UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from___to___

Commission File No. 001-39735

PROGRESS ACQUISITION CORP.

(Exact name of registrant as specified in its charter)

Delaware		85-3303412
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

10 Winthrop Square 6th Floor

Boston, MA 02110

(Address of Principal Executive Offices, including zip code)

(617) 401-2700

(Registrant’s telephone number, including area code)

50 Milk Street, 16^th Floor
Boston, MA, 02109

(Former name, former address and former fiscal year, if changed since last report)

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 Class A Common Stock and one-half of one Redeemable Warrant	PGRWU	The Nasdaq Stock Market LLC
Class A Common Stock, par value $0.0001 per share	PGRW	The Nasdaq Stock Market LLC
Redeemable Warrants, each whole warrant exercisable for one share of Class A Common Stock at an exercise price of $11.50	PGRWW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 ☒ No ☐

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). Yes ☒ No ☐

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
	☒ Non-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 ☒ No ☐

As of November 21, 2022, there were 958,188 shares of Class A common stock, par value $0.0001 per share, and 4,312,500 shares of Class B common stock, par value $0.0001 per share, of the registrant issued and outstanding.

PROGRESS ACQUISITION CORP.

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2022

TABLE OF CONTENTS

		Page
PART 1 - FINANCIAL INFORMATION		1

Item 1.	Financial Statements	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	29

Item 4.	Control and Procedures	29

PART II - OTHER INFORMATION		30

Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 3.	Defaults Upon Senior Securities.	31

Item 4.	Mine Safety Disclosures	31

Item 5.	Other Information	31

Item 6.	Exhibits	31

SIGNATURES		32

PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements

PROGRESS ACQUISITION CORP.
CONDENSED BALANCE SHEETS

	September 30, 2022			December 31, 2021
	(Unaudited)
Assets
Cash	$	21,078		$	111,312
Prepaid expenses		107,786			250,000
Total current assets		128,864			361,312
Prepaid expenses, non-current		—			27,397
Money market funds held in Trust Account		173,237,830			172,512,282
Total Assets	$	173,366,694		$	172,900,991

Liabilities, Class A Common Stock Subject to Possible Redemption, and Stockholders’ Deficit
Current liabilities:
Accounts payable and accrued expenses	$	290,091		$	379,718
Income tax payable		127,817			—
Convertible promissory notes		11,622			—
Due to related party		—			5,634
Total current liabilities		429,530			385,352
Warrant liability		443,514			2,309,416
Deferred underwriting discount		250,000			250,000
Total liabilities		1,123,044			2,944,768

Commitments and Contingencies (Note 7)
Class A common stock subject to possible redemption, 17,250,000 shares at redemption value as of September 30, 2022 and December 31, 2021		172,959,563			172,512,282

Stockholders’ Deficit
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding		—			—
Class A common stock, $0.0001 par value; 100,000,000 shares authorized; 150,000 shares issued and outstanding (excluding 17,250,000 shares subject to possible redemption) as of September 30, 2022 and December 31, 2021		15			15
Class B common stock, $0.0001 par value; 10,000,000 shares authorized; 4,312,500 shares issued and outstanding as of September 30, 2022 and December 31, 2021		431			431
Additional paid-in capital		1,472,806			—
Accumulated deficit		(2,189,165	)		(2,556,505	)
Total Stockholders’ Deficit		(715,913	)		(2,556,059	)
Total Liabilities, Class A Common Stock Subject to Possible Redemption, and Stockholders’ Deficit	$	173,366,694		$	172,900,991

The accompanying notes are an integral part of these unaudited condensed financial statements.

PROGRESS ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2022			2021			2022			2021
Operating costs	$	860,670		$	270,269		$	2,341,969		$	665,729
Loss from operations		(860,670	)		(270,269	)		(2,341,969	)		(665,729	)

Other income (expense)
Interest and dividend earned on money market funds held in Trust Account		758,630			3,545			946,819			7,995
Fair value exceeding amount paid for warrants		—			—			—			(1,318,351	)
Unrealized (loss) gain on change in fair value of convertible promissory notes		(51	)		—			12,123			—
Unrealized gain on change in fair value of warrants		84,925			742,478			1,865,902			3,052,923
Total other income, net		843,504			746,023			2,824,844			1,742,567

(Loss) income before income tax provision		(17,166	)		475,754			482,875			1,076,838
Income tax provision		(127,817	)		—			(127,817	)		—
Net (loss) income	$	(144,983	)	$	475,754		$	355,058		$	1,076,838

Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption		17,250,000			17,250,000			17,250,000			14,505,495
Basic and diluted net (loss) income per Class A share - redeemable	$	(0.01	)	$	0.02		$	0.02		$	0.06
Basic and diluted weighted average shares outstanding, Class A and Class B common stock – non-redeemable		4,462,500			4,462,500			4,462,500			4,353,297
Basic and diluted net (loss) income per Class A and Class B share – non-redeemable	$	(0.01	)	$	0.02		$	0.02		$	0.06

The accompanying notes are an integral part of these unaudited condensed financial statements.

PROGRESS ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022

	Class A Common Stock				Class B Common Stock				Additional Paid-in			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital			Deficit			Deficit
Balance as of December 31, 2021		150,000	$	15		4,312,500	$	431	$	—		$	(2,556,505	)	$	(2,556,059	)
Remeasurement of Class A common stock to redemption value		—		—		—		—		—			12,282			12,282
Net income		—		—		—		—		—			981,486			981,486
Balance as of March 31, 2022		150,000	$	15		4,312,500	$	431	$	—		$	(1,562,737	)	$	(1,562,291	)
Proceeds of convertible promissory notes over fair value		—		—		—		—		291,219			—			291,219
Share-based compensation		—		—		—		—		995,294			—			995,294
Net loss		—		—		—		—		—			(481,445	)		(481,445	)
Balance as of June 30, 2022		150,000	$	15		4,312,500	$	431	$	1,286,513		$	(2,044,182	)	$	(757,223	)
Proceeds of convertible promissory notes over fair value		—		—		—		—		95,036			—			95,036
Share-based compensation		—		—		—		—		550,820			—			550,820
Remeasurement of Class A common stock to redemption value		—		—		—		—		(459,563	)		—			(459,563	)
Net loss		—		—		—		—		—			(144,983	)		(144,983	)
Balance as of September 30, 2022		150,000	$	15		4,312,500	$	431	$	1,472,806		$	(2,189,165	)	$	(715,913	)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021

	Class A Common Stock				Class B Common Stock				Additional Paid-in			Accumulated			Total Stockholders’ Equity
	Shares		Amount		Shares		Amount		Capital			Deficit			(Deficit)
Balance as of December 31, 2020		150,000	$	15		4,312,500	$	431	$	24,554		$	(2,579	)	$	22,421
Proceeds allocated to Public Warrants		—		—		—		—		10,753,651			—			10,753,651
Offering costs allocated to Public Warrants		—		—		—		—		(244,820	)		—			(244,820	)
Remeasurement of Class A common stock to redemption value		—		—		—		—		(10,533,385	)		(3,903,139	)		(14,436,524	)
Net income		—		—		—		—		—			1,982,959			1,982,959
Balance as of March 31, 2021		150,000	$	15		4,312,500	$	431	$	—		$	(1,922,759	)	$	(1,922,313	)
Remeasurement of Class A common stock to redemption value		—		—		—		—		—			(3,926	)		(3,926	)
Net loss		—		—		—		—		—			(1,381,875	)		(1,381,875	)
Balance as of June 30, 2021		150,000	$	15		4,312,500	$	431	$	—		$	(3,308,560	)	$	(3,308,114	)
Remeasurement of Class A common stock to redemption value		—		—		—		—		—			(3,545	)		(3,545	)
Net income		—		—		—		—		—			475,754			475,754
Balance as of September 30, 2021		150,000	$	15		4,312,500	$	431	$	—		$	(2,836,351	)	$	(2,835,905	)

The accompanying notes are an integral part of these unaudited condensed financial statements.

PROGRESS ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS

	For the Nine Months Ended September 30,
	2022			2021
Cash flows from Operating Activities:
Net income	$	355,058		$	1,076,838
Adjustments to reconcile net income to net cash used in operating activities:
Fair value exceeding amount paid for warrants		—			1,318,351
Unrealized gain on change in fair value of convertible promissory notes		(12,123	)		—
Unrealized gain on change in fair value of warrants		(1,865,902	)		(3,052,923	)
Share-based compensation		1,546,114			—
Interest and dividend earned on money market funds held in Trust Account		(946,819	)		(7,995	)
Changes in current assets and current liabilities:
Prepaid expenses		169,611			(340,411	)
Income tax payable		127,817			—
Due to related party		(5,634	)		—
Accounts payable and accrued expenses		(89,627	)		279,239
Net cash used in operating activities		(721,505	)		(726,901	)

Cash Flows from Investing Activities:
Investment held in Trust Account		—			(172,500,000	)
Withdrawal of interest from Trust Account for franchise tax payment		221,271			—
Net cash provided by (used in) investing activities		221,271			(172,500,000	)

Cash flows from Financing Activities:
Proceeds from initial public offering, net of underwriters’ fees		—			147,000,000
Proceeds from over-allotment, net of underwriters’ fees		—			22,300,000
Proceeds from private placement		—			4,650,000
Proceeds from convertible promissory notes		410,000			—
Proceeds from issuance of promissory note to related party		—			85,700
Payment to promissory note to related party		—			(141,700	)
Payment of deferred offering costs		—			(477,169	)
Net cash provided by financing activities		410,000			173,416,831

Net change in cash		(90,234	)		189,930
Cash, beginning of the period		111,312			560
Cash, end of the period	$	21,078		$	190,490

Supplemental disclosure of non-cash activities
Deferred underwriting commissions charged to additional paid in capital	$	—		$	250,000
Initial value of Class A common stock subject to possible redemption	$	—		$	168,572,831
Remeasurement of Class A common stock to redemption value	$	447,281		$	3,935,164

The accompanying notes are an integral part of these unaudited condensed financial statements.

PROGRESS ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 1 — Organization, Business Operations and Going Concern

Organization and General

Progress Acquisition Corp. (the “Company”) was incorporated as a Delaware company on September 23, 2020. The Company was incorporated for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities (the “Business Combination”). The Company has not selected any specific Business Combination target and the Company has not, nor has anyone on its behalf, engaged in any substantive discussions, directly or indirectly, with any Business Combination target with respect to the Business Combination.

The Company has selected December 31 as its fiscal year end.

As of September 30, 2022, the Company had not commenced any operations. Significant activity for the period from September 23, 2020 (inception) through September 30, 2022, relates to the Company’s formation and the initial public offering (the “IPO”) described below, and, since the closing of the IPO, the search for a prospective initial 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 and dividend on cash and cash equivalents from the proceeds derived from the IPO and will recognize changes in the fair value of warrant liability as other income (expense).

The Company’s sponsor is Progress Capital I LLC, a Delaware limited liability company (the “Sponsor”).

Financing

The registration statement for the Company’s IPO was declared effective on February 8, 2021 (the “Effective Date”). On February 11, 2021, the Company consummated the IPO of 15,000,000 units, (the “Units” and, with respect to the shares of common stock included in the Units being offered, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $150,000,000, which is discussed in Note 3.

Simultaneously with the closing of the IPO, the Company consummated the sale of 4,450,000 Private Placement Warrants (the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to the Sponsor, generating total gross proceeds of $4,450,000.

Offering costs amounted to $3,477,169 consisting of $3,000,000 of underwriting discount and $477,169 of other offering costs.

The Company granted the underwriters in the IPO a 45-day option to purchase up to 2,250,000 additional Units to cover over-allotments, if any. On February 22, 2021, the underwriters exercised the over-allotment option in full to purchase 2,250,000 Units (the “Over-allotment Units”), generating an aggregate of gross proceeds of $22,500,000, and incurred $200,000 in cash underwriting fees and $250,000 in deferred underwriting fees.

Trust Account

Following the closing of the IPO on February 11, 2021, and the underwriters’ full exercise of over-allotment option on February 22, 2021, $172,500,000 ($10.00 per Unit) from the net proceeds of the sale of the Units and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”) maintained by Continental Stock Transfer & Trust Company, as trustee. The funds held in trust will be held as cash items or invested only in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 180 days or less, or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations. Except with respect to interest and dividend earned on the funds held in the Trust Account that may be released to the Company to pay its income or other tax obligations, the proceeds will not be released from the Trust Account until the earlier of the completion of a Business Combination or the redemption of 100% of the outstanding public shares if the Company has not completed a Business Combination within the Extended Combination Period (as defined below). The proceeds held in the Trust Account may be used as consideration to pay the sellers of a target business with which the Company completes a Business Combination. Any amounts not paid as consideration to the sellers of the target business may be used to finance operations of the target business.

On September 27, 2022, pursuant to the trust agreement dated as of February 8, 2021 between the Company and Continental Stock Transfer & Trust Company (“Continental”), the trustee of the Trust Account, the Company issued a request to Continental to withdraw $221,271 of interest income from the Trust Account for the payment of the Company’s taxes. The proceeds from this withdrawal were deposited into the Company’s operating bank account on September 28, 2022.

On October 27, 2022, the Company held a special meeting in lieu of the 2022 annual meeting of stockholders (the “Meeting”), at which the Company's stockholders approved the Extension Amendment (as defined below). At the Meeting, Stockholders holding 16,441,812 shares of common stock exercised their right to redeem such shares for a pro rata portion of the funds in the Company’s Trust Account. As a result, $165,347,999 (approximately $10.05 per share) was removed from the Trust Account to pay such holders.

As of a result of the approval of the Extension Amendment, the Sponsor has agreed to contribute to the Company a loan (the “Charter Extension Loan”) of $50,000 per month, for each calendar month (commencing on November 8, 2022 and on the 8th day of each subsequent month) until the Extended Date (as defined below) (each, an “Extension Period”), or portion thereof, that is needed to complete an initial Business Combination, for up to an aggregate of $300,000. Each Charter Extension Loan will be deposited in the Trust Account within five (5) business days from the beginning of such calendar month (or portion thereof).

On October 27, 2022, the Company filed an amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware (the “Extension Amendment”). The Extension Amendment extends the date by which the Company must consummate its initial business combination to May 8, 2023, or such earlier date as determined by our board of directors (the “Extended Date”) (the “Extended Combination Period”).

Initial Business Combination

The Company must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the value of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the interest and dividend earned on the Trust Account) at the time of the agreement to enter into the initial Business Combination. However, the Company will only complete a Business Combination if the post-transaction 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 1940, as amended (the “Investment Company Act”). There is no assurance that the Company will be able to complete a Business Combination successfully.

In connection with any proposed Business Combination, the Company will either (1) seek stockholder approval of the initial Business Combination at a meeting called for such purpose at which stockholders may seek to convert their shares, regardless of whether they vote for or against the proposed Business Combination or do not vote at all, into their pro rata share of the aggregate amount then on deposit in the Trust Account (net of taxes payable), or (2) provide its public stockholders with the opportunity to sell their shares to the Company by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the Trust Account (net of taxes payable).

The shares of common stock subject to redemption will be recorded at a redemption value and classified as temporary equity upon the completion of the IPO, in accordance with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case, the Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the issued and outstanding shares voted are voted in favor of the Business Combination.

The Company’s initial stockholders, officers and directors, and their affiliates have agreed (i) to vote any shares owned by them in favor of any proposed Business Combination, (ii) not to convert any shares in connection with a stockholder vote to approve a proposed initial Business Combination, and (iii) not to sell any shares to the Company in a tender offer in connection with any proposed Business Combination.

Going Concern and Liquidity

As of September 30, 2022, the Company had $21,078 in its operating bank account and working capital deficit of $22,399 (less taxes payable).

Prior to the completion of the Initial Public Offering, the Company’s liquidity needs had been satisfied through a payment from the Sponsor of $25,000 (see Note 5) for the founder shares to cover certain offering costs and the loan under an unsecured promissory note from the Sponsor of $141,700 (see Note 5). The Company fully paid the note to the Sponsor on February 12, 2021. Subsequent to the consummation of the Initial Public Offering and Private Placement, the Company’s liquidity needs have been satisfied through the proceeds from the consummation of the Private Placement not held in the Trust Account.

In addition, in order to finance offering costs in connection with a Business Combination, the Company’s Sponsor, officers, directors and their affiliates may, but are not obligated to, provide the Company Working Capital Loans, as defined below (see Note 5). To date, there were no amounts outstanding under any Working Capital Loans.

On April 26, 2022, the Company issued one promissory note in the principal amount of up to $195,000 to the Sponsor. The note bears no interest and is due and payable upon the earlier to occur of (i) the date on which the Company consummates its initial Business Combination and (ii) the date that the winding up of the Company is effective. At the Sponsor’s option, at any time prior to payment in full of the principal balance of the promissory note, the Sponsor may elect to convert all or any portion of the unpaid principal balance of the promissory note into that number of warrants, at a price of $1.00 per warrant (the “Conversion Warrants”). The Conversion Warrants shall be identical to the warrants issued by the Company to the Sponsor in the Private Placement upon consummation of the Company’s IPO, including as to exercise price, exercisability and exercise period. As of September 30, 2022, the Company has drawn down the promissory note in full.

On June 15, 2022, the Company issued one promissory note in the principal amount of up to $300,000 to the Sponsor. The note bears no interest and is due and payable upon the earlier to occur of (i) the date on which the Company consummates its initial Business Combination and (ii) the date that the winding up of the Company is effective. At the Sponsor’s option, at any time prior to payment in full of the principal balance of the promissory note, the Sponsor may elect to convert all or any portion of the unpaid principal balance of the promissory note into that number of warrants, at a price of $1.00 per warrant (the “Conversion Warrants”). The Conversion Warrants shall be identical to the warrants issued by the Company to the Sponsor in the Private Placement upon consummation of the Company’s IPO, including as to exercise price, exercisability and exercise period. As of September 30, 2022, the Company has drawn down $215,000 of the promissory note.

On September 27, 2022, pursuant to the trust agreement dated as of February 8, 2021 between the Company and Continental, the trustee of the Trust Account, the Company issued a request to Continental to withdraw $221,271 of interest income from the Trust Account for the payment of the Company’s taxes. The proceeds from this withdrawal were deposited into the Company’s operating bank account on September 28, 2022.

On October 27, 2022, stockholders holding 16,441,812 shares of common stock exercised their right to redeem such shares for a pro rata portion of the funds in the Company’s Trust Account. As a result, $165,347,999 (approximately $10.05 per share) will be removed from the Trust Account to pay such holders.

The Company anticipates that the $21,078 outside of the Trust Account as of September 30, 2022, will not be sufficient to allow the Company to operate through May 8, 2023, the scheduled liquidation date of the Company if it does not complete a Business Combination prior to such date. Until consummation of its Business Combination, the Company will be using the funds not held in the Trust Account, and any additional Working Capital Loans (as defined in Note 5), for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business Combination.

The Company believes it will need to raise additional funds in order to meet the expenditures required for operating its business. The Company will need to raise additional capital through loans from its Sponsor, officers, directors, or third parties. None of the Sponsor, officers or directors are under any obligation to advance funds to, or to invest in, the Company. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of its business plan, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all.

In connection with the Company’s assessment of going concern considerations in accordance with FASB’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management also determined that the liquidity condition and date for mandatory liquidation and dissolution raise substantial doubt about the Company’s ability to continue as a going concern through May 8, 2023, the scheduled liquidation date of the Company if it does not complete a Business Combination prior to such date. These condensed financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the issuance date of these financial statements. Management plans to address this uncertainty through loans from its Sponsor, officers, directors, or third parties, and the consummation of a Business Combination before May 8, 2023. None of the Sponsor, officers or directors are under any obligation to advance funds to, or to invest in, the Company. There is no assurance that the Company’s plans to raise capital or to consummate a Business Combination will be successful. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Risks and Uncertainties

Management continues to evaluate 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, cash flows and/or search for a target company, the specific impact is not readily determinable as of the date of the condensed financial statements. The condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.

On February 24, 2022, Russian forces launched significant military action against Ukraine, and sustained conflict and disruption in the region is possible. The impact to Ukraine as well as actions taken by other countries, including new and stricter sanctions imposed by Canada, the United Kingdom, the European Union, the United States, and other countries and companies and organizations against officials, individuals, regions, and industries in Russia and Ukraine, and actions taken by Russia in response to such sanctions, and each country’s potential response to such sanctions, tensions, and military actions could have a material adverse effect on the Company’s ability to complete the Business Combination. Any such material adverse effect from the conflict and enhanced sanctions activity may include reduced trading and business activity levels, disruption of financial markets, increased costs, disruption of services, inability to complete financial or banking transactions, and inability to service existing or new customers in the region. Prolonged unrest, military activities, or broad-based sanctions, should they be implemented, could have a material adverse effect on the Company’s ability to complete the Business Combination.

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.

Any redemption or other repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax. Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote or otherwise would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury. In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business Combination and in the Company’s ability to complete a Business Combination.

Note 2 — Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the SEC’s rules and regulations found in Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the period presented. Operating results for the three and nine months ended September 30, 2022 is not necessarily indicative of the results that may be expected through December 31, 2022.

The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Form 10-K as filed with the SEC on April 21, 2022.

Emerging Growth Company Status

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such 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

Main significant accounting estimates included in these financial statements are the determination of the fair value of the warrant liability, the convertible promissory notes, the Sponsor interests transferred to directors and officers, and the Class A common stock subject to redemption. Such estimates may be subject to change as more current information becomes available and, accordingly, the actual results could differ significantly from those estimates.

Cash and Cash Equivalents

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of September 30, 2022 and December 31, 2021.

Money Market Funds Held in Trust Account

At September 30, 2022 and December 31, 2021, the assets held in the Trust Account were invested in money market funds, which are classified as trading securities. Trading securities are presented on the balance sheet at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of investments held in Trust Account are included in interest and dividend income in the accompanying statements of operations. The estimated fair values of investments held in Trust Account are determined using available market information.

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. 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.

The fair value of the Company’s certain assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet. The fair values of cash and cash equivalents, prepaid expenses, accounts payable and accrued expenses are estimated to approximate the carrying values as of September 30, 2022 and December 31, 2021 due to the short maturities of such instruments.

The Company’s warrant liability is based on a valuation model utilizing management judgment and pricing inputs from observable and unobservable markets with less volume and transaction frequency than active markets. Significant deviations from these estimates and inputs could result in a material change in fair value. The fair value of the warrant liability is classified as Level 3. See Note 6 for additional information on assets and liabilities measured at fair value.

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 of $250,000. As of September 30, 2022 and December 31, 2021, the Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.

Common Stock Subject to Possible Redemption

All of the 17,250,000 Class A common stock sold as part of the Units in the IPO contain a redemption feature which allows for the redemption of such public shares in connection with the Company’s liquidation, if there is a stockholder vote or tender offer in connection with the Business Combination and in connection with certain amendments to the Company’s amended and restated certificate of incorporation. In accordance with SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within the control of the Company require common stock subject to redemption to be classified outside of permanent equity. Therefore, all Class A common stock has been classified outside of permanent equity.

The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid in capital and accumulated deficit.

As of September 30, 2022 and December 31, 2021, the Class A common stock reflected on the balance sheet is reconciled in the following table:

Gross proceeds from IPO	$	172,500,000
Less:
Proceeds allocated to Public Warrants		(10,753,651	)
Class A common stock issuance costs		(3,682,349	)
Plus:
Remeasurement of carrying value to redemption value		14,448,282
Class A common stock subject to possible redemption, December 31, 2021	$	172,512,282
Plus:
Remeasurement of carrying value to redemption value		(12,282	)
Class A common stock subject to possible redemption, March 31, 2022, June 30, 2022	$	172,500,000
Plus:
Remeasurement of carrying value to redemption value		459,563
Class A common stock subject to possible redemption, September 30, 2022		172,959,563

Net (Loss) Income Per Common Stock

Earnings and losses are shared pro rata between the redeemable shares and non-redeemable shares. The 13,275,000 potential common stock for outstanding warrants to purchase the Company’s shares were excluded from diluted earnings per share for the three and nine months ended September 30, 2022 and 2021 because the warrants are contingently exercisable, and the contingencies have not yet been met. As a result, diluted net (loss) income per common stock is the same as basic net (loss) income per common stock for the periods.

The table below presents a reconciliation of the numerator and denominator used to compute basic and diluted net (loss) income per share for the redeemable and non-redeemable portions of the Class A and Class B common stock:

	For the Three Months Ended September 30,
	2022						2021
	Redeemable			Non- redeemable			Redeemable		Non- redeemable
Basic and diluted net (loss) income per share:
Numerator:
Allocation of net (loss) income	$	(115,185	)	$	(29,798	)	$	377,974	$	97,780

Denominator:
Weighted-average shares outstanding		17,250,000			4,462,500			17,250,000		4,462,500

Basic and diluted net (loss) income per share	$	(0.01	)	$	(0.01	)	$	0.02	$	0.02

	For the Nine Months Ended September 30,
	2022				2021
	Redeemable		Non- redeemable		Redeemable		Non- redeemable
Basic and diluted net income per share:
Numerator:
Allocation of net income	$	282,084	$	72,974	$	828,265	$	248,573

Denominator:
Weighted-average shares outstanding		17,250,000		4,462,500		14,505,495		4,353,297

Basic and diluted net income per share	$	0.02	$	0.02	$	0.06	$	0.06

Offering Costs

The Company complies with the requirements of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A – “Expenses of Offering”. Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the IPO and were charged to temporary equity upon the completion of the IPO.

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 Topic 815, “Derivatives and Hedging”. Derivative instruments are recorded at fair value on the grant date and re-valued at each reporting date, with changes in the fair value reported in the statements of operations. Derivative assets and liabilities are classified on the balance sheets 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. The Company has determined the private placement warrants are a derivative liability (See Note 4).

Convertible Promissory Notes

The Company accounts for its convertible promissory notes under ASC 815, Derivatives and Hedging (“ASC 815”). Under 815-15-25, the election can be made at the inception of a financial instrument to account for the instrument under the fair value option under ASC 825, Financial Instruments (“ASC 825”). The Company has made such election for its convertible promissory notes. Using the fair value option, the convertible promissory notes are required to be recorded at its initial fair value on the date of issuance, and each balance sheet date thereafter. Differences between the face value of the convertible promissory notes and fair value at issuance are recognized as either an expense in the statements of operations (if issued at a premium) or as a capital contribution (if issued at a discount). Any material changes in the estimated fair value of the convertible promissory notes are recognized as non-cash gains or losses in the condensed statements of operations.

Stock-based Compensation

Stock-based compensation expense associated with the Company’s equity awards is measured at fair value upon the grant date and recognized over the requisite service period. To the extent a stock-based award is subject to a performance condition, the amount of expense recorded in a given period, if any, reflects an assessment of the probability of achieving such performance condition, with compensation recognized once the event is deemed probable to occur. Forfeitures are recognized as incurred.

Income Taxes

The Company accounts for income taxes under ASC 740, “Income Taxes.” ASC 740, Income Taxes, requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the unaudited condensed financial statements and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.

As of September 30, 2022 and December 31, 2021, the Company’s deferred tax asset had a full valuation allowance recorded against it. Our effective tax rate was -744.59% and 26.47% for the three and nine months ended September 30, 2022, and 0.00% and 0.00% for three and nine months ended September 30, 2021. The effective tax rate differs from the statutory tax rate of 21% for the three and nine months ended September 30, 2022, due to changes in fair of warrant liabilities, change in fair value of convertible promissory notes, shared based compensation, and the valuation allowance on the deferred tax assets.

ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2022 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 has identified the United States as its only “major” tax jurisdiction. The Company is subject to income taxation by major taxing authorities since inception. These examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

Recent Accounting Pronouncements

In August 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-06, “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”), which simplifies the accounting for convertible instruments. The guidance removes certain accounting models that separate the embedded conversion features from the host contract for convertible instruments. ASU 2020-06 allows for a modified or full retrospective method of transition. This update is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of adoption of ASU 2020-06 on its unaudited condensed financial statements.

Management does not believe that any other recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed financial statements.

Note 3 — Initial Public Offering

Pursuant to the IPO on February 11, 2021, the Company sold 15,000,000 Units at a purchase price of $10.00 per Unit. Each Unit consists of one Class A common stock and one-half of one redeemable warrant. Each whole warrant entitles the holder to purchase one Class A common stock at a price of $11.50 per share, subject to adjustment. The warrants will become exercisable 30 days after the completion of the initial Business Combination, and will expire five years after the completion of the initial Business Combination or earlier upon redemption or liquidation.

On February 22, 2021, the Underwriters exercised the over-allotment option in full to purchase 2,250,000 Units.

Note 4 — Private Placement Warrants

Simultaneously with the closing of the IPO, the Sponsor purchased an aggregate of 4,450,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, for an aggregate purchase price of $4,450,000, in a private placement (the “Private Placement”).

On February 22, 2021, simultaneously with the closing of the underwriters’ full exercise of the over-allotment option, the Company completed the private sale of an aggregate of 200,000 Private Placement Warrants to the Sponsor, at a purchase price of $1.00 per Private Placement Warrant, generating gross proceeds of $200,000.

The Private Placement Warrants are identical to the warrants sold in the IPO except that the Private Placement Warrants: (i) will not be redeemable by the Company and (ii) may be exercised for cash or on a cashless basis, as described in the IPO, in each case so long as they are held by the initial purchasers or any of their permitted transferees. If the Private Placement Warrants are held by holders other than the initial purchasers or any of their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by the holders on the same basis as the warrants included in the Units being sold in the IPO.

The Company has accounted for the 4,650,000 Private Placement Warrants in accordance with the guidance contained in FASB ASC 815-40. Such guidance provides that because the warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in the Company’s statements of operations. The Company will reassess the classification at each balance sheet date. If the classification changes as a result of events during the period, the warrants will be reclassified as of the date of the event that causes the reclassification.

Note 5 — Related Party Transactions

Founder Shares

On October 29, 2020, the Company issued 3,593,750 shares of Class B common stock to the Sponsor for $25,000 in cash, or approximately $0.007 per share, up to 468,750 shares of which are subject to forfeiture depending on the extent to which the underwriters’ over-allotment option is exercised. In February 2021, the Company effected a stock dividend of 0.2 shares for each founder share outstanding, resulting in an aggregate of 4,312,500 founder shares outstanding and held by the Sponsor (up to 562,500 of which are subject to forfeiture by our sponsor if the underwriters’ over-allotment option is not exercised in full). On February 22, 2021, the underwriter exercised its over-allotment option in full, hence, the 562,500 Founder Shares are no longer subject to forfeiture since then.

On April 21, 2022, the Sponsor transferred its interests representing a total of 260,000 shares of Class B common stock of the Company to two independent directors and two officers of the Company for no consideration. Pursuant to the terms of the agreements governing these transfers, if the transferee ceases to serve as a director or officer of the Company prior to the completion of the Company’s initial Business Combination, any unvested portion of the interests shall be immediately and automatically forfeited and deemed transferred to the Sponsor for no consideration. The transfer of the interests to the Company’s directors and officers is in the scope of FASB ASC Topic 718, “Compensation-Stock Compensation” (“ASC 718”). Under ASC 718, share-based compensation associated with equity-classified awards is measured at fair value upon the grant date. The fair value of the interests transferred to the Company’s directors and officers was $1,203,612 or approximately $4.63 per share. As of September 30, 2022, 230,000 shares were vested and the Company recognized $1,064,734 as share-based compensation.

On August 1, 2022, the Sponsor transferred its interests representing a total of 100,000 shares of Class B common stock of the Company to one independent director of the Company for no consideration. Pursuant to the terms of the agreements governing these transfers, if the transferee ceases to serve as a director of the Company prior to the completion of the Company’s initial Business Combination, any unvested portion of the interests shall be immediately and automatically forfeited and deemed transferred to the Sponsor for no consideration. The transfer of the interests to the Company’s director is in the scope of FASB ASC Topic 718, “Compensation-Stock Compensation” (“ASC 718”). Under ASC 718, share-based compensation associated with equity-classified awards is measured at fair value upon the grant date. The fair value of the interests transferred to the Company’s director was $481,380 or approximately $4.81 per share. As of September 30, 2022, all 100,000 shares were vested and the Company recognized $481,380 as share-based compensation.

