UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(MARK ONE)
For the quarter ended
For the transition period from ________ to ________
Commission file number:
| (Exact Name of Registrant as Specified in Its Charter) | ||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
| |
(Address of principal executive offices)
(Issuer’s telephone number)
Check whether the issuer (1) filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging Growth Company |
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Units, each consisting of one share of Common Stock and one Redeemable Warrant | ASPAU | Nasdaq Capital Market | ||
| Warrants, each exercisable for one share of Common Stock for $11.50 per share | ASPAW | Nasdaq Capital Market |
As
of August 15, 2022,
ABRI SPAC I, INC.
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2022
TABLE OF CONTENTS
i
PART I – FINANCIAL INFORMATION
ITEM 1. Unaudited Financial Statements
ABRI SPAC I, INC.
BALANCE SHEETS
| June 30, 2022 | December 31, 2021 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
Marketable securities held in Trust Account | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Total current liabilities | ||||||||
| Convertible promissory notes, related party | ||||||||
| Warrant liability | ||||||||
| Deferred underwriting commissions | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies (Note 5) | ||||||||
| Common stock subject to possible redemption, par value $ | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, par value $ | ||||||||
| Common stock, par value $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity (deficit) | ( | ) | ||||||
| Total liabilities, redeemable common stock and stockholders’ equity (deficit) | $ | $ | ||||||
The accompanying footnotes are an integral part of these unaudited condensed financial statements.
1
ABRI SPAC I, INC.
STATEMENTS OF OPERATIONS
| For the Three Months Ended | For the Three Months Ended | For the Six Months Ended | For the Period March 18, 2021 (Inception) Through | |||||||||||||
| June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Professional fees | $ | $ | $ | $ | ||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income: | ||||||||||||||||
| Interest income | ||||||||||||||||
| Change in fair value of warrant liability | ||||||||||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| $ | ( | ) | $ | $ | ( | ) | $ | |||||||||
| $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
The accompanying footnotes are an integral part of these unaudited condensed financial statements.
2
ABRI SPAC I, INC.
STATEMENTS OF CHANGES IN COMMON STOCK SUBJECT
TO POSSIBLE REDEMPTION AND
STOCKHOLDERS’ DEFICIT
FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND THE
PERIOD FROM MARCH 18, 2021
(INCEPTION) THROUGH JUNE 30, 2021
(Unaudited)
| Total | ||||||||||||||||||||||||||||
| Common Stock Subject to Possible Redemption | Common Stock | Additional Paid-in | Accumulated | Stockholder’s Equity | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||
| Balance, January 1, 2022 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Accretion of common stock to redemption value | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance at March 31, 2022 | ( | ) | ||||||||||||||||||||||||||
| Accretion of common stock to redemption value | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance at June 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Balance, March 18, 2021 (inception) | $ | $ | $ | $ | $ | |||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance at March 31, 2021 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Issuance of common stock to founders for cash | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance at June 30, 2021 | - | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
The accompanying footnotes are an integral part of these unaudited condensed financial statements.
3
ABRI SPAC I, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Six Months Ended | For the Period March 18, 2021 (Inception) Through | |||||||
| June 30, 2022 | June 30, 2021 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Change in fair value of warrant liability | ( | ) | ||||||
| Interest earned on marketable securities held in Trust Account | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | ||||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Deferred offering costs | ( | ) | ||||||
| Net cash used in operating activities | $ | ( | ) | $ | ( | ) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from notes payable - related party | ||||||||
| Net cash provided by financing activities | $ | $ | ||||||
| NET CHANGE IN CASH | ||||||||
| Cash - Beginning of period | ||||||||
| Cash - End of period | $ | $ | ||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Non-cash investing and financing activities: | ||||||||
| Issuance of founder shares for related party payables | $ | $ | ||||||
| Accretion of common stock to redemption value | $ | $ | ||||||
| Accrued offering costs | $ | $ | ||||||
The accompanying footnotes are an integral part of these unaudited condensed financial statements.
4
ABRI SPAC I, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022
(Unaudited)
NOTE 1 – NATURE OF THE ORGANIZATION AND BUSINESS
Abri SPAC I, Inc (“Abri” or the “Company”) was incorporated in the State of Delaware on March 18, 2021. The Company’s business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (our “Initial Business Combination”). The Company has selected December 31 as its fiscal year end. Throughout this report, the terms “our,” “we,” “us,” and the “Company” refer to Abri SPAC I, Inc.
As of June 30, 2022, and the date of this filing, the Company had not commenced core operations. All activity for the period from March 18, 2021 (Inception) through June 30, 2022 relates to the Company’s formation and raising funds through its initial public offering (“Initial Public Offering”), which is described below. The Company will not generate any operating revenues until after the completion of the Initial Business Combination, at the earliest. The Company is generating non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.
The registration statement
pursuant to which the Company registered its securities offered in the Initial Public Offering was declared effective on August 9, 2021.
On August 12, 2021, the Company consummated its Initial Public Offering of
Simultaneously with the consummation
of the closing of the Initial Public Offering, the Company completed the private sale of
Following the closing of the
Initial Public Offering on August 12, 2021, an amount of $
On August 19, 2021, the underwriters
notified the Company of their intent to exercise of the over-allotment option in part and, on August 23, 2021, the underwriters purchased
5
The stock exchange listing
rules provide that the Initial Business Combination must be with one or more target businesses that together have a fair market value
equal to at least
The payment to the Company’s
Sponsor of a monthly fee of $
The funds outside of the Trust Account are for our working capital requirements in searching for our Initial Business Combination. The allocation such funds represents our best estimate of the intended uses of these funds. If our estimate of the costs of undertaking due diligence and negotiating our Initial Business Combination is less than the actual amount necessary to do so, we may be required to raise additional capital, the amount, availability and cost of which is currently unascertainable. In this event, we could seek such additional capital through loans or additional investments from our insiders, members of our management team or third parties, but our insiders, members of our management team or third parties are not under any obligation to advance funds to, or invest in, us.
We will likely use substantially
all of the net proceeds of this offering, including the funds held in the Trust Account, in connection with our Initial Business Combination
and to pay our expenses relating thereto, including the deferred underwriting commission payable to the underwriter in an amount equal
to
To the extent we are unable
to consummate an Initial Business Combination, we will pay the costs of liquidation from our remaining assets outside of the Trust Account.
If such funds are insufficient, our insiders have agreed to pay the funds necessary to complete such liquidation (currently anticipated
to be no more than $
6
We believe that we will not
have sufficient available funds to operate for up to the next 12 months (or up to 18 months from the Initial Public Offering if we are
required to extend the period of time to consummate an Initial Business Combination), assuming that our Initial Business Combination is
not consummated during that time. However, if necessary, in order to meet our working capital needs following the consummation of this
offering, our insiders may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable
in their sole discretion. Each loan would be evidenced by a promissory note. The notes would either be paid upon consummation of our Initial
Business Combination, without interest, or, at the lender’s discretion, up to $
The Company’s Sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to their insider shares and any public shares they may hold in connection with the completion of our Initial Business Combination. In addition, our Sponsor and its officers and directors have agreed to waive their rights to liquidating distributions from the Trust Account with respect to their insider shares if we fail to complete our Initial Business Combination within the prescribed time frame. However, if its Sponsor or any of its officers, directors or affiliates acquire public shares in or after this offering, they will be entitled to liquidating distributions from the Trust Account with respect to such public shares if we fail to complete our Initial Business Combination within the prescribed time frame.
The Company will provide its
public stockholders with the opportunity to redeem all or a portion of their shares of common stock upon the completion of the Initial
Business Combination either (i) in connection with a stockholder meeting called to approve the Initial Business Combination or (ii) by
means of a tender offer. The decision as to whether the Company will seek stockholder approval of a proposed Initial Business Combination
or conduct a tender offer will be made by the Company, solely in the Company’s discretion. The public stockholders will be entitled
to redeem their shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account as of
two business days prior to the consummation of the Initial Business Combination including interest earned on the funds held in the Trust
Account and not previously released to the Company to pay its franchise and income taxes, divided by the number of then outstanding public
shares, subject to the limitations. The amount in the Trust Account is initially anticipated to be approximately $
The shares of common stock
subject to redemption was classified as temporary equity upon the completion of the Initial Public Offering and will subsequently be accreted
to redemption value, in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification
(“ASC”) 480 “Distinguishing Liabilities from Equity” (“ASC 480”). In such case, the Company will proceed
with a business combination if the Company has net tangible assets of at least $
7
The Company had 12 months from the closing of the Initial Public Offering
(the “Combination Period”) to complete the Initial Business Combination. However, if we were not able to consummate the Initial
Business Combination within 12 months, we will 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 an Initial Business Combination). The Sponsor and its affiliates
or designees are obligated to fund the Trust Account to extend the time for the Company to complete its Initial Business Combination.
On August 5, 2022, the Company deposited $
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic and Russia-Ukraine war on the economy and the capital markets and has concluded that, while it is reasonably possible that such events could have negative effects on the Company’s financial position, results of its operations, and/or search for a target company, the specific impacts are not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Going Concern and Management Liquidity Plans
As of June 30, 2022, we had
cash of $
Accordingly, the accompanying unaudited financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which contemplate continuation of the Company as a going concern and the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments that might result from the outcome of this uncertainty. Further, we have incurred and expect to continue to incur significant costs in pursuit of our financing and acquisition plans. Management plans to address this uncertainty during period leading up to the Initial Business Combination. The Company cannot provide any assurance that its plans to raise capital or to consummate an Initial Business Combination will be successful. Based on the foregoing, management believes that the Company will not have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of the Initial Business Combination or one year from this filing. These factors, among others, raise substantial doubt about our ability to continue as a going concern.
8
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. GAAP for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. 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 management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
Unaudited Interim Financial Statements
In the opinion of the Company, the unaudited financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of June 30, 2022, and its results of operations for the three and six months ended June 30, 2022.
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the SEC on February 4, 2022, which contains the audited financial statements and notes thereto. The financial information as of December 31, 2021 is derived from the audited financial statements presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The interim results for the six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any future interim periods.
Emerging Growth Company
We are 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 auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, 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 shareholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s unaudited 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.
9
Use of Estimates
The preparation of unaudited financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited 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 unaudited 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 Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of December 31, 2021 and June 30, 2022.
Marketable Securities Held in Trust Account
The Company had investments
in marketable securities held in the Trust Account which may be invested only in U.S. government securities with a maturity of
Offering Costs
Offering costs consist of
professional fees, filing, regulatory and other costs incurred through the balance sheet date that are directly related to the Initial
Public Offering. Offering costs are charged against the carrying value of the ordinary shares or the statements of operations based on
the relative value of the common shares and the Public Warrants to the proceeds received from the Units sold upon the completion of the
Initial Public Offering. Accordingly, on August 12, 2021, offering costs in the aggregate of $
Warrant Liability
The Company accounts for the Private Warrants in accordance with the guidance contained in ASC 480 under which the Private Warrants do not meet the criteria for equity treatment and must be recorded as derivative liabilities. Accordingly, upon issuance, the Company will classify the Private Warrants as liabilities at their fair value and will adjust the Private Warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until the Private Warrants are exercised or expire, and any change in fair value is recognized in the Company’s statements of operations. The fair value of the Private Warrants will be initially and subsequently measured at the end of each reporting period using a Black-Scholes option pricing model.
The Company’s Public Warrants are accounted for and are presented as equity and measured using a Monte Carlo simulation model.
10
Common Stock Subject to Possible Redemption
The Company accounts for its common stock subject to possible redemption in accordance with the guidance in ASC 480. 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 will be presented at redemption value and as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheets.
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes” (“ASC 740). Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 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 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 June 30, 2022 and December 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by taxing authorities since inception.
The Company recognizes deferred
tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the
Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences,
projected future taxable income, tax-planning strategies, and results of recent operations. The Company has incurred losses from inception
through June 30, 2022 and has deferred tax assets of approximately $
The Company has evaluated its income tax positions and has determined that it does not have any uncertain tax positions. The Company will recognize interest and penalties related to any uncertain tax positions through its income tax expense.
The Company is subject to franchise tax filing requirements in the State of Delaware.
11
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage. As of June 30, 2022 and December 31, 2021, the Company had 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 820, “Fair Value Measurements” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.
Fair Value Measurements
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. U.S. 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; |
| ● | 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 |
| ● | 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.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC 815, “Derivatives and Hedging”. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the issuance date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.
Net Loss Per Share
Net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share is computed similar to basic earnings per share, except the weighted average number of common shares outstanding are increased to include additional shares from the assumed exercise of share options, if dilutive. All outstanding convertible notes are considered common stock at the beginning of the period or at the time of issuance, if later, pursuant to the if-converted method. Since the effect of common stock equivalents is anti-dilutive with respect to losses, the shares issuable upon conversion have been excluded from the Company’s computation of net loss per common share for the three and six months ended June 30, 2022. These shares were included in the basic and diluted net loss per common share on the unaudited condensed consolidated statements of operations.
12
The following table summarizes the securities that would be excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive due to the Company’s net loss position, even though the exercise price could be less than the most recent fair value of the common shares:
| Six Months Ended June 30, | ||||
| 2022 | ||||
| Convertible debt | ||||
| Total | ||||
| Three Months Ended June 30, | ||||
| 2022 | ||||
| Convertible debt | ||||
| Total | ||||
The Company complies with
accounting and disclosure requirements of ASC 260 “Earnings Per Share.” The statements of operations include a presentation
of loss per redeemable share and loss per non-redeemable share following the two-class method of loss per share. In order to determine
the net loss attributable to both the redeemable shares and non-redeemable shares, the Company first considered the total loss allocable
to both sets of shares. This is calculated using the total net loss less any dividends paid. For purposes of calculating net loss per
share, any remeasurement of the ordinary shares subject to possible redemption was considered to be dividends paid to the public shareholders.
Subsequent to calculating the total loss allocable to both sets of shares, the Company split the amount to be allocated using a ratio
of
The earnings per share presented in the statements of operations is based on the following:
| For the Three Months Ended June 30, 2022 | ||||
| Net loss | $ | ( | ) | |
| Accretion of temporary equity to redemption value | ( | ) | ||
| Net loss including accretion of temporary equity to redemption value | $ | ( | ) | |
| Common Shares Subject to Redemption | Non-redeemable Common Shares | |||||||
| Basic and diluted net income (loss) per share: | ||||||||
| Numerator: | ||||||||
| Allocation of net loss including accretion of temporary equity | $ | ( | ) | $ | ( | ) | ||
| Accretion of temporary equity to redemption value | ||||||||
| Allocation of net loss | $ | ( | ) | $ | ( | ) | ||
| Denominator: | ||||||||
| Weighted-average shares outstanding | ||||||||
| $ | ( | ) | $ | ( | ) | |||
| For the Six Months Ended June 30, 2022 | ||||
| Net loss | $ | ( | ) | |
| Accretion of temporary equity to redemption value | ( | ) | ||
| Net loss including accretion of temporary equity to redemption value | $ | ( | ) | |
13
| Common Shares Subject to Redemption | Non-redeemable Common Shares | |||||||
| Basic and diluted net income (loss) per share: | ||||||||
| Numerator: | ||||||||
| Allocation of net loss including accretion of temporary equity | $ | ( | ) | $ | ( | ) | ||
| Accretion of temporary equity to redemption value | ||||||||
| Allocation of net loss | $ | ( | ) | $ | ( | ) | ||
| Denominator: | ||||||||
| Weighted-average shares outstanding | ||||||||
| $ | ( | ) | $ | ( | ) | |||
| For the Three Months Ended June 30, 2021 | ||||
| Non-redeemable Common Shares | ||||
| Basic and diluted net income (loss) per share: | ||||
| Numerator: | ||||
| Net loss | $ | ( | ) | |
| Denominator: | ||||
| Weighted-average shares outstanding | ||||
| Basic and diluted net loss per share | $ | ( | ) | |
| For the Period March 18, 2021 (Inception) Through June 30, 2021 | ||||
| Non-redeemable Common Shares | ||||
| Basic and diluted net income (loss) per share: | ||||
| Numerator: | ||||
| Net loss | $ | ( | ) | |
| Denominator: | ||||
| Weighted-average shares outstanding | ||||
| Basic and diluted net loss per share | $ | ( | ) | |
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s unaudited financial statements.
