Underwriting Agreement
The Company had granted the Underwriters a 30-day option from the date of IPO to purchase up to 1,305,000 additional Units to cover over-allotments, if any, at the IPO price less the underwriting discounts and commissions.
Simultaneously with the closing of the IPO, the Underwriters exercised the over-allotment option in full. As such, the Underwriters were paid an underwriting discount and commission of $0.25 per Unit, or $2,501,250 in the aggregate, payable upon the closing of the IPO, and I-Bankers was entitled to a business combination marketing fee of $3,501,750 in the aggregate, which is held in the Trust Account and payable upon completion of the Business Combination.
NOTE 6 ─ SHAREHOLDERS’ EQUITY
The Company is authorized to issue a total of 111,000,000 shares, par value of $0.0001 per share, consisting of (a) 110,000,000 shares of common stock, including (i) 100,000,000 shares of Class A common stock, and (ii) 10,000,000 shares of Class B common stock, and (b) 1,000,000 shares of preferred stock (the “Preferred Stock”).
As of December 31, 2021, there were 10,903,700 shares of Class A common stock issued and outstanding, which includes 10,005,000 shares issued in the public offering, 504,950 shares issued in the private placement, 373,750 representative shares and 20,000 shares issued pursuant to the Gaylor Securities Purchase Agreement. Furthermore, we have 2,501,250 shares of Class B common stock issued and outstanding. Pursuant to the Gaylor Securities Purchase Agreement, dated August 17, 2022, we have the option to sell to the Purchaser an additional 15,000 shares of Class A common stock. As of September 30, 2022 there were 10,903,700 shares of Class A common stock issued and outstanding.
Of the 2,501,250 shares of Class B common stock outstanding, an aggregate of up to 326,250 shares of Class B common stock were subject to forfeiture, to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so that the initial stockholders would collectively own 20% of the Company’s issued and outstanding common stock after the IPO (assuming the initial stockholders did not purchase any Public Shares in the IPO). As a result of the Underwriters’ full exercise of the over-allotment option, as of September 30, 2022, no share of Class B common stock was subject to forfeiture.
As of September 30, 2022, no share of preferred stock was issued or outstanding. The designations, voting and other rights and preferences of the preferred stock may be determined from time to time by the Company’s board of directors.
Rights
As of September 30, 2022, there were 10,005,000 Public Rights and 504,950 Private Placement Rights outstanding, respectively.
Each holder of a right will receive one-tenth (1/10) of one share of Class A common stock upon consummation of a Business Combination. In the event the Company will not be the surviving entity upon completion of the Company’s initial Business Combination, each holder of a Public Right will automatically receive the 1/10 share of Class A common stock underlying such Public Right (without paying any additional consideration); and each holder of a Private Placement Right or right underlying Units to be issued upon conversion of the Working Capital Loans will be required to affirmatively convert its rights in order to receive the 1/10 share of Class A common stock underlying each right (without paying any additional consideration). If the Company is unable to complete an initial Business Combination within the required time period and public stockholders redeem the public shares for the funds held in the Trust Account, holders of rights will not receive any such funds in exchange for their rights and the rights will expire worthless. The Company will not issue fractional shares upon conversion of the rights. If, upon conversion of the rights, a holder would be entitled to receive a fractional interest in a share, the Company will, upon exchange, comply with Section 155 of the Delaware General Corporation Law. Any fractional shares will be rounded down to the nearest whole share, and any rounding down and extinguishment may be done with or without any in lieu cash payment or other compensation being made to the holder of the relevant rights.
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, the rights may expire worthless.