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Item 1. Financial Statements

2022-08-15 compared with 2022-05-16 · 751 added, 549 removed, 96 unchanged (93% of the section changed)

2 unchanged sentences

UNAUDITED CONDENSED BALANCE SHEETS

Current Asset

Current Asset – cash

Current Assets

Prepaid expenses

Deferred offering costs

Total Current Assets

Liabilities and Stockholder’s Equity (Deficit)

Investments held in Trust Account

$ 116,961,952

Liabilities, Temporary Equity, and Stockholders’ Deficit

Current Liabilities

Accrued offering expenses

Promissory note – related party

Accrued expenses

Franchise tax payable

Due to related party

Total current liabilities

Warrant liability

Deferred underwriting fee payable

Total liabilities

Commitments and Contingencies

Stockholder’s Equity (Deficit)

Common stock subject to possible redemption, 11,500,000 shares at conversion value of $ 10.10 per share

Stockholders’ Deficit

Common stock, $ 0.0001 par value;

50,000,000 shares authorized;

2,875,000 and 0 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively (1)

3,405,000 and 0 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

Accumulated deficit

Total stockholder’s equity (deficit)

Total Liabilities and Stockholder’s Equity (Deficit)

(1) Includes up to 375,000 shares of common stock subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised in full or in part (see Note 5).

As a result of the underwriters’ full exercise their over-allotment option, no insider shares are subject to forfeiture after April 7, 2022.

( 4,280,388 )

stockholders’ deficit

( 4,280,048 )

Total Liabilities, Temporary Equity, and Stockholders’ Deficit

$ 116,961,952

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

1 unchanged sentence

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

Formation costs

Basic and diluted weighted average shares outstanding (1)

Basic and diluted net loss per share

(1) Excludes up to 375,000 shares of common stock subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised in full or in part (see Note 5).

As a result of the underwriters’ full exercise their over-allotment option, no insider shares are subject to forfeiture after April 7, 2022.

Three months ended

March 16, 2021

General and administrative expenses

Franchise tax expenses

Loss from operations

Interest earned on investment held in Trust Account

Change in fair value of warrant liabilities

Loss before income taxes

Income taxes provision

Basic and diluted weighted average shares outstanding, redeemable common stock

Basic and diluted net income per share, redeemable common stock

Basic and diluted weighted average shares outstanding, non-redeemable common stock

Basic and diluted net loss per share, non-redeemable common stock

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

ACQUISITION CORP.

UNAUDITED STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY(DEFICIT)

the Three Month Ended March 31, 2022

Stockholder’s

Balance as of January 1, 2022

UNAUDITED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY(DEFICIT)

Months Ended June 30, 2022

Stockholders’

Balance, January 1, 2022

Common stock issued to initial stockholders

Balance as of March 31, 2022

For the period from March 16, 2021 (inception) through March 31,

Sale of public units in initial public offering

Sale of private placement units

Sale of unit purchase option to underwriter

Underwriter commissions

( 7,187,500 )

Offering costs

Warrant Liabilities

Reclassification of common stock subject to redemption

( 11,500,000 )

( 96,337,784 )

( 96,338,934 )

Allocation of offering costs to common stock subject to redemption

Accretion of common stock to redemption value

( 22,649,478 )

( 4,062,993 )

( 26,712,471 )

Balance as of June 30, 2022

$ ( 4,280,388 )

$ ( 4,280,048 )

the period from March 16, 2021 (inception) through June 30, 2021

Stockholder’s

Balance as of March 16, 2021 (inception)

Balance as of March 31, 2021

(1) Includes up to 375,000 shares of common stock subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised in full or in part (see Note 5).

As a result of the underwriters’ full exercise their over-allotment option, no insider shares are currently subject to forfeiture after April 7, 2022.

Balance as of

March 16, 2021 (inception)

as of June 30, 2021

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

ACQUISITION CORP.

UNAUDITED STATEMENTS OF CASH FLOWS

the period from March 16,

2021 (inception) through

UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS

2021 (inception)

Cash flows from operating activities:

Adjustments to reconcile net cash used in operating activities:

Interest earned on investment held in Trust Account

Change in fair value of warrant liabilities

Prepaid expenses

Accrued expenses

Franchise tax payable

Formation costs paid by related party

Net cash provided by operating activities

Net cash used in operating activities

Cash Flows from Investing Activities:

Purchase of investment held in Trust Account

( 116,150,000

Net cash used in financing activities

( 116,150,000

Cash Flows from Financing Activities:

Proceeds from issuance of insider shares to the initial stockholders

Proceeds from sale of public units through public offering

Proceeds from sale of private placement units

Proceeds from sale of unit purchase option

Proceeds from issuance of promissory note to related party

Repayment of promissory note to related party

Repayment of advance from related party

Payment of underwriters’ commissions

Payment of deferred offering costs

Net cash used in financing activities

Net cash provided by financing activities

Net change in cash

1 unchanged sentence

Cash, end of the period

The accompanying notes are an integral part of

these unaudited condensed financial statements.

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2022

Note 1 — Description of Organization

and Business Operations

Redwoods Acquisition Corp.

(the “Company”)

is a newly organized blank check company incorporated as a Delaware corporation on March 16, 2021.

The Company was formed for the purpose

of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more

businesses or entities (“Business Combination”).

The Company is not limited to a particular industry or geographic region

for purposes of consummating a Business Combination.

As of March 31, 2022, the Company had not commenced

Supplemental Disclosure of Non-cash Financing Activities

Initial classification of common stock subject to redemption

Initial recognition of warrant liabilities

Deferred underwriting fee payable

Allocation of offering costs to common stock subject to redemption

Accretion of Common stock to redemption value

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

ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

1 — Description of Organization and Business Operations

Acquisition Corp.

(the “Company”) is a newly organized blank check company incorporated as a Delaware corporation on March

The Company was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization

or similar business combination with one or more businesses or entities (“Business Combination”).

The Company is not limited

to a particular industry or geographic region for purposes of consummating a Business Combination.

As of June 30, 2022, the Company had not commenced

any operations.

All activities through March 31, 2022 are related to the Company’s formation and initial public offering (“IPO”

as defined below in Note 3).

The Company will not generate any operating revenues until after the completion of a Business Combination,

at the earliest.

The Company will generate non-operating income in the form of interest income from the proceeds derived from the IPO.

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

The Company’s sponsor is Redwoods Capital

LLC, a Delaware limited liability company (the “Sponsor”).

All activities through June 30, 2022 are related to the Company’s formation, the initial public offering (“IPO”

as defined below in Note 4) and, subsequent to the IPO, identifying a target company for a Business Combination.

The Company will not

generate any operating revenues until after the completion of a Business Combination, at the earliest.

The Company will generate non-operating

income in the form of interest income from the proceeds derived from the IPO.

The Company has selected December 31 as its fiscal year

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

The registration statement for the Company’s

IPO became effective on March 30, 2022.

On April 4, 2022, the Company consummated the IPO of 10,000,000 units (which does not include

the exercise of the over-allotment option by the underwriters in the IPO) at an offering price of $ 10.00 per unit (the “Public Units’),

generating gross proceeds of $ 100,000,000 .

Simultaneously with the IPO, the Company sold to its Sponsor and Chardan Capital Markets LLC

(“Chardan”) 377,500 units and 100,000 units, respectively, at $ 10.00 per unit (the “Private Units”) in a private

placement generating total gross proceeds of $ 4,775,000 , which is described in Note 4.

Upon the closing of the IPO and the private placement

on April 4, 2022, a total of $ 101,000,000 was placed in a trust account (the “Trust Account”) maintained by Continental Stock

Transfer & Trust Company as a trustee and will be invested only in U.S.

government treasury bills with a maturity of 185 days or less

or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended (the “Investment

Company Act”), and that invest only in direct U.S.

On April 4, 2022, the Company consummated the IPO of 10,000,000 units at an offering price of

$ 10.00 per unit (the “Public Units’), generating gross proceeds of $ 100,000,000 .

