ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Certain Relationships and Related Transactions
On September 18, 2020, Chardan Monterey purchased 5,000,000 shares of common stock from us for $25,000, or $0.005 per share. On May 20, 2021, Chardan Monterey transferred 687,500 founder shares back to us for no consideration, which shares were cancelled. On May 21, 2021, Chardan Monterey transferred 3,315,625 founder shares to NorthStar at a price of $0.006 per share. On May 21, 2021, NorthStar transferred 150,000 founder shares to Dr. Satyal, our chief executive officer, and transferred 35,000 founder shares to each of our directors and director nominees at a price of $0.006 per share. On September 1, 2021, NorthStar transferred 1,078,125 founder shares back to us and Chardan Monterey transferred 359,375 founder shares back to us, in each case for no consideration, which shares were cancelled. As a result, NorthStar holds a balance of 1,912,500 founder shares and Chardan Monterey holds a balance of 637,500 founder shares. We refer to these shares held by our co-sponsors, officers and directors as “founder shares” or “insider shares.”
Simultaneously with the closing of our initial public offering, NorthStar purchased from us 4,087,500 private warrants and Chardan Monterey has purchased from us 1,362,500 private warrants, in each case, at a price of $1.00 per warrant, for an aggregate purchase price of $5,450,000. Each private warrant is exercisable for one (1) share of common stock at an exercise price of $11.50 per share.
In order to meet our working capital needs following the consummation of our initial public offering, our initial stockholders, officers and directors and their respective affiliates may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note. The notes would either be paid upon consummation of our initial business combination, without interest, or, at the lender’s discretion, up to $1,500,000 of the notes may be converted upon consummation of our business combination into additional private warrants to purchase shares of common stock at a conversion price of $1.00 per private warrant. Such private warrants will be identical to the private warrants issued at the closing of our initial public offering, except that each private warrant is exercisable for one share of common stock at an exercise price of $11.50 per share. If we do not complete a business combination, the loans would not be repaid.
In March 2022, the sponsor committed to provide us up to $100,000 in working capital loans as described in Note 5. Through the date of this filing, there have been no amounts advanced to us under the working capital loans. We may raise additional capital through loans or additional investments from the Sponsor or its stockholders, officers, directors, or third parties.
The holders of our insider shares and private warrants (and all underlying securities), are entitled to registration and stockholder rights pursuant to a registration and stockholder rights agreement signed on September 30, 2021. The holders of a majority of these securities are entitled to make up to two demands that we register such securities. The holders of the majority of the insider shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these shares of common stock are to be released from escrow. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our consummation of a business combination. Notwithstanding the foregoing, Chardan Monterey may not exercise its demand and “piggyback” registration rights after five and seven years, respectively, after the effective date of the registration statement of which this prospectus forms a part and may not exercise its demand rights on more than one occasion. We will bear the expenses incurred in connection with the filing of any such registration statements.
We have until October 5, 2022 to consummate an initial business combination. However, if we anticipate that we may not be able to consummate our initial business combination by October 5, 2022, we may, by resolution of our board if requested by our insiders or their affiliates, extend the period of time to consummate a business combination up to three times by an additional three months each time (for a total of up to 21 months, or up to July 5, 2023, to complete a business combination); provided that, pursuant to the terms of our amended and restated certificate of incorporation and the trust agreement, the only way to extend the time available for us to consummate our initial business combination is for our insiders or their affiliates or designees, upon five days’ advance notice prior to each applicable deadline, to deposit into the trust account $1,150,000 ($0.10 per unit in either case, or an aggregate of $3,450,000, if the time to consummate a business combination is extended to a full 21 months), on or prior to the date of the applicable deadline. In the event that our insiders elected to extend the time to complete a business combination and deposited the applicable amount of money into trust, the insiders would receive a non-interest bearing, unsecured promissory note equal to the amount of any such deposit that will not be repaid in the event that we are unable to close a business combination unless there are funds available outside the trust account to do so. In the event that we receive notice from our insiders five days prior to the applicable deadline of their intent to effect an extension, we intend to issue a press release announcing such intention at least three days prior to the applicable deadline. In addition, we intend to issue a press release the day after the applicable deadline announcing whether or not the funds had been timely deposited. Our insiders