NOTE 3 — INITIAL PUBLIC OFFERING
On August 12, 2021, the Company
consummated its Initial Public Offering of
Simultaneously with the consummation
of the closing of the Initial Public Offering, the Company completed the private sale of
On August 19, 2021, the underwriters
notified the Company of their intent to exercise of the over-allotment option in part and, on August 23, 2021, the underwriters purchased
Since the underwriters did
not exercise their over-allotment option in full,
14
We intend to use substantially
all of the net proceeds of the Initial Public Offering, including the funds held in the trust account, in connection with our Initial
Business Combination and to pay our expenses relating thereto, including a deferred underwriting commission payable to the underwriters
in an amount equal to
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.
NOTE 4 — RELATED PARTY TRANSACTIONS
Sponsor Shares
On April 12, 2021, the Company’s sponsor, Abri Ventures I, LLC (the “Sponsor”) purchased 1,437,500 shares (the “Founder Shares”) of the Company’s common stock for an aggregate price of $25,000.
Private Units
On
August 12, 2021, our Sponsor purchased an aggregate of
Subscription Agreement Amendment
On April 13, 2022, the Company and the Sponsor entered into an amendment (the “Subscription Agreement Amendment”) to the Private Placement Unit Subscription Agreement, dated August 9, 2021 by and between the Company and the Sponsor (the “Subscription Agreement”) in connection with the Company’s Initial Public Offering (see Note 3). Section 10.3 of the subscription Agreement provides the ability to amend the Subscription Agreement if signed by all parties thereto. The Subscription Agreement was executed solely to clarify that the lock-up period for the Private Units extends to 30 days after the completion of the Initial Business Combination.
Promissory Note - Related Party
On
April 20, 2021, the Company entered a promissory note with its Sponsor for principal amount received of $
15
Convertible Promissory Notes — Related Party
On March 8, 2022, the Company entered a convertible promissory note
with its Sponsor for principal amount received of $
On April 4, 2022, the Company entered a convertible promissory with its Sponsor of principal amount received of $500,000 to be used for operating expenses. The note was non-interest bearing, unsecured and payable on the date the Company consummates a Business Combination. In the event that a Business Combination did not close prior to August 12, 2022 (or up to February 12, 2023, if the period of time to consummate a business combination is extended) the note shall be deemed terminated and no amounts will be owed. At any time, up to a day prior to the closing of a business combination, the holder may convert the principal amount into private units of the Company at a conversion price of $10.00 per unit. As of June 30, 2022, there was $500,000 outstanding under the note.
Administrative and Support Services
The Company entered into an
administrative services agreement pursuant to which the Company pays the Sponsor a total of $
NOTE 5 — COMMITMENTS AND CONTINGENCIES
Merger Agreement and Termination
On January 27, 2022, the Company entered into a Merger Agreement (the “Merger Agreement”) by and among Apifiny Group Inc., a Delaware corporation (“Apifiny”), the Company, Abri Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”), Erez Simha, solely in his capacity as representative, agent and attorney-in-fact of the Apifiny security holders, and the Sponsor, solely in its capacity as representative, agent and attorney-in-fact of the Indemnified Party (as defined in the Merger Agreement) (collectively, the “Parties”).
On July 22, 2022, the Parties entered into a termination of merger letter agreement (the “Termination Agreement”). Pursuant to the Termination Agreement, the Parties agreed to mutually terminate the Merger Agreement, subject to the representations, warranties, conditions and covenants set forth in the Termination Agreement. In conjunction with the termination of the Merger Agreement, the Additional Agreements (as defined in the Merger Agreement) (including the Parent and Company Stockholder Support Agreements) have also been terminated in accordance with their respective terms as of July 22, 2022, the Termination Date.
The Termination Agreement contains mutual releases by all parties thereto, for all claims known and unknown, relating and arising out of, or relating to, among other things, the Merger Agreement, or the transactions contemplated by the Merger Agreement, subject to certain exceptions with respect to claims for indemnity or contribution.
If the Company has not consummated an initial business combination
by August 9, 2022 (12 months after consummation of the initial public offering, the “IPO”), or up to February 9, 2023 (18
months after the consummation of the IPO if the time-period is extended, as described herein), the Company will be required to dissolve
and liquidate. If the Company anticipates that it may not be able to consummate its initial business combination on or before August 9,
2022, the Company may, but is not obligated to, extend the period of time to consummate a business combination, for another two times
by an additional three months each time through February 9, 2023 (for a total of up to 18 months to complete a business combination)
pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation and the Investment Management Trust Agreement
entered into between the Company and Continental Stock Transfer & Trust Company, the trustee. On August 5, 2022, the Company deposited
$
16
Registration Rights
The holders of the Founder
Shares are entitled to registration rights pursuant to a registration rights agreement that was signed as of the effective date of the
Initial Public Offering. The holders of the majority of these securities are entitled to make up to three demands that the Company register
such securities. The holders of the majority of the Founder Shares can elect to exercise these registration rights at any time commencing
three months prior to the date on which the Founder Shares are to be released from escrow. In addition, the holders have certain “piggy-back”
registration rights with respect to registration statements filed subsequent to our consummation of our Initial Business Combination.
The holders of the Founder Shares have agreed not to transfer, assign or sell any of the such shares (except to certain permitted transferees)
until, with respect to
Unit Purchase Option
We sold to the underwriters,
for $
On August 12, 2021, the Company
accounted for the unit purchase option, inclusive of the receipt of $
17
NOTE 6 — STOCKHOLDERS’ EQUITY
Common Stock
The Company is authorized
to issue an aggregate of
Authorized Stock
Upon the effectiveness of
the Company’s registration statement on August 9, 2021, the Company amended and restated its certificate of incorporation to authorize
the issuance of up to
Public and Private Warrants
Each whole warrant entitles
the registered holder to purchase one common stock at a price of $
No public warrants will be exercisable for cash unless we have an effective and current registration statement covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to such shares. It is our current intention to have an effective and current registration statement covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to such shares in effect promptly following consummation of an Initial Business Combination. Notwithstanding the foregoing, if a registration statement covering the shares of common stock issuable upon exercise of the public warrants is not effective within 90 days following the consummation of our Initial Business Combination, public 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.