Simultaneously with the closing of the IPO,

the Company sold to the Sponsor and Chardan Capital Markets LLC (“Chardan”), in a private placement, 377,500 units and 100,000

units, respectively, at $ 10.00 per unit (the “Private Units”), generating total gross proceeds of $ 4,775,000 , which is described

Company granted the underwriters a 45-day option to purchase up to 1,500,000 additional Public Units to cover over-allotments, if any.

On April 7, 2022, the underwriters exercised the over-allotment option in full and purchased 1,500,000 Public Units at a price of $ 10.00

per Public Unit, generating gross proceeds of $ 15,000,000 .

Simultaneously with the closing of the over-allotment option, the Company

consummated the sale of an additional aggregate of 52,500 Private Units with the Sponsor and Chardan at a price of $ 10.00 per Private

Unit, generating total proceeds of $ 525,000 .

costs amounted to $ 8,365,339 , consisting $ 2,875,000 of underwriting fees, $ 4,312,500 of deferred underwriting fees (payable only upon

completion of a Business Combination) and $ 1,177,839 of other offering costs.

the closing of the IPO and the sale of Private Units on April 4, 2022, and the exercise of the over-allotment option and the sale of

the additional Private Units on April 7, 2022, a total of $ 116,150,000 was placed in a trust account (the “Trust Account”)

maintained by Continental Stock Transfer & Trust Company as a trustee and will be invested only in U.S.

government treasury bills

with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company

Act of 1940, as amended (the “Investment Company Act”), and that invest only in direct U.S.

government treasury obligations.

These funds will not be released until the earlier

of the completion of the initial Business Combination and the liquidation due to the Company’s failure to complete a Business Combination

within the applicable period of time.

The proceeds deposited in the Trust Account could become subject to the claims of the Company’s

creditors, if any, which could have priority over the claims of the Company’s public stockholders.

In addition, interest income

earned on the funds in the Trust Account may be released to the Company to pay its income or other tax obligations.

With these exceptions,

expenses incurred by the Company may be paid prior to a business combination only from the net proceeds of the IPO and private placement

not held in the Trust Account.

Pursuant to Nasdaq listing rules, the Company’s initial Business Combination must occur with one or more target businesses having an aggregate fair market value equal to at least 80% of the value of the funds in the Trust account (excluding any deferred underwriting discounts and commissions and taxes payable on the income earned on the Trust Account), which the Company refers to as the 80% test, at the time of the execution of a definitive agreement for its initial Business Combination, although the Company may structure a Business Combination with one or more target businesses whose fair market value significantly exceeds 80% of the trust account balance.

If the Company is no longer listed on Nasdaq, it will not be required to satisfy the 80% test.

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.

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2022

The Company will provide its holders of the outstanding

Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the

completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or

(ii) by means of a tender offer.

The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct

a tender offer will be made by the Company, solely in its discretion.

The Public Stockholders will be entitled to redeem their Public

Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $ 10.10 per Public Share, plus any pro

rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its franchise and income

tax obligations).

If a stockholder vote is not required by law and

the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Amended

and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”), conduct the redemptions

pursuant to the tender offer rules of the U.S.

Securities and Exchange Commission (“SEC”) and file tender offer documents

with the SEC prior to completing a Business Combination.

If, however, stockholder approval of the transaction is required by law, or the

Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with

a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules.

Additionally, each public stockholder may

elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction.

If the Company seeks stockholder

approval in connection with a Business Combination, the Company’s Sponsor and any of the Company’s officers or directors that

may hold Insider Shares (as defined in Note 6) (the “Initial Stockholders”) and Chardan have agreed (a) to vote

their Insider Shares, the shares underlying the Private Units (“Private Shares”) and any Public Shares purchased during or

after the IPO in favor of approving a Business Combination and (b) not to convert any shares (including the Insider Shares) in connection

with a stockholder vote to approve, or sell the shares to the Company in any tender offer in connection with, a proposed Business Combination.

The Initial Stockholders and Chardan have agreed

(a) to waive their redemption rights with respect to the Insider Shares, Private Shares and Public Shares held by them in connection with

the completion of a Business Combination and (b) not to propose, or vote in favor of, an amendment to the Amended and Restated Certificate

of Incorporation that would affect the substance or timing of the Company’s obligation to redeem 100 % of its Public Shares if the

Company does not complete a Business Combination, unless the Company provides the public stockholders with the opportunity to redeem their

Public Shares in conjunction with any such amendment.

The Company will have until 12 months from the

closing of the IPO to consummate a Business Combination.

In addition, if the Company anticipates that it may not be able to consummate

initial business combination within 12 months, the Company’s insiders or their affiliates may, but are not obligated to, extend

the period of time to consummate a business combination two times by an additional three months each time (for a total of 18 months to

complete a business combination) (the “Combination Period”).

In order to extend the time available for the Company to

consummate a Business Combination, the Company’s insiders or their affiliates or designees, upon five days’ advance notice

prior to the applicable deadline, must deposit into the Trust Account $1,000,000, or $1,150,000 if the underwriters’ over-allotment

option is exercised in full ($0.10 per Public Share in either case or an aggregate of $2,000,000 (or $2,300,000 if the over-allotment

option is exercised in full)), on or prior to the date of the applicable deadline.

On April 7, 2022, Chardan exercised the over-allotment

option in full (see Note 8).

If the Company is unable to complete a Business

Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly

as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash,

equal to the aggregate amount then on deposit in the Trust Account including interest (which interest shall be net of taxes payable, and

less certain amount of interest to pay dissolution expenses) divided by the number of then outstanding Public Shares, which redemption

will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions,

if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of

the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to

the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2022

The Initial Stockholders and Chardan have agreed

to waive their liquidation rights with respect to the Insider Shares and Private Shares, as applicable, if the Company fails to complete

a Business Combination within the Combination Period.

However, if any Initial Stockholder or Chardan acquires Public Shares in or after

the IPO, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business

Combination within the Combination Period.

The underwriters have agreed to waive their rights to their deferred underwriting commissions

(see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within in the Combination Period

and, in such event, such amounts will be included with the other 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 $10.10.

In order to protect the amounts held in the Trust

Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (excluding the Company’s

independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business

with which the Company has entered into a written letter of intent, confidentiality or similar agreement or business combination agreement,

reduce the amount of funds in the Trust Account to below the lesser of (i) $10.10 per Public Share and (ii) the actual amount per Public

Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.10 per share due to reductions

in the value of the trust assets, in each case less taxes payable, provided that such liability will not apply to any claims by a third

party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not

such waiver is enforceable), nor will it apply to any claims under the Company’s indemnity of the underwriters of the IPO against

certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”).

in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent

of any liability for such third party claims.

Liquidity and Capital Resources

As of March 31, 2022, the Company had cash of

$ 6,670 and a working capital deficit of $ 204,630 .

These funds will not be released until the earlier of the completion of the initial Business Combination and the liquidation due to the

Company’s failure to complete a Business Combination within the applicable period of time.

The proceeds deposited in the Trust

Account could become subject to the claims of the Company’s creditors, if any, which could have priority over the claims of the

Company’s public stockholders.

In addition, interest income earned on the funds in the Trust Account may be released to the Company

to pay its income or other tax obligations.

With these exceptions, expenses incurred by the Company may be paid prior to a business combination

only from the net proceeds of the IPO and private placement not held in the Trust Account.

to Nasdaq listing rules, the Company’s initial Business Combination must occur with one or more target businesses having an aggregate

fair market value equal to at least 80% of the value of the funds in the Trust account (excluding any deferred underwriting discounts

and commissions and taxes payable on the income earned on the Trust Account), which the Company refers to as the 80% test, at the time

of the execution of a definitive agreement for its initial Business Combination, although the Company may structure a Business Combination

with one or more target businesses whose fair market value significantly exceeds 80% of the trust account balance.

If the Company is

no longer listed on Nasdaq, it will not be required to satisfy the 80% test.

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

ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Company will provide its holders of the outstanding Public Shares (the “Public Stockholders”) with the opportunity to redeem

all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting

called to approve the Business Combination or (ii) by means of a tender offer.

The decision as to whether the Company will seek stockholder

approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion.

The Public Stockholders

will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated

to be $ 10.10 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to

the Company to pay its franchise and income tax obligations).

a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons,

the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”),

conduct the redemptions pursuant to the tender offer rules of the U.S.

