Mountain Crest Acquisition Corp. V S-1/A, filed Nov 9, 2021

Mountain Crest Acquisition Corp. V (MCAG)

S-1/A 2021-11-09

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Delaware		6770		87-1768041
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☒

Title of Class of Security being registered	Amount to be Registered		Proposed maximum offering price per share		Proposed Maximum Aggregate Offering Price⁽¹⁾⁽²⁾		Amount of Registration Fee
Units, each consisting of one share of Common Stock, $0.0001 par value and one Right to acquire 1/10 of one share of Common Stock		6,900,000	$	10.00	$	69,000,000	$	6,396.30
Shares of Common Stock, $0.0001 par value, included as part of the Units		6,900,000		—		—		—	⁽³⁾
Rights included as part of the Units		6,900,000		—		—		—	⁽³⁾
Shares of Common Stock underlying the Rights included as part of Units		690,000	$	10.00	$	6,900,000	$	639.63
Total					$	75,900,000	$	7,035.93	⁽⁴⁾

(1)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act.

(2)	Includes Units and shares of Common Stock and Rights underlying such Units which may be issued on exercise of a 45-day option granted to the Underwriters to cover over-allotments, if any.

(3)	No fee pursuant to Rule 457(g).

	Price to Public		Underwriting Discounts and Commissions			Proceeds, Before Expenses, to us
Per Unit	$	10.00	$	0.50	⁽¹⁾	$	9.50
Total	$	60,000,000	$	3,000,000		$	57,000,000

	PAGE
PROSPECTUS SUMMARY	1
SUMMARY FINANCIAL DATA	20
RISK FACTORS	21
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS	39
USE OF PROCEEDS	40
DIVIDEND POLICY	42
DILUTION	43
CAPITALIZATION	44
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	45
PROPOSED BUSINESS	49
MANAGEMENT	65
PRINCIPAL STOCKHOLDERS	73
CERTAIN TRANSACTIONS	75
DESCRIPTION OF SECURITIES	77
SHARES ELIGIBLE FOR FUTURE SALE	81
UNDERWRITING	82
LEGAL MATTERS	87
EXPERTS	87
WHERE YOU CAN FIND ADDITIONAL INFORMATION	87
INDEX TO FINANCIAL STATEMENTS	F-1

Securities offered	6,000,000 Units, at $10.00 per unit, each unit consisting of one share of common stock and one right entitling the holder thereof to receive one- tenth (1/10) of a share of common stock upon consummation of our initial business combination, subject to adjustment as described in this prospectus.

Proposed Nasdaq symbols	We anticipate the units, and the shares of common stock and rights once they begin separate trading, will be listed on Nasdaq under the symbols “MCAGU”, “MCAG”, and “MCAGR” respectively.

Trading commencement and separate trading of common stock and rights	The units will begin trading on or promptly after the date of this prospectus. Each of the common stock and rights may trade separately on the 45^thday after the date of this prospectus unless Chardan determines that an earlier date is acceptable (based upon, among other things, its assessment of the relative strengths of the securities markets and small capitalization companies in general, and the trading pattern of, and demand for, our securities in particular). In no event will Chardan allow separate trading of the common stock and rights until we file an audited balance sheet reflecting our receipt of the gross proceeds at the closing of this offering. Once the shares of common stock and rights commence separate trading, holders will have the option to continue to hold units or separate their units into the component pieces. Holders will need to have their brokers contact our transfer agent in order to separate the units into shares of common stock and rights. We will file a Current Report on Form 8-K with the U.S. Securities and Exchange Commission, or the SEC, including an audited balance sheet, promptly following the closing of this offering, which is anticipated to take place three business days from the date the units commence trading. The audited balance sheet will reflect our receipt of the proceeds from the exercise of the over-allotment option if the over-allotment option is exercised on the date of this prospectus. If the over-allotment option is exercised after the date of this prospectus, we will file an amendment to the Form 8-K or a new Form 8-K to provide updated financial information to reflect the exercise of the over-allotment option. We will also include in the Form 8-K, or amendment thereto, or in a subsequent Form 8-K, information indicating if Chardan has allowed separate trading of the common stock and rights prior to the 45^thday after the date of this prospectus.