We may redeem the outstanding warrants, in whole and not in part, at a price of $0.01 per warrant:
| ● | at any time while the warrants are exercisable; |
| ● | upon a minimum of 30 days’ prior written notice of redemption; |
| ● | if, and only if, the last sales price of our shares of common stock equals or exceeds $16.50 per share for any 20 trading days within a 30-trading day period ending three business days before we send the notice of redemption; and |
18
If the foregoing conditions
are satisfied and we issue a notice of redemption, each warrant holder can exercise his, her or its warrant prior to the scheduled redemption
date. However, the price of the shares of common stock may fall below the $
The redemption criteria for our warrants have been established at a price which is intended to provide warrant holders a reasonable premium to the initial exercise price and provide a sufficient differential between the then-prevailing share price and the warrant exercise price so that if the share price declines as a result of our redemption call, the redemption will not cause the share price to drop below the exercise price of the warrants.
If we call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.” 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 shares of 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. Whether we will exercise our option to require all holders to exercise their warrants on a “cashless basis” will depend on a variety of factors including the price of our shares of common stock at the time the warrants are called for redemption, our cash needs at such time and concerns regarding dilutive share issuances.
Common Stock Subject to Redemption
The Company’s common
stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence
of future events. The Company is authorized to issue
The common stock subject to possible redemption reflected on the balance sheet is reconciled in the following table:
| Gross proceeds from Initial Public Offering | $ | |||
| Less: | ||||
| Fair Value of Public Warrants at Issuance | ( | ) | ||
| Offering Costs allocated to common stock subject to possible redemption | ( | ) | ||
| Plus: | ||||
| Accretion of common stock subject to possible redemption amount | ||||
| Common stock subject to possible redemption | $ |
During the three and six months
ended June 30, 2022, there was accretion cost recorded in the statement of stockholders’ equity of $
19
NOTE 7 — WARRANTS
On August 12, 2021, the Company
consummated its Initial Public Offering of
Simultaneously with the consummation
of the closing of the Initial Public Offering, the Company completed the private sale of
Upon consummation of our Initial
Public Offering, we sold to the underwriters, for $
On August 19, 2021, the underwriters
notified the Company of their intent to exercise of the over-allotment option in part and, on August 23, 2021, the underwriters purchased
On April 13, 2022, the Company and Continental Stock Transfer & Trust Company (the “Warrant Agent”), entered into a supplement (the “Supplement to Warrant Agreement”) to the Warrant Agreement, dated as of August 9, 2021 by and between the Company and the Warrant Agent in connection with the Company’s Initial Public Offering (see Note 3). The Supplement to Warrant Agreement is being made pursuant to Section 9.8 of the Warrant Agreement which states the Warrant Agreement may be amended by the parties thereto by executing a supplemental warrant agreement without the consent of any of the warrant holders. The Supplement to Warrant Agreement is being executed solely to correct an ambiguity provision contained in Section 2.5 of the Warrant Agreement to clarify that the lock-up period for the Private Warrants extends to 30 days after the completion of the Company’s Initial Business Combination.
Each Private Unit, Additional Unit and Additional Private Unit are identical to the Unit from our Initial Public Offering except as described below.
The Sponsor has agreed to
waive its redemption rights with respect to any shares underlying the Private Units
20
The Private Units and their component securities will not be transferable, assignable or salable until 30 days after the consummation of our Initial Business Combination except to permitted transferees.
The Company evaluated the Public and Private Warrants as either equity-classified or liability-classified instruments based on an assessment of the warrants’ specific terms and ASC 480 and ASC 815. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. Pursuant to such evaluation, the Company further evaluated the Public and Private Warrants under ASC 815-40, Derivatives and Hedging — Contracts in Entity’s Own Equity, and concluded that the Private Warrants do not meet the criteria to be classified in stockholders’ equity (deficit).
Certain adjustments to the settlement amount of the Private warrants are based on a variable that is not an input to the fair value of an option as defined under ASC 815 — 40, and thus the warrants are not considered indexed to the Company’s own stock and not eligible for an exception from derivative accounting. The accounting treatment of derivative financial instruments requires that the Company record a derivative liability upon issuance of the warrants at the closing of the Initial Public Offering. Accordingly, the Company expects to classify each Private Warrant as a liability at its fair value, with subsequent changes in their respective fair values recognized in the statements of operations and comprehensive income (loss) at each reporting date.
The Company accounts for the
Public Warrants as equity based on its initial evaluation that the Public Warrants are indexed to the Company’s own stock. The fair
value of the Public Warrants was approximately $
NOTE 8 — FAIR VALUE MEASUREMENTS
The Company carries cash equivalents, marketable investments, Private Warrants, at fair value. Fair value is based on the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement.
The Company determined the fair value of its Level 1 financial instruments, which are traded in active markets, using quoted market prices for identical instruments. The Company’s Cash held in Trust Account is classified within Level 1 of the fair value hierarchy.
The Company’s warrant liability has been valued as Level 3 instruments.
