ITEM 1. BUSINESS
Introduction
We are a blank check company
incorporated on July 21, 2021 as a Delaware corporation and 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, which we refer to throughout
this report as our initial business combination. While we may pursue an initial business combination target in any business or industry,
we intend to search globally, with a focus on target companies within the healthcare industry.
The
Registration Statement for our initial public offering was declared effective on November 17, 2021 (the “Initial Public Offering,”
or “IPO”). On November 22, 2021, we consummated its Initial Public Offering of 6,000,000 units (the “Units”)
at $10.00 per Unit Each Unit consists of one share of common stock, $0.0001 par value (the “Common Stock”), one right
to receive one-twentieth (1/20) of a share of Common Stock upon the consummation of an initial business combination and one redeemable
warrant entitling the holder thereof to purchase three-fourths (3/4) of a share of Common Stock at a price of $11.50 per whole share.
The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $60,000,000. The Company granted the underwriters
a 45-day option to purchase up to 900,000 additional Units to cover over-allotments, if any. The Company incurred offering costs of $5,587,733,
of which $2,587,500 was for deferred underwriting commissions. On November 22, 2021, the over-allotment option was exercised in full.
On
November 22, 2021, simultaneously with the consummation of the IPO, the Company completed the private sale (the “Private Placement”)
of 193,889 units and 60,000 units, respectively (the “Private Units”) to Arisz Investments LLC, the Company’s
sponsor (the “Sponsor”) and Chardan Capital Markets, LLC, generating total proceeds of $2,538,886.
Also,
on November 22, 2021, the underwriters exercised the over-allotment option in full. The closing of the issuance and sale of the additional
Units (the “Over-Allotment Option Units”) occurred on November 24, 2021. The total aggregate issuance by the Company
of 900,000 units at a price of $10.00 per unit resulted in total gross proceeds of $9,000,000. On November 24, 2021, simultaneously with
the sale of the Over-Allotment Option Units, the Company consummated the private sale of an additional 13,500 Private Units and 9,000
Private Units to the sponsor and Chardan Capital Markets, LLC, respectively, generating gross proceeds of $225,000. The Private Units
were issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, as the transactions did not involve a public offering.
A
total of $69,000,000 of the net proceeds from the sale of Units in the IPO (including the Over-Allotment Option Units) and the Private
Placements on November 22, 2021 and November 24, 2021, were placed in a trust account (the “Trust Account”), located
in the United States and held as cash items or may be invested in U.S. government securities, within the meaning set forth in Section
2(a)(16) of the Investment Company Act, with a maturity of 185 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 us, until the earlier
of: (i) the consummation of a Business Combination or (ii) the distribution of the funds in the Trust Account to our stockholders.
If
we are unable to complete an initial business combination within 15 months (or up to 18 months if our time to complete a business combination
is extended as described herein) from the closing of the Initial Public Offering, we 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 100% of the outstanding
public shares for a pro rata portion of the funds held in the trust account, which redemption will completely extinguish public stockholders’
rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii)
as promptly as reasonably possible following such redemption, subject to the approval of our remaining holders of common stock and our
board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our obligations under Delaware law to provide
for claims of creditors and the requirements of other applicable law. Holders of rights or warrants will receive no proceeds in connection
with the liquidation with respect to such rights or warrants, which will expire worthless. In connection with our redemption of 100%
of our outstanding public shares, each holder will receive an amount equal to (1) the number of public shares being converted by such
public holder divided by the total number of public shares multiplied by (2) the amount then in the trust account (initially $10.00 per
share), which includes the deferred underwriting commission, plus a pro rata portion of any interest earned on the funds held in the
trust account and not previously released to us or necessary to pay our taxes (subject in each case to our obligations under Delaware
law to provide for claims of creditors).
Merger
Agreement
On
January 21, 2022, we entered into a merger agreement with Finfront Holding Company, a Cayman Islands exempted company (the “BitFuFu”),
pursuant to which (a) Arisz agreed to form BitFuFu Inc., a Cayman Islands exempted company, as its wholly owned subsidiary (“Purchaser”
or “PubCo”), (b) Purchaser would form Boundary Holding Company, a Cayman Islands exempted company, as its wholly owned
subsidiary (“Merger Sub”), (c) Arisz will be merged with and into Purchaser (the “Redomestication Merger”),
with Purchaser surviving the Redomestication Merger, and (d) Merger Sub will be merged with and into BitFuFu (the “Acquisition
Merger”), with BitFuFu surviving the Acquisition Merger as a direct, wholly owned subsidiary of Purchaser (collectively, the
“Business Combination”). Following the Business Combination, Purchaser will be a publicly traded company listed on
a stock exchange in the United States. On April 4, 2022, each of Arisz and BitFuFu entered into that certain Amendment to the Merger
Agreement pursuant to which, among other things, the parties clarified certain Cayman Island corporate law matters by mutual agreement.
Also on April 4, 2022, each of Purchaser, Merger Sub, Arisz and BitFuFu executed that certain Joinder Agreement to the Merger Agreement,
whereby each of Purchaser and Merger Sub have agreed, effective upon execution, that it shall become a party to the Merger Agreement
and shall be fully bound by, and subject to, all of the covenants, terms, representations, warranties, rights, obligations and conditions
of the Merger Agreement as though an original party thereto.
On
October 10, 2022, each of Arisz and BitFuFu entered into that certain Amendment (“Amendment No. 2”) to the Merger
Agreement to provide, among other things:
(1)
that until the earlier of (x) termination of the Merger Agreement in accordance with its terms, and (y) forty-five (45) calendar days
prior to the Outside Date, neither BitFuFu nor the Parent Parties (as defined in the Merger Agreement) shall participate in discussions,
negotiations or related activities with any Person concerning any Alternative Transaction,
(2)
that BitFuFu and Arisz shall cause the amendment and/or termination of certain agreements in order to remove all existing restrictions
on four hundred thousand (400,000) Insider Shares that are currently subject to transfer restrictions, so that such shares are freely
tradeable upon the Closing;
(3)
for a loan from BitFuFu to Arisz in the amount of Two Million Two Hundred and Twenty Thousand Dollars ($2,220,000) for the purpose of
funding any payment due in connection with an extension of the period of time for Arisz to consummate a business combination and for
working capital purposes (the “Loan”). The Loan shall be funded in three equal installments on each of October 26,
2022, January 26, 2023 and April 26, 2023, in each case in the amount of Seven Hundred Forty Thousand Dollars ($740,000). Of each such
installment, the sum of Six Hundred Ninety Thousand Dollars ($690,000) (the “Extension Funding Amount”) shall be used
to cover the extension costs, and the remaining Fifty Thousand ($50,000) shall be used for working capital. In the event that the actual
extension costs are less than the Extension Funding Amount, Arisz shall promptly repay the difference between such actual extension costs
and the Extension Funding Amount. Arisz shall issue a promissory note for the amount of the Loan in favor of the Company;
(4)
that the Outside Date is extended to August 1, 2023;
(5)
that the Merger Agreement may be terminated (a) by the Parent Parties, in the event that BitFuFu fails to fund any of the installment
amounts of the Loan specified in Section 9.8 of the Merger Agreement by the applicable due dates, (h) by the Parent Parties or BitFuFu,
in the event that the Parent Parties fail to obtain any extension to the termination date by which time Arisz must cease operations unless
a business combination has been consummated and (i) by BitFuFu, in the event that Arisz defaults on the Promissory Note as specified
in such Section 9.8, which default remains not cured within ten (10) calendar days; and
(6)
for (i) a Parent breakup fee payable by BitFuFu to Arisz equal to Four Million Dollars ($4,000,000) in cash in the event of the termination
of the Merger Agreement by Arisz pursuant to Section 11.1(b) of the Merger Agreement or as a result of BitFuFu’s refusal to consummate
the transactions contemplated thereby and (ii) a Company breakup fee payable by Arisz to BitFuFu in the amount of Five Million Dollars
($5,000,000) in the event of the termination of the Merger Agreement by BitFuFu pursuant to Section 11.1(c) of the Merger Agreement or
as a result of Arisz’s refusal to consummate the transactions contemplated thereby.
On
October 10, 2022, Arisz issued a promissory note for the amount of the Loan in favor of BitFuFu (the “Promissory Note”),
pursuant to which Arisz may elect to issue a number of unregistered shares of its common stock, valued for these purposes at $10.00 per
share, the aggregate value of which shall be equal to the outstanding principal amount of the Loan, to BitFuFu or its designee as payment
of its obligations under the Loan, except in the event that the actual extension costs are less than the Extension Funding Amount, Arisz
shall wire such prepayment to such account as designated by BitFuFu.
Backstop
Agreements
On
July 14, 2022, each of Arisz , BitFuFu, the Purchaser and the Sponsor (and, along with any assignee of the Sponsor, the “Buyer”)
entered into a backstop agreement (the “Backstop Agreement”) whereby, in connection with the Business Combination,
the Buyer has agreed to subscribe for and purchase no less than US$1.25 million worth of shares of Arisz common stock par value $0.0001
per share or Purchaser’s Class A ordinary shares, as specified therein. The Backstop Agreement terminated as per its terms on July
31, 2022.
On
October 13, 2022 the parties to the Backstop Agreement entered into a new backstop agreement (the “New Backstop Agreement”)
substantially on the same terms as the Backstop Agreement with the only substantive additional terms being that: 1) the subscription
amount is $2.0 million worth of shares and 2) the termination date is the earlier of: (i) the date agreed by the parties thereto in writing
and (ii) the date that the Merger Agreement is terminated, on its terms.
Our
Company
We
are a blank check company incorporated on July 21, 2021 as a Delaware corporation and 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, which
we refer to throughout this report as our initial business combination. While we may pursue an initial business combination target in
any business or industry, we intend to search globally, with a focus on target companies within the healthcare industry.
Our
Sponsor and Competitive Advantages
Our
Sponsor is an affiliate of M.S.Q. Ventures Inc (MSQ), a research-driven advisory firm with deep domain expertise in life sciences. MSQ
exclusively focuses on integration for emerging life sciences companies that discover, develop and commercialize innovative therapeutics-focused
products. Through MSQ’s deep sector knowledge, strong network and regional expertise, MSQ provides comprehensive advisory services
and solutions to streamline the most complex global projects. MSQ’s core capabilities include the development of partnership strategy
and execution, non-deal roadshow planning and execution, and key opinion leader (KOL) interviews. MSQ assists companies in increasing
visibility within the investment community and educating investors and executives on opportunities offered by these companies. Since
2016, the MSQ team has met with a substantial number of companies in North America and Europe to evaluate various partnership options
and to conduct one-on-one partnership meetings and KOL interviews.
MSQ
has instituted a strategy of identifying transformational innovations across the life sciences space. We will benefit from MSQ’s
expertise and resources, specifically in identifying scientific programs that have the potential to disrupt the current standard of care
in their respective areas. MSQ actively analyzes asymmetric risk/reward opportunities in North America and Europe and focuses on recognizing
synergies across global markets and companies for its clients. Our specific therapeutic areas of focus include (but not limited to) oncology,
dermatology, orphan diseases, gene/cell therapy and related areas.
Our
Board of Director and Management Team
Our
officers, directors and strategic advisors consist of seasoned investors and industry executives with an extensive track record of identifying,
investing, building, operating and advising leading businesses. In particular, the team possesses a deep understanding of the healthcare
industry, the evolution of these sectors and market opportunities.
Echo
Hindle-Yang has been our Chief Executive Officer since inception and became chairwoman of our board of directors upon consummation of
our IPO. Ms. Hindle-Yang has more than 20 years of extensive experience of leading complex organizations, managing transactions for fortune
500 global companies and founding new ventures to resolve unmet market needs. More recently, Ms. Hindle-Yang’s focus has largely
been within the healthcare industry, where she has advised global pharmaceutical and medical device companies in North America and Europe
on their corporate strategy endeavors, financing paths, portfolio optimization and acquisition opportunities. In 2016, Ms. Hindle-Yang
founded M.S.Q. Ventures, a New York-based advisory firm that focuses on integration for emerging life sciences companies. From 2011 to
2015, Ms. Hindle-Yang served as Chief Operation Officer at Playbutton LLC where she managed the company’s business strategy, marketing,
finance operations including IPO’s and acquisitions. In 2010, Ms. Hindle-Yang joined Gerber Scientific Inc as director of global
strategy and operations in charge of leading a brand-new global team to focus on overseas expansion and operations. Ms. Hindle-Yang holds
an MBA from Duke University with a health sector management certificate. Currently Ms. Hindle-Yang is serving on the DukeNY Board.
Marc
Estigarribia has been our Chief Financial Officer since inception. Mr. Estigarribia has been the Managing Director and Head of Origination
and Engagement at MSQ Ventures since May 2016, where he has led the company’s client origination and engagement effort in the life
science industry. Mr. Estigarribia maintains a deep network of global relationships with strategic partners and investors within the
life science industry. Between September 2015 and April 2016, Mr. Estigarribia served as vice president senior research analyst at Chardan.
Mr. Estigarribia was responsible for equity stock coverage of the Technology, TMT industry with a main vertical focus on Internet of
Things (IOT/M2M) Machine-to-Machine Communications (M2M) including Robotics,
Artificial
Intelligence and Semiconductors. Between March 2013 and August 2015, Mr. Estigarribia served as senior investment banking associate at
Wellington Shields. Mr. Estigarribia worked with both public and private growth companies to help provide capital raising, merger &
acquisition, and strategic financial advisory services in all facets of the capital structure — Private Equity, Senior Debt, Mezzanine
Debt, Unitranche, Equity, IPOs, Secondary Offerings, and Private Placements. Between April 2011 and March 2013, Mr. Estigarribia served
as CFO at Rubin Singer, a start-up company in the Luxury Goods Fashion industry where Mr. Estigarribia managed cash flow, capital formation
and investment advisory for this start-up company in the Luxury Goods Fashion industry. Mr. Estigarribia also maintained constant communication
flow with both existing and prospective equity and debt investors, and internal management board-team, while enhancing strategic relationships.
