Company had not experienced losses on this account and management believes the Company was not exposed to significant risks on such account.
Recent
Accounting Pronouncements
The
Company’s management does not believe that any recently issued, but not effective, accounting standards, if currently adopted,
would have a material effect on the accompanying financial statements.
Note
3 - Initial Public Offering
Public
Units
On
October 8, 2021, the Company sold 8,625,000 Units, including the full exercise of the underwriters’ over-allotment option to purchase
1,125,000 units, at a purchase price of $10.00 per Unit. Each Unit consists of one share of Class A common stock and one redeemable warrant
(the “Public Warrants”). Each whole warrant entitles the registered holder to purchase one share of the Class A common stock
at a price of $11.50 per share, subject to adjustment, at any time commencing on the later of 12 months from the effective date and 30
days after the completion of the initial Business Combination (see Note 6).
The
Company paid an underwriting fee at the closing of the IPO of $1,725,000. As of October 8, 2021, an additional fee of $3,018,750 (see
Note 6) was deferred and will become payable upon the Company’s completion of an initial Business Combination. The deferred fee
will become payable to the underwriter from the amounts held in the Trust Account.
Note
4 - Private Placement
Simultaneously
with the closing of the IPO, the Company’s Sponsor purchased an aggregate of 4,518,750 Private Placement Warrants, each exercisable
to purchase one share of Class A common stock at $11.50 per share, at a price of $1.00 per warrant, or $4,518,750 in the aggregate, in
a private placement.
The
Private Placement Warrants are identical to the Public Warrants sold in the IPO except that the Private Placement Warrants, (a) may not
(including the Class A common stock issuable upon exercise of these warrants), subject to certain limited exceptions, be transferred,
assigned or sold by the holders until 30 days after the completion of the initial Business Combination and (b) will be entitled to registration
rights.
Note
5 - Related Party Transactions
Founder
Shares
On
March 12, 2021, the Sponsor paid $, or approximately $ per share, in consideration for shares of Class B common
stock, par value $ (the “Founder Shares”). In September 2021, the Company effected a stock dividend of an aggregate
shares of Class B common stock, resulting in the Sponsor holding an aggregate of 2,156,250 Founder Shares, which included
shares subject to forfeiture if the over-allotment option was not exercised in full or in part by the underwriters. As a result of the
full exercise of the over-allotment exercise by the underwriters upon consummation of the IPO on October 8, 2021, these shares are no
longer subject to forfeiture.
On
July 9, 2021, the Sponsor entered into a Stock Grant Agreement with the Company’s independent directors and certain of the Company’s
officers, under which they are granted Founder Shares and Private Placement Warrants as an inducement to serve as directors and officers
of the Company. Under the terms of the agreement, the Sponsor will transfer Founder Shares to each of the Company’s four
independent directors, Founder Shares to the Company’s Chief Executive Officer and shares to the Company’s
Chief Financial Officer, for a sales price of $ per share, or an aggregate of $ (the “purchase price”). The transferred
shares shall vest upon the Company consummating an initial business combination. In the event that a recipient ceases to serves as either
officer or directors prior to the vesting date, the Sponsor has the option to repurchase the shares at the purchase price. The fair value
of the shares at July 9, 2021, was estimated using a Monte Carlo simulation model to be approximately $ million in the aggregate.
The Company will record the fair value of the transferred shares as Officer and director compensation expense upon consummation of an
initial business combination, in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 718 “Compensation-Stock
Compensation”, which requires deferral of the expense recognition until after the performance condition is achieved, if the performance
condition is a business combination or similar liquidity event. The transferred shares will have the same terms and restrictions as the
Founder Shares held by the Sponsor.
Additionally,
under the terms of the agreement, the Sponsor transferred Private Placement Warrants to each of the Company’s four independent
directors, 36,000 Private Placement Warrants to the Company’s Chief Executive Officer and 24,000 Private Placement Warrants to
the Company’s Chief Financial Officer, for no consideration. The granted Private Placement Warrants vested upon the consummation
of the IPO. The fair value of the granted warrants at July 9, 2021, was estimated using a Monte Carlo simulation model to be $
in the aggregate. Accordingly, the Company recorded the fair value of the transferred Private Placement Warrants as Officer and director
compensation expense upon consummation of the IPO, in accordance with the guidance in Accounting Standards Codification (“ASC”)
Topic 718 “Compensation-Stock Compensation”.
The
initial stockholders have agreed not to transfer, assign or sell any of their founder shares (or shares of common stock issuable upon
conversion thereof) until the earlier to occur of: (A) nine months after the completion of the initial Business Combination and (B) subsequent
to the initial Business Combination, (x) if the reported last sale price of the Class A common stock equals or exceeds $12.00 per share
(as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading
day period commencing at least 150 days after our initial Business Combination , or (y) the date on which the Company completes a liquidation,
merger, capital stock exchange or other similar transaction that results in all of the Company’s stockholders having the right
to exchange their shares of common stock for cash, securities or other property (the “Lock-up). Any permitted transferees will
be subject to the same restrictions and other agreements of our initial stockholders with respect to any founder shares.
Promissory
Note - Related Party
The
Sponsor issued a promissory note allowing the Company to borrow up to $300,000
under an unsecured promissory note to be used for a portion of the expenses of the IPO. The Company had borrowed $137,575
under promissory note. On October 26, 2021, the Company fully repaid the outstanding promissory note balance of $137,575.
As of September 30, 2022 and December 31, 2021, there was no balance outstanding under the promissory note.
Working
Capital Loans
In
addition, in order to finance transaction costs in connection with an intended Business Combination, the Sponsor or an affiliate of the
Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required
on a non-interest basis (“Working Capital Loans”). If the Company completes the initial Business Combination, it would repay
the Working Capital Loans. In the event that the initial Business Combination does not close, the Company may use a portion of the working
capital held outside the Trust Account to repay the Working Capital Loans but no proceeds from the Trust Account would be used to repay
the Working Capital Loans. Up to $1,125,000 of such Working Capital Loans may be convertible into warrants at a price of $1.00 per warrant
at the option of the lender, upon consummation of the initial Business Combination. Such warrants would be identical to the Private Placement
Warrants. Except as set forth above, the terms of Working Capital Loans by the Company’s officers and directors, if any, have not
been determined and no written agreements exist with respect to the Working Capital Loans. As of September 30, 2022 and December 31,
2021, the Company had no borrowings under the Working Capital Loans.
Administrative
Service Fee
The
Company has entered into an administrative services agreement on the effective date of the registration statement for the IPO pursuant
to which the Company will pay an affiliate of the Sponsor a total of $10,000 per month for office space, utilities and secretarial and
administrative support services. Upon completion of the initial Business Combination or the Company’s liquidation, the Company
will cease paying these monthly fees. For the three and nine months ended September 30, 2022, the Company incurred $30,000 and $90,000,
respectively, in administrative service fee. At September 30, 2022 and December 31, 2021, the Company accrued $118,710 and $28,710, respectively,
in administrative service fee payable to its Sponsor. For the three and nine months ended September 30, 2021, the Company did not incur
any fees for these services.
Note
6 - Commitments and Contingencies
Registration
Rights
The
holders of the founder shares, the Private Placement Warrants (including securities contained therein) and warrants (including securities
contained therein) that may be issued upon conversion of Working Capital Loans, and any shares of Class A common stock issuable upon
the exercise of the Private Placement Warrants and any shares of Class A common stock and warrants that may be issued upon conversion
as part of the Working Capital Loans and Class A common stock issuable upon conversion of the founder shares, are entitled to registration
rights pursuant to a registration rights agreement signed on October 8, 2021, requiring the Company to register such securities for resale
(in the case of the founder shares, only after conversion to the Class A common stock). The holders of the majority of these securities
are entitled to make up to three demands, excluding short form demands, that the Company registers such securities. In addition, the
holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the Company’s
completion of its initial Business Combination and rights to require the Company to register for resale such securities pursuant to Rule
415 under the Securities Act. The registration rights agreement does not contain liquidated damages or other cash settlement provisions
resulting from delays in registering the Company’s securities. The Company will bear the expenses incurred in connection with the
filing of any such registration statements.
Underwriting
Agreement
On
October 8, 2021, the Company paid a cash underwriting discount of 2.0% per Unit, or $1,725,000.
The
underwriters are entitled to a deferred underwriting discount of 3.5% of the gross proceeds of the IPO, or $3,018,750, which will be
paid to the underwriters from the funds held in the trust account upon completion of the Company’s initial Business Combination
subject to the terms of the underwriting agreement.
Note
7 - Stockholder’s Deficit
Preferred
Stock - The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 and provides that
shares of preferred stock may be issued from time to time in one or more series. The Company’s board of directors will be authorized
to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and
any qualifications, limitations and restrictions thereof, applicable to the shares of each series. At September 30, 2022 and December
31, 2021, there were no shares of preferred stock issued or outstanding.
Class
A Common stock - The Company is authorized to issue 100,000,000 shares of Class A common stock with a par value of $0.0001 per
share. At September 30, 2022 and December 31, 2021, there were no shares of Class A common stock issued and outstanding, excluding 8,625,000
shares of Class A common stock subject to possible redemption.
Class
B Common stock -The Company is authorized to issue 10,000,000 shares of Class B common stock with a par value of $0.0001 per
share. Holders are entitled to one vote for each share of Class B common stock. At September 30, 2022 and December 31, 2021, there were
2,156,250 shares of Class B common stock issued and outstanding.
Holders
of the Class A common stock and holders of the Class B common stock will vote together as a single class on all matters submitted to
a vote of the Company’s stockholders, except as required by law. Unless specified in the Company’s certificate of incorporation
or bylaws, or as required by applicable provisions of the Delaware General Corporate Law (“DGCL”) or applicable stock exchange
rules, the affirmative vote of a majority of the Company’s shares of common stock that are voted is required to approve any such
matter voted on by its stockholders.
The
shares of Class B common stock will automatically convert into shares of the Class A common stock at the time of the consummation of
the initial Business Combination on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations
and the like, and subject to further adjustment as provided herein. In the case that additional shares of Class A common stock, or equity-linked
securities, are issued or deemed issued in excess of the amounts offered in the IPO and related to the closing of the initial Business
Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless
the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance
or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock
will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding
upon the completion of the IPO (excluding the placement warrants and underlying securities) plus all shares of Class A common stock and
equity-linked securities issued or deemed issued in connection with the initial Business Combination (excluding any shares or equity-linked
securities issued, or to be issued, to any seller in the initial Business Combination or placement equivalent warrants to our Sponsor
or its affiliates upon conversion of Working Capital Loans made to the Company). The term “equity-linked securities” refers
to any debt or equity securities that are convertible, exercisable or exchangeable for shares of Class A common stock issued in a financing
transaction in connection with our initial Business Combination, including but not limited to a private placement of equity or debt.
Securities could be “deemed issued” for purposes of the conversion rate adjustment if such shares are issuable upon the conversion
or exercise of convertible securities, warrants or similar securities.
Warrants
- As of September 30, 2022 and December 31, 2021, there were 8,625,000 Public Warrants and 4,518,750 Private Placement Warrants
outstanding. Each whole warrant entitles the registered holder to purchase one share of the Class A common stock at a price of $11.50
per share, subject to adjustment as discussed below, at any time commencing on the later of 12 months from the effective date of the
registration statement for the IPO and 30 days after the completion of the initial Business Combination. Pursuant to the warrant agreement,
a warrant holder may exercise its warrants only for a whole number of shares of Class A common stock. This means that only a whole warrant
may be exercised at any given time by a warrant holder. No fractional warrants will be issued upon separation of the units and only whole
warrants will trade. The warrants will expire five years after the completion of the Company’s initial Business Combination, at
5:00 p.m., New York City time, or earlier upon redemption or liquidation.
The
Company has agreed that the Company will use its best efforts to file with the SEC a registration statement covering the shares of Class
A common stock issuable upon exercise of the warrants, to cause such registration statement to become effective and to maintain a current
prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed, as specified in the warrant agreement.
If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the
60th business day after the closing of the initial Business Combination, warrant holders may, until such time as there is an effective
registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise
warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding
the foregoing, if a registration statement covering the Class A common stock issuable upon exercise of the warrants is not effective
within a specified period following the consummation of the initial Business Combination, warrant holders may, until such time as there
is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration
statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act of 1933,
as amended (the “Securities Act”), provided that such exemption is available.
Once
the warrants become exercisable, the Company may redeem the outstanding warrants (except as described herein with respect to the placement
warrants):
|
●
at a price of $0.01 per warrant; |
|
●
upon not less than 30 days’ prior written notice of redemption given after the warrants become exercisable (the “30-day
redemption period”) to each warrant holder; and |
|
●
if, and only if, the reported last sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock
splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period
commencing once the warrants become exercisable and ending three business days before we send the notice of redemption to the warrant
holders. |
In
addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes
in connection with the closing of the initial Business Combination at a Newly Issued Price of less than $9.20 per share of Class A common
stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in
the case of any such issuance to the Sponsor or its affiliates, without taking into account any founder shares held by the Sponsor or
such affiliates, as applicable, prior to such issuance), (y) the aggregate gross proceeds from such issuances represent more than 60%
of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination on the date of the
consummation of the initial Business Combination (net of redemptions), and (z) the Market Value is below $9.20 per share, then the exercise
price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the greater of the Market Value and the Newly Issued
Price, and the $18.00 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 180% of
the greater of the Market Value and the Newly Issued Price.
