Notes
to Financial Statements
March
31, 2023
(UNAUDITED)
Note
1 — ORGANIZATION AND BUSINESS OPERATIONS
Jupiter
Wellness Acquisition Corporation (the “Company”) is a blank check company incorporated on September 14, 2021, under the laws
of the State of Delaware for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization,
reorganization or other similar business combination with one or more businesses or entities (a “Business Combination”).
On October 26, 2022, the Company identified a target company for a Business Combination and activities in connection with the proposed
acquisition of Chijet Inc., a Cayman Islands exempted company (see Note 4). The Company will not generate any operating revenues until
after consummation of the initial 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.
As
of March 31, 2023, the Company had not yet commenced any operations. All activity as of March 31, 2023, relates to the
Company’s formation and the initial Public Offering (as defined below). 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 September 30 as its fiscal year end.
On
December 9, 2021, the Company consummated its IPO of 13,800,000 units (the “Units” and, with respect to the shares of Class
A common stock included in the Units, the “Public Shares”) at $10.00 per unit, which included 1,800,000 Units issued pursuant
to the full exercise by the Underwriters (as defined below) of their over-allotment option, and the private sale of an aggregate of 629,000
Units (the “Private Placement Units” and with respect to the shares of Class A common stock included in the Units, the “Private
Placement Shares”) to its sponsor, Jupiter Wellness Sponsor LLC (the “Sponsor”) and I-Bankers Securities, Inc. (“I-Bankers”)
at a purchase price of $10.00 per Private Placement Unit, generating gross proceeds of $6,290,000 to the Company that closed simultaneously
with the closing of the IPO (see Note 3). The Company’s Units have been listed on the Nasdaq Global Market (“Nasdaq”).
Transaction
costs amounted to $7,985,917 consisting of $2,760,000 in cash of underwriting commissions, $4,830,000 of business combination marketing
fee, and $395,917 of other offering costs. In addition, as of December 9, 2021, cash of $1,630,676 was held outside of the Trust Account
(as defined below) and is available for working capital purposes.
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO and the sale
of the Private Placement Units, although substantially all of the net proceeds are intended to be applied generally toward consummating
a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company
must complete a Business Combination with one or more operating businesses or assets that together have an aggregate fair market value
equal to at least 80% of the net assets held in the Trust Account (net of amounts disbursed to management for working capital purposes,
if permitted, and excluding the amount of any deferred underwriting commissions) at the time of the Company’s signing a definitive
agreement in connection with its initial Business Combination. 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 an interest in the target
business or assets sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940,
as amended (the “Investment Company Act”).
Upon
the closing of the IPO on December 9, 2021, the Company deposited $139,380,000 ($10.10 per Unit) from the proceeds of the IPO and certain
proceeds of the sales of Private Placement Units in the trust account (“Trust Account”), located in the United States and
invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity
of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting
certain conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion
of a Business Combination and (ii) the distribution of the funds held in the Trust Account, as described below.
The
Company will provide its 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. The stockholders will be entitled to redeem their shares for a pro rata portion of the amount held
in the Trust Account (initially $10.10 per share), calculated as of two business days prior to the completion of a Business Combination,
including any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax
obligations. The shares of Class A common stock will be recorded at redemption value and classified as temporary equity upon the completion
of the IPO, in accordance with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from
Equity.”
The
Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 upon such completion
of a Business Combination and, if the Company seeks stockholder approval, a majority of the outstanding shares voted are voted in favor
of the Business Combination.
If
the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed to (i) waive its redemption
rights with respect to their Private Placement Shares in connection with the completion of the Business Combination, (ii) waive its redemption
rights with respect to their Private Placement Shares in connection with a stockholder vote to approve an amendment to the Company’s
second amended and restated certificate of incorporation (a) to modify the substance or timing of the Company’s obligation to redeem
100% of the Public Shares if the Company does not complete the Business Combination within the Combination Period (as defined below)
or (b) with respect to any other provision relating to stockholders’ rights or pre-initial Business Combination activity and (iii)
waive its rights to liquidating distributions from the Trust Account with respect to their Private Placement Shares if the Company fails
to complete the Business Combination within the Combination Period. In addition, the Sponsor has agreed to vote any share it held in
favor of the Business Combination.