The estimated fair value of the Private Warrants is determined using Level 3 inputs. Inherent in a Black-Scholes pricing model are assumptions related to dividend yield, term, volatility and risk-free rate. The Company estimates the volatility of its common shares based on management’s understanding of the volatility associated with instruments of other similar entities. The risk-free interest rate is based on the U.S. Treasury rate matching the expected term of the warrants. The expected life of the warrants is simulated based on management assumptions regarding the timing and likelihood of completing our Initial Business Combination. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero.
21
The fair value of the Private
Warrants from the private placement that closed simultaneously with the closing of the Initial Public Offering was approximately $
Transfers to/from Levels 1, 2, and 3 are recognized at the beginning of the reporting period. During the period ended December 31, 2021, the Public Warrants began trading separately on September 7, 2021 at the option of the holder. The Company transferred the Private Warrants from Level 3 to Level 2 during the three months ended June 30, 2022, as the inputs significant to the valuation became observable as they are benchmarked to those used for the Public Warrants.
The following table presents information about the transfer to/from Levels 1, 2, and 3 within the fair value hierarchy:
| Warrant liabilities | Total Level 3 Financial Instruments | |||||||
| Level 3 financial instruments as of December 31, 2021 | $ | $ | ||||||
| Change in fair value | ( | ) | ( | ) | ||||
| Level 3 financial instruments as of March 31, 2022 | ||||||||
| Change in fair value | ( | ) | ( | ) | ||||
| Transfer to Level 2 | ( | ) | ( | ) | ||||
| Level 3 financial instruments as of June 30, 2022 | $ | $ | ||||||
The following table presents information about the Company’s assets that are measured at fair value on a recurring basis at June 30, 2022 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
| Fair value measurements at reporting date using: | ||||||||||||||||
| Description | Fair Value | Quoted prices in active markets for identical liabilities (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||
| Assets: | ||||||||||||||||
| Cash | $ | $ | $ | $ | ||||||||||||
| Cash held in Trust Account – U.S. Money Market | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Warrant liabilities | $ | $ | $ | $ | - | |||||||||||
The following table presents information about the Company’s assets that are measured at fair value on a recurring basis at December 31, 2021 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
| Fair value measurements at reporting date using: | ||||||||||||||||
| Description | Fair Value | Quoted prices in active markets for identical liabilities (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||
| Assets: | ||||||||||||||||
| Cash | $ | $ | $ | $ | ||||||||||||
| Cash held in Trust Account – U.S. Money Market | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Warrant liabilities | $ | $ | $ | $ | ||||||||||||
22
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.
NOTE 9 — SUBSEQUENT EVENTS
Management evaluated subsequent events and transactions that occurred after the balance sheet date, up to the date that the unaudited financial statements were issued. Based upon this review management did not identify any subsequent events, except for those disclosed below, that would have required adjustment or disclosure in the unaudited financial statements.
On July 22, 2022, the Parties entered into a termination of merger letter agreement (the “Termination Agreement”). Pursuant to the Termination Agreement, the Parties agreed to mutually terminate the Merger Agreement, subject to the representations, warranties, conditions and covenants set forth in the Termination Agreement. In conjunction with the termination of the Merger Agreement, the Additional Agreements (as defined in the Merger Agreement) (including the Parent and Company Stockholder Support Agreements) have also been terminated in accordance with their respective terms as of July 22, 2022, the Termination Date (see Note 5).
On August 5, 2022, the Company
deposited $
23
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this report (this “Quarterly Report”) to “we,” “us” or the “Company” refer to Abri SPAC I, Inc. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Abri Ventures I, LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s final prospectus for its Initial Public Offering (as defined below) filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s filings with the SEC can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated on March 18, 2021 as a Delaware corporation and formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar Business Combination with one or more businesses or initial public offering and the sale of the Private Placement Units, our capital stock, debt or a combination of cash, stock and debt.
As of June 30, 2022, and the date of this filing, the Company had not commenced core operations. All activity for the period from March 18, 2021 (inception) through June 30, 2022 relates to the Company’s formation and raising funds through its initial public offering (“Initial Public Offering”), which is described in Note 3 – Initial Public Offering in Item 1 of this Quarterly Report. The Company will not generate any operating revenues until after the completion of the Initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.
The outbreak of the COVID-19 coronavirus has resulted in a widespread health crisis that has adversely affected the economies and financial markets worldwide, and potential target companies may defer or end discussions for a potential business combination with us whether or not COVID-19 affects their business operations. The extent to which COVID-19 impacts our search for a business combination will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. We may be unable to complete a business combination if continued concerns relating to COVID-19 restrict travel, limiting our ability to conduct meetings to negotiate and consummate transactions in a timely manner with potential investors, target company’s personnel, or vendors and services providers.
Management continues to evaluate the impact of the COVID-19 pandemic and Russia-Ukraine war on the industry and has concluded that, while it is reasonably possible that such could have negative effects on the Company’s financial position, results of its operations, and/or search for a target company, the specific impacts are not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
24
On August 12, 2021, simultaneously with the consummation of the Initial Public Offering, we sold to our Sponsor in a Private Placement, 276,250 Private Units at a purchase price of $10.00 per Private Unit, generating gross proceeds to the Company of $2,762,500. The Private Units are identical to the Public Units.
On August 19, 2021, the underwriters notified the Company of their intent to exercise of the over-allotment option in part and, on August 23, 2021, the underwriters purchased 733,920 additional Units (the “Additional Units”) at $10.00 per Additional Unit upon the closing of the over-allotment option, generating additional gross proceeds of $7,339,200. On August 23, 2021, simultaneously with the sale of the Additional Units, the Company consummated the sale of an additional 18,348 Private Units at $10.00 per additional Private Unit (the “Additional Private Units”), generating additional gross proceeds of $183,480. A total of $7,339,200 of the net proceeds from the sale of the Additional Units and the Additional Private Units was deposited in the Trust Account, bringing the aggregate proceeds held in the Trust Account on that date to $57,339,200.
