Simultaneously with the consummation of the IPO, the Company consummated the private placement of 459,500 shares of common stock (“
Private Shares
”), at a price of $10.00 per share for an aggregate purchase price of $4,595,000.
In connection with the IPO, the underwriters were granted a
45-day
option from the date of the prospectus for the IPO to purchase up to 2,250,000 additional units to cover over-allotments, if any. On October 1, 2021 this option expired unused.
Following our IPO and the sale of the Private Shares, a total of $150,000,000 ($10.00 per Unit) was placed in the Trust Account. We incurred $3,537,515 in IPO related costs, including $1,500,000 of underwriting fees and $2,037,515 of other costs.
On May 9, 2022, the Sponsor loaned the Company the aggregate amount of $483,034 in order to assist the Company to fund its working capital needs. The loan is evidenced by two promissory notes in the aggregate principal amount of $483,034 from the Company, as maker, to the Sponsor, as payee. The promissory notes are
non-interest
bearing and due on the earlier of: (i) the liquidation or release of all of the monies held in the Trust Account or (ii) the date on which the Company consummates an acquisition, merger or other business combination transaction involving the Company or its affiliates. The principal balance may be prepaid at any time. As of June 30, 2022, the Company had borrowed $483,034 under the promissory notes. During July 2022, the Company fully repaid one of the promissory notes in the amount of $187,034 which represented monies loaned to the Company for the payment of Delaware franchise taxes. The Company utilized the interest earned on the Trust Account to repay the promissory note, $120,000 of which was distributed to it from the Trust Account during June 2022, and $62,069 of which was distributed to it from the Trust Account during July 2022. The second promissory note in the amount of $296,000 remains outstanding.
As of June 30, 2022, we had marketable securities held in the Trust Account of $150,109,154 (including $109,154 of interest income) consisting of mutual funds. Interest income on the balance in the Trust Account may be used by us to pay taxes. As of June 30, 2022, the Trust Account has released $120,000 to the Company to pay franchise tax obligations.
For the nine months ended June 30, 2022, cash used in operating activities was $820,761. Net loss of $3,745,579 was impacted primarily by changes in operating assets and liabilities of $3,069,031, stock-based compensation of $83,889, partially offset by trust interest income of $228,102.
We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account to complete our initial business combination. We may withdraw interest to pay our taxes and liquidation expenses if we are unsuccessful in completing a business combination. We estimate our annual franchise tax obligations to be $200,000, which is the maximum amount of annual franchise taxes payable by us as a Delaware corporation per annum, which we may pay from funds from the Public Offering held outside of the Trust Account or from interest earned on the funds held in the Trust Account and released to us for this purpose. Our 2021 Delware franchise tax amounted to $182,069. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the Trust Account reduced by our operating expense and franchise taxes. We expect the interest earned on the amount in the Trust Account will be sufficient to pay our income taxes. To the extent that our equity 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. As of June 30, 2022, the Trust Account has released $120,000 to the Company to pay tax obligations.
Further, our sponsor, officers and directors or their respective affiliates may, but are not obligated to, loan us funds as may be required (the “
Working Capital Loans
”). If we complete a business combination, we would repay the Working Capital Loans. In the event that a business combination does not close, we may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Such Working Capital Loans would be evidenced by promissory notes. The notes would either be repaid upon consummation of a business combination, without interest, or, at the lender’s discretion, or converted upon consummation of a business combination into additional Private Shares at a price of $10.00 per Private Share. As of June 30, 2022, no Working Capital Loans have been issued.
In connection with our assessment of going concern considerations in accordance with FASB Accounting Standards Update (“ASU”)
2014-15,
“Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” our management has determined that we have and will continue to incur significant costs in pursuit of acquisition plans which raises substantial doubt about our ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should we be required to liquidate after November 17, 2022. The financial statements do not include any adjustment that might be necessary if we are unable to continue as a going concern.
We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business for the 15 month period from the closing of our initial public offering (or 18 months from such date if we extend the period of time to consummate a business combination). However, if our 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, we may have insufficient funds available to operate our business prior to our business combination. In connection with the execution of the Business Combination Agreement, certain investors entered into certain subscription agreements, each dated December 17, 2021 (the “
PIPE Subscription Agreements
”), with certain investors, pursuant to which such investors have agreed to purchase an aggregate of 2,050,000 ordinary shares (the “
PIPE Shares
”) of Cayman NewCo (together, the “
Subscriptions
”), for a purchase price of $10.00 per share, for an aggregate purchase price of $20.5 million to be issued substantially concurrently with the consummation of the Business Combination. The obligations of each party to consummate the Subscriptions are conditioned upon, among other things, customary closing conditions. Under the Business Combination Agreement, either we or Rezolve may terminate the Business Combination Agreement if the aggregate transaction proceeds (excluding any amount pursuant to the PIPE Subscription Agreement to which Apeiron Investment Group Limited is party and any other amounts invested by the investors specified in the Business Combination Agreement) provided or committed to be provided are not more than $50 million. If we are unable to complete a business combination (including the Business Combination) because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account.