Holders of the founder shares have agreed not to transfer, assign or sell (subject to certain limited exceptions set forth below) their founder shares or any shares of the Company’s Class A common stock issuable upon conversion thereof: (i) with respect to 50% of such shares, for a period ending on the earlier of the one-year anniversary of the date of the consummation of the initial Business Combination and the date on which the closing price of the Company’s Class A common stock equals or exceeds $12.50 per share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any 20 trading days within a 30-trading day period following the consummation of the initial Business Combination and (ii) with respect to the remaining 50% of such shares, for a period ending on the one-year anniversary of the date of the consummation of the initial Business Combination, or earlier, in either case, if, subsequent to the initial Business Combination, the Company consummates a liquidation, merger, stock exchange or other similar transaction which results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.

Promissory Note — Related Party

On September 30, 2020, the Sponsor agreed to loan the Company up to $300,000 to be used for a portion of the expenses of the IPO. These loans are non-interest bearing, unsecured and are due at the earlier of September 30, 2021 or the closing of the IPO. The loan was repaid upon the closing of the IPO out of the offering proceeds not being placed in the Trust Account. The Company had borrowed $141,700 under the promissory note, and the note was paid in full on February 12, 2021.

Convertible Promissory Notes

On April 26, 2022, the Company issued one promissory note in the principal amount of up to $195,000 to the Sponsor. The Note bears no interest and is due and payable upon the earlier to occur of (i) the date on which the Company consummates its initial Business Combination and (ii) the date that the winding up of the Company is effective. At the Sponsor’s option, at any time prior to payment in full of the principal balance of the promissory note, the Sponsor may elect to convert all or any portion of the unpaid principal balance of the promissory note into that number of warrants, at a price of $1.00 per warrant (the “Conversion Warrants”). The Conversion Warrants shall be identical to the warrants issued by the Company to the Sponsor in the Private Placement upon consummation of the Company’s IPO, including as to exercise price, exercisability and exercise period. As of September 30, 2022, the Company has drawn down the promissory note in full.

On June 15, 2022, the Company issued one promissory note in the principal amount of up to $300,000 to the Sponsor. The Note bears no interest and is due and payable upon the earlier to occur of (i) the date on which the Company consummates its initial Business Combination and (ii) the date that the winding up of the Company is effective. At the Sponsor’s option, at any time prior to payment in full of the principal balance of the promissory note, the Sponsor may elect to convert all or any portion of the unpaid principal balance of the promissory note into that number of warrants, at a price of $1.00 per warrant (the “Conversion Warrants”). The Conversion Warrants shall be identical to the warrants issued by the Company to the Sponsor in the Private Placement upon consummation of the Company’s IPO, including as to exercise price, exercisability and exercise period. As of September 30, 2022, the Company has drawn down $215,000 of the promissory note.

Related Party Loans

In order to meet the Company’s working capital needs following the consummation of the IPO, the Sponsor, officers, directors and their affiliates may, but are not obligated to, loan the Company funds (“Working Capital Loans”), 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 the initial Business Combination, without interest, or, at holder’s discretion, up to $1,500,000 of the notes may be converted into warrants at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants. In the event that the initial Business Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from the Trust Account would be used for such repayment. As of September 30, 2022 and December 31, 2021, no such Working Capital Loans were outstanding.

Administrative Service Fee

Commencing on February 8, 2021, the Company will make a payment of a monthly fee of $10,000 to the Sponsor or an affiliate thereof for administrative services including office space, utilities and secretarial support provided to the Company. Upon completion of the initial Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees. During the three and nine months ended September 30, 2022, the Company incurred and paid $30,000 and $90,000 administrative service fees, respectively. During the three and nine months ended September 30, 2021, the Company incurred $30,000 and $80,000 administrative service fees, respectively.

Note 6 — Fair Value Measurements

The following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of September 30, 2022, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.

	September 30,		Quoted Prices In Active Markets		Significant Other Observable Inputs		Significant Other Unobservable Inputs
	2022		(Level 1)		(Level 2)		(Level 3)
Assets:
U.S. Money Market funds held in Trust Account	$	173,237,830	$	173,237,830	$	—	$	—
	$	173,237,830	$	173,237,830	$	—	$	—
Liabilities:
Warrant Liability	$	443,514	$	—	$	—	$	443,514
Convertible promissory notes		11,622		—		—		11,622
	$	455,136	$	—	$	—	$	455,136

The following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2021, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.

	December 31,		Quoted Prices In Active Markets		Significant Other Observable Inputs		Significant Other Unobservable Inputs
	2021		(Level 1)		(Level 2)		(Level 3)
Assets:
U.S. Money Market funds held in Trust Account	$	172,512,282	$	172,512,282	$	—	$	—
	$	172,512,282	$	172,512,282	$	—	$	—
Liabilities:
Warrant Liability	$	2,309,416	$	—	$	—	$	2,309,416
	$	2,309,416	$	—	$	—	$	2,309,416

Private Placement Warrants

The estimated fair value of the Private Placement Warrants was determined using Level 3 inputs. Inherent in a Monte-Carlo simulation model are assumptions related to expected stock-price volatility (pre-merger and post-merger), expected term, dividend yield and risk-free interest rate. The Company estimates the volatility of its common stock 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 Constant Maturity similar to the expected remaining life of the warrants. The expected life of the warrants is simulated based on management assumptions regarding the timing and likelihood of completing a business combination. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero. The assumptions used in calculating the estimated fair values represent the Company’s best estimate. However, inherent uncertainties are involved. If factors or assumptions change, the estimated fair values could be materially different.

The key inputs into the Monte Carlo simulation model for the Private Placement Warrants were as follows as of September 30, 2022 and December 31, 2021:

Input	September 30, 2022			December 31, 2021
Expected term (years)		5.64			5.67
Expected volatility		9.20	%		10.10	%
Risk-free interest rate		4.03	%		1.32	%
Stock price	$	9.98		$	9.75
Dividend yield		0.00	%		0.00	%
Exercise price	$	11.50		$	11.50

The following table sets forth a summary of the changes in the fair value of the Level 3 warrant liability for the three and nine months ended September 30, 2022:

	Warrant Liability
Fair value as of January 1, 2022	$	2,309,416
Revaluation of warrant liability for the three months ended March 31, 2022		(1,202,395	)
Fair value as of March 31, 2022	$	1,107,021
Revaluation of warrant liability for the three months ended June 30, 2022		(578,582	)
Fair value as of June 30, 2022	$	528,439
Revaluation of warrant liability for the three months ended September 30, 2022		(84,925	)
Fair value as of September 30, 2022	$	443,514

The following table sets forth a summary of the changes in the fair value of the Level 3 warrant liability for the year ended December 31, 2021:

	Warrant Liability
Fair value as of January 1, 2021	$	—
Initial fair value of warrant liability upon issuance at IPO		5,711,648
Initial fair value of warrant liability upon issuance at over-allotment		256,703
Revaluation of warrant liability for the year ended December 31, 2021		(3,658,935	)
Fair value as of December 31, 2021	$	2,309,416

Convertible Promissory Notes

The Company used a Monte Carlo model to value the convertible promissory notes on the issuance date and September 30, 2022. The convertible promissory notes are classified within Level 3 of the fair value hierarchy at the measurement date due to the use of unobservable inputs.

The key inputs into the pricing model for the convertible promissory notes on the issuance date were as follows:

Input
Expected term (years)		5.34 – 5.68
Expected volatility		9.20% - 19.00%
Risk-free interest rate		2.79% - 4.06%
Stock price	$	9.88 – 9.98

The key inputs into the pricing model for the convertible promissory notes on September 30, 2022 were as follows:

Input	September 30, 2022
Expected term (years)		5.64
Expected volatility		9.20	%
Risk-free interest rate		4.06	%
Stock price	$	9.98

The following table sets forth a summary of the changes in the fair value of the convertible promissory notes from initial measurement to September 30, 2022:

	Convertible Promissory Notes
Initial measurement of convertible promissory notes	$	18,781
Revaluation of convertible promissory notes from initial measurement to June 30, 2022		(12,174	)
Fair value as of June 30, 2022	$	6,607
Initial measurement of convertible promissory notes		4,964
Revaluation of convertible promissory notes from initial measurement to September 30, 2022		51
Fair value as of September 30, 2022	$	11,622

There were no transfers in or out of Level 3 from other levels in the fair value hierarchy during the three and nine months ended September 30, 2022 for the convertible promissory notes.

