For the nine months ended September 30, 2023 the Company’s net income increased by $4,876,939 to $3,412,746 compared to a loss of ($1,464,193) the nine months ended September 30, 2022. The increase in net income is the result of an increase of $5,364,398 in interest income on trust investments to $6,769,588 for the nine months ended September 30, 2023 compared to $1,405,190 for the nine months ended September 30, 2022 due to an increase in the general interest rate environment resulting in more interest earned on the investments in trust. Total expenses decreased $723,569 to $1,882,843 for the nine months ended September 30, 2023 compared to $2,606,412 for the nine months ended September 30, 2022 primarily due to a decrease in professional fees and other start-up costs due to the Initial Public Offering occurring during the nine months ended September 30, 2022 as well as changes in remaining useful life and related amortization expense after the Extension Agreement Proposal and its extension until July 25, 2024. The Company also accrued $1,473,999 in income taxes during the nine months ended September 30, 2023 compared to $262,971 for the nine months ended September 30, 2022, an increase of $1,211,028. The increase is the result of the increase in the income earned on the trust account.
Liquidity and Capital Resources
On January 25, 2022, we consummated the Initial Public Offering of 23,000,000 Units at $10.00 per Unit, including the issuance of 3,000,000 Units as a result of the underwriter’s exercise of its over-allotment option, generating gross proceeds of $230,000,000 as described in Note 3 to the condensed financial statements. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 13,100,000 private placement warrants (the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement transaction to the Sponsor, generating gross proceeds of $13,100,000 as described in Note 4 to the condensed financial statements.
Following the Initial Public Offering and the sale of the Private Placement Warrants, a total of $235,750,000 was placed in the trust account. We incurred $11,634,010 in costs related to the Initial Public Offering, consisting of $4,200,000 of underwriting fees, $6,900,000 of deferred underwriting fees and $534,010 of other offering costs.
For the nine months ended September 30, 2023, cash used in operating activities was $549,354. Net income of $3,412,746 was affected by interest earned on investments held in the trust account of $6,769,588, profit interest compensation of $302,230 and changes in operating assets and liabilities provided $2,505,258 of cash for operating activities. During the nine months ended September 30, 2023, the Company’s primary uses of cash were management fees of $180,000, professional fees of $235,000, listing fees of $85,000, and travel expenses of $5,940.
As of September 30, 2023, we held investments in the trust account of $49,826,432 consisting of U.S. Treasury Bills with a maturity of 185 days or less. On July 20, 2023, the Company held a special meeting of stockholders (the “Special Meeting”). In connection with the vote to approve the Extension Amendment Proposal, the holders of 18,355,353 shares of Class A common stock of the Company properly exercised their right to redeem their shares for cash in the amount of $193.8 million. We may withdraw interest from the trust account to pay taxes, if any. 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. We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account (less income taxes payable), to complete our initial business combination.
As of September 30, 2023, we held cash of $603,414 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, 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 our initial business combination.
In connection with the Company’s assessment of going concern considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that if the Company is unsuccessful in consummating an initial business combination within 30 months from the closing of the IPO (July 25, 2024 – less than 12 months from the date of these unaudited financial statements), the mandatory liquidation requirement that the Company cease all operations, redeem the public shares and thereafter liquidate and dissolve raises substantial doubt about the ability to continue as a going concern. Management has determined that the Company does not have funds that are sufficient to fund the working capital needs of the Company until the consummation of an initial business combination or the winding up of the Company as stipulated in the Company’s amended and restated certificate of incorporation. The accompanying financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern. These unaudited financial statements do not include any adjustments that might result from the outcome of this uncertainty.
In order to fund working capital deficiencies or finance transaction costs in connection with our initial business combination, the Sponsor, or an affiliate of the Sponsor, or certain of the Company’s executive officers and directors may, but are not obligated to, loan the Company funds as may be required. If we complete our initial business combination, we will repay such working capital loans. 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 working capital loans but no proceeds from the trust account would be used for such repayment. Up to $2,000,000 of such working capital loans 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 Warrant.
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