Units:

Number outstanding before this offering	0 units

Number to be outstanding after this offering and sale of private units	6,205,000 units¹

Shares of common stock:

Number outstanding before this offering	1,725,000 shares²

Number to be outstanding after this offering and sale of private units	7,882,900 shares³

(1)	Assumes the over-allotment option has not been exercised.

(2)	This number includes an aggregate of up to 225,000 shares of common stock held by our initial stockholders that are subject to forfeiture if the over-allotment option is not fully exercised by the underwriters.

(3)	Assumes the over-allotment option has not been exercised and that 225,000 insider shares that are subject to forfeiture if the over-allotment option is not exercised by the underwriters in full have been forfeited. If the over-allotment option is exercised in full, there will be a total of 9,025,900 shares of common stock issued and outstanding.

Rights included as part of units:

Number outstanding before this offering	0 rights

Number to be outstanding after this offering and sale of private units	6,205,000 rights⁴

		●	the insider shares are subject to certain transfer restrictions, as described in more detail below, and

		●	our insiders have entered into letter agreements with us, pursuant to which they have agreed (i) to waive their conversion rights with respect to their insider shares and any public shares they purchase in connection with the completion of our initial business combination and (ii) to waive their redemption rights with respect to their insider shares if we fail to complete our initial business combination within 12 months from the closing of this offering (or 15 or 18 months, as applicable) (although they will be entitled to redemption rights with respect to any public shares they hold if we fail to complete our business combination within the prescribed time frame).

		●	If we submit our initial business combination to our public stockholders for a vote, our insiders have agreed to vote their insider shares, private shares and any public shares purchased during or after this offering in favor of our initial business combination.

		●	repayment at the closing of this offering of non-interest bearing loans up to an aggregate amount of $500,000;

		●	payment of $10,000 per month to Mountain Crest Global Holdings LLC for office space and related services, subject to deferral as described herein;

		●	reimbursement of out-of-pocket expenses incurred by our insiders or any of their affiliates in connection with certain activities on our behalf, such as identifying and investigating possible business targets and business combinations; and

		●	repayment of loans which may be made by our insiders or any of their affiliates to finance transaction costs in connection with an initial business combination, the terms of which have not been determined.

	There is no limit on the amount of out-of-pocket expenses reimbursable by us; provided, however, that to the extent such expenses exceed the available proceeds not deposited in the trust account, such expenses would not be reimbursed by us unless we consummate an initial business combination. We have no policy which prohibits our insiders or any member of our management team from negotiating the reimbursement of such expenses by a target business. Our audit committee will review and approve all reimbursements and payments made to any insider or member of our management team, or our or their respective affiliates, and any reimbursements and payments made to members of our audit committee will be reviewed and approved by our board of directors, with any interested director abstaining from such review and approval.

Potential revisions to agreements with insiders	We could seek to amend certain agreements made by our management team disclosed in this prospectus without the approval of stockholders, although we have no intention to do so. For example, restrictions on our executives relating to the voting of securities owned by them, the agreement of our management team to remain with us until the closing of a business combination, the obligation of our management team to not propose certain changes to our organizational documents or the obligation of the management team and its affiliates to not receive any compensation in connection with a business combination could be modified without obtaining stockholder approval. Although stockholders would not be given the opportunity to redeem their shares in connection with such changes, in no event would we be able to modify the redemption or liquidation rights of our stockholders without permitting our stockholders the right to redeem their shares in connection with any such change. We will not agree to any such changes unless we believed that such changes were in the best interests of our stockholders (for example, if such a modification were necessary to complete a business combination).

	None of our insiders, director nominees or their affiliates has committed to purchase units in this offering or any units or shares of common stock in the open market or in private transactions. However, if a significant number of stockholders vote, or indicate an intention to vote, against a proposed business combination, our insiders or their affiliates could make such purchases in the open market or in private transactions in order to influence the vote. Notwithstanding the foregoing, our insiders and their affiliates will not make purchases of shares of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act.