Note 7 — Commitments and Contingencies

Registration Rights

The holders of the founder shares and representative shares issued and outstanding on the date of the IPO, as well as the holders of the Private Placement Warrants and any warrants the Sponsor, officers, directors or their affiliates may be issued in payment of Working Capital Loans made to the Company (and all underlying securities), will be entitled to registration rights pursuant to an agreement signed on February 8, 2021. The holders of a majority of these securities are entitled to make up to two demands that the Company registers 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 lockup period for these shares of common stock expires. The holders of a majority of the representative shares, Private Placement Warrants and warrants issued to the Sponsor, officers, directors or their affiliates in payment of Working Capital Loans made to the Company (or underlying securities) can elect to exercise these registration rights at any time after the Company consummates a Business Combination. Notwithstanding anything to the contrary, EarlyBirdCapital may only make a demand on one occasion and only during the five-year period beginning on February 8, 2021. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the Company’s consummation of a Business Combination; provided, however, that EarlyBirdCapital may participate in a “piggy-back” registration only during the seven-year period beginning on February 8, 2021. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

Underwriting Agreement

The underwriters had a 45-day option from February 11, 2021 to purchase up to an aggregate of 2,250,000 additional Units to cover over-allotments, if any. On February 22, 2021, the underwriters purchased an additional 2,250,000 units to exercise its over-allotment option in full. The proceeds of $22,500,000 from the over-allotment was deposited in the Trust Account after deducting the cash underwriting discounts.

The underwriters are entitled to a cash underwriting discount of 2% of the gross proceeds of the IPO, or $3,450,000 since the underwriters’ over-allotment was exercised in full, $250,000 of which will be deferred underwriting discount, upon the completion of the Company’s initial Business Combination subject to the terms of the underwriting agreement. Additionally, if the Company consummates its initial business combination, the underwriter is entitled to a cash fee for its services in relation thereto in an aggregate amount equal to up to 3.5% of the total gross proceeds raised in such offering.

Representative’s Common Stock

In December 2020, the Company issued to designees of EarlyBirdCapital 150,000 representative shares for nominal consideration. The holders of the representative shares have agreed not to transfer, assign or sell any such shares without the Company’s prior consent until the completion of the initial Business Combination. In addition, the holders of the representative shares have agreed (i) to waive their conversion rights (or right to participate in any tender offer) with respect to such shares in connection with the completion of the initial Business Combination and (ii) to waive their rights to liquidating distributions from the Trust Account with respect to such shares if the Company fails to complete its initial Business Combination within the Combination Period. The stock was treated as cost of capital and charged directly to stockholders’ equity (deficit).

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 February 8, 2021 pursuant to Rule 5110(e)(1) of the FINRA Manual. Pursuant to FINRA Rule 5110(e)(1), these securities will not be sold during the IPO, or sold, transferred, assigned, pledged, or hypothecated, or be 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 February 8, 2021 or commencement of sales of the IPO, except to any underwriter and selected dealer participating in the IPO and their bona fide officers or partners, provided that all securities so transferred remain subject to the lockup restriction above for the remainder of the time period.

Right of First Refusal

The Company has granted EarlyBirdCapital a right of first refusal for a period commencing from the consummation of the IPO until the consummation of the initial Business Combination (or the liquidation of the Trust Account in the event that the Company fails to consummate its initial Business Combination within the Combination Period) to act as book running manager, placement agent and/or arranger for all financings where the Company seeks to raise equity, equity-linked, debt or mezzanine financings relating to or in connection with a Business Combination.

In addition, under certain circumstances EarlyBirdCapital will be granted, for a period of 12 months from the closing of the IPO, the right to act as lead underwriter for the next U.S. registered public offering of securities undertaken by the Company or the Sponsor or its affiliates for the purpose of raising up to $150 million in capital and placing 90% or more of the proceeds in a trust or escrow account to be used to acquire one or more operating businesses that have not been identified at the time of the IPO.

Note 8 — Stockholders’ Deficit

Preferred Stock — The Company is authorized to issue 1,000,000 preferred shares at par value of $0.0001 each. As of September 30, 2022 and December 31, 2021, there were no shares of preferred stock issued or outstanding.

Class A Common Stock — The Company is authorized to issue 100,000,000 Class A common stock with a par value of $0.0001 per share. As of September 30, 2022 and December 31, 2021, there were 150,000 shares of common stock issued and outstanding, excluding 17,250,000 and 17,250,000 shares of Class A common stock subject to possible redemption, respectively.

Class B Common Stock — The Company is authorized to issue 10,000,000 Class B common stock with a par value of $0.0001 per share. On October 29, 2020, the Company issued 3,593,750 shares of Class B common stock to the Sponsor for $25,000 in cash, or approximately $0.007 per share, up to 468,750 shares of which are subject to forfeiture depending on the extent to which the underwriters’ over-allotment option is exercised. In February 2021, the Company effected a stock dividend of 0.2 shares for each founder share outstanding, resulting in an aggregate of 4,312,500 founder shares outstanding and held by the Sponsor (up to 562,500 of which are subject to forfeiture by our sponsor if the underwriters’ over-allotment option is not exercised in full). As a result of the underwriters’ election to fully exercise of their over-allotment option on February 22, 2021, the 562,500 shares were no longer subject to forfeiture.

Holders of the founder shares may not transfer, assign or sell (subject to certain limited exceptions set forth below) their founder shares and any shares of the Company’s Class A common stock issuable upon conversion thereof: (i) with respect to 50% of such shares, for a period ending on the earlier of the one-year anniversary of the date of the consummation of the initial Business Combination and the date on which the closing price of the Company’s Class A common stock equals or exceeds $12.50 per share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any 20 trading days within a 30-trading day period following the consummation of the initial Business Combination and (ii) with respect to the remaining 50% of such shares, for a period ending on the one-year anniversary of the date of the consummation of the initial Business Combination, or earlier, in either case, if, subsequent to the initial Business Combination, the Company consummates a liquidation, merger, stock exchange or other similar transaction which results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.

Public Warrants

Each whole warrant entitles the holder to purchase one Class A common stock at a price of $11.50 per share, subject to adjustment as discussed herein. In addition, if (x) the Company issues additional shares of common stock or equity-linked securities for capital raising purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors, and in the case of any such issuance to the Sponsor, initial stockholders or their affiliates, without taking into account any founder shares held by them prior to such issuance), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination on the date of the consummation of the initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s Class A common stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummates the initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the greater of (i) the Market Value or (ii) the price at which the Company issues the additional shares of common stock or equity-linked securities.

The warrants will become exercisable 30 days after the completion of the initial Business Combination, and will expire five years after the completion of the Company’s initial Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.

No warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating to such shares of Class A common stock. Notwithstanding the foregoing, if a registration statement covering the shares of Class A common stock issuable upon exercise of the public warrants is not effective within a specified period following the consummation of the initial Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act of 1933, as amended, or the Securities Act, provided that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. In the event of such cashless exercise, each holder would pay the exercise price by surrendering the warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A 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” for this purpose will mean the average reported last sale price of the shares of Class A common stock for the 5 trading days ending on the trading day prior to the date of exercise.

The Company may call the warrants for redemption in whole and not in part, at a price of $0.01 per warrant,

	●	At any time after the warrants become exercisable,

	●	Upon not less than 30 days’ prior written notice of redemption to each warrant holder,

	●	If, and only if, the reported last sale price of the shares of Class A common stock equals or exceeds $21.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30-trading day period commencing at any time after the warrants become exercisable and ending on the third business day prior to the notice of redemption to warrant holders; and

	●	if, and only if, there is a current registration statement in effect with respect to the shares of Class A common stock underlying such warrants.

If the Company calls the warrants for redemption as described above, the Company’s management will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.”

Note 10 — Subsequent Events

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the unaudited condensed financial statements were issued. Other than described below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Note Regarding Forward-Looking Statements

All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q (the “Report”) including, without limitation, statements under this “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward- looking statements. When used in this Report, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or our management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of our management, as well as assumptions made by, and information currently available to, the our management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the Securities and Exchange Commission (the “SEC”). All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.

