What changed in this filing

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Item 1. Financial Statements

2023-08-21 compared with 2023-05-24 · 364 added, 259 removed, 749 unchanged (45% of the section changed)

Financial Statements.

ACQUISITION CORP.

CONDENSED BALANCE SHEETS

2022 (Audited)

REDWOODS ACQUISITION CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

Current Assets

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$ 118,246,636

Liabilities, Temporary Equity, and Stockholders’ Deficit

3 unchanged sentences

Income tax payable

Exercise tax liability

Redeemed common stock payable to public stockholders

Excise tax liability

Total Current Liabilities

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Commitments and Contingencies

Common stock subject to possible redemption, 5,396,650 shares and 11,500,000 shares at redemption value of $ 10.29 and $ 10.21 per share as of March 31, 2023 and December 31, 2022, respectively

Common stock subject to possible redemption, 5,396,650 shares and 11,500,000 shares at redemption value of $10.47 and $ 10.21 per share as of June 30, 2023 and December 31, 2022, respectively

Stockholders’ Deficit

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$ 118,246,636

The accompanying notes are an integral part of

these unaudited condensed financial statements.

these unaudited condensed consolidated financial statements.

REDWOODS ACQUISITION CORP.

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three months ended

Six months ended

General and administrative expenses

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Loss from operations

Interest earned on investments held in Trust Account

Unrealized gain on investment held in Trust Account

Interest earned on investment held in Trust Account

Change in fair value of convertible notes

1 unchanged sentence

Income (loss) before income taxes

Income tax provision

Income taxes provision

Net income (loss)

$ ( 153,546 )

$ ( 208,826 )

$ ( 213,836 )

Basic and diluted weighted average shares outstanding, redeemable common stock

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

2,500,000 (1)

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

(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.

The accompanying notes are an integral part of

these unaudited condensed financial statements.

these unaudited condensed consolidated financial statements.

REDWOODS ACQUISITION CORP.

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

For the Three Month Ended March 31, 2023

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

For the Three and Six Months

Ended June 30, 2023

Stockholders’

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( 1,322,195 )

Exercise tax liability

Excise tax liability

Balance as of March 31, 2023

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( 4,877,792 )

For the Three Month Ended March 31, 2022

Stockholder’s

Balance as of January 1, 2022

Accretion of common stock to redemption value

( 1,014,375 )

Balance as of June 30, 2023

$ ( 6,046,053 )

$ ( 6,045,713 )

For the Three and Six Months

Ended June 30, 2022

Stockholders’

equity(deficit)

Balance, January 1, 2022

Common stock issued to initial stockholders

Balance as of March 31, 2022

(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.

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 accompanying notes are an integral part of

these unaudited condensed financial statements.

these unaudited condensed consolidated financial statements.

REDWOODS ACQUISITION CORP.

UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS

Three Months Ended

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Cash flows from operating activities:

Net Income (loss)

$ ( 213,836 )

Adjustments to reconcile net cash used in operating activities:

Interest earned on investment held in Trust Account

Unrealized gain on investment held in Trust Account

Change in fair value of convertible notes

( 2,112,292 )

Change in fair value of warrant liabilities

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Deferred income tax liability

Net cash provided by (used in) operating activities

Net cash used in operating activities

Cash flows from investing activities:

Cash deposited in Trust Account

Net cash used in investing activities

Purchase of investment held in Trust Account

( 116,150,000 )

Cash withdrawn from Trust Account to pay taxes

Cash withdrawn from Trust Account to pay redeemed public stockholders

Cash deposited in Trust Account for term extension

Net cash provided by (used in) investing activities

( 116,150,000 )

Cash flows from financing activities:

Proceeds from issuance of insider shares to the initial stockholders

Proceeds from issuance of convertible promissory notes to related party

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

Payment to redeemed public stockholders

( 63,169,451 )

Repayment of promissory note to related party

Repayment of advance from related party

Payment of underwriters’ commissions

( 2,875,000 )

Payment of deferred offering costs

Net cash provided by (used in) financing activities

( 62,299,451 )

Net change in cash

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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

Exercise tax liability

Redeemed common stock payable

Excise tax liability

The accompanying notes are an integral part of

these unaudited condensed financial statements.

these unaudited condensed consolidated financial statements.

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 1 — Description of Organization

and Business Operations

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Note 1 — Description of Organization and Business Operations

Redwoods Acquisition Corp.

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for purposes of consummating a Business Combination.

As of March 31, 2023, the Company had not commenced

As of June 30, 2023, the Company had not commenced

any operations.

All activities through March 31, 2023 are related to the Company’s formation, the initial public offering (“IPO”

All activities through June 30, 2023 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.

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in the Trust Account.

On March 31, 2023, the Company 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 with redemption value of approximately $ 63,169,451 (or $ 10.35 per share) of the

Company’s common stock were tendered for redemption.

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

As a result of the stockholder approval of the Extension

Amendment and the Trust Amendment, the Sponsor, or any of their respective 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 the Business Combination.

will be forgiven by the contributors if the Company is unable to consummate the Business Combination except to the extent of any funds

held outside of 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.

On March 31, 2023, the Company 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 with

redemption value of approximately $ 63,169,451 (or $ 10.35 per share) of the Company’s common stock were tendered for

On June 29, 2023, the Sponsor made a deposit of $ 360,000 to the Trust

Account and extended the period of time the Company has to consummate an initial Business Combination from July 4, 2023 to October 4,

As a result of the stockholder approval of the

Extension Amendment and the Trust Amendment, the Sponsor, or any of their respective 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 the Business Combination.

The loans will be forgiven by the contributors if the Company is unable to consummate the Business Combination except to the extent of

any funds held outside of the Trust Account.

The Company will provide its holders of the outstanding

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Public Shares in conjunction with any such amendment.

The Company has until July 4, 2023 to consummate

a Business Combination.

In addition, if the Company anticipates that it may not be able to consummate a Business Combination by such date,

the Sponsor or its affiliates may extend the period of time to consummate a Business Combination five times by an additional one month

each time (for a total of 20 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 Sponsor or its affiliates or designees, within two business days

prior to the applicable deadline, must deposit into the Trust Account $120,000 for each subsequent one-month extension.

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

The Company has until October 4, 2023 (after depositing

$ 360,000 into the Trust Account on June 29, 2023) to consummate a Business Combination.

In addition, if the Company anticipates that it

may not be able to consummate a Business Combination by such date, the Sponsor or its affiliates may extend the period of time to consummate

a Business Combination five times by an additional one month each time to December 4, 2023 (for a total of 20 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 Sponsor or its affiliates or designees, within two business days prior to the applicable deadline, must deposit into the Trust Account

$120,000 for each subsequent one-month extension.

If the Company is unable to complete a Business

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of any liability for such third party claims.

On May 30, 2023, the Company entered into a business

combination agreement (the “Business Combination Agreement”) by and among the Company, ANEW Medical Sub, Inc., a Wyoming corporation

(“Merger Sub”), and ANEW Medical, Inc., a Wyoming corporation (“ANEW”).

The Business Combination Agreement provides,

among other things, that on the terms and subject to the conditions set forth therein, Merger Sub will merge with and into ANEW, with

ANEW as the surviving company in the merger and, after giving effect to such merger, a wholly owned subsidiary of the Company (the “Merger”).

Upon the closing of the Merger, the Company will change its name to “ANEW Medical, Inc.”

Under the Business Combination Agreement, the

Company will acquire all of the outstanding equity interests of ANEW in exchange for shares of the Company’s common stock, par value

$ 0.0001 per share (the “Common Stock”), based on an implied ANEW equity value of $ 60,000,000 , to be paid to ANEW stockholders

at the effective time of the Merger.

In addition, certain ANEW stockholders will be issued additional shares of Common Stock (the “Contingent

Consideration Shares”), which will be issued as follows:

(i) 2,000,000 Contingent Consideration Shares upon the Company achieving

a closing price equal to or exceeding $12.50 for 10 trading days within a 20-day trading period in the first three years following the

closing of the Merger;

(ii) 2,000,000 Contingent Consideration Shares upon the Company achieving a closing price equal to or exceeding

$15.00 for 10 trading days within a 20-day trading period in the first three years following the closing of the Merger;

and (iii) 1,000,000

Contingent Consideration Shares upon the Company achieving a closing price equal to or exceeding $20.00 for 10 trading days within a 20-day

trading period in the first five years following the closing of the Merger .

In connection with the execution of the Business

Combination Agreement, the Sponsor and other persons party thereto (together with the Sponsor, collectively, the “Company Insiders”),

entered into a support agreement with the Company and ANEW (the “Sponsor Support Agreement”).

Under the Sponsor Support Agreement,

the Sponsor agreed to vote, at any meeting of the stockholders of the Company and in any action by written consent of the stockholders

of the Company, all of such Sponsor’s 2,875,000 shares of common stock (the “Founder Shares”) and 530,000 Private Units,

each consisting of one share of Common Stock (such shares, together with the Founder Shares, the “Supporter Shares”), one

warrant and one right, (i) in favor of (a) the Business Combination Agreement and each ancillary document to which the Company is a party

and the transactions contemplated thereby and (b) the other proposals that the Company and ANEW agreed in the Business Combination Agreement

shall be submitted at such meeting for approval by the Company’s stockholders together with the proposal to approve the Merger,

(ii) approval of the Company’s Amended and Restated Certificate of Incorporation and Bylaws and (iii) against any other action that

would reasonably be expected to impede, interfere with or adversely affect the Merger.

The Sponsor Support Agreement also prohibits the

Sponsor from, among other things and subject to certain exceptions, selling, assigning or transferring any Supporter Shares held by the

Sponsor or taking any action that would have the effect of preventing or materially delaying the Sponsor from performing its obligations

under the Sponsor Support Agreement.

In addition, in the Sponsor Support Agreement, the Sponsor agreed to waive, and not to assert or

claim, to the fullest extent permitted by applicable law, any anti-dilution protection pursuant to the organizational documents of the

Company in connection with the Merger.

The Sponsor Support Agreement commits 1,375,000

Founder Shares (the “Deferred Shares”) to a share escrow account which will be established at the closing of the Merger pursuant

to an escrow agreement to be entered into on such date by and among the Company, the Company Insiders and Continental Stock Transfer &

Trust Company, as escrow agent.

The Deferred Shares will be released from the escrow account as follows:

(i) 458,333 Deferred Shares upon

the Company achieving a closing price equal to or exceeding $12.50 for 10 trading days within a 20-day trading period in the first three

years following the closing of the Merger;

(ii) 458,333 Deferred Shares upon the Company achieving a closing price equal to or exceeding

$15.00 for 10 trading days within a 20-day trading period in the first three years following the closing of the Merger;

and (iii) 458,333

Deferred Shares upon the Company achieving a closing price equal to or exceeding $20.00 for 10 trading days within a 20-day trading period

in the first five years following the closing of the Merger.

In connection with the execution of the Business

Combination Agreement, certain ANEW stockholders (the “ANEW Supporting Stockholders”) entered into a voting and support agreement

with the Company and ANEW (the “ANEW Support Agreement”).

Under the ANEW Support Agreement, each ANEW Supporting Stockholder

agreed that, at any meeting of ANEW’s stockholders related to the transactions contemplated by the Business Combination Agreement,

each such ANEW Supporting Stockholder will appear at the meeting or otherwise cause its shares to be voted (i) in favor of the Business

Combination Agreement and the transactions contemplated thereby, and authorize and approve any amendment to ANEW’s governing documents

that is deemed necessary or advisable by ANEW to effect the Merger;

and (ii) against any other action would reasonably be expected to

impede, interfere with or adversely affect the Merger.

The ANEW Support Agreement also restricts the

ANEW Supporting Stockholders from, among other things, selling, assigning or otherwise transferring any of its shares unless the buyer,

assignee or transferee thereof executes a joinder agreement to the ANEW Support Agreement in a form reasonably acceptable to the Company.

Liquidity, Capital Resources and Going Concern

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

capital of $ 598,362 (excluding redemptions payable to public stockholders and income tax and franchise tax payable as the taxes will be

paid out of the Trust Account).

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

to be used, in part, for transaction costs related to the Business Combination (see Note 6).

The Company has until July 4, 2023 (or December

As of June 30, 2023, the Company had cash of $ 123,722

and a working capital deficit of $ 646,300 (excluding income tax and franchise tax payable as the taxes will be paid out of the Trust Account).

On March 22, 2023, March 30, 2023, and June 28, 2023 the Sponsor provided a loan of $ 150,000 , $ 360,000 and $ 360,000 , respectively, to

be used, in part, for transaction costs related to the Business Combination (see Note 6).

The Company has until October 4, 2023 (or December

4, 2023, if the time to complete a business combination is extended as described herein) to consummate a Business Combination.

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to obtain additional financing in order to meet its obligations.

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

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.

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

October 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.

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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 unaudited condensed financial statements.

The unaudited condensed financial statements do not include any

adjustments that might result from the future outcome of this uncertainty.

Additionally, as a result of the military action

commenced in February 2022 by the Russian Federation and Belarus in the country of Ukraine and related economic sanctions, the Company’s

ability to consummate a Business Combination, or the operations of a target business with which the Company ultimately consummates a Business

Combination, may be materially and adversely affected.

In addition, the Company’s ability to consummate a transaction may be dependent

on the ability to raise equity and debt financing which may be impacted by these events, including as a result of increased market volatility,

or decreased market liquidity in third-party financing being unavailable on terms acceptable to the Company or at all.

The impact of this

action and related sanctions on the world economy and the specific impact on the Company’s financial position, results of operations

and/or ability to consummate a Business Combination are not yet determinable.

The financial statements do not include any adjustments

that might result from the outcome of this uncertainty.

Management has evaluated the impact of

persistent inflation and rising interest rates, financial market instability, including the recent bank failures, the lingering

effects of the COVID-19 pandemic and certain geopolitical events, including the conflict in Ukraine and the surrounding region, and

has concluded that while it is reasonably possible that the risks and uncertainties related to or resulting from these events could

have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the

specific impact is not readily determinable as of the date of these unaudited condensed consolidated financial statements.

unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of these

risks and uncertainties.

Inflation Reduction Act of 2022

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Combination and in the Company’s ability to complete a Business Combination.

At this time, it has been determined that the IR Act

tax provisions would have an impact to the Company’s fiscal 2023 tax provision as there were redemptions by the public stockholders

At this time, it has been determined that the

IR Act tax provisions would have an impact to the Company’s fiscal 2023 tax provision as there were redemptions by the public stockholders

in March 2023;

as a result, the Company recorded $631,696 exercise tax liability as of March 31, 2023.

as a result, the Company recorded $ 631,696 excise tax liability as of June 30, 2023.

The Company will continue to monitor

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are needed to the Company’s tax provision in future periods.

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 2 — Significant Accounting Policies

Basis 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.

Operating results for the three months ended

March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or any future

These financial statements should be read in conjunction with the Company’s 2022 Annual Report on Form 10-K as filed with

the SEC on April 10, 2023.

The accompanying unaudited condensed

consolidated 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.

Operating results for the six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the

year ending December 31, 2023 or any future period.

These financial statements should be read in conjunction with the

Company’s 2022 Annual Report on Form 10-K as filed with the SEC on April 10, 2023.

Emerging Growth Company

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Use of Estimates

In preparing these unaudited condensed financial

statements in conformity with U.S.

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 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

In preparing these unaudited condensed

consolidated financial statements in conformity with U.S.

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

unaudited condensed consolidated 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 consolidated 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 $ 117,985 and $ 340,962 in cash

and did not have any cash equivalents as of March 31, 2023 and December 31, 2022, respectively.

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

with an original maturity of six months or less when purchased to be cash equivalents.

The Company had $ 123,722 and $ 340,962 in cash and

did not have any cash equivalents as of June 30, 2023 and December 31, 2022, respectively.

Investments Held in Trust Account

As of March 31, 2023, the assets held in the Trust

As of June 30, 2023, the assets held in the Trust

Account were held in cash and U.S.

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

The Company accounts for income taxes under ASC

740, “Income Taxes.” ASC 740, Income Taxes, requires the recognition of deferred tax assets and liabilities for both the expected

impact of differences between the unaudited condensed financial statements and tax basis of assets and liabilities and for the expected

future tax benefit to be derived from tax loss and tax credit carry forwards.

ASC 740 additionally requires a valuation allowance to be

established when it is more likely than not that all or a portion of deferred tax assets will not be realized.

The Company accounts for income taxes under

ASC 740, “Income Taxes.” ASC 740, Income Taxes, requires the recognition of deferred tax assets and liabilities for both

the expected impact of differences between the unaudited condensed consolidated financial statements and tax basis of assets and

liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards.

ASC 740 additionally

requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will

not be realized.

The Company’s effective tax rate was 852.52 %

and 0.00 % for the three months ended March 31, 2023 and 2022, respectively.

The effective tax rate differs from the statutory tax rate

of 21 % for the three months ended March 31, 2023 and 2022, due to change in fair value of warrants and convertible notes and the change

in valuation of deferred tax assets.

and 0.00 % for the three months ended June 30, 2023 and 2022, respectively, and 30.76 % and 0.00 % for six months ended June 30, 2023 and

2022, respectively.

The effective tax rate differs from the statutory tax rate of 21 % for the three and six months ended June 30, 2023

and 2022, due to change in fair value of warrants and convertible notes and the change in valuation of deferred tax assets.

ASC 740 also clarifies the accounting for uncertainty

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As such, the Company is computing its taxable

income (loss) and associated income tax provision based on actual results through March 31, 2023.

income (loss) and associated income tax provision based on actual results through June 30, 2023.

The Company recognizes accrued interest and penalties

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

and penalties as of March 31, 2023 and December 31, 2022.

and penalties as of June 30, 2023 and December 31, 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.

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

The Company has identified the United States and

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Net Loss Per Share

The 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.

Any 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 March 31, 2023,

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

The Company complies with accounting and

disclosure requirements of FASB ASC 260, Earnings Per Share.

The unaudited condensed consolidated 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.

Any 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, 2023, 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.

The net income (loss) per share presented in the

unaudited condensed statement of operations is based on the following:

unaudited condensed consolidated statement of operations is based on the following:

Three Months Ended

Six Months Ended

2023 2022 2023 2022

Net income (loss) $ ( 153,546 ) $ ( 208,826 ) $ 967,065 $ ( 213,836 )

Accretion of common stock to redemption value (1) ( 1,014,375 ) ( 26,712,471 ) ( 2,336,570 ) ( 26,712,471 )

( 1,322,195 )

Net loss including accretion of common stock to redemption value $ ( 1,167,921 ) $ ( 26,921,297 ) $ ( 1,369,505 ) $ ( 26,926,307 )

Three Months Ended

March 31, 2023

June 30, 2023

Three Months Ended

March 31, 2022

Basic and diluted net income (loss) per common stock

Allocation of net loss

June 30, 2022

Basic and diluted net income/(loss) per share:

Allocation of net income (loss) including accretion of

$ ( 716,100 )

Accretion of ordinary shares subject to possible redemption to redemption value

$ ( 451,821 )

$ ( 20,614,715 )

$ ( 6,306,582 )

Accretion of common stock to redemption value (1)

Allocation of net income (loss)

$ ( 451,821 )

$ ( 6,306,582 )

Basic and diluted weighted average shares outstanding

Basic and diluted net income (loss) per common stock

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Basic and diluted net income (loss) per share

Six Months Ended

June 30, 2023

Six Months Ended

June 30, 2022

Basic and diluted net income/(loss) per share:

Allocation of net income (loss) including accretion of

$ ( 973,281 )

$ ( 396,224 )

$ ( 17,293,091 )

$ ( 9,633,216 )

Accretion of common stock to redemption value (1)

Allocation of net income (loss)

$ ( 396,224 )

$ ( 9,633,216 )

Basic and diluted weighted average shares outstanding

Basic and diluted net income (loss) per share

(1) Accretion

amount includes fees deposited into the Trust Account to extend the time for the Company to complete the Business Combination and franchise

and income taxes paid out of the Trust Account.

Concentration of Credit Risk

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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 March 31, 2023 and December 31,

current assets, accrued expenses, due to sponsor are estimated to approximate the carrying values as of June 30, 2023 and December 31,

2022 due to the short maturities of such instruments.

2 unchanged sentences

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.

initially accounted for its convertible promissory notes under ASC 815, “Derivatives and Hedging” and elected the fair value

option under ASC 825.

Using the fair value option method, 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.

Changes in the estimated fair value of the notes are recognized

as a non-cash gain or loss on the statements of operations.

Subsequently,

the conversion feature of the convertible promissory notes was amended on May 15, 2023;

the holder of the convertible promissory notes,

in its sole discretion, may convert any or all of the unpaid principal under the convertible promissory notes into common stocks of the

Company (see Note 6).

As a result, the Company assessed the change in conversion feature and determined that the convertible promissory

notes should be recorded as debt (liability) at cash proceeds on the balance sheet.

The Company’s assessment of the embedded conversion

feature considered the derivative scope exception guidance under ASC 815 pertaining to equity classification of contracts in an entity’s

The Company’s assessment was also based

on ASC 470-50 – Debt Modifications and Exchanges;

management determined that the amended conversion option (which is based on shares

of the Company’s common stocks) is substantially different from the original conversion option (which was based on units).

each unit consists of one share of common stock, one share of right convertible into one-tenth (1/10) of one share of common stock upon

the consummation of a Business Combination, the original conversion option offers at least 10% more shares of common stock (including

underlying shares from the rights conversion) than the amended conversion option.

As such, a remeasurement under ASC 825 has occurred

and the previously selected fair value option is no longer applied.

The convertible promissory notes were recorded as debt (liability)

at cash proceeds on the balance sheet effective May 15, 2023.

For all newly issued and unmodified convertible promissory notes, the

Company elects an early adoption of 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”) and accounts for newly issued s as debt (liability) on the balance sheet.

considers the derivative scope exception guidance under ASC 815 pertaining to equity classification of contracts in an entity’s

The Company accounts for warrants (Public Warrants

17 unchanged sentences

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

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Common Stock Subject to Possible Redemption

14 unchanged sentences

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 unaudited condensed

financial statements.

consolidated financial statements.

Note 3 — Cash and Investment Held in

Trust Account

As of March 31, 2023 and December 31, 2022, investment

As of June 30, 2023 and December 31, 2022, investment

securities in the Company’s Trust Account consisted of $ 56,950,088 and $ 117,806,478 in cash and U.S.

1 unchanged sentence

The following table presents information about

the Company’s assets that are measured at fair value on a recurring basis as of March 31, 2023 and indicates the fair value hierarchy

the Company’s assets that are measured at fair value on a recurring basis as of June 30, 2023 and indicates the fair value hierarchy

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

Markets (Level 1)

Marketable securities held in Trust Account

$ 119,416,545

Markets (Level 1)

Marketable securities held in Trust Account

1 unchanged sentence

$ 117,806,478

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 4 — Initial Public Offering

30 unchanged sentences

retained earnings, additional paid-in capital).

As of March 31, 2023, the shares of common stock

As of June 30, 2023, the shares of common stock

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

10 unchanged sentences

$ 117,361,652

Accretion of carrying value to redemption value – three months period ended March 31, 2023

Accretion of carrying value to redemption value – six months period ended June 30, 2023

Redeemed common stock payable to public stockholders

( 63,169,451 )

Class A Common stock subject to possible redemption– March 31, 2023

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Class A Common stock subject to possible redemption– June 30, 2023

Note 5 — Private Placement

21 unchanged sentences

are currently subject to forfeiture.

As of March 31, 2023, there were 2,875,000 Insider Shares issued and outstanding.

As of June 30, 2023, there were 2,875,000 Insider Shares issued and outstanding.

The Initial Stockholders have agreed, subject

12 unchanged sentences

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

As of March 31, 2023, the Company

had no borrowings under the Promissory Notes.

On March 22, 2023, the Company issued an unsecured, non-interest bearing

promissory note in the principal amount of $ 150,000 to the Sponsor (“Convertible Note 1”).

On March 30, 2023, the Company

issued an unsecured, non-interest bearing promissory note in the principal amount of $ 360,000 to the Sponsor (“Convertible Note

As of June 30, 2023, the Company had

no borrowings under the Promissory Notes.

On March 22, 2023, the Company issued an unsecured,

non-interest bearing promissory note in the principal amount of $ 150,000 to the Sponsor (“Convertible Note 1”).

2023, the Company issued an unsecured, non-interest bearing promissory note in the principal amount of $ 360,000 to the Sponsor (“Convertible

Both convertible promissory notes are payable upon the closing of the Business Combination or the liquidation of the Company.

1 unchanged sentence

promissory notes into Private Units of the Company, at a price of $ 10.00 per unit, upon consummation of the Business Combination.

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

On May 15, 2023, the conversion feature of

Convertible Note 1 and Convertible Note 2 was amended;

the holder of the convertible promissory notes, in its sole discretion, may

convert any or all of the unpaid principal under the convertible promissory notes into shares of common stock of the Company, at a

conversion price of $ 10.00 per share, upon consummation of the Business Combination.

On June 28, 2023, the Company issued an

unsecured, non-interest bearing promissory note in the principal amount of $ 360,000 to the Sponsor (“Convertible Note

Convertible Note 3 is payable upon the closing of the Business Combination or the liquidation of the Company.

of the Convertible Note 3, in its sole discretion, may convert any or all of the unpaid principal under the convertible promissory

notes into shares of common stock of the Company, at a price of $ 10.00 per share, upon consummation of the Business Combination.

As of June 30, 2023, a total amount of $ 870,000

was outstanding under the three convertible promissory notes.

Related Party Loans

14 unchanged sentences

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

As of March 31, 2023, the Company had no borrowings

As of June 30, 2023, the Company had no borrowings

under the working capital loans.

7 unchanged sentences

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

For the three months ended

March 31, 2023 and 2022, the Company incurred $ 30,000 and $ 0 , respectively, in fees for these services, of which $ 30,000 and $ 90,000 were

included in accrued expenses in the accompanying condensed unaudited balance sheets as of March 31, 2023 and December 31, 2022, respectively.

For the six months ended June

30, 2023 and 2022, the Company incurred $ 60,000 and $ 30,000 , respectively, in fees for these services, of which $ 150,000 and $ 90,000 were

included in accrued expenses in the accompanying unaudited condensed consolidated balance sheets as of June 30, 2023 and December 31,

2022, respectively.

Note 7 — Commitments and

30 unchanged sentences

to the terms of the underwriting agreement.

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Unit Purchase Option

34 unchanged sentences

entitled to one vote for each share.

At March 31, 2023, there were 3,405,000 shares of common stock issued and outstanding (excluding

At June 30, 2023, there were 3,405,000 shares of common stock issued and outstanding (excluding 5,396,650

shares subject to possible redemption).

21 unchanged sentences

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

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Warrants — Each

55 unchanged sentences

the warrants may expire worthless.

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

The private warrants have terms and provisions

18 unchanged sentences

The following table presents information about

the Company’s liabilities that are measured at fair value on March 31, 2023 and December 31, 2022, and indicates the fair value

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

the Company’s liabilities that are measured at fair value on June 30, 2023 and December 31, 2022, and indicates the fair value hierarchy

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

Warrant liability

Convertible Note 1

Convertible Note 2

Warrant liability

Convertible Note 1

Convertible Note 2

The private warrants are accounted for as liabilities

2 unchanged sentences

are recorded in the statement of operations each period.

REDWOODS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

The table below shows the change in fair value of warrant liabilities

as of March 31, 2023:

as of June 30, 2023:

Fair value at January 1, 2023

Change in fair value

Fair value as of March 31, 2023

Fair value as of June 30, 2023

The Company established the initial fair value

5 unchanged sentences

measurement date due to the use of unobservable inputs.

The key inputs into the Black-Scholes model were

as follows at their measurement date:

The key inputs into the Black-Scholes model were as follows at their

measurement date:

Exercise Price

9 unchanged sentences

assumptions which were unchanged as of March 31, 2023.

Convertible Note 2

Convertible Note 1

Time to maturity

3 unchanged sentences

Risk-free rate

The following table presents the changes in the fair value of the Level

3 Convertible Notes:

The following table presents the changes in the

fair value of the Level 3 Convertible Notes:

Fair value as of January 1, 2023

3 unchanged sentences

Fair value as of March 31, 2023

As a result of amendments to the conversion feature of Convertible

Note 1 and Convertible Note 2, a remeasurement under ASC 825 has occurred and the previously selected fair value option is no longer applied.

The convertible promissory notes were recorded as debt (liability) at cash proceeds on the balance sheet effective May 15, 2023.

June 30, 2023, the Convertible Note 1 and Convertible Note 2 were recorded at $ 150,000 and $ 360,000 , respectively, based on the cash proceeds

on March 22, 2023 and March 30, 2023.

Note 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 the date that

the unaudited condensed financial statements were issued.

Based on this review, the Company did not identify any subsequent events that

would have required disclosure in the unaudited condensed financial statements.

In accordance with ASC 855,

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

up to the date that the unaudited condensed consolidated financial statements were issued.

Based on this review, the Company did not

identify any subsequent events that would have required disclosure in the unaudited condensed consolidated 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