Additionally,
each public stockholder may elect to redeem its Public Shares, without voting, and if they do vote, irrespective of whether they vote
for or against a proposed Business Combination.
Notwithstanding
the foregoing, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the
tender offer rules, the Company’s second amended and restated certificate of incorporation provides that a public stockholder,
together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted
from redeeming its shares with respect to more than an aggregate of 15% of the Public Shares without the Company’s prior written
consent.
The
Company will have until 12 months from the closing of the IPO (or 18 months from the closing of the IPO if the Company may extend the
period of time to consummate a Business Combination) (the “Combination Period”) to complete a Business Combination. 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 no more than 10 business days thereafter, redeem 100% of the
outstanding Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account,
including interest earned (less up to $50,000 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 liquidation distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval
of the 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 requirements of other applicable law. On December 6, 2022, the
Company extended the Combination Period until March 8, 2023. On March 6, 2023, the Company deposited another extension payment to extend the Combination Period until June 8, 2023.
The
Sponsor has agreed to waive its liquidation rights with respect to the Founder Shares (as defined below) and Private Placement Shares
if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor 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 business combination
marketing fees (see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination
Period and, in such event, such amounts will be included with the 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 the IPO price per Unit ($10.10).
The
Sponsor has agreed that it will be liable to the Company, if and to the extent any claims by a third party for services rendered or products
sold to the Company, or by a prospective target business with which the Company has discussed entering into a transaction agreement,
reduce the amount of funds in the Trust Account to below (1) $10.10 per Public Share or (2) such lesser amount per Public Share held
in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of trust assets, in each case
net of the amount of interest which may be withdrawn to pay taxes. This liability will not apply with respect to any claims by a third
party who executed a waiver of any and all rights to seek access to the Trust Account 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. The Company will seek to reduce the possibility
that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers
(other than the Company’s independent auditors), prospective target businesses or other entities with which the Company does business,
execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Underwriting
Agreement and Business Combination Marketing Agreement
The
Company engaged I-Bankers as the representative of the underwriters (the “Underwriters”) in the IPO of the Company’s
Class A common stock, par value of $0.0001 per share (“Shares”), for $120 million and the simultaneous listing on Nasdaq.
Pursuant to that certain underwriting agreement, I-Bankers acted as the representative of the Underwriters of the IPO for 12,000,000
Units at $10.00 per unit, plus an over-allotment option equal to 15% of the number of Units offered, or 1,800,000 Units, which was exercised
in full simultaneously upon the closing of the IPO. The Company paid I-Bankers underwriters’ commission of $2,760,000, equal to
2.0% of the gross proceeds raised in the IPO for such services upon the consummation of the IPO (exclusive of any applicable finders’
fees which might become payable).
Upon
the closing of the IPO, the Company issued to I-Bankers a five-year warrant to purchase 414,000 Shares of Class A common stock, equal
to 3.0% of the Shares issued in the IPO (“Representative Warrants”). The exercise price of Representative Warrants is $12.00
per Share. In addition, I-Bankers was issued 276,000 shares of Class A common stock upon the consummation of IPO (“Representative
Shares”).
