On August 4, 2022, we consummated the Additional Private Placement of 3,680,000 Additional Private Placement Warrants at a price of $0.75 per Additional Private Placement Warrant, generating total proceeds of $2,760,000. The Additional Private Placement Warrants were purchased by the Sponsor and are substantially similar to the Private Placement Warrants issued to the Sponsor at the time of the Initial Public Offering. The Additional Private Placement Warrants have been issued pursuant to, and are governed by, the Warrant Agreement that we entered into at the time of the Initial Public Offering.
The proceeds received by us in connection with the issuance of the Additional Private Placement Warrants have been deposited in the Trust Account. In accordance with the Memorandum and Articles, the Combination Period was extended by six months to February 17, 2023.
Our management has broad discretion with respect to the specific application of the net proceeds of its Initial Public Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.
If we are unable to complete a Business Combination within 18 months from the closing of the Initial Public Offering, or February 17, 2023, which is extendable at our Sponsor’s option for an additional six months as described above (the “Combination Period”), we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to us to pay our taxes, net of taxes payable (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and board of directors, dissolve and liquidate, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if the Company fails to complete its initial Business Combination within the Combination Period.
Liquidity and Going Concern
As of September 30, 2022, we had approximately $1.4 million in our operating bank account and working capital of approximately $0.9 million.
Our liquidity needs through December 31, 2021 were satisfied through the payment of $25,000 from the Sponsor to cover for certain expenses on behalf of us in exchange for issuance of Founder Shares (as defined in Note 4), and the loan from the Sponsor of approximately $150,000 under the Note (as defined in Note 4), which was converted into a Working Capital Loan (as defined in Note 4) on August 17, 2021. Subsequent to the consummation of the Initial Public Offering, our liquidity has been satisfied through the net proceeds from the consummation of the Initial Public Offering and the Private Placement held outside of the Trust Account. In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of our officers and directors may, but are not obligated to, provide us Working Capital Loans (see Note 4). As of September 30, 2022 and December 31, 2021, the fair value of the Working Capital Loan was $150,000 and $200,000, respectively.
In connection with our assessment of going concern considerations in accordance with FASB Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” we have determined that the mandatory liquidation and subsequent dissolution raises substantial doubt about our ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should we be required to liquidate after February 17, 2023. The condensed financial statements do not include any adjustment that might be necessary if we are unable to continue as a going concern. Management plans to complete a business combination prior to the mandatory liquidation date.
Results of Operations
Our entire activity from March 19, 2021 (inception) through September 30, 2022, was in preparation for an Initial Public Offering. We will not generate any operating revenues until the closing and completion of our initial Business Combination, at the earliest.
For the three months ended September 30, 2022, we had a net income of approximately $2,571,000, which consisted of a non-cash gain of approximately $1,529,000 for the change in fair value of derivative warrant liabilities, and approximately $1,259,000 of income from investments held in the Trust Account, partly offset by approximately $157,000 in general and administrative expenses, and $60,000 in administrative expenses-related party.
For the three months ended September 30, 2021, we had a net loss of approximately $41,000, which consisted of approximately $104,000 in general and administrative expenses, $40,000 in administrative expenses—related party, approximately $889,000 in offering costs associated with derivative warrant liabilities, offset by a non-cash loss of approximately $962,000 for the change in fair value of derivative warrant liabilities, approximately $31,000 of income from investments held in the Trust Account.
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