Mountain Crest Acquisition V(MCAG) - 2021 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS Presents the unaudited condensed financial statements and accompanying notes detailing the company's financial position and performance Condensed Balance Sheet (Unaudited) | ASSETS | Amount ($) | | :--- | :--- | | Current asset - cash | 25,000 | | Deferred offering costs | 98,590 | | TOTAL ASSETS | 123,590 | | LIABILITIES | Amount ($) | | Accrued expenses | 2,200 | | Accrued offering costs | 18,298 | | Promissory note – related party | 80,292 | | TOTAL LIABILITIES | 100,790 | | STOCKHOLDER'S EQUITY | | Common Stock | 173 | | Additional paid-in capital | 24,827 | | Accumulated deficit | (2,200) | | Total stockholder's equity | 22,800 | | TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY | 123,590 | - On November 2, 2021, the Company declared a 20% stock dividend on each insider share, retroactively increasing the number of issued and outstanding shares from 1,437,500 to 1,725,000[13] Condensed Statements of Operations (Unaudited) | Metric | Three Months Ended Sep 30, 2021 ($) | Inception (Apr 8, 2021) Through Sep 30, 2021 ($) | | :--- | :--- | :--- | | Operating and formation costs | 1,200 | 2,200 | | Loss from operations | (1,200) | (2,200) | | Net loss | (1,200) | (2,200) | | Weighted average shares outstanding, basic and diluted | 1,500,000 | 1,500,000 | | Basic and diluted net loss per share | (0.01) | (0.01) | - A 20% stock dividend was declared on November 2, 2021, retroactively increasing issued and outstanding shares from 1,437,500 to 1,725,000[17] Condensed Statements of Changes in Stockholders' Equity (Unaudited) | Item | Shares | Amount ($) | Additional paid-in capital ($) | Accumulated Deficit ($) | Total Stockholder's Equity ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | Balance – April 8, 2021 (Inception) | — | — | — | — | — | | Issuance of common stock to Sponsor | 1,725,000 | 173 | 24,827 | — | 25,000 | | Net loss (Apr 8 - Jun 30, 2021) | — | — | — | (1,000) | (1,000) | | Balance – June 30, 2021 | 1,725,000 | 173 | 24,827 | (1,000) | 24,000 | | Net loss (Jul 1 - Sep 30, 2021) | — | — | — | (1,200) | (1,200) | | Balance – September 30, 2021 | 1,725,000 | 173 | 24,827 | (2,200) | 22,800 | - The issuance of common stock to the Sponsor on April 8, 2021, resulted in 1,725,000 shares, $173 par value, and $24,827 additional paid-in capital, totaling $25,000[20] - A 20% stock dividend was declared on November 2, 2021, retroactively increasing issued and outstanding shares from 1,437,500 to 1,725,000[20] Condensed Statement of Cash Flows (Unaudited) | Cash Flow Activity | Amount ($) | | :--- | :--- | | Cash Flows from Operating Activities: | | | Net loss | (2,200) | | Increase in accrued expenses | 2,200 | | Net cash used in operating activities | — | | Cash Flows from Financing Activities: | | | Proceeds from issuance of common stock to Sponsor | 25,000 | | Net cash provided by financing activities | 25,000 | | Net Change in Cash | 25,000 | | Cash – beginning of period | — | | Cash – end of period | 25,000 | | Non-Cash investing and financing activities: | | | Offering costs paid through promissory note – related party | 80,292 | | Deferred offering costs included in accrued offering costs | 18,298 | - The company had $25,000 in cash at the end of the period, primarily from the issuance of common stock to the Sponsor[24] Notes to Condensed Financial Statements (Unaudited) Note 1 — Description of Organization and Business Operations - The Company was incorporated on April 8, 2021, as a blank check company (SPAC) to effect a business combination, focusing on private companies in North America and Asia Pacific (excluding mainland China, Hong Kong, or Macau)[27] - The Initial Public Offering (IPO) closed on November 16, 2021, raising $60,000,000 from 6,000,000 units, with an additional $2,050,000 from private placement units[29][30] - Underwriters fully exercised their over-allotment option on November 18, 2021, issuing an additional 900,000 units for $9,000,000, bringing the total in the Trust Account to $69,000,000[33] - The Company has until November 16, 2022 (with potential extensions) to consummate a Business Combination; otherwise, it will liquidate and redeem public shares[39][40] - Management has determined that the mandatory liquidation, should a business combination not occur, raises substantial doubt about the Company's ability to continue as a going concern[45] Note 2 — Summary of Significant Accounting