In
addition, under a business combination marketing agreement, the Company has engaged I-Bankers as an advisor in connection with the Business
Combination and will pay I-Bankers a cash fee for such marketing services upon the consummation of the Business Combination in an amount
equal to, in the aggregate, 3.5% of the gross proceeds of the IPO, including any proceeds from the exercise of the underwriters’
over-allotment option. The fee will become payable to the Underwriters from the amounts held in the Trust Account solely in the event
that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
Going
Concern Consideration
The
Company expects to incur significant costs in pursuit of its financing and acquisition plans. In connection with the Company’s
assessment of going concern considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures
of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that if the Company
is unsuccessful in consummating an initial business combination within the prescribed period of time from the closing of the IPO, the
requirement that the Company cease all operations, redeem the public shares and thereafter liquidate and dissolve raises substantial
doubt about the ability to continue as a going concern. The balance sheet does not include any adjustments that might result from the
outcome of this uncertainty. Management has determined that the Company has funds that are sufficient to fund the working capital needs
of the Company until the consummation of an initial business combination or the winding up of the Company as stipulated in the Company’s
amended and restated memorandum of association. The accompanying financial statement has been prepared in conformity with generally accepted
accounting principles in the United States of America (“GAAP”), which contemplate continuation of the Company as a going
concern.
Risks
and Uncertainties
Management
continues to evaluate 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 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 this financial statement. The financial statement does not
include any adjustments that might result from the outcome of this uncertainty.
NOTE
2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying 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 US Securities and Exchange Commission (“SEC”).
Emerging
Growth Company Status
The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act and 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 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
The
preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statement and the reported amounts of 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 financial statement, which management considered in formulating its estimate, could change in the near term due to
one or more future confirming events. Actual results could differ from those estimates.
Cash
and Cash Equivalents
The
Company had $17,731 in cash as of March 31, 2023. The Company considers all short-term investments with an original maturity of three
months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of March 31, 2023.
Marketable
Securities Held in Trust Account
At
March 31, 2023, substantially all of the assets held in the Trust Account were held in money market funds which are invested primarily
in U.S. Treasury securities. All of the Company’s investments held in the Trust Account are classified as trading securities. Trading
securities are presented on the balance sheet at fair value at the end of each reporting period. Gains and losses resulting from the
change in fair value of investments held in Trust Account are included in interest earned on marketable securities held in Trust Account
in the accompanying statements of operations. The estimated fair values of investments held in Trust Account are determined
using available market information. At March 31, 2023, $145,433,953 was held in the Trust Account.
Offering
Costs Associated with the IPO
The
Company complies with the requirements of the ASC 340-10-S99-1. Offering costs consisted of legal, accounting, underwriting fees and
other costs incurred through the IPO that were directly related to the IPO. The Company incurred offering costs amounting to $7,985,917
as a result of the IPO consisting of $2,760,000 in cash of underwriting commissions, $4,830,000 of business combination marketing fee,
and $395,917 of other offering costs. As of March 31, 2023, offering costs in the aggregate of $3,155,917 have been charged to stockholders’
equity and $4,830,000 have been classified to current liabilities, respectively.
Class
A Common Stock Subject to Possible Redemption
All
of the 13,800,000 shares of Class A common stock sold as part of the Units in the IPO contain a redemption feature. In accordance with
the Accounting Standards Codification 480-10-S99-3A “Classification and Measurement of Redeemable Securities”, redemption
provisions not solely within the control of the Company require the security to be classified outside of permanent equity. Ordinary liquidation
events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions
of ASC 480. The change in the carrying value of redeemable shares of common stock resulted in charges against additional paid-in capital
and accumulated deficit. Accordingly, at March 31, 2023, the shares of Class A common stock subject to possible redemption in the amount
of $144,837,830 were presented as temporary equity, outside of the stockholders’ equity section of the Company’s balance
sheet.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution
which, at times, may exceed the federal depository insurance coverage corporation limit of $250,000. The Company has not experienced
losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Fair
Value of Financial Instruments
Fair
value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction
between market participants at the measurement date. U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value.
The
hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements)
and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
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Level
1, defined as observable inputs such as quoted prices for identical instruments in active markets; |
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Level
2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted
prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active;
and |
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Level
3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
In
some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In
those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input
that is significant to the fair value measurement.
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value
Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet, primarily due to their short-term
nature.