Between July 1996 and March 2011, Mr. Estigarribia served as a sell-side Equity Research Analyst at Citigroup. Mr. Estigarribia’s
responsibilities covered 70% of the teams’ total coverage for telecommunication services and media companies in Latin America.
Mr. Estigarribia initiated and launched the numerous reports within the wireless and media sectors between 2000 and 2003. Through these
roles, Mr. Estigarribia has developed and maintained relationships with top tier institutional investors. Mr. Estigarribia obtained his
MBA degree in 1995 from NYU Stern School of Business and his BS in Economics from Binghamton University, State University of New York.
Nick
He has been a member of our board of directors since November 17, 2021. Since January 2017, Mr. He has been the Founder and the Chief
Executive Officer of GPS Renting, a privately held real estate investment firm with brokerage and property management services which
brings cutting-edge mobile technology, strategic planning, and extensive real estate experience to serve clients. Between April 2012
and November 2016, Mr. He started as a strategy and product planer and became the senior program manager lead when he left Microsoft.
Mr. He was responsible for product strategies, including, but not limited to Market opportunity & Business Plan, Growth strategy,
Turnaround Strategy at Microsoft. Between May 2008 and September 2008, Mr. He served as summer associate consultant at McKinsey &
Co. where Mr. He led the Financial Analysis and Planning project which analysis of technology spending and recommended a 5-year investment
strategy. Mr. He obtained his MBA degree focusing on strategy and marketing in 2009 from Duke University Fuqua School of Business.
Rushi
Trivedi, PhD has been a member of our board of directors since November 17, 2021. Since 2019, Dr. Trivedi has been founder of RepliGene
Life Sciences, a company that specializes in the production of Cell and Gene Therapy adducts. Dr. Trivedi focuses on unmet clinical needs
and assists in bringing the next generation Cell and Gene Therapies to the market. Between June 2015 and April 2019, Dr. Trivedi served
as strategy consultant at McKinsey & Company where Dr. Trivedi gained extensive experience in M&A, business development, due
diligence, portfolio management and asset integration while drawing heavily from his background in oncology and drug development to serve
clients in these topics across pharma, medical technology tech, and private equity. Dr. Trivedi is a widely published scientist with
over 400 citations in leading peer-reviewed journals. Dr. Trivedi obtained his Doctor of Philosophy in Biochemistry and Molecular Biology
from Stowers Institute of Medical Research and University of Kansas Medical Center in 2015, and his MS in Medicinal and Pharmaceutical
Chemistry from University of Kansas in 2009, and his BS in Pharmaceutical Sciences from Purdue University in 2007.
Dr.
Romain Guerel has been a member of our board of directors since November 17, 2021. Since March 2020, Dr. Guerel is the founder and CEO
of MSolution Consulting. The consulting company provides project management consultancy for European and North American companies. Starting
March 2019, Dr. Guerel has been elected as an executive board member of a French International School where he has in charge with other
7 board members of all administrative and strategic decisions on behalf of the parent’s committee. From September 2012 to February
2020, Dr. Guerel worked as a director for Century 3 Project Management Company where he was in charge on multiple management projects
for Fortune 500 companies. From 2001 to 2012, Dr. Guerel was the co-founder and Managing Director of Capital Resources where he was in
charge of raising funds for high-end real estate projects. Dr. Guerel obtained his Doctor of Philosophy in Management from HKUST Business
School in 2011, and has Master of Laws degrees in Commercial French law and International law from the Law School of Nice Sophia Antipolis.
The
past performance of our management team, or advisor or their respective affiliates is not a guarantee either (i) of success with respect
to any business combination we may consummate or (ii) that we will be able to identify a suitable candidate for our initial business
combination. No member of our management team has had management experience with special purpose acquisition corporations in the past.
You should not rely on the historical record of our management team’s or advisor’s or their respective affiliates’
performance as indicative of our future performance.
Competition
In
identifying, evaluating and selecting a target business for our initial business combination, we may encounter intense competition from
other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged
buyout funds, and operating businesses seeking strategic business combinations. Many of these entities are well established and have
extensive experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors
possess greater financial, technical, human and other resources than we do. Our ability to acquire larger target businesses will be limited
by our available financial resources. This inherent limitation gives others an advantage in pursuing the initial business combination
of a target business. Furthermore, our obligation to pay cash in connection with our public stockholders who exercise their redemption
rights may reduce the resources available to us for our initial business combination and our outstanding warrants, and the future dilution
they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive
disadvantage in successfully negotiating an initial business combination.
Employees
We
currently have two officers. These individuals are not obligated to devote any specific number of hours to our matters but they intend
to devote as much of their time as they deem necessary, in the exercise of their respective business judgement, to our affairs until
we have completed our initial business combination. The amount of time they will devote in any time period will vary based on whether
a target business has been selected for our initial business combination and the stage of the initial business combination process we
are in. We do not intend to have any full-time employees prior to the completion of our initial business combination. We do not have
an employment agreement with any member of our management team.
For
additional discussion of the general development of our business, see our final prospectus on Form 424B4 filed with the SEC on November
17, 2021.
ITEM 1A. RISK FACTORS
As
a smaller reporting company, we are not required to make disclosures under this Item.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not
applicable.
ITEM 2. PROPERTIES
Our
executive offices are located at 199 Water St, 31st Floor, New York, NY 10038, and our telephone number is 212-845-9945.
Commencing
on the date our securities are first listed on Nasdaq, we have agreed to pay Arisz Investments LLC, our sponsor a total of $10,000 per
month for office space, utilities and secretarial and administrative support. We consider our current office space adequate for our current
operations.
ITEM 3. LEGAL PROCEEDINGS
We
may be subject to legal proceedings, investigations and claims incidental to the conduct of our business from time to time. We are not
currently a party to any material litigation or other legal proceedings brought against us. We are also not aware of any legal proceeding,
investigation or claim, or other legal exposure that has a more than remote possibility of having a material adverse effect on our business,
financial condition or results of operations.
ITEM 4. MINE SAFETY DISCLOSURES
Not
Applicable.
part
II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our
units began to trade on The Nasdaq Global Market, or Nasdaq, under the symbol “ARIZU” on or about November 22, 2021. The
common stock, rights and redeemable warrants comprising the units began separate trading on December 9, 2021, under the symbols “ARIZ,”
“ARIZR,” and “ARIZW,” respectively.
Holders
of Record
As
of December 6, 2022, there were 8,901,389 shares of our common stock issued and outstanding held by approximately
3 stockholders of record, and there were 1,943,889 and 69,000 shares of our common stock issued and outstanding held by our Sponsor
and Chardan, respectively. The number of record holders was determined from the records of our transfer agent and does not include
beneficial owners of shares of common stock whose shares are held in the names of various security brokers, dealers, and registered
clearing agencies.
Dividends
We
have not paid any cash dividends on our common stock to date and do not intend to pay cash dividends prior to the completion of an initial
business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements
and general financial condition subsequent to completion of a business combination. The payment of any dividends subsequent to a business
combination will be within the discretion of our board of directors at such time. It is the present intention of our board of directors
to retain all earnings, if any, for use in our business operations and, accordingly, our board of directors does not anticipate declaring
any dividends in the foreseeable future. In addition, our board of directors is not currently contemplating and does not anticipate declaring
any share dividends in the foreseeable future. Further, if we incur any indebtedness, our ability to declare dividends may be limited
by restrictive covenants we may agree to in connection therewith.
Securities
Authorized for Issuance Under Equity Compensation Plans
None.
Recent
Sales of Unregistered Securities
There
were no unregistered securities to report which have not been previously included in a Quarterly Report on Form 10-Q or a Current Report
on Form 8-K.
Purchases
of Equity Securities by the Issuer and Affiliated Purchasers
None.
ITEM 6. [RESERVED]
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The
following discussion and analysis of our 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 “Special Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors”
and elsewhere in this Annual Report on Form 10-K.
Overview
We
are a blank check company formed under the laws of the State of Delaware on July 21, 2021. We were formed for the purpose of entering
into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination.
On January 21, 2022, Arisz
entered into that certain Agreement and Plan of Merger (as may be amended, supplemented or otherwise modified from time to time, the
“Merger Agreement”), by and between Arisz and Finfront Holding Company, a Cayman Islands exempted company (“BitFuFu”),
pursuant to which (a) Arisz will form BitFuFu Inc., a Cayman Islands exempted company, as its wholly owned subsidiary (“Purchaser”),
(b) Purchaser will form Boundary Holding Company, a Cayman Islands exempted company, as its wholly owned subsidiary (“Merger
Sub”), (c) Arisz will be merged with and into Purchaser (the “Redomestication Merger”), with Purchaser surviving
the Redomestication Merger, and (d) Merger Sub will be merged with and into BitFuFu (the “Acquisition Merger”), with
BitFuFu surviving the Acquisition Merger as a direct wholly owned subsidiary of Purchaser (collectively, the “Business Combination”).
Following the Business Combination, Purchaser will be a publicly traded company listed on a stock exchange in the United States. On April
4, 2022, each of Arisz and the Company entered into that certain Amendment to the Merger Agreement pursuant to which, among other things,
the parties clarified certain Cayman Island corporate law matters by mutual agreement.
In consideration of the Acquisition
Merger, Purchaser will issue 150,000,000 ordinary shares (the “Closing Payment Shares”) with a deemed price per share
US$10.00 (“Aggregate Stock Consideration”) to the shareholders of BitFuFu. The Aggregate Stock Consideration consists
of 7,500,000 Class A ordinary shares and 142,500,000 Class B ordinary shares of Purchaser.
The
Merger Agreement provides that the closing of the Business Combination shall occur no later than July 31, 2022 (the “Outside
Date”) and that the Outside Date may be extended upon the written agreement of Arisz and BitFuFu.
On
July 14, 2022, each of Arisz, BitFuFu, the Purchaser and Arisz’s Sponsor (along with any assignee of Arisz’s Sponsor,
the “Buyer”) entered into a backstop agreement (the “Backstop Agreement”) whereby, in connection
with the Business Combination, the Buyer has agreed to subscribe for and purchase no less than US$1.25 million worth of shares of Arisz
common stock par value $0.0001 per share or Purchaser’s Class A ordinary shares.
On
October 10, 2022, Arisz and BitFuFu entered into an amendment to the Merger Agreement to provide, among other things: 1) for a loan
from BitFuFu to Arisz in the amount of $2,220,000 (the “Loan”) for the purpose of funding Arisz’s extension
of the time to consummate a business combination and for working capital purposes, and 2) remove all existing restrictions on 400,000
Insider Shares that are currently subject to transfer restrictions, so that such shares are freely tradeable upon the Closing. The Loan
will be funded in three equal installments of $740,000 on each of October 26, 2022, January 26, 2023 and April 26, 2023.
On
October 10, 2022, Arisz issued an unsecured promissory note to BitFuFu for the amount of the Loan at an interest rate of 3.5% per annum
and is due on October 26, 2023. Arisz may elect to issue a number of unregistered shares of its common stock, valued for these purposes
at $10.00 per share, the aggregate value of which shall be equal to the outstanding principal amount of the Loan.
On
October 13, 2022, the parties to the Backstop Agreement entered into a new backstop agreement substantially on the same terms as the
Backstop Agreement with the only substantive additional terms being that: 1) the subscription amount is $2.0 million worth of shares
and 2) the termination date is the earlier of: (i) the date agreed by the parties thereto in writing and (ii) the date that the Merger
Agreement is terminated, on its terms.
On
October 24, 2022, Arisz received $740,000, the first installment of the Loan, from BitFuFu.
On
November 9, 2022, Arisz deposited $690,000 into the Trust Account (representing $0.10 per each share of redeemable common stock) to extend
the time for Arisz to complete the Business Combination by three months until February 17, 2023.
We
expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete
the 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 September
30, 2022 were organizational activities and those necessary to prepare for our initial public offering (“IPO”), and,
after our IPO, searching for a target business to acquire. We do not expect to generate any operating revenues until after the completion
of our initial Business Combination. We expect to generate non-operating income in the form of interest income on marketable securities
held after the IPO. We expect that we will 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 September 30, 2022, we had a net loss of $359,608, which consists of loss of approximately $597,351 derived from general
and administrative expenses of approximately $544,157, franchise tax expense of $53,194 and income tax expense of $49,057, offset by
interest earned on marketable securities of approximately $286,800.
For
the period from July 21, 2021 (inception) through September 30, 2021, we had a net loss of $490, all of which derived from general and
administrative expenses.
Liquidity and Going Concern
On
November 22, 2021 the Company consummated the IPO of 6,000,000 units (which does not include the exercise of the over-allotment option
by the underwriters in the IPO) at an offering price of $10.00 per unit (the “Public Units”), generating gross proceeds
of $60,000,000. Simultaneously with the IPO, the Company sold to its Sponsor and Chardan Capital Markets LLC (“Chardan”)
(and/or their designees) 253,889 units at $10.00 per unit (the “Private Units”) in a private placement generating
total gross proceeds of $2,538,886. Concurrently, the Company repaid $105,000 to the Sponsor, under related party loan evidenced by promissory
note issued on August 5, 2021.
On
November 24, 2021, the underwriters fully exercised its over-allotment option and purchased 900,000 units (the “Over-allotment
Units”) at a price of $10.00 per Unit, generating gross proceeds of $9,000,000. Upon the closing of the Over-allotment on November
24, 2021, the Company consummated the sale of additional 22,500 Private Units (the “Additional Private Units”) with
the Sponsor and Chardan at a price of $10.00 per Private Unit, generating total proceeds of $225,000.
A
total of $69,000,000 of the net proceeds from the sale of Public Units in the IPO (including the over-allotment option units) and the
Private Placements on November 22, 2021 and November 24, 2021, were placed in a trust account established for the benefit of the Company’s
public shareholders.
Following
the IPO, the full exercise of the over-allotment option, and the sale of the Private Placement Units, we had $655,286 of cash held outside
of the Trust Account, after payment of costs related to the IPO, available for working capital purposes. We incurred a total of $5,587,733
in transaction costs, including $1,725,000 of underwriting fees, $2,587,500 of deferred underwriting fees and $1,275,233 of other offering
costs. For the year ended September 30, 2022, cash used in operating activities was $484,814 and none for the period from July 21, 2021
(inception) through September 30, 2021.