Policies - The financial statements are prepared in conformity with U.S. GAAP and Article 8 of Regulation S-X for interim financial information[47][48] - The Company is an "emerging growth company" and has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards[49] - Deferred offering costs of $98,590 were incurred as of September 30, 2021, to be charged to stockholder's equity upon IPO completion or to operations if unsuccessful[56] - Net loss per share is computed by dividing net loss by the weighted average number of common stock shares outstanding, with no dilutive securities identified[57] Note 3 — Initial Public Offering | IPO Event | Units | Gross Proceeds ($) | | :--- | :--- | :--- | | Initial Sale (Nov 16, 2021) | 6,000,000 | 60,000,000 | | Over-allotment Option Exercise (Nov 18, 2021) | 900,000 | 9,000,000 | | Total Units Sold | 6,900,000 | 69,000,000 | - Each unit consists of one share of common stock and one right, with each right entitling the holder to one-tenth of one share of common stock at the closing of a Business Combination[63] Note 4 — Private Placement | Private Placement Event | Units | Gross Proceeds ($) | | :--- | :--- | :--- | | Initial Sale (Nov 16, 2021) | 205,000 | 2,050,000 | | Over-allotment Related Sale (Nov 18, 2021) | 18,000 | 180,000 | | Total Private Units Sold | 223,000 | 2,230,000 | - Proceeds from private placement units were added to the Trust Account and will be used to fund the redemption of Public Shares if a Business Combination is not completed[64] Note 5 — Related Party Transactions - On April 8, 2021, 1,437,500 Insider Shares were issued to the Sponsor for $25,000, retroactively adjusted to 1,725,000 shares due to a 20% stock dividend on November 2, 2021[65] - The Sponsor loaned the Company up to $500,000 via a non-interest-bearing promissory note, with $80,292 outstanding as of September 30, 2021, and paid in full on November 16, 2021[66] - The Company agreed to pay the Sponsor up to $10,000 per month for office space, utilities, and administrative support, commencing November 12, 2021[67] Note 6 — Commitments & Contingencies - Legal counsel fees include a $25,000 retainer, $100,000 upon IPO closing, and $50,000 upon business combination closing[69] | Underwriting Fees | Amount ($) | | :--- | :--- | | Upfront Underwriting Fee | 1,380,000 | | Deferred Underwriting Fee | 2,070,000 | | Total Underwriting Fees | 3,450,000 | - 177,900 Representative Shares, valued at $1,383,617, were issued to the underwriter and are subject to a 180-day lock-up period[73] Note 7 — Stockholder's Equity - The Company is authorized to issue 30,000,000 shares of common stock with a par value of $0.0001 per share[74] - As of November 2, 2021, 1,725,000 Insider Shares were issued and outstanding, including shares subject to forfeiture if the underwriters' over-allotment option was not fully exercised[74] - Each Public Right entitles the holder to one-tenth of one share of common stock upon consummation of a Business Combination[76] Note 8 — Subsequent Events - On November 2, 2021, a 20% stock dividend was declared on Insider Shares, increasing the number of issued and outstanding Insider Shares to 1,725,000[79] - The IPO closed on November 16, 2021, generating $60,000,000 from 6,000,000 units, and a private placement generated $2,050,000 from 205,000 units[80] - The underwriters fully exercised their over-allotment option on November 18, 2021, adding $9,000,000 to the Trust Account, bringing the aggregate proceeds held to $69,000,000[82][83] Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Discusses the company's financial condition, operational results, liquidity, and critical accounting policies as a blank check entity Overview - Mountain Crest Acquisition Corp. V was incorporated on April 8, 2021, as a blank check company to effect a business combination[86] - The Company expects to incur significant costs in its acquisition plans and cannot assure success in completing a Business Combination[87] Results of Operations - As of September 30, 2021, the Company had not commenced any operations, with all activity related to its formation and initial public offering[88] | Metric | Inception (Apr 8, 2021) Through Sep 30, 2021 ($) | | :--- | :--- | | Net loss | (2,200) | | Operating costs | 1,000 | | Estimated franchise taxes | 1,200 | Liquidity and Capital Resources - Substantial doubt exists about the Company's ability to continue as a going concern if a business combination is not consummated by November 