On January 27, 2022, the Company, entered into a Merger Agreement (the “Merger Agreement”) by and among Apifiny Group Inc., a Delaware corporation (“Apifiny”), the Company, Abri Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”), Erez Simha, solely in his capacity as representative, agent and attorney-in-fact of the Apifiny security holders, and the Sponsor, solely in its capacity as representative, agent and attorney-in-fact of the Indemnified Party (as defined in the Merger Agreement) (collectively, the “Parties”). Pursuant to the terms of the Merger Agreement, a business combination between Abri and Apifiny will be effected through the merger of Merger Sub with and into Apifiny, with Apifiny surviving the merger as a wholly owned subsidiary of the Company (the “Merger”).
On July 22, 2022, the Parties entered into a termination of merger letter agreement (the “Termination Agreement”). Pursuant to the Termination Agreement, the Parties agreed to mutually terminate the Merger Agreement, subject to the representations, warranties, conditions and covenants set forth in the Termination Agreement. In conjunction with the termination of the Merger Agreement, the Additional Agreements (as defined in the Merger Agreement) (including the Parent and Company Stockholder Support Agreements) have also been terminated in accordance with their respective terms as of July 22, 2022, the Termination Date.
The Termination Agreement contains mutual releases by all parties thereto, for all claims known and unknown, relating and arising out of, or relating to, among other things, the Merger Agreement, or the transactions contemplated by the Merger Agreement, subject to certain exceptions with respect to claims for indemnity or contribution.
If the Company has not consummated an initial business combination by August 9, 2022 (12 months after consummation of the initial public offering, the “IPO”), or up to February 9, 2023 (18 months after the consummation of the IPO if the time-period is extended, as described herein), the Company will be required to dissolve and liquidate. If the Company anticipates that it may not be able to consummate its initial business combination on or before August 9, 2022, the Company may, but is not obligated to, extend the period of time to consummate a business combination, for another two times by an additional three months each time through February 9, 2023 (for a total of up to 18 months to complete a business combination) pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation and the Investment Management Trust Agreement entered into between the Company and Continental Stock Transfer & Trust Company, the trustee. On August 5, 2022, the Company deposited $573,392 into the Trust Account to extend the time to complete its Initial Business Combination for an additional three months, or until November 12, 2022.
25
Results of Operations
All activities for the three and six months ended June 30, 2022 were related to the Company’ organizational activities and identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our Business Combination. We generate non-operating income in the form of interest income on cash held in the Trust Account. We are incurring expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the six months ended June 30, 2022, we had net loss of $1,709,339, which consisted of operating costs of $1,900,314, offset by interest income on cash held in the Trust Account of $81,973 and a change in fair value of warrant liability of $109,002.
For the three months ended June 30, 2022, we had net loss of $386,732, which consisted of operating costs of $504,605, offset by interest income on cash held in the Trust Account of $76,629 and a change in fair value of warrant liability of $41,244.
For the period from March 18, 2021 (Inception) through June 30, 2021, we had a net loss of $31,434, which consisted mainly of legal and professional fees for our formation costs.
For the three months ended June 30, 2021, we had a net loss of $30,939, which consisted mainly of legal and professional fees for our formation costs.
Going Concern
As of June 30, 2022, we had cash of $156,755 and a working capital deficit of $1,273,123. Our liquidity needs prior to the consummation of our Initial Public Offering had been satisfied through proceeds from notes payable and advances from related party and from the issuance of common stock. Subsequent to the consummation of our Initial Public Offering, we expect that we will need additional capital to satisfy our liquidity needs beyond the net proceeds from the consummation of our Initial Public Offering and the proceeds held outside of the Trust Account for paying existing accounts payable, identifying and evaluating prospective business combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating an Initial Business Combination. Although certain of our initial stockholders, officers and directors or their affiliates have committed to loan us funds from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, there is no guarantee that we will receive such funds.
26
The Company has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans. The Company lacks the financial resources it needs to sustain operations for a reasonable period of time, which is considered to be one year from the issuance date of the financial statements. Although no formal agreement exists, the Sponsor is committed to extend working capital loans as needed. The Company cannot assure stockholders that its plans to consummate an initial business combination will be successful. In addition, management is currently evaluating the impact of the COVID-19 pandemic and the Russia-Ukraine war and its effect on the Company’s financial position, results of its operations and/or search for a target company.
These factors, among others, raise substantial doubt about our ability to continue as a going concern one year from the date of these financial statements are issued. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities other than an agreement to pay our Sponsor a monthly fee of $10,000 for office space, utilities and secretarial and administrative support. We began incurring these fees on August 9, 2021 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination and our liquidation.
In connection with our Initial Business Combination, we are obligated to pay our expenses relating thereto, including the deferred underwriting commission payable to our underwriter in an amount equal to 3.0% of the total gross proceeds raised in the offering, or $1,500,000, upon consummation of our Initial Business Combination.
Upon consummation of our Initial Public Offering, we sold to our underwriters, for $100, an option to purchase up to a total of 300,000 units (or up to 345,000 if the over-allotment is exercised in full) exercisable, in whole or in part, at $11.50 per unit, commencing on the consummation of our Initial Business Combination. The purchase option may be exercised for cash or on a cashless basis, at the holder’s option, and expires five years from the commencement of sales in our Initial Public Offering. The option and the 300,000 units, as well as the 300,000 shares of common stock, and the warrants to purchase 300,000 shares of common stock that may be issued upon exercise of the option have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following the effective date of our registration statement, or August 9, 2021.