Overview

We were formed on September 23, 2020 for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more target businesses. Our efforts to identify a prospective target business are not limited to a particular industry or geographic region although we currently are focusing on target businesses in the nexus of media, entertainment and technology. We are intending to utilize cash derived from the proceeds of our initial public offering, our securities, debt or a combination of cash, securities and debt, in effecting a business combination. The issuance of additional shares of common stock or preferred stock:

●

may significantly reduce the equity interest of our stockholders, which dilution would increase if the anti-dilution provisions in our Class B common stock resulted in the issuance of our Class A common stock on a greater than one-to-one basis upon conversion of our Class B common stock;

●

may subordinate the rights of holders of shares of Class A common stock if we issue shares of preferred stock with rights senior to those afforded to our shares of Class A common stock;

●

will likely cause a change in control if a substantial number of our shares of Class A common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and most likely will also result in the resignation or removal of our present officers and directors; and

●

may adversely affect prevailing market prices for our securities.

Similarly, if we issue debt securities, it could result in:

●

default and foreclosure on our assets if our operating revenues after a business combination are insufficient to pay our debt obligations:

●

acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security contains covenants that required the maintenance of certain financial ratios or reserves and we breach any such covenant without a waiver or renegotiation of that covenant;

●

our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; and

●

our inability to obtain additional financing, if necessary, if the debt security contains covenants restricting our ability to obtain additional financing while such security is outstanding.

On February 11, 2021, we consummated our initial public offering of 15,000,000 units. Each unit consists of one share of common stock of the Company, par value $0.0001 per share (“Common Stock”), and one-half of one redeemable warrant of the Company, with each warrant entitling the holder thereof to purchase one share of Common Stock for $11.50 per whole share. The units were sold at a price of $10.00 per unit, generating gross proceeds to the Company of $150,000,000.

On February 11, 2021, simultaneously with the consummation of our initial public offering, we completed the private sale of an aggregate of 4,450,000 warrants to our sponsor at a purchase price of $1.00 per private placement warrant, generating gross proceeds of $4,450,000.

On February 22, 2021, the underwriters exercised the over-allotment option in full to purchase 2,250,000 units. On February 22, 2021, simultaneously with the closing of the underwriters’ full exercise of the over-allotment option, we completed the private sale of an aggregate of 200,000 private placement warrants to our sponsor, at a purchase price of $1.00 per private placement warrant, generating gross proceeds of $200,000.

Following the closing of our initial public offering on February 11, 2021 and the underwriters’ full exercise of over-allotment option on February 22, 2021, $172,500,000 from the net proceeds of the sale of the units in our initial public offering, the exercise of the over-allotment option and the sale of the private placement warrants was placed in a Trust Account established for the benefit of our public stockholders (the “Trust Account”) and maintained by Continental, as trustee.

If we are unable to complete our initial business combination by May 8, 2023, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including any interest not previously released to us but net of franchise and income taxes payable, 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 liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to its obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our initial business combination by November 11, 2022 and, in such event, such amounts will be included with the funds held in the Trust Account that will be available to fund the redemption of the public shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than $10.00.

Our amended and restated certificate of incorporation provides that we will have only until May 8, 2023 to complete an initial business combination. If we have not completed an initial business combination by such date, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including any interest not previously released to us but net of taxes payable, 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 liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

Risks and Uncertainties

Results of Operations

As of September 30, 2022, we have not commenced any operations. All activity for the period from September 23, 2020 (inception) through September 30, 2022 relates to our formation, initial public offering and search for a target company. We will not generate any operating revenues until after the completion of our initial business combination, at the earliest. We will generate non-operating income in the form of interest and dividend income from the proceeds derived from the initial public offering and placed in the Trust Account.

For the three months ended September 30, 2022, we had a net loss of $144,983 which was comprised of unrealized loss on change in fair value of convertible promissory notes of $51, operating costs of $860,670, and income tax provision of $127,817, less interest and dividend income of $758,630 from money market funds held in our Trust Account and unrealized gain on change in fair value of warrants of $84,925.

For the nine months ended September 30, 2022, we had a net income of $355,058 which was comprised of interest and dividend income of $946,819 from money market funds held in our Trust Account, unrealized gain on change in fair value of warrants of $1,865,902, unrealized gain on change in fair value of convertible promissory notes of $12,123, less operating costs of $2,341,969 and income tax provision of $127,817.

For the three months ended September 30, 2021, we had a net income of $475,754 which was comprised of operating costs of $270,269, interest income of $3,545 from marketable securities held in our Trust Account, and unrealized gain on change in fair value of warrants of $742,478.

For the nine months ended September 30, 2021, we had a net income of $1,076,838 which was comprised of operating costs of $665,729, interest income of $7,995 from marketable securities held in our Trust Account, unrealized gain on change in fair value of warrants of $3,052,923, and other expense relating to fair value exceeding amount paid for warrants of $1,318,351.

Going Concern and Liquidity

As of September 30, 2022, we had $21,078 in our operating bank account and working capital deficit of $22,399 (less tax payable).

Prior to the completion of the Initial Public Offering, our liquidity needs had been satisfied through a payment from the Sponsor of $25,000 for the Founder Shares to cover certain offering costs and the loan under an unsecured promissory note from the Sponsor of $141,700. We fully paid the note to the Sponsor on February 12, 2021. Subsequent to the consummation of the Initial Public Offering and Private Placement, our liquidity needs have been satisfied through the proceeds from the consummation of the Private Placement not held in the Trust Account.

In addition, in order to finance transaction costs in connection with a Business Combination, our Sponsor, officers, directors and their affiliates may, but are not obligated to, provide us Working Capital Loans, as defined below. To date, there were no amounts outstanding under any Working Capital Loans.

On April 26, 2022, we issued one promissory note in the principal amount of up to $195,000 to the Sponsor. The note bears no interest and is due and payable upon the earlier to occur of (i) the date on which we consummate the initial Business Combination and (ii) the date that the winding up is effective. At the Sponsor’s option, at any time prior to payment in full of the principal balance of the promissory note, the Sponsor may elect to convert all or any portion of the unpaid principal balance of the promissory note into that number of warrants, at a price of $1.00 per warrant (the “Conversion Warrants”). The Conversion Warrants shall be identical to the warrants issued by us to the Sponsor in the Private Placement upon consummation of the IPO, including as to exercise price, exercisability and exercise period. As of September 30, 2022, we have drawn down the promissory note in full.

On June 15, 2022, we issued one promissory note in the principal amount of up to $300,000 to the Sponsor. The note bears no interest and is due and payable upon the earlier to occur of (i) the date on which we consummate the initial Business Combination and (ii) the date that the winding up is effective. At the Sponsor’s option, at any time prior to payment in full of the principal balance of the promissory note, the Sponsor may elect to convert all or any portion of the unpaid principal balance of the promissory note into that number of warrants, at a price of $1.00 per warrant (the “Conversion Warrants”). The Conversion Warrants shall be identical to the warrants issued by us to the Sponsor in the Private Placement upon consummation of the IPO, including as to exercise price, exercisability and exercise period. As of September 30, 2022, we have drawn down $215,000 of the promissory note.

On September 27, 2022, pursuant to the trust agreement dated as of February 8, 2021 between us and Continental, the trustee of the Trust Account, we issued a request to Continental to withdraw $221,271 of interest income from the Trust Account for the payment of our taxes. The proceeds from this withdrawal were deposited into our operating bank account on September 28, 2022.

As of a result of the approval of the Extension Amendment, the Sponsor has agreed to contribute to the Company a Charter Extension Loan of $50,000 per month, for each calendar month (commencing on November 8, 2022 and on the 8th day of each subsequent month) until the Extended Date, or portion thereof, that is needed to complete an initial Business Combination, for up to an aggregate of $300,000. Each Charter Extension Loan will be deposited in the Trust Account within five (5) business days from the beginning of such calendar month (or portion thereof).

We anticipate that the $21,078 outside of the Trust Account as of September 30, 2022, will not be sufficient to allow us to operate through May 8, 2023, the scheduled liquidation date of the Company if it does not complete a Business Combination prior to such date. Until consummation of the Business Combination, we will be using the funds not held in the Trust Account, and any additional Working Capital Loans, for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business Combination.

We believe we will need to raise additional funds in order to meet the expenditures required for operating our business. We will need to raise additional capital through loans from our Sponsor, officers, directors, or third parties. None of the Sponsor, officers or directors are under any obligation to advance funds to, or to invest in, us. If we are unable to raise additional capital, we may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of our business plan, and reducing overhead expenses. We cannot provide any assurance that new financing will be available to us on commercially acceptable terms, if at all.

In connection with our assessment of going concern considerations in accordance with FASB’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management also determined that the liquidity condition and date for mandatory liquidation and dissolution raise substantial doubt about our ability to continue as a going concern through May 8, 2023, the scheduled liquidation date if we do not complete a Business Combination prior to such date. These condensed financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should we be unable to continue as a going concern.

These conditions raise substantial doubt about our ability to continue as a going concern for the next twelve months from the issuance date of these financial statements. Management plans to address this uncertainty through loans from our Sponsor, officers, directors, or third parties, and the consummation of a Business Combination before May 8, 2023. None of the Sponsor, officers or directors are under any obligation to advance funds to, or to invest in, us. There is no assurance that our plans to raise capital or to consummate a Business Combination will be successful. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Critical Accounting Policies and Estimates

The preparation of the unaudited condensed financial statements in conformity with US 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 unaudited condensed financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. We have identified the following as our critical accounting policies:

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 Topic 815, “Derivatives and Hedging”. Derivative instruments are recorded at fair value on the grant date and re-valued at each reporting date, with changes in the fair value reported in the statements of operations. Derivative assets and liabilities are classified on 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. The Company has determined the private placement warrants are a derivative liability.

Convertible Promissory Notes

Common Stock Subject to Possible Redemption

Net (Loss) Income Per Common Stock

Commitments and Contractual Obligations

Underwriting Agreement

Administrative Service Fee

Off-Balance Sheet Arrangements

As of September 30,2022, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

JOBS Act

The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We will qualify as an “emerging growth company” and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an independent registered public accounting firm’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the report of the independent registered public accounting firm providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of this offering or until we are no longer an “emerging growth company,” whichever is earlier.

Factors That May Adversely Affect our Results of Operations

Our results of operations and our ability to complete an initial business combination may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. Our business could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, the ongoing effects of the COVID-19 pandemic, including resurgences and the emergence of new variants, and geopolitical instability, such as the military conflict in Ukraine. We cannot at this time fully predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our business and our ability to complete an initial business combination.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and are not required to provide the information otherwise required under this item .

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures designed to ensure that information required to be disclosed in our reports filed or submitted under 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 management, including our Chief Executive Officer and Chief Financial Officer (together, the “Certifying Officers”), or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our Certifying Officers, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the foregoing, our Certifying Officers concluded that our disclosure controls and procedures were not effective as of September 30, 2022, due to the material weakness in analyzing complex financial instruments including the proper classification of warrants as liabilities and redeemable Class A common stock as temporary equity. In light of this material weakness, we performed additional analysis as deemed necessary to ensure that our unaudited interim financial statements were prepared in accordance with U.S. generally accepted accounting principles. Accordingly, management believes that the financial statements included in this Quarterly Report on Form 10-Q present fairly in all material respects our financial position, results of operations and cash flows for the periods presented.

Regarding the restatements to the March 31, 2021, and June 30, 2021 quarterly financial statements included in the Company’s Form 10-Qs, as filed with the SEC on May 24, 2021 and August 17, 2021, respectively, as well as the Company’s balance sheet included on the Company’s Form 8-K, as filed with the SEC on February 18, 2021, certain redemption provisions not solely within the control of the Company require common stock subject to redemption to be classified outside of permanent equity. The Company had previously classified a portion of the Class A common stock in permanent equity. The Company restated its financial statements to classify all Class A common stock as temporary equity and any related impact, as the threshold in its charter would not change the nature of the underlying shares as redeemable and thus would be required to be disclosed outside of permanent equity.

It is noted that the non-cash adjustments to the financial statements do not impact the amounts previously reported for our cash and cash equivalents or total assets.

In light of the material weakness, we have enhanced our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements. Our plans at this time include providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.

We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Changes in Internal Control over Financial Reporting

Other than as discussed above, there have been no changes to our internal control over financial reporting during the quarter ended September 30, 2022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

As of the date of this Report, other than as set forth below, there have been no material changes with respect to those risk factors previously disclosed in our (i) registration statement, (ii) Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on April 18, 2022, (iii) Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, as filed with the SEC on My 23, 2022 and (iv) Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, as filed with the SEC on August 22, 2022. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risks could arise that may also affect our business or ability to consummate an initial business combination. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.

A new 1% U.S. federal excise tax could be imposed on us in connection with redemptions by us of our shares in connection with a Business Combination or other stockholder vote pursuant to which stockholders would have a right to submit their shares for redemption (a “Redemption Event”)..

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases (including redemptions) of stock by publicly traded domestic (i.e., U.S.) corporations and certain domestic subsidiaries of publicly traded foreign corporations. The excise tax is imposed on the repurchasing corporation itself, not its stockholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury Department”) has been given authority to provide regulations and other guidance to carry out, and prevent the abuse or avoidance of the excise tax. The IR Act applies only to repurchases that occur after December 31, 2022.

Any redemption or other repurchase that occurs after December 31, 2022, in connection with a Redemption Event may be subject to the excise tax. Whether and to what extent we would be subject to the excise tax in connection with a Redemption Event would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Redemption Event, (ii) the structure of the Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with the Business Combination (or otherwise issued not in connection with the Redemption Event but issued within the same taxable year of the Business Combination) and (iv) the content of regulations and other guidance from the Treasury Department. In addition, because the excise tax would be payable by us, and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business Combination and in our ability to complete a Business Combination.

To mitigate the risk that we might be deemed to be an investment company for purposes of the Investment Company Act , we may, at any time, instruct the trustee to liquidate the securities held in the Trust Account and instead to hold the funds in the Trust Account in cash items until the earlier of the consummation of our initial Business Combination or our liquidation. As a result, following the liquidation of securities in the Trust Account, we would likely receive minimal interest, if any, on the funds held in the Trust Account, which would reduce the dollar amount our public stockholders would receive upon any redemption or liquidation of the Company.

The funds in the Trust Account have, since our IPO, been held only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds investing solely in U.S. government treasury obligations and meeting certain conditions under Rule 2a-7 under the Investment Company Act. However, to mitigate the risk of us being deemed to be an unregistered investment company (including under the subjective test of Section 3(a)(1)(A) of the Investment Company Act) and thus subject to regulation under the Investment Company Act, we may, at any time, instruct Continental, the trustee with respect to the Trust Account, to liquidate the U.S. government treasury obligations or money market funds held in the Trust Account and thereafter to hold all funds in the Trust Account as cash items until the earlier of the consummation of our initial Business Combination or the liquidation of the Company. Following such liquidation, we would likely receive minimal interest, if any, on the funds held in the Trust Account. However, interest previously earned on the funds held in the Trust Account still may be released to us to pay our taxes, if any, and certain other expenses as permitted. As a result, any decision to liquidate the securities held in the Trust Account and thereafter to hold all funds in the Trust Account in cash items would reduce the dollar amount our public stockholders would receive upon any redemption or liquidation of the Company.

In the event that we may be deemed to be an investment company, we may be required to liquidate the Company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None. For a description of the use of proceeds generated in our initial public offering and private placement, see Part II, Item 2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, as filed with the SEC on May 24, 2021. There has been no material change in the planned use of proceeds from the Company’s initial public offering and private placement as described in the Registration Statement.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

Item 6. Exhibits

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

No.		Description of Exhibit
31.1*		Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		Inline XBRL Instance Document.
101.SCH*		Inline XBRL Taxonomy Extension Schema Document.
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*	Filed herewith.
**	Furnished.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	PROGRESS ACQUISITION CORP.

Date: November 22, 2022	By:	/s/ David Arslanian
	Name:	David Arslanian
	Title:	Chief Executive Officer and Co-President
		(Principal Executive Officer)

Date: November 22, 2022	By:	/s/ Richard Gallagher
	Name:	Richard Gallagher
	Title:	Chief Financial Officer
		(Principal Accounting and Financial Officer)

SEC Form 10-Q filed by Progress Acquisition Corp.