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Item 2. Management’s Discussion and Analysis

2023-05-24 compared with 2022-11-14 · 157 added, 86 removed, 223 unchanged (52% of the section changed)

45 unchanged sentences

in connection with our initial business combination:

may significantly dilute the equity interest of our stockholders who would not have pre-emption rights in respect of any such issuance;

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

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

may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us;

may adversely affect prevailing market prices for our securities.

significantly dilute the equity interest of our stockholders who would not have pre-emption rights in respect of any such issuance;

subordinate the rights of holders of shares of common stock if we issue shares of preferred stock with rights senior to those afforded

to our shares of common stock;

cause a change in control if a substantial number of our shares of common stock are issued, which may affect, among other things, our

ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers

and directors;

have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking

to obtain control of us;

adversely affect prevailing market prices for our securities.

Similarly, if we issue debt securities or otherwise

incur significant debt, it could result in:

default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;

acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;

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

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

using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes;

limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;

increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;

limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy, and other purposes and other disadvantages compared to our competitors who have less debt.

and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;

● acceleration

of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants

that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;

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

inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing

while the debt security is outstanding;

a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends

on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate

● limitations

on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;

vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;

● limitations

on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of

our strategy, and other purposes and other disadvantages compared to our competitors who have less debt.

We expect to continue to incur significant costs

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generated any operating revenues to date.

Our only activities through September 30, 2022 were organizational activities and those necessary

Our only activities through March 31, 2023 were organizational activities and those necessary

to prepare for our IPO, which is described below, and subsequent to the IPO, identifying a target company for an initial business combination.

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as well as for due diligence expenses in connection with searching for, and completing, an initial business combination.

For the three months ended September 30, 2022, we had net income of

$731,121 which consisted of general and administrative expenses of $140,426, franchise tax of $39,300, change in fair value of warrant

liabilities of $678,400, and income tax expense of $79,752, offset by interest earned on the investments held in the Trust Account of

For the three months ended September 30, 2021, we had net loss of $16.

For the nine months ended September 30, 2022, we had net income of $517,286

which consisted of general and administrative expenses of $338,650, franchise tax of $78,825, change in fair value of warrant liabilities

of $555,917, and income tax expense of $79,752, offset by interest earned on the investments held in the Trust Account of $458,596.

the period from March 16, 2021 (inception) through September 30, 2021, we had net loss of $3,527 which consisted of formation costs.

For the three months ended March 31, 2023, we had

net income of $1,120,611 which consisted of general and administrative expenses of $293,654, franchise tax of $32,100, increase in fair

value of warrant liabilities of $10,600, change in fair value of convertible promissory notes of $462,670 and income tax expense of $255,773,

offset by interest earned on the investments held in the Trust Account of $1,250,067.

For the three months ended March 31, 2022, we had

a net loss of $5,010, all of which were derived from general and administrative expenses.

Liquidity and Capital Resources

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of an initial business combination) and $1,177,839 of other offering costs.

We intend to use substantially all of the net

proceeds of the IPO and the private placement, including the funds held in the Trust Account, in connection with our initial business

combination and to pay our expenses relating thereto, including deferred underwriting discounts and commissions payable to the underwriters

in the IPO in an amount equal to 3.75% of the total gross proceeds raised in the IPO upon consummation of our initial business combination.

To the extent that our capital stock is used in whole or in part as consideration to effect our initial business combination, the remaining

proceeds held in the Trust Account as well as any other net proceeds not expended will be used as working capital to finance the operations

On March 31, 2023, we held a special meeting of stockholders,

at which the Company’s stockholders approved (i) an amendment to the Company’s amended and restated certificate of incorporation

(the “Extension Amendment”) and (ii) an amendment (the “Trust Amendment”) to the Investment Management Trust Agreement,

dated March 30, 2022, by and between the Company and Continental Stock Transfer & Trust Company, as trustee, extending the date by

which the Company must consummate a business combination from April 4, 2023 to July 4, 2023, with the ability to further extend the deadline

on a monthly basis up to five times from July 4, 2023 to December 4, 2023.

In connection with the stockholders’ vote at the special

meeting, an aggregate of 6,103,350 shares of the Company’s common stock were tendered for redemption representing a total redemption

amount of $63,169,451 (or $10.35 per share).