Securities and Exchange Commission (“SEC”) and

file tender offer documents with the SEC prior to completing a Business Combination.

If, however, stockholder approval of the transaction

is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem

shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules.

Additionally,

each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction.

If the Company seeks stockholder approval in connection with a Business Combination, the Company’s Sponsor and any of the Company’s

officers or directors that may hold Insider Shares (as defined in Note 6) (the “Initial Stockholders”) and Chardan have

agreed (a) to vote their Insider Shares, the shares underlying the Private Units (“Private Shares”) and any Public Shares

purchased during or after the IPO in favor of approving a Business Combination and (b) not to convert any shares (including the

Insider Shares) in connection with a stockholder vote to approve, or sell the shares to the Company in any tender offer in connection

with, a proposed Business Combination.

Initial Stockholders and Chardan have agreed (a) to waive their redemption rights with respect to the Insider Shares, Private Shares

and Public Shares held by them in connection with the completion of a Business Combination and (b) not to propose, or vote in favor of,

an amendment to the Amended and Restated Certificate of Incorporation that would affect the substance or timing of the Company’s

obligation to redeem 100 % of its Public Shares if the Company does not complete a Business Combination, unless the Company provides the

public stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.

Company will have until 12 months from the closing of the IPO to consummate a Business Combination.

In addition, if the Company anticipates

that it may not be able to consummate initial business combination within 12 months, the Company’s insiders or their affiliates

may, but are not obligated to, extend the period of time to consummate a business combination two times by an additional three months

each time (for a total of 18 months to complete a business combination) (the “Combination Period”).

In order to extend

the time available for the Company to consummate a Business Combination, the Company’s insiders or their affiliates or designees,

upon five days’ advance notice prior to the applicable deadline, must deposit into the Trust Account $1,150,000 ($0.10 per Public

Share or an aggregate of $2,300,000), on or prior to the date of the applicable deadline.

the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except

for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public

Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest

(which interest shall be net of taxes payable, and less certain amount of interest to pay dissolution expenses) divided by the number

of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders

(including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably

possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board

of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims

of creditors and the requirements of other applicable law.

ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Initial Stockholders and Chardan have agreed to waive their liquidation rights with respect to the Insider Shares and Private Shares,

as applicable, if the Company fails to complete a Business Combination within the Combination Period.

However, if any Initial Stockholder

or Chardan acquires Public Shares in or after the IPO, such Public Shares will be entitled to liquidating distributions from the Trust

Account if the Company fails to complete a Business Combination within the Combination Period.

The underwriters have agreed to waive

their rights to their deferred underwriting commissions (see Note 7) held in the Trust Account in the event the Company does not complete

a Business Combination within in the Combination Period and, in such event, such amounts will be included with the other 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 $ 10.10 .

order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims

by a third party (excluding the Company’s independent registered public accounting firm) for services rendered or products sold

to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality

or similar agreement or business combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $ 10.10

per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust

Account, if less than $ 10.10 per share due to reductions in the value of the trust assets, in each case less taxes payable, provided

that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all

rights to the monies held in the Trust Account (whether or not such waiver is enforceable), nor will it apply to any claims under the

Company’s indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act

of 1933, as amended (the “Securities Act”).

Moreover, in the event that an executed waiver is deemed to be unenforceable

against a third party, the Sponsor will not be responsible to the extent of any liability for such third party claims.

and Capital Resources

As of June 30, 2022, the Company had cash of $ 447,382

and a working capital of $ 596,255 .

The Company’s liquidity needs prior to the

2 unchanged sentences

Subsequent to the closing of the IPO,

the Company’s liquidity has been satisfied through the net proceeds of $ 1,215,100 from the consummation of the IPO and the private

placement held outside of the Trust Account.

In addition, in order to finance transaction costs in connection with a Business Combination,

the Sponsor, Initial Shareholders or their affiliates may, but are not obligated to, provide the Company working capital loans (see Note

As of March 31, 2022, there were no amounts outstanding under any working capital loans.

Based on the foregoing, management believes that

the Company will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of a

Business Combination or one year from this filing.

Over this time period, the Company will use these funds to pay existing accounts payable,

identify and evaluate prospective initial Business Combination candidates, perform due diligence on prospective target businesses, pay

for travel expenditures, select the target business to merge with or acquire, and structure, negotiate and consummate the Business Combination.

Note 2 — Significant Accounting Policies

Basis of Presentation

The accompanying financial statements are presented

the Company’s liquidity has been satisfied through the net proceeds of $ 1,215,100 from the consummation of the IPO (including the

over-allotment option) and the private placements held outside of the Trust Account.

In addition, in order to finance transaction costs

in connection with a Business Combination, the Sponsor, Initial Shareholders or their affiliates may, but are not obligated to, provide

the Company working capital loans (see Note 6).

As of June 30, 2022, there were no amounts outstanding under any working capital loans.

on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity to meet its needs

through the earlier of the consummation of a Business Combination or one year from this filing.

Over this time period, the Company will

use these funds to pay existing accounts payable, identify and evaluate prospective initial Business Combination candidates, perform

due diligence on prospective target businesses, pay for travel expenditures, select the target business to merge with or acquire, and

structure, negotiate and consummate the Business Combination.

2 — Significant Accounting Policies

of Presentation

The accompanying unaudited condensed financial statements are presented

in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules

and regulations of the SEC, and include all normal and recurring adjustments that management

of the Company considers necessary for a fair presentation of its financial position and operation results.

Interim results are not necessarily

indicative of results to be expected for any other interim period or for the full year.

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2022

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the 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 an 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

In preparing these financial statements in conformity

and regulations of the SEC, and include all normal and recurring adjustments that management of the Company considers necessary for a

fair presentation of its financial position and operation results.

Interim results are not necessarily indicative of results to be expected

for any other interim period or for the full year.

Growth Company

Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our

Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements

that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required

to comply with the 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.

ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

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

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 an 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.

In preparing these unaudited condensed financial statements in conformity

GAAP, the Company’s management makes 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 expenses during the reporting

Making estimates requires management to exercise

significant judgment.

It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances

that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near

and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements and the reported expenses

during the reporting period.

Making estimates requires management to exercise significant judgment.

It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the

date of the unaudited condensed financial statements, which management considered in formulating its estimate, could change in the near

term due to one or more future confirming events.

Accordingly, the actual results could differ significantly from those estimates.

Cash 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 had $ 6,670 in cash and did not have

any cash equivalents as of March 31, 2022.

Deferred Offering Costs

and Cash Equivalents

Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.

The Company had $ 447,382 in cash and did not have any cash equivalents as of June 30, 2022.

Investments Held in Trust Account

As of June 30, 2022, the assets held in the Trust

Account were held in cash and U.S.

Treasury securities.

The Company classifies its U.S.

Treasury securities as trading securities in accordance

with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 320, “Investments—Debt

and Equity Securities.” Trading securities are presented on the balance sheets at fair value at the end of each reporting period.

Gains and losses resulting from the change in fair value of these securities is included in gain on investments held in Trust Account

in the accompanying statement of operations.

The estimated fair values of all assets held in the Trust Account are determined using available

market information and classified as Level 1 measurements.

The Company complies with the requirements of

1 unchanged sentence

Staff Accounting Bulletin Topic 5A, “Expenses of Offering”.

Deferred offering costs were $ 7,334,539 consisting principally

of underwriting, legal, accounting and other expenses that are directly related to the IPO and charged to stockholders’ equity upon

the completion of the IPO.

The Company follows the asset and liability method

of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for

the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets

and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply

to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred

tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date.

allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

ASC 740 prescribes

a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or

expected to be taken in a tax return.

For those benefits to be recognized, a tax position must be more likely than not to be sustained

upon examination by taxing authorities.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as

income tax expense.

There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of March 31, 2022.

Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from

its position.

The Company is subject to income tax examinations by major taxing authorities since inception.

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2022

The Company has identified the United States as

its only “major” tax jurisdiction.

The Company may be subject to potential examination

by federal and state taxing authorities in the areas of income taxes.

These potential 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.

