Liquidity and Capital Resources
On June 9, 2021, Blue Safari Group Acquisition Corp. (the “Company”) consummated the IPO of 5,000,000 units (the “Units”). Each Unit consists of one ordinary share (“Ordinary Share”) and one right (“Right”) to receive one-tenth of one Ordinary Share upon the consummation of an initial business combination. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $50,000,000. We granted the underwriters a 45-day option to purchase up to 750,000 additional Units to cover over-allotments, if any, which the underwriters exercised in full simultaneously with the consummation of the IPO. The total aggregate issuance by us of 5,750,000 units at a price of $10.00 per unit resulted in a total gross proceeds of $57,500,000.
As of June 9, 2021, a total of $58,075,000 of the net proceeds from the IPO and the Private Placement (as defined below) were deposited in a trust account established for the benefit of the Company’s public shareholders. Simultaneously with the closing of the IPO, the Company consummated the private placement (“Private Placement”) with BSG First Euro Investment Corp., the Company’s sponsor, of 292,500 units (the “Private Units”) at a price of $10.00 per Private Unit, generating total proceeds of $2,925,000. The Private Units are identical to the Units sold in the IPO. Additionally, such initial purchasers agreed not to transfer, assign or sell any of the Private Units or underlying securities (except in limited circumstances, as described in the Registration Statement) until 30 days after the completion of the Company’s initial business combination. Such initial purchasers were granted certain demand and piggyback registration rights in connection with the purchase of the Private Units. The Private Units were issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, as the transactions did not involve a public offering.
Following the Initial Public Offering and the sale of the Private Units, a total of $58,075,000 was placed in the Trust Account, and the Company had $884,500 of cash held outside of the Trust Account, after payment of costs related to the Initial Public Offering, and available for working capital purposes. The Company incurred $4,158,799 in transaction costs, including $1,150,000 of underwriting fees, $2,012,500 of deferred underwriting fees, the fair value of the representative shares of $478,857, and $517,442 of other offering costs.
For the six months ended June 30, 2022, there was $718,049 of cash used in operating activities. Net loss of $2,862,839 was offset by changes in current assets and liabilities of $2,229,402 and interest earned on cash and marketable securities held in Trust Account amounting to $84,612.
For the Period from February 23, 2021 (Inception) to June 30, 2021, there was $445,562 of cash used in operating activities. Net loss of $103,595 was affected by changes in current assets and liabilities of $349,136 used in cash, offset by formation costs paid by the Company’s sponsor of $7,169.
As of June 30, 2022, the Company had $346,368 of cash on hand and working capital deficit of $4,056,717.
The Company expect to incur increased expenses since becoming a public company (for legal, financial reporting, accounting and auditing compliance), as well as expenses in connection with the initial business combination.
On June 1, 2022, using the loan amount received to date, the Company deposited into the Company’s trust account an additional $575,000 (representing $0.10 per Class A ordinary share) to extend the combination period from June 14, 2022 to September 14, 2022. It is uncertain that the Company will be able consummate a business combination by this date. If a business combination is not consummated by the required dates, there will be a mandatory liquidation and subsequent dissolution. In connection with the Company’s assessment of going concern considerations in accordance with the authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-15, “Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern”, management has determined that mandatory liquidation, and subsequent dissolution, should the Company be unable to complete a business combination, raises substantial doubt about the Company’s ability to continue as a going concern. 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 and liabilities should the Company be required to liquidate after September 14, 2022 (or December 14, 2022 if extended).
Based upon the above analysis, management determined that these conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued.