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As of September 30, 2023 and December 31, 2022, there were Founder Shares issued and outstanding. The aggregate capital contribution was $25,000, or approximately $0.01 per share.

The number of Founder Shares issued was determined based on the expectation that such Founder Shares would represent 20% of the outstanding shares upon completion of the IPO (excluding the sale of Private Placement Shares and issuance of the Representative Shares).

In November 2021, the Sponsor transferred an aggregate of 443,750 Founder Shares to the Company’s former officers, directors, secretary and their designees at the same price originally paid for such shares prior to the closing of the IPO. As a result of such transfers, US Tiger Securities, Inc., a Representative, as the designee of Mr. Lei Huang, former Chief Executive Officer who resigned on December 22, 2022, acquired 122,000 Founder Shares at the same price originally paid for such shares. Dr. Lei Xu, the Company’s former President, Ms. Yuanmei Ma, the Company’s former Chief Financial Officer, Ms. Christy Szeto, the Company’s former secretary, Dr. David Xianglin Li, Mr. Michael Daidov, and Mr. Norman Kristoff, each of the Company’s former directors collectively acquired the remaining 321,750 Founder Shares at the same price originally paid for such shares. On December 22, 2022, the Company’s officers, directors and secretary resigned from their respective positions and returned and sold a total of 343,750 Founder Shares back to the Sponsor for the original purchase price. Out of the issued and outstanding shares of Class B Common Stock, an aggregate of shares remains owned by former management.

The sale of the Founder Shares from Sponsor to the Company’s officers, directors and secretary is in the scope of FASB ASC Topic 718, “Compensation-Stock Compensation” (“ASC 718”). Under ASC 718, stock-based compensation associated with equity-classified awards is measured at fair value upon the grant date. The grant date fair value of the remaining 100,000 shares, net of forfeiture of 343,750 shares, granted to the Company’s officers, directors and secretary was $716,250, or $7.16 per share. The Founders Shares were granted subject to a performance condition (i.e., the occurrence of a Business Combination). Compensation expense related to the Founders Shares is recognized only when the performance condition is probable of occurrence under the applicable accounting literature in this circumstance. As of September 30, 2023 and December 31, 2022, the Company determined that a Business Combination was not considered probable, and, therefore, no stock-based compensation expense has been recognized. Stock-based compensation would be recognized at the date a Business Combination is considered probable (i.e., upon consummation of a Business Combination) in an amount equal to the number of Founders Shares times the grant date fair value per share (unless subsequently modified) less the amount initially received for the purchase of the Founder Shares.

The holders of the Founder Shares have agreed not to transfer, assign or sell 50% of their Founder Shares until the earlier to occur of: (A) six months after the date of the consummation of the Company’s initial Business Combination, or (B) 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 any 30-trading day period commencing after the Company’s initial Business Combination and the remaining 50% of the Founder Shares may not be transferred, assigned or sold until six months after the date of the consummation of the Company’s initial Business Combination, or earlier, in either case, if, subsequent to the Company’s initial Business Combination, the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the Company’s stockholders having the right to exchange their shares for cash, securities or other property.

On November 5, 2021, the Company completed the private sale of shares of Class A Common Stock to the Sponsor, Fortune Rise Sponsor LLC, at a purchase price of $10.00 per Private Placement Share, generating gross proceeds to the Company of $. The Private Placement Shares are identical to the public shares, except that the holders have agreed not to transfer, assign or sell any of the Private Placement Shares (except to certain permitted transferees) until 30 days after the completion of the Company’s initial Business Combination.

In connection with BCA, on October 24, 2023, the Sponsor, the Company and WODI-PWT entered into a letter agreement (the “Sponsor Letter Agreement”) pursuant to which the Sponsor agreed to (a) vote in favor of the Business Combination Agreement and the Business Combination, (b) waive any adjustment to the conversion ratio set forth in the governing documents of the Company or any other anti-dilution or similar protection with respect to the Class B Common Stock, such that the Class B Common Stock will convert into Class A Common Stock at the Closing on a one-to-one basis, and (c) subject certain of the Class B Common Stock currently held by the Sponsor to forfeiture.

Prepaid Expenses – Related Party

Effective December 1, 2022 (the “Effective Date”), Mr. J. Richard Iler, the Company’s former Principal Executive Officer, Chief Financial Officer, Secretary, and Treasurer, entered into a Consulting Agreement (the “Agreement”) with the Company and OriginClear, Inc. (OriginClear), a Nevada corporation and the parent company of the Sponsor, pursuant to which Mr. Iler received an initial payment of $ and received separate payments of $25,000 monthly from January 2023 through April 2023. The term of the Agreement was for six months starting from the Effective Date, unless earlier terminated. As of September 30, 2023 and December 31, 2022, the Company prepaid to Mr. Iler under the Agreement amounted to $ and $, respectively.

Due to Related Parties

In December 2022, OriginClear advanced $ to the Company for working capital. On April 17, 2023, the board of directors of the Company approved the issuance of an unsecured promissory note dated November 23, 2022 in the principal amount of $50,000 to OriginClear and the Company reclassified this $ advance into a promissory note – related party. As of September 30, 2023 and December 31, 2022, balance due to OriginClear amounted to $ and $, respectively.

Effective July 14, 2023, the board of directors of the Company unanimously appointed Richard A. Brand to serve as the Company’s Chief Financial Officer and Principal Executive Officer. Mr. Brand assumed the roles of principal executive officer, principal financial officer and principal accounting officer. The terms and conditions of Mr. Brand’s appointment are governed by a consulting agreement dated as of July 14, 2023 by and between the Company and Mr. Brand (the “Consulting Agreement”). The Consulting Agreement provides for compensation to Mr. Brand of $ per month. The Consulting Agreement provides for a term of six months, unless earlier terminated by either party upon 10 business days’ written notice. As of September 30, 2023 and December 31, 2022, balance due to Mr. Brand amounted to $ and $, respectively.