Critical Accounting Estimates
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 periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting estimates:
Derivative Warrant Liabilities
We will account for warrants for shares of the Company’s common stock that are not indexed to our own stock as liabilities at fair value on the balance sheet in accordance with ASC 815-40. Such warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized as a component of other income (expense), net on the statements of operations. We will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of any warrants.
Recent Accounting Standards
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.
27
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company we are not required to make disclosures under this Item.
ITEM 4. Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended June 30, 2022, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial officer has concluded that during the period covered by this report, our disclosure controls and procedures were effective.
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
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.
28
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
None.
ITEM 1A. Risk Factors
As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K filed with the SEC on February 4, 2022, except for those included below. Any of those risk factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
As the number of special purpose acquisition companies increases, there may be more competition to find an attractive target for an initial business combination. This could increase the costs associated with completing our initial business combination and may result in our inability to find a suitable target for our initial business combination.
In recent years, the number of special purpose acquisition companies that have been formed has increased substantially. Many companies have entered into business combinations with special purpose acquisition companies, and there are still many special purpose acquisition companies seeking targets for their initial business combination, as well as many additional special purpose acquisition companies currently in registration. As a result, at times, fewer attractive targets may be available, and it may require more time, effort and resources to identify a suitable target for an initial business combination.
In addition, because there are more special purpose acquisition companies seeking to enter into an initial business combination with available targets, the competition for available targets with attractive fundamentals or business models may increase, which could cause target companies to demand improved financial terms. Attractive deals could also become scarcer for other reasons, such as economic or industry sector downturns, geopolitical tensions or increases in the cost of additional capital needed to close business combinations or operate targets post-business combination. In addition, escalating tensions between Russia and Ukraine and any continuing military incursion of Russia into Ukraine could adversely impact macroeconomic conditions, give rise to regional instability and result in heightened economic sanctions from the U.S. and the international community in a manner that adversely affects us and our ability to consummate our initial business combination. This could increase the cost of, delay or otherwise complicate or frustrate our ability to find a suitable target for and/or complete our initial business combination.
Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial business combination, investments and results of operations.
We are subject to laws and regulations enacted by national, regional and local governments. In particular, we are required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, including our ability to negotiate and complete our Business Combination, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business and results of operations. On March 30, 2022, the SEC issued proposed rules relating to, among other items, enhancing disclosures in business combination transactions involving SPACs and private operating companies; amending the financial statement requirements applicable to transactions involving shell companies; effectively limiting the use of projections in SEC filings in connection with proposed business combination transactions; increasing the potential liability of certain participants in proposed business combination transactions; and the extent to which SPACs could become subject to regulation under the Investment Company Act of 1940. These rules, if adopted, whether in the form proposed or in revised form, and certain positions and legal conclusions expressed by the SEC in connection therewith may materially adversely affect our ability to negotiate and complete our Business Combination and may increase the costs and time related thereto.
29
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
Simultaneously with the closing of our Initial Public Offering, we consummated a Private Placement with our Sponsor of 276,250 Private Units at a price of $10.00 per Private Unit, generating total proceeds of $2,762,500. As of August 12, 2021, a total of $50,000,000 of the net proceeds from the Initial Public Offering and the Private Placement were deposited in a trust account established for the benefit of the Company’s public stockholders.
On August 19, 2021, the underwriters partially exercised the over-allotment option, and the closing of the sale of the additional Units pursuant to the over-allotment option occurred on August 23, 2021. The issuance by us of 73,920 over-allotment option units at a price of $10.00 per unit resulted in gross proceeds of $7,339,200. Additionally, our Sponsor purchased 18,348 Private Units generating gross proceeds of $183,480. Since the underwriters did not exercise their over-allotment option in full, 4,020 shares of common stock issued to our Sponsor prior to the Initial Public Offering and the Private Placement, were forfeited for no consideration. As of that date, a total of $57,339,200 of the net proceeds from our Initial Public Offering and the Private Placement were deposited in a trust account established for the benefit of the Company’s public stockholders.
We intend to use substantially all of the net proceeds of the Initial Public Offering, including the funds held in the Trust Account, in connection with our Initial Business Combination and to pay our expenses relating thereto, including a deferred underwriting commission payable to the underwriters in an amount equal to 3.0% of the total gross proceeds raised in the Initial Public Offering upon consummation of our Initial Business Combination. To the extent that our capital stock is used in whole or in part as consideration to effect our Initial Business Combination, the remaining proceeds held in the trust account, as well as any other net proceeds not expended, 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 Initial Business Combination if the funds available to us outside of the trust account were insufficient to cover such expenses.
We paid a total of $1,250,000 in underwriting discounts and commissions and $512,500 for other costs and expenses related to our Initial Public Offering.
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.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Mine Safety Disclosures
Not applicable.
ITEM 5. Other Information
None.
30
ITEM 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report:
| * | Filed herewith. |
| ** | Furnished herewith. This certification is being furnished solely to accompany this report pursuant to 18 U.S.C. Section 1350 and is not being filed for purposes of Section 18 of the Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filings of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. |
31
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ABRI SPAC I, INC. | ||
| Date: August 15, 2022 | By: | /s/ Jeffrey Tirman |
| Jeffrey Tirman | ||
| Chief Executive Officer (Principal Executive Officer) | ||
| Date: August 15, 2022 | By: | /s/ Christopher Hardt |
| Christopher Hardt | ||
|
Chief Financial Officer (Principal Financial and Accounting Officer) | ||
32