Results of Operations
Our only activities from July 23, 2020 (inception) through September 30, 2022 were organizational activities, those necessary to consummate the initial public offering, described below, and identifying a target company for a business combination. We do not expect to generate any operating revenues until after the completion of our business combination. We generate non-operating income in the form of interest income on marketable securities held in the trust account. We are incurring 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 September 30, 2022, we had net loss of $420,491, which consisted of operating costs of $863,871 and provision for income taxes of $80,843, offset by interest income on marketable securities held in the trust account of $524,223.
For the nine months ended September 30, 2022, we had net loss of $966,755, which consisted of operating costs of $1,575,797 and provision for income taxes of $83,722, offset by interest income on marketable securities held in the trust account of $692,764.
For the three months ended September 30, 2021, we had net loss $182, which consisted of operating and formation costs.
For the nine months ended September 30, 2021, we had net loss $207, which consisted of operating and formation costs.
Liquidity and Capital Resources
On October 5, 2021, we consummated the initial public offering of 10,000,000 units, at $10.00 per unit, generating total gross proceeds of $100,000,000. Simultaneously with the closing of the initial public offering, we consummated the sale of 5,000,000 private warrants at a price of $1.00 per private warrant in private placements to Chardan Monterey and NorthStar, generating gross proceeds of $5,000,000.
On October 6, 2021, in connection with the underwriter’s exercise of their over-allotment option in full, we consummated the sale of an additional 1,500,000 units, at $10.00 per unit, and the sale of an additional 450,000 private warrants, at $1.00 per private warrant, generating total gross proceeds of $15,450,000.
Following the initial public offering, the full exercise of the over-allotment option, and the sale of private warrants, a total of $116,150,000 was placed in the trust account. We incurred transaction costs of $2,822,084, consisting of $2,300,000 of underwriting fees, and $522,084 of other offering costs.
For the nine months ended September 30, 2022, cash used in operating activities was $616,992. Net loss of $966,755 was affected by interest earned on marketable securities held in the trust account of $692,764. Changes in operating assets and liabilities provided $1,042,527 of cash for operating activities.
For the nine months ended September 30, 2021, cash used in operating activities was $294. Net loss of $207 was affected by the changes in operating assets and liabilities which used $87 of cash for operating activities.
As of September 30, 2022, we had marketable securities held in the trust account of $116,545,797 (including approximately $695,135 of interest income) consisting of securities held in a money market fund that invests in U.S Treasury securities with a maturity of 185 days or less. Interest income on the balance in the trust account may be used by us to pay taxes. Through September 30, 2022, we had withdrawn $299,338 of amounts from interest earned on the trust account to pay our taxes. As discussed above, approximately $96.1 million was removed from the trust account on October 3, 2022 to pay redeeming stockholders, leaving approximately $20.5 million in the trust account. On October 4, 2022, NorthStar deposited $350,000 into the trust account in connection with the extension of the Combination Period to January 5, 2023.
We intend to use substantially all of the funds held in the trust account, including any amount representing interest earned on the trust account (less income taxes payable), to complete our business combination. To the extent that our capital stock is used in whole or in part as consideration to effect a business combination, the remaining funds held in the trust account will be used as working capital to finance the operations of the target business. Such working capital funds could be used in a variety of ways including continuing or expanding the target business’ operations, for strategic acquisitions and for marketing, research and development of existing or new products. Such funds could also be used to repay any operating expenses or finders’ fees which we had incurred prior to the completion of our business combination if the funds available to us outside of the trust account were insufficient to cover such expenses.