Conditions to completing our initial business combination	There is no limitation on our ability to raise funds privately or through loans in connection with our initial business combination. Our initial business combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80% of the value of the trust account (excluding any deferred underwriter’s fees and taxes payable on the income earned on the trust account) at the time of the agreement to enter into the initial business combination. If we are no longer listed on Nasdaq, we will not be required to satisfy the 80% test.

	If our board is not able to independently determine the fair market value of the target business or businesses, we may obtain an opinion from an independent investment banking or accounting firm as to the fair market value of the target business. We will complete our initial business combination only if the post-transaction company in which our public stockholders own shares will own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction company owns 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business combination transaction. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% test, provided that in the event that the business combination involves more than one target business, the 80% test will be based on the aggregate value of all of the target businesses.

Conversion rights	In connection with any stockholder meeting called to approve a proposed initial business combination, each public stockholder will have the right, regardless of whether he, she or it is voting for or against such proposed business combination, to demand that we convert his, her or its public shares into a pro rata share of the trust account upon consummation of the business combination.

	The holders of the insider shares and private units (and underlying securities) will not participate in any redemption distribution with respect to their insider shares and private units (and underlying securities), but may have any public shares redeemed upon liquidation.

	If we are unable to conclude our initial business combination and we expend all of the net proceeds of this offering not deposited in the trust account, without taking into account any interest earned on the trust account, we expect that the initial per-share redemption price will be approximately $10.00.

	We will pay the costs of any liquidation following the redemptions from our remaining assets outside of the trust account. If such funds are insufficient, our insiders have agreed to pay the funds necessary to complete such liquidation (currently anticipated to be no more than approximately $15,000) and have agreed not to seek repayment for such expenses.

	The underwriters have agreed to waive their rights to the deferred underwriting commissions held in the trust account in the event we do not consummate a business combination within 12 months from the closing of this offering (or 15 or 18 months, as applicable) 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 our public shares.

	●	the potential adverse effect of registration rights on the market price of our common stock;

	●	the exclusive forum provisions in our amended and restated certificate of incorporation;

	June 30, 2021						May 27, 2021
	Actual			As Adjusted			Actual
Working capital (deficiency)⁽¹⁾	$	(62,690	)	$	58,674,000		$	(14,298	)
Total assets	$	111,690		$	60,474,000		$	63,298
Total liabilities	$	87,690		$	1,800,000		$	39,298
Value of ordinary shares subject to possible conversion/tender	$	—			60,000,000	⁽²⁾		—
Stockholders’ equity (deficit)	$	24,000		$	(1,326,000	)	$	24,000

(1)	The “as adjusted” calculation includes $60,000,000 cash held in trust from the proceeds of this offering and the sale of the private units, plus $450,000 of cash held outside the trust account plus actual stockholder’s equity on June 30, 2021, less deferred underwriting commission.

(2)	The “as adjusted” calculation equals the “as adjusted” total assets, less the “as adjusted” total liabilities, less the “as adjusted” shareholder’s equity.

	Without Over- Allotment Option			Over- Allotment Option Exercised
Gross proceeds
From offering	$	60,000,000		$	69,000,000
From sale of private units		2,050,000			2,230,000
Total gross proceeds		62,050,000			71,230,000
Offering expenses⁽¹⁾
Non-contingent underwriting discount (2% of gross proceeds from offering)		1,200,000	⁽²⁾		1,380,000	⁽²⁾
Initial Trustee Fee		6,500			6,500
Legal fees and expenses		200,000			200,000
Nasdaq listing fee		55,000			55,000
Printing and engraving expenses		20,000			20,000
Accounting fees and expenses		40,000			40,000
SEC/FINRA Expenses		18,921			18,921
Miscellaneous		59,579			59,579
Total offering expenses (not including the deferred underwriting discount)		1,600,000	⁽³⁾		1,780,000	⁽³⁾
Held in the trust account⁽⁴⁾	$	60,000,000		$	69,000,000
Not held in the trust account⁽⁵⁾	$	450,000		$	450,000

	Amount			% of Total
Legal, accounting and other third-party expenses attendant to the search for target businesses and to the due diligence investigation, structuring and negotiation of our initial business combination	$	50,000			11	%
Legal and accounting fees related to regulatory reporting obligations	$	50,000			11	%
Consulting, travel and miscellaneous expenses incurred during search for initial business combination target	$	50,000			11	%
Payment for office space, administrative and support services	$	120,000			27	%
Nasdaq continued listing fees	$	55,000			12	%
Working capital to cover miscellaneous expenses, including D&O insurance	$	125,000	⁽⁵⁾		28	%
Total	$	450,000			100.0	%

(1)	The offering expenses relate to all expenses associated with the offering. However, a portion of the offering expenses, including the SEC registration fee, the FINRA filing fee, the non-refundable portion of the Nasdaq listing fee and a portion of the legal and audit fees, have already been paid from the funds we received as loans from our insiders described below. Therefore, these loans will be repaid using the proceeds of the offering since they were used to pay the offering costs described in the Use of Proceeds table.
(2)	No discounts or commissions will be paid with respect to the purchase of the private units.
(3)	Does not include the deferred underwriting commission in cash payable to Chardan in an amount equal to 3.0% of the total gross proceeds raised in the offering ($1,800,000, or $2,070,000 if the underwriter’s over-allotment option is exercised in full).
(4)	The funds held in the trust account may, but need not, be used to pay our expenses relating to completing our initial business combination. Such funds held in the trust account include a deferred underwriting commission payable to Chardan in an amount equal to 3.0% of the total gross proceeds raised in the offering ($1,800,000, or $2,070,000 if the underwriter’s over-allotment option is exercised in full). The underwriters have agreed to pay Mountain Crest Global Holdings LLC an aggregate of $690,000 upon the closing of the offering as compensation for certain consulting services provided by Mountain Crest Global Holdings LLC to the underwriters.
(5)	These expenses are estimates only. Our actual expenditures for some or all of these items may differ from the estimates set forth herein. For example, we may incur greater legal and accounting expenses than our current estimates in connection with negotiating and structuring our initial business combination based upon the level of complexity of that business combination. We do not anticipate any change in the categories of our intended use of proceeds.

				Exercise of
	No exercise of			over-allotment
	over-allotment			option
	option			in full
Public offering price	$	9.09	⁽¹⁾	$	9.09	⁽¹⁾
Net tangible book value before this offering	$	(0.04	)	$	(0.04	)
Increase attributable to new investors	$	(0.49)		$	(0.52)
Pro forma net tangible book value after this offering and the sale of the units	$	(0.53)		$	(0.56)
Dilution to new investors	$	9.62		$	9.65
Percentage of dilution to new investors		105.8	%		106.2	%

	Shares purchased						Total consideration					Average Price per
	Shares			Percentage			Amount		Percentage			Share
Initial shareholders — Initial Shares		1,500,000			17.6	%	$	25,000		0.0	%	$	0.02
Public stockholders (including underlying shares of rights)		6,600,000	⁽¹⁾		77.6	%	$	60,000,000		96.7	%	$	9.09
Private units (including underlying shares of rights)		225,500	⁽²⁾		2.7	%	$	2,050,000		3.3	%	$	9.09
Representative shares		177,900			2.1	%	$	—		—	%	$	—
Total		8,503,400			100.0	%	$	62,075,000		100.0	%

(1)	Assumes the issuance of an additional 600,000 shares for underlying shares of rights to the public shareholders.
(2)	Assumes the issuance of an additional 20,500 shares for underlying shares of rights to the private unit holders.

	Without			With
	Over- allotment			Over- allotment
Numerator:
Net tangible book value before this offering		(62,690	)		(62,690	)
Net proceeds from this offering and sale of the private placement units, net of expenses		60,450,000			69,450,000
Plus: Offering costs accrued in advance, excluded from tangible book value		86,690			86,690
Less: Deferred underwriting fees		(1,800,000	)		(2,070,000	)
Less: Proceeds held in trust subject to redemption/tender		(60,000,000	)		(69,000,000	)
		(1,326,000	)		(1,596,000	)
Denominator:
Shares of common stock outstanding prior to this offering		1,500,000			1,725,000
Shares of common stock included in the units offered		6,000,000			6,900,000
Shares of common stock underlying the rights to be included in the public units		600,000			690,000
Shares of common stock included in the private units		205,000			223,000
Shares of common stock underlying the rights to be included in the private units		20,500			22,300
Representative shares		177,900			177,900
Less: Shares subject to redemption		(6,000,000	)		(6,900,000	)
		2,503,400			2,838,200