Note
8 - Fair Value of Financial Instruments
The
Company follows the guidance in ASC Topic 820 for its financial assets and liabilities that are re-measured and reported at fair value
at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company
would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly
transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities,
the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of
unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value
hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the
assets and liabilities:
|
● |
Level
1, 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; |
|
● |
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
many cases, a valuation technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy described
above. The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy.
The
following tables present information about the Company’s assets as of September 30, 2022 and December 31, 2021, and indicates the
Level in the fair value hierarchy:
Schedule
of Liabilities Measured at Fair value on a Recurring Basis
| |
| | |
Quoted | | |
Significant | | |
Significant | |
| |
| | |
Prices In | | |
Other | | |
Other | |
| |
| | |
Active | | |
Observable | | |
Unobservable | |
| |
September 30, | | |
Markets | | |
Inputs | | |
Inputs | |
| |
2022 | | |
(Level 1) | | |
(Level 2) | | |
(Level 3) | |
Assets: | |
| | | |
| | | |
| | | |
| | |
Investment held in Trust Account | |
$ | 88,073,560 | | |
$ | 88,073,560 | | |
$ | — | | |
$ | — | |
| |
| | |
Quoted | | |
Significant | | |
Significant | |
| |
| | |
Prices In | | |
Other | | |
Other | |
| |
| | |
Active | | |
Observable | | |
Unobservable | |
| |
December 31, | | |
Markets | | |
Inputs | | |
Inputs | |
| |
2021 | | |
(Level 1) | | |
(Level 2) | | |
(Level 3) | |
Assets: | |
| | | |
| | | |
| | | |
| | |
Cash and investment held in Trust Account | |
$ | 87,550,283 | | |
$ | 87,550,283 | | |
$ | — | | |
$ | — | |
Note
9 - Subsequent Events
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date the unaudited condensed
financial statements were issued. The Company did not identify any subsequent events, other than the below, that would have required
adjustment or disclosure in the unaudited condensed financial statements.
The Company determined that it is in the best interests
of the Company and its stockholders to dissolve and liquidate in accordance with the provisions of Amended and Restated Certificate of
Incorporation, due to the Company’s inability to consummate an initial Business Combination by the Liquidation Date. The Company
will redeem all of 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 its tax obligations
(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).
Additionally, the amended articles of incorporation
state that the Company must wind up and dissolve if the Company is unable to complete its Business Combination within the Combination
Period and no extension is exercised, subject to approval by the Company’s board of directors and any remaining shareholders. The
Company is seeking board approval to amend the articles of incorporation to continue the Company as it looks to complete its Business
Combination, see below. There is no assurance the amendment to the articles of incorporation will be approved by the Company’s board
of directors and any remaining shareholders.
On
October 13, 2022, Parsec Capital Acquisitions Corp., a Delaware corporation (“PCX”), entered into an agreement and plan of
merger (the “Merger Agreement”) by and among PCX, Enteractive Media Inc., a Canadian corporation (“Enteractive Media”)
and Enteractive Merger Sub, Inc., a Canadian corporation and a wholly owned subsidiary of PCX (“Merger Sub”). PCX and Merger
Sub are sometimes referred to collectively as the “PCX Parties.” Pursuant to the Merger Agreement, a business combination
between PCX and Enteractive Media will be effected through the merger of Merger Sub with and into Enteractive Media, with Enteractive
Media surviving the merger as a wholly owned subsidiary of PCX (the “Merger”). Upon the closing of the Merger (the “Closing”),
it is anticipated that PCX will change its name to “Enteractive Media Inc.” The board of directors of PCX has (i) approved
and declared advisable the Merger Agreement, the Ancillary 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 shareholders of PCX.
If the Board of Directors and/or Shareholders approve
to amend the articles of incorporation to continue the Company, the Merger is expected to be consummated in the first quarter of 2023,
following the receipt of the required approval by the shareholders of PCX and the shareholder of Enteractive Media and the satisfaction
of certain other customary closing conditions.