For the three months ended March 31, 2022, cash used in operating activities was $308,780. Net income of $6,948,312 was attributable to the change in fair value of warrant liabilities of $7,022,133, interest earned on marketable securities held in the Trust Account of $178,120, an unrealized gain on marketable securities held in Trust Account of $33,465 and changes in operating assets and liabilities which used $23,374 in cash from operating activities.
For the three months ended March 31, 2021, cash used in operating activities was $249,853. Net income of $13,517,723 was attributable to the change in fair value of warrant liability of $14,663,866, interest earned on marketable securities held in the Trust Account of $65,089, and changes in operating assets and liabilities, which provided $961,379 in cash from operating activities.
As of March 31, 2022, we had cash and marketable securities held in the Trust Account of $414,195,135. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account to complete our Business Combination. We may withdraw interest to pay franchise and income taxes. Through March 31, 2022, cash withdrawn from the Trust Account to pay franchise and income taxes totaled $281,342, of which $143,715 was withdrawn during the three months ended March 31, 2022. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our 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.
As of March 31, 2022, we had cash of $419,052 held outside of our Trust Account. We intend to use the funds held outside our 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.
In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, we intend to borrow additional amounts under the Promissory Note, under which $1,750,000 remained available to be drawn as of March 31, 2022. The Promissory Note is
non-interest
bearing and payable on the earlier of (i) September 18, 2022 or (ii) the consummation of our initial Business Combination.
If we fully draw down on the Promissory Note and require additional funds for working capital purposes, the sponsor, an affiliate of the sponsor, or our officers and directors may, but are not obligated to, loan us such additional funds as may be required. If we complete a Business Combination, we would repay such additional loaned amounts, without interest, upon consummation of the Business Combination. In the event that a Business Combination does not close, we may use a portion of the working capital held outside the trust account to repay such additional loaned amounts but no proceeds from our trust account would be used for such repayment. Up to $1,500,000 of such additional loans (if any) may be convertible into warrants, at a price of $1.50 per warrant at the option of the lender. The warrants would be identical to the private placement warrants, including as to exercise price, exercisability and exercise period. Except for the foregoing, the terms of such additional loans (if any) have not been determined and no written agreements exist with respect to such loans.
We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if we do need to raise additional capital and are unable to, then we may be required to take additional measures to conserve liquidity, which could include, but not necessarily include or be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. We cannot provide any assurance that new financing will be available to us on commercially acceptable terms, if at all.
Off-Balance
Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance
sheet arrangements as of March 31, 2022. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating
off-balance
sheet arrangements. We have not entered into any
off-balance
sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any
non-financial
assets.
On June 29, 2021, we issued an unsecured promissory note to our Sponsor (the “Promissory Note”), pursuant to which we may borrow up to an aggregate principal amount of $2,500,000. The Promissory Note is
non-interest
bearing and payable on the earlier of (i) September 18, 2022 or (ii) the consummation of the Initial Business Combination. As of March 31, 2022, the outstanding balance under the Promissory Note was $750,000 and the remaining amount available to be drawn was $1,750,000.
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than the Promissory Note and an agreement to pay an affiliate of the Sponsor a monthly fee of $10,000 for office space and administrative support to the Company. We began incurring these fees on September 15, 2020 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination and the Company’s liquidation.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or $14,490,000 in the aggregate. Subject to the terms of the underwriting agreement, (i) the deferred fee will be placed in the Trust Account and released to the underwriters only upon the completion of a Business Combination and (ii) the deferred fee will be waived by the underwriters in the event that we do not complete a Business Combination. Up to 50% of the deferred underwriting commissions may be paid at the sole discretion of our management team to the underwriters in the allocations determined by our management team and/or to third parties not participating in the Initial Public Offering (but who are members of the Financial Industry Regulatory Authority) that assist us in consummating its initial Business Combination.
In connection with our assessment of going concern considerations in accordance with the authoritative guidance in Financial Accounting Standard Board (“FASB”) Accounting Standards Update (“ASU”)
2014-15,
“Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that the mandatory liquidation and subsequent dissolution, should we be unable to complete a business combination, raises substantial doubt about the our ability to continue as a going concern. We have until September 18, 2022 to consummate a Business Combination. It is uncertain that we will be able to consummate a Business Combination by this time. If a Business Combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after September 18, 2022.
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