NOTES
TO FINANCIAL STATEMENTS
Note
1 - Description of Organization and Business Operations, Going Concern and Basis of Presentation
FutureTech
II Acquisition Corp. (the “Company”) is a blank check company incorporated in Delaware on August 19, 2021. The Company was
formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar
business combination with one or more businesses (the “Business Combination”). The Company is an early stage and emerging
growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As
of March 31, 2023, the Company had not commenced any operations. All activity for the period from April 13, 2021 (inception) through
March 31, 2023 relates to organizational activities and identifying a target company for a business combination. The Company will not
generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate
non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the Company’s initial
public offering (the “Initial Public Offering”). The Company has selected December 31 as its fiscal year end.
The
registration statement for the Initial Public Offering was declared effective on February 14, 2022. On February 18, 2022, the Company
consummated the Initial Public Offering of 11,500,000 units (“Units” and, with respect to the shares of Class A common stock
included in the Units offered, the “Public Shares”), generating gross proceeds of $115,000,000, which is described in Note
3.
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the sale of 520,075 private placement units (the “Private
Placement Units”) at a price of $ per unit in a private placement to the FutureTech Partners II LLC (the “Sponsor”),
generating gross proceeds of $, which is described in Note 4.
Following
the closing of the Initial Public Offering on February 18, 2022, an amount of $117,300,000 ($10.00 per Unit) from the net proceeds of
the sale of the Units in the Initial Public Offering and the Private Placement Units was placed in a trust account (“Trust Account”)
which may be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of
1940, as amended (the “Investment Company Act”), with a maturity of 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 the
Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the Trust Account to the Company’s
stockholders, as described below.
Transaction
costs of the Initial Public Offering with the exercise of the overallotment amounted to $5,688,352 consisting of $1,725,000 of cash underwriting
fees, $3,450,000 of deferred underwriting fees and $513,352 of other costs.
Following
the closing of the Initial Public Offering, $700,000 of cash was held outside of the Trust Account available for working capital purposes.
As of March 31, 2023, the Company has available to it $150,257 of cash on its balance sheet and a working capital deficit of $1,920,820.
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering
and the sale of the Private Placement Units, although substantially all of the net proceeds are intended to be applied generally toward
consummating a Business Combination. NASDAQ rules provide that the Business Combination must be with one or more target businesses that
together have a fair market value equal to at least 80% of the balance in the Trust Account (as defined below) (less any deferred underwriting
commissions and taxes payable on interest earned on the Trust Account) at the time of the signing of a definitive agreement to enter
a Business Combination. The Company will only complete a Business Combination if the post-Business Combination company owns or acquires
50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient
for it not to be required to register as an investment company under the Investment Company Act. There is no assurance that the Company
will be able to successfully effect a Business Combination.
FUTURETECH
II ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
Note
1 - Description of Organization and Business Operations (Continued)
The
Company has until May 18, 2023 (or up to August 18, 2023, as applicable) to consummate a Business Combination. If the Company is unable
to complete a Business Combination within 12 months from the closing of the Initial Public Offering (or up to 18 months from the closing
of the Initial Public Offering at the election of the Company in two separate three month extensions subject to satisfaction of certain
conditions, including the deposit of up to $1,150,000 ($0.10 per unit in either case) for each three month extension, into the Trust
Account, or as extended by the Company’s stockholders in accordance with its certificate of incorporation), the Company will (i)
cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days
thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust
Account including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its taxes
(less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption
will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions,
if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of
the Company’s remaining stockholders and its board of directors, dissolve and liquidate, subject in the case of clauses (ii) and
(iii) above to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law. Accordingly, it is the Company’s intention to redeem its Public Shares as soon as reasonably possible following the 12th month
(or up to 18 months from the closing of the Initial Public Offering at the election of the Company in two separate three month extensions
subject to satisfaction of certain conditions, including the deposit of up to $1,150,000 ($0.10 per unit in either case) for each three
month extension, into the Trust Account, or as extended by the Company’s stockholders in accordance with its certificate of incorporation).