16, 2022[90] - The IPO and private placements, including the over-allotment option, resulted in $69,000,000 being deposited into the Trust Account[91][92][94] - As of September 30, 2021, the Company had $25,000 in cash, with $610,839 held outside the Trust Account after the IPO closing, intended for identifying and evaluating target businesses[98] Off-Balance Sheet Arrangements - The Company had no off-balance sheet arrangements, obligations, assets, or liabilities as of September 30, 2021[99] Contractual Obligations - The Company has no long-term debt, capital lease obligations, or operating lease obligations[100] - An agreement exists to pay the Sponsor up to $10,000 per month for administrative support, though no amounts were incurred for the period ended September 30, 2021[100] | Obligation | Amount ($) | Condition | | :--- | :--- | :--- | | Deferred Underwriting Fee | 2,070,000 | Payable upon completion of a Business Combination | Critical Accounting Policies - Deferred offering costs are identified as a critical accounting policy, amounting to $98,590 as of September 30, 2021[103] - These costs will be charged to stockholder's equity upon IPO completion or to operations if the IPO is unsuccessful[103] Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Disclosures about market risk are not required as the company qualifies as a smaller reporting company - The Company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[105] Item 4. CONTROLS AND PROCEDURES Evaluates disclosure controls and procedures, identifying a material weakness and noting no other significant changes Evaluation of Disclosure Controls and Procedures - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were not effective as of September 30, 2021[107] - A material weakness was identified due to insufficient financial statement review and approval controls, impacting franchise taxes and going concern disclosures[107] Changes in Internal Control Over Financial Reporting - No material changes in internal control over financial reporting occurred during the most recently completed fiscal quarter, except for the previously mentioned material weakness[108] PART II – OTHER INFORMATION Item 1. LEGAL PROCEEDINGS The company reports no current legal proceedings - There are no legal proceedings to report[111] Item 1A. RISK FACTORS Refers to previously disclosed risk factors from the IPO prospectus, with no material changes reported - Risk factors are detailed in the final prospectus for the Initial Public Offering filed with the SEC on November 12, 2021[112] - No material changes to the previously disclosed risk factors have occurred as of the date of this Quarterly Report[112] Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS Details the use of proceeds from the IPO and private placements, totaling $69 million placed in trust - The IPO closed on November 16, 2021, selling 6,000,000 units for $60,000,000, and a private placement sold 205,000 units for $2,050,000[113] - The underwriters fully exercised the over-allotment option on November 18, 2021, issuing an additional 900,000 units for $9,000,000, and an additional 18,000 private units for $180,000[114] - A total of $69,000,000 from the IPO and private placements was placed in a trust account for public shareholders[115] | Offering Costs | Amount ($) | | :--- | :--- | | Underwriting discounts and commissions | 1,380,000 | | Other offering costs and expenses | 1,640,361 | | Deferred underwriting discounts and commissions | 2,070,000 | | Total Offering Costs | 5,090,361 | Item 3. DEFAULTS UPON SENIOR SECURITIES The company reports no defaults upon senior securities - There are no defaults upon senior securities to report[118] Item 4. MINE SAFETY DISCLOSURES This section is not applicable to the company's operations - This item is not applicable[119] Item 5. OTHER INFORMATION The company reports no other material information - There is no other information to report[120] Item 6. EXHIBITS Lists all exhibits filed with or incorporated by reference into the quarterly report - The report includes various exhibits such as the Underwriting Agreement, Amended and Restated Certificate of Incorporation, Rights Agreement, and certifications from the Principal Executive and Financial Officers[122] PART III – SIGNATURES SIGNATURES Contains the legally required signatures of the company's certifying officers - The report was signed by Suying Liu, Chief Executive Officer and Chief Financial Officer, on December 23, 2021[127]