Offering costs were $ 8,365,339 consisting principally of underwriting,

legal, accounting and other expenses that are directly related to the IPO and charged to stockholders’ equity upon the completion

Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred

tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial

statements carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are

measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected

to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the

period that included the enactment date.

Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount

expected to be realized.

ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition

and measurement of tax positions taken or expected to be taken in a tax return.

For those benefits to be recognized, a tax position must

be more likely than not to be sustained upon examination by taxing authorities.

The Company recognizes accrued interest and penalties

related to unrecognized tax benefits as income tax expense.

There were no unrecognized tax benefits and no amounts accrued for interest

and penalties as of June 30, 2022.

The Company is currently not aware of any issues under review that could result in significant payments,

accruals or material deviation from its position.

The Company is subject to income tax examinations by major taxing authorities since

Company has identified the United States as its only “major” tax jurisdiction.

Company may be subject to potential examination by federal and state taxing authorities in the areas of income taxes.

These potential

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.

ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

The provision for income taxes was deemed to be immaterial for the

six months ended June 30, 2022.

Loss Per Share

Company complies with accounting and disclosure requirements of FASB ASC 260, Earnings Per Share.

The unaudited condensed statements

of operations include a presentation of income (loss) per redeemable share and income (loss) per non-redeemable share following the two-class

method of income per share.

In order to determine the net income (loss) attributable to both the redeemable shares and non-redeemable

shares, the Company first considered the undistributed income (loss) allocable to both the redeemable shares and non-redeemable shares

and the undistributed income (loss) is calculated using the total net loss less any dividends paid.

The Company then allocated the undistributed

income (loss) ratably based on the weighted average number of shares outstanding between the redeemable and non-redeemable shares.

remeasurement of the accretion to redemption value of the common shares subject to possible redemption was considered to be dividends

paid to the public shareholders.

As of June 30, 2022, the Company did not have any dilutive securities and other contracts that could,

potentially, be exercised or converted into common shares and then share in the earnings of the Company.

As a result, diluted loss per

share is the same as basic loss per share for the period presented.

net income (loss) per share presented in the unaudited condensed statement of operations is based on the following:

Accretion of common stock to redemption value

Net loss including accretion of common stock to redemption value

Three Months Ended

June 30, 2022

June 30, 2021

Basic and diluted net loss per common stock

Allocation of net loss

Accretion of ordinary shares subject to possible redemption to redemption value

Allocation of net income (loss)

Basic and diluted weighted average shares outstanding

Basic and diluted net loss per ordinary share

Six Months Ended

June 30, 2022

June 30, 2021

Basic and diluted net loss per common stock

Allocation of net loss

Accretion of ordinary shares subject to possible redemption to redemption value

Allocation of net income (loss)

Basic and diluted weighted average shares outstanding

Basic and diluted net loss per ordinary share

ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Concentration

of Credit Risk

Financial instruments that potentially subject the Company to concentration

of credit risk consist of a cash account in a financial institution and money market funds held in the Trust Account.

The Company has

not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.

June 30, 2022 and December 31, 2021, approximately $ 116 million and $Nil, respectively, was over the Federal Deposit Insurance Corporation

(FDIC) limit.

Value of Financial Instruments

FASB ASC Topic 820 “Fair Value Measurements

and Disclosures” defines fair value, the methods used to measure fair value and the expanded disclosures about fair value measurements.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between the

buyer and the seller at the measurement date.

In determining fair value, the valuation techniques consistent with the market approach,

income approach and cost approach shall be used to measure fair value.

FASB ASC Topic 820 establishes a fair value hierarchy for inputs,

which represent the assumptions used by the buyer and seller in pricing the asset or liability.

These inputs are further defined as observable

and unobservable inputs.

Observable inputs are those that buyer and seller would use in pricing the asset or liability based on market

data obtained from sources independent of the Company.

Unobservable inputs reflect the Company’s assumptions about the inputs that

the buyer and seller would use in pricing the asset or liability developed based on the best information available in the circumstances.

The fair value hierarchy is categorized into three

levels based on the inputs as follows:

Level 1 — Valuations

based on unadjusted quoted prices in active markets for identical assets or liabilities that

the Company has the ability to access.

Valuation adjustments and block discounts are not

being applied.

Since valuations are based on quoted prices that are readily and regularly

available in an active market, valuation of these securities does not entail a significant

degree of judgment.

Level 2 — Valuations

based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted

prices in markets that are not active for identical or similar assets, (iii) inputs other

than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally

from or corroborated by market through correlation or other means.

Level 3 — Valuations

based on inputs that are unobservable and significant to the overall fair value measurement.

The fair value of the Company’s certain

assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures,”

approximates the carrying amounts represented in the consolidated balance sheet.

The fair values of cash and cash equivalents, and other

current assets, accrued expenses, due to sponsor are estimated to approximate the carrying values as of June 30, 2022 and December 31,

2021 due to the short maturities of such instruments.

See Note 9 for the disclosure of the Company’s assets and liabilities that

were measured at fair value on a recurring basis.

The Company accounts for warrants (Public Warrants

or Private 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”) Accounting Standards Codification

(“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging

The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480,

meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification

under ASC 815, including whether the warrants are indexed to the Company’s own common shares and whether the warrant holders

could potentially require “net cash settlement” in a circumstance outside of the Company’s 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.

The Company has elected to account

for its Public Warrants as equity and the Private Warrants as liabilities.

ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Stock Subject to Possible Redemption

Company accounts for its 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) are classified as a liability instrument and are

measured at fair value.

Conditionally redeemable common stock (including common stock that feature redemption rights that is either within

the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control)

is classified as temporary equity.

At all other times, common stock is classified as stockholders’ equity.

The Company’s

management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

The provision for income taxes was deemed to be

immaterial for the three months ended March 31, 2022.

Net Loss Per Share

Net loss per share is computed by dividing net

loss by the weighted average number of shares of common stock outstanding during the period, excluding shares of common stock subject

to forfeiture by the Initial Stockholders.

Weighted average shares were reduced for the effect of an aggregate of 375,000 shares of common

stock that are subject to forfeiture if the over-allotment option is not exercised in full by the underwriters (see Note 5).

31, 2022, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into

shares of common stock and then share in the earnings of the Company.

As a result, diluted loss per share is the same as basic loss per

share for the period presented.

As a result of the underwriters’ full exercise their over-allotment option on April 7, 2022, no

insider shares are currently subject to forfeiture.

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 .

The Company is not exposed to significant risks on such account as of March 31, 2022.

Fair Value of Financial Instruments

The fair value of the Company’s assets and

liabilities, which qualify as financial instruments under ASC 825, “Financial Instruments,” approximates the carrying

amounts represented in the accompanying balance sheet, primarily due to their short-term nature.

The Company accounts 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”) Accounting Standards Codification (“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, meet the definition of a liability pursuant

to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether

the warrants are indexed to the Company’s own common shares and whether the warrant holders could potentially require “net

cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification.

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.

The Company determined that upon further review of the warrant agreement, the Public

Warrants issued pursuant to the warrant agreement qualify for equity accounting treatment and private warrants (see Note 7) do not meet

criteria for equity classification.

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2022

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.

Common Stock Subject to Possible Redemption

The Company accounts for its 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) are classified as a liability instrument and are measured at fair value.

Conditionally redeemable

common stock (including common stock that feature redemption rights that is either within the control of the holder or subject to redemption

upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity.

times, common stock is classified as stockholders’ equity.

The Company’s common stock features certain redemption rights that

are considered to be outside of the Company’s control and subject to occurrence of uncertain future events.

The Company recognizes

changes in redemption value immediately as they occur and adjusts the carrying value of redeemable c ommon stock to

equal the redemption value at the end of each reporting period.

Increases or decreases in the carrying amount of shares of redeemable

c ommon stock are affected by charges against additional paid in capital or accumulated

deficit if additional paid in capital equals to zero .

Recent Accounting Pronouncements

In August 2020, the Financial Accounting

Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion

and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU

2020-06”) to simplify accounting for certain financial instruments.

ASU 2020-06 eliminates the current models that require separation

of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance

pertaining to equity classification of contracts in an entity’s own equity.

