Liquidity and Capital Resources
On February 2, 2021, we consummated the Initial Public Offering of 21,999,960 Units, at a price of $10.00 per Unit, which included the full exercise by the underwriters of their over-allotment option in the amount of 2,869,560 Units, generating gross proceeds of $219,999,600. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 6,399,992 Private Placement Warrants to the Sponsor at a price of $1.00 per Private Placement Warrant generating gross proceeds of $6,399,992.
Following the Initial Public Offering, the full exercise of the over-allotment option, and the sale of the Private Placement Warrants, a total of $219,999,600 was placed in the Trust Account, and we had $1,517,076 of cash held outside of the Trust Account, after payment of costs related to the Initial Public Offering, and available for working capital purposes. We incurred $12,630,102 in transaction costs, including $4,399,992 of underwriting fees, $7,699,986 of deferred underwriting fees and $530,124 of other offering costs.
For the three months ended March 31, 2022, cash used in operating activities was $281,784. Net income of $2,897,673 was affected by the change in fair value of warrant liabilities of $3,015,666 and interest earned on marketable securities held in the Trust Account of $86,333. Changes in operating assets and liabilities provided $77,458 of cash for operating activities.
For the three months ended March 31, 2021, cash used in operating activities was $218,879. Net income of $10,160,609 was affected by the change in fair value of warrant liabilities of $12,701,979, a loss on initial issuance of Private Placement Warrants of $1,471,998, transaction costs allocated to warrant liabilities of $794,263 and interest earned on marketable securities held in the Trust Account of $25,252. Changes in operating assets and liabilities provided $87,482 of cash for operating activities.
As of March 31, 2022, we had cash and marketable securities held in the Trust Account of $220,172,032. 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 deferred underwriting commissions and income taxes payable), to complete our Business Combination. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our 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 March 31, 2022, we had cash of $268,255. 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 a Business Combination.
On July 23, 2021 and October 26, 2021, the Company’s founders committed to provide us with an aggregate of $2,500,000 in loans. The loans, if issued, will be non-interest bearing, unsecured and will be repaid upon the consummation of a Business Combination. If the Company does not consummate a Business Combination, all amounts loaned to the Company will be forgiven except to the extent that we have funds available outside of the Trust Account to repay such loans.
On February 25, 2022, the Company entered into a non-interest bearing promissory note with the sponsor for a principal of $500,000 “the Sponsor Loan.” The promissory note under the Sponsor Loan is payable on the earlier of (i) January 28, 2023 and (ii) the consummation of a Business Combination. The principal balance may be prepaid at any time.
In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to (except as described above), loan us funds as may be required. If we complete a Business Combination, we may repay such loaned amounts out of the proceeds of the Trust Account released to us. In the event that a 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, at a price of $1.00 per warrant, at the option of the lender. The warrants would be identical to the Private Placement Warrants.
We do not 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 in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, then notwithstanding the Sponsor Loan, we may have insufficient funds available to operate our business prior to our Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of our public shares upon consummation of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination.