Public Shares the right to have their shares redeemed in connection with our initial Business Combination or to redeem 100% of our Public Shares if we do not complete our initial Business Combination within the Combination Period, (B) with respect to any other provision relating to the rights of holders of our Public Shares or pre-initial business combination activity and, (iii) waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares or Private Placement Warrants they hold if we fail to consummate the initial Business Combination within the Combination Period (although they will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares they hold if we fail to complete our initial Business Combination within the Combination Period). In the event of any such liquidating distribution from the Trust Account, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the Initial Public Offering price per Unit in the Initial Public Offering.
Results of Operations
All activity for the period from February 1, 2021 (inception) through March 31, 2023 relates to our formation, the Initial Public Offering and, since the closing of the Initial Public Offering, the search for a prospective initial Business Combination candidate. Except as set forth in the immediately preceding sentence, we have neither engaged in any operations nor generated any revenues to date. We will not generate any operating revenues until after the completion of our initial Business Combination, at the earliest.
We generate non-operating income in the form of interest income on cash from the proceeds derived from the Initial Public Offering. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the three months ended March 31, 2023, we had net income of $6,312,136. This consisted of interest income from investment in Trust Account and cash of $6,617,656, interest income from bank of $1,136 and gain from change in fair market value of warrants of $80,695, offset by formation and operating costs of $387,351.
For the three months ended March 31, 2022, we had net income of $12,167,979, which consisted of formation and operating costs of $426,919 offset by interest income from investment in Trust Account of $48,767, interest income from bank of $270 and gain from change in fair market value of warrants of $12,545,861.
Liquidity and Capital Resources
As of March 31, 2023 and December 31, 2022 the Company had $216,824 and $356,174 in cash, respectively, and $897,425 and $511,210 in working capital deficit, respectively. As of March 31, 2023 and December 31, 2022, $15,663,280 and $9,045,624, respectively, of the amount on deposit in investment held in the Trust Account represented interest income.
The Company’s liquidity needs up to its IPO were satisfied through a capital contribution from the Sponsor of $25,000 (see Note 5) for the founder shares and the loan under an unsecured promissory note from the Sponsor of up to $300,000, which was repaid in full on July 23, 2021 (see Note 5). Subsequent to the consummation of the IPO, the Company’s liquidity needs have been satisfied through the net proceeds from the consummation of the Private Placement not held in the Trust Account. In addition, in order to finance transaction costs in connection with a Business Combination, the Company’s Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, provide the Company Working Capital Loans (see Note 5). To date, there were no amounts outstanding under any Working Capital Loans.
The Company received a commitment letter dated March 30, 2022 that confirms the Sponsor will commit to provide periodic financial support to the Company at the request of the Company, sufficient for it to satisfy its obligations as they come due until the earlier of: (a) the completion of the initial Business Combination, or (b) liquidation. Any such support will be repaid to the Sponsor by the Company upon the completion of the Initial Business Combination or upon liquidation.
Based on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, we will be using these funds to pay existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.
Going Concern
The Company does not believe it will need to raise additional funds in order to meet the expenditures required for operating our business. However, if the estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, the Company may have insufficient funds available to operate our business prior to a Business Combination. Moreover, the Company may need to obtain additional financing either to complete a Business Combination or because the Company becomes obligated to redeem a significant number of public shares upon consummation of a Business Combination, in which case the Company may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, the Company would only complete such financing simultaneously with the completion of a Business Combination. If the Company is unable to complete a Business Combination because it does not have sufficient funds available, the Company will be forced to cease operations and liquidate the Trust Account. In addition, following a Business Combination, if cash on hand is insufficient, the Company may need to obtain additional financing in order to meet its obligations.
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