The new standard also introduces additional disclosures

for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity.

ASU 2020-06 amends

the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments.

2020-06 is effective January 1, 2024 for the Company and should be applied on a full or modified retrospective basis, with early

adoption permitted beginning on January 1, 2021.

The Company is currently assessing the impact, if any, that ASU 2020-06 would have

on its financial position, results of operations or cash flows.

Management does not believe that any recently

issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.

Note 3 — Initial Public Offering

Pursuant to the IPO on April 4, 2022, the Company

sold 10,000,000 Public Units at $ 10.00 per Public Unit, generating gross proceeds of $ 100,000,000 .

Each Public Unit consists of one share

of common stock (“Public Share”), one right (“Public Right”) and one redeemable warrant (“Public Warrant”).

Each Public Right will convert into one-tenth (1/10) of one share of common stock upon the consummation of a Business Combination.

Public Warrant entitles the holder to purchase one share of common stock at a price of $ 11.50 per share, subject to adjustment.

Warrants will become exercisable on the later of the completion of the Company’s initial Business Combination or 12 months from

the closing of the IPO, and will expire five years after the completion of the Company’s initial Business Combination or earlier

upon redemption or liquidation.

common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence

of uncertain future events.

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 shares of redeemable common stock are affected by charges against additional paid in capital or accumulated deficit if

additional paid in capital equals to zero.

Accounting Pronouncements

August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s

Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments.

ASU 2020-06 eliminates

the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies

the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity.

The new standard

also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s

ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for

all convertible instruments.

ASU 2020-06 is effective January 1, 2024 for the Company and should be applied on a full or modified

retrospective basis, with early adoption permitted beginning on January 1, 2021.

The Company is currently assessing the impact,

if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.

Management does not believe that any 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 — Cash and Investment Held in

Trust Account

As of June 30, 2022, investment securities in the Company’s Trust

Account consisted of $ 116,296,397 cash and U.S.

Treasury securities.

The Company did not have a Trust Account at December 31, 2021.

The following table presents information about

the Company’s assets that are measured at fair value on a recurring basis as of June 30, 2022 and indicates the fair value hierarchy

of the valuation inputs the Company utilized to determine such fair value.

Markets (Level 1)

Other Observable

Inputs (Level 2)

Other Unobservable

Marketable securities held in trust account

$ 116,296,397

4 — Initial Public Offering

On April 4, 2022, pursuant to its initial public

offering (the “IPO”), the Company sold 10,000,000 Public Units at $ 10.00 per Public Unit, generating gross proceeds of $ 100,000,000 .

The Company granted the underwriters a 45-day option to purchase up to 1,500,000 additional Public Units to cover over-allotments, if

On April 7, 2022, the underwriters exercised the over-allotment option in full and purchased 1,500,000 Public Units at a price of

$ 10.00 per Public Unit, generating gross proceeds of $ 15,000,000 .

Each Public Unit consists of one share of common stock (“Public

Share”), one right (“Public Right”) and one redeemable warrant (“Public Warrant”).

Each Public Right will

convert into one-tenth (1/10) of one share of common stock upon the consummation of a Business Combination.

Each Public Warrant entitles

the holder to purchase one share of common stock at a price of $ 11.50 per share, subject to adjustment.

The Public Warrants will become

exercisable on the later of the completion of the Company’s initial Business Combination or 12 months from the closing of the IPO,

and will expire five years after the completion of the Company’s initial Business Combination or earlier upon redemption or liquidation.

of the 11,500,000 Public Shares sold as part of the Public Units in the IPO contain a redemption feature which allows for the

2 unchanged sentences

In accordance with the 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.

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2022

T he Company’s

redeemable common stock is subject to SEC and its staff’s guidance on redeemable equity instruments, which has been codified in

ASC 480-10-S99.

If it is probable that the equity instrument will become redeemable, the Company has the option to either accrete changes

in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will

become redeemable, if later) to the earliest redemption date of the instrument or to recognize changes in the redemption value immediately

as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period.

Company has elected to recognize the changes immediately.

The accretion or remeasurement is treated as a deemed dividend (i.e., a reduction

to retained earnings, or in absence of retained earnings, additional paid-in capital).

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.

ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Company’s redeemable common stock is subject to SEC and its staff’s guidance on redeemable equity instruments, which has

been codified in ASC 480-10-S99.

If it is probable that the equity instrument will become redeemable, the Company has the option to either

accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the

instrument will become redeemable, if later) to the earliest redemption date of the instrument or to recognize changes in the redemption

value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting

The Company has elected to recognize the changes immediately.

The accretion or remeasurement is treated as a deemed dividend

(i.e., a reduction to retained earnings, or in absence of retained earnings, additional paid-in capital).

As of June 30, 2022, the shares of common stock

reflected on the balance sheet are reconciled in the following table.

Gross proceeds

$ 115,000,000

Proceeds allocated to Public Warrants

( 9,917,024 )

Proceeds allocated to Public Rights

( 8,744,042 )

Offering costs of Public Shares

( 6,901,405 )

Accretion of carrying value to redemption value

Class A Common stock subject to possible redemption

$ 116,150,000

Note 5 — Private Placement

2 unchanged sentences

of $ 4,775,000 in a private placement.

The Private Units are identical to the Public Units except with respect to certain registration

rights and transfer restrictions.

Simultaneously with the closing of the over-allotment option, the Company consummated the sale of

an additional aggregate of 52,500 Private Units with the Sponsor and Chardan at a price of $ 10.00 per Private Unit, generating total proceeds

of $ 525,000 .

The Private Units are identical to the Public Units except with respect to certain registration rights and transfer restrictions

and the private warrants, which have terms and provisions that are identical to those of the warrants being sold as part of the units

in the IPO, except that the private warrants (i) will be exercisable either for cash or on a cashless basis at the holder’s option

and (ii) will not be redeemable by the Company, in either case as long as the private warrants are held by the initial purchasers or any

of their permitted transferees.

The net proceeds from the Private Units were added to the proceeds from the IPO to be held in the Trust

2 unchanged sentences

and all underlying securities will expire worthless.

Note 5 — Related Party Transactions

Insider Shares

6 — Related Party Transactions

On January 4, 2022, the Company issued 2,875,000

shares of common stock to the Initial Stockholders (the “Insider Shares”) for an aggregated consideration of $ 25,000 , or approximately

shares of common stock (the “Insider Shares”) to the Initial Stockholders for an aggregate consideration of $ 25,000 , or approximately

$ 0.009 per share.

As of March 31, 2022, there were 2,875,000 Insider

Shares issued and outstanding, among which, up to 375,000 shares subject to forfeiture by the Initial Stockholders to the extent that

the underwriters’ over-allotment is not exercised in full, so that the Initial Stockholders would collectively own 20 % of the Company’s

issued and outstanding shares after the IPO (assuming the Initial Stockholders did not purchase any Public Shares in the IPO and excluding

the Private Units).

As a result of the underwriters’ full exercise of their over-allotment option on April 7, 2022, no insider shares

are currently subject to forfeiture.

The Initial Stockholders have agreed, subject to certain limited exceptions, not to transfer, assign or sell any of their Insider Shares until, with respect to 50% of the Insider Shares, the earlier of six months after the consummation of a Business Combination and the date on which the closing price of the common stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing after a Business Combination and, with respect to the remaining 50% of the Insider Shares, until the six months after the consummation of a Business Combination, or earlier, in either case, if, subsequent to a Business Combination, the Company completes 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 January 4, 2022 and February 28, 2022, the

Sponsor agreed to loan the Company up to an aggregate amount of $ 200,000 to be used, in part, for transaction costs incurred in connection

with the IPO (the “Promissory Notes”).

As of June 30, 2022, there were 2,875,000 Insider Shares issued and outstanding.

Initial Stockholders have agreed, subject to certain limited exceptions, not to transfer, assign or sell any of their Insider Shares

until, with respect to 50% of the Insider Shares, the earlier of six months after the consummation of a Business Combination and

the date on which the closing price of the common stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends,

reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing after a

Business Combination and, with respect to the remaining 50% of the Insider Shares, until the six months after the consummation of

a Business Combination, or earlier, in either case, if, subsequent to a Business Combination, the Company completes 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.

ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note — Related Party

On January 4, 2022 and February 28, 2022, the Sponsor agreed to loan

the Company up to an aggregate amount of $ 200,000 to be used, in part, for transaction costs incurred in connection with the IPO (the

“Promissory Notes”).

The Promissory Notes were unsecured, interest-free and due on the closing the IPO.

The Company repaid the outstanding balance of $ 200,000 as of March 31, 2022 to the Sponsor on April 7 and April 8, 2022.

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2022

Related Party Loans

In addition, in order to finance transaction costs

in connection with searching for a target business or consummating an intended initial business combination, the initial stockholders,

officers, directors or their affiliates may, but are not obligated to, loan us funds as may be required.

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.

The Company repaid

the outstanding balance of $ 200,000 to the Sponsor on April 7 and April 8, 2022.

As of June 30, 2022, the Company had no borrowings under

the Promissory Note.

addition, in order to finance transaction costs in connection with searching for a target business or consummating an intended initial

business combination, the initial stockholders, officers, directors or their affiliates may, but are not obligated to, loan us funds

as may be required.

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.

Such loans would be evidenced by promissory notes.

The notes would either be paid upon consummation of our initial business combination, without interest, or, at the lender’s discretion,

up to $ 500,000 of the notes may be converted upon consummation of the Company’s business combination into private units at a price

of $ 10.00 per unit.

The purchase price of these units will approximate the fair value of such units when issued.

However, if it is determined,

at the time of issuance, that the fair value of such units exceeds the purchase price, the Company would record compensation expense for

the excess of the fair value of the units on the day of issuance over the purchase price in accordance with Accounting Standards

Codification (“ASC”) 718 - Compensation - Stock Compensation.

As of March 31, 2022, the Company had no borrowings

under the working capital loans.

Administrative Services Agreement

The notes would either be paid upon consummation of our initial business combination,

without interest, or, at the lender’s discretion, up to $ 500,000 of the notes may be converted upon consummation of the Company’s

business combination into private units at a price of $ 10.00 per unit.

The purchase price of these units will approximate the fair value

of such units when issued.

However, if it is determined, at the time of issuance, that the fair value of such units exceeds the purchase

price, the Company would record compensation expense for the excess of the fair value of the units on the day of issuance over the

purchase price in accordance with Accounting Standards Codification (“ASC”) 718 - Compensation - Stock Compensation.

of June 30, 2022, the Company had no borrowings under the working capital loans.

Administrative

Services Agreement

The Company entered into an agreement, commencing

5 unchanged sentences

interest and be due and payable no later than the date of the consummation of initial Business Combination.

Note 6 — Commitments and

Contingencies

Risks and Uncertainties

Management is currently evaluating the impact

of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect

on the Company’s future financial position, results of its operations and/or search for a target company, there has not been a significant

impact as of the date of these financial statements.

The financial statements do not include any adjustments that might result from the

future outcome of this uncertainty.

Registration Rights

The holders of the insider shares, the private units, securities underlying the Unit Purchase Option and any units that may be issued upon conversion of working capital loans or extension loans (and any securities underlying the private units or units issued upon conversion of the working capital loans or extension loans) will be entitled to registration rights pursuant to a registration rights agreement signed on the effective date of the IPO.

The holders of a majority of these securities are entitled to make up to two demands (or one demand with respect to the securities underlying the Unit Purchase Option) that the Company register such securities.

The holders of the majority of the Insider Shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these shares of common stock are to be released from escrow.

The holders of a majority of the private units and units issued in payment of working capital loans made to us can elect to exercise these registration rights at any time commencing on the date that the Company consummate an initial business combination.

In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of an initial business combination.

Furthermore, notwithstanding the foregoing, pursuant to FINRA Rule 5110, Chardan may not exercise its demand and “piggyback” registration rights after five and seven years, respectively, after the commencement of sales of this offering and may not exercise its demand rights on more than one occasion.

For the three months and six

months ended June 30, 2022, the Company incurred $ 30,000 and $ 30,000 , respectively, in fees for these services, of which $ 30,000 and none

were included in accrued expenses in the accompanying condensed unaudited balance sheets as of June 30, 2022 and December 31, 2021, respectively.

Note 7 — Commitments

and Contingencies

and Uncertainties

Management is currently evaluating the impact of the COVID-19 pandemic

on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s

future financial position, results of its operations and/or search for a target company, there has not been a significant impact as of

the date of these unaudited condensed financial statements.

The unaudited condensed financial statements do not include any adjustments

that might result from the future outcome of this uncertainty.

holders of the insider shares, the private units, securities underlying the Unit Purchase Option and any units that may be issued upon

conversion of working capital loans or extension loans (and any securities underlying the private units or units issued upon conversion

of the working capital loans or extension loans) will be entitled to registration rights pursuant to a registration rights agreement

signed on the effective date of the IPO.

The holders of a majority of these securities are entitled to make up to two demands (or one

demand with respect to the securities underlying the Unit Purchase Option) that the Company register such securities.

The holders of

the majority of the Insider Shares can elect to exercise these registration rights at any time commencing three months prior to the date

on which these shares of common stock are to be released from escrow.

The holders of a majority of the private units and units issued

in payment of working capital loans made to us can elect to exercise these registration rights at any time commencing on the date that

the Company consummate an initial business combination.

In addition, the holders have certain “piggy-back” registration rights

with respect to registration statements filed subsequent to the consummation of an initial business combination.

Furthermore, notwithstanding

the foregoing, pursuant to FINRA Rule 5110, Chardan may not exercise its demand and “piggyback” registration rights after

five and seven years, respectively, after the commencement of sales of this offering and may not exercise its demand rights on more than

one occasion.

The Company will bear the expenses incurred in connection with the filing of any such registration statements.

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2022

Underwriting Agreement

The Company has granted Chardan, the representative

of the underwriters, a 45-day option from the date of this prospectus to purchase up to 1,500,000 additional Units to cover over-allotments,

if any, at the IPO price less the underwriting discounts and commissions.

On April 7, 2022, Chardan exercised the over-allotment option

in full (see Note 8).

The underwriters were paid a cash underwriting

discount of 2.5 % of the gross proceeds of the IPO, or $ 2,500,000 .

In addition, the underwriters will be entitled to a deferred fee of

3.75 % of the gross proceeds of the IPO, or $ 3,750,000 (or $ 4,312,500 if the over-allotment option is exercised in full), which will be

paid upon the closing of a Business Combination from the amounts held in the Trust Account, subject to the terms of the underwriting agreement.

Unit Purchase Option

Simultaneously with the IPO, the Company sold

to Chardan, for $ 100 , an option (the “Unit Purchase Option”) to purchase 300,000 Units (or 345,000 units if the over-allotment

option is exercised in full) exercisable at $ 11.50 per Unit (or an aggregate exercise price of $ 3,450,000 , or $ 3,967,500 if the over-allotment

option is exercised in full) commencing on the later of six months from the effective date of the registration statement related to the

IPO and the consummation of a Business Combination.

The Unit Purchase Option may be exercised for cash or on a cashless basis, at the

holder’s option, and expires five years from the effective date of the registration statement related to the IPO.

The Units issuable

upon exercise of the Unit Purchase Option are identical to those offered in the IPO.

The Company accounts for the Unit Purchase Option,

inclusive of the receipt of $ 100 cash payment, as an expense of the IPO resulting in a charge directly to stockholders’ equity.

The Unit Purchase Option and such units purchased pursuant to the Unit Purchase Option, as well as the common stock underlying such units,

the rights included in such units, the shares of common stock that are issuable for the rights included in such units, the warrants included

in such units, and the shares underlying such warrants, have been deemed compensation by FINRA and are therefore subject to a 180-day

lock-up pursuant to FINRA Rule 5110(e)(1).

The Unit Purchase Option grants to holders demand and “piggy back” rights

for periods of five and seven years, respectively, from the effective date of the registration statement with respect to the registration

under the Securities Act of the securities directly and indirectly issuable upon exercise of the Unit Purchase Option.

will bear all fees and expenses attendant to registering the securities, other than underwriting commissions which will be paid for by

the holders themselves.

The exercise price and number of units issuable upon exercise of the Unit Purchase Option may be adjusted in certain

circumstances including in the event of a stock dividend, or the Company’s recapitalization, reorganization, merger or consolidation.

However, the option will not be adjusted for issuances of common stock at a price below its exercise price.

Right of First Refusal

The Company has granted Chardan a right of first

refusal, for a period of 18 months after the date of the consummation of a Business Combination, to act as lead underwriters or minimally

as a co-manager, with at least 30% of the economics;

or, in the case of a three-handed deal 20% of the economics, for any and all future

public and private equity and debt offerings during such period.

ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Pursuant to an underwriting agreement in connection

with the IPO, the Company granted Chardan, the representative of the underwriters, a 45-day option from the date of the prospectus for

the IPO to purchase up to 1,500,000 additional Public Units to cover over-allotments, if any, at the IPO price less the underwriting

discounts and commissions.

On April 7, 2022, Chardan exercised the over-allotment option in full (see Note 4).

underwriters were paid a cash underwriting discount of 2.5 % of the gross proceeds of the IPO (including the exercise of the over-allotment

option), or $ 2,875,000 .

In addition, the underwriters will be entitled to a deferred fee of 3.75 % of the gross proceeds of the IPO (including

the exercise of the over-allotment option), or $ 4,312,500 , which will be paid upon the closing of a Business Combination from the amounts

held in the Trust Account, subject to the terms of the underwriting agreement.

Purchase Option

Simultaneously

with the IPO (including the closing of the over-allotment option), the Company sold to Chardan, for $ 100 , an option (the “Unit

Purchase Option”) to purchase 345,000 units exercisable at $ 11.50 per unit (or an aggregate exercise price of $ 3,967,500 ) commencing

on the later of six months from the effective date of the registration statement related to the IPO and the consummation of a Business

The Unit Purchase Option may be exercised for cash or on a cashless basis, at the holder’s option, and expires five

years from the effective date of the registration statement related to the IPO.

The units issuable upon exercise of the Unit Purchase

Option are identical to those offered in the IPO.

The Company accounts for the Unit Purchase Option, inclusive of the receipt of $ 100

cash payment, as an expense of the IPO resulting in a charge directly to stockholders’ equity.

The Unit Purchase Option and such

units purchased pursuant to the Unit Purchase Option, as well as the common stock underlying such units, the rights included in such

units, the shares of common stock that are issuable for the rights included in such units, the warrants included in such units, and the

shares underlying such warrants, have been deemed compensation by FINRA and are therefore subject to a 180-day lock-up pursuant to FINRA

Rule 5110(e)(1).

The Unit Purchase Option grants to holders demand and “piggy back” rights for periods of five and seven years,

respectively, from the effective date of the registration statement with respect to the registration under the Securities Act of the

securities directly and indirectly issuable upon exercise of the Unit Purchase Option.

The Company will bear all fees and expenses attendant

to registering the securities, other than underwriting commissions which will be paid for by the holders themselves.

The exercise price

and number of units issuable upon exercise of the Unit Purchase Option may be adjusted in certain circumstances including in the event

of a stock dividend, or the Company’s recapitalization, reorganization, merger or consolidation.

However, the option will not be

adjusted for issuances of common stock at a price below its exercise price.

of First Refusal

Company has granted Chardan a right of first refusal, for a period of 18 months after the date of the consummation of a Business

Combination, to act as a book-running manager or placement agent, with at least 30% of the economics, for any and all future public and

private equity, equity linked and debt offerings of the Company or any of its successors or subsidiaries.

Note 8 — Stockholders’

Stock — The Company is authorized to issue 50,000,000 shares of common stock with a par value of $ 0.0001

Stock — The Company is authorized to issue 50,000,000 shares of common stock with a par value of $ 0.0001 per

Holders of the common stock are entitled to one vote for each share.

At March 31, 2022, there were 2,875,000 shares of common

stock issued and outstanding (excluding 10,000,000 shares subject to possible redemption), of which an aggregate of up to 375,000 shares

are subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised in full, so that the initial

stockholders would own 20 % of the issued and outstanding shares after the IPO.

As a result of the underwriters’ full exercise their

over-allotment option on April 7, 2022, no insider shares are currently subject to forfeiture.

Rights — Each

holder of a right will receive one-tenth (1/10) of one share of common stock upon consummation of a Business Combination, even if the

holder of such right redeemed all shares held by it in connection with a Business Combination.

No fractional shares will be issued upon

conversion of the rights.

No additional consideration will be required to be paid by a holder of rights in order to receive its additional

shares upon consummation of a Business Combination, as the consideration related thereto has been included in the Unit purchase price

paid for by investors in the IPO.

If the Company enters into a definitive agreement for a Business Combination in which the Company will

not be the surviving entity, the definitive agreement will provide for the holders of rights to receive the same per share consideration

the holders of the common stock will receive in the transaction on an as-converted into common stock basis and each holder of a right

will be required to affirmatively covert its rights in order to receive 1/10 share underlying each right (without paying additional consideration).

At June 30, 2022, there were 3,405,000 shares of common stock

issued and outstanding (excluding 11,500,000 shares subject to possible redemption).

ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Rights — Each holder

of a right will receive one-tenth (1/10) of one share of common stock upon consummation of a Business Combination, even if the holder

of such right redeemed all shares held by it in connection with a Business Combination.

No fractional shares will be issued upon conversion

of the rights.

No additional consideration will be required to be paid by a holder of rights in order to receive its additional shares

upon consummation of a Business Combination, as the consideration related thereto has been included in the unit purchase price paid for

by investors in the IPO.

If the Company enters into a definitive agreement for a Business Combination in which the Company will not be

the surviving entity, the definitive agreement will provide for the holders of rights to receive the same per share consideration the

holders of the common stock will receive in the transaction on an as-converted into common stock basis and each holder of a right will

be required to affirmatively covert its rights in order to receive 1/10 share underlying each right (without paying additional consideration).

The shares issuable upon conversion of the rights will be freely tradable (except to the extent held by affiliates of the Company).

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2022

If the Company is unable to complete a Business

Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of rights will not receive

any of such funds with respect to their rights, nor will they receive any distribution from the Company’s assets held outside of

the Trust Account with respect to such rights, and the rights will expire worthless.

Further, there are no contractual penalties for failure

to deliver securities to the holders of the rights upon consummation of a Business Combination.

Additionally, in no event will the Company

be required to net cash settle the rights.

Accordingly, holders of the rights might not receive the shares of common stock underlying

the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the

Trust Account, holders of rights will not receive any of such funds with respect to their rights, nor will they receive any distribution

from the Company’s assets held outside of the Trust Account with respect to such rights, and the rights will expire worthless.

Further, there are no contractual penalties for failure to deliver securities to the holders of the rights upon consummation of a Business

Additionally, in no event will the Company be required to net cash settle the rights.

Accordingly, holders of the rights

might not receive the shares of common stock underlying the rights.

Warrants — Each

8 unchanged sentences

upon exercise of the Public Warrants is not effective within 90 days from the closing of the Company’s initial Business Combination,

warrant holders may, until such time as there is an effective registration statement and during any period when we shall have failed to

maintain an effective registration statement, exercise warrants on a cashless basis pursuant to an available exemption from registration

warrant holders may, until such time as there is an effective registration statement and during any period when we shall have failed

to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to an available exemption from registration

under the Securities Act.

If an exemption from registration is not available, holders will not be able to exercise their warrants on a

cashless basis.

If an exemption from registration is not available, holders will not be able to exercise their warrants on

a cashless basis.

The warrants will expire five years from the closing of the Company’s initial Business Combination at 5:00 p.m.,

New York City time or earlier redemption.

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 Company’s

initial Business Combination at an issue price or effective issue price of less than $ 9.50 per share (with such issue price or effective

issue price to be determined in good faith by our board of directors), (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 Company’s initial Business Combination,

and (z) the volume weighted average trading price of the Company’s common stock during the 20 trading day period starting

on the trading day prior to the day on which the Company consummates its initial Business Combination (such price, the “Market

Price”) is below $ 9.50 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115 %

of the Market Price, and the $ 16.50 per share redemption trigger price described below will be adjusted (to the nearest cent) to be equal

to 165 % of the Market Value.