As such, the Company’s stockholders could potentially be liable for any claims to the extent of distributions received by them
(but no more) and any liability of such stockholders may extend well beyond the third anniversary of such date. On February 17, 2023,
the Company caused to be deposited $1,150,000 into the Trust Account for its public stockholders, representing $0.10 per Public Share,
allowing the Company to extend the period of time it has to consummate its initial Business Combination by three months from February
18, 2023 to May 18, 2023 (the “Extension”). The Extension is the first of the two three-month extensions permitted mentioned
above.
The
Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products
sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality
or similar agreement or Business Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.20
per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the day of liquidation of the Trust Account,
if less than $10.20 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will
not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to monies held in
the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of
the underwriter of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as
amended (the “Securities Act”). However, the Company has not asked the Sponsor to reserve for such indemnification obligations,
nor has the Company independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believe
that the Sponsor’s only assets are securities of the Company. Therefore, the Company cannot assure its stockholders that the Sponsor
would be able to satisfy those obligations. None of the Company’s officers or directors will indemnify the Company for claims by
third parties including, without limitation, claims by vendors and prospective target businesses. The Company will seek to reduce the
possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors,
service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the
Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Liquidity
and Management’s Plans
At
March 31, 2023, the Company had cash of $150,257 and working capital deficit of $1,920,820.
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,” the Company has until May 18, 2023 to complete a Business Combination. It is uncertain that the Company will
be able to consummate an initial Business Combination by this time. If an initial Business Combination is not consummated by this date
and the Company has not exercised its option to extend the deadline, there will be a mandatory liquidation and subsequent dissolution
of the Company. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.
The financial statements do not include any adjustments that might result from the Company’s inability to continue as a going concern.
FUTURETECH
II ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
Note
1 - Description of Organization and Business Operations (Continued)
Risks
and Uncertainties
Management
is currently evaluating the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could
have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific
impact is not readily determinable as of the date of the financial statement. The financial statements do not include any adjustments
that might result from the 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. Further, 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 consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Note
2 - Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United
States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article
8 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Certain information or footnote disclosures normally
included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations
of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete
presentation of financial position, results of operations, or cash flows.
In
the opinion of the Company’s management, the unaudited financial statements as of March 31, 2023 and December 31, 2022 and for
the three months ended March 31, 2023 and 2022 include all adjustments, which are only of a normal and recurring nature, necessary
for a fair statement of the financial position of the Company as of March 31, 2023 and December 31, 2022 and its results of
operations and cash flows for the three months ended March 31, 2023 and 2022. The results of operations for the three months ended March
31, 2023 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2023 or any
future interim period.
FUTURETECH
II ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
Note
2 - Summary of Significant Accounting Policies (Continued)
Emerging
Growth Company
The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our
Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required
to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements
of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously
approved.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do
not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of
such extended transition period, which means that when a standard is issued or revised and it has different application dates for public
or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies
adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company,
which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period
difficult or impossible because of the potential differences in accounting standards used.
Use
of Estimates
The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Making
estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of
a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating
its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ
significantly from those estimates.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution
which, at times may exceed the Federal depository insurance coverage of $250,000. At March 31, 2023, the Company had not experienced
losses on this account and management believes the Company is not exposed to significant risks on such account.
Cash
and Cash Equivalents
The
Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash
equivalents are carried at cost, which approximates fair value. As of March 31, 2023 and December 31, 2022, the Company had cash of $150,257
and $262,756, respectively. The Company had no cash equivalents as of March 31, 2023 and December 31, 2022.
FUTURETECH
II ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
Note
2 - Summary of Significant Accounting Policies (Continued)
Trust
Account
Upon
the closing of the Initial Public Offering and the Private Placement, $117,300,000 ($10.00 per Unit) of the net proceeds of the Initial
Public Offering and certain of the proceeds of the Private Placement Units was held in the Trust Account located in the United States
with Continental Stock Transfer & Trust Company acting as trustee, and invested only in U.S. government treasury obligations with
a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act,
which will be invested only in direct U.S. government treasury obligations, as determined by the Company, until the earlier of: (i) the
completion of a Business Combination and (ii) the distribution of the Trust Account as described above.