Business
Combination Marketing Fee
Pursuant
to the business combination marketing agreement, the Company has engaged I-Bankers as an advisor in connection with the Business Combination
and will pay I-Bankers a cash fee for such marketing services upon the consummation of the Business Combination in an amount equal to,
in the aggregate, 3.5% of the gross proceeds of the IPO, including any proceeds from the full or partial exercise of the underwriters’
over-allotment option.
Stock-Based
Compensation
The
Company recognizes compensation costs to employees under FASB Accounting Standards Codification 718 “Compensation – Stock
Compensation” (“ASC 718”). Under ASC 718, companies are required to measure the compensation costs of share-based compensation
arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees
are required to provide services. Share based compensation arrangements include stock options and warrants. As such, compensation cost
is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods
of the option grant.
On
September 14, 2021, the inception date, the Company adopted Accounting Standards Update (“ASU”) No. 2018-07 “Compensation
– Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” These amendments expand the
scope of Topic 718, Compensation – Stock Compensation (which currently only includes share-based payments to employees) to include
share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees
and employees will be substantially aligned.
Income
Taxes
The
Company complies with the accounting and reporting requirements of FASB ASC, 740, “Income Taxes”. Deferred tax assets and
liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement 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. There
were no unrecognized tax benefits as of March 31, 2023 and September 30, 2022. Deferred tax assets were deemed to be de minimis as of
March 31, 2023 and September 30, 2022.
FASB
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. No amounts were accrued for the payment of interest and penalties at March 31, 2023 and September
30, 2022.
Income
taxes was accrued for $546,123
and $308,307 for the six and three months ended March 31, 2023, respectively.
Warrants
ASC
480 requires a reporting entity to classify certain freestanding financial instruments as liabilities (or in some cases as assets). ASC
480-10-S99 addresses concerns raised by the SEC regarding the financial statement classification and measurement of securities subject
to mandatory redemption requirements or whose redemption is outside the control of the issuer. If the stock subject to mandatory redemption
provisions represents the only shares in the reporting entity, it must report instruments in the liabilities section of its statement
of financial position. The stock subject must then describe them as shares subject to mandatory redemption, so as to distinguish the
instruments from other financial statement liabilities. The Company concludes that the warrants to I-Bankers do not exhibit any of the
above characteristics and, therefore, are outside the scope of ASC 480. The warrants were issued in accordance with the guidance contained
in ASC 815-40, Derivatives and Hedging — Contracts in Entity’s Own Equity. Such guidance provides that because the warrants
meet the criteria for equity treatment.
Recent
Accounting Pronouncements
Management
does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material
effect on the Company’s financial statement.
NOTE
3 — Public Offering
At
the IPO, the Company sold 13,800,000 Units at a purchase price of $10.00 per Unit, which included 1,800,000 Units issued pursuant to
the full exercise by the Underwriters of their over-allotment option, generating gross proceeds to the Company of $138,000,000. Each
Unit consists of one share of Class A common stock of the Company, par value $0.0001 per share (“Class A common stock”),
and one right to receive one-eighth of one share of Class A common stock upon the consummation of the Company’s initial business
combination (see Note 6).
A
total of $139,380,000 of the net proceeds from the IPO and the sale of the Private Placement Units was placed in a U.S.-based Trust
Account maintained by American Stock Transfer & Trust Company, LLC, acting as trustee.
NOTE
4 — BUSINESS COMBINATION
On
October 26, 2022, Jupiter Wellness Acquisition Corp., a blank check, special purpose acquisition company incorporated as a Delaware corporation
(the “Company”), issued a press release (the “Press Release”) announcing that the Company has entered into a
definitive Business Combination Agreement (the “BCA”) on October 25, 2022, with Chijet Inc., a Cayman Islands exempted company
(together with its subsidiaries, “Chijet”), each of the referenced holders of Chijet’s outstanding capital shares (collectively,
the “Sellers”) and certain other parties formed in connection with the transactions contemplated by the BCA (the “Business
Combination”), including Chijet Motor Company, Inc., a Cayman Islands exempted company and a wholly owned subsidiary of Chijet
(“Pubco”). Chijet indirectly holds controlling interests in Shandong Baoya New Energy Vehicle Co., Ltd., a Chinese company
(“Baoya”), which is a producer and manufacturer of electric vehicles and FAW Jilin Automobile Co., Ltd., a Chinese company
(“FAW Jilin”), which manufactures and sells traditional fuel vehicles.
Subject
to the terms and conditions of the BCA, Pubco will acquire all of the issued and outstanding shares of Chijet from the Sellers (“Purchased
Shares”) in exchange for ordinary shares of Pubco and Chijet shall surrender for no consideration its shares in Pubco, such that
Chijet becomes a wholly owned subsidiary of Pubco and the Sellers become shareholders of Pubco (the “Share Exchange”). Immediately
thereafter, Merger Sub will merge with and into the Company, with the Company continuing as the surviving entity, as a result of which,
(i) the Company shall become a wholly owned subsidiary of Pubco, and (ii) each issued and outstanding security of the Company immediately
prior to the consummation of the Business Combination shall no longer be outstanding and shall automatically be cancelled, in exchange
for the right of the holder thereof to receive a substantially equivalent security of Pubco (and with the holders of the Company’s
publicly traded shares of Class A common stock, par value $0.0001 per share (“Company Class A Common Stock”), that do not
redeem their shares also receiving one (1) contingent value right (“CVR,” as defined in the BCA) for each share of Company
Class A Common Stock held).
Pursuant
to the BCA, at the closing, Pubco shall issue and deliver to the Sellers an aggregate number of Pubco ordinary shares (the “Exchange
Shares”) with an aggregate value equal to One Billion Six Hundred Million U.S. Dollars ($1,600,000,000), with each Pubco ordinary
share valued at the redemption price, and with each Seller receiving its pro rata share of the applicable Exchange Shares based on the
number of Purchased Shares owned by such Seller, divided by the total number of purchased shares owned by all Sellers. However, the issuance
to certain of the Sellers (the “Earnout Participants”) of Exchange Shares having a value of Six Hundred and Seventy Four
Million U.S. Dollars ($674,000,000), with each of such shares being valued at the redemption price (such Pubco ordinary shares, subject
to equitable adjustment for share splits, share dividends, combinations, recapitalizations and the like after the closing, including
to account for any equity securities into which such shares are exchanged or converted, and together with the earnings thereof, the “Earnout
Shares”), and each of the Earnout Participants shall have the contingent right to receive a pro rata portion of such Earnout Shares
and earnings thereon (such pro rata allocation based on the number of Purchased Shares owned by such Earnout Participant, divided by
the total number of Purchased shares owned by all Earnout Participants) based on Pubco and its subsidiaries achieving certain financial
performance metrics over for calendar years 2023, 2024 and 2025 or meeting certain stock price metrics from the closing until 30 trading
days after the date on which Pubco files its annual report for the calendar year ended December 31, 2023, 2024 and 2025, respectively
with the SEC. To the extent that any such Earnout Shares are not earned, they (along with income thereon) will be redistributed pro rata
to the holders of CVRs.
On
December 5, 2022, the company issued an unsecured promissory note (the “Note”) in the principal amount of $1,380,000 to Chijet
(See Note 7 for further discussion.). In connection with the issuance of the Note, on December 5, 2022, the Company deposited an aggregate
of $1,380,000 into the trust account of the Company for its public stockholders, which enables the Company to further extend the period
of time it has to consummate its initial business combination by three months from December 8, 2022 to March 9, 2023 (the “Extension”).
The Extension is the first of up to two three-month extensions permitted under the Company’s governing documents.
On
March 6, 2023, Jupiter Wellness Acquisition Corp. (the “Company”) issued two unsecured promissory note (the
“Note”) in the principal amount totaling of $1,280,000 to Chijet, Inc. In connection
with the issuance of the Note, on March 6, 2023, the Company deposited an aggregate of $1,380,000 into the trust account of the Company
for its public stockholders, which enables the Company to further extend the period of time it has to consummate its initial business
combination by three months from March 9, 2022 to June 8, 2023 (the “Extension”). The Extension is the second of up to two
three-month extensions permitted under the Company’s governing documents. The $100,000 balance of the $1,380,000 was funded by the Company itself out of funds available in its operating account.
The
business combination was not closed as of March 31,
2023.
NOTE
5 — RELATED PARTY TRANSACTIONS
Founder
Shares
On
September 20, 2021, the Sponsor purchased 2,875,000 shares of the Company’s Class B common stock (the “Founder Shares”)
for an aggregate purchase price of $50,000.
In
December 2021, the Company effected a 0.2 for 1 stock dividend for each share of Class B common stock outstanding (which has been accounted
for as a stock split) of 575,000 shares of Class B common stock, which resulted in an aggregate of 3,450,000 shares of Class B common
stock outstanding. All share and associated amounts have been retroactively restated to reflect the share dividend.
The
Founder Shares include an aggregate of up to 450,000 shares of Class B common stock subject to forfeiture by the Sponsor to the extent
that the underwriters’ over-allotment is not exercised in full or in part, so that the number of Founder Shares will collectively
represent 20% of the Company’s issued and outstanding shares upon the completion of the IPO. On December 9, 2021, the Underwriter
exercised the over-allotment option in full. As a result, no Founder Shares is subject to for forfeiture (see Note 3).
Private
Placement
Concurrently
with the closing of the IPO, the Sponsor and the Underwriters purchased an aggregate of 629,000 Private Placement Units, generating gross
proceeds of $6,290,000 in aggregate in a private placement. Each Private Placement Unit will consist of one share of Class A common stock
and one right. Each right underlying the Private Placement Unit (the “Private Placement Right”) will entitle the holder to
receive one-eighth of one share of Class A common stock at the closing of a Business Combination. The proceeds from the sale of the Private
Placement Units have been added to the net proceeds from the IPO held in the Trust Account. If the Company does not complete a Business
Combination within the Combination Period, the proceeds from the sale of the Private Placement Units will be used to fund the redemption
of the Public Shares (subject to the requirements of applicable law), and the Private Placements Units and all underlying securities
will expire worthless.
The
Private Placement Units (including the underlying Private Placement Rights, the Private Placement Shares and the shares of Class A common
stock issuable upon conversion of the Private Placement Rights) will not be transferable, assignable or salable until 30 days after the
completion of the initial Business Combination (except as described under the section of the IPO prospectus entitled “Principal
Stockholders — Restrictions on Transfers of Founder Shares and Private Placement Units”). Following such period, the Private
Placement Units (including the underlying Private Placement Rights, the Private Placement Shares and the shares of Class A common stock
issuable upon conversion of the Private Placement Rights) will be transferable, assignable or salable, except that the Private Placement
Units will not trade.
Accrued
Expenses - Related Parties
Pursuant
to the executed Offer Letters, the Company agreed to pay the Company’s Chief Financial Officer $5,000 in cash per month starting
from December 9, 2021. As of March 31, 2023 and September 30, 2022, the Company had accrued expenses – related parties in amount
of $13,667 and $8,667 in connection with the accrued compensation to the Company’s management and directors, respectively.
Working
Capital Loans
In
addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor, an affiliate of the Sponsor,
or certain of the Company’s officers and directors or their affiliates may, but are not obligated to, loan the Company funds
as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay
the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans
would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the
Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the
Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation
of a Business Combination, without interest, or, at the lender’s discretion, up to $1.5
million of such Working Capital Loans may be convertible into private placement-equivalent units at a price of $10.00
per unit at the option of the lender. Such units would be identical to the Private Placement Units. Except for the foregoing, the
terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. As
of March 31, 2023, no
Working Capital Loans were outstanding.
Promissory
Note - Related Party
On March 6, 2023, the Company issued an unsecured promissory note in the principal amount of $100,000 to
Jupiter Wellness Investment Corp., a wholly owned subsidiary of Jupiter Wellness, Inc. The Note is non-interest bearing and payable in
cash upon the earlier of the closing of the Company’s initial business combination and date of liquidation of the Company.
On March
8, 2023, the Company issued an unsecured promissory note in the principal amount of $200,000 to Jupiter Wellness, Inc. This note is non-interest
bearing and payable in cash upon the earlier of the closing of the Company’s initial business combination and date of liquidation
of the Company.
NOTE
6 — COMMITMENTS AND CONTINGENCIES
Registration
Rights
The
holders of the Founder Shares, Private Placement Units (and their underlying securities), the Representative Shares, the Representative
Warrants (and their underlying securities), the 300,000 shares of Class A common stock issuable to the Company’s directors and
officers within 10 days following the Business Combination and any Units that may be issued upon conversion of the Working Capital Loans
(and their underlying securities) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior
to or on the effective date of the IPO requiring the Company to register such securities for resale (in the case of the Founder Shares,
only after conversion to Class A common stock). The holders of these securities are entitled to make up to three demands, excluding short
form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration
rights with respect to registration statements filed subsequent to the completion of a Business Combination and rights to require the
Company to register for resale such securities pursuant to Rule 415 under the Securities Act. The registration rights agreement does
not contain liquidated damages or other cash settlement provisions resulting from delays in registering the Company’s securities.
The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting
Agreement
The
Company had granted the Underwriters a 30-day option from the date of IPO to purchase up to 1,800,000 additional Units to cover over-allotments,
if any, at the IPO price less the underwriting discounts and commissions.
Simultaneously
upon the closing of the IPO, the Underwriters exercised the over-allotment option in full. As such, the Underwriters were paid an underwriting
discount and commission of $0.20 per Unit, or $2,760,000 in the aggregate payable upon the closing of the IPO, and I-Bankers was entitled
to a business combination marketing fee of $4,830,000 in the aggregate, which is held in the Trust Account and payable upon completion
of the Business Combination.
NOTE
7 — PROMISSORY NOTE
On
December 5, 2022, the company issued an unsecured promissory note (the “Note”) in the principal amount of $1,380,000 to Chijet.
Chijet, entered into a business combination agreement with the Company, among others, on October 25, 2022. The Note is non-interest bearing
and payable in cash upon the earlier of the closing of the Company’s initial business combination and date of liquidation of the
Company.
On
March 6, 2023, the company issued an unsecured promissory note in the principal amount of $1,180,000 to Chijet. The Note is non-interest
bearing and payable in cash upon the earlier of the closing of the Company’s initial business combination and date of liquidation
of the Company.
On
March 6, 2023, the Company issued an unsecured promissory note in the principal amount of $100,000 to Jupiter Wellness Investment Corp.,
a wholly owned subsidiary of Jupiter Wellness, Inc. The Note is non-interest bearing and payable in cash upon the earlier of the closing
of the Company’s initial business combination and date of liquidation of the Company.
On
March 8, 2023, the Company issued an unsecured promissory note in the principal amount of $200,000 to Jupiter Wellness, Inc. This note
is non-interest bearing and payable in cash upon the earlier of the closing of the Company’s initial business combination and date
of liquidation of the Company.
NOTE
8 — STOCKHOLDERS’ EQUITY
The
Company is authorized to issue a total of 111,000,000 shares, par value of $0.0001 per share, consisting of (a) 110,000,000 shares of
common stock, including (i) 100,000,000 shares of Class A common stock, and (ii) 10,000,000 shares of Class B common stock, and (b) 1,000,000
shares of preferred stock (the “Preferred Stock”).
As
of March 31, 2023 and September 30, 2022, there were 905,000
shares of Class A common stock and 3,450,000
shares of Class B common stock issued and outstanding, which such amount having been restated to reflect a 0.2
for 1 stock dividend for each share of Class B common stock outstanding in December 2021 (excluding 13,800,000
shares of Class A common stock subject to possible redemption).