The Company may redeem the outstanding Public

Warrants at any time while the warrants are exercisable:

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 Company’s initial Business Combination at an issue price or effective issue price of less than

$ 9.50 per share (with such issue price or effective issue price to be determined in good faith by our board of directors), (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 Company’s initial Business Combination, and (z) the volume weighted average trading price of the Company’s

common stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummates

its initial Business Combination (such price, the “Market Price”) is below $ 9.50 per share, the exercise price of the warrants

will be adjusted (to the nearest cent) to be equal to 115 % of the Market Price, and the $ 16.50 per share redemption trigger price described

below will be adjusted (to the nearest cent) to be equal to 165 % of the Market Value.

ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Company may redeem the outstanding Public Warrants at any time while the warrants are exercisable:

● in whole and not in part;

2 unchanged sentences

● if, and only if, the last reported sale price of the Company’s common stock equals or exceeds $ 16.50 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the to the warrant holders.

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2022

If the Company calls the Public Warrants for redemption,

management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,”

as described in the warrant agreement.

In such event, each holder would pay the exercise price by surrendering the whole warrants for

that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common

stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value”

(defined below) by (y) the fair market value.

The “fair market value” shall mean the average reported last sale price

of the common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption

is sent to the holders of warrants.

Except as described above, no warrants will be

exercisable and the Company will not be obligated to issue common stock unless at the time a holder seeks to exercise such warrant, a

prospectus relating to the common stock issuable upon exercise of the warrants is current and the common stock have been registered or

qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants.

Under the terms of

the warrant agreement, the Company has agreed to use its best efforts to meet these conditions and to maintain a current prospectus relating

to the common stock issuable upon exercise of the warrants until the expiration of the warrants.

However, the Company cannot assure that

it will be able to do so and, if the Company does not maintain a current prospectus relating to the common stock issuable upon exercise

of the warrants, holders will be unable to exercise their warrants and the Company will not be required to settle any such warrant exercise.

If the prospectus relating to the common stock issuable upon the exercise of the warrants is not current or if the common stock is not

qualified or exempt from qualification in the jurisdictions in which the holders of the warrants reside, the Company will not be required

to net cash settle or cash settle the warrant exercise, the warrants may have no value, the market for the warrants may be limited and

the warrants may expire worthless.

The private warrants have terms and provisions

that are identical to those of the warrants being sold as part of the units in the IPO, except that the private warrants (i) will be exercisable

either for cash or on a cashless basis at the holder’s option and (ii) will not be redeemable by the Company, in either case as

long as the private warrants are held by the initial purchasers or any of their permitted transferees.

Note 8 — Subsequent Events

In accordance with ASC 855,

“Subsequent Events,” the Company evaluated subsequent events and transactions that occurred after the balance sheet date

up to May 16, 2022 the date that the financial statement was issued.

Based on this review, except the event described below, the

Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statement.

On April 4, 2022, the Company consummated the

IPO of 10,000,000 units (which does not include the exercise of the over-allotment option by the underwriters in the IPO) at an offering

price of $10.00 per unit, generating gross proceeds of $100,000,000, which is described in Note 3.

Simultaneously with the IPO, the Company

sold to its Sponsor and Chardan 377,500 units and 100,000 units, respectively, at $10.00 per unit in a private placement generating total

gross proceeds of $ 4,775,000 , which is described in Note 4.

On April 7, 2022, Chardan, as the representative

of the underwriters, exercised the over-allotment option and purchased 1,500,000 Public Units at a price of $10.00 per Public Unit, generating

gross proceeds of $15,000,000.

Simultaneously with the closing of the over-allotment Units, the Company consummated the sale of an additional

aggregate of 52,500 Private Units with the Sponsor and Chardan at a price of $10.00 per Private Unit, generating total proceeds of $525,000.

Total proceeds of $15,150,000 (net of underwriting fees of $375,000) from the sale of the over-allotment units and the additional Private

Units were placed in the Trust Account.

On April 7 and April 8, 2022, the Company repaid $ 200,000 outstanding

balance at March 31, 2022 to the Sponsor, under related party loans evidenced by promissory notes issued on January 4, 2022 and February

the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the

Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.

In such event, each holder would pay

the exercise price by surrendering the whole warrants for that number of shares of common stock equal to the quotient obtained by dividing

(x) the product of the number of shares of common stock underlying the warrants, multiplied by the difference between the exercise

price of the warrants and the “fair market value” (defined below) by (y) the fair market value.

The “fair market

value” shall mean the average reported last sale price of the common stock for the 10 trading days ending on the third trading

day prior to the date on which the notice of redemption is sent to the holders of warrants.

as described above, no warrants will be exercisable and the Company will not be obligated to issue common stock unless at the time a

holder seeks to exercise such warrant, a prospectus relating to the common stock issuable upon exercise of the warrants is current and

the common stock have been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the

holder of the warrants.

Under the terms of the warrant agreement, the Company has agreed to use its best efforts to meet these conditions

and to maintain a current prospectus relating to the common stock issuable upon exercise of the warrants until the expiration of the

However, the Company cannot assure that it will be able to do so and, if the Company does not maintain a current prospectus

relating to the common stock issuable upon exercise of the warrants, holders will be unable to exercise their warrants and the Company

will not be required to settle any such warrant exercise.

If the prospectus relating to the common stock issuable upon the exercise of

the warrants is not current or if the common stock is not qualified or exempt from qualification in the jurisdictions in which the holders

of the warrants reside, the Company will not be required to net cash settle or cash settle the warrant exercise, the warrants may have

no value, the market for the warrants may be limited and the warrants may expire worthless.

private warrants have terms and provisions that are identical to those of the warrants being sold as part of the units in the IPO, except

that the private warrants (i) will be exercisable either for cash or on a cashless basis at the holder’s option and (ii) will not

be redeemable by the Company, in either case as long as the private warrants are held by the initial purchasers or any of their permitted

ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

9 —Fair Value Measurements

fair value of the Company’s consolidated financial assets and liabilities reflects management’s estimate of amounts that

the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities

in an orderly transaction between market participants at the measurement date.

In connection with measuring the fair value of its assets

and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize

the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities).

The following

fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order

to value the assets and liabilities:

Quoted prices in active

markets for identical assets or liabilities.

An active market for an asset or liability is a market in which transactions for the

asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Observable inputs other

than Level 1 inputs.

Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted

prices for identical assets or liabilities in markets that are not active.

Unobservable inputs based

on the assessment of the assumptions that market participants would use in pricing the asset or liability.

The following table presents information about

the Company’s liabilities that are measured at fair value on June 30, 2022 and December 31, 2021, and indicates the fair value hierarchy

of the valuation inputs the Company utilized to determine such fair value:

Warrant liability

private warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the balance

Changes in the fair value of the warrants are recorded in the statement of operations each period.

table below shows the change in fair value of warrant liabilities as of June 30, 2022:

Private Warrants

Fair value at January 1, 2022

Initial recognition

Change in fair value

Fair value as of June 30, 2022

ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Company established the initial fair value for the private warrants at $ 529,495 on April 4, 2022, the date of the Company’s IPO,

using the Black-Scholes model.

The Company allocated the proceeds received from the sale of Private Units, first to the private warrants

based on their fair values as determined at initial measurement, with the remaining proceeds recorded as common shares subject to possible

redemption, and common shares based on their relative fair values recorded at the initial measurement date.

The warrants were classified

as Level 3 at the initial measurement date due to the use of unobservable inputs.

key inputs into the Black-Scholes model were as follows at their measurement date:

June 30, 2022

(initial measurement)

Exercise Price

Underlying share price

Expected Volatility

Warrant life (years)

Risk-free rate

10 — Subsequent Events

In accordance with ASC 855, “Subsequent Events,” the Company

evaluated subsequent events and transactions that occurred after the balance sheet date up to August 15, 2022 on which the unaudited condensed

financial statements were issued.

Based on this review, the Company did not identify any subsequent events that would have required adjustment

or disclosure in the unaudited condensed financial statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements