Results of Operations
As of March 31, 2023, we had not commenced any operations. All activity for the period from March 30, 2021 (inception) through March 31, 2023 relates to our formation and initial public offering, and, since the completion of the initial public offering, our search for a target to consummate a business combination. We will not generate any operating revenues until after the completion of a business combination, at the earliest. We will generate non-operating income in the form of interest income from the proceeds derived from the initial public offering and placed in a U.S.-based trust account (the “Trust Account”) at JP Morgan Chase Bank, N.A., maintained by Continental Stock Transfer & Trust Company, acting as trustee. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
We classify the warrants issued in connection with our initial public offering and private placement as liabilities at their fair value and adjust the warrant instruments to fair value at each reporting period. These liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statements of operations.
For the three months ended March 31, 2023, we had net loss of $1,944,607 which consisted of listing expenses of $24,426, administrative expenses of $101,791, legal and accounting expenses of $2,132,103, and insurance expense of $49,531, and a $2,104,627 change in the fair value of warrant liabilities, offset by interest and dividend income on marketable securities held in Trust Account of $2,467,871.
For the three months ended March 31, 2022, we had net income of $576,936, which consisted of listing expenses of $21,250, administrative expenses of $53,893, legal and accounting expenses of $246,958, and insurance expense of $178,233, offset by an unrealized gain on fair value changes of warrants of $1,035,750 and realized gains on marketable securities held in the Trust Account of $41,520.
Liquidity, Capital Resources and Going Concern
As of March 31, 2023, we had $1,341,543 in cash held outside of the Trust Account and a working capital deficit of $5,035,521.
Following our initial public offering and the sale of warrants in a private placement (the “private placement warrants”) to the Sponsor, a total of $227,250,000 was placed in the Trust Account.
For the three months ended March 31, 2023, net cash provided by operating activities was $1,387,052. Net loss of $1,944,607 was increased by accrued interest and dividends on marketable securities held in the Trust Account of $893,395 and offset by an unrealized loss on the change in fair value of warrant liability of $2,104,627 and changes in operating assets and liabilities of $2,120,427.
As of March 31, 2023, we had marketable securities held in the Trust Account of $235,313,162 (including $2,250,000 of deposits related to the extension payment and $5,813,162 of interest, dividends and realized gains on marketable securities from October 21, 2021 through March 31, 2023) consisting of securities held in Treasury Securities and a money market fund that invests in U.S. Treasury securities with a maturity of 185 days or less.
As of March 31, 2023, we had cash of $1,341,543 held outside the Trust Account. We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a business combination.
We may need to raise additional funds in order to meet the expenditures required for operating our business prior to our initial business combination. We expect to incur significant costs related to identifying a target business, undertaking in-depth due diligence and negotiating an initial business combination. These conditions raise substantial doubt about our ability to continue as a going concern for a period of time within one year from the date that the financial statements accompanying this Quarterly Report are issued.