As a result of the approval of the Extension Amendment

and the Trust Amendment, Redwoods Capital LLC, or any of its affiliates or designees, agreed to deposit into the Trust Account $360,000

for the initial three-month extension and $120,000 per month for each subsequent one-month extension.

The extension payment(s) will bear

no interest and will be repayable by the Company to the contributors upon consummation of an initial business combination.

The loans will

be forgiven by the contributors if the Company is unable to consummate an initial business combination except to the extent of any funds

held outside of the Trust Account.

As of March 31, 2023, we had marketable securities

held in the Trust Account of $119,416,545 consisting of securities held in a treasury trust fund that invests in U.S.

securities,” within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less.

Interest income on the balance in the Trust Account may be used by us to pay taxes.

Through March 31, 2023, we did not withdraw any interest

earned on the Trust Account to pay our taxes.

We intend to use substantially all of the funds held in the Trust Account, to acquire a

target business and to pay our expenses relating thereto.

To the extent that our capital stock is used in whole or in part as consideration

to effect a Business Combination, the remaining funds held in the Trust Account will be used as working capital to finance the operations

of the target business.

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Such funds could also

be used to repay any operating expenses or finders’ fees which we had incurred prior to the completion of our initial business combination

be used to repay any operating expenses or finders’ fees which we had incurred prior to the completion of our Business Combination

if the funds available to us outside of the Trust Account were insufficient to cover such expenses.

As of September 30, 2022, the Company had cash of $414,144 and a working

capital of $336,777.

Until consummation of the Business Combination, we intend to use the funds held outside the Trust Account for identifying

and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and

from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements

of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business

If our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business

Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior

to our Business Combination.

In this event, our officers, directors or their affiliates may, but are not obligated to, loan us funds as

may be required.

If we consummate an initial Business Combination, we would repay such loaned amounts out of the proceeds of the Trust

Account released to us upon consummation of the Business Combination.

In the event that a Business Combination does not close, we may

use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from our Trust Account

would be used for such repayment.

The terms of such loans by our initial shareholders, officers and directors, if any, have not been determined

and no written agreements exist with respect to such loans.

The Company has incurred and expects to continue to incur significant professional

costs to remain as a publicly traded company and to incur significant transaction costs in pursuit of the consummation of a Business Combination.

If the Company is unable to complete the Business Combination because it does not have sufficient funds available, the Company will be

forced to cease operations and liquidate the Trust Account.

In addition, following the Business Combination, if cash on hand is insufficient,

the Company may need to obtain additional financing in order to meet its obligations.

In connection with the Company’s assessment

of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”)

2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the Company has until

April 4, 2023 (or October 4, 2023, if the Company extends the time to complete a Business Combination) to complete a Business Combination.

As of March 31, 2023, the Company had cash of $117,985 and a working

capital deficit of $598,362 (excluding redemptions payable to public stockholders and income tax and franchise tax payable as these amounts

will be paid out of the Trust Account).

On March 22 and March 30, 2023, the Sponsor provided a loan of up to $150,000 and $360,000, respectively,

to be used, in part, for transaction costs related to the Business Combination.

Until consummation of the Business Combination, we intend

to use the funds held outside the Trust Account for identifying and evaluating prospective acquisition candidates, performing business

due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses,

reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring,

negotiating and consummating the Business Combination.

If our estimate of the costs of identifying a target business, undertaking in-depth

due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds

available to operate our business prior to our Business Combination.

In this event, our officers, directors or their affiliates may, but

are not obligated to, loan us funds as may be required.

If we consummate an initial Business Combination, we would repay such loaned amounts

out of the proceeds of the Trust Account released to us upon consummation of the Business Combination.

In the event that a Business Combination

does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds

from our Trust Account would be used for such repayment.

The terms of such loans by our initial shareholders, officers and directors,

if any, have not been determined and no written agreements exist with respect to such loans.

The Company has incurred and expects to continue to incur significant

professional costs to remain as a publicly traded company and to incur significant transaction costs in pursuit of the consummation of

a Business Combination.

If the Company is unable to complete the Business Combination because it does not have sufficient funds available,

the Company will be forced to cease operations and liquidate the Trust Account.

In addition, following the Business Combination, if cash

on hand is insufficient, the Company may need to obtain additional financing in order to meet its obligations.

In connection with the

Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards

Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,”

the Company has until July 4, 2023 (or December 4, 2023, if the Company extends the time to complete a Business Combination) to complete

a Business Combination.

It is uncertain that the Company will be able to consummate a Business Combination by this time.

If a Business Combination is not consummated

by such date and an extension has not been requested by the Sponsor and approved by the Company’s stockholders, there will be a

mandatory liquidation and subsequent dissolution of the Company.

Management has determined that the mandatory liquidation, should a Business

Combination not occur and an extension not be requested by the Sponsor, and potential subsequent dissolution raise substantial doubt about

the Company’s ability to continue as a going concern.

The financial statement does not include any adjustments that might result

from the outcome of this uncertainty.

If a Business

Combination is not consummated by such date and an extension has not been requested by the Sponsor and approved by the Company’s

stockholders, there will be a mandatory liquidation and subsequent dissolution of the Company.

Management has determined that the date

for liquidation and subsequent dissolution as well as liquidity concerns raise substantial doubt about the Company’s ability to

continue as a going concern.

The financial statement does not include any adjustments that might result from the outcome of this uncertainty.

Off-Balance Sheet Arrangements

We have no obligations, assets or liabilities,

which would be considered off-balance sheet arrangements as of September 30, 2022.

which would be considered off-balance sheet arrangements as of March 31, 2023.

We do not participate in transactions that create relationships

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Contractual Obligations

Promissory Notes – Related Party

On January 4, 2022 and February 28, 2022, Redwoods

Capital LLC (the “Sponsor”) agreed to loan us 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 outstanding balance of $200,000 under the Promissory Notes was repaid on April 7 and April 8, 2022.

As of September

30, 2022, the Company had no borrowings under the Promissory Note.

Convertible Promissory Notes – Related Party

On March 22, 2023, we issued an unsecured, non-interest

bearing promissory note in the principal amount of up to $150,000 to the Sponsor.

The promissory note is payable upon the closing of the

Business Combination or the liquidation of the Company.

The holder of the promissory note, in its sole discretion, may convert any or

all of the unpaid principal under the promissory note into private units of the Company, at a price of $10.00 per unit, upon consummation

of the Business Combination.

On March 30, 2023, we issued an unsecured, non-interest

bearing promissory note in the principal amount of up to $360,000 to the Sponsor.

The promissory note is payable upon the closing of the

Business Combination or the liquidation of the Company.

The holder of the promissory note, in its sole discretion, may convert any or

all of the unpaid principal under the promissory note into private units of the Company, at a price of $10.00 per unit, upon consummation

of the Business Combination.

Registration Rights

The holders of our insider shares, as well as

the holders of the private units, the securities underlying the unit purchase option and any securities our insiders, officers, directors

or their affiliates may be issued in payment of working capital loans made to us (and any shares of common stock issuable upon the exercise

of the underlying private warrants and any shares of common stock issuable upon conversion of the underlying the private rights), will

be entitled to registration rights pursuant to registration rights agreement.

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 we 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 we consummate our initial business combination.

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

rights with respect to registration statements filed subsequent to our consummation of our initial business combination.

the expenses incurred in connection with the filing of any such registration statements.

Administrative Services Agreement

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Investments Held in Trust Account

As of September 30, 2022, the assets held in the

Trust Account were held in cash and U.S.

As of March 31, 2023, 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.

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.

Fair Value of Financial Instruments

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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 September 30, 2022 and December 31,

current assets, accrued expenses, due to sponsor are estimated to approximate the carrying values as of March 31, 2023 and December 31,

2022 due to the short maturities of such instruments.

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Company’s assets and liabilities that were measured at fair value on a recurring basis.

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 March 31, 2023 and December 31, 2022 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.

Convertible Promissory Note

accounts for their convertible promissory notes under ASC 815, “Derivatives and Hedging” (“ASC 815”).

815-15-25, the election can be at the inception of a financial instrument to account for the instrument under the fair value option under

The Company has made such election for their convertible promissory notes.

Using the fair value option, each convertible promissory

note is required to be recorded at its initial fair value on the date of issuance, and each balance sheet date thereafter.

the estimated fair value of the notes are recognized as a non-cash gain or loss on the statements of operations.

The Company accounts for warrants (Public Warrants

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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 2. Management’s Discussion and Analysis