Promissory Notes — Related Party (Working Capital Loans)

On November 4, 2022, an aggregate of $ (the “First Extension Payment”) was deposited into the Company’s Trust Account for the public stockholders, representing $0.10 per public share, which enabled the Company to extend the period of time it had to consummate its initial Business Combination by three months from November 5, 2022 to February 5, 2023 (the “First Extension”). The First Extension was the first of the two three-month extensions permitted under the Company’s amended and restated certificate of incorporation prior to its amendment in April 2023. In connection with the First Extension Payment, the Company issued unsecured promissory notes (the “First Extension Note”) to certain initial stockholders, including (i) a note of $413,750 to Mr. Koon Keung Chan, the former manager of the Sponsor of the Company who resigned on December 22, 2022, (ii) a note of $ to US Tiger Securities, an existing stockholder, and (iii) a note of $170,000 to Dr. Lei Xu, the former President and Chairwoman of the Company who resigned on December 22, 2022. The three promissory notes together with the Company’s working capital fund were used to pay for the First Extension Payment. These three promissory notes totaling $733,750 were assigned to WODI as creditor on December 22, 2022.

On February 6, 2023, $ (the “Second Extension Payment”) was deposited into the Trust Account, for the public stockholders, representing $0.10 per public share, which enabled the Company to extend the period of time it had to consummate its initial Business Combination by three months from February 5, 2023 to May 5, 2023 (the “Second Extension”). The Second Extension was the second and final of the two three-month extensions permitted under the Company’s amended and restated certificate of incorporation prior to its amendment in April 2023. In connection with the Second Extension Payment, the Company issued an unsecured promissory note (the “Second Extension Note”) to WODI.

On March 16, 2023, the board of directors of the Company approved the issuance of an unsecured promissory note dated March 9, 2023 in the principal amount of $ (the “Note 1”) to WODI.

On April 17, 2023, the board of directors of the Company, approved the issuance of the following unsecured promissory notes (“Notes 2”):

On May 5, 2023, in connection with the Third Extension Payment, the Company issued an unsecured promissory note in the principal amount of $ (the “Third Extension Note”) to WODI.

On June 5, 2023, in connection with the Fourth Extension Payment, the Company issued an unsecured promissory note in the principal amount of $ (the “Fourth Extension Note”) to WODI.

The Company also issued the following unsecured promissory notes (“Notes 3”) to WODI for working capital purpose:

On July 5, 2023, in connection with the Fifth Extension Payment, the Company issued an unsecured promissory note in the principal amount of $ (the “Fifth Extension Note”) to WODI.

On August 4, 2023, in connection with the Sixth Extension Payment, the Company issued an unsecured promissory note in the principal amount of $ (the “Sixth Extension Note”) to WODI.

On September 5, 2023, in connection with the Seventh Extension Payment, the Company issued an unsecured promissory note in the principal amount of $ (the “Seventh Extension Note”) to WODI.

The Company also issued the following unsecured promissory notes (“Notes 4”) to WODI for working capital purpose:

The First Extension Note, the Second Extension Note, the Third Extension Note, the Fourth Extension Note, the Fifth Extension Note, the Sixth Extension Note, the Seventh Extension Note, Note 1, Notes 2, Notes 3, and Notes 4 (herein referred to as the “Notes” or the “Working Capital Loans”) are non-interest bearing and payable (subject to the waiver against trust provisions) on the earlier of (i) consummation of the Company’s initial Business Combination and (ii) the date of the liquidation of the Company. The principal balance may be prepaid at any time, at the election of the Company. The holders of the Notes have the right, but not the obligation, to convert their Notes, in whole or in part, respectively, into private shares of Class A Common Stock (the “Conversion Shares”), as described in the IPO prospectus of the Company (File Number 333-256511). The number of Conversion Shares to be received by the holders in connection with such conversion shall be an amount, up to $3,000,000, determined by dividing (x) the sum of the outstanding principal amount payable to such holders by (y) $10.00.

In order to finance transaction costs in connection with an intended initial Business Combination, the founders or an affiliate of the founders or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required. If the Company completes the initial Business Combination, it would repay such loaned amounts. Up to $3,000,000 of such loans may be convertible into working capital shares, at a price of $10.00 per share at the option of the lender. Such working capital shares would be identical to the Private Placement Shares. 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, 2023 and December 31, 2022, the Company had borrowings of $ and $, respectively, under the promissory notes — related party (working capital loans).

Common stock — The Company was initially authorized to issue up to shares of common stock, par value $ per share. On February 19, 2021, there were shares of common stock issued and outstanding. On March 2, 2021, the Company amended and restated its certificate of incorporation to divide its common stock into Class A Common Stock and Class B Common Stock, with the result that the Company is authorized to issue up to 60,000,000 shares of common stock, par value $0.0001 per share, comprised of shares of Class A Common Stock and shares of Class B Common Stock. In connection therewith, the Company cancelled 2,443,750 shares of common stock issued to the Sponsor and issued shares of Class B Common Stock to the Sponsor.

Holders of record of Common Stock are entitled to one vote for each share held on all matters to be voted on by stockholders. The Company’s stockholders are entitled to receive ratable dividends when, as and if declared by the board of directors out of funds legally available therefor. Holders of record of the Class A Common Stock and holders of record of the Class B Common Stock will vote together as a single class on all matters submitted to a vote of the stockholders, with each share of common stock entitling the holder to one vote except as required by applicable law. The shares of Class B Common Stock will automatically convert into shares of Class A Common Stock at the closing of the Company’s initial Business Combination on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution right.

Class A Common Stock — The Company is authorized to issue shares of Class A Common Stock with a par value of $ per share.

In connection with the special meeting of stockholders on April 10, 2023, holders of  public shares of Class A common stock properly exercised their right to redeem their shares (and did not withdraw their redemption) for cash at a redemption price of approximately $ per share, for an aggregate redemption amount of approximately $.

In connection with the special meeting of stockholders on June 2, 2023, holders of  public shares of Class A common stock properly exercised their right to redeem their shares (and did not withdraw their redemption) for cash at a redemption price of approximately $ per share, for an aggregate redemption amount of approximately $.

Representative Shares

The Company issued Representative Shares in Class A Common Stock to the Representatives of the underwriters for the Company’s IPO, as part of their underwriting compensation. The Representative Shares are identical to the public shares except that the Representatives have agreed not to transfer, assign or sell any such Representative Shares until the completion of the Company’s initial Business Combination. The Representative Shares are deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following the date of the commencement of sales in this offering pursuant to FINRA Rule 5110(e)(1). In addition, the Representatives have agreed (i) to waive their redemption rights with respect to such shares in connection with the completion of the Company’s initial Business Combination and (ii) to waive their rights to liquidating distributions from the Trust Account (as defined below) with respect to such shares if the Company fails to complete its initial Business Combination by December 5, 2023 (or up to November 5, 2024, if the Company extends the time to complete a Business Combination and payment of the extension by our Sponsor, or its affiliates).

As of September 30, 2023 and December 31, 2022, there were shares of common stock issued and outstanding, excluding and shares of common stock, respectively, subject to possible redemption.

Class B Common Stock — The Company is authorized to issue shares of Class B Common Stock with a par value of $ per share. On March 2, 2021, the Company issued shares of Class B Common Stock to the founders for $, so that the founders collectively owned 20% of the Company’s issued and outstanding common stock after the IPO (excluding the Private Placement Shares and the Representative Shares). As of September 30, 2023 and December 31, 2022, there were shares of Class B Common Stock issued and outstanding.

In connection with BCA, on October 24, 2023, the Sponsor, the Company and WODI-PWT entered into a letter agreement (the “Sponsor Letter Agreement”) pursuant to which the Sponsor agreed to (a) vote in favor of the Business Combination Agreement and the Business Combination, (b) waive any adjustment to the conversion ratio set forth in the governing documents of the Company or any other anti-dilution or similar protection with respect to the Class B Common Stock, such that the Class B Common Stock will convert into Class A Common Stock at the Closing on a one-to-one basis, and (c) subject certain of the Class B Common Stock currently held by the Sponsor to forfeiture.

Warrants — On November 5, 2021, the Company issued warrants in connection with the IPO. Each whole warrant entitles the registered holder to purchase one whole share of the Company’s Class A Common Stock at a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing on the later of 12 months from the closing of the IPO or 30 days after the completion of the initial Business Combination. Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of shares of Class A Common Stock. This means that only a whole warrant may be exercised at any given time by a warrant holder. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. The warrants 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.

As of September 30, 2023 and December 31, 2022, warrants were outstanding.

The Company has agreed that as soon as practicable, but in no event later than 30 business days, after the closing of the initial Business Combination, it will use its commercially reasonable efforts to file, and within 60 business days following its initial Business Combination to have declared effective, a registration statement for the registration, under the Securities Act, of the shares of Class A Common Stock issuable upon exercise of the warrants. The Company will use its commercially reasonable efforts to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. No warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the Class A Common Stock issuable upon exercise of the warrants and a current prospectus relating to such shares of common stock. Notwithstanding the above, if the Company’s Class A Common Stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event it so elect, it will not be required to file or maintain in effect a registration statement, but it will be required to use its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.

Once the warrants become exercisable, the Company may call the warrants for redemption:

The Company accounted for the 4,887,500 warrants issued with the IPO as equity instruments in accordance with ASC 480, “Distinguishing Liabilities from Equity” and ASC 815-40, “Derivatives and Hedging: Contracts in Entity’s Own Equity.” The Company accounted for the warrant as an expense of the IPO resulting in a charge directly to stockholders’ equity. The Company estimates that the fair value of the warrants of the date of grant date is approximately $ million, or $0.906 per Unit, using the Monte Carlo Model. The fair value of the warrants is estimated as of the date of grant date using the following assumptions: (1) expected volatility of 16.2%, (2) risk-free interest rate of 1.16%, (3) expected life of 5.91 years, (4) exercise price of $11.50 and (5) stock price of $9.548.

During the six months ended June 30, 2023, the Company was providing its state income tax provision based on estimates of potential income tax liability before finalizing this state income tax nexus study. Because the Company’s former Principal Executive Officer, Chief Financial Officer (Principal Financial and Accounting Officer), Secretary, and Treasurer, was residing and operating the Company in the state of Florida from December 2022 to July 2023, the Company has been accruing its state income tax using the Florida corporation income tax rate of 5.5%. In November 2023, the Company has completed the Company’s state income tax nexus analysis and concluded that the Company is not required to pay any income tax in the state of Florida. As a result, the Company’s estimates on income tax provision for the nine months ended September 30, 2023 reflects the conclusion of the nexus analysis and recorded the reversal of estimated Florida state income taxes by $ and recorded in the current income tax provision for the three months ended September 30, 2023. In addition, the three-month ended September 30, 2023 also reflects the true up of $ (including $ of interest and penalties) resulted from the difference between the actual 2022 income tax provision as stated in its income tax returns that were filed in October 2023 and the Company’s reported income tax provision in its year ended December 31, 2022 statement of operations.

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

References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Fortune Rise Acquisition Corporation. References to our “management” or our “management team” refer to our officers and directors, and references to the “sponsor” refer to Fortune Rise Sponsor LLC. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from the results, expectations and plans discussed in these forward-looking statements.

Special Note Regarding Forward-Looking Statements

This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “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. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and variations thereof and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of our final prospectus for our initial public offering filed with the SEC on November 3, 2021. Our securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Overview

We are a blank check company formed as a Delaware corporation for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses.

Effective December 22, 2022, Ka Wai Cheung, Koon Lin Chan, and Koon Keung Chan, Fortune Rise Sponsor LLC (the “Sponsor”), and Water On Demand, Inc., a Nevada corporation that controls our Sponsor (“WODI”), entered into a Membership Interest Purchase and Transfer Agreement pursuant to which they sold to WODI all right, title and interest in and to the membership interests held by each of Messrs. Cheung, Chan, and Chan in the Sponsor (an aggregate of 100 membership interests) for $400,000.

In addition, effective December 22, 2022, our Sponsor entered into a Securities Transfer Agreement with each of US Tiger Securities, Inc. (as designee of Lei Huang), Lei Xu, Yuanmei Ma, Norman C. Kristoff, David Xianglin Li, Michael Davidov, and Christy Szeto (the “Sellers”), pursuant to which the Sellers sold to the Sponsor an aggregate of 343,750 shares of Class B Common Stock for the purchase price of $3,506.25. Out of the issued and outstanding shares of Class B Common Stock, an aggregate of 100,000 shares remain owned by former management.

Lastly, on December 22, 2022, each of Koon Keung Chan, Lei Xu, and US Tiger Securities, Inc. assigned each of their promissory notes issued on November 4, 2022 in the aggregate amount of $733,750 to the Sponsor.

Since our inception, we have been actively searching for a suitable business combination target, and on October 24, 2023, we entered into a Business Combination Agreement (as it may be amended, supplemented or otherwise modified from time to time, the “BCA”) with FRLA Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”), and Water On Demand, Inc. (f/k/a Progressive Water Treatment, Inc.), a Texas corporation (“WODI-PWT”), pursuant to which we have agreed to acquire all the outstanding securities of WODI-PWT based on certain material financial and business terms and conditions being met. We are not limited to a particular industry or geographic region for purposes of consummating an initial business combination except that we will not undertake our initial business combination with any entity with its principal business operations in China (including Hong Kong and Macau).

We will effectuate our business combination using cash (subject to potential reduction of the trust account for the benefit of our public stockholders (the “Trust Account”) by stockholder redemptions) derived from the proceeds of (i) our initial public offering (the “IPO”), (ii) the sale of Common Stock (the “Private Placement Shares”) in a private placement (the “Private Placement”) to the Sponsor, and/or (iii) the issuance of additional shares, debt or a combination of shares and debt.

We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a business combination will be successful. Our management has broad discretion with respect to the specific application of the proceeds of the IPO and the Private Placement that are held outside of the Trust Account, although substantially all the net proceeds are intended to be applied generally towards consummating a business combination and working capital.

Since our IPO, our sole business activity has been identifying and evaluating suitable acquisition transaction candidates. We presently have no revenue and have had losses since inception from incurring formation and operating costs. We have relied upon the sale of our securities and loans from the Sponsor and other parties to fund our operations.

Recent Developments

Extension of the Company’s Time to Consummate its Initial Business Combination

On November 4, 2022, an aggregate of $977,500 (the “First Extension Payment”) was deposited into our Trust Account for the public stockholders, representing $0.10 per public share, which enabled us to extend the period of time we had to consummate our initial business combination by three months from November 5, 2022 to February 5, 2023 (the “First Extension”). The First Extension was the first of the two three-month extensions permitted under our amended and restated certificate of incorporation prior to its amendment in April 2023. In connection with the First Extension Payment, we issued unsecured promissory notes (the “First Extension Notes”) to certain initial stockholders including (i) a note of $413,750 to Mr. Koon Keung Chan, the former manager of the Sponsor, (ii) a note of $150,000 to US Tiger Securities, and (iii) a note of $170,000 to Dr. Lei Xu, our former President and Chairwoman. The First Extension Notes were later assigned to our Sponsor on December 22, 2022.

On February 6, 2023, $977,500 (the “Second Extension Payment”) was deposited into the Trust Account, for the public stockholders, representing $0.10 per public share, which enabled us to extend the period of time we had to consummate our initial business combination by three months from February 5, 2023 to May 5, 2023 (the “Second Extension”). The Second Extension was the second and final of the two three-month extensions permitted under our amended and restated certificate of incorporation prior to its amendment in April 2023. In connection with the Second Extension Payment, we issued an unsecured promissory note (the “Second Extension Note”) to WODI.

On May 5, 2023, $330,064.50 (the “Third Extension Payment”) was deposited into the Trust Account, for the public stockholders, representing $0.0625 per public share, which enabled us to extend the period of time we had to consummate our initial business combination by one month from May 5, 2023 to June 5, 2023 (the “Third Extension”). The Third Extension was the first of the six one-month extensions permitted under our amended and restated certificate of incorporation after its amendment in April 2023. In connection with the Third Extension Payment, we issued an unsecured promissory note (the “Third Extension Note”) to WODI.

On June 5, 2023, $100,000 (the “Fourth Extension Payment”) was deposited into the Trust Account, for the public stockholders, representing $0.027 per public share, which enabled us to extend the period of time we had to consummate our initial business combination by one month from June 5, 2023 to July 5, 2023 (the “Fourth Extension”). The Fourth Extension was the second of the six one-month extensions permitted under our amended and restated certificate of incorporation after its amendment in April 2023. In connection with the Fourth Extension Payment, we issued an unsecured promissory note (the “Fourth Extension Note”) to WODI.

On July 5, 2023, $100,000 (the “Fifth Extension Payment”) was deposited into the Trust Account, for the public stockholders, representing $0.027 per public share, which enabled us to extend the period of time we had to consummate our initial business combination by one month from July 5, 2023 to August 5, 2023 (the “Fifth Extension”). The Fifth Extension was the third of the six one-month extensions permitted under our amended and restated certificate of incorporation after its amendment in April 2023. In connection with the Fifth Extension Payment, we issued an unsecured promissory note (the “Fifth Extension Note”) to WODI.

On August 4, 2023, $100,000 (the “Sixth Extension Payment”) was deposited into the Trust Account, for the public stockholders, representing $0.027 per public share, which enabled us to extend the period of time we have to consummate our initial business combination by one month from August 5, 2023 to September 5, 2023 (the “Sixth Extension”). The Sixth Extension was the fourth of the six one-month extensions permitted under our amended and restated certificate of incorporation after its amendment in April 2023. In connection with the Sixth Extension Payment, we issued an unsecured promissory note (the “Sixth Extension Note”) to WODI.

On September 5, 2023, $100,000 (the “Seventh Extension Payment”) was deposited into the Trust Account, for the public stockholders, representing $0.027 per public share, which enabled us to extend the period of time we have to consummate our initial business combination by one month from September 5, 2023 to October 5, 2023 (the “Seventh Extension”). The Seventh Extension was the fifth of the six one-month extensions permitted under our amended and restated certificate of incorporation after its amendment in April 2023. In connection with the Seventh Extension Payment, we issued an unsecured promissory note (the “Seventh Extension Note”) to WODI.

On October 5, 2023, $100,000 (the “Eighth Extension Payment”) was deposited into the Trust Account, for the public stockholders, representing $0.027 per public share, which enabled us to extend the period of time we have to consummate our initial business combination by one month from October 5, 2023 to November 5, 2023 (the “Eighth Extension”). The Eighth Extension was the sixth of the six one-month extensions permitted under our amended and restated certificate of incorporation after its amendment in April 2023. In connection with the Seventh Extension Payment, we issued an unsecured promissory note (the “Eighth Extension Note”) to WODI.

On November 6, 2023, $100,000 (the “Ninth Extension Payment”) was deposited into the Trust Account, for the public stockholders, representing $0.032 per public share, which enabled us to extend the period of time we have to consummate our initial business combination by one month from November 5, 2023 to December 5, 2023 (the “Ninth Extension”). The Ninth Extension was the first of the twelve one-month extensions permitted under our amended and restated certificate of incorporation after its amendment on October 25, 2023. In connection with the Ninth Extension Payment, we issued an unsecured promissory note (the “Ninth Extension Note,” collectively with the First Extension Notes, the Second Extension Note, the Third Extension Note, the Fourth Extension Note, and the Fifth Extension Note, the Sixth Extension Note, the Seventh Extension Note and the Eighth Extension Note, herein referred to as the “Notes”) to WODI.

The Notes are non-interest bearing and payable (subject to the waiver against trust provisions) on the earlier of (i) consummation of our initial business combination and (ii) the date of our liquidation. The principal balance may be prepaid at any time, at our election. The holders of the Notes have the right, but not the obligation, to convert their Notes, in whole or in part, respectively, into private shares of our Class A Common Stock (the “Conversion Shares”), as described in our IPO prospectus (File Number 333-256511). The number of Conversion Shares to be received by the holders in connection with such conversion shall be an amount, up to $3,000,000, determined by dividing (x) the sum of the outstanding principal amount payable to such holders by (y) $10.00.

Extension of Business Combination Deadline

On March 3, 2023, our board of directors approved a stockholder proposal to amend our amended and restated certificate of incorporation to extend, upon the request of our Sponsor and approval by our board of directors, the period of time for us to (i) consummate a business combination, (ii) cease our operations if we fail to complete such business combination, and (iii) redeem or repurchase 100% of the public shares, up to six times, each by an additional month, for an aggregate of six additional months (i.e. from May 5, 2023 to up to November 5, 2023) or such earlier date as determined by the board of directors.

On April 10, 2023, at a special meeting of stockholders, our stockholders approved the filing of an amendment to the Amended and Restated Certificate of Incorporation (the “Amendment”) to extend, upon the request of our Sponsor, and approval by our board of directors, the period of time for us to (i) consummate a business combination, (ii) cease our operations if we fail to complete such business combination, and (iii) redeem or repurchase 100% of the public shares, up to six times, each by an additional month, for an aggregate of six additional months (i.e. from May 5, 2023 to up to November 5, 2023) or such earlier date as determined by the board of directors. On April 11, 2023, we filed the Amendment with the Delaware Secretary of State. The stockholder vote to approve the Amendment also triggered a redemption right for the holders of the public shares of Class A Common Stock. As a result of the Amendment, 4,493,968 shares of Class A Common Stock were redeemed for a total redemption amount of $47,501,242.

As a result of the June 2, 2023 special meeting of stockholders of the Company, the Company filed with the Secretary of State of the State of Delaware an amendment to the Company’s amended and restated certificate of incorporation to amend the monthly extension amounts to be paid by the Sponsor (or its affiliates), to extend the period of time for the Company to consummate a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving the Company to be made upon the request of the Sponsor, and approval by the Company’s board of directors, from an amended price per unredeemed share of Class A Common Stock of $0.0625 to the lower of $100,000 or $0.05 per unredeemed share of Class A Common Stock.

On June 2, 2023, at a special meeting of stockholders, the holders of 1,666,080 public shares properly exercised their right to redeem their shares (and did not withdraw their redemption) for cash at a redemption price of approximately $10.76 per share, for an aggregate redemption amount of approximately $17,927,021. Following such redemptions, 3,614,952 public shares of Class A Common Stock remain outstanding.

On October 25, 2023, at a special meeting of stockholders, in connection with the votes to approve the extension of the Business Combination period for an additional twelve months, from November 5, 2023 to up to November 5, 2024, the holders of 452,404 public shares properly exercised their right to redeem their shares (and did not withdraw their redemption) for cash at a redemption price of approximately $10.96 per share, for an aggregate redemption amount of approximately $5.0 million. Following such redemptions, 3,162,548 public shares of Class A Common Stock remain outstanding.

Business Combination Agreement

On October 24, 2023, we entered into the BCA with Merger Sub and WODI-PWT.

The BCA provides, among other things, that Merger Sub will merge with and into WODI-PWT, with WODI-PWT as the surviving company in the merger and, after giving effect to such merger, WODI-PWT shall be a wholly-owned subsidiary of us (the “Merger”). We will change our name to “Water on Demand, Inc.” The Merger and the other transactions contemplated by the BCA are hereinafter referred to as the “Business Combination.” In accordance with the terms and subject to the conditions of the BCA, at the effective time of the Merger (the “Effective Time”), among other things: (i) each share of Class A Common Stock and each share of Class B Common Stock (except for Class B Common Stock held by the Sponsor which are subject to forfeiture pursuant to the Sponsor Letter Agreement) that is issued and outstanding immediately prior to the Merger will become one share of our common stock, par value $0.0001 per share, and (ii) each share of common stock of WODI-PWT (subject to limited exceptions) issued and outstanding as of immediately prior to the Effective Time shall be automatically canceled and extinguished and converted into the right to receive that number of shares of our common stock equal to an exchange ratio, calculated as (a) the aggregate equity value of WODI-PWT of $32.0 million, divided by the aggregate number of shares of WODI-PWT common stock outstanding immediately prior to the Effective Time, divided by (b) the FRLA Share Value, where “FRLA Share Value” means (i) the aggregate amount of cash on deposit in the Trust Account (without giving effect to stockholder redemptions) as of two business days prior to the closing date of the Merger, including interest not previously released to us to pay our taxes divided by (ii) the total number of then issued and outstanding shares of Class A Common Stock (without giving effect to stockholder redemptions).

Results of Operations

Our entire activity from inception to date was related to our formation, the IPO and general and administrative activities. Since the IPO, our activity has been limited to the evaluation of business combination candidates, and we will not generate any operating revenues, if any, until the closing and completion of our initial business combination. We generate non-operating income in the form of money market fund dividend income earned on investments held in the Trust Account. We are incurring expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

For the three months ended September 30, 2023, we had a net income of $40,383 which consisted of dividend income earned on investments held in Trust Account of $487,742, offset by formation and operating costs of $393,380, franchise tax expenses of $38,000 and income tax provision of $15,979.

For the three months ended September 30, 2022, we had a net income of $176,285, which consisted of dividend earned on investment held in Trust Account of $450,819 and offset by formation and operating costs $225,934 and franchise tax expenses of $48,600.

For the nine months ended September 30, 2023, we had a net income of $391,662 which consisted of dividend earned on investment held in Trust Account of $2,342,684, offset by formation and operating costs of $1,353,037, franchise tax expenses of $110,400 and income tax provision of $487,585.

For the nine months ended September 30, 2022, we had a net loss of $276,541, which consisted of formation and operating costs $731,906 and franchise tax expenses of $145,200 and offset by dividend earned on investment held in Trust Account of $600,565.

Liquidity and Capital Resources

As of September 30, 2023, we had cash outside the Trust Account of $111,745 available for working capital needs. All remaining cash is held in the Trust Account and is generally unavailable for our use prior to an initial business combination, and is restricted for use either in a business combination or to redeem the public shares of Common Stock. As of September 30, 2023, none of the amount on deposit in the Trust Account was available to be withdrawn as described above except for tax payments.

For the nine months ended September 30, 2023, there was $2,592,619 of cash used in operating activities resulting from dividend earned on investment held in Trust Account amounting to $2,342,684, non-cash deferred tax expense of $83,724, increase in prepaid expenses of $188,772, decrease in income tax payable of $271,346 and decrease in franchise tax payable of $199,759, offset by net income of $391,662, decrease in prepaid expenses – related party of $25,000, increase in due to a related party of $15,000, and increase in accounts payable and accrued expenses of $62,004.

For the nine months ended September 30, 2022, there was $616,202 of cash used in operating activities resulting from net loss of $276,541 and dividend earned on investment held in Trust Account amounting to $600,565, offset by decrease in prepaid expenses of $149,852, increase in accounts payable and accrued expenses of $1,813, and increase in franchise taxes payable of $109,239.

For the nine months ended September 30, 2023, there was $64,749,327 of cash provided by investing activities resulting from the withdrawal of an investment held in the Trust Account amounting to $66,456,892, offset by the purchase of an investment held in Trust Account amounting to $1,707,565.

For the nine months ended September 30, 2022, there were no cash investing activities.

For the nine months ended September 30, 2023, there was $62,217,277 of cash used in financing activities resulting from the Class A common stock redemptions of $65,428,262, offset by the proceeds from the issuance of promissory notes to a related party amounting to $3,210,985.

For the nine months ended September 30, 2022, there were no cash financing activities.

Until consummation of the business combination, we will use the funds held outside the Trust Account, and any additional funding that may be loaned to us by our Sponsor, for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the business combination.

If our estimates of the costs of undertaking in-depth due diligence and negotiating a business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to the business combination and will need to raise additional capital. In this event, our officers, directors or their affiliates may, but are not obligated to, loan us funds as may be required. If we consummate an initial business combination, we would repay such loaned amounts out of the proceeds of the Trust Account released to us upon consummation of the business combination, or, at the lender’s discretion, up to $3,000,000 of such loans may be convertible into shares of Class A Common Stock of the post business combination entity at a price of $10.00 per share of Class A Common Stock. In the event that the initial business combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from our Trust Account would be used for such repayment. The terms of such loans by our initial stockholders, officers and directors, if any, have not been determined and no written agreements exist with respect to such loans.

Moreover, we may need to obtain additional financing either to consummate our initial business combination or because we become obligated to redeem a significant number of our public shares upon consummation of our initial business combination, in which case we may issue additional securities or incur debt in connection with such business combination. Subject to compliance with applicable securities laws, we would only consummate such financing simultaneously with the consummation of our initial business combination. Following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.

In connection with our assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (ASU) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that these conditions raise substantial doubt about our ability to continue as a going concern. Management’s plan in addressing this uncertainty is through the promissory notes – related parties and the Working Capital Loans. In addition, if we are unable to complete a business combination within the Combination Period by December 5, 2023 (or up to November 5, 2024, if the Company extends the time to complete a Business Combination), our board of directors would proceed to commence a voluntary liquidation and thereby a formal dissolution of the Company. There is no assurance that our plans to consummate a business combination will be successful within the Combination Period. As a result, management has determined that this additional condition also raises substantial doubt about our ability to continue as a going concern. The unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Off-Balance Sheet Financing Arrangements

We have no obligations, assets or liabilities that would be considered off-balance sheet arrangements as of September 30, 2023 and December 31, 2022. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.

Contractual Obligations

As of September 30, 2023 and December 31, 2022, we do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities. As of September 30, 2023 and December 31, 2022, we have $15,000 and $50,000, respectively, payable due to a related party. As of September 30, 2023 and December 31, 2022, we have $3,994,735 and $733,750, respectively, promissory notes issued to related parties.

We are obligated to pay the underwriters a deferred underwriters’ discount equal to 3.5% of the gross proceeds of the IPO. The deferred underwriters’ discount of $3,421,250 will become payable to the US Tiger Securities and EF Hutton, a division of Benchmark Investment LLC, the representatives of the several underwriters of the IPO (each, a “Representative”), from the amounts held in the Trust Account solely in the event that we complete a business combination.

Critical Accounting Policies and Estimates

Use of Estimates

The preparation of unaudited condensed financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Warrants

We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) ASC 480 “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, whether they meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to our own Common Stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of our control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations.

We accounted for the 4,887,500 Warrants issued with the Initial Public Offering as equity instruments in accordance with ASC 480, “Distinguishing Liabilities from Equity” and ASC 815-40, “Derivatives and Hedging: Contracts in Entity’s Own Equity.”

Class A Common Stock Subject to Possible Redemption

We account for our Class A Common Stock, $0.0001 par value per share (the “Class A Common Stock”), subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Common Stock subject to mandatory redemption (if any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable Class A Common Stock (including Class A Common Stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, Class A Common Stock is classified as stockholders’ equity. Our public shares feature certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, as of September 30, 2023 and December 31, 2022, shares of Class A Common Stock subject to possible redemption are presented at redemption value of $10.95 and $10.39, respectively, per share as temporary equity, outside of the stockholders’ deficit section of our unaudited condensed balance sheets. We recognize changes in redemption value immediately as they occur and adjust the carrying value of redeemable Class A Common Stock to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying value of shares of redeemable Class A Common Stock are affected by charges against additional paid in capital or accumulated deficit if additional paid in capital equals to zero.

Net Income (Loss) per Share

We comply with accounting and disclosure requirements of FASB ASC 260, Earnings Per Share. In order to determine the net income (loss) attributable to both the redeemable shares and non-redeemable shares, we first considered the undistributed income (loss) allocable to both the redeemable Common Stock and non-redeemable Common Stock and the undistributed income (loss) is calculated using the total net loss less any dividends paid. We then allocated the undistributed income (loss) ratably based on the weighted average number of shares outstanding between the redeemable and non-redeemable Common Stock. Any remeasurement of the accretion to redemption value of the Common Stock subject to possible redemption was considered to be dividends paid to the public stockholders.

Recent Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, “Debt – Debt Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40).” The amendment in this ASU is to address issues identified as a result of the complexity associated with applying generally accepted accounting principles (GAAP) for certain financial instruments with characteristics of liabilities and equity. For convertible instruments, the Board decided to reduce the number of accounting models for convertible debt instruments and convertible preferred stock per this ASU. Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host contract as compared with prior GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The amendments in this ASU are effective for public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. We have not early adopted the ASU, and it will become effective for us on January 1, 2024, as we are an emerging growth company. We believe the adoption of this ASU would not have a material effect on our unaudited condensed financial statements.

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company, we have elected not to provide the disclosure required by this item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Financial Officer who also serves as our principal executive officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of September 30, 2023, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our Chief Financial Officer who also serves as our principal executive officer, has concluded that during the period covered by this report, our disclosure controls and procedures were effective.

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting, as defined in Rules 13a-15(f) of the Exchange Act, during the quarter ended September 30, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

To the knowledge of our management, there is no litigation currently pending or contemplated against us, any of our officers or directors in their capacity as such or against any of our property.

Item 1A. Risk Factors.

As a smaller reporting company under Rule 12b-2 of the Exchange Act, we are not required to include risk factors in this Report. However, 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 on Form S-1 for our initial public offering, (ii) Annual Reports on Form 10-K for the years ended December 31, 2021 and 2022, as filed with the SEC on March 28, 2022 (as amended April 22, 2022) and April 13, 2023, respectively, and (iii) Proxy Statement on Schedule 14A, as filed with the SEC on October 2, 2023. 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.

To mitigate the risk that we might be deemed to be an investment company for purposes of the Investment Company Act, we instructed Wilmington Trust, National Association, the trustee with respect to the Trust Account, to liquidate the investments held in the Trust Account and instead to hold the funds in the Trust Account in cash until the earlier of the consummation of our initial business combination or our liquidation. As a result, following such liquidation of investments in the Trust Account, we will receive less interest on the funds held in the Trust Account than we would have received had we not liquidated such investments 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 had, 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, on September 28, 2023, 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 instructed Wilmington Trust, National Association, the trustee with respect to the Trust Account, to liquidate the investments held in the Trust Account and instead to hold the funds in the Trust Account in cash until the earlier of the consummation of our initial business combination or our liquidation. Following such liquidation, we may receive less interest on the funds held in the Trust Account than the interest we would have received pursuant to our original Trust Account investments; 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. Consequently, the transfer of the funds in the Trust Account to cash could reduce the dollar amount our public stockholders would receive upon any redemption or our liquidation.

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

Nasdaq may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.

We cannot assure you that our securities will continue to be, listed on Nasdaq. In order to continue listing our securities on Nasdaq prior to our initial business combination, we must maintain certain financial, distribution and share price levels. On August 21, 2023, we received a written notice from the Listing Qualifications Department of Nasdaq indicating that we are not in compliance with Listing Rule 5450(b)(2)(A), due to our failure to maintain a minimum Market Value of Listed Securities of $50 million, and on October 16, 2023 we received a written notice that we are not in compliance with Listing Rule 5450(a)(2), due to our failure to maintain a minimum of 400 Total Holders. The notices are notifications of deficiency, not of imminent delisting. The Company has transferred the listing of its securities to the Nasdaq Capital Market, and has until November 30, 2023 to submit a plan of compliance to achieve and sustain compliance with Nasdaq continued listing requirements. If Nasdaq does not accept our plan, we will have the opportunity to appeal the decision in front of a Nasdaq Hearings Panel. We cannot assure you that we will be able to regain compliance with the Nasdaq continued listing requirements, including the minimum Total Holders, or that our securities will continue to be listed on Nasdaq.

Additionally, in connection with our initial business combination, we will be required to demonstrate compliance with the applicable exchange’s initial listing requirements, which are more rigorous than the continued listing requirements, in order to continue to maintain the listing of our securities. We cannot assure you that we will be able to meet those initial listing requirements at that time.

If any of our securities are delisted from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect such securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or pre-empts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Our Units, Class A common stock and warrants currently qualify as covered securities under such statute. Although the states are pre-empted from regulating the sale of covered securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed on Nasdaq, our securities would not qualify as covered securities under such statute and we would be subject to regulation in each state in which we offer our securities, including in connection with our initial business combination, which may negatively impact our ability to consummate our initial business combination.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities

On November 5, 2021, we consummated our initial public offering of 9,775,000 units, including 1,275,000 units as a result of the exercise in full of the underwriters’ over-allotment option, in each case, at an offering price of $10.00 per Unit, generating aggregate gross proceeds of $97,750,000. The securities sold in our initial public offering were registered under the Securities Act on a registration statement on Form S-1 (File No. 333-256511). The registration statement became effective on November 2, 2021. For a description of the use of the proceeds generated in our IPO and private placement, see Part I, Item 2 of this Quarterly Report. There has been no material change in the planned use of the proceeds from the IPO and private placement as is described in the Company’s final prospectus related to the IPO.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

On October 25, 2023, we held a special meeting of our stockholders at which our stockholders approved, among other things, proposals to amend our certificate of incorporation. In connection with the vote to approve such proposal, the holders of 452,404 shares of Class A common stock properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.96 per share, for an aggregate redemption amount of approximately $5.0 million.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

Disclosure Pursuant to Item 1.01 of Current Report on Form 8-K – Entry into a Material Definitive Agreement.

On November 13, 2023, we entered into indemnification agreements with each of our directors and executive officers (the “Indemnification Agreement”). The Indemnification Agreement supplements the indemnification rights provided under our certificate of incorporation, bylaws, and applicable law.

This form of Indemnification Agreement, among other things, requires the Company to indemnify each director and executive officer, under the circumstances and to the extent provided in the agreement, to the fullest extent permitted by Delaware law, including indemnification of expenses such as attorneys’ fees, judgments, fines and settlement amounts incurred by the director or executive officer in any action or proceeding arising out of the person’s service as a director or executive officer. The form of agreement also sets forth procedures with respect to requests for indemnification from a director or executive officer.

A copy of a form of the Indemnification Agreement is attached as Exhibit 10.14 to this Quarterly Report on Form 10-Q for the quarter ended September 30, 2023. The foregoing description of the Indemnification Agreement is a summary and does not purport to be complete and is qualified in its entirety by reference to Exhibit 10.14.

Item 6. Exhibits

The following exhibits are filed as part of, or incorporated by reference into, this Report.

_____________________ 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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