All statements other than statements of historical fact included in this Report
including, without limitation, statements under "Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operations" regarding the
Company's financial position, business strategy and the plans and objectives of
management for future operations, are forward-looking statements. When used in
this Report, words such as "anticipate," "believe," "estimate," "expect,"
"intend" and similar expressions, as they relate to us or the Company's
management, identify forward-looking statements. Such forward-looking statements
are based on the beliefs of management, as well as assumptions made by, and
information currently available to, the Company's management. Actual results
could differ materially from those contemplated by the forward-looking
statements as a result of certain factors detailed in our filings with the SEC.
The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with our audited financial
statements and the notes related thereto which are included in "Item 8.
Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
Certain information contained in the discussion and analysis set forth below
includes forward-looking statements. Our actual results may differ materially
from those anticipated in these forward-looking statements as a result of many
factors, including those set forth under "Cautionary Note Regarding
Forward-Looking Statements and Risk Factor Summary," "Item 1A. Risk Factors" and
elsewhere in this Annual Report on Form 10-K.
Overview
We are a blank check company formed for the purpose of effecting a merger,
capital stock exchange, asset acquisition, stock purchase, reorganization or
similar business combination with one or more target businesses. We intend to
effectuate our business combination using cash from the proceeds of IPO and the
sale of the placement units that occurred simultaneously with the completion of
our IPO, our capital stock, debt or a combination of cash, stock and debt.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete a business
combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any operating revenues
to date. Our only activities from inception through December 31, 2022, were
organizational activities and those necessary to prepare for and close the IPO,
described below, and since the IPO, the search for a prospective initial
business combination. We do not expect to generate any operating revenues until
after the completion of an initial business combination, at the earliest. We
have generated and expect to continue to generate non-operating income in the
form of interest income from the proceeds of the IPO placed in the Trust
Account. We have incurred and expect that we will continue to incur increased
expenses as a result of being a public company (for legal, financial reporting,
accounting and auditing compliance), as well as for due diligence expenses in
connection with searching for, and completing, a business combination.
For the year ended December 31, 2022, we had a net income of $442,188, which
consists of the change in fair value of warrants $1,280,272, interest income of
$219,100, and realized gains on investments held in Trust Account of $946,411
partially offset by operating expenses of $1,780,437 (driven by general and
administrative expenses of $1,243,266, consulting fees - related party of
$434,321, and Delaware franchise taxes of $102,850) and income tax expense of
$223,159.
For the period from March 25, 2021 (inception) through December 31, 2021, we had
a net loss of $63,523, which primarily consists of operating expenses of
$314,359 (driven by general and administrative expenses of $71,703, consulting
fees - related party of $178,667 and Delaware franchise taxes of $63,989) and
transaction costs allocated to warrant issuance of $11,910, partially offset by
change in fair value of warrants $263,666.
Liquidity and Capital Resources
On December 27, 2021, the Company consummated its initial public offering (the
"IPO") of 8,625,000 units (the "Units") generating gross proceeds of
$86,250,000. Each Unit consists of one share of common stock, and one redeemable
warrant (each, a "Public Warrant"). Each Public Warrant entitles the holder to
purchase one share of common stock at a price of $11.50 per share, subject to
adjustment at the closing of a business combination.
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On December 27, 2021, simultaneously with the consummation of the IPO, the
Company consummated the issuance and sale ("Private Placement") of 4,450,000
Private Placement Warrants (the "Private Placement Warrants") in a private
placement transaction at a price of $1.00 per Private Placement Warrant,
generating gross proceeds of $4,450,000. Each whole Private Placement Warrant
will be exercisable to purchase one share of common stock at a price of $11.50
per share. A portion of the proceeds from the Private Placement Warrants were
added to the proceeds from the IPO to be 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 Placement Warrants will be used to
fund the redemption of the Public Shares (subject to the requirements of
applicable law), and the Private Placement Warrants and all underlying
securities will be worthless.
On December 29, 2021, the underwriters exercised the over-allotment option in
full pursuant to which an additional 1,125,000 Units at a price of $10.00 per
Unit were sold. The Over-allotment Units are identical to the Units sold at IPO.
Upon the closing of the Over-allotment on December 29, 2021, the Company
consummated a private sale of an additional 393,750 Private Placement Warrants
at a price of $1.00 per Private Placement Warrant, generating gross proceeds of
$393,750. As of December 29, 2021, a total of $87,112,500 of the net proceeds
from the IPO (including the Over-allotment Units) and the sale of Private
Placement Warrants was placed in a U.S.-based trust account. As the
over-allotment option was fully exercised, no portion of the 2,156,250 shares
purchased by the initial shareholders is subject to forfeiture any longer.
For the year ended December 31, 2022, cash used in operating activities was
$1,324,146, cash provided by investing activities was $67,763,012 and cash used
in financing activities was $67,826,556.
For the period from March 25, 2021 (inception) through December 31, 2021, cash
used in operating activities was $196,570. Net Cash used in investing activities
was $87,112,500 and Net cash provided by financing activities was $88,712,570
reflecting the proceeds of our IPO and subsequent investment of most proceeds
into US Treasuries in our trust account.
As of December 31, 2022, we had investments held in the trust account of
$20,294,981. We intend to use substantially all of the funds held in the trust
account, including any amounts representing interest earned on the trust account
(less taxes payable), to complete our business combination. To the extent that
our capital stock or debt is used, in whole or in part, as consideration to
complete our business combination, the remaining proceeds held in the Trust
Account will be used as working capital to finance the operations of the target
business or businesses, make other acquisitions and pursue our growth
strategies.
As of December 31, 2022, we had cash of $15,810 outside of the trust account. We
intend to use the funds held outside the trust account primarily to identify and
evaluate target businesses, perform business due diligence on prospective target
businesses, travel to and from the office, similar locations of prospective
target businesses or their representatives or owners, review corporate documents
and material agreements of prospective target businesses, and structure,
negotiate and complete a business combination.
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 and subsequent
dissolution described in the financial statements, 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 has until April 27, 2023 to
consummate a business combination with the option to extend up to two (2) times
by an additional month each time (or up to June 27, 2023) by depositing into the
trust account $100,000 for each additional month extension. It is uncertain that
the Company will be able to consummate a business combination by the specified
period. If a business combination is not consummated by April 27, 2023, as
extended and the monthly options to extend up to June 27, 2023 are not exercised
(and the stockholders of the Company do not agree to further amend our
certificate of incorporation to allow for a further extension of the Combination
Period beyond June 27, 2023), there will be a mandatory liquidation and
subsequent dissolution. These financial statements do not include any
adjustments relating to the recovery of the recorded assets or the
classification of the liabilities that might be necessary should the Company be
unable to continue as a going concern.
Also, in connection with the Company's assessment of going concern
considerations in accordance with the ASU 2014-15 management has determined that
if the Company is unable to raise additional funds to alleviate liquidity needs
as well as complete a business combination by April 27, 2023 and the monthly
options to extend up to June 27, 2023 are not exercised (and the stockholders of
the Company do not agree to further amend our certificate of incorporation to
allow for a further extension of the Combination Period beyond June 27, 2023)
then the Company will cease all operations except for the purpose of
liquidating. The liquidity condition as well
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as the date for mandatory liquidation and subsequent dissolution raise
substantial doubt about the Company's ability to continue as a going concern.
These financial statements do not include any adjustments relating to the
recovery of the recorded assets or the classification of the liabilities that
might be necessary should the Company be unable to continue as a going concern.
Special Meeting
On December 21, 2022, the Company held a special meeting in lieu of its 2022
annual meeting of stockholders (the "special meeting"). The stockholders
approved the proposal to amend (the "Certificate of Incorporation Amendment")
the Company's certificate of incorporation by allowing the Company to extend
(the "Extension") the date by which it has to consummate a business combination
(the "Combination Period") for an additional three (3) months, from December 27,
2022 to March 27, 2023, by depositing into the Trust Account $300,000 for the
three-month extension, and thereafter to extend the Combination Period up to
three (3) times by an additional month each time (or up to June 27, 2023) by
depositing into the Trust Account $100,000 for each additional month extension.
In connection with the votes to approve the Extensions, the holders of 6,689,428
shares of common stock of the Company properly exercised their right to redeem
their shares for cash at a redemption price of approximately $10.19 per share,
for an aggregate redemption amount of approximately $68,165,271.
On December 28, 2022, the Company deposited $300,025 into the Trust Account to
extend the date by which it has to consummate a business combination to March
27, 2023.
As discussed in Note 11 to our financial statements, on March 23, 2023, Gardiner
Healthcare exercised an Extension and deposited $100,000 into the trust account
in order to extend the Combination Period to April 27, 2023.
Off-Balance Sheet Financing Arrangements
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities other than the amended Promissory Note with
the Sponsor. The amended Promissory Note is non-interest bearing and all
outstanding amounts under the amended Promissory Note will be due on the earlier
of: (i) June 27, 2023, or (ii) the date on which the Company consummates an
initial business combination.
The Company has engaged Chardan as an advisor in connection with a Business
Combination to introduce us to potential investors that are interested in
purchasing the Company's securities in connection with a potential Business
Combination, assist the Company in obtaining stockholder approval for a Business
Combination and assist the Company with its press releases and public filings in
connection with a Business Combination. The Company will pay Chardan the
Marketing Fee for such services upon the consummation of an initial Business
Combination in an amount equal to 3.5% of the gross proceeds of this offering,
(or $3,018,750).
Business Combination Marketing Agreement
We have engaged Chardan Capital Markets, LLC ("Chardan") as an advisor in
connection with a business combination to introduce us to potential investors
that are interested in purchasing our securities in connection with the
potential business combination, assist us in obtaining stockholder approval for
the business combination and assist us with our press releases and public
filings in connection with the business combination. We will pay Chardan the
Marketing Fee for such services upon the consummation of an initial business
combination in an amount equal to 3.5% of the gross proceeds of the IPO,
including proceeds from the exercise of the over-allotment option (exclusive of
any other fees which might become payable pursuant to any other agreement among
Chardan and the us or any target business). We have also agreed, pursuant to the
business combination marketing agreement, to retain Chardan as lead financial
advisor to us in connection with our initial business combination, and as a
non-exclusive placement agent in connection with any private placement
undertaken in connection with such business combination, in each case on
mutually agreeable terms and conditions and pursuant to one or more separate
engagement letters to be entered into between the parties.
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We qualify as an "emerging growth company" and
under the JOBS Act are allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded)
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companies. We are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting
standards on the relevant dates on which adoption of such standards is required
for non-emerging growth companies. As such, our financial statements may not be
comparable to companies that comply with public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the
other reduced reporting requirements provided by the JOBS Act. Subject to
certain conditions set forth in the JOBS Act, if, as an "emerging growth
company," we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an auditor's attestation report on our system of
internal control over financial reporting pursuant to Section 404 of the
Sarbanes-Oxley Act, (ii) provide all of the compensation disclosure that may be
required of non-emerging growth public companies under the Dodd-Frank Wall
Street Reform and Consumer Protection Act, (iii) comply with any requirement
that may be adopted by the PCAOB regarding mandatory audit firm rotation or a
supplement to the auditor's report providing additional information about the
audit and the financial statements (auditor discussion and analysis) and (iv)
disclose certain executive compensation related items such as the correlation
between executive compensation and performance and comparisons of executive
compensation to median employee compensation. These exemptions will apply for a
period of five years following the completion of our IPO or until we are no
longer an "emerging growth company," whichever is earlier.
Critical Accounting Estimates
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of expenses during
the reporting period. Actual results could differ from those estimates. We have
not identified any critical accounting estimates other than significant
assumptions made by management in the valuation of our derivative warrant
liabilities.
Significant judgements are required by management in the valuation of our
liability classified Private Placement Warrants. Inherent in the Monte Carlo
pricing model used to value the Private Placement Warrants are assumptions
related to expected share-price volatility, expected life, risk-free interest
rate and dividend yield. We estimate the volatility of our common shares based
on industry historical volatility that matches the expected remaining life of
the Private Placement Warrants. The risk-free interest rate is based on the U.S.
Treasury zero-coupon yield curve on the grant date for a maturity similar to the
expected remaining life of the Private Placement Warrants. The expected life of
the Private Placement Warrants is assumed to be equivalent to their remaining
contractual term. The dividend rate is based on the historical rate, which we
anticipate to remain at zero. Actual deviations from our assumptions may have a
material effect on our financial statements.
Recent Accounting Standards
See Note 2 to the financial statements required by Item 15 of this Annual Report
on Form 10-K.
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