In March 2020, the World Health Organization classified the
COVID-19
outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact of the
COVID-19
outbreak continues to evolve. The impact of the
COVID-19
outbreak on our results of operations, financial position and cash flows will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions. These developments and the impact of the
COVID-19
outbreak on the financial markets and the overall economy are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy continue to be impacted for an extended period, our ability to complete our initial Business Combination may be materially adversely affected due to significant governmental measures being implemented to contain the
COVID-19
outbreak or treat its impact, including travel restrictions, the shutdown of businesses and quarantines, among others, which may limit our ability to have meetings with potential investors or affect the ability of a potential target company’s personnel, vendors and service providers to negotiate and consummate our initial Business Combination in a timely manner.
We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational activities, those necessary to prepare for our IPO and, after completing our IPO, identifying a target company for a Business Combination and negotiating and working to consummate the Pending Business Combination. We do not expect to generate any operating revenues until after completion of a Business Combination. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as expenses as we conduct due diligence on prospective Business Combination candidates. Additionally, we recognize
non-cash
gains and losses with other income (expense) related to changes in recurring fair value measurement of our Warrant liabilities and the asset or liability for the Backstop Agreement at each reporting period.
For the quarter ended September 30, 2021, we had net income of $4,035,669, which consists of $2,326,673 in operating costs, offset by
non-cash
gains of $1,111,334 and $5,251,008 related to changes in the fair value of the Warrant liability and Backstop Agreement, respectively.
For the nine-months ended September 30, 2021, we had a net loss of $9,599,566, which consists of
non-cash
losses of $3,677,499 related to change in the fair value of the Warrants, $1,605,246 related to offering costs allocated to warrant liabilities, expenses of $3,450,000 related to the Backstop Placement Fee and operating costs of $3,079,072, partially offset by a
non-cash
gain on the change in fair value of the Backstop Agreement of $2,212,251.
Liquidity and Capital Resources
As of September 30, 2021, we had cash of $176,462 outside of 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, and structure, negotiate and complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in connection with our initial Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we would repay such loaned amounts. In the event that our initial Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants identical to the Private Placement Warrants, at a price of $1.50 per warrant at the option of the lender.
We do not currently believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking due diligence and negotiating a Business Combination are more than we estimate, we may have insufficient funds available to operate our business prior to our initial Business Combination. Moreover, we may need to obtain additional financing either to complete our initial Business Combination or because we become obligated to redeem a significant number of our Public Shares upon consummation of our initial Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our initial Business Combination. If we are unable to complete our initial Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
For the nine months ended September 30, 2021, cash used in operating activities was $1,062,193. Net loss of $9,599,566 was affected by a
non-cash
loss of $3,677,499 related to changes in the fair value of warrants, a
non-cash
gain of $2,212,251 related to changes in the fair value of the backstop agreement, losses of $1,605,246 related to offering costs allocated to warrant liabilities, expenses of $3,450,000 related to the payable for the Backstop Placement Fee and changes in operating assets and liabilities, which used an aggregate of $2,016,879 of cash from operating activities.
As of September 30, 2021, we had cash and marketable securities of $690,000,000 held in the Trust Account. We intend to use substantially all of the funds held in the Trust Account (less taxes paid and deferred underwriting commissions) to complete our initial Business Combination. To the extent that our capital stock 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.