As
of March 31, 2023 and December 31, 2022, the Company had $121,415,083 and $118,976,585, respectively, in marketable securities held in
the Trust Account.
Offering
Costs Associated with the Initial Public Offering
The
Company complies with the requirements of the Financial Accounting Standards Board ASC 340-10-S99-1 and SEC Staff Accounting Bulletin
(“SAB”) Topic 5A, “Expenses of Offering.” Offering costs of $513,352 consist principally of costs
incurred in connection with formation of the Company and preparation for the Initial Public Offering. These costs, together with the
underwriter discount of $1,725,000 were charged to additional paid-in capital upon completion of the Initial Public Offering.
Class
A Common Stock Subject to Possible Redemption
The
Company accounts for its common stock subject to possible redemption in accordance with the guidance enumerated in ASC 480 “Distinguishing
Liabilities from Equity.” Common stock subject to mandatory redemption is classified as a liability instrument and is measured
at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the
control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control)
is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s
Class A common stock features certain redemption rights that are considered by the Company to be outside of the Company’s control
and subject to the occurrence of uncertain future events. Accordingly, at March 31, 2023 and December 31, 2022, the Class A common stock
subject to possible redemption in the amount of $120,594,740 and $118,466,326, respectively, is presented as temporary equity, outside
of the stockholders’ equity section of the Company’s balance sheets. The increase of
$2,128,414 during the three months ended March 31, 2023 in the Class A common stock subject to possible redemption is a remeasurement
adjustment to the redemption value.
Net
Income (Loss) Per Share
Net
income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding
during the period. The Company applies the two-class method in calculating earnings per share. Earnings and losses are shared pro rata
between the two classes of shares. The calculation of diluted loss per share of common stock does not consider the effect of the warrants
issued in connection with the (i) Initial Public Offering and (ii) sale of the Private Placement Units, because the warrants are contingently
exercisable, and the contingencies have not yet been met. As a result, diluted earnings per share is the same as basic earnings per share
for the periods presented.
FUTURETECH
II ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
Note
2 - Summary of Significant Accounting Policies (Continued)
The
following table reflects the calculation of basic and diluted net income (loss) per share (in dollars, except per share amounts):
Schedule
of Calculation of Basic and Diluted Net Income Per Common Share
| |
|
Three
Months Ended |
|
| |
|
March
31, |
|
| |
|
2023 |
|
| |
|
|
|
| Class
A common stock |
|
|
|
|
| Numerator:
Income allocable to Class A common stock |
|
$ |
645,831 |
|
| Denominator:
Basic and diluted weighted average shares outstanding |
|
|
11,500,000 |
|
| Basic
and diluted net income per share, Class A Common Stock |
|
$ |
0.06 |
|
| |
|
|
|
|
| Class
B common stock |
|
|
|
|
| Numerator:
Income allocable to Class B common stock |
|
$ |
161,458 |
|
| Denominator:
Basic and diluted weighted average shares outstanding |
|
|
2,875,000 |
|
| Basic
and diluted net income per share, Class B Common Stock |
|
$ |
0.06 |
|
| | |
Three Months
Ended | |
| | |
March 31, | |
| | |
2022 | |
| | |
| |
| Class A common stock | |
| | |
| Numerator: Loss allocable to
Class A common stock | |
$ | (48,894 | ) |
| Denominator: Basic
and diluted weighted average shares outstanding | |
| 5,814,607 | |
| Basic and diluted
net loss per share, Class A Common Stock | |
$ | (0.01 | ) |
| | |
| | |
| Class B common stock | |
| | |
| Numerator: Loss allocable to Class B common
stock | |
$ | (22,616 | ) |
| Denominator: Basic
and diluted weighted average shares outstanding | |
| 2,689,607 | |
| Basic and diluted
net loss per share, Class B Common Stock | |
$ | (0.01 | ) |
Fair
Value of Financial Instruments
The
fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction
between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets
or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
●
Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets. This is the level
that the Marketable Securities Held in Trust Account are considered (being $121,415,083 and $118,976,585 as of March 31, 2023 and December
31, 2022, respectively);
●
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted
prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active;
and
FUTURETECH
II ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
●
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
In
some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In
those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input
that is significant to the fair value measurement.
Income
Taxes
The
Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset
and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed
for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible
amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income.
Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC
Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax
positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not
to be sustained upon examination by taxing authorities. The Company’s management determined the United States is the Company’s
only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income
tax expense. There were no unrecognized tax benefits as of March 31, 2023 and December 31, 2022 and no amounts accrued for interest
and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material
deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
New
Law and Changes
On
August 16, 2022, the Inflation Reduction Act (the “IR Act”) was signed into law, which, beginning in 2023, will impose a
1% excise tax on public company stock buybacks. The Company is assessing the potential impact of the IR Act.
The
IR Act imposes a 1% excise tax on the fair market value of stock repurchases made by covered corporations after December 31, 2022. The
total taxable value of shares repurchased is reduced by the fair market value of any newly issued shares during the taxable year. Redemption
rights are ubiquitous to nearly all SPACs. Until there is further guidance from the IRS, the Company will continue to assess the potential
impact of the IR Act. The Company does not expect a material impact on the Company’s financial statements.
Recently
Issued 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. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023 and should be applied on a full
or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company is currently assessing the impact,
if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.
Management
does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a
material effect on the Company’s financial statements.
FUTURETECH
II ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
Note
3 - Public Offering
Pursuant
to the Initial Public Offering and full exercise of the underwriters’ overallotment option, the Company sold 11,500,000 Units at
a purchase price of $10.00 per Unit. Each Unit consists of one share of Class A common stock and one redeemable warrant (“Public
Warrant”). Each Public Warrant will entitle the holder to purchase one share of Class A common stock at an exercise price of $11.50
per share (see Note 7).
Note
4 - Private Placement
Simultaneously
with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 520,075 Private Placement Units at a price of
$ per Private Placement Unit (or $ in the aggregate), from the Company. The Sponsor transferred $ to the Trust
Account on February 16, 2022.
The
proceeds from the sale of the Private Placement Units were added to the net proceeds from the Initial Public Offering held in the Trust
Account. The warrants included in the Private Placement Units (the “Private Placement Warrants”) are identical to the warrants
sold in the Initial Public Offering, except as described in Note 7. If the Company does not complete a Business Combination within the
required period, the Private Placement Warrants will expire worthless.
Note
5 - Related Party Transactions
Class
B Common Stock
On
October 8, 2021, the Company issued an aggregate of shares of Class B common stock to the Sponsor for an aggregate purchase
price of $ in cash, or approximately $ per share. Such Class B common stock includes an aggregate of up to shares
that were subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment was not exercised in full or
in part, so that the Sponsor would collectively own 20% of the Company’s issued and outstanding shares after the Initial Public
Offering (assuming the initial stockholders did not purchase any Public Shares in the Initial Public Offering and excluding the Private
Placement Units and underlying securities).
The
initial stockholders have agreed not to transfer, assign or sell any of the Class B common stock (except to certain permitted transferees)
until the earlier of (i) one year after the date of the consummation of a Business Combination, or (ii) the date on which the closing
price of the Company’s common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations
and recapitalizations) for any 20 trading days within any 30-trading day period commencing six months after a Business Combination, or
earlier, in each case, if, subsequent to a Business Combination, the Company consummates a subsequent liquidation, merger, stock exchange
or other similar transaction which results in all of the Company’s stockholders having the right to exchange their common stock
for cash, securities or other property.
Promissory
Note - Related Party
On
August 19, 2021, the Sponsor issued an unsecured promissory note to the Company, pursuant to which the Company 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 is non-interest bearing
and payable on the earlier of (i) March 31, 2022 or (ii) the consummation of the Initial Public Offering. As of March 31, 2023 and December
31, 2022, there was $144,443 outstanding pursuant to the promissory note, respectively. As of March 31, 2023 and December 31, 2022, the
Company was delinquent under the terms of the promissory note.
Related
Party Loans
In
order to finance transaction costs in connection with a Business Combination, the Sponsor, an affiliate of the Sponsor, or the Company’s
officers and directors may, but are not obligated to, loan the Company funds as may be required (the “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 $ of such loans may be converted upon consummation of a Business
Combination into units at a price of $ per unit. The Units will be identical to the Private Placement Units. In the event that a
Business Combination does not close, the Company 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 March 31, 2023 and December 31,
2022, the Company has no working capital loans outstanding.
FUTURETECH
II ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
Note
5 - Related Party Transactions (Continued)
Extension
Loan - Related Party
If
the Company anticipates that it may not be able to consummate a Business Combination within 12 months, the Company may, by resolution
of the Company’s board if requested by the Sponsor, extend the period of time to consummate a Business Combination up to two times,
each by an additional three months (for a total of up to 18 months to complete a Business Combination), subject to the Sponsor depositing
additional funds into the Trust Account as set out below. Pursuant to the terms of the Company’s amended and restated certificate
of incorporation and the trust agreement entered into between the Company and Continental Stock Transfer & Trust Company, in order
for the time available for the Company to consummate the initial Business Combination to be extended, the Sponsor or its affiliates or
designees, upon five business days’ advance notice prior to the applicable deadline, must deposit into the Trust Account $
($0.10 per unit), on or prior to the date of the applicable deadline, for each of the available three month extensions, providing a total
possible Business Combination period of 18 months at a total payment value of $ ($ per unit) (the “Extension Loans”).
Any such payments would be made in the form of non-interest-bearing loans. If the Company completes its initial Business Combination,
the Company will, at the option of the Sponsor, repay the Extension Loans out of the proceeds of the Trust Account released to the Company
or convert a portion or all of the total loan amount into units at a price of $ per unit, which units will be identical to the Private
Placement Units. If the Company does not complete a Business Combination, the Company will repay such loans only from funds held outside
of the Trust Account. Furthermore, the letter agreement among the Company and the Company’s officers, directors, and the Sponsor
contains a provision pursuant to which the Sponsor will agree to waive its right to be repaid for such loans to the extent there is insufficient
funds held outside of the Trust Account in the event that the Company does not complete a Business Combination. The Sponsor and its affiliates
or designees are not obligated to fund the Trust Account to extend the time for the Company to complete the initial Business Combination.
The public stockholders will not be afforded an opportunity to vote on the extension of time to consummate an initial Business Combination
from 12 months to 18 months described above or redeem their shares in connection with such extensions. On February 17, 2023 the Company
caused to be deposited $1,150,000 into the Company’s Trust account for its public stockholders, representing $0.10 per Public Share,
allowing the Company to extend the period of time it has to consummate its initial Business Combination by three months from February
18, 2023 to May 18, 2023 (the “Extension”). The Extension is the first of two three-month extensions permitted under the
Company’s governing documents. As of March 31, 2023 and December 31, 2022, there was $1,150,000 and $0 outstanding under the related
party loans.
Administrative
Support Agreement
Commencing
on the date the Units are first listed on Nasdaq, the Company has agreed to pay the Sponsor a total of $10,000 per month for office space,
utilities and secretarial and administrative support for up to 18 months. Upon completion of the initial Business Combination or the
Company’s liquidation, the Company will cease paying these monthly fees. During the three months ended March 31, 2023 and March
31, 2022, the Company recorded $30,000 and $10,000, respectively, to the statement of operations pursuant to the agreement.
Representative
Shares
The
Company issued to EF Hutton and/or its designees, 115,000 shares of Class A common stock upon the Initial Public Offering. EF Hutton
has agreed not to transfer, assign or sell any such common stock until the completion of the Company’s initial Business Combination.
In addition, EF Hutton has agreed (i) to waive its redemption rights with respect to such common stock in connection with the completion
of the Company’s initial Business Combination and (ii) to waive its rights to liquidating distributions from the Trust Account
with respect to such common stock if the Company fails to complete its initial Business Combination within 12 months (or up to 18 months
if the Company extends the period of time to consummate a Business Combination) from the closing of the Initial Public Offering.
The
representative shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately
following the commencement of sales in the Initial Public Offering pursuant to Rule 5110(e)(1) of FINRA’s NASD Conduct Rules. Pursuant
to FINRA Rule 5110(e)(1), these securities may not be sold, transferred, assigned, pledged or hypothecated or the subject of any hedging,
short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period
of 180 days immediately following the effective date of the registration statement for the Initial Public Offering, nor may they be sold,
transferred, assigned, pledged or hypothecated for a period of 180 days immediately following the commencement of sales in the Initial
Public Offering except to any underwriter and selected dealer participating in the offering and their bona fide officers or partners,
registered persons or affiliates or as otherwise permitted under Rule 5110(e)(2), and only if any such transferee agrees to the foregoing
lock-up restrictions.
FUTURETECH
II ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
Note
6 - Commitments and Contingencies
Registration
Rights
The
holders of the insider shares, as well as the holders of the Private Placement Units (and underlying securities) and any securities issued
in payment of working capital loans made to the Company, are entitled to registration rights pursuant to an agreement signed on the effective
date of Initial Public Offering. The holders of a majority of these securities are entitled to make up to three demands that the Company
register such securities. Notwithstanding anything to the contrary, the underwriters (and/or their designees) may only make a demand
registration (i) on one occasion and (ii) during the five-year period beginning on the effective date of the Initial Public Offering.
The holders of the majority of these securities can elect to exercise these registration rights at any time after the Company consummates
a Business Combination. In addition, the holders have certain “piggy-back” registration rights with respect to registration
statements filed subsequent to the consummation of a Business Combination. Notwithstanding anything to the contrary, the underwriters
(and/or their designees) may participate in a “piggy-back” registration only during the seven-year period beginning on the
effective date of the Initial Public Offering. The Company will bear the expenses incurred in connection with the filing of any such
registration statements.
Underwriting
Agreement
The
underwriter was paid a cash underwriting discount of one and a half percent (1.50%) of the gross proceeds of the Initial Public Offering,
or $1,725,000. In addition, the underwriter is entitled to a deferred fee of three and a half percent (3.50%) of the gross proceeds of
the Initial Public Offering, or $3,450,000. The deferred fee was placed in the Trust Account and will be paid in cash upon the closing
of a Business Combination, subject to the terms of the underwriting agreement. In addition, the Company issued EF Hutton and/or its designees,
115,000 shares of Class A common stock upon the consummation of the Initial Public Offering.
Right
of First Refusal
For
a period beginning on the closing of the Initial Public Offering and ending twenty-four (24) months from the closing of a Business Combination,
the Company granted EF Hutton, division of Benchmark Investments, LLC a right of first refusal to act as lead-left book running manager
and lead left manager for any and all future private or public equity, convertible and debt offerings during such period.
FUTURETECH
II ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
Note
7 - Stockholders’ Equity
Preferred
Shares - The Company is authorized to issue 1,000,000 preferred shares with a par value of $0.0001 per share with such designation,
rights and preferences as may be determined from time to time by the Company’s Board of Directors. At March 31, 2023 and December
31, 2022, there were no preferred shares issued or outstanding.
Class
A Common Stock - The Company is authorized to issue 100,000,000 shares of Class A common stock with a par value of $0.0001 per
share. Holders of the Company’s Class A common stock are entitled to one vote for each share. At March 31, 2023 and December 31,
2022, there were 635,075 shares of Class A common stock issued and outstanding, respectively, which included 115,000 representative shares.
As of March 31, 2023 and December 31, 2022, there were 11,500,000 shares, respectively, of Class A common stock that were classified
as temporary equity in the accompanying balance sheets.
Class
B Common Stock - The Company is authorized to issue 10,000,000 shares of Class B common stock with a par value of $0.0001
per share. Holders of the Company’s Class B common stock are entitled to one vote for each share. At March 31, 2023 and December
31, 2022, there were 2,875,000 shares of Class B common stock issued and outstanding. Upon exercise of the over-allotment option, 375,000
shares of Class B common stock are no longer subject to forfeiture.
Only
holders of the Class B common stock will have the right to vote on the election of directors prior to the Business Combination. Holders
of Class A common stock and holders of Class B common stock will vote together as a single class on all matters submitted to a vote of
the Company’s stockholders except as otherwise required by law. In connection with the Company’s initial Business Combination,
the Company may enter into a shareholders agreement or other arrangements with the shareholders of the target or other investors to provide
for voting or other corporate governance arrangements that differ from those in effect upon completion of the Initial Public Offering.
The
shares of Class B common stock will automatically convert into Class A common stock at the time of a Business Combination, or earlier
at the option of the holder, on a one-for-one basis, subject to adjustment. In the case that additional shares of Class A common stock,
or equity-linked securities, are issued or deemed issued in excess of the amounts issued in the Initial Public Offering and related to
the closing of a Business Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common
stock will be adjusted (unless the holders of a majority of the then-outstanding shares of Class B common stock agree to waive such adjustment
with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of
all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all
shares of common stock outstanding upon the completion of Initial Public Offering plus all shares of Class A common stock and equity-linked
securities issued or deemed issued in connection with a Business Combination (net of the number of shares of Class A common stock redeemed
in connection with a Business Combination), excluding any shares or equity-linked securities issued or issuable to any seller of an interest
in the target to the Company in a Business Combination.
Warrants
- The Public Warrants will become exercisable 30 days after the completion of a Business Combination. The Public Warrants will
expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
The
Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation
to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares of Class
A common stock issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of Class A
common stock is available, subject to the Company satisfying its obligations with respect to registration, or a valid exemption from
registration is available. No warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue
any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified
under the securities laws of the state of residence of the exercising holder, or an exemption from registration is available.
FUTURETECH
II ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
Note
7 - Stockholders’ Equity (Continued)
The
Company has agreed that as soon as practicable, but in no event later than 20 business days after the closing of a Business Combination,
the Company will use its commercially reasonable efforts to file, and within 60 business days following a Business Combination to have
declared effective, a registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the
warrants and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed.
Notwithstanding the above, if the Class A common stock is at the time of any exercise of a warrant not listed on a national securities
exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the
Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis”
in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to
file or maintain in effect a registration statement, but will use its commercially reasonable efforts to register or qualify the shares
under applicable blue sky laws to the extent an exemption is not available.
Redemption
of Warrants When the Price per Share of Class A Common Stock Equals or Exceeds $18.00 - Once the warrants become exercisable, the
Company may redeem the outstanding Public Warrants:
| ● |
in
whole and not in part; |
| |
|
| ● |
at
a price of $0.01 per Public Warrant; |
| |
|
| ● |
upon
a minimum of 30 days’ prior written notice of redemption, or the 30-day redemption period to each warrant holder; and |
| |
|
| ● |
if,
and only if, the last reported sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits,
stock dividends, reorganization, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing
once the warrants become exercisable and ending on the third trading day prior to the date on which the Company sends the notice
of redemption to warrant holders. |
If
and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register
or qualify the underlying securities for sale under all applicable state securities laws.
If
the Company calls the Public Warrants for redemption, as described above, its management will have the option to require any holder that
wishes to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise
price and number of shares of common stock issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including
in the event of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except
as described below, the Public Warrants will not be adjusted for issuances of common stock at a price below its exercise price. Additionally,
in no event will the Company be required to net cash settle the Public Warrants. If the Company is unable to complete a Business Combination
within the required period and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not receive
any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held
outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.
The
Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering.
Note
8 – Subsequent Events
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date. Based upon this review the Company did
not identify any subsequent events that would have required adjustment or disclosure in the financial statements.