As
of September 30, 2022, we had marketable securities held in the Trust Account of $69,286,800 consisting of securities held in a treasury
trust fund that invests in United States government treasury bills, bonds or notes with a maturity of 180 days or less. Interest income
on the balance in the Trust Account may be used by us to pay taxes. Through September 30, 2022, we did not withdraw any interest earned
on the Trust Account to pay our taxes. We intend to use substantially all of the funds held in the Trust Account, to acquire a
target business and to pay our expenses relating thereto. To the extent that our capital stock is used in whole or in part as consideration
to effect a Business Combination, the remaining funds held in the Trust Account will be used as working capital to finance the operations
of the target business. Such working capital funds could be used in a variety of ways including continuing or expanding the target business’
operations, for strategic acquisitions and for marketing, research and development of existing or new products. Such funds could also
be used to repay any operating expenses or finders’ fees which we had incurred prior to the completion of our Business Combination
if the funds available to us outside of the Trust Account were insufficient to cover such expenses.
As of September 30, 2022,
we had cash of $173,789 outside of the Trust Account and working capital of $87,562 (excluding income tax and franchise tax payable).
The Company has 15 months from the closing of the IPO to consummate a Business Combination (unless further extended as described herein).
It is uncertain that we will be able to consummate a Business Combination by this time. If a Business Combination is not consummated by
this date, there will be a mandatory liquidation and subsequent dissolution.
Until
consummation of the Business Combination, we intend to use the funds held outside the Trust Account for identifying and evaluating prospective
acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants
or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses,
selecting the target business to acquire and structuring, negotiating and consummating the Business Combination. If our estimate of the
costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual
amount necessary to do so, we may have insufficient funds available to operate our business prior to our Business Combination. In this
event, our officers, directors or their affiliates may, but are not obligated to, loan us funds as may be required. If we consummate
an initial Business Combination, we would repay such loaned amounts out of the proceeds of the Trust Account released to us upon consummation
of the Business Combination. In the event that a Business Combination does not close, we may use a portion of the working capital held
outside the Trust Account to repay such loaned amounts, but no proceeds from our Trust Account would be used for such repayment. The
terms of such loans by our initial shareholders, officers and directors, if any, have not been determined and no written agreements exist
with respect to such loans.
We expect to continue to incur
significant professional costs to remain as a publicly traded company and to incur significant transaction costs in pursuit of the consummation
of a Business Combination. In connection with the Company’s assessment of going concern considerations in accordance with Financial
Accounting Standard Board’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties
about an Entity’s Ability to Continue as a Going Concern,” management has determined that these conditions raise substantial
doubt about the Company’s ability to continue as a going concern. In addition, if the Company is unable to complete a Business Combination
within the Combination Period, the Company’s board of directors would proceed to commence a voluntary liquidation and thereby a
formal dissolution of the Company. There is no assurance that the Company’s plans to consummate a Business Combination (within 15
months from the closing of IPO) will be successful within the Combination Period. As a result, management has determined that such additional
condition also raise substantial doubt about the Company’s ability to continue as a going concern. The financial statement does
not include any adjustments that might result from the outcome of this uncertainty.
Off-Balance
Sheet Financing Arrangements
We
have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of September 30, 2022. We do
not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as
variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have
not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments
of other entities, or purchased any non-financial assets.
Contractual
Obligations
We
do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than described
below.
Upon
closing of a Business Combination, the underwriters will be entitled to a deferred fee of $0.375 per public share, or $2,587,500 in the
aggregate. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that
we complete a Business Combination, subject to the terms of the underwriting agreement. The underwriters will also be entitled to 51,750
common shares, to be issued if the Company closes a Business Combination.
Critical
Accounting Policies
The
preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure
of contingent assets and liabilities at the date of the financial statements, and income and expenses during the period reported. Actual
results could materially differ from those estimates. We have identified the following critical accounting policies:
Common
stock Subject to Possible Redemption
We
account for our common stock subject to possible redemption in accordance with the guidance in 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 feature redemption rights
that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the
Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity.
The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s control
and subject to occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented at redemption
value as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet. 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. Increases or decreases in the carrying amount of shares of redeemable common stock are affected
by charges against additional paid in capital or accumulated deficit if additional paid in capital equals to zero.
Net
Income (Loss) per Share
The
Company complies with accounting and disclosure requirements of FASB ASC 260, Earnings Per Share. The statements of operations include
a presentation of income (loss) per redeemable share and income (loss) per non-redeemable share following the two-class method of income
per share. In order to determine the net income (loss) attributable to both the redeemable shares and non-redeemable shares, the Company
first considered the undistributed income (loss) allocable to both the redeemable shares and non-redeemable shares and the undistributed
income (loss) is calculated using the total net loss less any dividends paid. The Company then allocated the undistributed income (loss)
ratably based on the weighted average number of shares outstanding between the redeemable and non-redeemable shares. Any remeasurement
of the accretion to redemption value of the common shares subject to possible redemption was considered to be dividends paid to the public
shareholders.
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 Financial Accounting Standards Board (“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, whether they 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 of 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 equity at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants
are required to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter.
Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations.
Offering
Costs
Offering
costs consist of underwriting, legal, accounting, registration and other expenses incurred through the balance sheet date that are directly
related to the IPO. The Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A –
“Expenses of Offering”. Offering costs are allocated between public shares and public rights based on the estimated fair
values of public shares and public rights at the date of issuance.
Recent
Accounting Standards
In
August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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. The amendments are effective for smaller reporting companies for fiscal years beginning after
December 15, 2023, including interim periods within those fiscal years. 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.
Management
does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect
on our financial statements.
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As
a smaller reporting company, we are not required to make disclosures under this Item.
ITEM
8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
This
information appears following Item 15 of this Report and is included herein by reference.
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation
of Disclosure Controls and Procedures
Disclosure
controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed
under the Exchange Act, such as this Report, is recorded, processed, summarized, and reported within the time period specified in the
SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated
and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely
decisions regarding required disclosure. Our management evaluated, with the participation of our current chief executive officer and
chief financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as
of September 30, 2022, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded
that, as of September 30, 2022, our disclosure controls and procedures were effective.
We
do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and
procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the
disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there
are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure
controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all
our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain
assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions.
Management’s
Report on Internal Controls Over Financial Reporting
This
Annual Report on Form 10-K does not include a report of management’s assessment regarding internal control over financial reporting
or an attestation report of our independent registered public accounting firm due to a transition period established by rules of the
SEC for newly public companies.
Changes
in Internal Control over Financial Reporting
There
were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange
Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
ITEM 9B. OTHER INFORMATION
Merger
Agreement
On
January 21, 2022, we entered into a merger agreement with Finfront Holding Company, a Cayman Islands exempted company (the “BitFuFu”),
pursuant to which (a) Arisz agreed to form BitFuFu Inc., a Cayman Islands exempted company, as its wholly owned subsidiary (“Purchaser”
or “PubCo”), (b) Purchaser would form Boundary Holding Company, a Cayman Islands exempted company, as its wholly owned
subsidiary (“Merger Sub”), (c) Arisz will be merged with and into Purchaser (the “Redomestication Merger”),
with Purchaser surviving the Redomestication Merger, and (d) Merger Sub will be merged with and into BitFuFu (the “Acquisition
Merger”), with BitFuFu surviving the Acquisition Merger as a direct, wholly owned subsidiary of Purchaser (collectively, the
“Business Combination”). Following the Business Combination, Purchaser will be a publicly traded company listed on
a stock exchange in the United States. On April 4, 2022, each of Arisz and BitFuFu entered into that certain Amendment to the Merger
Agreement pursuant to which, among other things, the parties clarified certain Cayman Island corporate law matters by mutual agreement.
Also on April 4, 2022, each of Purchaser, Merger Sub, Arisz and BitFuFu executed that certain Joinder Agreement to the Merger Agreement,
whereby each of Purchaser and Merger Sub have agreed, effective upon execution, that it shall become a party to the Merger Agreement
and shall be fully bound by, and subject to, all of the covenants, terms, representations, warranties, rights, obligations and conditions
of the Merger Agreement as though an original party thereto.
On October 10, 2022, each
of Arisz and BitFuFu entered into that certain Amendment (“Amendment No. 2”) to the Merger Agreement to provide, among
other things:
(1)
that until the earlier of (x) termination of the Merger Agreement in accordance with its terms, and (y) forty-five (45) calendar days
prior to the Outside Date, neither BitFuFu nor the Parent Parties (as defined in the Merger Agreement) shall participate in discussions,
negotiations or related activities with any Person concerning any Alternative Transaction,
(2)
that BitFuFu and Arisz shall cause the amendment and/or termination of certain agreements in order to remove all existing restrictions
on four hundred thousand (400,000) Insider Shares that are currently subject to transfer restrictions, so that such shares are freely
tradeable upon the Closing;
(3)
for a loan from BitFuFu to Arisz in the amount of Two Million Two Hundred and Twenty Thousand Dollars ($2,220,000) for the purpose of
funding any payment due in connection with an extension of the period of time for Arisz to consummate a business combination and for
working capital purposes (the “Loan”). The Loan shall be funded in three equal installments on each of October 26,
2022, January 26, 2023 and April 26, 2023, in each case in the amount of Seven Hundred Forty Thousand Dollars ($740,000). Of each such
installment, the sum of Six Hundred Ninety Thousand Dollars ($690,000) (the “Extension Funding Amount”) shall be used
to cover the extension costs, and the remaining Fifty Thousand ($50,000) shall be used for working capital. In the event that the actual
extension costs are less than the Extension Funding Amount, Arisz shall promptly repay the difference between such actual extension costs
and the Extension Funding Amount. Arisz shall issue a promissory note for the amount of the Loan in favor of the Company;
(4)
that the Outside Date is extended to August 1, 2023;
(5)
that the Merger Agreement may be terminated (a) by the Parent Parties, in the event that BitFuFu fails to fund any of the installment
amounts of the Loan specified in Section 9.8 of the Merger Agreement by the applicable due dates, (h) by the Parent Parties or BitFuFu,
in the event that the Parent Parties fail to obtain any extension to the termination date by which time Arisz must cease operations unless
a business combination has been consummated and (i) by BitFuFu, in the event that Arisz defaults on the Promissory Note as specified
in such Section 9.8, which default remains not cured within ten (10) calendar days; and
(6)
for (i) a Parent breakup fee payable by BitFuFu to Arisz equal to Four Million Dollars ($4,000,000) in cash in the event of the termination
of the Merger Agreement by Arisz pursuant to Section 11.1(b) of the Merger Agreement or as a result of BitFuFu’s refusal to consummate
the transactions contemplated thereby and (ii) a Company breakup fee payable by Arisz to BitFuFu in the amount of Five Million Dollars
($5,000,000) in the event of the termination of the Merger Agreement by BitFuFu pursuant to Section 11.1(c) of the Merger Agreement or
as a result of Arisz’s refusal to consummate the transactions contemplated thereby.
On
October 10, 2022, Arisz issued a promissory note for the amount of the Loan in favor of BitFuFu (the “Promissory Note”),
pursuant to which Arisz may elect to issue a number of unregistered shares of its common stock, valued for these purposes at $10.00 per
share, the aggregate value of which shall be equal to the outstanding principal amount of the Loan, to BitFuFu or its designee as payment
of its obligations under the Loan, except in the event that the actual extension costs are less than the Extension Funding Amount, Arisz
shall wire such prepayment to such account as designated by BitFuFu.
Backstop
Agreements
On
July 14, 2022, each of Arisz , BitFuFu, the Purchaser and the Sponsor (and, along with any assignee of the Sponsor, the “Buyer”)
entered into a backstop agreement (the “Backstop Agreement”) whereby, in connection with the Business Combination,
the Buyer has agreed to subscribe for and purchase no less than US$1.25 million worth of shares of Arisz common stock par value $0.0001
per share or Purchaser’s Class A ordinary shares, as specified therein. The Backstop Agreement terminated as per its terms on July
31, 2022.
On
October 13, 2022 the parties to the Backstop Agreement entered into a new backstop agreement (the “New Backstop Agreement”)
substantially on the same terms as the Backstop Agreement with the only substantive additional terms being that: 1) the subscription
amount is $2.0 million worth of shares and 2) the termination date is the earlier of: (i) the date agreed by the parties thereto in writing
and (ii) the date that the Merger Agreement is terminated, on its terms.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not
applicable.
part
III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The
following table sets forth information about our directors and executive officers.
Name | |
Age | | |
Position |
Echo Hindle-Yang | |
46 | | |
Chairman of the Board of Directors and Chief Executive Officer |
Marc Estigarribia | |
53 | | |
Chief Financial Officer |
Rushi Trivedi | |
37 | | |
Director |
Romain Guerel | |
51 | | |
Director |
Nick He | |
40 | | |
Director |
Echo
Hindle-Yang has been our Chief Executive Officer since inception and became chairwoman of our board of directors upon consummation of
our IPO. Ms. Hindle-Yang has more than 20 years of extensive experience of leading complex organizations, managing transactions for fortune
500 global companies and founding new ventures to resolve unmet market needs. More recently, Ms. Hindle-Yang’s focus has largely
been within the healthcare industry, where she has advised global pharmaceutical and medical device companies in North America and Europe
on their corporate strategy endeavors, financing paths, portfolio optimization and acquisition opportunities. In 2016, Ms. Hindle-Yang
founded M.S.Q. Ventures, a New York-based advisory firm that focuses on integration for emerging life sciences companies. From 2011 to
2015, Ms. Hindle-Yang served as Chief Operation Officer at Playbutton LLC where she managed the company’s business strategy, marketing,
finance operations including IPO’s and acquisitions. In 2010, Ms. Hindle-Yang joined Gerber Scientific Inc as director of global
strategy and operations in charge of leading a brand-new global team to focus on overseas expansion and operations. Ms. Hindle-Yang holds
an MBA from Duke University with a health sector management certificate. Currently Ms. Hindle-Yang is serving on the DukeNY Board.
Marc
Estigarribia has been our Chief Financial Officer since inception. Mr. Estigarribia has been the Managing Director and Head of Origination
and Engagement at MSQ Ventures since May 2016, where he has led the company’s client origination and engagement effort in the life
science industry. Mr. Estigarribia maintains a deep network of global relationships with strategic partners and investors within the
life science industry. Between September 2015 and April 2016, Mr. Estigarribia served as vice president senior research analyst at Chardan.
Mr. Estigarribia was responsible for equity stock coverage of the Technology, TMT industry with a main vertical focus on Internet of
Things (IOT/ M2M) Machine-to-Machine Communications (M2M) including Robotics, Artificial Intelligence and Semiconductors. Between March
2013 and August 2015, Mr. Estigarribia served as senior investment banking associate at Wellington Shields. Mr. Estigarribia worked with
both public and private growth companies to help provide capital raising, merger & acquisition, and strategic financial advisory
services in all facets of the capital structure — Private Equity, Senior Debt, Mezzanine Debt, Unitranche, Equity, IPOs, Secondary
Offerings, and Private Placements. Between April 2011 and March 2013, Mr. Estigarribia served as CFO at Rubin Singer, a start-up company
in the Luxury Goods Fashion industry where Mr. Estigarribia managed cash flow, capital formation and investment advisory for this start-up
company in the Luxury Goods Fashion industry. Mr. Estigarribia also maintained constant communication flow with both existing and prospective
equity and debt investors, and internal management board-team, while enhancing strategic relationships. Between July 1996 and March 2011,
Mr. Estigarribia served as a sell-side Equity Research Analyst at Citigroup. Mr. Estigarribia’s responsibilities covered 70% of
the teams’ total coverage for telecommunication services and media companies in Latin America. Mr. Estigarribia initiated and launched
the numerous reports within the wireless and media sectors between 2000 and 2003. Through these roles, Mr. Estigarribia has developed
and maintained relationships with top tier institutional investors. Mr. Estigarribia obtained his MBA degree in 1995 from NYU Stern School
of Business and his BS in Economics from Binghamton University, State University of New York.
Nick He has been a member
of our board of directors since November 17, 2021. Since January 2017, Mr. He has been the Founder and the Chief Executive Officer of
GPS Renting, a privately held real estate investment firm with brokerage and property management services which brings cutting-edge mobile
technology, strategic planning, and extensive real estate experience to serve clients. Between April 2012 and November 2016, Mr. He started
as a strategy and product planer and became the senior program manager lead when he left Microsoft. Mr. He was responsible for product
strategies, including, but not limited to Market opportunity & Business Plan, Growth strategy, Turnaround Strategy at Microsoft.
Between May 2008 and September 2008, Mr. He served as summer associate consultant at McKinsey & Co. where Mr. He led the Financial
Analysis and Planning project which analysis of technology spending and recommended a 5-year investment strategy. Mr. He obtained his
MBA degree focusing on strategy and marketing in 2009 from Duke University Fuqua School of Business.
Rushi Trivedi, PhD has been a member of our board
of directors since November 17, 2021. Since 2019, Dr. Trivedi has been founder of RepliGene Life Sciences, a company that specializes
in the production of Cell and Gene Therapy adducts. Dr. Trivedi focuses on unmet clinical needs and assists in bringing the next generation
Cell and Gene Therapies to the market. Between June 2015 and April 2019, Dr. Trivedi served as strategy consultant at McKinsey & Company
where Dr. Trivedi gained extensive experience in M&A, business development, due diligence, portfolio management and asset integration
while drawing heavily from his background in oncology and drug development to serve clients in these topics across pharma, medical technology
tech, and private equity. Dr. Trivedi has published widely in leading peer-reviewed journals. Dr. Trivedi obtained his Doctor of Philosophy
in Biochemistry and Molecular Biology from Stowers Institute of Medical Research and University of Kansas Medical Center in 2015, and
his MS in Medicinal and Pharmaceutical Chemistry from University of Kansas in 2009, and his BS in Pharmaceutical Sciences from Purdue
University in 2007.
Dr. Romain Guerel has
been a member of our board of directors since November 17, 2021. Since March 2020, Dr. Guerel is the founder and CEO of MSolution
Consulting. The consulting company provides project management consultancy for European and North American companies. Starting March
2019, Dr. Guerel has been elected as an executive board member of a French International School where he has in charge with other 7
board members of all administrative and strategic decisions on behalf of the parent’s committee. From September 2012 to
February 2020, Dr. Guerel worked as a director for Century 3 Project Management Company where he was in charge on multiple
management projects for Fortune 500 companies. From 2001 to 2012, Dr. Guerel was the co-founder and Managing Director of Capital
Resources where he was in charge of raising funds for high-end real estate projects. Dr. Guerel obtained his Doctor of Philosophy in
Management from HKUST Business School in 2011, and has Master of Laws degrees in Commercial French law and International law from
the Law School of Nice Sophia Antipolis.
Number, terms of office and appointment of
officers and directors
Our board of directors has five members, three
of whom are deemed “independent” under SEC and Nasdaq rules. Our board of directors is divided into three classes with only
one class of directors being elected in each year and each class serving a three-year term. The term of office of the first class
of directors, consisting of Romain Guerel, will expire at our first annual meeting of stockholders. The term of office of the second class
of directors, consisting of Nick He and Rushi Trivedi, will expire at the second annual meeting. The term of office of the third class
of directors, consisting of Echo Hindle-Yang and Marc Estigarribia, will expire at our third annual meeting of stockholders. We may
not hold an annual meeting of stockholders until after we consummate our initial business combination.
Our officers are appointed by the board of directors
and serve at the discretion of the board of directors, rather than for specific terms of office. Our board of directors is authorized
to appoint persons to the offices set forth in our bylaws as it deems appropriate. Our bylaws provide that our directors may consist of
a chairman of the board, and that our officer may consist of chief executive officer, president, chief financial officer, executive vice
president(s), vice president(s), secretary, treasurer and such other officers as may be determined by the board of directors.
Executive Compensation
No executive officer has received any cash compensation
for services rendered to us. Commencing on the date of our IPO prospectus through the completion of our initial business combination with
a target business, we will pay to Arisz Investment LLC, a fee of $10,000 per month for providing us with office space and certain office
and secretarial services. However, pursuant to the terms of such agreement, our sponsor agreed to defer the payment of such monthly fee.
Any such unpaid amount will accrue without interest and be due and payable no later than the date of the consummation of our initial business
combination. Other than the $10,000 per month administrative fee, no compensation or fees of any kind, including finder’s fees,
consulting fees and other similar fees, will be paid to our insiders or any of the members of our management team, for services rendered
prior to or in connection with the consummation of our initial business combination (regardless of the type of transaction that it is).
However, such individuals will receive reimbursement for any out-of-pocket expenses incurred by them in connection with activities
on our behalf, such as identifying potential target businesses, performing business due diligence on suitable target businesses and business
combinations as well as traveling to and from the offices, plants or similar locations of prospective target businesses to examine their
operations. There is no limit on the amount of out-of-pocket expenses reimbursable by us; provided, however, that to the extent such
expenses exceed the available proceeds not deposited in the trust account and the interest income earned on the amounts held in the trust
account, such expenses would not be reimbursed by us unless we consummate an initial business combination.
After our initial business combination, members
of our management team who remain with us may be paid consulting, management or other fees from the combined company with any and all
amounts being fully disclosed to stockholders, to the extent then known, in the proxy solicitation materials furnished to our stockholders.
It is unlikely the amount of such compensation will be known at the time of a stockholder meeting held to consider our initial business
combination, as it will be up to the directors of the post-combination business to determine executive and director compensation.
In this event, such compensation will be publicly disclosed at the time of its determination in a Current Report on Form 8-K, as
required by the SEC.
Director independence
Nasdaq listing standards require that within one
year of the listing of our securities on the Nasdaq Global Market we have at least three independent directors and that a majority of
our board of directors be independent. An “independent director” is defined generally as a person other than an officer or
employee of the company or its subsidiaries or any other individual having a relationship which in the opinion of the company’s
board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of
a director. Our Board of Directors had determined that each of Rushi Trivedi, Romain Guerel and Nick He is an “independent director”
as defined in the Nasdaq listing standards and applicable SEC rules. Our independent directors will have regularly scheduled meetings
at which only independent directors are present.
We will only enter into a business combination
if it is approved by a majority of our independent directors. Additionally, we will only enter into transactions with our officers and
directors and their respective affiliates that are on terms no less favorable to us than could be obtained from independent parties. Any
related-party transactions must be approved by our audit committee and a majority of disinterested directors.
Audit Committee
Effective as of the date of our IPO prospectus,
we established an audit committee of the board of directors, which consists of Rushi Trivedi, Romain Guerel and Nick He, each of whom
is an independent director. Nick He serves as chairman of the audit committee.
The audit committee’s duties, which are
specified in our Audit Committee Charter, include, but are not limited to:
| ● | reviewing
and discussing with management and the independent registered public accounting firm the
annual audited financial statements, and recommending to the board whether the audited financial
statements should be included in our Form 10-K; |
| ● | discussing
with management and the independent registered public accounting firm significant financial
reporting issues and judgments made in connection with the preparation of our financial statements; |
| ● | discussing
with management major risk assessment and risk management policies; |
| ● | monitoring
the independence of the independent registered public accounting firm; |
| ● | verifying
the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible
for reviewing the audit as required by law; |
| ● | reviewing
and approving all related-party transactions; |
| ● | inquiring
and discussing with management our compliance with applicable laws and regulations; |
| ● | pre-approving all
audit services and permitted non-audit services to be performed by our independent registered public accounting firm, including
the fees and terms of the services to be performed; |
| ● | appointing
or replacing the independent registered public accounting firm; |
| ● | determining
the compensation and oversight of the work of the independent registered public accounting firm (including resolution of disagreements
between management and the independent registered public accounting firm regarding financial reporting) for the purpose of preparing
or issuing an audit report or related work; |
| ● | establishing
procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or
reports which raise material issues regarding our financial statements or accounting policies; and |
| ● | approving
reimbursement of expenses incurred by our management team in identifying potential target businesses. |
Financial Experts on Audit Committee
The audit committee will at all times be composed
exclusively of “independent directors” who are “financially literate” as defined under the Nasdaq listing standards.
The Nasdaq listing standards define “financially literate” as being able to read and understand fundamental financial statements,
including a company’s balance sheet, income statement and cash flow statement.
In addition, we must certify to Nasdaq that the
committee has, and will continue to have, at least one member who has past employment experience in finance or accounting, requisite professional
certification in accounting, or other comparable experience or background that results in the individual’s financial sophistication.
The board of directors has determined that Nick He qualifies as an “audit committee financial expert,” as defined under rules
and regulations of the SEC.
Compensation Committee
Effective as of the date of our IPO prospectus,
we established a compensation committee of the board of directors consisting of Rushi Trivedi, Romain Guerel and Nick He, each of whom
is an independent director. Rushi Trivedi serves as chairman of the compensation committee.
We adopted a compensation committee charter, which
details the principal functions of the compensation committee, including:
| ● | reviewing and approving on an annual basis the corporate
goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating our Chief Executive Officer’s performance
in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer’s
based on such evaluation; |
| ● | reviewing and approving the compensation of all of our other
executive officers and reviewing and making recommendations with respect to all non-executive officer compensation; |
| ● | reviewing our executive compensation policies and plans; |
| ● | implementing and administering our incentive compensation
equity-based remuneration plans; |
| ● | assisting management in complying with our proxy statement
and annual report disclosure requirements; |
| ● | approving all special perquisites, special cash payments
and other special compensation and benefit arrangements for our executive officers and employees; |
| ● | producing a report on executive compensation to be included
in our annual proxy statement; and |
| ● | reviewing, evaluating and recommending changes, if appropriate,
to the remuneration for directors. |
The charter also provides that the compensation
committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and will
be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving
advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence
of each such adviser, including the factors required by Nasdaq and the SEC.
Director nominations
We do not have a standing nominating committee,
though we intend to form a corporate governance and nominating committee as and when required to do so by law or Nasdaq rules. In accordance
with Rule 5605(e)(2) of the Nasdaq rules, a majority of the independent directors may recommend a director nominee for selection
by the board of directors. The board of directors believes that the independent directors can satisfactorily carry out the responsibility
of properly selecting or approving director nominees without the formation of a standing nominating committee. Rushi Trivedi, Romain Guerel
and Nick He will participate in the consideration and recommendation of director nominees. In accordance with Rule 5605(e)(1)(A) of
the Nasdaq rules, all such directors are independent. As there is no standing nominating committee, we do not have a nominating committee
charter in place.
The board of directors will also consider director
candidates recommended for nomination by our stockholders during such times as they are seeking proposed nominees to stand for election
at the next annual meeting of stockholders (or, if applicable, a special meeting of stockholders). Our stockholders that wish to nominate
a director for election to the Board should follow the procedures set forth in our bylaws.
We have not formally established any specific,
minimum qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying and evaluating
nominees for director, the board of directors considers educational background, diversity of professional experience, knowledge of our
business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our stockholders
Director Compensation
No director will receive cash compensation for
serving on our board. Prior to the closing of the offering, the sponsor transferred an aggregate of 57,500 insider shares to the directors.
Compensation Committee Interlocks and Insider
Participation
We may not have a compensation committee in place
prior to the completion of our initial business combination. Any executive compensation matters that arise prior to the time we have a
compensation committee in place will be determined by our independent directors. None of our directors who currently serve as members
of our compensation committee is, or has at any time in the past been, one of our officers or employees. None of our executive officers
currently serves, or in the past year has served, as a member of the compensation committee of any other entity that has one or more executive
officers serving on our board of directors. None of our executive officers currently serves, or in the past year has served, as a member
of the board of directors of any other entity that has one or more executive officers serving on our compensation committee.
Code of ethics
Effective upon consummation of our IPO, we adopted
a code of ethics that applies to all of our executive officers, directors and employees. The code of ethics codifies the business and
ethical principles that govern all aspects of our business.
Conflicts of interest
Investors should be aware of the following potential
conflicts of interest:
| ● | None of our officers and directors is required to commit
their full time to our affairs and, accordingly, they may have conflicts of interest in allocating their time among various business
activities. |
| ● | In the course of their other business activities, our officers
and directors may become aware of investment and business opportunities which may be appropriate for presentation to our company as well
as the other entities with which they are affiliated. Thus, our officers and directors may have conflicts of interest in determining
to which entity a particular business opportunity should be presented. |
| ● | Our officers and directors may in the future become affiliated
with entities, including other blank check companies, engaged in business activities similar to those intended to be conducted by our
company. |
| ● | Unless we consummate our initial business combination, our
officers, directors and other insiders will not receive reimbursement for any out-of-pocket expenses incurred by them to the extent
that such expenses exceed the amount of available proceeds not deposited in the trust account. |
| ● | The insider shares beneficially owned by our officers and
directors will be released from escrow only if our initial business combination is successfully completed. Additionally, if we are unable
to complete an initial business combination within the required time frame, our officers and directors will not be entitled to receive
any amounts held in the trust account with respect to any of their insider shares or private units. Furthermore, Arisz Investment LLC
has agreed that the private units will not be sold or transferred by it until after we have completed our initial business combination.
For the foregoing reasons, our board may have a conflict of interest in determining whether a particular target business is an appropriate
business with which to effect our initial business combination. |
In general, officers and directors of a corporation
incorporated under the laws of the State of Delaware are required to present business opportunities to a corporation if:
| ● | the corporation could financially undertake the opportunity; |
| ● | the opportunity is within the corporation’s line of
business; and |
| ● | it would not be fair to the corporation and its stockholders
for the opportunity not to be brought to the attention of the corporation. |
Accordingly, as a result of
multiple business affiliations, our officers and directors may have similar legal obligations relating to presenting business opportunities
meeting the above-listed criteria to multiple entities. Furthermore, our certificate of incorporation provides that the doctrine
of corporate opportunity will not apply with respect to any of our officers or directors in circumstances where the application of the
doctrine would conflict with any fiduciary duties or contractual obligations they may have. In order to minimize potential conflicts of
interest which may arise from multiple affiliations, our officers and directors (other than our independent directors) have agreed to
present to us for our consideration, prior to presentation to any other person or entity, any suitable opportunity to acquire a target
business, until the earlier of: (1) our consummation of an initial business combination and (2) 15 months (or up to 18 months
if our time to complete a business combination is extended as described herein) from the date of our IPO prospectus. This agreement is,
however, subject to any pre-existing fiduciary and contractual obligations such officer or director may from time to time have to
another entity. Accordingly, if any of them becomes aware of a business combination opportunity which is suitable for an entity to which
he or she has pre-existing fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations
to present such business combination opportunity to such entity, and only present it to us if such entity rejects the opportunity. We
do not believe, however, that the pre-existing fiduciary duties or contractual obligations of our officers and directors will materially
undermine our ability to complete our business combination because in most cases the affiliated companies are closely held entities controlled
by the officer or director or the nature of the affiliated company’s business is such that it is unlikely that a conflict will arise.
Section 16(a) Beneficial Ownership
Reporting Compliance
Section 16(a) of
the Securities Exchange Act of 1934, as amended, or the Exchange Act, requires our executive officers, directors and persons who beneficially
own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial reports of
ownership and reports of changes in ownership of our shares of common stock and other equity securities. These executive officers, directors,
and greater than 10% beneficial owners are required by SEC regulation to furnish us with copies of all Section 16(a) forms filed
by such reporting persons.
Based solely on our review
of such forms furnished to us and written representations from certain reporting persons, we believe that all filing requirements applicable
to our executive officers, directors and greater than 10% beneficial owners were filed in a timely manner.
ITEM 11. EXECUTIVE COMPENSATION
Employment Agreements
We have not entered into any
employment agreements with our executive officers and have not made any agreements to provide benefits upon termination of employment.
Executive Officers and Director Compensation
Other than the $10,000 per
month administrative fee paid to the Arisz Investments LLC, our Sponsor, over which Echo Hindle-Yang is the managing member, no executive
officer has received any cash compensation for services rendered to us. No compensation of any kind, including any finder’s fee,
reimbursement, consulting fee or monies in respect of any payment of a loan, will be paid by us to our Sponsor, officers or directors
or any affiliate of our Sponsor, officers or directors, prior to, or in connection with any services rendered in order to effectuate,
the consummation of our initial business combination (regardless of the type of transaction that it is). However, these individuals will
be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target
businesses and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments
that were made to our Sponsor, officers or directors or our or their affiliates. Any such payments prior to an initial business combination
will be made using funds held outside the trust account. Other than quarterly audit committee review of such payments, we do not expect
to have any additional controls in place governing our reimbursement payments to our directors and executive officers for their out-of-pocket
expenses incurred in connection with identifying and consummating an initial business combination.
Compensation Committee Interlocks and Insider Participation
None of our officers currently serves, or in the
past year has served, as a member of the compensation committee of any entity that has one or more officers serving on our board of directors.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth
as of December 6, 2022 the number of shares of common stock beneficially owned by (i) each person who is known by us to be the
beneficial owner of more than five percent of our issued and outstanding shares of common stock (ii) each of our officers and directors;
and (iii) all of our officers and directors as a group. As of September 30, 2022, we had 8,901,389 shares of common stock, issued
and outstanding.
Unless otherwise
indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common
stock beneficially owned by them. The following table does not reflect record of beneficial ownership of any shares of common stock
issuable upon exercise of the warrants or conversion of rights, as the warrants are not exercisable, and the rights are not
convertible within 60 days of December 6, 2022.
Name and Address of Beneficial Owner(1) | |
Number of Shares Beneficially Owned(2)(3) | | |
Percentage
of Outstanding Shares | |
Echo Hindle-Yang(4) | |
| 1,983,889 | | |
| 22
.3 | % |
Marc Estigarribia | |
| 10,000 | | |
| * | % |
Rushi Trivedi | |
| 2,500 | | |
| * | % |
Romain Guerel | |
| 2,500 | | |
| * | % |
Nick He | |
| 2,500 | | |
| * | % |
| |
| | | |
| | |
All officers and directors as a group | |
| 1,725,000 | | |
| 20 .0 | % |
(5 individuals) | |
| | | |
| | |
Arisz Investment LLC(5) | |
| 1,943,889 | | |
| 21.8 | % |
MMCAP International Inc. SPC/ MM Asset Management Inc.(6) | |
| 330,000 | | |
| 3.7 | % |
Saba Capital Management, L.P.(7) | |
| 475,000 | | |
| 5.3 | % |
Shaolin Capital Management LLC(8) | |
| 525,000 | | |
| 5.9 | % |
Mizuho Financial Group, Inc.(9) | |
| 507,400 | | |
| 5.7 | % |
| (1) | Unless otherwise indicated, the business address of each of
the following entities or individuals is C/O MSQ Ventures, 12 E 49th St, 17th floor, New York, NY 10017. |
| (2) | Interests shown consist solely of insider shares, classified
as shares of common stock. Reflects the transfer of an aggregate of 57,500 insider shares to the directors by the Sponsor prior to the
consummation of the offering. |
| (3) | Does not include beneficial ownership of any shares of common
stock underlying outstanding private rights, private warrants, and the Unit Purchase Option as such shares are not issuable within 60
days of the date of this report |
| (4) | Consists of (i) 40,000 shares of Common Stock held by Echo Hindle-Yang,
(ii) 276,389 shares of Common Stock underlying the private placement units held directly by Arisz Investment LLC, and (iii) 1,667,500
shares of Common Stock held by Arisz Investment LLC. Ms. Hindle-Yang is the manager of Arisz Investment LLC and has voting and dispositive
control over the shares of Common Stock held by Arisz Investment LLC over which Echo Hindle-Yang has voting and dispositive power. Ms.
Hindle-Yang disclaims beneficial ownership of such shares, except to the extent of her pecuniary interest therein. |
| (5) | Consists of (i) 276,389 shares of Common Stock underlying the
private placement units held directly by Arisz Investment LLC and (ii) 1,667,500 shares of Common Stock held directly by Arisz Investment
LLC. Echo Hindle-Yang is the manager of Arisz Investment LLC and therefore has voting and dispositive control over the shares of Common
Stock and Common Stock held by Arisz Investment LLC. Our Chairman and Chief Executive Officer has voting and dispositive power over the
shares owned by Arisz Investment LLC. |
| (6) | MMCAP International Inc. SPC/ MM Asset Management Inc. have
beneficial ownership and voting and dispositive power. The addresses are c/o Mourant Governance Services (Cayman) Limited 94 Solaris
Avenue, Camana Bay, P.O. Box 1348, Grand Cayman, KY1-1108, Cayman Islands and 161 Bay Street, TD Canada Trust Tower Ste 2240 Toronto,
ON M5J 2S1 Canada. |
| (7) | Saba Capital Management, L.P., a Delaware limited partnership
(“Saba Capital”), Saba Capital Management GP, LLC, a Delaware limited liability company (“Saba GP”), and Mr. Boaz
R. Weinstein (together, the “Reporting Persons”).Saba Capital is organized as a limited partnership under the laws of the State
of Delaware. Saba GP is organized as a limited liability company under the laws of the State of Delaware. Mr. Weinstein is a citizen
of the United States. The address of the business office of each of the Reporting Persons is 405 Lexington Avenue, 58th Floor, New York,
New York 10174. |
| (8) | Shaolin Capital Management LLC,
a company incorporated under the laws of State of Delaware, which serves as the investment advisor to Shaolin Capital Partners Master
Fund, Ltd. a Cayman Islands exempted company MAP 214 Segregated Portfolio, a segregated portfolio of LMA SPC, and DS Liquid DIV RVA SCM
LLC being managed accounts advised by the Shaolin Capital Management LLC. The address of the business
office of the Reporting Person is 7610 NE 4th Court, Suite 104 Miami FL 33138 |
| (9) | Mizuho Financial Group, Inc., Mizuho Bank, Ltd. and Mizuho Americas
LLC may be deemed to be indirect beneficial owners of said equity securities directly held by Mizuho Securities USA LLC which is their
wholly-owned subsidiary. The address is1271 Avenue of the Americas, NY, NY 10020, USA |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Founder Shares
On
August 5, 2021, our Sponsor purchased 1,437,500 founder shares for an aggregate purchase price of $25,000. On October 29, 2021, we effected
a 1.2-for-1.0 stock split of our common stock, resulting in our sponsor holding an aggregate of 1,725,000 insider shares. The number of
founder shares issued was determined based on the expectation that such founder shares would represent approximately 20% of the outstanding
shares upon completion of our IPO (excluding the shares of common stock issued to the representative or its designees, the placement units
and securities underlying the placement units and assuming the initial stockholders do not purchase units in the IPO). As of September
30, 2022, the Sponsor owned 1,943,889 shares of common stock. As the underwriters’ over-allotment option has been exercised in full,
none of the shares of Common Stock held by the Sponsor are subject to forfeiture.
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) six months after the completion of the initial Business Combination and (B) subsequent to the initial Business
Combination, if the reported last sale price of the common stock equals or exceeds $12.50 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 after
the initial Business Combination.
Promissory Note – Related Party
On
August 5, 2021, the Sponsor issued to us an unsecured promissory note, pursuant to which we may borrow up to an aggregate principal amount
of $300,000, to be used for payment of costs related to the Initial Public Offering. The note was non-interest bearing and payable on
the earlier of the consummation of the Initial Public Offering or the date on which we determine not to proceed with the Initial Public
Offering.. Concurrently with the IPO, the Company repaid the outstanding balance of $105,000 to the Sponsor.
Related Party Loans
In
order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or our officers
and directors may, but are not obligated to, loan us funds as may be required (“Working Capital Loans”). Such Working
Capital Loans would be evidenced by promissory notes. The notes would either be repaid upon consummation of a Business Combination, without
interest, or, at the lender’s discretion, up to $1,500,000 of notes may be converted upon consummation of a Business Combination
into additional Placement Units at a price of $10.00 per Unit. In the event that a Business Combination does not close, we may use a portion
of 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 September 30, 2022, there was no amount outstanding under any Working Capital Loan.
Administrative Services Arrangement
Our
financial advisor has agreed, commencing from the date that our securities are first listed on NASDAQ through the earlier of our consummation
of a Business Combination and its liquidation, to make available to us certain general and administrative services, including office space,
utilities and administrative services, as we may require from time to time. We have agreed to pay the Sponsor $10,000 per month for these
services.
General
Our Sponsor, officers and directors, or any of their
respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as
identifying potential target businesses and performing due diligence on suitable business combinations. Our audit committee will review
on a quarterly basis all payments that were made to our Sponsor, officers or directors or our or their affiliates and will determine which
expenses and the amount of expenses that will be reimbursed. There is no cap or ceiling on the reimbursement of out-of-pocket expenses
incurred by such persons in connection with activities on our behalf.
Other
than the payment to our Sponsor of $10,000 per month, for up to 15 months (or up to 18 months if extended), for office space, utilities
and secretarial and administrative support, no compensation of any kind, including finders, consulting or other similar fees, will be
paid to any of our existing stockholders, officers, directors or any of their respective affiliates, prior to, or for any services they
render in order to effectuate the consummation of an initial business combination.
Related Party Policy
Our Code of Ethics, which we adopted on November
17, 2021, requires us to avoid, wherever possible, all related party transactions that could result in actual or potential conflicts of
interests, except under guidelines approved by the board of directors (or the audit committee). Related-party transactions are defined
as transactions in which (1) the aggregate amount involved will or may be expected to exceed $120,000 in any calendar year, (2) we or
any of our subsidiaries is a participant, and (3) any (a) executive officer, director or nominee for election as a director, (b) greater
than 5% beneficial owner of our common stock, or (c) immediate family member, of the persons referred to in clauses (a) and (b), has or
will have a direct or indirect material interest (other than solely as a result of being a director or a less than 10% beneficial owner
of another entity). A conflict of interest situation can arise when a person takes actions or has interests that may make it difficult
to perform his or her work objectively and effectively. Conflicts of interest may also arise if a person, or a member of his or her family,
receives improper personal benefits as a result of his or her position.
In addition, our audit committee, pursuant to a
written charter that we adopted on November 17, 2021, is responsible for reviewing and approving related party transactions to the extent
that we enter into such transactions. An affirmative vote of a majority of the members of the audit committee present at a meeting at
which a quorum is present will be required in order to approve a related party transaction. A majority of the members of the entire audit
committee will constitute a quorum. Without a meeting, the unanimous written consent of all of the members of the audit committee will
be required to approve a related party transaction. A form of the audit committee charter that we adopted on November 17, 2021, is filed
as an exhibit to the registration statement of which our IPO prospectus is a part. We also require each of our directors and executive
officers to complete a directors’ and officers’ questionnaire that elicits information about related party transactions.
These procedures are intended to determine whether
any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director,
employee or officer.
To further minimize conflicts of interest, we have
agreed not to consummate an initial business combination with an entity that is affiliated with any of our Sponsor, officers or directors
unless we, or a committee of independent directors, have obtained an opinion from an independent investment banking firm or another independent
entity that commonly renders valuation opinions that our initial business combination is fair to our company from a financial point of
view. Furthermore, no finder’s fees, reimbursements, consulting fee, monies in respect of any payment of a loan or other compensation
will be paid by us to our Sponsor, officers or directors or any affiliate of our Sponsor, officers or directors prior to, for services
rendered to us prior to, or in connection with any services rendered in order to effectuate, the consummation of our initial business
combination (regardless of the type of transaction that it is). However, the following payments will be made to our Sponsor, officers
or directors, or our or their affiliates, none of which will be made from the proceeds of our public offering held in the trust account
prior to the completion of our initial business combination:
| ● | Repayment
of up to an aggregate of $300,000 in loans made to us by our Sponsor to cover offering-related
and organizational expenses; |
| ● | Payment
to our financial advisor of $10,000 per month, for up to 15 months (or 18 months if the time to complete a business is extended), for
office space, utilities and secretarial and administrative support; |
| ● | Reimbursement
for any out-of-pocket expenses related to identifying, investigating and completing an initial
business combination; and |
| ● | Repayment
of non-interest bearing loans which may be made by our Sponsor or an affiliate of our Sponsor
or certain of our officers and directors to finance transaction costs in connection with
an intended initial business combination, the terms of which (other than as described above)
have not been determined nor have any written agreements been executed with respect thereto.
Up to $1,500,000 of such loans may be convertible into units, at a price of $10.00 per unit
at the option of the lender, upon consummation of our initial business combination. The units
would be identical to the placement units. |
Our audit committee will review on a quarterly basis
all payments that were made to our Sponsor, officers, directors or our or their affiliates.
Director Independence
Nasdaq listing standards require
that a majority of our board of directors be independent. For a description of the director independence, see “— Part III, Item
10 - Directors, Executive Officers and Corporate Governance”.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The following is a summary of fees paid or to be
paid to Friedman, LLP, or Friedman, for services rendered.
Audit Fees. Audit
fees consist of fees for professional services rendered for the audit of our year-end financial statements and services that are normally
provided by Friedman in connection with regulatory filings. The aggregate fees of Friedman for professional services rendered for
the audit of our annual financial statements, review of the financial information included in our Forms 8-K for the respective periods
and other required filings with the SEC for the period from July 21, 2021 (date of inception) to September 30, 2021 totaled approximately
$0.00 and $85,000 for the year ended September 30, 2022. The above amounts include interim procedures and audit fees, as well as attendance
at audit committee meetings.
Audit-Related Fees.
Audit-related fees consist of fees billed for assurance and related services that are reasonably related to performance of the audit or
review of our financial statements and are not reported under “Audit Fees.” These services include attest services that are
not required by statute or regulation and consultations concerning financial accounting and reporting standards. During the period from
July 21, 2021 to September 30, 2021 and for the year ended September 30, 2022, we did not pay Friedman any audit-related fees.
Tax Fees. We did
not pay Friedman for tax return services, planning and tax advice for the period July 21, 2021 to September 30, 2021 and for the year
ended September 30, 2022.
All Other Fees.
We did not pay Friedman for any other services for the period from July 21, 2021 to September 30, 2021 and for the year ended September
30, 2022.
Pre-Approval Policy
Our audit committee was
formed upon the consummation of our initial public offering. As a result, the audit committee did not pre-approve all of the foregoing
services, although any services rendered prior to the formation of our audit committee were approved by our board of directors. Since
the formation of our audit committee, and on a going-forward basis, the audit committee has and will pre-approve all auditing services
and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis
exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the
audit).
part
IV
The accompanying notes are an integral part of
these financial statements.
The accompanying notes are an integral part of
these financial statements.
The accompanying notes are an integral part of
these financial statements.
The accompanying notes are an integral part of
these financial statements.
NOTES TO FINANCIAL STATEMENTS
Note 1 — Organization and Business Operation
Arisz Acquisition Corp. (“Arisz” or
the “Company”) is a newly organized blank check company incorporated as a Delaware corporation on July 21, 2021. The Company
was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business
combination with one or more businesses or entities (“Business Combination”). The Company has selected September 30 as its
fiscal year end.
As of September 30, 2022, the Company had not
commenced any operations. All activities through September 30, 2022 have been limited to organizational activities as well as activities
related to the Initial Public Offering (“IPO” as defined below in Note 3). The Company will not generate any operating revenues
until after the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest
income from the proceeds derived from the IPO.
The Company’s sponsor is Arisz Investments
LLC (the “Sponsor”), a Delaware limited liability company affiliated with the Company’s Chairman and Chief Executive
Officer.
On January 21, 2022, Arisz entered into a merger
agreement with Finfront Holding Company, a Cayman Islands exempted company (the “BitFuFu”), pursuant to which (a) Arisz agreed
to form BitFuFu Inc., a Cayman Islands exempted company, as its wholly owned subsidiary (“Purchaser” or “PubCo”),
(b) Purchaser would form Boundary Holding Company, a Cayman Islands exempted company, as its wholly owned subsidiary (“Merger Sub”),
(c) Arisz will be merged with and into Purchaser (the “Redomestication Merger”), with Purchaser surviving the Redomestication
Merger, and (d) Merger Sub will be merged with and into BitFuFu (the “Acquisition Merger”), with the Company surviving the
Acquisition Merger as a direct, wholly owned subsidiary of Purchaser (collectively, the “Business Combination”). Following
the Business Combination, Purchaser will be a publicly traded company listed on a stock exchange in the United States. On April 4,
2022, each of Arisz and BitFuFu entered into that certain Amendment to the Merger Agreement pursuant to which, among other things, the
parties clarified certain Cayman Island corporate law matters by mutual agreement.
On July 14, 2022, each of Arisz , BitFuFu, the
Purchaser and Arisz’s Sponsor (along with any assignee of Arisz’s Sponsor, the “Buyer”) entered into a backstop
agreement (the “Backstop Agreement”) whereby, in connection with the Business Combination, the Buyer has agreed to subscribe
for and purchase no less than US$1.25 million worth of shares of Arisz common stock par value $0.0001 per share or Purchaser’s Class
A ordinary shares.
On October 10, 2022, Arisz and BitFuFu entered
into an amendment to the Merger Agreement to provide, among other things: 1) for a loan from BitFuFu to Arisz in the amount of $2,220,000
(the “Loan”) for the purpose of funding Arisz’s extension of the time to consummate a business combination and for working
capital purposes, and 2) remove all existing restrictions on 400,000 Insider Shares that are currently subject to transfer restrictions,
so that such shares are freely tradeable upon the Closing. The Loan will be funded in three equal installments of $740,000 on each of
October 26, 2022, January 26, 2023 and April 26, 2023, and 3) extend the Outside Date to August 1, 2023.
On October 10, 2022, Arisz issued an unsecured
promissory note to BitFuFu for the amount of the Loan at an interest rate of 3.5% per annum and is due on October 26, 2023. Arisz may
elect to issue a number of unregistered shares of its common stock, valued for these purposes at $10.00 per share, the aggregate value
of which shall be equal to the outstanding principal amount of the Loan.
On October 13, 2022, the parties to the Backstop
Agreement entered into a new backstop agreement substantially on the same terms as the Backstop Agreement with the only substantive additional
terms being that: 1) the subscription amount is $2.0 million worth of shares and 2) the termination date is the earlier of: (i) the date
agreed by the parties thereto in writing and (ii) the date that the Merger Agreement is terminated, on its terms.
Financing
The registration statement for the Company’s
IPO became effective on November 17, 2021. On November 22, 2021 the Company consummated the IPO of 6,000,000 units (which does not include
the exercise of the over-allotment option by the underwriters in the IPO) at an offering price of $10.00 per unit (the “Public Units’),
generating gross proceeds of $60,000,000. Simultaneously with the IPO, the Company sold to its Sponsor and Chardan Capital Markets LLC
(“Chardan”) (and/or their designees) 253,889 units at $10.00 per unit (the “Private Units”) in a private placement
generating total gross proceeds of $2,538,886, which is described in Note 4.
Concurrently, the Company repaid $105,000 to the
Sponsor, under related party loan evidenced by promissory note issued on August 5, 2021.
The Company granted the underwriters a 45-day
option to purchase up to 900,000 additional Units to cover over-allotments, if any. On November 24, 2021, the underwriters fully exercised
the over-allotment option and purchased 900,000 units (the “Over-allotment Units”) at a price of $10.00 per Unit, generating
gross proceeds of $9,000,000. Upon the closing of the Over-allotment on November 24, 2021, the Company consummated the sale of additional
22,500 Private Units (the “Additional Private Units”) with the Sponsor and Chardan at a price of $10.00 per Private Unit,
generating total proceeds of $225,000.
Transaction costs amounted to $5,587,733, consisting
of $1,725,000 of underwriting fees, $2,587,500 of deferred underwriting fees (payable only upon completion of a Business Combination)
and $1,275,233 of other offering costs.
Trust Account
Upon closing of the IPO, the Private Units, the
sale of the Over-allotment Units and the sale of the Additional Private Units, a total of $69,000,000 ($10.00 per Unit) was placed in
a U.S.-based trust account (the “Trust Account”) with Continental Stock Transfer& Trust acting as trustee and can be invested
only in U.S. government treasury bills with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule
2a-7 under the Investment Company Act and that invest only in direct U.S. government treasury obligations. These funds will not be released
until the earlier of the completion of the initial Business Combination and the liquidation due to the Company’s failure to complete
a Business Combination within the applicable period of time. 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. In addition,
interest income earned on the funds in the Trust account may be released to the Company to pay its income or other tax obligations. With
these exceptions, expenses incurred by the Company may be paid prior to a business combination only from the net proceeds of the IPO and
private placement not held in the Trust Account.
Business Combination
Pursuant to NASDAQ listing rules, the Company’s
initial Business Combination must occur with one or more target businesses having an aggregate fair market value equal to at least 80%
of the value of the funds in the Trust account (excluding any taxes payable on the income earned on the Trust account), which the Company
refers to as the 80% test, at the time of the execution of a definitive agreement for its initial business combination, although the Company
may structure a business combination with one or more target businesses whose fair market value significantly exceeds 80% of the trust
account balance. If the Company is no longer listed on NASDAQ, it will not be required to satisfy the 80% test.
The Public Shares subject to redemption will be
recorded at a redemption value and classified as temporary equity upon the completion of the IPO in accordance with the Accounting Standards
Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case, the Company will proceed
with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination
and, if the Company seeks stockholder approval, a majority of the 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 (the “Amended and Restated Certificate of Incorporation”),
conduct the redemptions pursuant to the tender offer rules of the U.S. 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 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. Additionally,
each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction.
If the Company seeks stockholder approval in connection with a Business Combination, the Company’s Sponsor and any of the Company’s
officers or directors that may hold Insider Shares (as defined in Note 5) (the “Initial Stockholders”) and Chardan have agreed
(a) to vote their Insider Shares, Private Shares (as defined in Note 4) and any Public Shares purchased during or after the IPO in favor
of approving a Business Combination and (b) not to convert any shares (including the Insider Shares) in connection with a stockholder
vote to approve, or sell the shares to the Company in any tender offer in connection with, a proposed 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 Public Stockholders will be entitled to redeem their Public
Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.00 per Public 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 franchise and income
tax obligations). If the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to
the tender offer rules, the Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate
of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under
Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its
shares with respect to more than an aggregate of 20% or more of the Public Shares, without the prior consent of the Company.
The Initial Stockholders and Chardan have agreed
(a) to waive their redemption rights with respect to the Insider Shares, Private Shares, Underwriter Shares and Public Shares held by
them in connection with the completion of a Business Combination and (b) not to propose, or vote in favor of, an amendment to the 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 with the
opportunity to redeem their Public Shares in conjunction with any such amendment.
The Company will have until 15 months (or up to
18 months if the time to complete a business combination is extended as described herein) from the closing of the IPO to consummate a
Business Combination. In addition, if the Company anticipates that it may not be able to consummate initial business combination within
15 months, the Company’s insiders or their affiliates may, but are not obligated to, extend the period of time to consummate a business
combination two times by an additional three months each time (for a total of 18 months to complete a business combination) (the “Combination
Period”).
Liquidation
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 (which interest shall be net of taxes payable, and
less certain amount 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 in each case to
the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
The Sponsor and Chardan have agreed to waive their
liquidation rights with respect to the Insider Shares and Private Shares if the Company fails to complete a Business Combination within
the Combination Period. However, if the Sponsor or underwriters acquires Public Shares in or after the IPO, 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 in 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
$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 amount of funds in the Trust Account to below $10.00 per Public Share, except as to any claims by a third party who executed a valid
and enforceable agreement with the Company waiving any right, title, interest or claim of any kind they may have in or to any monies held
in the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of IPO 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.
Going Concern Consideration
As of September 30, 2022, cash of $173,789 and
a working capital of $87,562 (excluding income tax and franchise tax payable). The Company has 15 months (or up to 18 months if the time
to complete a business combination is extended as described herein) from the closing of the IPO to consummate a Business Combination.
It is uncertain that we will be able to consummate a Business Combination by this time. If a Business Combination is not consummated by
this date, there will be a mandatory liquidation and subsequent dissolution.
The Company expects to continue to incur significant professional
costs to remain as a publicly traded company and to incur significant transaction costs in pursuit of the consummation of a Business Combination.
The Company may need to obtain additional financing either to complete its Business Combination or because it becomes obligated to redeem
a significant number of public shares upon consummation of its Business Combination, in which case the Company may issue additional securities
or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, the Company would only
complete such financing simultaneously with the completion of our Business Combination. If the Company is unable to complete its Business
Combination because it does not have sufficient funds available, it will be forced to cease operations and liquidate the Trust Account.
On November 9, 2022, the Company deposited $690,000
into the Trust Account (representing $0.10 per each share of redeemable common stock) to extend the time for Arisz to complete the Business
Combination by three months until February 17, 2023. It is uncertain that the Company will be able consummate a Business Combination by
this date. If a Business Combination is not consummated by the required date, there will be a mandatory liquidation and subsequent dissolution.
In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s
Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue
as a Going Concern,” management has determined that if the Company is unable to complete a Business Combination within 15 months
from the closing of the IPO, then the Company will cease all operations except for the purpose of liquidating. The date for liquidation
and subsequent dissolution raise 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.
Risks and Uncertainties
Management is currently evaluating the impact
of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect
on the Company’s future financial position, results of its operations and/or search for a target company, there has not been a significant
impact as of the date of these financial statements. The financial statements do not include any adjustments that might result from the
future outcome of this uncertainty.
Additionally, as a result of the military action
commenced in February 2022 by the Russian Federation and Belarus in the country of Ukraine and related economic sanctions, the Company’s
ability to consummate a Business Combination, or the operations of a target business with which the Company ultimately consummates a Business
Combination, may be materially and adversely affected. In addition, the Company’s ability to consummate a transaction may be dependent
on the ability to raise equity and debt financing which may be impacted by these events, including as a result of increased market volatility,
or decreased market liquidity in third-party financing being unavailable on terms acceptable to the Company or at all. The impact of this
action and related sanctions on the world economy and the specific impact on the Company’s financial position, results of operations
and/or ability to consummate a Business Combination are not yet determinable. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
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.
At this time, it has been determined that none
of the IR Act tax provisions have an impact to the Company’s fiscal 2022 tax provision. The Company will continue to monitor for updates
to the Company’s business along with guidance issued with respect to the IR Act to determine whether any adjustments are needed to the
Company’s tax provision in future periods.
Note 2 — Significant Accounting Policies
Basis of Presentation
The accompanying audited financial statements
are presented in U.S. Dollars and in conformity with accounting principles generally accepted in the United States of America (“GAAP”)
and pursuant to the rules and regulations of the SEC. Accordingly, they include all of the information and footnotes required by GAAP.
In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentation have been included.
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 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 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
In preparing these financial statements in conformity
with U.S. GAAP, the Company’s management makes 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 expenses during the reporting
period.
Making estimates requires management to exercise
significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances
that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near
term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. The Company had $173,789 and $75,000 in cash
as of September 30, 2022 and September 30, 2021, respectively. The Company did not have any cash equivalents for both fiscal years.
Investments held in Trust Account
At September 30, 2022, the assets held in the
Trust Account were held in money market funds, which are invested in U.S. Treasury securities.
The Company classifies its U.S. Treasury and equivalent
securities as held-to-maturity in accordance with ASC Topic 320 “Investments — Debt and Equity Securities.” Held-to-maturity
securities are those securities which the Company has the ability and intent to hold until maturity. Held-to- maturity treasury securities
are recorded at amortized cost on the accompanying balance sheet and adjusted for the amortization or accretion of premiums or discounts.
Offering Costs
The Company complies with the requirements of
ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A – “Expenses of Offering”. Offering costs $5,587,733 consisting
primarily of underwriting, legal, accounting, registration and other expenses incurred through the balance sheet date that are directly
related to the IPO and charged to shareholders’ equity upon the completion of the IPO.
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 Financial Accounting Standards Board (“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, whether they 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 of 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 equity at the time of issuance.
For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded
as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair
value of the warrants are recognized as a non-cash gain or loss on the statements of operations.
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) are classified as a liability instrument and are measured at fair value. Conditionally redeemable
common stock (including common stock that feature redemption rights that is either within the control of the holder or subject to redemption
upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other
times, common stock is classified as stockholders’ equity. The Company’s common stock features certain redemption rights that
are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, as of September
30, 2022, shares of common stock subject to possible redemption are presented at redemption value of $10.04 per share as temporary
equity, outside of the shareholders’ equity section of the Company’s balance sheet. 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. Increases or decreases in the carrying amount of shares of redeemable common stock are affected by charges
against additional paid in capital or accumulated deficit if additional paid in capital equals to zero.
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 and money market funds held in the
Trust Account. The Company has not experienced losses on this account and management believes the Company is not exposed to significant
risks on such account.
Fair Value of Financial Instruments
The fair value of the Company’s assets and
liabilities, which qualify as financial instruments under ASC 825, “Financial Instruments,” approximates the carrying amounts
represented in the accompanying balance sheet, primarily due to their short-term nature.
Net Income (Loss) per Share
The Company complies with accounting and disclosure
requirements of FASB ASC 260, Earnings Per Share. The statements of operations include a presentation of income (loss) per redeemable
share and income (loss) per non-redeemable share following the two-class method of income per share. In order to determine the net income
(loss) attributable to both the redeemable shares and non-redeemable shares, the Company first considered the undistributed income (loss)
allocable to both the redeemable shares and non-redeemable shares and the undistributed income (loss) is calculated using the total net
loss less any dividends paid. The Company then allocated the undistributed income (loss) ratably based on the weighted average number
of shares outstanding between the redeemable and non-redeemable shares. Any remeasurement of the accretion to redemption value of the
common shares subject to possible redemption was considered to be dividends paid to the public shareholders. As of September 30, 2022,
the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary
shares and then share in the earnings of the Company. As a result, diluted loss per share is the same as basic loss per share for the
period presented.
The net income (loss) per share presented in the
statements of operations is based on the following:
|
|
For the year ended
September 30, 2022 |
|
|
For the period from July 21,
2021 (inception)
to September 30, 2021 |
|
Net Loss | |
$ | (359,608 | ) | |
$ | (490 | ) |
Accretion of common stock to redemption value | |
| (14,432,564 | ) | |
| — | |
Net loss including accretion of common stock to redemption value | |
$ | (14,792,172 | ) | |
$ | (490 | ) |
| |
For the year ended September 30, 2022 | |
| |
Redeemable shares | | |
Non-
redeemable shares | |
Basic and diluted net income/(loss) per share: | |
| | |
| |
Numerators: | |
| | |
| |
Allocation of net loss including accretion of common stock | |
$ | (11,098,722 | ) | |
$ | (3,693,450 | ) |
Accretion of common stock to redemption value | |
| 14,145,764 | | |
| — | |
Allocation of net income (loss) | |
$ | 3,333,842 | | |
$ | (3,693,450 | ) |
| |
| | | |
| | |
Denominators: | |
| | | |
| | |
Weighted-average shares outstanding | |
| 5,893,151 | | |
| 1,961,132 | |
Basic and diluted net income/(loss) per share | |
$ | 0.57 | | |
$ | (1.88 | ) |
| |
For the period from July 21, 2021 (inception) to September 30, 2021 | |
| |
Redeemable shares | | |
Non-
redeemable shares | |
Basic and diluted net income/(loss) per share: | |
| | |
| |
Numerators: | |
| | |
| |
Allocation of net loss including accretion of common stock | |
$ | — | | |
$ | (490 | ) |
Accretion of common stock to redemption value | |
| — | | |
| — | |
Allocation of net income (loss) | |
$ | — | | |
$ | (490 | ) |
| |
| | | |
| | |
Denominators: | |
| | | |
| | |
Weighted-average shares outstanding | |
| — | | |
| 1,500,000 | |
Basic and diluted net income/(loss) per share | |
$ | — | | |
$ | (0.00 | ) |
Income Taxes
The Company accounts for income taxes under ASC
740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected
impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit
to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when
it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC 740 also clarifies the accounting for uncertainty
in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process
for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits
to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides
guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
The Company recognizes accrued interest and penalties
related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest
and penalties as of September 30, 2022. The Company is currently not aware of any issues under review that could result in significant
payments, accruals or material deviation from its position.
The Company has identified the United States and
the State of New York as its only “major” tax jurisdictions.
The Company may be subject to potential examination
by federal and state taxing authorities in the areas of income taxes. These potential 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.
Recent Accounting Standards
In August 2020, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update (“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. The amendments are effective
for smaller reporting companies for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.
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.
Management does not believe that any recently
issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
Note 3 — Initial Public Offering
Pursuant to the IPO on November 22, 2021, the
Company sold 6,000,000 Units at $10.00 per Public Unit, generating gross proceeds of $60,000,000. The Company granted the underwriters
a 45-day option to purchase up to 900,000 additional Units to cover over-allotments, if any. On November 24, 2021, the underwriters fully
exercised the over-allotment option and purchased 900,000 units at a price of $10.00 per Unit, generating gross proceeds of $9,000,000.
Each Public Unit consists of one share of common stock (“Public Share”), one right (“Public Right”) and one redeemable
warrant (“Public Warrant”). Each Public Right will convert into one-twentieth (1/20) of one share of common stock upon the
consummation of a Business Combination. Each whole Public Warrant entitles the holder to purchase three-fourths (3/4) of one share of
common stock at a price of $11.50 per whole share, subject to adjustment. The warrants will become exercisable on the later of 30 days
after the completion of the Company’s initial Business Combination or 15 months from the closing of the IPO, and will expire five
years after the completion of the Company’s initial Business Combination or earlier upon redemption or liquidation.
All of the 6,900,000 Public Shares sold
as part of the Public Units in the IPO contain a redemption feature which allows for the redemption of such Public Shares if there is
a stockholder vote or tender offer in connection with the Business Combination and in connection with certain amendments to the Company’s
amended and restated certificate of incorporation, or in connection with the Company’s liquidation. In accordance with the SEC and
its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely
within the control of the Company require common stock subject to redemption to be classified outside of permanent equity.
The Company’s redeemable common stock is
subject to SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99. If it is probable
that the equity instrument will become redeemable, the Company has the option to either accrete changes in the redemption value over the
period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the
earliest redemption date of the instrument or to recognize changes in the redemption value immediately as they occur and adjust the carrying
amount of the instrument to equal the redemption value at the end of each reporting period. The Company has elected to recognize the changes
immediately. The accretion or remeasurement is treated as a deemed dividend (i.e., a reduction to retained earnings, or in absence of
retained earnings, additional paid-in capital).
As of September 30, 2022, the shares of common
stock reflected on the balance sheets are reconciled in the following table.
| |
As of September 30,
2022 | |
Gross proceeds | |
$ | 69,000,000 | |
Less: | |
| | |
Proceeds allocated to Public Warrants | |
| (6,658,288 | ) |
Proceeds allocated to Public Rights | |
| (2,726,727 | ) |
Offering costs of Public Shares | |
| (4,760,749 | ) |
Plus: | |
| | |
Accretion of carrying value to redemption value | |
| 14,432,564 | |
Class A Common stock subject to possible redemption | |
$ | 69,286,800 | |
Note 4 — Private Placement
Simultaneously with the closing of the IPO, the
Sponsor and Chardan (and/or their designees) purchased an aggregate of 253,889 Private Units at a price of $10.00 per Private Unit for
an aggregate purchase price of $2,538,886 in a private placement. Upon the closing of the Over-allotment on November 24, 2021, the Company
consummated the sale of additional 22,500 Private Units with the Sponsor and Chardan at a price of $10.00 per Private Unit, generating
total proceeds of $225,000. The Private Units are identical to the Public Units except with respect to certain registration rights and
transfer restrictions. The proceeds from the Private Units 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 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
Insider Shares
On August 5, 2021, the Company issued 1,437,500
shares of common stock to the Initial Stockholders (the “Insider Shares”) for an aggregated consideration of $25,000. On October
29, 2021, the Company effected a 1.2-for-1.0 stock split of common stock, resulting in the Sponsor holding an aggregate of 1,725,000 Insider
Shares, for approximately $0.014 per share, of which, up to 225,000 shares subject to forfeiture by the Initial Stockholders to the extent
that the underwriters’ over-allotment is not exercised in full, so that the Initial Stockholders will collectively own 20% of the
Company’s issued and outstanding shares after the IPO. As the over-allotment option was fully exercised on November 24, 2021, no
portion of the Insider Shares are subject to forfeiture.
The Initial Stockholders have agreed, subject
to certain limited exceptions, not to transfer, assign or sell any of their Insider Shares until, with respect to 50% of the Insider Shares,
the earlier of six months after the consummation of a Business Combination and the date on which the closing price of the common
stock equals or exceeds $12.50 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 after a Business Combination and, with respect to the remaining
50% of the Insider Shares, until the six months after the consummation of a Business Combination, or earlier, in either case, if,
subsequent to a Business Combination, the Company completes a liquidation, merger, stock exchange or other similar transaction which results
in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Promissory Note — Related Party
On August 5, 2021, the Sponsor agreed to
loan the Company up to an aggregate amount of $300,000 to be used, in part, for transaction costs incurred in connection with the IPO
(the “Promissory Note”). The Promissory Note is unsecured, interest-free and due on the earlier of March 31, 2022 or
the closing the IPO. Concurrently with the IPO, the Company repaid the outstanding balance of $105,000 to the Sponsor.
Administrative Services Agreement
The Company entered into an administrative services
agreement with the Sponsor pursuant to which the Company pays a total of $10,000 per month for office space, administrative and support
services. Upon completion of the initial Business Combination or liquidation, the Company will cease paying these monthly fees. However,
pursuant to the terms of such agreement, the Sponsor agreed to defer the payment of such monthly fee. Any such unpaid amount will accrue
without interest and be due and payable no later than the date of the consummation of the initial Business Combination. For the year ended
September 30, 2022 and the period from July 21 (inception) to September 30, 2021, the Company incurred $100,000 and none, respectively,
in fees for these services, of which $100,000 and none are included in accounts payable and accrued expenses in the accompanying balance
sheets September 30, 2022 and September 30, 2021, respectively.
Note 6 — Commitments and
Contingencies Risks and Uncertainties
Management is currently evaluating the impact
of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect
on the Company’s future financial position, results of its operations and/or search for a target company, there has not been a significant
impact as of the date of these financial statements. The financial statements do not include any adjustments that might result from the
future outcome of this uncertainty.
Registration Rights
The holders of the insider shares, the private
units, securities underlying the Unit Purchase Option and any units that may be issued upon conversion of working capital loans or extension
loans (and any securities underlying the private units or units issued upon conversion of the working capital loans or extension loans)
will be entitled to registration rights pursuant to a registration rights agreement signed prior to or on the effective date of IPO requiring
the Company to register such securities for resale. The holders of these securities are entitled to make up to two demands, excluding
short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration
rights with respect to registration statements filed subsequent to the completion of the initial business combination. The Company will
bear the expenses incurred in connection with the filing of any such registration statements.
Right of First Refusal
The Company has granted Chardan for a period of
24 months after the date of the consummation of the Company’s Business Combination, a right of first refusal to act as book-running
manager, with at least 30% of the economics, for any and all future public and private equity and debt offerings.
Underwriting Agreement
The Company has granted Chardan, the representative
of the underwriters, a 45-day option from the date of this prospectus to purchase up to 900,000 additional Units to cover over-allotments,
if any, at the IPO price less the underwriting discounts and commissions.
The underwriters were paid a cash underwriting
discount of 2.5% of the gross proceeds of the IPO (including the exercise of the over-allotment option), or $1,725,000. In addition, the
underwriters will be entitled to a deferred fee of 3.75% of the gross proceeds of the IPO (including the exercise of the over-allotment
option), or $2,587,500, which will be paid upon the closing of a Business Combination from the amounts held in the Trust Account, subject
to the terms of the underwriting agreement. The underwriters will also be entitled to 0.75% of the gross proceeds of the IPO in the form
of common stock of the Company at a price of $10.00 per share, to be issued if the Company closes a Business Combination.
Unit Purchase Option
The Company sold to Chardan (and/or its designees),
for $100, an option (the “Unit Purchase Option”) to purchase 115,000 units (as the over-allotment option was fully exercised
on November 24, 2021) exercisable at $11.50 per Unit (or an aggregate exercise price of $1,322,500) commencing on the later of six months
from the effective date of the registration statement related to the IPO and the consummation of a Business Combination. The Unit Purchase
Option may be exercised for cash or on a cashless basis, at the holder’s option, and expires five years from the effective date
of the registration statement related to the IPO. The Units issuable upon exercise of the Unit Purchase Option are identical to those
offered in the IPO. The Company accounts for the Unit Purchase Option, inclusive of the receipt of $100 cash payment, as an expense of
the IPO resulting in a charge directly to stockholders’ equity. The option and the underlying securities that may be issued upon
exercise of the option, have been deemed compensation by FINRA and are therefore subject to a 180-day lock-up pursuant to Rule 5110(e)(1)
of FINRA’s NASDAQ Conduct Rules. Additionally, the option may not be sold, transferred, assigned, pledged or hypothecated for a
one-year period (including the foregoing 180-day period) following the date of IPO except to any underwriter and selected dealer participating
in the IPO and their bona fide officers or partners. The Unit Purchase Option grants to holders demand and “piggy back” rights
for periods of five and seven years, respectively, from the effective date of the registration statement with respect to the registration
under the Securities Act of the securities directly and indirectly issuable upon exercise of the Unit Purchase Option. The Company will
bear all fees and expenses attendant to registering the securities, other than underwriting commissions which will be paid for by the
holders themselves. The exercise price and number of units issuable upon exercise of the Unit Purchase Option.
Note 7 — Stockholders’ Equity
Common Stock — The
Company is authorized to issue 15,000,000 shares of common stock with a par value of $0.0001 per share. Holders of the common stock are
entitled to one vote for each share. On October 29, 2021, the Company effected a 1.2-for-1.0 stock split of common stock, resulting in
the Sponsor holding an aggregate of 1,725,000 Insider Shares, for approximately $0.014 per share. At September 30, 2022, there were 2,001,389
shares of common stock issued and outstanding (excluding 6,900,000 shares subject to possible redemption).
Rights — Each holder
of a right will receive one-twentieth (1/20) of one share of common stock upon consummation of a Business Combination, even if the holder
of such right redeemed all shares held by it in connection with a Business Combination. No fractional shares will be issued upon conversion
of the rights. No additional consideration will be required to be paid by a holder of rights in order to receive its additional shares
upon consummation of a Business Combination, as the consideration related thereto has been included in the Unit purchase price paid for
by investors in the Initial Public Offering. If the Company enters into a definitive agreement for a Business Combination in which the
Company will not be the surviving entity, the definitive agreement will provide for the holders of rights to receive the same per share
consideration the holders of the common stock will receive in the transaction on an as-converted into common stock basis and each holder
of a right will be required to affirmatively covert its rights in order to receive 1/20 share underlying each right (without paying additional
consideration). The shares issuable upon conversion of the rights will be freely tradable (except to the extent held by affiliates of
the Company).
If the Company is unable to complete a Business
Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of rights will not receive
any of such funds with respect to their rights, nor will they receive any distribution from the Company’s assets held outside of
the Trust Account with respect to such rights, and the rights will expire worthless. Further, there are no contractual penalties for failure
to deliver securities to the holders of the rights upon consummation of a Business Combination. Additionally, in no event will the Company
be required to net cash settle the rights. Accordingly, holders of the rights might not receive the shares of common stock underlying
the rights.
Warrants — Each
redeemable warrant entitles the holder thereof to purchase three-fourths (3/4) of one share of common stock at a price of $11.50 per
full share and will become exercisable on the later of the completion of an initial Business Combination and 12 months from the
closing of the IPO. However, no public warrants will be exercisable for cash unless the foregoing, if a registration statement covering
the issuance of the common stock issuable upon exercise of the public warrants is not effective within 90 days from the closing
of the Company’s initial Business Combination, warrant holders may, until such time as there is an effective registration statement
and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis
pursuant to an available exemption from registration under the Securities Act. If an exemption from registration is not available, holders
will not be able to exercise their warrants on a cashless basis. The warrants will expire five years from the closing of the Company’s
initial Business Combination at 5:00 p.m., New York City time or earlier redemption.
In addition, if (x) the Company issues additional
shares of common stock or equity-linked securities for capital raising purposes in connection with the closing of the Company’s
initial Business Combination at an issue price or effective issue price of less than $9.50 per share (with such issue price or effective
issue price to be determined in good faith by our board of directors), (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 Company’s initial Business Combination,
and (z) the volume weighted average trading price of the Company’s common stock during the 20 trading day period starting
on the trading day prior to the day on which the Company consummates its initial Business Combination (such price, the “Market
Price”) is below $9.50 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115%
of the Market Price, and the $16.50 per share redemption trigger price described below will be adjusted (to the nearest cent) to be equal
to 165% of the Market Value.
The Company may redeem the outstanding warrants:
| ● | in whole and not in part; |
|
● |
at a price of $0.01 per warrant; |
|
● |
upon a minimum of 30 days’ prior written notice of redemption, which the Company refers to as the 30-day redemption period; |
|
● |
if, and only if, the last reported sale price of the Company’s common stock equals or exceeds $16.50 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 ending on the third trading day prior to the date on which the Company sends the notice of redemption to the to the warrant holders. |
If the Company calls the Public Warrants for redemption,
management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,”
as described in the warrant agreement. In such event, each holder would pay the exercise price by surrendering the whole warrants for
that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common
stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value”
(defined below) by (y) the fair market value. The “fair market value” shall mean the average reported last sale price
of the common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption
is sent to the holders of warrants.
Except as described above, no warrants will be
exercisable and the Company will not be obligated to issue common stock unless at the time a holder seeks to exercise such warrant, a
prospectus relating to the common stock issuable upon exercise of the warrants is current and the common stock have been registered or
qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants. Under the terms of
the warrant agreement, the Company has agreed to use its best efforts to meet these conditions and to maintain a current prospectus relating
to the common stock issuable upon exercise of the warrants until the expiration of the warrants. However, the Company cannot assure that
it will be able to do so and, if the Company does not maintain a current prospectus relating to the common stock issuable upon exercise
of the warrants, holders will be unable to exercise their warrants and the Company will not be required to settle any such warrant exercise.
If the prospectus relating to the common stock issuable upon the exercise of the warrants is not current or if the common stock is not
qualified or exempt from qualification in the jurisdictions in which the holders of the warrants reside, the Company will not be required
to net cash settle or cash settle the warrant exercise, the warrants may have no value, the market for the warrants may be limited and
the warrants may expire worthless.
The private warrants have terms and provisions
that are identical to those of the warrants being sold as part of the units in the IPO except that the private warrants will be entitled
to registration rights. The private warrants (including the common stock issuable upon exercise of the private warrants) will not be transferable,
assignable or salable until 30 days after the completion of our initial business combination except to permitted transferees.
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 following table presents information about
the Company’s assets that are measured at fair value on a recurring basis at September 30, 2022 and indicates the fair value hierarchy
of the valuation inputs the Company utilized to determine such fair value.
| |
September 30, 2022 | | |
Quoted Prices in Active Markets (Level 1) | | |
Significant Other Observable Inputs (Level 2) | | |
Significant Other Unobservable Inputs (Level 3) | |
Assets | |
| | |
| | |
| | |
| |
Trust Account - U.S. Treasury Securities Money Market Fund | |
$ | 69,286,800 | | |
$ | 69,286,800 | | |
| — | | |
| — | |
Note 9 — Income Taxes
The Company’s net deferred tax assets are
as follows:
|
|
September 30, |
|
|
|
2022 |
|
Deferred tax asset |
|
|
|
Net operating loss carryforward |
|
$ |
— |
|
Startup/Organization Expenses |
|
|
20,396 |
|
Total deferred tax asset |
|
|
20,396 |
|
Valuation allowance |
|
|
(20,396 |
) |
Deferred tax asset, net of allowance |
|
$ |
— |
|
The income tax provision consists of the following:
| |
For the Year ended September 30,
2022 | |
Federal | |
| |
Current | |
$ | 49,057 | |
Deferred | |
| (20,294 | ) |
State | |
| | |
Current | |
$ | — | |
Deferred | |
| — | |
Change in valuation allowance | |
| 20,294 | |
Income tax provision | |
$ | 49,057 | |
A reconciliation of the Company’s statutory
income tax rate to the Company’s effective income tax rate is as follows (in thousands):
|
For the
Year ended September 30,
2022 | |
Income at U.S. statutory rate |
| 21.00 | % |
State taxes, net of federal benefit |
| 0.00 | % |
Transaction costs |
| (30.26 | )% |
Change in valuation allowance |
| (6.53 | )% |
|
| (15.80 | )% |
As of September 30, 2022, the Company did not have any U.S. federal
and state net operating loss carryovers available to offset future taxable income.
In assessing the realization of the deferred tax
assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which
temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred
tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of
the information available, management believes that significant uncertainty exists with respect to future realization of the deferred
tax assets and has therefore established a full valuation allowance. The change in the valuation
allowance was $20,294 for the year ended September 30, 2022.
The provisions for U.S. federal and state
income taxes were $49,057 and $0 for the year ended September 30, 2022 and for
the period from July 21, 2021 (inception) to September 30, 2021, respectively. The Company’s tax returns for the year
ended September 30, 2022 and 2021 remain open and subject to examination.
Note 10 — Subsequent Events
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date through December 6, 2022 when the financial statements were issued. Other than described
below, the Company did not identify any other subsequent events that would have required adjustment or disclosure in the financial statements.
On October 10, 2022, Arisz and BitFuFu entered
into an amendment to the Merger Agreement to provide, among other things: 1) for a loan from BitFuFu to Arisz in the amount of $2,220,000
(the “Loan”) for the purpose of funding Arisz’s extension of the time to consummate a business combination and for working
capital purposes, 2) remove all existing restrictions on 400,000 Insider Shares that are currently subject to transfer restrictions, so
that such shares are freely tradeable upon the Closing. The Loan will be funded in three equal installments of $740,000 on each of October
26, 2022, January 26, 2023 and April 26, 2023, and 3) extend the Outside Date to August 1, 2023.
On October 10, 2022, Arisz issued an unsecured
promissory note to BitFuFu for the amount of the Loan at an interest rate of 3.5% per annum and is due on October 26, 2023. Arisz may
elect to issue a number of unregistered shares of its common stock, valued for these purposes at $10.00 per share, the aggregate value
of which shall be equal to the outstanding principal amount of the Loan.
On October 13, 2022, the parties to the Backstop
Agreement entered into a new backstop agreement substantially on the same terms as the Backstop Agreement with the only substantive additional
terms being that: 1) the subscription amount is $2.0 million worth of shares and 2) the termination date is the earlier of: (i) the date
agreed by the parties thereto in writing and (ii) the date that the Merger Agreement is terminated, on its terms.
On October 24, 2022, Arisz received $740,000,
the first installment of the Loan, from BitFuFu.
On November 9, 2022, Arisz deposited $690,000
into the Trust Account (representing $0.10 per each share of redeemable common stock) to extend the time for Arisz to complete the Business
Combination by three months until February 17, 2023.
Arisz Acquisition Corp.
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