	June 30, 2021
	Actual			As Adjusted
Notes payable to related party⁽¹⁾	$	68,392		$	—
Deferred underwriting commissions⁽²⁾		—			1,800,000
Common stock, 0.0001 par value, none and 6,000,000 shares are subject to possible redemption/tender, respectively		—			60,000,000	⁽³⁾
Stockholders’ equity
Shares of common stock, $0.0001 par value, 5,000,000 shares authorized, 1,725,000 shares issued and outstanding, actual; 1,882,900 shares issued and outstanding, as adjusted		173			188
Additional paid-in capital		24,827			0
Accumulated deficit		(1,000	)		(1,326,188	)
Total stockholders’ equity		24,000			(1,326,000	)
Total capitalization	$	92,392		$	59,526,000

(1)	Certain of our directors agreed to loan us up to $500,000 under unsecured promissory notes to be used for a portion of the expenses of this offering, which are due at the earlier of the closing of the initial public offering or the date on which the Company determines not to conduct an initial public offering. As of June 30, 2021, there was $68,392 of borrowings under such promissory notes.

(2)	Assumes the full forfeiture of 225,000 shares that are subject to forfeiture by our founders depending on the extent to which the underwriters’ over-allotment option is exercised.

	●	permit stockholders to convert their shares in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and

	●	file proxy materials with the SEC.

	●	prior to the consummation of our initial business combination, we shall either (1) seek stockholder approval of our initial business combination at a meeting called for such purpose at which public stockholders may seek to convert their shares of common stock, regardless of whether they vote for or against the proposed business combination, into a portion of the aggregate amount then on deposit in the trust account, net of taxes payable, or (2) provide our stockholders with the opportunity to sell their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account, net of taxes payable, in each case subject to the limitations described herein;

	●	we will consummate our initial business combination only if public stockholders do not exercise conversion rights in an amount that would cause our net tangible assets to be less than $5,000,001 and a majority of the outstanding shares of common stock voted are voted in favor of the business combination;

	●	if our initial business combination is not consummated within 12 months (or 15 or 18 months, as applicable) the closing of this offering, then our existence will terminate and we will distribute all amounts in the trust account to all of our public holders of shares of common stock;

	●	upon the consummation of this offering, $60,000,000, or $69,000,000 if the over-allotment option is exercised in full, shall be placed into the trust account;

	●	we may not consummate any other business combination, merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar transaction prior to our initial business combination; and

	●	prior to our initial business combination, we may not issue additional shares of capital stock that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote on any initial business combination.

	●	Restrictions relating to liquidating the trust account if we failed to consummate a business combination in the time-frames specified above could be amended, but only if we allowed all stockholders to redeem their shares in connection with such amendment;

	●	Restrictions relating to our insiders being required to vote in favor of a business combination or against any amendments to our organizational documents could be amended to allow our insiders to vote on a transaction as they wished;

	●	The requirement of members of the management team to remain our officer or director until the closing of a business combination could be amended to allow persons to resign from their positions with us if, for example, the current management team was having difficulty locating a target business and another management team had a potential target business;

	●	The restrictions on transfer of our securities could be amended to allow transfer to third parties who were not members of our original management team;

	●	The obligation of our management team to not propose amendments to our organizational documents could be amended to allow them to propose such changes to our stockholders;

	●	The obligation of insiders to not receive any compensation in connection with a business combination could be modified in order to allow them to receive such compensation; and

	●	The requirement to obtain a valuation for any target business affiliated with our insiders, in the event it was too expensive to do so.

	●	Our having an extended period of time to consummate a business combination (although with less in trust as a certain number of our stockholders would certainly redeem their shares in connection with any such extension);

	●	Our insiders being able to vote against a business combination or in favor of changes to our organizational documents;

	●	Our operations being controlled by a new management team that our stockholders did not elect to invest with;

	●	Our insiders receiving compensation in connection with a business combination; and

	●	Our insiders closing a transaction with one of their affiliates without receiving an independent valuation of such business.