Pursuant to the Non-Redemption Agreement, the Non-Redeeming Stockholder agreed to (a) not redeem the Shares in connection with the vote to amend the Company’s amended and restated certificate of incorporation to extend the date by which the Company has to consummate an initial business combination from October 11, 2022 to April 11, 2023 and (b) vote all of its Shares in favor of the Extension. In connection with the foregoing, Gary Teplis, the Chief Executive Officer of the Company, agreed to pay to the Non-Redeeming Stockholder $0.05 per Share per month through the Extended Date, in a single cash payment within 45 days from the date of the Non-Redemption Agreement.
Results of Operations
As of September 30, 2022, we have not commenced any operations. All activity for the period from August 12, 2020 (inception) through September 30, 2022 relates to our formation and IPO, and, since the completion of the IPO, our searching 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 generate non-operating income in the form of interest income from the proceeds derived from the IPO and placed in the Trust Account.
For the three months ended September 30, 2022, we had a net income of $1,158,637 which included unrealized gain on change in fair value of warrants of $1,389,550, interest income earned on the proceeds in the Trust Account of $222,471 and interest income earned on the operating bank account of $1, partially offset by operating costs of $439,362 and income tax provision of $14,023.
For the nine months ended September 30, 2022, we had a net income of $9,540,916 which included unrealized gain on change in fair value of warrants of $11,915,139, interest income earned on the proceeds in the Trust Account of $534,340 and interest income earned on the operating bank account of $2, partially offset by operating costs of $2,885,762 and income tax provision of $22,803.
For the three months ended September 30, 2021, we had a net loss of $569,008 which included operating costs of $4,903,000, partially offset by unrealized gain on change in fair value of warrants of $4,327,824, interest income earned on the proceeds in the Trust Account of $6,165 and interest income earned on the operating bank account of $3.
For the nine months ended September 30, 2021, we had a net income of $12,043,581 which included unrealized gain on change in fair value of warrants of $17,773,513, interest income earned on the proceeds in the Trust Account of $19,240 and interest income earned on the operating bank account of $23, partially offset by operating costs of $5,749,195.
Liquidity and Capital Resources
As of September 30, 2022, we had cash outside our Trust Account of $24,338 available for working capital needs.
In connection with the stockholder vote to amend the Company’s Amended and Restated Certificate of Incorporation, on June 14, 2022, stockholders holding an aggregate of 24,944,949 shares of our Class A common stock exercised their right to redeem their shares for approximately $10.01 per share of the funds held in our Trust Account, totaling $249,614,847.
On June 16, 2022, pursuant to the trust agreement dated as of December 8, 2020 between the Company and CST, the Company issued a request to CST to withdraw $81,200 of interest income from the Trust Account for the payment of the Company’s taxes.
As of September 30, 2022, we had investments held in the Trust Account of $50,865,089, consisting of mutual funds comprised of U.S. Treasury Bills.
For the nine months ended September 30, 2022, cash used by operating activities was $99,916. Net income of $9,540,916 was impacted by interest income earned on Trust of $534,340, unrealized gain on change in fair value of warrants of $11,915,139, and changes in operating assets and liabilities, which provided $2,808,647 of cash for operating activities.
For the nine months ended September 30, 2021, cash used in operating activities was $630,274. Net income of $12,043,581 was impacted by interest earned on investments held in the Trust Account of $19,240, change in fair value of warrant liability of $17,773,513, and changes in operating assets and liabilities, which provided $5,118,898 of cash for operating activities.
We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (excluding the deferred underwriters’ discount) to complete our initial Business Combination. We may withdraw interest to pay our taxes and liquidation expenses if we are unsuccessful in completing a Business Combination. We estimate our annual franchise tax obligations to be $200,000, which is the maximum amount of annual franchise taxes payable by us as a Delaware corporation per annum, which we may pay from funds from the IPO held outside of the Trust Account or from interest earned on the funds held in the Trust Account and released to us for this purpose. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the trust account reduced by our operating expense and franchise taxes. We expect the interest earned on the amount in the trust account will be sufficient to pay our income taxes. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our initial Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
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