Of
the 3,450,000 shares of Class B common stock outstanding, an aggregate of up to 450,000 shares of Class B common stock were subject to
forfeiture, to the extent that the underwriters’ over-allotment option is not exercised in full or in part, so that the Sponsor
would collectively own 20% of the Company’s issued and outstanding common stock after the IPO (assuming Sponsor does not purchase
any Public Shares in the IPO). As a result of the Underwriters’ full exercise of the over-allotment option on December 9, 2021,
no share of Class B common stock is subject to forfeiture.
As
of March 31, 2023 and September 30, 2022, no
share of Preferred Stock was issued or outstanding. The designations, voting and other rights and preferences of the Preferred Stock
may be determined from time to time by the Company’s board of directors.
Rights
Each
holder of a right will receive one-eighth (1/8) of one share of Class A common stock upon consummation of a Business Combination. In
the event the Company will not be the surviving entity upon completion of the Company’s initial Business Combination, each holder
of a public right will automatically receive the 1/8 share of Class A common stock underlying such public right (without paying any additional
consideration); and each holder of a Private Placement Right or right underlying Units to be issued upon conversion of the Working Capital
Loans will be required to affirmatively convert its rights in order to receive the 1/8 share of Class A common stock underlying each
right (without paying any additional consideration). If the Company is unable to complete an initial Business Combination within the
required time period and public stockholders redeem the public shares for the funds held in the Trust Account, holders of rights will
not receive any such funds in exchange for their rights and the rights will expire worthless. The Company will not issue fractional shares
upon conversion of the rights. If, upon conversion of the rights, a holder would be entitled to receive a fractional interest in a share,
the Company will, upon exchange, comply with Section 155 of the Delaware General Corporation Law. The Company will make the determination
of how to treat fractional shares at the time of its initial Business Combination and will include such determination in the proxy materials
that it will send to stockholders for their consideration of such initial Business Combination.
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, the rights may expire
worthless.
Representative
Warrants and Representative Shares
Upon
the closing of the IPO, the Company issued to the Underwriters Representative Warrants, the exercise price of which will be $12.00 per
Share, and 276,000 Representative Shares.
The
Representative Warrants shall be exercisable, in whole or in part, commencing the later of December 9, 2022 and the closing of the Company’s
initial Business Combination and terminating on December 9, 2026.
The
Company accounted for the 414,000 warrants as an expense of the IPO resulting in a charge directly to stockholders’ equity. The
fair value of Representative Warrants was estimated to be approximately $1,087,164 (or $2.626 per warrant) using the Black-Scholes option-pricing
model. The fair value of the Representative Warrants granted to the Underwriters was estimated as of the date of grant using the following
assumptions: (1) expected volatility of 35%, (2) risk-free interest rate of 1.18% and (3) expected life of five years. The Representative
Warrants and the shares of Class A common stock underlying Representative Warrants have been deemed compensation by FINRA and are therefore
subject to a 180-day lock-up immediately following December 9, 2021 pursuant to FINRA Rule 511€)(1). The Representative
Warrants
grants to holders demand and “piggy back” rights for periods of five and seven years from December 9, 2021. 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 shares issuable upon exercise of the Representative Warrants 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 Representative Warrants will not be adjusted for issuances of Class A common stock at a price below its exercise
price.
The
Underwriters agreed not to transfer, assign or sell any of the Representative Shares without the Company’s prior written consent
until the completion of the Business Combination. The Underwriters agreed (i) to waive its redemption rights with respect to such shares
in connection with the completion of the initial Business Combination and (ii) to waive its rights to liquidating distributions from
the Trust Account with respect to the Representative Shares if the Company fails to complete its initial Business Combination within
Combination Period. The shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days
immediately following December 9, 2021 pursuant to FINRA Rule 5110(e)(1).
NOTE
9 — SUBSEQUENT EVENTS
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statement
was available to be issued. The Company did not identify any subsequent events that would have required adjustment or disclosure in the
financial statement.