The underwriters had a 45-day option from the date of IPO to purchase up to an additional 1,500,000 units (“Over-Allotment Option Units”) to cover over-allotments, if any. On October 26, 2021 the underwriters fully exercised their over-allotment option, purchasing 1,500,000 units, generating additional gross proceeds of $15,000,000. The Company deposited net proceeds of $14,700,000 into the Trust Account.
NOTE 4. PRIVATE PLACEMENT
On October 21, 2021, simultaneously with the closing of the IPO, the Sponsor purchased from the Company 400,000 Private Units, at $10.00 per Private Unit, for a total purchase price of $4,000,000. Each Private Unit is identical to the Public Units, except as provided herein. Of the $4,000,000 gross proceeds, the Company deposited $2,000,000 into the Trust account.
On October 26, 2021, simultaneously with the sale of the Over-Allotment Option Units, the Company consummated the private sale of an additional 30,000 Private Units, generating gross proceeds to the Company of $300,000. The Company deposited the proceeds of $300,000 into the Trust Account.
The Private Units, underlying private shares of common stock and private rights and private warrants will not be transferable, assignable or salable until 30 days after the consummation of the initial Business Combination except to permitted transferees.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On February 3, 2021, the Sponsor paid $25,000, or approximately $0.009 per share, to cover certain of the offering and formation costs in exchange for an aggregate of 2,875,000 shares of common stock, par value $0.0001 per share (the “Founder Shares”). The Founder Shares include an aggregate of up to 375,000 shares subject to forfeiture if the over-allotment option is not exercised by the underwriters in full. On October 26, 2021, the underwriters fully exercised their over-allotment option, so there is no forfeiture of shares.
The Sponsor has agreed not to transfer, assign or sell any of the Founder Shares (except to certain permitted transferees) until, with respect to 50% of the Founder Shares, the earlier of six months after the date of the consummation of the initial Business Combination and the date on which the closing price of the Company’s common stock equals or exceeds $12.50 per share for any 20 trading days within a 30-trading day period following the consummation of the initial Business Combination and, with respect to the remaining 50% of the Founder Shares, six months after the date of the consummation of the initial Business Combination, or earlier in each case if, subsequent to the initial 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 (the “Lock-up”). The Founder Shares are held in escrow with Continental Stock Transfer & Trust Company during the period in which they are subject to the transfer restrictions described above.
Administrative Service Fee
The Company has agreed, commencing on the effective date of the IPO, to pay the Sponsor a total of $10,000 per month for office space, administrative and support services. Upon completion of the Company’s Business Combination or its liquidation, the Company will cease paying these monthly fees. For the three and six months ended June 30, 2022, the Company incurred and settled $30,000 and $60,000 for these services. For the three months ended June 30, 2021 and for the period from January 22, 2021 (inception) through June 30, 2021, the Company did not incur any fees for these services.
Promissory Note — Related Party
On May 1, 2021, the Company issued an unsecured promissory note to the Sponsor, pursuant to which the Company could borrow up to an aggregate principal amount of $250,000 to be used for a portion of the expenses of the IPO. This loan was non-interest bearing,