Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2023

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form

10-Q

and Article 8 of Regulation

S-X

of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the period presented.

The accompanying unaudited financial statements should be read in conjunction with the Company’s Annual Report on

Form10-K

as filed with the SEC on February 21, 2023. The interim results for the three and nine months ended September 30, 2023 is not necessarily indicative of the results to be expected for the period ending December 31, 2023 or for any future periods.

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as 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 condensed 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 condensed financial statements in conformity with GAAP requires 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 condensed financial statements and the reported amounts of income and 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 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 cash of $263,240 and $467,756 as of September 30, 2023 and December 31, 2022, respectively, and had no cash equivalents.

Marketable Securities Held in Trust Account

At September 30, 2023 and December 31, 2022, substantially all of the assets held in the Trust Account are comprised solely of 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 money market funds meeting certain conditions under Rule

2a-7

promulgated under the Investment Company Act that invest only in direct U.S. government treasury obligation. The Company’s marketable securities 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 these securities are included in investment income earned on marketable securities held in Trust Account in the accompanying unaudited statements of operations. The estimated fair values of marketable securities held in Trust Account are determined using available market information.

Class A Common Stock Subject to Possible Redemption

As discussed in Note 3, all of the 10,005,000 shares of Class A common stock sold as part of the Units in the Initial Public Offering contain a redemption feature which allows for the redemption of such Public Shares in connection with the Company’s liquidation, if there is a stockholder vote or tender offer in connection with the Business Combination and in connection with certain amendments to the Company’s Charter. In accordance with ASC 480, conditionally redeemable Class A common stock (including shares of Class A common stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary 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. Although the Company did not specify a maximum redemption threshold, its charter provides that currently, the Company will not redeem its Public Shares in an amount that would cause its net tangible assets (stockholders’ equity) to be less than

$5,000,001. However, the threshold in its charter would not change the nature of the underlying shares as redeemable and thus Public Shares would be required to be disclosed outside of permanent equity. At September 30, 2023 and December 31, 2022, there were 195,992 and 10,005,000 shares of Class A common stock subject to possible redemption outstanding (excluding the 543,300 private placement shares and 100,050 representative shares reported as part of permanent equity) and accretion of its carrying value to redemption value totaled to $3,456,922 and $6,172,845, respectively.

On July 7, 2023, the Company held a special meeting at which stockholders approved the proposal to amend the Company’s Charter to extend the date by which the Company must consummate a business combination from July 8, 2023 to July 15, 2023, and to allow the Company’s Chief Executive Officer or Chief Financial Officer, without a further stockholder vote, to further extend the termination date from July 15, 2023 to August 8, 2023, and thereafter on a monthly basis up to six times after August 8, 2023. . In connection with the special meeting, stockholders elected to redeem an aggregate of 4,331,613 shares of Class A common stock at a redemption price of approximately $10.58 per share for an aggregate amount of approximately $45,849,102. On August 7, 2023, September 5, 2023, and October 5, 2023, the Company notified Continental that it was extending the time available to the Company to consummate its initial business combination from August 8, 2023 to September 8, 2023, and from

September 8, 2023

October 8, 2023

, and from October 8, 2023 to November 8, 2023, respectively ( the “Extensions”). The Extensions are the fourth, fifth, and sixth of up to nine

(9) one-month

extensions permitted under the Company’s governing documents.

On September 28, 2023, the Company held a special meeting of stockholders (the “Special Meeting”), where stockholders approved the proposal (the “Business Combination Proposal”) to adopt the business combination agreement, dated as of March 13, 2023, as amended on August 4, 2023 (the “Business Combination Agreement”), as it may further be amended from time to time, by and among the Company, SRIVARU Holding Limited, a Cayman Islands exempted company, and Pegasus Merger Sub Inc., a Delaware corporation and approve the business combination and the other transactions contemplated by the Business Combination Agreement and the terms thereto.

In connection with the Special Meeting, stockholders properly elected to redeem an aggregate of 5,530,395 shares of Class A Common Stock (the “Redemption”). Following the Special Meeting, holders of approximately 53,000 shares of Class A Common Stock subsequently reversed their redemption election. The shares were redeemed for an approximate price of $10.76 per share, for an aggregate amount of $58,922,549.

These redemptions were not paid at September 30, 2023, and are reflected as a liability on the accompanying balance sheets.

At September 30, 2023 and December 31, 2022, the shares of Class A common stock subject to possible redemption reflected in the condensed balance sheets are reconciled in the following table:


Gross proceeds	$	100,050,000
Less:
Shares of class A common stock issuance costs		(5,400,448	)
Overfunding in Trust Account ($0.25/unit)		2,501,250
Plus:
Accretion of carrying value to redemption value		6,172,845

Shares of Class A common stock subject to possible redemption, December 31, 2022		103,323,647
Plus:
Accretion of carrying value to redemption value		811,919

Shares of Class A common stock subject to possible redemption, March 31, 2023		104,135,566
Plus:
Accretion of carrying value to redemption value		1,628,281

Shares of Class A common stock subject to possible redemption, June 30, 2023		105,763,847
Less:
Redemption of shares		(104,771,651	)
Plus:
Accretion of carrying value to redemption value		1,016,722

Shares of Class A common stock subject to possible redemption, September 30, 2023	$	2,008,918

Offering Costs

The Company complies with the requirements of the Financial Accounting Standards Board ASC

340-10-S99-1

and SEC Staff Accounting Bulletin (“SAB”) Topic 5A, “Expenses of Offering”. Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directly related to the Initial Public Offering. These costs, together with the underwriter discount of $1,500,750, were charged to additional

paid-in

capital upon completion of the Public Offering.

Income Taxes

The Company accounts for income taxes under ASC 740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement 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 67.88% and 61.88% for the three months ended September 30, 2023 and 2022, respectively, and (112.95%) and 60.38% for the nine months ended September 30, 2023 and for the period from January 7, 2022 (inception) through September 30, 2022, respectively. The effective tax rate differs from the statutory tax rate of 21% for the three and nine months ended September 30, 2023 and for the period from January 7, 2022 (inception) through September 30, 2022, primarily due to business combination expenses and the valuation allowance on the deferred tax assets.

ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position 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. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 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.

The Company has identified the United States as its only “major” tax jurisdiction.

The Company is subject to income tax examinations by major taxing authorities since inception. These examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

The provision for income taxes for the three and nine months ended September 30, 2023 was $171,535 and $644,313, respectively.

Net Income (Loss) Per Share

Net Loss Per Share

The Company complies with accounting and disclosure requirements of ASC Topic 260, “Earnings Per Share.” Net loss per common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Accretion associated with the redeemable shares of Class A common stock is excluded from loss per share as the redemption value approximates fair value.

The calculation of diluted loss per common stock does not consider the effect of the warrants issued with the (i) Initial Public Offering or (ii) Private Placement because the exercise of the warrants is contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive. Such warrants are exercisable to purchase 10,548,300 shares of Class A common stock in the aggregate following a Business Combination.

The Company’s statement of operations includes a presentation of loss per share for Class A common stock (inclusive of shares subject to possible redemption, private placement shares, and representative shares) in a manner similar to the

two-class

method of loss per common stock. As of September 30, 2023, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into common stock, 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 following table reflects the calculation of basic and diluted net loss per share of common stock (in dollars, except per share amounts):


	For the Three Months Ended September 30,
	2023						2022
	Class A			Class B			Class A			Class B
Basic and diluted net loss per share of common stock
Numerator:
Allocation of net loss	$	(308,513	)	$	(115,718	)	$	(63,957	)	$	(26,078	)
Denominator:
Basic and diluted weighted average shares outstanding		6,668,491			2,501,250			6,134,376			2,501,250
Basic and diluted net loss per share of common stock	$	(0.05	)	$	(0.05	)	$	(0.01	)	$	(0.01	)


	For the Nine Months Ended September 30,						For the Period from January 7, 2022 (Inception) through September 30,
	2023						2022
	Class A			Class B			Class A			Class B
Basic and diluted net loss per share of common stock
Numerator:
Allocation of net loss	$	(58,210	)	$	(15,644	)	$	(47,026	)	$	(44,393	)
Denominator:
Basic and diluted weighted average shares outstanding		9,307,152			2,501,250			2,121,664			2,002,881
Basic and diluted net loss per share of common stock	$	(0.01	)	$	(0.01	)	$	(0.02	)	$	(0.02	)

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution which, at times may exceed the Federal Deposit Insurance Corporation coverage of $250,000. On September 30, 2023 and December 31, 2022, the Company had not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.

Fair Value of Financial Instruments

Fair value of Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheets, primarily due to their short-term nature.

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. ASU

2020-06

is effective January 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted as of inception of the Company.

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed financial statements.

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, close of the Offering, and/or search for a target company, the specific impact is not readily determinable as of the date of these condensed financial statements. The condensed financial statements do not include any adjustments that might result from the 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. Further, 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 condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Inflation Reduction Act of 2022

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its stockholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.

Any redemption or other repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax. Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote or otherwise would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury. In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business Combination and in the Company’s ability to complete a Business Combination.

On July 10, 2023 and September 28, 2023, the Company’s stockholders redeemed 4,331,613 shares of Class A common stock and 5,477,395 shares of Class A common stock, respectively, for a total amount of $104,771,651. The Company evaluated the classification and accounting of the stock redemption under ASC 450, “Contingencies”. ASC 450 states that when a loss contingency exists the likelihood that the future event(s) will confirm the loss or impairment of an asset, or the incurrence of a liability can range from probable to remote. A contingent liability must be reviewed at each reporting period to determine appropriate treatment. The Company evaluated the current status and probability of completing a Business Combination as of September 30, 2023, and concluded that it is probable that a contingent liability should be recorded. As of September 30, 2023, the Company recorded $1,047,717 of excise tax liability calculated as 1% of shares redeemed on July 10, 2023 and September 28, 2023.

Mobiv Acquisition Corp 10-Q